EXECUTION COPY
Exhibit 10.18
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CM CAPITAL CORPORATION,
as Company,
CORE-▇▇▇▇ INTERNATIONAL, INC.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee
on behalf of the Holders
CORE-▇▇▇▇ RECEIVABLES MASTER TRUST
POOLING AGREEMENT
Dated as of April 1, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional and Calculation Provisions . . . . . . . . . . . . 24
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES. . . . . . . . . . . . . . 25
2.1. Conveyance of Receivables . . . . . . . . . . . . . . . . . . . . . . 25
2.2. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3. Representations and Warranties of the Company
Relating to the Company . . . . . . . . . . . . . . . . . . . . . . 28
2.4. Representations and Warranties of the Company
Relating to the Receivables . . . . . . . . . . . . . . . . . . . . 32
2.5. Repurchase of Ineligible Receivables. . . . . . . . . . . . . . . . . 33
2.6. Purchase of Investor Certificateholders' Interest
in Trust Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 34
2.7. Affirmative Covenants of the Company. . . . . . . . . . . . . . . . . 35
2.8. Negative Covenants of the Company . . . . . . . . . . . . . . . . . . 38
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS. . . . . . . . . . 42
3.1. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO . . . . . . . . . 47
ARTICLE V
THE CERTIFICATES AND INTERESTS . . . . . . . . . . . . 47
5.1. The Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2. Authentication of Certificates. . . . . . . . . . . . . . . . . . . . 48
5.3. Registration of Transfer and Exchange of Certificates . . . . . . . . 48
5.4. Mutilated, Destroyed, Lost or Stolen
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Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . 51
5.6. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . 52
5.7. Access to List of Investor Certificateholders'
Names and Addresses . . . . . . . . . . . . . . . . . . . . . . . . 52
5.8. Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . 53
5.9. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.10. Company Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.11. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . 57
5.12. Notices to Clearing Agency. . . . . . . . . . . . . . . . . . . . . . 57
5.13. Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY . . . . . . . . . . . . . . . . 58
6.1. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . 58
6.2. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII
EARLY AMORTIZATION EVENTS. . . . . . . . . . . . . . 59
7.1. Early Amortization Events . . . . . . . . . . . . . . . . . . . . . . 59
7.2. Additional Rights Upon the Occurrence of Certain Events . . . . . . . 60
ARTICLE VIII
THE TRUSTEE . . . . . . . . . . . . . . . . . 61
8.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.2. Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 63
8.3. Trustee Not Liable for Recitals in Certificates . . . . . . . . . . . 65
8.4. Trustee May Own Certificates. . . . . . . . . . . . . . . . . . . . . 66
8.5. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 66
8.6. Eligibility Requirements for Trustee. . . . . . . . . . . . . . . . . 67
8.7. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . 67
8.8. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.9. Merger or Consolidation of Trustee. . . . . . . . . . . . . . . . . . 68
8.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . 69
8.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.12. Trustee May Enforce Claims Without Possession of Certificates . . . . 70
8.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 70
8.14. Rights of Investor Certificateholders to Direct Trustee . . . . . . . 71
8.15. Representations and Warranties of Trustee . . . . . . . . . . . . . . 71
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8.16. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . 71
8.17. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . . . . 72
9.1. Termination of Trust; Liquidation of Receivables. . . . . . . . . . . 72
9.2. Clean-Up Call and Final Termination Date of
Investor Certificates of any Series . . . . . . . . . . . . . . . . 72
9.3. Final Payment with Respect to Any Series. . . . . . . . . . . . . . . 74
9.4. Company's Termination Rights. . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . 75
10.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.2. Protection of Right, Title and Interest to Trust. . . . . . . . . . . 77
10.3. Limitation on Rights of Holders . . . . . . . . . . . . . . . . . . . 77
10.4. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.6. Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . 79
10.7. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.8. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . 79
10.9. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.10. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . . 79
10.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.12. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 80
10.13. Actions by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.14. Merger and Integration. . . . . . . . . . . . . . . . . . . . . . . . 80
10.15. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.16. Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . 80
10.17. No Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.18. No Bankruptcy Petition. . . . . . . . . . . . . . . . . . . . . . . . 80
10.19. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . 81
10.20. Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . 81
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EXHIBITS
Exhibit A Form of Lockbox Agreement
Exhibit B Form of Eligible Segregated Account Bank Agreement
Exhibit C Form of Annual Opinion of Counsel
Exhibit D Internal Operating Procedures Memorandum
SCHEDULES
Schedule 1 Receivables
Schedule 2 Identification of the Trust Accounts
Schedule 3 Actions with respect to Chattel Paper
Schedule 4 Location of Chief Executive Office
Schedule 5 Contractual Obligations
Schedule 6 Form of Legend for Receivables Computer Files
Schedule 7 Conditions Precedent to becoming Eligible Receivable
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1
POOLING AGREEMENT, dated as of April 1, 1998, among CM Capital
Corporation, a Delaware corporation (the "COMPANY"); Core-▇▇▇▇ International,
Inc., a Delaware corporation ("CORE-▇▇▇▇"), in its capacity as servicer (the
"SERVICER"); and The Chase Manhattan Bank, a New York banking corporation, not
in its individual capacity, but solely as trustee (in such capacity, the
"TRUSTEE").
W I T N E S S E T H :
WHEREAS, as of the date hereof, (i) the Company, the Servicer and the
Sellers (as hereinafter defined) are entering into a Receivables Sale Agreement
(as amended, supplemented or otherwise modified from time to time, the
"RECEIVABLES SALE AGREEMENT") and (ii) the Company, the Servicer, the Sellers,
in their capacities as servicers of the Receivables (in such capacities, the
"SUB-SERVICERS"), and the Trustee are entering into a Servicing Agreement (as
amended, supplemented or otherwise modified from time to time, the "SERVICING
AGREEMENT"); and
WHEREAS, the parties hereto wish to enter into this Agreement in order
to create a master trust to which the Company will transfer all of its right,
title and interest in, to and under the Receivables and other Trust Assets now
or hereafter owned by the Company, or in which the Company has an interest, and
such master trust shall, from time to time at the direction of the Company,
issue one or more Series of Investor Certificates which shall represent
interests in the Receivables and such other Trust Assets as specified herein and
in the Supplement related to such Series.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section I.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ACCOUNTS" shall have the meaning specified in subsection 2.1(a)(v) of
this Agreement.
"ADJUSTED INVESTED AMOUNT" shall have, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
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"AFFILIATE" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person; PROVIDED
that a Person shall not be deemed an Affiliate of another Person solely
by reason of an individual serving as an officer or director of such
other Person. For purposes of this definition, "control" of a Person
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGED RECEIVABLE" shall mean, as of any date of determination, any
Receivable (a) which is unpaid in whole or in part for more than 61 days
after its original due date or (b) which is, as of such date of
determination, a Charged-Off Receivable.
"AGENT" shall mean, with respect to any Series, the Person or Persons,
if any, so designated in the related Supplement.
"AGGREGATE ADJUSTED INVESTED AMOUNT" shall mean, with respect to any
date of determination, the sum of the Adjusted Invested Amounts with
respect to all Outstanding Series on such date of determination.
"AGGREGATE ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect to
any date of determination, the sum of the Allocated Receivables Amounts
with respect to all Outstanding Series on such date of determination.
"AGGREGATE DAILY COLLECTIONS" shall mean, with respect to any Business
Day, the aggregate amount of all Collections deposited into the Collection
Account which first became Available Funds after 1:00 p.m., New York City
time, on the prior Business Day and prior to 1:00 p.m., New York City time,
on such Business Day; PROVIDED, that during the first three Business Days
following the Issuance Date for Series 1998-1 Certificates, Aggregate Daily
Collections will not include Collections which have become Available Funds
from deposits made prior to such Issuance Date.
"AGGREGATE INVESTED AMOUNT" shall mean, at any date of determination,
the sum of the Invested Amounts with respect to all Outstanding Series on
such date of determination.
"AGGREGATE OVERCONCENTRATION AMOUNT" shall mean, with respect to any
date of determination, the sum of the Overconcentration Amounts of all
Eligible Obligors at the end of the preceding Business Day.
"AGGREGATE RECEIVABLES AMOUNT" shall mean, with respect to any date of
determination, (i) the aggregate Principal Amount of all Eligible
Receivables in the Trust at the end of the Business Day immediately
preceding such date MINUS (ii) the Aggregate Overconcentration Amount for
such date MINUS (iii) to the extent included
3
in clause (i), the aggregate amount of general price increases by the
Tobacco Companies for which the Tobacco Companies have agreed to
reimburse the Sellers and for which the Sellers give rebates to their
customers relating thereto and which will give rise to Dilution
Adjustments, PLUS (iv) the Aggregate Uncleared Funds Amount.
"AGGREGATE TARGET RECEIVABLES AMOUNT" shall mean, with respect to any
date of determination, the sum of the Target Receivables Amounts with
respect to all Outstanding Series on such date of determination.
"AGGREGATE UNCLEARED FUNDS AMOUNT" shall mean on any date, any amounts
on deposit in any Eligible Segregated Account or Lockbox Account which were
not Available Funds as of the last time that funds were transferred from
such accounts to the Collection Account.
"AGREEMENT" shall mean this Pooling Agreement and all amendments and
modifications hereof and supplements hereto, and including, unless
expressly stated otherwise, each Supplement.
"ALLOCABLE CHARGED-OFF AMOUNT" shall have, with respect to any Series,
the meaning specified in subsection 3.1(e).
"ALLOCABLE RECOVERIES AMOUNT" shall have, with respect to any Series,
the meaning specified in subsection 3.1(e).
"ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
"AMORTIZATION PERIOD" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"AVAILABLE FUNDS" shall mean any funds which are immediately available
funds on the applicable date of determination.
"BOOK-ENTRY CERTIFICATES" shall mean the Certificates issued to a
Clearing Agency to facilitate the use of book entries by such Clearing
Agency to evidence ownership of beneficial interests in the Certificates,
transfers of which beneficial interests shall be made through book entries
by such Clearing Agency, all as described in Section 5.11; PROVIDED,
HOWEVER, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive
Certificates are issued to the Certificate Book-Entry Holders, such
Certificates shall no longer be "Book-Entry Certificates".
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday or (ii) another day on which commercial banking institutions or
trust companies in the
4
State of New York or in the city where the Corporate Trust Office is
located, are authorized or obligated by law, executive order or
governmental decree to be closed; PROVIDED that, when used in connection
with the calculation of Certificate Rates which are determined by
reference to the Eurodollar Rate, "Business Day" shall mean any Business
Day on which dealings in Dollars between banks may be carried on in both
London, England and New York, New York.
"BUSINESS DAY RECEIVED" shall have the meaning specified in subsection
2.3(e) of the Servicing Agreement.
"CASH DILUTION PAYMENT" shall have the meaning specified in
subsection 4.6(a) of the Servicing Agreement.
"CERTIFICATE" shall mean any Series of Investor Certificates.
"CERTIFICATE BOOK-ENTRY HOLDER" shall mean, with respect to a Book-
Entry Certificate, the Person who is listed on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such
Clearing Agency, as the beneficial owner of such Book-Entry Certificate
(directly or as an indirect participant, in accordance with the rules of
such Clearing Agency).
"CERTIFICATE RATE" shall mean, with respect to any Series and Class of
Certificates, the percentage interest rate (or formula on the basis of
which such interest rate shall be determined) stated in the applicable
Supplement.
"CERTIFICATE REGISTER" shall mean the register maintained pursuant to
Section 5.3, providing for the registration of the Certificates and
transfers and exchanges thereof.
"CERTIFICATEHOLDERS' INTEREST" shall have the meaning specified in
subsection 3.1(b).
"CHARGED-OFF RECEIVABLES" shall mean all Receivables (or portions
thereof) which, in accordance with the Policies of the applicable Seller,
have or should have been written off as uncollectible, including without
limitation the Receivables of any Obligor which becomes the subject of any
voluntary or involuntary bankruptcy proceeding.
"CLASS" shall mean, with respect to any Series, any one of the classes
of Certificates of that Series as specified in the related Supplement.
"CLEAN-UP CALL PERCENTAGE" shall have, with respect to any Series, the
meaning specified in the related Supplement for such Series.
5
"CLEAN-UP CALL REPURCHASE PRICE" shall have the meaning specified in
Section 9.2.
"CLEARING AGENCY" shall mean each organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with such Clearing Agency.
"COLLECTION ACCOUNT" shall have the meaning specified in subsection
3.1(b)(i), and shall include, without limitation, all subaccounts thereof.
"COLLECTION P.O. BOX" shall mean each post office box (other than
Lockboxes) of the Company to which Obligors on the Receivables are
instructed to remit payments on the Receivables.
"COLLECTIONS" shall mean all collections, including the Aggregate
Uncleared Funds Amount, and all amounts received in respect of the
Receivables, including Recoveries, Seller Repurchase Payments, Seller
Adjustment Payments, Servicer Indemnification Amounts paid by the Servicer
and any other payments received in respect of Dilution Adjustments,
together with all collections received in respect of the Related Property
in the form of cash, checks, wire transfers or any other form of cash
payment, and all proceeds of Receivables and collections thereof
(including, without limitation, collections constituting an account or
general intangible or evidenced by a note, instrument, letter of credit,
security, contract, security agreement, chattel paper or other evidence of
indebtedness or security, whatever is received upon the sale, exchange,
collection or other disposition of, or any indemnity, warranty or guaranty
payable in respect of, the foregoing and all "proceeds", as defined in
Section 9-306 of the UCC as in effect in the State of New York, of the
foregoing).
"COLLECTOR" shall mean any delivery person or salesperson employed by
the Servicer or any Sub-Servicer who is authorized to collect payments in
respect of Receivables in accordance with the Policies of the Seller which
generated such Receivables.
"COMPANY" shall mean CM Capital Corporation, a Delaware corporation.
"COMPANY COLLECTION SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"COMPANY EXCHANGE" shall have the meaning specified in subsection
5.10(a).
"COMPANY INTEREST" shall have the meaning specified in subsection
3.1(b).
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"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of
its property is bound.
"CORE-▇▇▇▇" shall mean Core-▇▇▇▇ International, Inc., a Delaware
corporation.
"CORPORATE TRUST OFFICE" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(Attention: Structured Finance Services).
"CREDIT ENHANCER" shall mean, with respect to any Outstanding Series,
that Person, if any, designated as such in the applicable Supplement.
"CUT-OFF DATE" shall mean the close of business on March 27, 1998.
"DAILY REPORT" shall have the meaning specified in subsection 4.1 of
the Servicing Agreement.
"DCR" shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co. or any successor
thereto.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in Section
5.11.
"DEPOSIT DATE" shall have the meaning specified in subsection 3.1(d).
"DEPOSITORY" shall mean, with respect to any Series, the Clearing
Agency designated as the "Depository" in the related Supplement.
"DEPOSITORY AGREEMENT" shall mean, with respect to any Series, an
agreement among the Company, the Trustee and a Clearing Agency, or a letter
of undertaking to a Clearing Agency by the Company and the Trustee, in each
case in a form reasonably satisfactory to the Trustee and the Company.
"DILUTION ADJUSTMENTS" shall mean any rebates, administrative fees,
discounts, credit memos, refunds, non-cash payments or other adjustments
(including, without limitation, as a result of the application of any
special or other discounts or any reconciliations) in respect of any
Receivable, the amount owing for any returns (including, without
limitation, as a result of the return of any defective goods) or
cancellations and the amount of any other reduction in the amount owing
under any Receivable (including, without limitation, any elimination of
service charges), in each case granted, permitted or made by the applicable
Seller or the Servicer to the related Obligor, PROVIDED that a "Dilution
Adjustment" does not include any Charged-Off Receivable.
7
"DISTRIBUTION DATE" shall mean, except as otherwise set forth in the
applicable Supplement, the 20th day of each calendar month, beginning on
May 20, 1998, or if such 20th day is not a Business Day, the next
succeeding Business Day.
"DOLLARS," "U.S. DOLLARS", "U.S. $" and "$" shall mean dollars in
lawful currency of the United States of America.
"EARLY AMORTIZATION EVENT" shall have, with respect to any Series, the
meaning specified in Section 7.1 of this Agreement (without taking into
account any Supplements) and in any Supplement for such Series.
"EARLY AMORTIZATION PERIOD" shall have, with respect to any Series,
the definition assigned to such term in Section 7.1 of this Agreement
(without taking into account any Supplements) and in any Supplement for
such Series.
"EARLY TERMINATION" shall have the meaning assigned to such term in
the Receivables Sale Agreement.
"ELIGIBLE INSTITUTION" shall mean a depositary institution or trust
company (which may include the Trustee and its affiliates) organized under
the laws of the United States of America or any one of the states thereof
or the District of Columbia; PROVIDED, HOWEVER, that at all times (i) such
depositary institution or trust company is a member of the Federal Deposit
Insurance Corporation, the certificates of deposit or unsecured and
uncollateralized debt obligations of such depositary institution or trust
company are rated in one of the two highest long-term or highest short-term
rating category by each Rating Agency and (ii) such depositary institution
or trust company has a combined capital and surplus of at least
$50,000,000.
"ELIGIBLE INVESTMENTS" shall mean any deposit accounts, book-entry
securities, negotiable instruments or securities represented by instruments
in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) federal funds, demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated under
the laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein the commercial paper, certificates
of deposit or other short-term unsecured and uncollateralized debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of
8
the Rating Agencies rating such investment in one of the two highest
investment category granted thereby;
(c) commercial paper rated, at the time of the investment or
contractual commitment to invest therein, in one of the two highest rating
category by each Rating Agency rating such commercial paper;
(d) investments in money market funds (including funds for which the
Trustee or any of its Affiliates is investment manager or adviser) rated in
one of the two highest rating category by each Rating Agency rating such
money market fund (PROVIDED, that if such Rating Agency is S&P, such rating
shall be AAAm-G);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b) above; or
(g) any other investment upon satisfaction of the Rating Agency
Condition with respect thereto.
"ELIGIBLE OBLIGOR" shall mean, as of any date of determination, each
Obligor in respect of a Receivable that satisfies the following eligibility
criteria:
(a) it is a resident of the United States, its territories or
possessions;
(b) it is not the United States federal government, or any
subdivision thereof, or any agency, department or instrumentality thereof
(a "FEDERAL GOVERNMENT OBLIGOR"), or any state or local government, or any
subdivision thereof, or any agency, department, or instrumentality thereof
(a "STATE/LOCAL GOVERNMENT OBLIGOR"; each Federal Government Obligor and
each State/Local Government Obligor being a "GOVERNMENT OBLIGOR"),;
(c) it is not a Seller or an Affiliate of a Seller; and
(d) it is not the subject of any voluntary or involuntary bankruptcy
proceeding;
PROVIDED, HOWEVER, that if 40% or more of the Principal Amount of
Receivables of an Obligor (measured by the Principal Amount of Receivables
of such Obligor in the Trust) is reported as being aged 91 days or more
after the respective original due dates of such Receivables as at the end
of the Settlement Period immediately preceding the most recent Settlement
Report Date (commencing with the Settlement Report Date
9
occurring on May 15, 1998), such Obligor shall not be deemed an Eligible
Obligor until such time as the Servicer furnishes the Trustee with a
report (which may be part of a Daily Report or a Monthly Settlement
Statement) demonstrating that less than 40% of the Principal Amount of
Receivables of such Obligor then in the Trust are aged 91 days or more
after the respective original due dates of such Receivables.
"ELIGIBLE RECEIVABLE" shall mean, as of any date of determination,
each Receivable owing by an Eligible Obligor that as of such date satisfies
the following eligibility criteria:
(a) it constitutes either (i) an account within the meaning of Section
9-106 of the UCC of the State the law of which governs the perfection of
the interest granted in it, (ii) chattel paper within the meaning of
Section 9-105 of such UCC, subject, in the case of chattel paper, to
compliance with the procedures set forth in Schedule 3 hereto; or (iii) a
general intangible (to the extent that such Receivable includes interest,
finance charges, returned check or late charges or sales or similar taxes)
within the meaning of Section 9-106 of such UCC;
(b) it is not an Aged Receivable;
(c) the goods related to it shall have been shipped or the services
related to it shall have been performed and such Receivable shall have been
billed to the related Obligor;
(d) it is denominated and payable only in U.S. Dollars in the United
States;
(e) it arose in the ordinary course of business from the sale of
goods, products or services of the relevant Seller and in accordance with
the Policies of such Seller and, at such date of determination, no Early
Termination has occurred with respect to such Seller;
(f) (i) it does not contravene any applicable law, rule or regulation
and the applicable Seller is not in violation of any law, rule or
regulation in connection with it, in each case which in any way renders
such Receivable unenforceable or would otherwise impair in any material
respect the collectibility of such Receivable and (ii) it is not subject to
any investigation or proceeding known by such Seller that would reasonably
be expected to adversely affect the payment or enforceability thereof;
(g) it is an account receivable representing all or part of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the 1940 Act;
(h) (i) it is not a Receivable of a Seller Division which has not
become a New Division or (ii) it is not a Receivable purchased by a Seller
from any Person other than a Receivable purchased in connection with the
acquisition by a Seller of the
10
business unit or operating assets of another Person, so long as the
Seller Division consisting of such business unit or operating assets has
become a New Division and the conditions set forth on Schedule 7 hereto
have been satisfied;
(i) it is not a Receivable for which the applicable Seller has
established an offsetting specific reserve; PROVIDED that a Receivable
subject only in part to the foregoing shall be an Eligible Receivable to
the extent not so subject;
(j) it is not a Receivable with original payment terms in excess of 60
days from its original invoice date, or in respect of which the applicable
Seller has (i) altered the basis of the aging from the initial due date for
payment such that the final due date extends to a date more than 60 days
from its original invoice date or (ii) otherwise made any modification
except in the ordinary course of business and consistent with the Policies
of such Seller;
(k) all required consents, approvals or authorizations necessary for
the creation and enforceability of such Receivable and the effective
assignment and sale thereof by the applicable Seller to the Company and by
the Company to the Trust shall have been obtained with respect to such
Receivable;
(l) the applicable Seller is not in default in any material respect
under the terms of the contract, if any, from which such Receivable arose;
provided that if a series of Receivables arise under a single contract
Receivables not subject to such default shall be an Eligible Receivable to
the extent not so subject;
(m) all right, title and interest in it has been validly sold to the
Company by the applicable Seller pursuant to the Receivables Sales
Agreement;
(n) the Company or the Trust will have legal and beneficial ownership
therein free and clear of all Liens other than such Liens described in
clauses (i) and (iv) of the definition of Permitted Liens and such
Receivable has been the subject of either a valid transfer from the Company
to the Trust or, alternatively, the grant of a first priority perfected
security interest therein to the Trust free and clear of all Liens other
than such Liens described in clauses (i) and (iv) of the definition of
Permitted Liens;
(o) it is not subject to any dispute in whole or in part or to any
offset, counterclaim, defense, rescission, recoupment or subordination;
PROVIDED that a Receivable subject only in part to any of the foregoing
shall be an Eligible Receivable to the extent not so subject;
(p) it is at all times the legal, valid and binding obligation of the
Obligor thereon, enforceable against such Obligor to pay the full Principal
Amount thereof in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting
11
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or law);
(q) each of the representations and warranties with respect thereto
made in the Receivables Sale Agreement by the applicable Seller with
respect to such Receivable is true and correct in all material respects;
and
(r) at the time such Receivable was sold by the applicable Seller to
the Company under the Receivables Sale Agreement, no event described in
subsection 6.01(g) (other than clause (v) thereof) of the Receivables Sale
Agreement (without giving effect to any requirement as to the passage of
time) had occurred with respect to such Seller.
"ELIGIBLE SEGREGATED ACCOUNT" shall mean (a) a segregated account or
accounts maintained with a depositary institution or trust company whose
long-term unsecured debt obligations are rated in one of the three highest
long-term or short-term rating categories by each Rating Agency rating such
depository institution or trust company at the time of any deposit therein,
PROVIDED, that if such obligations are only rated by one of S&P or ▇▇▇▇▇'▇,
such rating shall suffice, or (b) a segregated account or accounts
maintained with a federal of state chartered depository institution subject
to regulations regarding fiduciary funds on deposit substantially similar
to 12 C.F.R. Section 9.10(b).
"ELIGIBLE SEGREGATED ACCOUNT BANK" shall mean any bank or depositary
institution with which an Eligible Segregated Account has been established.
"ELIGIBLE SEGREGATED ACCOUNT BANK AGREEMENT" shall have the meaning
specified in subsection 2.3(b)(ii) of the Servicing Agreement.
"ELIGIBLE SUCCESSOR SERVICER" shall mean a Person which, at the time
of its appointment as Servicer, (i) is legally qualified and has the
corporate power and authority to service the Receivables transferred to the
Trust, (ii) has demonstrated the ability to service a portfolio of similar
receivables in accordance with the standards set forth in subsection 6.2(c)
of the Servicing Agreement and (iii) has a combined capital and surplus of
at least $5,000,000.
"ENHANCEMENT" shall mean, with respect to any Series, (i) the funds on
deposit in or credited to any bank account (or subaccount thereof) of the
Trust for the benefit of any Holders of such Series, (ii) any surety
arrangement, any letter of credit, guaranteed rate agreement, maturity
guaranty facility, tax protection agreement, interest rate swap, currency
swap or other contract, agreement or arrangement, in each case for the
benefit of any Holders of such Series, as designated in the applicable
Supplement and (iii) the subordination of one Class of Certificates in a
Series to another class in such Series or the subordination of any
Certificate held or interest owned by the Company to the Investor
Certificates of such Series.
12
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGEABLE COMPANY INTEREST" shall have the meaning specified in
subsection 3.1(a) and shall be exchangeable as provided in Section 5.10.
"EXCHANGE DATE" shall have the meaning, with respect to any Series
issued pursuant to a Company Exchange, specified in Section 5.10.
"EXCHANGE NOTICE" shall have the meaning, with respect to any Series
issued pursuant to a Company Exchange, specified in Section 5.10.
"FORCE MAJEURE DELAY" shall mean, with respect to any Servicing Party,
any cause or event which is beyond the control and not due to the
negligence of such Servicing Party which delays, prevents or prohibits the
Servicer's delivery of Daily Reports and/or Monthly Settlement Statements,
including, without limitation, acts of God or the elements and fire, but
excluding strikes by any Servicing Party's employees; PROVIDED that no such
cause or event shall be deemed to be a Force Majeure Delay unless the
Servicer shall have given the Company and the Trustee written notice
promptly after the beginning of such delay.
"FRACTIONAL UNDIVIDED INTEREST" shall mean the fractional undivided
interest in the Certificateholders' Interest evidenced by an Investor
Certificate.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"GENERAL OPINION" shall mean, with respect to any action, an Opinion
of Counsel to the effect that (A) such action has been duly authorized by
all necessary corporate action on the part of the Servicer, the applicable
Seller or Sellers or the Company, as the case may be, (B) any agreement
executed in connection with such action constitutes a legal, valid and
binding obligation of the Servicer, the applicable Seller or Sellers or the
Company, as the case may be, enforceable in accordance with the terms
thereof, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity), (C) such
action does not violate any Requirement of Law or require any consent or
filing thereunder, (D) such action does not result in a breach of, or
default under any contractual obligation, or creation of any Lien,
pursuant thereto and (E) any condition precedent to any such action
specified in the applicable agreement, if any, has been complied with,
which opinion in the case of clauses (D) or (E) may, to the extent that
such opinion concerns questions of fact, rely on an Officer's Certificate
with respect to such questions of fact.
13
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"HOLDERS" shall mean the collective reference to (i) the Investor
Certificateholders, (ii) the owner of the Exchangeable Company Interest and
(iii) if applicable, the owner of each Series Subordinated Interest.
"INDEBTEDNESS" shall mean, with respect to any Person at any date, (a)
all indebtedness of such Person for borrowed money, (b) any obligation owed
for the deferred purchase price of property or services which purchase
price is evidenced by a note or similar written instrument, (c) notes
payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money, (d) that portion of
obligations of such Person under capital leases which is properly
classified as a liability on a balance sheet in conformity with GAAP and
(e) all Indebtedness referred to in clauses (a) through (d) above of
another Person secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof.
"INDEPENDENT PUBLIC ACCOUNTANTS" means any independent certified
public accountants of nationally recognized standing which constitute one
of the accounting firms commonly referred to as the "big six" accounting
firms (or any successor thereto); PROVIDED that such firm is independent
with respect to the Servicer within the meaning of Rule 2-01(b) of
Regulation S-X under the Securities Act.
"INELIGIBLE RECEIVABLE" shall have the meaning specified in Section
2.5.
"INITIAL CLOSING DATE" shall mean April 1, 1998.
"INITIAL INVESTED AMOUNT" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"INSOLVENCY EVENT" shall mean the occurrence of any one or more of the
Early Amortization Events specified in paragraph (a) of Section 7.1.
"INTERNAL OPERATING PROCEDURES MEMORANDUM" shall mean the internal
operating procedures memorandum prepared by the Trustee as set forth in
Exhibit D hereto.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"INVESTED AMOUNT" shall mean, with respect to any Outstanding Series,
the meaning assigned to such term in the related Supplement for such
Series.
14
"INVESTED PERCENTAGE" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"INVESTMENT EARNINGS" shall have the meaning specified in subsection
3.1(c).
"INVESTOR CERTIFICATEHOLDER" shall mean the registered holder of, or
the bearer of, an Investor Certificate.
"INVESTOR CERTIFICATES" shall mean the Certificates executed by the
Company and authenticated by or on behalf of the Trustee, substantially in
the form attached to the applicable Supplement, but shall not include any
Certificate held by the Company.
"ISSUANCE DATE" shall mean, with respect to any Series, the date of
issuance of such Series, or the date of any issuance of additional
certificates representing any increase to the Invested Amount of such
Series, as specified in the related Supplement.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement relating to such
asset and (c) in the case of securities, any purchase option, call or other
similar right of a third party with respect to such securities; PROVIDED,
HOWEVER, that if a lien is imposed under Section 412(n) of the Internal
Revenue Code or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which Section 412(n) of the
Internal Revenue Code or Section 302(f) of ERISA applies, then such lien
shall not be treated as a "Lien" from and after the time any Person who is
obligated to make such payment pays to such plan the amount of such lien
determined under Section 412(n)(3) of the Internal Revenue Code or Section
302(f)(3) of ERISA, as the case may be, and provides to the Trustee, any
Agent and each Rating Agency written evidence reasonably satisfactory to
the Rating Agencies of the release of such lien, or such lien expires
pursuant to Section 412(n)(4)(B) of the Internal Revenue Code or Section
302(f)(4)(B) of ERISA.
"LOCKBOX" shall mean the post office boxes listed on Schedule 3 to the
Receivables Sale Agreement to which the Obligors are instructed to remit
payments on the Receivables and/or such other post office boxes as may be
established pursuant to Section 2.3 of the Servicing Agreement.
"LOCKBOX ACCOUNT" shall mean each intervening bank account of the
Company used by a Lockbox Processor for deposit of funds received in a
Lockbox prior to their transfer to the Collection Account, which account
may also be used by Collectors and other employees of the Servicing
Parties for deposit of Collections received by such persons or direct
payment by Obligors.
15
"LOCKBOX AGREEMENT" shall mean, with respect to each Lockbox
Processor, a lockbox agreement in substantially the form set forth as
Exhibit A hereto, or such other form of lockbox agreement with a Lockbox
Processor acceptable to each Agent, or if there are no Agents, which upon
execution thereof the Rating Agency Condition is satisfied.
"LOCKBOX BANK" shall mean the depositary institution that holds a
Lockbox Account.
"LOCKBOX PROCESSOR" shall mean the depositary institution or
processing company (which may be the Trustee) which processes payments on
the Receivables sent by the Obligors thereon forwarded to a Lockbox.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material impairment of the
ability of a Seller, a Servicing Party or the Company, as the case may be,
to perform its obligations under the Transaction Documents, (b) a
materially adverse effect on the business, operations, property or
condition (financial or otherwise) of the Company, (c) a material
impairment of the validity or enforceability of any of the Transaction
Documents against a Seller, a Servicing Party or the Company, (d) a
material impairment of the collectibility of the Receivables taken as a
whole or (e) a material impairment of the interests, rights or remedies of
the Trustee or the Investor Certificateholders under or with respect to the
Transaction Documents or the Receivables taken as a whole.
"MONTHLY SERVICING FEE" shall have the meaning specified in subsection
2.5(a) of the Servicing Agreement.
"MONTHLY SETTLEMENT STATEMENT" shall have the meaning specified in
Section 4.2 of the Servicing Agreement.
"NEW DIVISION" shall mean any Seller Division which has satisfied the
criteria for the addition of a Seller Division specified in any Pooling and
Servicing Agreement.
"1940 ACT" shall mean the Investment Company Act of 1940, as amended.
"OBLIGOR" shall mean, with respect to any Receivable, the party
obligated to make payments with respect to such Receivable, including any
guarantor thereof.
"OFFICER'S CERTIFICATE" shall mean, unless otherwise specified in this
Agreement, a certificate signed by the President, Chief Financial Officer,
Treasurer, Controller, or any Vice President of the Servicer or the
Company, as the case may be, or, in the case of a Successor Servicer, a
certificate signed by a Vice President and the financial controller (or an
officer holding an office with equivalent or more senior responsibilities)
of such Successor Servicer.
16
"OPINION OF COUNSEL" shall mean a written opinion or opinions of one
or more counsel (who, unless otherwise specified in this Agreement, may be
internal counsel) to the Company or the Servicer, designated by the Company
or the Servicer, as the case may be, which is reasonably acceptable to the
Trustee.
"OPTIONAL TERMINATION NOTICE" shall have, with respect to any Series,
the meaning specified in the related Supplement for such Series.
"OUTSTANDING SERIES" shall mean, at any time, a Series issued pursuant
to an effective Supplement for which the Series Termination Date for such
Series has not occurred.
"OVERCONCENTRATION AMOUNT" shall mean, at any date with respect to an
Eligible Obligor, the Principal Amount of Eligible Receivables due from
such Obligor at such date which, expressed as a percentage of the Principal
Amount of all Eligible Receivables in the Trust at such date, exceeds the
percentage set forth below for the applicable category of that Obligor at
such date (or such higher percentage after giving effect to which the
Rating Agency Condition is satisfied):
MINIMUM RATING
S&P DCR ▇▇▇▇▇'▇ PERCENTAGE
--- --- ------- ----------
A-1+ or AA- D-1+ or AA- P-1 or Aa3 15%
A-1 or A+ D-1 or A+ P-1 or A1 11.25%
A-2 or BBB+ D-2 or BBB+ P-2 or Baa1 5.625%
A-3 or BBB- D-3 or BBB- P-3 or Baa3 3.75%
Not rated/other Less than D-3 or BBB- Not rated/other 2.25%
/Not rated
; PROVIDED, HOWEVER, (i) that all Eligible Obligors that are Affiliates of
each other shall be deemed to be a single Eligible Obligor to the extent
the Servicer knows or has reason to know of the affiliation and in that
case, the applicable debt rating for such group of Obligors shall be the
debt rating of the ultimate parent of the group.
The percentage applicable to any Obligor (or the ultimate parent of
the affiliated group of which such Obligor is a member, as the case may be)
will be the percentage associated with the lowest of such Obligor's (or
such ultimate parent's, as the case may be) short-term and long-term senior
debt rating issued by S&P, ▇▇▇▇▇'▇ and DCR; PROVIDED THAT: (i) if such debt
is not rated by DCR, the applicable percentage will be the percentage
associated with the rating issued by S&P
17
or ▇▇▇▇▇'▇ and (ii) if S&P or ▇▇▇▇▇'▇ issues no rating with respect to
the debt of such Obligor (or such ultimate parent, as the case may be),
then the percentage applicable to such Obligor (or such ultimate parent,
as the case may be) shall be the percentage associated with the
categories "Not rated/other" and "Less than D-3 or BBB-/Not rated and NOT
rated/other." The ratings specified in the table are minimums for each
percentage category, so that a rating not shown in the table falls in the
category associated with the highest rating shown in the table that is
lower than that rating.
"PAYING AGENT" shall mean any paying agent and co-paying agent
appointed pursuant to Section 5.6 and, unless otherwise specified in the
related Supplement of any Outstanding Series and with respect to such
Series, shall initially be the Trustee.
"PERMITTED LIENS" shall mean, at any time, for any Person:
(i) Liens created pursuant to this Agreement or the
Receivables Sale Agreement;
(ii) Liens for taxes, assessments or other governmental
charges or levies not yet due and payable or if such Person shall
currently be contesting the validity thereof in good faith by
appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of such Person;
(iii) Liens on a Receivable arising as a result of offsetting
specific reserves and rights of set-off, counterclaim or other
defenses with respect to such Receivable; and
(iv) Liens for federal taxes, state tobacco excise taxes or
ERISA obligations in an aggregate at any one time outstanding not in
excess of $250,000 and any other Liens securing obligations not in
excess of $100,000 in the aggregate at any one time outstanding.
"PERSON" shall mean any individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"POLICIES" shall mean, with respect to each Seller, the credit and
collection policies and the returned goods policies of such Seller, copies
of which have been delivered to the Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
Transaction Documents.
"POOLING AND SERVICING AGREEMENTS" shall mean, collectively, this
Agreement, the Servicing Agreement and each Supplement for an Outstanding
Series.
18
"POTENTIAL EARLY AMORTIZATION EVENT" shall mean an event which, with
the giving of notice and/or the lapse of time, would constitute an Early
Amortization Event hereunder or under any Supplement for an Outstanding
Series.
"POTENTIAL SERVICER DEFAULT" shall mean an event which, with the
giving of notice and/or the lapse of time, would constitute a Servicer
Default.
"PREPAYMENT REQUEST" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"PRINCIPAL AMOUNT" shall mean, with respect to any Receivable, the
amount due thereunder.
"PRINCIPAL TERMS" shall have, with respect to any Series issued
pursuant to a Company Exchange, the meaning specified in subsection
5.10(c).
"RATING AGENCY" shall mean, with respect to each Outstanding Series,
any rating agency or agencies designated as such in the related Supplement;
PROVIDED that in the event that no Outstanding Series has been rated, then
for purposes of the definitions of "Eligible Institution", "Eligible
Investments" and Section 2.3(b) of the Servicing Agreement, "RATING AGENCY"
shall mean S&P and references to "each Rating Agency" shall refer solely to
S&P.
"RATING AGENCY CONDITION" shall mean, subject to the applicable
Supplement, with respect to any action, that each Rating Agency shall have
notified the Company, the Servicer, any Agent and the Trustee in writing
that such action will not result in a reduction or withdrawal of the rating
of any Outstanding Series or any Class of any such Outstanding Series with
respect to which it is a Rating Agency.
"RECEIVABLE" shall mean the indebtedness and payment obligations of
any Person to a Seller or acquired by a Seller (including, without
limitation, obligations constituting an account or general intangible or
evidenced by a note, instrument, contract, security agreement, chattel
paper or other evidence of indebtedness or security) arising from a sale of
merchandise or the provision of services by such Seller or the Person from
whom such indebtedness and payment obligation was acquired by a Seller,
including, without limitation, any right to payment for goods sold or for
services rendered, and including the right to payment of any interest,
sales taxes, finance charges, returned check or late charges and other
obligations of such Person with respect thereto.
"RECEIVABLES PURCHASE DATE" shall mean, with respect to any
Receivable, the Business Day on which the Company purchases such Receivable
from the applicable Seller and transfers such Receivable to the Trust.
19
"RECEIVABLES SALE AGREEMENT" shall have the meaning specified in the
recitals hereto.
"RECORD DATE" shall mean, with respect to any Series, the dates
specified as such in the applicable Supplement.
"RECOVERIES" shall mean all amounts collected (net of out-of-pocket
costs of collection) in respect of Charged-Off Receivables.
"RELATED PROPERTY" shall mean, with respect to each Receivable:
(a) all of the applicable Seller's interest in the goods (other
than returned goods), if any, sold and delivered to an Obligor
relating to the sale which gave rise to such Receivable;
(b) all other security interests or Liens, and the applicable
Seller's interest in the property subject thereto, from time to time
purporting to secure payment of such Receivable, together with all
financing statements signed by an Obligor describing any collateral
securing such Receivable; and
(c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
in the case of clauses (b) and (c), without limitation, whether pursuant to
the contract related to such Receivable or otherwise or pursuant to any
obligations evidenced by a note, instrument, contract, security agreement,
chattel paper or other evidence of indebtedness or security and the
proceeds thereof.
"REPORTED DAY" shall have the meaning specified in Section 4.1 of the
Servicing Agreement.
"REPURCHASE OBLIGATION DATE" shall have the meaning specified in
subsection 2.5(a).
"REQUIREMENT OF LAW" for any Person shall mean the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"RESPONSIBLE OFFICER" shall mean (i) when used with respect to the
Trustee, any officer within the Corporate Trust Office of the Trustee
including any Vice President, any Assistant Vice President, Trust Officer
or Assistant Trust Officer or any other
20
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and (ii) when used with
respect to any other Person, the Chairman or Vice Chairman of the Board,
President, Chief Financial Officer, any Vice President, Treasurer,
Controller, Assistant Treasurer or Secretary of such Person.
"REVOLVING PERIOD" shall mean, with respect to any Outstanding Series,
the meaning assigned to such term in the related Supplement for such
Series.
"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended.
"SELLER ADJUSTMENT PAYMENTS" shall have the meaning specified in
Section 2.05 of the Receivables Sale Agreement.
"SELLER DIVISION" shall mean any business unit or operating assets
acquired by a Seller which is made part of an existing division of a Seller
or made a new division (but not a subsidiary) of a Seller.
"SELLER REPURCHASE PAYMENTS" shall have the meaning specified in
Section 2.06 of the Receivables Sale Agreement.
"SELLERS" shall mean the collective reference to Core-▇▇▇▇, in its
capacity as a Seller under the Receivables Sale Agreement, the wholly-owned
Subsidiaries of Core-▇▇▇▇ listed as Sellers on the signature pages thereof
and any wholly-owned Subsidiaries of Core-▇▇▇▇ which have been added as
Sellers in accordance with the provisions of the Receivables Sale Agreement
and the other Transaction Documents (but, in each case, excluding any such
Subsidiaries which have been terminated as Sellers in accordance with the
provisions thereof and of the other Transaction Documents), all of the
foregoing in their capacities as Sellers under the Receivables Sale
Agreement; each, individually, a "SELLER".
"SERIES" shall mean any series of Investor Certificates, the terms of
which are set forth in a Supplement.
"SERIES ACCOUNT" shall mean any deposit, trust, escrow, reserve or
similar account maintained by the Trustee for the benefit of the Investor
Certificateholders of any Series or Class, as specified in any Supplement.
"SERIES COLLECTION SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
21
"SERIES COLLECTION SUB-SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"SERIES NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning specified in subsection 3.1(a).
"SERIES PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the meaning
specified in subsection 3.1(a).
"SERIES SUBORDINATED INTEREST" shall mean, with respect to any Series,
the interest of the Company in the Trust Assets, if any, which is
subordinated to the Certificateholders' Interest of such Series, as set
forth in the Supplement for such Series.
"SERIES TERMINATION DATE" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"SERVICE TRANSFER" shall have the meaning specified in Section 6.1 of
the Servicing Agreement.
"SERVICER" shall initially mean Core-▇▇▇▇ in its capacity as Servicer
under the Transaction Documents and, after any Service Transfer, the
Successor Servicer.
"SERVICER DEFAULT" shall have, with respect to any Series, the meaning
specified in Section 6.1 of the Servicing Agreement and, if applicable, as
supplemented by the related Supplement for such Series.
"SERVICER INDEMNIFICATION AMOUNTS" shall have the meaning specified in
Section 5.2(c) of the Servicing Agreement.
"SERVICER SITE REVIEW" shall mean a review performed by the Trustee of
the servicing operations of the Servicer at its offices.
"SERVICING AGREEMENT" shall have the meaning specified in the recitals
hereto.
"SERVICING FEE" shall have the meaning specified in subsection 2.5(a)
of the Servicing Agreement.
"SERVICING FEE PERCENTAGE" shall mean 1% per annum.
"SERVICING PARTY" shall mean the collective reference to the Servicer
and each Sub-Servicer.
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"SETTLEMENT PERIOD" shall mean (i) initially, the period commencing
April 1, 1998 and ending on the last day of the April 1998 fiscal month of
the Servicer, and (ii) thereafter, each fiscal month of the Servicer.
"SETTLEMENT REPORT DATE" shall mean, except as otherwise set forth in
the applicable Supplement, the 15th day of each calendar month (or if such
15th day is not a Business Day, the next succeeding Business Day).
"SPECIAL ALLOCATION SETTLEMENT REPORT DATE" shall have the meaning
specified in subsection 3.1(e).
"SPECIFIED BANKRUPTCY OPINION PROVISIONS" shall mean the factual
assumptions and the actions to be taken by any Seller or the Company, in
each case as specified in the legal opinion of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ relating to certain bankruptcy matters and delivered on
the Initial Closing Date.
"STANDBY LIQUIDATION SYSTEM" shall mean a system satisfactory to the
Trustee by which the Trustee will receive and store electronic information
regarding Receivables from the Servicer and each Sub-Servicer which may be
utilized in the event of a liquidation of the Receivables to be carried out
by the Trustee.
"SUBORDINATED NOTE" shall have the meaning specified in Section 8.01
of the Receivables Sale Agreement.
"SUB-SERVICER" shall have the meaning specified in the recitals
hereto.
"SUBSIDIARY" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"SUCCESSOR SERVICER" shall have the meaning specified in Section 6.2
of the Servicing Agreement.
"SUPPLEMENT" shall mean, with respect to any Series, a supplement to
this Agreement complying with the terms of Section 5.10(c), executed in
conjunction with the issuance of any Series.
"TARGET RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
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"TAX OPINION" shall mean, with respect to any action, an Opinion of
Counsel of one or more outside law firms (a) to the effect that, for
federal income tax purposes, (i) such action will not adversely affect the
characterization as debt or as an interest in a partnership (other than a
partnership taxable as a corporation), as the case may be, of any Investor
Certificates of any Outstanding Series or Class not retained by the
Company, (ii) following such action, the Trust will not be classified as an
association or a publicly traded partnership taxable as a corporation,
(iii) such action will not cause or constitute a taxable event in which
gain or loss would be recognized by any Investor Certificateholder or the
Trust and (iv) in the case of Section 5.9, the Investor Certificates of the
new Series which are not retained by the Company will be characterized as
debt or as an interest in a partnership (other than a partnership taxable
as a corporation) and (b) with respect to state taxation issues, in
substantially the form delivered on the Initial Closing Date.
"TERMINATION NOTICE" shall have the meaning specified in Section 6.1
of the Servicing Agreement.
"TOBACCO COMPANIES" shall mean the collective reference to any company
engaged in the manufacture and sale of cigarettes.
"TRANSACTION DOCUMENTS" shall mean the collective reference to this
Agreement, the Servicing Agreement, each Supplement with respect to any
Outstanding Series, the Receivables Sale Agreement, the Lockbox Agreements,
the Eligible Segregated Account Bank Acknowledgements, the Certificates and
any other documents delivered pursuant to or in connection therewith.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning specified in
Section 5.3 and shall initially be the Trustee.
"TRANSFER DEPOSIT AMOUNT" shall have the meaning specified in
subsection 2.5(b).
"TRANSFERRED AGREEMENTS" shall have the meaning specified in
subsection 2.1(b).
"TRUST" shall mean the Core-▇▇▇▇ Receivables Master Trust created by
this Agreement.
"TRUST ACCOUNT" shall have the meaning, with respect to any Series,
specified in the applicable Supplement for such Series.
"TRUST ASSETS" shall have the meaning specified in Section 2.1.
"TRUST TERMINATION DATE" shall have the meaning specified in
subsection 9.1(a).
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"TRUSTEE" shall mean the institution executing this Agreement as
trustee, or its successor in interest, or any successor trustee appointed
as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction or if no jurisdiction is
specified, as in effect in the State of New York.
Section I.2. OTHER DEFINITIONAL AND CALCULATION PROVISIONS. (a) All
terms defined in this Agreement, the Servicing Agreement or in any Supplement
shall have such defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partly defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under GAAP. To the
extent that the definitions of accounting terms herein are inconsistent with the
meanings of such terms under GAAP, the definitions contained herein shall
control.
(c) 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; and Section, subsection,
Schedule and Exhibit references contained in this Agreement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement unless
otherwise specified.
(d) All references herein to any agreement or instrument shall be
deemed references to such agreement or instrument as amended, supplemented or
otherwise modified from time to time in which case such reference shall be to
the agreement or instrument.
(e) The definitions contained in Section 1.1 are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Where a definition contained in Section 1.1 specifies that such
term shall have the meaning set forth in the related Supplement, the definition
of such term set forth in the related Supplement may be preceded by a prefix
indicating (or include in its definition) the specific Series or Class to which
such definition shall apply.
(g) Where reference is made in this Agreement or any related
Supplement to the amount of Receivables, such reference shall, unless explicitly
stated otherwise, be deemed a reference to the Principal Amount (as such term is
defined in Section 1.1) of such Receivables.
25
(h) Any reference herein or in any other Transaction Document to a
provision of the Internal Revenue Code or ERISA shall be deemed a reference to
any successor provision thereto.
(i) To the extent that any provision of this Agreement or any other
Transaction Document requires that a calculation be performed with respect to a
date occurring prior to the effective date of such Transaction Document, such
calculation shall be performed as provided therein as though such Transaction
Document had been effective on and as of such prior date.
(j) In calculating the Principal Amount of Receivables on any day, the
Principal Amount of Receivables shall be reduced by the amount of collections
received on such day (whether or not such Collections have resulted in Available
Funds); PROVIDED, that to the extent that a Collection is subsequently
dishonored by the bank on which such Collection is drawn, the Principal Amount
of Receivables shall be reinstated by the amount of such dishonored Collection.
In addition, for purposes of making the allocations required by Article III of
this Agreement, as supplemented by the Supplements, on any day, the Servicer
shall only direct, and the Trustee shall only be required to transfer, Available
Funds.
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1. CONVEYANCE OF RECEIVABLES.
(a) By execution and delivery of this Agreement, the Company does
hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Holders, without recourse (except as specifically provided
herein), all of its present and future right, title and interest in, to and
under:
(i) all Receivables, including those existing at the close of
business on the Initial Closing Date and all Receivables thereafter arising
from time to time until but not including the Trust Termination Date;
(ii) the Related Property;
(iii) all Collections;
(iv) all payment, enforcement and other rights (including
rescission, replevin or reclamation), but none of the obligations,
relating to any Receivable or arising therefrom;
(v) the Collection Account, each Eligible Segregated Account,
each Lockbox and each Lockbox Account (collectively, the "ACCOUNTS"),
including (A) all
26
funds and other evidences of payment held therein and all certificates
and instruments, if any, from time to time representing or evidencing any
of such Accounts or any funds and other evidences of payment held
therein, (B) all investments of such funds held in such Accounts and all
certificates and instruments from time to time representing or evidencing
such investments, (C) all notes, certificates of deposit and other
instruments from time to time hereafter delivered or transferred to, or
otherwise possessed by, the Trustee for and on behalf of the Company in
substitution for any of the then existing Accounts and (D) all interest,
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any and all of the then existing Accounts;
(vi) all monies due or to become due and all amounts received
with respect to the items listed in clauses (i) through (v) and all
proceeds (including, without limitation, whatever is received upon the
sale, exchange, collection or other disposition of the foregoing and all
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of New York) thereof, including all Recoveries relating thereto;
(b) The Company, to secure its obligations hereunder, hereby
transfers, assigns, sets over and otherwise conveys to the Trustee for the
benefit of the Holders, and grants to the Trustee, for the benefit of the
Holders, a first priority perfected security interest in, all its right,
title and interest in, to and under the following: each of the Receivables
Sale Agreement and the Servicing Agreement, including in respect of each
agreement, (A) all property assigned thereunder and all rights of the Company
to receive monies due and to become due under or pursuant to such agreement,
whether payable as fees, expenses, costs or otherwise, (B) all rights of the
Company to receive proceeds of any credit or similar types of insurance,
indemnity, warranty or guaranty with respect to such agreement, (C) claims of
the Company for damages arising out of or for breach of or default under such
agreement, (D) the right of the Company to amend, waive or terminate such
agreement, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder, (E) all other rights, remedies, powers,
privileges and claims of the Company under or in connection with such
agreement (whether arising pursuant to such agreement or otherwise available
to the Company at law or in equity), including the rights of the Company to
enforce such agreement and to give or withhold any and all consents,
requests, notices, directions, approvals, extensions or waivers under or in
connection therewith and (F) all monies due or to become due and all amounts
received with respect to the items listed in clauses (A) through (F) and all
proceeds (including, without limitation, whatever is received upon the sale,
exchange, collection or other disposition of the foregoing and all "proceeds"
as defined in Section 9-306 of the UCC as in effect in the State of New York)
thereof, including all Recoveries relating thereto (all of the foregoing set
forth in subclauses (A)-(F), inclusive, the "TRANSFERRED AGREEMENTS");
Such property described in the foregoing paragraphs (a) and (b), together
with all investments and all monies on deposit in any other bank account or
accounts maintained for the benefit of any Holders and all monies available
under any Enhancement to be provided by any
27
Enhancement Provider for any Series for payment to Holders shall constitute
the assets of the Trust (the "TRUST ASSETS").
Subject to Section 5.9, although it is the intent of the parties to
this Agreement that the conveyance of the Company's right, title and interest
in, to and under the Receivables and the other Trust Assets described in
paragraph (a) pursuant to this Agreement shall constitute a purchase and sale
and not a loan, in the event that such conveyance is deemed to create a loan,
the Company hereby grants to the Trustee, for the benefit of the Investor
Certificateholders, a perfected first priority security interest in all of
the Company's present and future right, title and interest in, to and under
the Receivables and such other Trust Assets to secure the payment of the
applicable Invested Amounts, interest thereon and the other fees and expenses
payable to the Investor Certificateholders, and that this Agreement shall
constitute a security agreement under applicable law in favor of the Trustee,
for the benefit of the Investor Certificateholders.
(c) The assignment, set over and conveyance to the Trust pursuant
to Section 2.1(a) shall be made to the Trustee, on behalf of the Trust, and
each reference in this Agreement to such assignment, set over and conveyance
shall be construed accordingly. In connection with the foregoing assignment,
except as expressly provided otherwise in the Transaction Documents, the
Company, the Servicer and each Sub-Servicer agree to deliver to the Trustee
each Trust Asset (including any original documents or instruments included in
the Trust Assets as are necessary to effect such assignment) in which the
transfer of an interest is perfected under the UCC or otherwise solely by
possession and not by filing a financing statement or similar document.
Notwithstanding the assignment of the Transferred Agreements set
forth in Section 2.1(b), the Company does not hereby assign or delegate any
of its duties or obligations under the Transferred Agreements to the Trust or
the Trustee and neither the Trust nor the Trustee accepts such duties or
obligations, and the Company shall continue to have the right and the
obligation to purchase Receivables from the Sellers thereunder from time to
time. The foregoing assignment, set-over and conveyance does not constitute
and is not intended to result in a creation or an assumption by the Trust,
the Trustee, any Investor Certificateholder or the Company, in its capacity
as a Holder, of any obligation of the Servicer, the Company, any Seller or
any other Person in connection with the Receivables or under any agreement or
instrument relating thereto, including, without limitation, any obligation to
any Obligor.
In connection with such assignment, the Company agrees to record
and file, at its own expense, any financing statements (and continuation
statements with respect to such financing statements when applicable) or,
where applicable, registrations in the appropriate records, (i) with respect
to the Receivables now existing and hereafter created and (ii) with respect
to any other Trust Assets a security interest in which may be perfected under
the relevant UCC, legislation or similar statute by such filing or
registration, as the case may be, in each case meeting the requirements of
applicable law in such manner and in such jurisdictions as are necessary to
perfect and maintain perfection of the assignment of the
28
Receivables and such other Trust Assets to the Trust, and to deliver a
file-stamped copy or certified statement of such financing statement or
registration or other evidence of such filing or registration to the Trustee
on or prior to the date of issuance of any Certificates. The Trustee shall
be under no obligation whatsoever to file such financing statement, or a
continuation statement to such financing statement, or to make any other
filing or other registration under the UCC, other relevant legislation or
similar statute in connection with such transfer. The Trustee shall be
entitled to conclusively rely on the filings or registrations made by or on
behalf of the Company without any independent investigation and the Company's
obligation to make such filings as evidence that such filings have been made.
In connection with such assignment, the Company further agrees, at
its own expense, on or prior to the Initial Closing Date (a) to indicate, or
to cause to be indicated, in its computer files (but not on individual
invoices or individual collection files) relating to such Receivables (by
means of a general legend, substantially in the form described on Schedule 6
hereto, that will automatically appear each time a Person enters the Sellers'
Receivables program that unless otherwise specifically identified as a
receivable not so sold, transferred, assigned and conveyed, all Receivables
(and any such other receivables) included therein and all other Receivables
Property (and any other similar related property) have been sold,
transferred, assigned and conveyed pursuant to the Receivables Sale Agreement
or this Agreement, respectively, to the Company or the Trust for the benefit
of the Holders, as the case may be, and (b) to deliver, or cause to be
delivered, to the Trustee computer files, microfiche lists or typed or
printed lists (the "RECEIVABLES LISTS") containing true and complete lists of
all such Receivables transferred to the Trust, identified by Obligor and
setting forth the Receivables balance for each such Receivable, as of the
Cut-Off Date. Such tapes or disks shall be marked as Schedule 1 to this
Agreement and are hereby incorporated into and made a part of this Agreement.
Section 2.2. ACCEPTANCE BY TRUSTEE. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, assigned to the
Trust pursuant to Section 2.1 and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of all
Holders. The Trustee further acknowledges that prior to, or simultaneously
with, the execution and delivery of this Agreement, the Company delivered or
caused to be delivered to the Trustee the computer file printout or
microfiche list described in the last paragraph of Section 2.1.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
RELATING TO THE COMPANY. The Company hereby represents and warrants to the
Trustee and the Trust, for the benefit of the holders of Certificates of each
Outstanding Series, as of the Issuance Date of such Series, that:
29
(a) CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Company (i) is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its organization, (ii) has all requisite
corporate power and authority and all legal right to own and operate its
properties, to lease the properties it operates as lessee and to conduct
its business as now conducted, (iii) is duly qualified as a foreign
corporation to do business and is in good standing under the laws of each
jurisdiction where such qualification is necessary and (iv) is in
compliance with its certificate or articles of incorporation and by-laws or
other organizational or governing documents and, in all material respects,
any other Requirements of Law. The Company does not engage in activities
prohibited by the Transaction Documents or its certificate of
incorporation.
(b) CORPORATE POWER; AUTHORIZATION; CONSENTS. The Company has the
corporate power and authority, and the legal right, to execute, deliver and
perform this Agreement and the other Transaction Documents to which it is a
party and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party. No consent or authorization
of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which it is a party by or
against the Company other than (i) those which have duly been obtained or
made and are in full force and effect on the Initial Closing Date, (ii) any
filings of UCC-1 financing statements or similar documents necessary to
perfect the Company's or the Trust's interest in the Trust Assets and (iii)
those that may be required under the state securities or "blue sky" laws in
connection with the offering or sale of certificates. This Agreement and
each other Transaction Document to which the Company is a party have been
duly executed and delivered on behalf of the Company.
(c) ENFORCEABILITY. This Agreement and each of the other Transaction
Documents to which the Company is a party (i) constitute the legal, valid
and binding obligations of the Company enforceable against it in accordance
with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and except as such enforceability may be
limited by general principles of equity (whether considered in a proceeding
at law or in equity) and (ii) are effective to, and all action has been
taken to, cause compliance with paragraph (n) of the definition of Eligible
Receivables.
(d) NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Company is a
party will not violate its certificate or articles of incorporation and
by-laws or other organizational or governing documents and, any other
Requirement of Law in any material respect, and will not result in, or
require, the creation or imposition of any Lien (other than Liens
30
contemplated or permitted hereby) on any of its properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
(e) NO CONFLICT. The execution and delivery of this Agreement and the
other Transaction Documents to which the Company is a party, the
performance of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not, in any material
respect, conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Company is a party or by
which it or any of its property is bound.
(f) NO MATERIAL LITIGATION. There are no actions, suits,
investigations or proceedings at law or in equity (including, without
limitation, injunctions, writs or restraining orders) by or before any
arbitrator, court or Governmental Authority now pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any properties, revenues or rights of the Company which (i) involve this
Agreement or any of the other Transaction Documents or any of the
transactions contemplated hereby or thereby, (ii) which could reasonably be
expected to affect adversely the income tax or franchise tax attributes of
the Trust under the United States federal or any state or franchise tax
systems or (iii) would be reasonably likely to have a Material Adverse
Effect. The transactions contemplated hereunder and the use of the proceeds
thereof will not violate any Requirement of Law.
(g) NO DEFAULT. The Company is not in default, in any material
respect, under or with respect to any of its Contractual Obligations. No
Early Amortization Event or Potential Early Amortization Event has occurred
and is continuing.
(h) COMPLIANCE WITH LAW. The Company has complied with all applicable
provisions of its certificate or articles of incorporation and by-laws or
other organizational or governing documents and, in all material respects,
any other Requirements of Law with respect to the Company, its business and
properties and the Trust Assets.
(i) TAX RETURNS. The Company has filed or caused to be filed all tax
returns which are required to have been filed by it and has paid or caused
to be paid all taxes shown thereon to be due and payable, and any
assessments made against it or any of its property. No tax Lien has been
filed, and, to the best knowledge of the Company, no claim is being
asserted, with respect to any taxes other than Liens permitted pursuant to
clause (iv) of the definition of Permitted Liens. For purposes of this
paragraph, "taxes" shall mean any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature (including interest,
penalties and additions thereto) that is imposed by any Governmental
Authority.
31
(j) LOCATION OF RECORDS; CHIEF EXECUTIVE OFFICE. The offices at which
the Company keeps its records concerning the Receivables either (x) are
located at the addresses set forth for the Sellers on Schedule 2 of the
Receivables Sale Agreement or (y) have been reported to the Trustee in
accordance with the provisions of subsection 2.8(l) of this Agreement. The
chief executive office of the Company is located at the address set forth
on Schedule 4 (as such location may be changed from time to time in
accordance with Section 2.8(1) of the Agreement) and is the place where the
Company is "located" for the purposes of Section 9-103(3)(d) of the UCC as
in effect in the State of New York. The state and county where the chief
executive office of the Company is "located" for the purposes of Section
9-103(3)(d) of the UCC as in effect in the State of New York has not
changed in the past four months.
(k) SOLVENCY. Both prior to and after giving effect to the
transactions occurring on each Issuance Date, (i) the fair value of the
assets of the Company at a fair valuation will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Company; (ii)
the present fair salable value of the property of the Company will be
greater than the amount that will be required to pay the probable
liability of the Company on its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; (iii) the Company will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (iv) the Company
will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted. For all purposes of clauses (i) through (iv)
above, the amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability. The Company does not
intend to, nor does it believe that it will, incur debts beyond its
ability to pay such debts as they mature, taking into account the timing
of and amounts of cash to be received by it and the timing of and amounts
of cash to be payable in respect of its debt.
(l) INVESTMENT COMPANY. Neither the Company nor the Trust (before and
after giving effect to the issuance of Certificates on such Issuance Date)
is an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, or is exempt from all provisions of such act.
(m) OWNERSHIP; SUBSIDIARIES. All of the issued and outstanding
capital stock of the Company is owned, legally and beneficially, by
Core-▇▇▇▇. The Company has no Subsidiaries.
(n) NAMES. The legal name of the Company is as set forth in this
Agreement. The Company has not had, nor has, any trade names, fictitious
names, assumed names or "doing business as" names.
32
(o) LIABILITIES. Other than, (i) the liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise) arising
under or in respect of the Transaction Documents and (ii) immaterial
amounts due and payable in the ordinary course of business of a special-
purpose company, the Company does not have any liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise), whether
due or to become due.
(p) USE OF PROCEEDS; FEDERAL RESERVE BOARD REGULATION. No proceeds of
the issuance of any Investor Certificates will be used by the Company to
purchase or carry any margin stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System, as in effect from time to
time). The Company is in compliance with all applicable regulations of the
Board of Governors of the Federal Reserve System (including, without
limitation, Regulations U and G with respect to "margin stock").
(q) COLLECTION PROCEDURES. The Company and each Seller have in place
procedures pursuant to the Policies which are either necessary or advisable
to ensure the timely collection of Receivables in accordance with the
Transaction Documents.
(r) LOCKBOX ACCOUNTS; ELIGIBLE SEGREGATED ACCOUNTS. The Lockbox Banks
and Eligible Segregated Account Banks are the only institutions holding any
Lockbox Accounts or Eligible Segregated Accounts for the receipt of
payments from Obligors in respect of Receivables and no Persons other than
Obligors have been instructed to make payments to Lockbox Accounts or
Eligible Segregated Accounts. (i) Each Lockbox Agreement to which the
Company is party is in full force and effect, (ii) each Lockbox Account is
free and clear of any Lien (other than any right of set-off expressly
provided for in the applicable Lockbox Agreement), (iii) each Eligible
Segregated Account Agreement to which the Company is party is in full force
and effect and (iv) each Eligible Segregated Account established pursuant
to subsection 2.3(b) of the Servicing Agreement is free and clear of any
Lien.
(s) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" law by the
Company.
The representations and warranties set forth in this Section 2.3 shall
survive after the date made and the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company or the
Servicer or by a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties and to each Agent with
respect to all Outstanding Series. The Trustee's obligations in respect of any
breach are limited as provided in subsection 8.2(g).
33
Section 2.4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING
TO THE RECEIVABLES. The Company hereby represents and warrants to the Trustee
and the Trust, for the benefit of the holders of Certificates of each
Outstanding Series, (x) as of the Issuance Date of such Series, and (y) with
respect to each Receivable transferred to the Trust after such Issuance Date, as
of the related Receivables Purchase Date, unless, in either case, otherwise
stated in the applicable Supplement or unless such representation or warranty
expressly relates only to a prior date, that:
(a) Schedule 1 to this Agreement sets forth an accurate and complete
listing as of the Cut-Off Date of all Receivables to be transferred to the
Trust as of the Initial Closing Date and the information contained therein
with respect to the identity of the Obligor of, and Principal Amount of,
each such Receivable is true and correct in all material respects as of the
Cut-Off Date. As of the Cut-Off Date, the aggregate amount of Receivables
owned by the Company is accurately set forth in all material respects in
Schedule 1 hereto.
(b) Each Receivable existing on the Initial Closing Date or, in the
case of Receivables transferred to the Trust after the Initial Closing
Date, on the date that each such Receivable shall have been transferred to
the Trust, has been conveyed to the Trust free and clear of any Lien,
except for Permitted Liens specified in clauses (i) and (iv) of the
definition thereof.
(c) On the Initial Closing Date, each Receivable transferred to the
Trust that is included in the calculation of the initial Aggregate
Receivables Amount is an Eligible Receivable and, in the case of
Receivables transferred to the Trust after the Initial Closing Date, on the
date such Receivable shall have been transferred to the Trust, each such
Receivable that is included in the calculation of the Aggregate Receivables
Amount on such date is an Eligible Receivable. Each Receivable classified
as an "Eligible Receivable" by the Company in any document or report
delivered hereunder satisfies the requirements of eligibility contained in
the definition of Eligible Receivable.
The representations and warranties set forth in this Section 2.4 shall
survive after the date made and the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company or the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties, the party discovering such breach shall give
prompt written notice to the other parties and to each Agent with respect to all
Outstanding Series. The Trustee's obligations in respect of any breach are
limited as provided in Section 8.2(g).
Section 2.5. REPURCHASE OF INELIGIBLE RECEIVABLES. (a) REPURCHASE
OBLIGATION. If (i) any representation or warranty under subsections 2.4(a), (b)
or (c) is not true and correct in any material respect as of the date specified
therein with respect to any Receivable transferred to the Trust, (ii) there is a
breach of any covenant under subsection 2.8(c) with respect to any Receivable
and such breach has a material adverse effect on the
34
Certificateholders' Interest in such Receivable or (iii) the Trust's interest
in any Receivable is not a first priority perfected ownership or security
interest at any time as a result of any action taken by, or any failure to
take action by, the Company (any Receivable as to which the conditions
specified in any of clauses (i), (ii) or (iii) of this subsection 2.5(a)
exists is referred to herein as an "INELIGIBLE RECEIVABLE") then, upon the
earlier (the date on which such earlier event occurs, the "REPURCHASE
OBLIGATION DATE") of the discovery by the Company of any such event which
continues unremedied or receipt by the Company of written notice given by the
Trustee or the Servicer of any such event which continues unremedied, the
Company shall become obligated to repurchase or cause to be repurchased such
Ineligible Receivable on the terms and conditions set forth in subsection
2.5(b).
(b) REPURCHASE OF RECEIVABLES. Subject to the last sentence of
this subsection 2.5(b), the Company shall repurchase, or cause to be
repurchased, each Ineligible Receivable required to be repurchased
pursuant to subsection 2.5(a) by depositing in the Collection Account in
immediately available funds on the Business Day following the related
Repurchase Obligation Date an amount equal to the lesser of (x) the
amount by which the Aggregate Target Receivables Amount exceeds the
Aggregate Receivables Amount (after giving effect to the reduction
thereof by the Principal Amount of such Ineligible Receivable) and (y)
the aggregate outstanding Principal Amount of each such Ineligible
Receivable (the "TRANSFER DEPOSIT AMOUNT"). Upon transfer or deposit of
the Transfer Deposit Amount, the Trust shall automatically and without
further action be deemed to sell, transfer, assign, set over and
otherwise convey to the Company, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to such
Ineligible Receivable, all monies due or to become due with respect
thereto and all proceeds thereof; and such repurchased Ineligible
Receivable shall be treated by the Trust as collected in full as of the
date on which it was transferred. The Trustee shall execute such
documents and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by the Company to effect the
conveyance of such Receivables pursuant to this subsection. Except as
otherwise specified in any Supplement, the obligation of the Company to
repurchase any Ineligible Receivable shall constitute the sole remedy
respecting the event giving rise to such obligation available to Investor
Certificateholders (or the Trustee on behalf of Investor
Certificateholders) unless such obligation is not satisfied in full in
accordance with the terms of this Agreement.
Section 2.6. PURCHASE OF INVESTOR CERTIFICATEHOLDERS' INTEREST IN
TRUST PORTFOLIO. (a) In the event of any breach of any of the representations
and warranties set forth in Section 2.3, which breach has a material adverse
effect on the interests of the holders of an Outstanding Series (without giving
effect to any Enhancement) under or with respect to the Transaction Documents,
then the Trustee, at the written direction of holders of Certificates evidencing
more than 50% of the Invested Amount of such Outstanding Series shall notify the
Company to purchase such Outstanding Series and the Company shall be obligated
to make such purchase on the next Distribution Date occurring at least five
Business Days after receipt of such notice on the terms and conditions set forth
in subsection 2.6(b) below; PROVIDED, HOWEVER, that no such purchase shall be
required to be made if, by such Distribution Date, the representations and
warranties contained in Section 2.3 shall be satisfied in all material
35
respects and any material adverse effect on the holders of such Outstanding
Series caused thereby shall have been cured.
(b) As required under subsection 2.6(a) above, the Company shall
deposit into the Collection Account for credit to the applicable subaccount of
the Collection Account on the Business Day preceding such Distribution Date an
amount equal to the purchase price (as described in the next succeeding
sentence) for the Certificateholders' Interest for such Outstanding Series on
such day. The purchase price for any such purchase will be equal to (i) the
Adjusted Invested Amount of such Outstanding Series on the date on which the
purchase is made plus (ii) an amount equal to all interest accrued but unpaid on
such Series up to the Distribution Date on which the distribution of such
deposit is scheduled to be made pursuant to Section 9.2 plus (iii) any other
amount required to be paid in connection therewith pursuant to any Supplement.
Notwithstanding anything to the contrary in this Agreement, the entire amount of
the purchase price deposited in the Collection Account (together with amounts on
deposit in the applicable Series Principal Collection Sub-subaccount) shall be
distributed to the related Investor Certificateholders on such Distribution Date
pursuant to Section 9.2. If the Trustee gives notice directing the Company to
purchase the Certificates of an Outstanding Series as provided above, except as
otherwise specified in any Supplement, the obligation of the Company to purchase
such Certificates pursuant to this Section 2.6 shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.6 available to the applicable Investor Certificateholders (or the Trustee on
behalf of such Investor Certificateholders) unless such obligation is not
satisfied in full in accordance with the terms of this Agreement.
Section II.7. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
hereby covenants that, until the Trust Termination Date occurs, the Company
shall:
(a) FINANCIAL STATEMENTS. (i) Furnish to the Trustee, each Agent and
the Rating Agencies, within 120 days after the end of each fiscal year, the
balance sheet and related statements of income, stockholders' equity and
cash flows showing the financial condition of the Company as of the close
of such fiscal year and the results of its operations during such year,
certified by an appropriate Responsible Officer of the Company to the
effect that such financial statements fairly present the financial
condition and results of operations of the Company in accordance with GAAP
consistently applied;
(ii) Furnish to the Trustee, each Agent and the Rating
Agencies, within 60 days after the end of each of the first three
fiscal quarters of each fiscal year, the Company's balance sheet
and related income statement showing the financial condition of the
Company as of the close of such fiscal quarter and the results of
its operations during such fiscal year (and, beginning with the
second fiscal year, showing, on a comparative basis, such
information as of and for the corresponding dates and periods of
the preceding fiscal year), all certified by a Responsible Officer
of such Person as fairly presenting the financial condition and
results of operations of the Company in accordance
36
with GAAP consistently applied, subject to normal year-end audit
adjustments; and
(iii) Furnish to the Trustee and each Agent, promptly, from time
to time, such other information regarding the operations, business
affairs and financial condition of the Company, or compliance with the
terms of any Transaction Document, in each case as any Agent or the
Trustee may reasonably request.
(b) ANNUAL OPINION. Deliver to the Trustee an Opinion of Counsel,
substantially in the form of Exhibit C, by March 31st of each year, the
first such delivery hereunder to occur in March 1999.
(c) PAYMENT OF OBLIGATIONS; COMPLIANCE WITH OBLIGATIONS. Pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature
(including, without limitation, all taxes, assessments, levies and other
governmental charges imposed on it), except where the amount or validity
thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of the Company. The Company shall defend the
right, title and interest of the Trustee and the Holders in, to and under
the Receivables and the other Trust Assets, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Company, any Seller, any Sub-Servicer or the Servicer.
(d) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and accounts in which full, true and correct
entries in conformity in all material respects with GAAP and all
Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities; and permit representatives of the
Trustee or any Agent for any Outstanding Series upon reasonable advance
notice to visit and inspect any of its properties and examine and make
abstracts from any of its books and records during normal business hours
on any Business Day and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other
condition of the Company with officers and employees of the Company and
with its Independent Public Accountants; PROVIDED, that the Trustee shall
notify the Company prior to any contact with such accountants and, prior
to the occurrence of an Early Amortization Event, shall permit
representatives of the Company to be present during such discussions.
(e) COMPLIANCE WITH LAW AND POLICIES. (i) Comply in all material
respects with all Requirements of Law applicable to the Company.
(ii) Cause each Seller to perform its obligations in
accordance with, and comply in all material respects with, the
Policies, as amended from time to
37
time in accordance with the Transaction Documents, in regard to the
Receivables and the Related Property.
(f) PURCHASE OF RECEIVABLES. Purchase Receivables solely pursuant to
(i) the Receivables Sale Agreement or (ii) this Agreement.
(g) DELIVERY OF COLLECTIONS. In the event that the Company receives
Collections directly from Obligors, deposit such Collections into the
applicable Lockbox Account, Eligible Segregated Account or the Collection
Account within one Business Day after receipt thereof by the Company.
(h) NOTICES. Promptly (and, in any event, within five Business Days
after a Responsible Officer of the Company becomes aware of such event)
give written notice to the Trustee, each Rating Agency and each Agent for
any Outstanding Series of:
(i) the occurrence of any Early Amortization Event or
Potential Early Amortization Event; and
(ii) any Lien not permitted by subsection 2.8(c) on any
Receivable or any other Trust Assets.
(i) LOCKBOXES; ELIGIBLE SEGREGATED ACCOUNTS. (i) Maintain, and keep
in full force and effect, each Lockbox Agreement and Eligible Segregated
Account Agreement to which the Company is a party, and not amend or
otherwise modify each such agreement, except in each case to the extent
otherwise permitted under the terms of this Agreement and the other
Transaction Documents; PROVIDED, HOWEVER, that the Company may enter into
any amendments or modifications of a Lockbox Agreement or Eligible
Segregated Account Agreement that the Company reasonably deems necessary to
conform such Lockbox Agreement or Eligible Segregated Account Agreement to
the cash management system of the Servicer and that are reasonably
acceptable to the Trustee and each Agent, (ii) ensure that each related
Lockbox Account shall be free and clear of, and defend each such Lockbox
Account against and (iii) ensure that each related Eligible Segregated
Account shall be free and clear of, and defend such Eligible Segregated
Account against, any writ, order, stay, judgment, warrant of attachment or
execution or similar process.
(j) SEPARATE CORPORATE EXISTENCE.
(i) Maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions and
ensure that the funds of the Company will not be diverted to any other
Person or for other than corporate uses of the Company, nor will any
material amount of such funds be commingled with the funds of any
Seller or any other Subsidiary or Affiliate of any Seller;
38
(ii) To the extent that it shares the same officers or other
employees as any of its stockholders or Affiliates, the salaries of
and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and
each such entity shall bear its fair share of the salary and benefit
costs associated with all such common officers and employees;
(iii) To the extent that it jointly contracts with any of its
stockholders or Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such
entity shall bear its fair share of such costs. To the extent that
the Company contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
or services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between the Company
and any of its Affiliates, whether currently existing or hereafter
entered into, shall be only on an arm's-length basis, it being
understood and agreed that the transactions contemplated in the
Transaction Documents meet the requirements of this clause (iii);
(iv) Maintain a principal executive office at a separate
address from the address of Core-▇▇▇▇ and its Affiliates; PROVIDED
that a separate space within, but segregated from, that of Core-▇▇▇▇
and its Affiliates shall constitute separate addresses for purposes of
this clause (iv). To the extent that the Company and any of its
stockholders or Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such expenses;
(v) Issue separate financial statements prepared not less
frequently than quarterly and prepared in accordance with GAAP;
(vi) Conduct its affairs in its own name and strictly in
accordance with its articles of incorporation and observe all
necessary, appropriate and customary corporate formalities, including,
but not limited to, holding all regular and special stockholders' and
directors' meetings appropriate to authorize all corporate action,
keeping separate and accurate minutes of its meetings, passing all
resolutions or consents necessary to authorize actions taken or to
be taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany
transaction accounts;
(vii) Not assume or guarantee any of the liabilities of any
Seller, any Servicing Party or any Affiliate of any thereof; and
39
(viii) Take, or refrain from taking, as the case may be, all
other actions that are necessary to be taken or not to be taken in
order to (x) ensure that the assumptions and factual recitations set
forth in the Specified Bankruptcy Opinion Provisions remain true and
correct in all material respects with respect to the Company and (y)
comply in all material respects with those procedures described in
such provisions which are applicable to the Company.
(k) PRESERVATION OF CORPORATE EXISTENCE. (i) Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation and (ii) qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would, if not remedied within
30 days, be reasonably likely to have a Material Adverse Effect.
(l) NET WORTH. Maintain at all times a consolidated net worth, as
determined in accordance with GAAP, of at least $9,500,000.
(m) MAINTENANCE OF PROPERTY. Keep all property and assets useful
and necessary to permit the monitoring and collection of Receivables.
(n) FURTHER ASSURANCES. File, or cause to be filed, at the
applicable Seller's expense and in accordance with the provisions of the
UCC of the applicable jurisdiction, duly completed and executed
continuation statements with respect to all financing statements filed
in connection with the transactions contemplated by the Receivables Sale
Agreement.
Section 2.8. NEGATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants that, until the Trust Termination Date occurs, it shall not directly
or indirectly:
(a) ACCOUNTING OF TRANSFERS. Prepare any financial statements which
shall account for the transactions contemplated by the Receivables Sale
Agreement in any manner other than as a sale of (or capital contribution
of) Receivables and the other Trust Assets by the Sellers to the Company or
in any other respect account for or treat the transactions under the
Receivables Sale Agreement (including for financial accounting purposes,
except as required by law) in any manner other than as transfers of
Receivables and the other Trust Assets by the Sellers to the Company;
PROVIDED, HOWEVER, that this subsection shall not apply for any tax or tax
accounting purposes.
(b) LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except: (i) Indebtedness evidenced by the
Subordinated Note; (ii) Indebtedness representing fees, expenses and
indemnities payable pursuant to and in accordance with the Transaction
Documents; and (iii) Indebtedness for services supplied or furnished to
the Company in an amount not to exceed $25,000 at any one time
outstanding; PROVIDED that any Indebtedness permitted hereunder and
described in clauses (i) and (iii) shall be payable by the Company solely
from funds available to
40
the Company which are not otherwise required to be applied to the payment
of any amounts by the Company pursuant to any Pooling and Servicing
Agreements.
(c) LIMITATION ON LIENS AND SALES. Except for the conveyance
hereunder, the Company will not sell, pledge, assign or transfer to any
Person, or create, incur, assume or suffer to exist any Lien upon any
Receivables or any of its property, assets or revenues, whether now owned
or hereafter acquired, except for Permitted Liens, it being understood that
no Permitted Lien under clause (ii) of the definition thereof shall cover
any of the Trust Assets (except to the limited extent permitted by clause
(iv) of such definition).
(d) LIMITATION ON GUARANTEE OBLIGATIONS. Become or remain liable,
directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or repurchase,
agreement to supply or advance funds, or otherwise, except in connection
with indemnification obligations of the Company to the limited extent
provided in the Company's articles of incorporation and by-laws; PROVIDED
that any such indemnification shall be paid solely from funds available to
the Company which are not otherwise needed to be applied to the payment of
any amounts pursuant to any Pooling and Servicing Agreements, and shall not
constitute a claim against the Company to the extent that insufficient
funds exist to make such payment.
(e) LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in its
present method of conducting business (other than as contemplated by the
Transaction Documents), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets other than the assignments and transfers contemplated hereby .
(f) LIMITATION ON DIVIDENDS AND OTHER PAYMENTS. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of capital
stock of the Company, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company (any of the
foregoing, a "restricted payment"), or make, directly or indirectly,
payments in any form in respect of the Subordinated Note unless (i) at the
date such restricted payment or payment in respect of the Subordinated Note
is made, the Company shall have made all payments in respect of its
repurchase obligations pursuant to this Agreement outstanding at such date,
(ii) at the date such restricted payment is made, outstanding principal
amount of the Subordinated Note shall be zero, and (iii) any such
restricted payment is made no more frequently than on a monthly basis and
is effected in accordance with all corporate and legal formalities
applicable to the Company; PROVIDED, HOWEVER, that (A) no restricted
payment or payment in
41
respect of the Subordinated Note, shall be made on any date if (x) a
Potential Early Amortization Event of a type referred to in clause
(a)(ii) or (iii) of Section 7.1 or (y) an Early Amortization Event has
occurred and is continuing (or would occur as a result of such payment)
on such date and (B) all restricted payments, and payments in respect of
the Subordinated Note, made on any date shall be payable by the Company
solely from funds available to the Company which are not otherwise needed
on such date to be applied to the payment of any amounts by the Company
pursuant to any Pooling and Servicing Agreement.
(g) BUSINESS OF THE COMPANY. Engage at any time in any business or
business activity other than the acquisition of Receivables pursuant to the
Receivables Sale Agreement, the assignments and transfers hereunder and the
other transactions contemplated by the Transaction Documents, and any
activity incidental to the foregoing and necessary or convenient to
accomplish the foregoing, or enter into or be a party to any agreement or
instrument other than in connection with the foregoing, except those
agreements or instruments permitted under subsection 2.8(i).
(h) LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any
Person, except for any Exchangeable Company Interest, any Series
Subordinated Interest, the Receivables and the other Trust Assets.
(i) AGREEMENTS. (A) Become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except the Transaction Documents,
leases of office space, equipment or other facilities for use by the
Company in its ordinary course of business, employment agreements, service
agreements, agreements relating to shared employees and the other
Transaction Documents and agreements necessary to perform its obligations
under the Transaction Documents, (B) issue any power of attorney (except to
the Trustee or the Servicer or except for the purpose of permitting any
Person to perform any ministerial functions on behalf of the Company that
are not prohibited by or inconsistent with the terms of the Transaction
Documents), or (C) amend, supplement, modify or waive any of the provisions
of the Receivables Sale Agreement or any Lockbox Agreement or Eligible
Segregated Account Agreement or request, consent or agree to or suffer to
exist or permit any such amendment, supplement, modification or waiver or
exercise any consent rights granted to it thereunder unless such amendment,
supplement, modification or waiver or such exercise of consent rights would
not be reasonably likely to have a Material Adverse Effect and, in the case
of the Receivables Sale Agreement, the Rating Agency Condition shall have
been satisfied with respect to any such amendments, supplements,
modifications or waivers.
(j) POLICIES; AMENDMENTS TO RECEIVABLES. (i) Make any change or
modification (or permit any change or modification to be made) in any
material respect to the Policies, except (x) if such changes or
modifications are necessary under
42
any Requirement of Law, (y) if such changes or modifications would not
reasonably be likely to have a Material Adverse Effect or (z) if the
Rating Agency Condition is satisfied with respect thereto; PROVIDED,
HOWEVER, that if any change or modification, other than a change or
modification permitted pursuant to clause (x) or (y) above, would be
reasonably likely to have a material adverse effect on the interests of
the Investor Certificateholders of a Series which is not rated by a
Rating Agency, the consent of the applicable Agent (or as specified in
the related Supplement) shall be required to effect such change or
modification.
(ii) Take any action with respect to the Receivables of the
type which if taken by the Servicer would violate the provisions of
Section 4.6 of the Servicing Agreement.
(k) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES. Subject to
the delivery requirement set forth in subsection 2.1(c), take any action to
cause any Receivable to be evidenced by any "instrument" other than,
provided that the procedures set forth in Schedule 3 are fully implemented
with respect thereto, an instrument which alone or together with a security
agreement constitutes "chattel paper" (each as defined in the UCC as in
effect in any state in which the Company's or the applicable Seller's chief
executive office or books and records relating to such Receivable are
located), except in connection with its enforcement or collection of an
Aged Receivable.
(l) OPTIONAL TERMINATION. Fail to deliver an Optional Termination
Notice to the Trustee with respect to any Outstanding Series, unless it
shall deliver an Optional Termination Notice to the Trustee with respect to
all Outstanding Series.
(m) OFFICES. Move outside or within the state where such office is
now located the location of its chief executive office or of any of the
offices where it keeps its records with respect to the Receivables without
(i) in the case of moves outside such state, giving 30 days' prior written
notice to the Trustee and each Rating Agency, (ii) in the case of moves
within such state, giving the Trustee prompt notice of a change within the
state where such office is now located of the location of its chief
executive office or any office where it keeps its records with respect to
the Receivables and (iii) taking all actions reasonably requested by the
Trustee (including but not limited to all filings and other acts necessary
or advisable under the UCC or similar statute of each relevant
jurisdiction) in order to continue the Trust's first priority perfected
ownership or security interest in all Receivables now owned or hereafter
created; PROVIDED, HOWEVER, that the Company shall not change the location
of its chief executive office to outside of the United States, or to a
state which is within the Tenth Circuit unless it delivers an Opinion of
Counsel reasonably acceptable to the Rating Agencies to the effect that
OCTAGON GAS SYSTEMS, INC. ▇. ▇▇▇▇▇▇, 995 F.2d 948 (10th Cir. 1993), is no
longer controlling precedent in the Tenth Circuit.
43
(n) CHANGE IN NAME. Change its name, identity or corporate structure
in any manner which would or might make any financing statement or
continuation statement (or other similar instrument) filed in accordance
herewith seriously misleading within the meaning of Section 9-402(7) of the
UCC as in effect in any applicable jurisdiction in which UCC filings have
been made in respect of the Trust Assets without 30 days' prior written
notice to the Trustee and each Rating Agency.
(o) CHARTER. Amend or make any change or modification to its
certificate of incorporation or by-laws without first satisfying the Rating
Agency Condition (other than an amendment, change or modification made
pursuant to changes in law of the state of its incorporation or amendments
to change the Company's name (subject to compliance with clause (m) above),
resident agent or address of resident agent).
(p) ADDITION OF SELLERS. Agree to the addition of any Subsidiary of
Core-▇▇▇▇ as an additional Seller pursuant to Section 9.12 of the
Receivables Sale Agreement without (i) such Subsidiary complying with all
conditions precedent set forth in Section 3.02 of the Receivables Sale
Agreement, or such Subsidiary's being simultaneously added as a Sub-
Servicer (or without another Subsidiary's simultaneously agreeing to act as
a Sub-Servicer in respect of such additional Seller) under the Transaction
Documents pursuant to Section 2.6 of the Servicing Agreement.
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
THE FOLLOWING PORTION OF THIS ARTICLE III
IS APPLICABLE TO ALL SERIES.
Section III.1. RIGHTS OF HOLDERS. (a) Each Series of Investor
Certificates shall represent Fractional Undivided Interests in the Trust
(including any Enhancement applicable to such Series as specified in the related
Supplement) relating to such Series and the right to receive Collections and
other amounts at the times and in the amounts specified in this Article III (as
supplemented by the Supplement related to such Series) to be deposited in the
Collection Account and any other accounts maintained for the benefit of the
Investor Certificateholders or paid to the Investor Certificateholders (with
respect to each outstanding Series, the "CERTIFICATEHOLDERS' INTEREST"). The
"EXCHANGEABLE COMPANY INTEREST" shall be the interest in the Trust not
represented by any Series of Investor Certificates then outstanding or Series
Subordinated Interests then in existence, including the right to receive
Collections and other amounts at the times and in the amounts specified in this
Article III to be paid to the Company (the "COMPANY INTEREST"), and each Series
Subordinated Interest, if any, shall be the interest specified as such pursuant
to the related Supplement; PROVIDED, HOWEVER, that no such Exchangeable Company
Interest or Series Subordinated Interest shall include any interest in any Trust
Account or any other accounts maintained for the benefit of the Investor
44
Certificateholders or the benefit of any Enhancement Provider, except as
specifically provided in this Article III.
(b) ESTABLISHMENT OF COLLECTION ACCOUNT; AUTHORITY OF THE TRUSTEE IN
RESPECT OF THE COLLECTION ACCOUNT AND HOLDERS' INTERESTS THEREIN. (i) The
Trustee, for the benefit of the Investor Certificateholders, shall cause to be
established and maintained in the name of the Trust with an Eligible Institution
or with the corporate trust department of the Trustee or an affiliate of the
Trustee, a segregated trust account (the "COLLECTION ACCOUNT"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Investor Certificateholders. Schedule 2, which is hereby
incorporated into and made a part of this Agreement, identifies the Collection
Account by setting forth the account number of such account, the account
designation of such account and the name of the institution with which such
account has been established. The Collection Account shall be divided into
individual subaccounts for each Outstanding Series (each, respectively, a
"SERIES COLLECTION SUBACCOUNT" and, collectively, the "SERIES COLLECTION
SUBACCOUNTS") and for the Company (the "COMPANY COLLECTION SUBACCOUNT"). For
administrative purposes only, the Trustee shall establish or cause to be
established for each Series, so long as such Series is an Outstanding Series,
sub-subaccounts of the Series Collection Subaccounts with respect to such Series
(respectively, the "SERIES PRINCIPAL COLLECTION SUB-SUBACCOUNT" and "SERIES NON-
PRINCIPAL COLLECTION SUB-SUBACCOUNT" and, collectively, the "SERIES COLLECTION
SUB-SUBACCOUNTS").
(ii) The Trustee, on behalf of the Investor Certificateholders,
shall possess all right, title and interest in all funds on deposit from time to
time in the Collection Account and in all proceeds thereof. The Collection
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Investor Certificateholders and, to the extent set forth in any
Supplement, any Enhancement Provider set forth therein. If, at any time, the
Servicer has actual notice or knowledge that any institution holding the
Collection Account is other than the corporate trust department of the Trustee
or an affiliate of the Trustee, or that any other institution holding the
Collection Account has ceased to be an Eligible Institution, the Servicer shall
direct the Trustee in writing to establish within 30 days a substitute account
therefor with an Eligible Institution, transfer any cash and/or any Eligible
Investments to such new account and from the date any such substitute accounts
are established, such account shall be the Collection Account. Neither the
Company nor the Servicer, nor any person or entity claiming by, through or under
the Company or Servicer, shall have any right, title or interest in, except to
the extent expressly provided under the Transaction Documents, or any right to
withdraw any amount from, the Collection Account. Pursuant to the authority
granted to the Servicer in subsection 2.2(a) of the Servicing Agreement, the
Servicer shall have the power, revocable by the Trustee, to instruct the Trustee
in writing to make withdrawals from and payments to the Collection Account for
the purposes of carrying out the Servicer's or the Trustee's duties hereunder.
(c) ADMINISTRATION OF THE COLLECTION ACCOUNT. At the written
direction of the Servicer, funds on deposit in the Collection Account available
for investment shall be invested by the Trustee in Eligible Investments selected
by the Servicer. All such Eligible Investments shall be held by the Trustee for
the benefit of the Investor Certificateholders.
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Amounts on deposit in each Series Non-Principal Collection Sub-subaccount shall,
if applicable, be invested in Eligible Investments that will mature, or that
are payable or redeemable upon demand of the holder thereof, so that such
funds will be available on or before the Business Day immediately preceding
the next Distribution Date. None of such Eligible Investments shall be
disposed of prior to the maturity date with respect thereto unless such
disposition is reasonably necessary to prevent a loss. All interest and
investment earnings (net of losses and investment expenses) (the "INVESTMENT
EARNINGS") on funds deposited in a Series Non-Principal Collection
Sub-subaccount shall be deposited in such sub-subaccount. Amounts on deposit
in the Series Principal Collection Sub-subaccounts and any other
sub-subaccounts as specified in the related Supplement shall be invested in
Eligible Investments that mature, or that are payable or redeemable upon
demand of the holder thereof, so that such funds will be available not later
than the date which is specified in any Supplement. The Trustee, or its
nominee or custodian, shall maintain possession of the instruments or
securities, if any, evidencing any Eligible Investments from the time of
purchase thereof until the time of sale or maturity. Any Investment Earnings
on such invested funds in a Series Principal Collection Sub-subaccount and
any other sub-subaccounts as specified in the related Supplement will be
deposited in the related Series Non-Principal Collection Sub-subaccount. If
the Servicer fails to give such written instruction, the amounts in the
Collection Account available for investment shall remain uninvested.
(d) DAILY COLLECTIONS. (i) Promptly following its receipt of
Collections in the form of available funds in the Lockbox Accounts or Eligible
Segregated Accounts, but in no event later than the Business Day following such
receipt, the Servicer shall transfer, or cause to be transferred, all
Collections on deposit (less the aggregate amount of set-offs permitted to be
retained pursuant to any applicable Lockbox Agreement or Eligible Segregated
Accounts Agreement) in the form of available funds in the Lockbox Accounts, or
Eligible Segregated Accounts directly to the Collection Account.
(ii) On the date funds become available in the Collection Account
(unless received after 1:00 p.m., New York City time, on such date, then on
the next Business Day) (the "DEPOSIT DATE"), the Trustee shall (in accordance
with the written directions received from the Servicer pursuant to subsection
(h) below, upon which the Trustee may conclusively rely) transfer from
Aggregate Daily Collections for such Deposit Date, to the respective Series
Collection Subaccount for each Outstanding Series, an amount equal to the
product of (x) the applicable Invested Percentage for such Outstanding Series
and (y) such Aggregate Daily Collections.
(iii) On each Deposit Date, the Trustee shall (in accordance with
the written directions received from the Servicer pursuant to subsection (h)
below, upon which the Trustee may conclusively rely) allocate funds
transferred to the Series Collection Subaccount for each Outstanding Series
pursuant to subsection (d)(ii) above to the Series Non-Principal Collection
Sub-subaccount, the Series Principal Collection Sub-subaccount and such other
Sub-subaccounts of each such Series in accordance with the related Supplement
for such Series.
46
(iv) On each Deposit Date, except as otherwise provided in a
Supplement, the Trustee shall (in accordance with the written directions
received from the Servicer pursuant to subsection (h) below, upon which the
Trustee may conclusively rely) transfer to the Company Collection Subaccount
from Aggregate Daily Collections deposited into the Collection Account
pursuant to subsection (d)(i) above on such Deposit Date, the remaining funds
(less an amount equal to the costs and expenses, if any, incurred by the
Trustee with respect to the sale of the Receivables pursuant to subsection
7.2(a) or 9.1(b) and reimbursable to the Trustee as provided in Section 8.5),
if any, on deposit in the Collection Account on such date after giving effect
to transfers to be made pursuant to subsection (d)(ii) above.
(e) CERTAIN ALLOCATIONS FOLLOWING AN AMORTIZATION PERIOD. (i) If, on
any Settlement Report Date, an Amortization Period has occurred and is
continuing with respect to any Outstanding Series and at such Settlement Report
Date, a Revolving Period is still in effect with respect to any other
Outstanding Series (a "SPECIAL ALLOCATION SETTLEMENT REPORT DATE"), then the
Servicer shall make the following calculations:
(A) the amount (the "ALLOCABLE CHARGED-OFF AMOUNT") equal to the
excess, if any, of (I) the aggregate Principal Amount of Charged-Off
Receivables for the related Settlement Period over (II) the aggregate
amount of Recoveries received during the related Settlement Period;
(B) the amount (the "ALLOCABLE RECOVERIES AMOUNT") equal to the
excess, if any, of (I) the aggregate amount of Recoveries received during
the related Settlement Period over (II) the aggregate Principal Amount of
Charged-Off Receivables for the related Settlement Period; and
(ii) If, on any Special Allocation Settlement Report Date, any of
the Allocable Charged-Off Amount or the Allocable Recoveries Amount is
greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions received pursuant to subsection (h) above,
upon which the Trustee may conclusively rely) make (A) a pro rata allocation
to each Outstanding Series (based on the Invested Percentage for such Series)
of a portion of each such positive amount and (B) an allocation to the
Exchangeable Company Interest of the remaining portion of each such positive
amount; PROVIDED, that the aggregate Allocable Recoveries Amount allocated
pursuant to this subsection 3.1(e)(ii) shall never exceed the Allocable
Charged-Off Amount previously allocated pursuant to this subsection
3.1(e)(ii).
(iii) With respect to each portion of the Allocable Charged-Off
Amount and the Allocable Recoveries Amount which is allocated to an
Outstanding Series pursuant to subsection 3.1(e)(ii), the Trustee shall apply
each such amount to such Series in accordance with the related Supplement for
such Series.
(f) ALLOCATIONS FOR THE EXCHANGEABLE COMPANY INTEREST. Until the
occurrence and continuance of a Potential Early Amortization Event or an Early
Amortization Event, in each case set forth in Section 7.1 of the Agreement, or
an Early Amortization
47
Period, on each Business Day and, after the occurrence and continuance of a
Potential Early Amortization Event or an Early Amortization Event, in each
case set forth in Section 7.1 of the Agreement, or an Early Amortization
Period, and until the Trust Termination Date, on each Distribution Date,
after making all allocations required pursuant to subsection 3.1(d), the
Trustee shall (in accordance with the written direction of the Servicer, upon
which the Trustee may conclusively rely) transfer to the owner of the
Exchangeable Company Interest the remaining amount on deposit in the Company
Collection Subaccount.
(g) SET-OFF. (i) In addition to the provisions of Section 8.5, if
the Company shall fail to make a payment as provided in this Agreement or any
Supplement, the Servicer or the Trustee may set off and apply any amounts
otherwise payable to the Company under any Pooling and Servicing Agreement,
including without limitation any amounts allocable to the Exchangeable
Company Interest or any Series Subordinated Interest. The Company hereby
waives demand, notice or declaration of such set-off and application;
PROVIDED that notice will promptly be given to the Company of such set-off;
PROVIDED FURTHER that failure to give such notice shall not affect the
validity of such set-off.
(ii) In addition to the provisions of Section 8.5, in the event
the Servicer shall fail to make a payment as provided in any Pooling and
Servicing Agreement, the Trustee may set off and apply any amounts otherwise
payable to the Servicer in its capacity as Servicer under the Transaction
Documents on account of such obligation. The Servicer hereby waives demand,
notice or declaration of such set-off and application; PROVIDED that notice
will promptly be given to the Servicer of such set-off; PROVIDED FURTHER that
failure to give such notice shall not affect the validity of such set-off.
(h) ALLOCATION AND APPLICATION OF FUNDS. The Servicer shall direct
the Trustee in writing (which may be given in the form of the Daily Report and
Monthly Settlement Statement) in a timely manner to apply all Collections with
respect to the Receivables in accordance with this Article III and in the
Supplement with respect to each Outstanding Series. The Servicer shall direct
the Trustee in writing to pay Collections to the owner of the Exchangeable
Company Interest to the extent such Collections are allocated to the
Exchangeable Company Interest under subsection 3.1(f) and as otherwise provided
in Article III. Notwithstanding anything in this Agreement, any Supplement or
any other Transaction Document to the contrary, to the extent that the Trustee
receives any Daily Report prior to 2:00 p.m., New York City time, on any
Business Day, the Trustee shall make any applications of funds required thereby
on the same Business Day and otherwise on the next succeeding Business Day.
THE REMAINDER OF ARTICLE III SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO EACH SERIES.
SUCH REMAINDER SHALL BE APPLICABLE ONLY TO THE
SERIES RELATING TO THE SUPPLEMENT IN WHICH
SUCH REMAINDER APPEARS.
48
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO
ARTICLE V
THE CERTIFICATES AND INTERESTS
Section V.1. THE CERTIFICATES. The Investor Certificates of each
Series and any Class thereof shall be in fully registered form and shall be
substantially in the form of the exhibits with respect thereto attached to
the applicable Supplement. The Certificates shall, upon issue, be executed
and delivered by the Company to the Trustee for authentication and redelivery
as provided in Section 5.2. The Investor Certificates shall be issued in
minimum denominations of $1,000,000 and in integral multiples of $100,000 in
excess thereof unless otherwise specified in any Supplement for any Series
and Class. Unless otherwise specified in any Supplement for any Series, the
Investor Certificates of any Series or Class shall be issued upon initial
issuance as one or more global certificates in an aggregate original
principal amount equal to the Initial Invested Amount with respect to such
Series or Class. The Company is hereby authorized to execute and deliver
each Certificate on behalf of the Trust. Each Certificate shall be executed
by manual or facsimile signature on behalf of the Company by a Responsible
Officer. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Company or the Trustee shall not be rendered
invalid, notwithstanding that such individual has ceased to be so authorized
prior to or on the date of the authentication and delivery of such
Certificates or does not hold such office at the date of such Certificates.
No Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless there appears on such Certificate a certificate
of authentication substantially in the form provided for herein executed by
or on behalf of the Trustee by the manual signature of a duly authorized
signatory, and such certificate of authentication upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication but failure to do so shall not render them
invalid.
Section V.2. AUTHENTICATION OF CERTIFICATES. Contemporaneously
with the execution and delivery of this Agreement, the Trustee shall
authenticate and deliver the initial Series of the Investor Certificates that
is issued upon original issuance, upon the written order of the Company in a
form reasonably satisfactory to the Trustee, to the holders of the initial
Series of Investor Certificates, against payment to the Company of the
Initial Invested Amount. The Investor Certificates shall be duly
authenticated by or on behalf of the Trustee in authorized denominations
equal to (in the aggregate) the Initial Invested Amount and the interests
evidenced thereby, and together with any Series Subordinated Interest and the
Exchangeable Company Interest, shall constitute the entire ownership of the
Trust. Upon a
49
Company Exchange as provided in Section 5.10 and the satisfaction of certain
other conditions specified therein, the Trustee shall authenticate and
deliver the Certificates of additional Series (with the designation provided
in the applicable Supplement) (or, if provided in any Supplement, the
additional Investor Certificates of an existing Series), upon the written
order of the Company, to the Persons designated in such Supplement or order
(if no additional Supplement is required). Upon the order of the Company,
the Investor Certificates of any Series shall be duly authenticated by or on
behalf of the Trustee, in authorized denominations equal to (in the
aggregate) the Initial Invested Amount of such Series (or, if provided in any
Supplement, the additional Investor Certificates of an existing Series), of
Investor Certificates.
Section V.3. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at the office or agency to be maintained
by a transfer agent and registrar (which may be the Trustee) (the "TRANSFER
AGENT AND REGISTRAR") in accordance with the provisions of Section 8.16 a
register (the "CERTIFICATE REGISTER") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Transfer Agent and Registrar shall
provide for the registration of the Investor Certificates and of transfers and
exchanges of the Investor Certificates as herein provided. The Company hereby
appoints the Trustee as Transfer Agent and Registrar for the purpose of
registering the Investor Certificates and transfers and exchanges of the
Investor Certificates as herein provided. The Trustee shall be permitted to
resign as Transfer Agent and Registrar upon 30 days' written notice to the
Company and the Servicer; PROVIDED, HOWEVER, that such resignation shall not be
effective and the Trustee shall continue to perform its duties as Transfer Agent
and Registrar until the Trustee has appointed a successor Transfer Agent and
Registrar reasonably acceptable to the Company and such successor Transfer Agent
and Registrar has accepted such appointment. The provisions of Sections 8.1,
8.2, 8.3, 8.5 and 10.19 shall apply to the Trustee also in its role as Transfer
Agent or Registrar, as the case may be, for so long as the Trustee shall act as
Transfer Agent or Registrar, as the case may be.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Transfer Agent and Registrar for their services under this Section 5.3. The
Trustee hereby agrees that, upon the receipt of such funds from the Company,
it shall pay the Transfer Agent and Registrar such amounts.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Company shall execute, and, upon the written
request of the Company, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Investor
Certificates in authorized denominations of the same Series (and Class)
representing like aggregate Fractional Undivided Interests and which bear
numbers that are not contemporaneously outstanding.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same
Series (and Class) in authorized
50
denominations of like aggregate Fractional Undivided Interests, bearing
numbers that are not contemporaneously outstanding, upon surrender of the
Investor Certificates to be exchanged at any such office or agency of the
Transfer Agent and Registrar maintained for such purpose.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Company shall execute, and, upon the written request of the
Company, the Trustee shall authenticate and (unless the Transfer Agent and
Registrar is different from the Trustee, in which case the Transfer Agent and
Registrar shall) deliver, the Investor Certificates of such Series which the
Investor Certificateholder making the exchange is entitled to receive. Every
Investor Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer
substantially in the form attached to the form of such Investor Certificate
and duly executed by the holder thereof or his attorney-in-fact duly
authorized in writing delivered to the Trustee (unless the Transfer Agent and
Registrar is different from the Trustee, in which case to the Transfer Agent
and Registrar) and complying with any requirements set forth in the
applicable Supplement.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require any Investor Certificateholder that is transferring or exchanging one
or more Certificates to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Investor Certificates.
All Investor Certificates surrendered for registration of transfer
and exchange shall be cancelled and disposed of in a customary manner
satisfactory to the Trustee.
The Company shall execute and deliver Certificates to the Trustee
or the Transfer Agent and Registrar in such amounts and at such times as are
necessary to enable the Trustee and the Transfer Agent and Registrar to
fulfill their respective responsibilities under this Agreement and the
Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense
in the Borough of Manhattan, The City of New York and, subject to subsection
5.3(a), if specified in the related Supplement for any Series, any other city
designated in such Supplement, an office or offices or agency or agencies
where Investor Certificates may be surrendered for registration or transfer
or exchange.
(c) Unless otherwise stated in any related Supplements,
registration of transfer of Certificates containing a legend relating to
restrictions on transfer of such Certificates (which legend shall be set
forth in the Supplement relating to such Investor Certificates) shall be
effected only if the conditions set forth in the related Supplement are
complied with.
Certificates issued upon registration or transfer of, or in
exchange for, Certificates bearing the legend referred to above shall also
bear such legend unless the
51
Company, the Servicer, the Trustee and the Transfer Agent and Registrar
receive an Opinion of Counsel satisfactory to each of them, to the effect
that such legend may be removed.
(d) (i) The Company may not transfer, assign, exchange or otherwise
pledge or convey the Series Subordinated Interest of any Series or the
Exchangeable Company Interest except, with respect to the Exchangeable
Company Interest, pursuant to Section 5.10.
(ii) Neither the Company nor the Servicer shall at any time
participate in the listing of any Targeted Investor Certificate (as defined
below) on an "established securities market" within the meaning of Section
7704(b)(1) of the Internal Revenue Code and any proposed, temporary or
final treasury regulation thereunder as of the date hereof, including,
without limitation, an over-the-counter or interdealer quotation system
that regularly disseminates firm buy or sell quotations. "TARGETED
INVESTOR CERTIFICATE" shall mean any Certificate representing a right to
receive interest or principal with respect to any Class or Series of
Investor Certificates with respect to which an Opinion of Counsel has not
been rendered that such Certificates will be treated as debt for federal
income tax purposes (it being understood that any Certificate with respect
to which an Opinion of Counsel has been rendered that such Certificate will
be treated EITHER as debt or as an interest in a partnership for federal
income tax purposes shall be a Targeted Investor Certificate).
(e)(i) No transfer of a Targeted Investor Certificate or grant of a
participation therein shall be permitted if (A) such transfer or grant would
cause the number of Targeted Holders (as defined below) to exceed 75 or (B)
the transferee or grantee, as the case may be, is a trust, partnership or "S
corporation" (within the meaning of Section 1361(a) of the Code) (a
"FLOW-THROUGH ENTITY"), unless such flow-through entity represents that less
than 50% of the aggregate value of such flow-through entity's assets consist
of Targeted Investor Certificates. "TARGETED HOLDER" shall mean each holder
of a Targeted Investor Certificate; PROVIDED, HOWEVER, that any Person
holding more than one interest with respect to the Investor Certificates or
the Trust, each of which separately would cause such Person to be a Targeted
Holder, shall be treated as a single Targeted Holder.
(ii) The Company and the Servicer hereby jointly and severally
agree not to permit the sum of (x) the number of Persons holding a right to
receive any amount in respect of the Exchangeable Company Interest or any
Series Subordinated Interest and (y) the number of Servicing Parties that
receive any portion of the Servicing Fee to exceed 25.
(iii) Any determination by the Transfer Agent and Registrar (in
accordance with the information contained in the Certificate Register and the
certifications made by each transferee and participant pursuant to the
applicable Supplement, upon which information the Transfer Agent and
Registrar may conclusively rely) that the event described in either clause
(i)(A) or (i)(B) of this subsection 5.3(e) would occur as the result of a
transfer of a Targeted Investor Certificate or the grant of a participation
therein shall be (X) communicated in writing to the transferring or granting
Investor Certificateholder prior to the effective date set
52
out in the notice of transfer or participation required by, or otherwise
provided for under, the related Supplement and (Y) binding upon the parties
absent manifest error.
(iv) Except as specified in any Supplement for a related Series,
all Investor Certificates of any Series shall be equally and ratably entitled
as provided herein to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Agreement
and the applicable Supplement.
Section V.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence in the form
of a certification by the holder thereof of the destruction, loss or theft of
any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by
them to save the Trust and each of them harmless, then, in the absence of
actual notice to the Trustee or Transfer Agent and Registrar that such
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and, upon the written request of the Company, the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate Fractional Undivided Interest and bearing a number that is not
contemporaneously outstanding. In connection with the issuance of any new
Certificate under this Section 5.4, the Trustee or the Transfer Agent and
Registrar may require the payment by the Holder of a sum sufficient to cover
any tax or other governmental expenses (including the fees and expenses of
the Trustee and Transfer Agent and Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 5.4 shall constitute
complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section V.5. PERSONS DEEMED OWNERS. At all times prior to due
presentation of a Certificate for registration of transfer, the Company, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, any Agent and
any agent of any of them may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Article IV of the related Supplement and for all
other purposes whatsoever, and neither the Trustee, the Paying Agent, the
Transfer Agent and Registrar, any Agent nor any agent of any of them shall be
affected by any notice to the contrary. Notwithstanding the foregoing
provisions of this Section 5.5, in determining whether the holders of the
requisite Fractional Undivided Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
(or interests therein) owned by the Company, the Servicer or any Affiliate
thereof shall be disregarded and deemed not to be outstanding, except that,
in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Certificates which a Responsible Officer of the Trustee actually knows
to be so owned shall be so disregarded. Certificates (or interests therein)
so owned by the Company, the Servicer or any Affiliate thereof which have
been pledged in good faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the
53
satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates (or interests therein) and that the pledgee is not the
Company, the Servicer or an Affiliate thereof.
Section V.6. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
(and/or any other account or accounts maintained for the benefit of the
Investor Certificateholders as specified in the related Supplement for any
Series) pursuant to Articles III and IV. The Trustee may revoke such power
and remove the Paying Agent if the Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. Unless otherwise specified in the related
Supplement for any Series and with respect to such Series, the Paying Agent
shall initially be the Trustee and, if the Trustee so chooses, any co-paying
agent chosen by the Trustee. Each Paying Agent shall have a combined capital
and surplus of at least $50,000,000. The Paying Agent shall be permitted to
resign upon 30 days' written notice to the Trustee. In the event that the
Paying Agent shall so resign, the Trustee shall appoint a successor to act as
Paying Agent (which shall be a depositary institution or trust company)
reasonably acceptable to the Company which appointment shall be effective on
the date on which the Person so appointed gives the Trustee written notice
that it accepts the appointment. Any resignation or removal of the Paying
Agent and appointment of successor Paying Agent pursuant to this Section 5.6
shall not become effective until acceptance of appointment by the successor
Paying Agent, as provided in this Section 5.6. The Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Trustee to execute and deliver to the Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the
Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Holders. The Paying Agent shall return all unclaimed funds to the Trustee
and upon removal of a Paying Agent such Paying Agent shall also return all
funds in its possession to the Trustee. The provisions of Sections 8.1, 8.2,
8.3, 8.5 and 10.19 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent. Any reference
in this Agreement to the Paying Agent shall include any co-paying agent, if
any, unless the context requires otherwise.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Paying Agent for its services under this Section 5.6. The Trustee hereby
agrees that, upon the receipt of such funds from the Company, it shall pay
the Paying Agent such amounts.
Section V.7. ACCESS TO LIST OF INVESTOR CERTIFICATEHOLDERS' NAMES
AND ADDRESSES. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Company, the Servicer or the Paying
Agent, within ten Business Days after receipt by the Trustee of a request
therefor from the Company, the Servicer or the Paying Agent, respectively, in
writing, a list of the names and addresses of the Investor Certificateholders
as then recorded by or on behalf of the Trustee. If three or more Investor
54
Certificateholders of record or any Investor Certificateholder of any Series
or a group of Investor Certificateholders of record representing Fractional
Undivided Interests aggregating not less than 10% of the Invested Amount of
the related Outstanding Series (the "APPLICANTS") apply in writing to the
Trustee, and such application states that the Applicants desire to
communicate with other Investor Certificateholders of any Series with respect
to their rights under this Agreement or under the Investor Certificates and
is accompanied by a copy of the communication which such Applicants propose
to transmit, then the Trustee, after having been adequately indemnified by
such Applicants for its costs and expenses, shall transmit or shall cause the
Transfer Agent and Registrar to transmit, such communication to the Investor
Certificateholders reasonably promptly after the receipt of such application.
Every Investor Certificateholder, by receiving and holding an
Investor Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, officers,
directors or employees shall be held accountable by reason of the disclosure
or mailing of any such information as to the names and addresses of the
Investor Certificateholders hereunder, regardless of the sources from which
such information was derived.
As soon as practicable following each Record Date, the Trustee
shall provide to the Paying Agent or its designee, a list of Investor
Certificateholders in such form as the Paying Agent may reasonably request.
Section V.8. AUTHENTICATING AGENT. (a) The Trustee may appoint
one or more authenticating agents with respect to the Certificates which
shall be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Whenever reference is
made in this Agreement to the authentication of Certificates by the Trustee
or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication on behalf of the Trustee by an
authenticating agent and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent. Each authenticating agent must be
acceptable to the Company.
(b) Any institution succeeding to the corporate trust business of
an authenticating agent shall continue to be an authenticating agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee. Upon the receipt by the
Trustee of any such notice of resignation and upon the giving of any such
notice of termination by the Trustee, the Trustee shall immediately give
notice of such resignation or termination to the Company. Any resignation of
an authenticating agent shall not become effective until acceptance of
appointment by the successor authenticating agent as provided in this Section
5.8. The Trustee may at any time terminate the agency of an authenticating
agent by giving notice of termination to such authenticating agent. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time an authenticating agent shall cease to be acceptable to the
Trustee, the
55
Trustee promptly may appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment hereunder shall
become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating
agent. No successor authenticating agent (other than an Affiliate of the
Trustee) shall be appointed unless reasonably acceptable to the Trustee and
the Company.
(d) The Company hereby agrees to provide the Trustee from time to
time sufficient funds, on a timely basis and in accordance with and subject
to Section 8.5, for the payment of any reasonable compensation payable to
each authenticating agent for its services under this Section 5.8. The
Trustee hereby agrees that, upon the receipt of such funds from the Company
it shall pay each authenticating agent such amounts.
(e) The provisions of Sections 8.1, 8.2, 8.3 and 8.5 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 5.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
"This is one of the Certificates described in the Pooling Agreement
dated as of April 1, 1998, among CM Capital Corporation, Core-▇▇▇▇
International, Inc., as Servicer, and The Chase Manhattan Bank, as Trustee.
---------------------------
as Authenticating Agent
for the Trustee
By
------------------------
Authorized Signatory"
Section V.9. TAX TREATMENT. It is the intent of the Servicer, the
Company, the Investor Certificateholders and the Trustee that, for federal,
state and local income and franchise tax purposes, the Investor Certificates
be treated as evidence of indebtedness secured by the Trust Assets and the
Trust not be characterized as an association taxable as a corporation. The
Company, the Servicer and the Trustee, by entering into this Agreement, and
each Investor Certificateholder, by its acceptance of its Investor
Certificate, agree to treat the Investor Certificates for federal, state and
local income and franchise tax purposes as indebtedness. The provisions of
this Agreement and all related Transaction Documents shall be construed to
further these intentions of the parties. This Section 5.9 shall survive the
termination of this Agreement and shall be binding on all transferees of any
of the foregoing persons.
56
Section V.10. COMPANY EXCHANGES. (a) The Company may, in
accordance with the procedures set forth below, call for an adjustment of the
Exchangeable Company Interest in exchange for (i) an increase in the Invested
Amount of Investor Certificates of an Outstanding Series (or a Class thereof)
and an increase in the related Series Subordinated Interest or (ii) one or
more newly issued Series of Investor Certificates and the related newly
created Series Subordinated Interest (a "NEW SERIES") (any such exchange, a
"COMPANY EXCHANGE"). The Company may perform a Company Exchange by notifying
the Trustee, in writing at least five days in advance (an "EXCHANGE NOTICE")
of the date upon which the Company Exchange is to occur (an "EXCHANGE DATE").
Any Exchange Notice shall state the designation of any Series (and/or Class,
if applicable) to be issued (or increased) on the Exchange Date and, with
respect to each such Series (and/or Class, if applicable): (a) its
additional or Initial Invested Amount, as the case may be, if any, which in
the aggregate at any time may not be greater than the current value of the
Exchangeable Company Interest, if any, at such time, (b) its Certificate Rate
(or the method for allocating interest payments or other cash flow to such
Series), if any, and (c) whether such New Series will be a companion series
to an Outstanding Series as described in paragraph (d) below (an "EXISTING
COMPANION SERIES"; and together with the New Series, a "COMPANION SERIES").
On the Exchange Date, the Trustee shall, upon the written order of the
Company, authenticate and deliver any Certificates evidencing an increase in
the Invested Amount of Investor Certificates of an Outstanding Series (or a
Class thereof) or a newly issued Series only upon delivery by the Company to
the Trustee of the following (together with the delivery by the Company to
the Trustee of any additional agreements, instruments or other documents as
are specified in the related Supplement): (a) a Supplement executed by the
Company and specifying the Principal Terms of such Series (provided that no
such Supplement shall be required for any increase in the Invested Amount of
an Outstanding Series (or Class thereof) of Investor Certificates unless it
is so required by the related Supplement; PROVIDED that if the Certificate
Rate for the new Certificates is different from the Certificate Rate
applicable to the outstanding Certificates of such Series (or Class thereof)
the new Certificate Rate shall be set forth in an Officer's Certificate of
the Company delivered to the Trustee), (b) a Tax Opinion addressed to the
Trustee and the Trust, (c) a General Opinion addressed to the Trustee and the
Trust, (d) an agreement pursuant to which the Enhancement Provider, if any,
agrees to provide Enhancement, (e) an Officer's Certificate that the Exchange
will not result in the occurrence of a Potential Early Amortization Event or
Early Amortization Event with respect to any Outstanding Series and that all
conditions precedent to the Exchange contained in the Pooling and Servicing
Agreements have been complied with, and (f) written confirmation from each
Rating Agency that the Company Exchange will not result in the Rating
Agency's reducing or withdrawing its rating on any then Outstanding Series
rated by it. Upon the delivery of the items listed in clauses (a) through
(f) above, the existing Exchangeable Company Interest and the applicable
Series Subordinated Interests, as the case may be, shall be deemed adjusted
as of the Exchange Date, and the new Series Subordinated Interests, if any,
shall be deemed duly created as of the Exchange Date, in each case as
provided above. There is no limit to the number of Company Exchanges that
the Company may perform under this Agreement. If the Company shall, on any
Exchange Date, retain any Investor Certificates issued on such Exchange Date,
it shall, prior to transferring any such Certificates to another Person,
obtain a
57
Tax Opinion. Additional restrictions relating to a Company Exchange may be
set forth in any Supplement.
(b) Upon any Company Exchange, the Trustee, in accordance with the
written directions of the Company, shall issue to the Company under Section
5.1, for execution and redelivery to the Trustee for authentication under
Section 5.2, (i) one or more Certificates representing an increase in the
Invested Amount of an Outstanding Series (or Class thereof) or (ii) one or
more new Series of Investor Certificates. Any such Certificates shall be
substantially in the form specified in the applicable Supplement and each
shall bear, upon its face, the designation for such Series (and Class
thereof) to which each such certificate belongs so selected by the Company.
(c) In conjunction with a Company Exchange, the parties hereto
shall, except as otherwise provided in subsection (a) above, execute a
Supplement to this Agreement, which shall define, with respect to any
additional Investor Certificates or newly issued Series, as the case may be:
(i) its name or designation, (ii) its additional or initial principal amount,
as the case may be (or method for calculating such amount), (iii) its coupon
rate (or formula for the determination thereof), (iv) the interest payment
date or dates and the date or dates from which interest shall accrue, (v) the
method for allocating Collections to Holders, including the applicable
Investor Percentage, (vi) the names of any accounts to be used by such Series
and the terms governing the operation of any such accounts, (vii) the issue
and terms of a letter of credit or other form of Enhancement, if any, with
respect thereto, (viii) the terms, if any, on which the Certificates of such
Series may be repurchased by the Company or may be remarketed to other
investors, (ix) the Series Termination Date, (x) any deposit account
maintained for the benefit of Holders, (xi) the number of Classes of such
Series, and if more than one Class, the rights and priorities of each such
Class, (xii) the rights of the owner of the Exchangeable Company Interest
that have been transferred to the holders of such Series, (xiii) the
designation of any Series Accounts and the terms governing the operation of
any such Series Accounts, (xiv) provisions reasonably acceptable to the
Trustee concerning the payment of the Trustee's fees and expenses and (xv)
other relevant terms (all such terms, the "PRINCIPAL TERMS" of such Series).
The Supplement executed in connection with the Company Exchange shall contain
administrative provisions which are reasonably acceptable to the Trustee.
(d) In order for a New Series to be part of a Companion Series, the
Supplement for the related Existing Companion Series must provide for or
permit the Amortization Period to commence on the Issuance Date for such New
Series, and on or prior to the Issuance Date for the New Series the Servicer
and the Company shall take all actions, if any, necessary to cause the
Amortization Period for such Existing Companion Series to commence on such
Issuance Date. The proceeds from the issuance of the New Series shall be
deposited in the applicable Series Principal Collection Sub-subaccount and
the Company shall, on the Issuance Date for such New Series, deposit into the
applicable Series Non-Principal Sub-subaccount the amount of interest that
will accrue on the New Series over a period specified in the related
Supplement for such New Series. On each day on which principal is paid to the
holders of the Existing Companion Series, the Trustee shall distribute
58
to the Company from the applicable Series Principal Collection Sub-subaccount
of the New Series an amount (up to the amount of available funds in such
account) equal to the amount distributed on such day to the Investor
Certificateholders of any Existing Companion Series; PROVIDED that, after
giving effect to such distributions, the Aggregate Receivables Amount shall
equal or exceed the sum of (i) the Target Receivables Amount with respect to
such Existing Companion Series on such day, PLUS (ii) the Target Receivables
Amount with respect to the New Series on such day, PLUS (iii) the Target
Receivables Amount with respect to any other Outstanding Series on such day;
PROVIDED FURTHER that the Trustee may conclusively rely on the calculations
of the Servicer of such amounts.
Section V.11. BOOK-ENTRY CERTIFICATES. If specified in any
related Supplement, the Investor Certificates, or any portion thereof, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
depository specified in such Supplement (the "DEPOSITORY") which shall be the
Clearing Agency, specified by, or on behalf of, the Company for such Series.
The Investor Certificates shall initially be registered on the Certificate
Register in the name of the nominee of such Clearing Agency, and no
Certificate Book-Entry Holder will receive a definitive certificate
representing such Certificate Book-Entry Holder's interest in the Investor
Certificates, except as provided in Section 5.13. Unless and until
definitive, fully registered Investor Certificates ("DEFINITIVE
CERTIFICATES") have been issued to Holders pursuant to Section 5.13 or the
related Supplement:
(a) the provisions of this Section 5.11 shall be in full force and
effect;
(b) the Company, the Servicer and the Trustee may deal with each
Clearing Agency for all purposes (including the making of distributions on
the Investor Certificates) as the Holder without respect to whether there
has been any actual authorization of such actions by the Certificate
Book-Entry Holders with respect to such actions;
(c) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Agreement, the provisions of this Section
5.11 shall control; and
(d) the rights of Certificate Book-Entry Holders shall be exercised
only through the Clearing Agency and the related Clearing Agency
Participants and shall be limited to those established by law and
agreements between such related Certificate Book-Entry Holders and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Investor Certificates to
such Clearing Agency Participants.
Notwithstanding the foregoing, no Class or Series of Investor Certificates may
be issued as Book Entry Certificates (but, instead, shall be issued as
Definitive Certificates) unless at the time of issuance of such Class or Series
the Company and the Trustee receive an opinion of
59
independent counsel that the Certificates of such Class or Series will be
treated as indebtedness for federal income tax purposes.
Section V.12. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Holders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Book-Entry Holders
pursuant to Section 5.13, the Trustee shall, give all such notices and
communications specified herein to be given to the Investor Certificateholders
to the Clearing Agencies.
Section V.13. DEFINITIVE CERTIFICATES. If (a)(i) the Company advises
the Trustee in writing that any Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the applicable Depository
Agreement, and (ii) the Company is unable to locate a qualified successor, (b)
the Company, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (c) after the
occurrence of a Servicer Default or an Early Amortization Event, Certificate
Book-Entry Holders representing Fractional Undivided Interests aggregating more
than 50% of the Invested Amount held by such Certificate Book-Entry Holders of
each affected Series then issued and outstanding advise the Clearing Agency
through the Clearing Agency Participants in writing, and the Clearing Agency
shall so notify the Trustee, that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the
Certificate Book-Entry Holders, the Trustee shall notify the Clearing Agency,
which shall be responsible to notify the Certificate Book-Entry Holders, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Book-Entry Holders requesting the same. Upon surrender to the
Trustee of the Book-Entry Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Company
shall execute and the Trustee shall authenticate the Definitive Certificates.
Neither the Company nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions.
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY
Section VI.1. LIMITATION ON LIABILITY. None of the Company's
directors or officers or employees or agents, shall be under any liability to
the Trust, the Trustee, the Holders or any other Person for any action taken or
for refraining from the taking of any action pursuant to this Agreement, whether
or not such action or inaction arises from express or implied duties under this
Agreement; PROVIDED, that this provision shall not protect any such director,
officer, employee or agent against any liability which would otherwise be
imposed on such Person by reason of wilful misconduct, bad faith or gross
negligence in the performance of such Person's duties or by reason of reckless
disregard of such Person's obligations and duties hereunder.
60
Section VI.2. LIABILITIES. By entering into this Agreement, the
Company agrees to be liable, directly to the injured party, for the entire
amount of any losses, claims, damages or liabilities, arising out of or based on
the arrangement created by any Pooling and Servicing Agreement or the actions of
the Servicer taken pursuant hereto or thereto (except those losses, claims,
damages or liabilities incurred by an Investor Certificateholder in the capacity
of an investor in the Investor Certificates as a result of the performance of
the Receivables, market fluctuations or other similar market or investment
risks) as though the Pooling and Servicing Agreements created a partnership
under the New York Uniform Limited Partnership Act with the Company as a general
partner thereof. The Company agrees to pay, indemnify and hold harmless each
Investor Certificateholder against and from any and all such losses, claims,
damages and liabilities, except to the extent they arise from any action or
omission by such Investor Certificateholder; PROVIDED that any payments made by
the Company in respect of any of the foregoing items shall be made solely from
funds available to the Company which are not otherwise required to be applied to
the payment of any amounts pursuant to any Pooling and Servicing Agreements
(other than to the Company), shall be non-recourse other than with respect to
such funds and shall not constitute a claim against the Company to the extent
that insufficient funds exist to make such payment. In the event of a Service
Transfer, the Successor Servicer (except for the Trustee in its capacity as
Successor Servicer) will indemnify and hold harmless the Company for any losses,
claims, damages and liabilities of the Company arising under this Section 6.2
from the actions or omissions of such Successor Servicer.
ARTICLE VII
EARLY AMORTIZATION EVENTS
Section VII.1. EARLY AMORTIZATION EVENTS. Unless modified with
respect to any Series of Investor Certificates by any related Supplement, if any
one of the following events (each, an "EARLY AMORTIZATION EVENT") shall occur:
(a)(i) the Company shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or the Company shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Company any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
61
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 such days from
the entry thereof; or (iv) the Company shall take any action in
furtherance of any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Company shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
(b) the Trust or the Company shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(c) the Trust is characterized for federal income tax purposes as a
"publicly traded partnership" or as an association taxable as a
corporation; or
(d) the Trustee shall be appointed as Successor Servicer pursuant to
subsection 6.2(b) of the Servicing Agreement;
then, an "EARLY AMORTIZATION PERIOD" with respect to all Outstanding Series
shall commence without any notice or other action on the part of the Trustee or
any Investor Certificateholder immediately upon the occurrence of such event.
The Servicer shall notify each Rating Agency, each Agent and the Trustee in
writing of the occurrence of any Early Amortization Period, specifying the cause
thereof. Further, upon the commencement against the Company of a case,
proceeding or other action described in clause (a)(ii) or (iii) above, the
Company shall not purchase Receivables from any Seller, or transfer Receivables
to the Trust, until such time, if any, as such case, proceeding or other action
is vacated, discharged, or stayed or bonded pending appeal.
Additional Early Amortization Events and the consequences thereof may
be set forth in each Supplement with respect to the Series relating thereto.
Section VII.2. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS. (a) If an Insolvency Event with respect to the Company occurs, the
Company shall immediately cease to transfer Receivables to the Trust and
shall promptly give notice to the Trustee of such occurrence.
Notwithstanding any cessation of the transfer to the Trust of additional
Receivables, Receivables transferred to the Trust prior to the occurrence of
such Insolvency Event and Collections in respect of such Receivables and
interest, whenever created, accrued in respect of such Receivables, shall
continue to be a part of the Trust. Within 15 days of the Trustee's receipt
of notice of the occurrence of an Insolvency Event in accordance with Section
7.1, if the Aggregate Invested Amount and all accrued and unpaid interest
thereon have not been paid to the Investor Certificateholders, then the
Trustee shall (i) publish a notice in a newspaper with a national circulation
(an "AUTHORIZED NEWSPAPER") that an Insolvency Event has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables and the other Trust Assets in a commercially reasonable manner
and (ii) send written notice to the Investor Certificateholders and request
instructions from such holders, which notice shall request each Investor
Certificateholder to advise the Trustee in writing that it elects one of the
following options: (A) the Investor Certificateholder wishes
62
the Trustee to instruct the Servicer not to sell, dispose of or otherwise
liquidate the Receivables and the other Trust Assets, or (B) the Investor
Certificateholder wishes the Trustee to instruct the Servicer to sell,
dispose of or otherwise liquidate the Receivables and the other Trust Assets
and to instruct the Servicer to reconstitute the Trust upon the same terms
and conditions set forth herein, or (C) the Investor Certificateholder
refuses to advise the Trustee as to the specific action the Trustee shall
instruct the Servicer to take. If after 60 days from the day notice pursuant
to clause (i) above is first published (the "PUBLICATION DATE"), the Trustee
shall not have received written instructions of (x) holders of Certificates
representing undivided interests in the Trust aggregating in excess of 50% of
the related Invested Amount of each Series (or in the case of a series having
more than one Class of Investor Certificates, each Class of such series)
selecting option (A) above and (y) if the owners of the Exchangeable Company
Interest do not include the Company (and following the delivery of written
notice in the form referred to above by the Company to such owners), the
owners thereof representing undivided interests in the Trust aggregating in
excess of 50% of the Company Interest, the Trustee shall instruct the
Servicer to proceed to sell, dispose of, or otherwise liquidate the
Receivables and the other Trust Assets in a commercially reasonable manner
and on commercially reasonable terms, which shall include the solicitation of
competitive bids, and the Servicer shall proceed to consummate the sale,
liquidation or disposition of the Receivables and the other Trust Assets as
provided above with the highest bidder therefor; PROVIDED, HOWEVER, that if
the allocable sale price, less all reasonable fees, expenses and other
amounts due hereunder to the Trustee, its agents and counsel to the Trustee,
to be realized from such sale, liquidation or disposition would be less than
the Aggregate Invested Amount plus accrued and unpaid interest thereon
through the Distribution Date next succeeding the date of such sale, the
Trustee must receive the prior unanimous consent of all the Investor
Certificateholders to such sale, liquidation or disposition. The Company or
any of its Affiliates shall be permitted to bid for the Receivables and the
other Trust Assets. In addition, the Company or any of its Affiliates shall
have the right to match any bid by a third person and be granted the right to
purchase the Receivables and the other Trust Assets at such matched bid
price. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions
of Sections 7.1 and 7.2 shall be cumulative and not mutually exclusive. The
costs and expenses incurred by the Trustee in such sale shall be reimbursable
to the Trustee as provided in Section 8.5.
(b) The proceeds from the sale, liquidation or disposition of the
Receivables and the other Trust Assets pursuant to subsection (a) above shall
be treated as Collections on the Receivables and such proceeds will be
distributed to any Servicers who are not Affiliates of the Company for the
payment of servicing fees and to the Trustee in an amount equal to the amount
of any expenses incurred by the Trustee acting in its capacity either as
Trustee or as liquidating agent pursuant to subsection 7.2(a) above which
have not otherwise been reimbursed prior thereto. Thereafter, the remaining
funds, if any, shall be distributed (i) to holders of each Series after
immediately being deposited in the Collection Account, in accordance with the
provisions of subsection 3.1(d) and the related Supplement for such Series
and (ii) after giving effect to the transfer to be made pursuant to the
preceding clause
63
(i), the remainder, if any, shall be allocated to the Company Interest and
shall be released to the owner of the Exchangeable Company Interest upon
cancellation thereof.
ARTICLE VIII
THE TRUSTEE
Section VIII.1. DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of a Servicer Default or an Early Amortization Event of which a
Responsible Officer of the Trustee has actual knowledge and after the curing
of all Servicer Defaults and Early Amortization Events which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in the Pooling and Servicing Agreements and no implied
covenants or obligations shall be read into such Pooling and Servicing
Agreements against the Trustee. If a Servicer Default or Early Amortization
Event to the actual knowledge of a Responsible Officer of the Trustee has
occurred (which has not been cured or waived), the Trustee shall exercise the
rights and powers vested in it in its capacity as Trustee by any Pooling and
Servicing Agreement and shall use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. The provisions of this Section
shall be applicable to the Trustee in its capacity as Trustee hereunder. If
the Trustee shall have succeeded to the obligations of the Servicer, the
provisions of the Servicing Agreement shall govern the actions of the Trustee
as Successor Servicer.
(b) The Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein upon
resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Trustee and believed by it to be
genuine and to have been signed or presented to it pursuant to any Pooling
and Servicing Agreement by the proper party or parties; but in the case of
any of the above which are specifically required to be furnished to the
Trustee pursuant to any provision of the Pooling and Servicing Agreements,
the Trustee shall, subject to Section 8.2, examine them to determine whether
they substantially conform to the requirements of this Agreement; PROVIDED,
that the Trustee shall not be responsible for the accuracy or content of any
document furnished pursuant to any Pooling and Servicing Agreement.
(c) Subject to subsection 8.1(a), no provision of any Pooling and
Servicing Agreement shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act or its own
misconduct; PROVIDED, HOWEVER, that:
(i) The Trustee shall not be liable in its individual capacity for an
error of judgment unless it shall be proved that the Trustee was negligent,
or acted in bad faith, in ascertaining the pertinent facts;
(ii) The Trustee shall not be liable in its individual capacity with
respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with
64
the Pooling and Servicing Agreement or at the direction of the Servicer or
the holders of Investor Certificates evidencing in excess of 50% (or such
lesser percentage as set forth in any applicable provision) of the
Aggregate Invested Amount;
(iii) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with any of its obligations, unless a
Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer, any Agent or any Investor Certificateholder. In the absence of
written notice, the Trustee may conclusively rely that there is no
Servicer Default or Early Amortization Event;
(iv) The Trustee shall not be charged with knowledge of a Servicer
Default or Early Amortization Event unless a Responsible Officer of the
Trustee obtains actual knowledge of such event or the Trustee receives
written notice of such default or event from the Servicer, any Agent or any
Investor Certificateholder. In the absence of written notice received by a
Responsible Officer of the Trustee, the Trustee may conclusively rely that
there is no Servicer Default or Early Amortization Event;
(v) The Trustee shall not be liable for any investment losses
resulting from any investments of funds on deposit in the Accounts or any
subaccounts thereof; and
(vi) The Trustee shall have no duty to monitor the performance of the
Servicer, nor shall it have any liability in connection with malfeasance or
nonfeasance by the Servicer. The Trustee shall have no liability in
connection with compliance of the Servicer or the Company with statutory or
regulatory requirements related to the Receivables.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties under any Pooling and Servicing Agreement or in the exercise of any of
its rights or powers, if there is reasonable ground 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 any
Pooling and Servicing Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any obligations of
the Servicer under such Agreement except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of such Agreement.
(e) Except as expressly provided in any Pooling and Servicing
Agreement, the Trustee shall have no power to vary the corpus of the Trust.
(f) Provided that the Servicer and the Company shall have provided to
the Trustee promptly upon request all books, records and other information
reasonably requested by the Trustee and shall have provided the Trustee with all
necessary access to the properties, books and records of the Servicer and the
Company which the Trustee may reasonably
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require, then within 90 days following the Initial Closing Date, the Trustee
shall have (i) completed the Servicer Site Review and (ii) established the
Standby Liquidation System, and shall have notified and delivered
descriptions to the Servicer, each Rating Agency and each Agent of such
events.
(g) The Trustee shall deliver the Internal Operating Procedures
Memorandum to the Company and the Servicer on the Initial Closing Date. From
and after such date, the Trustee shall take such actions as are set forth in
the Internal Operating Procedures Memorandum unless prevented from doing so
through no fault of the Trustee.
Section VIII.2. RIGHTS OF THE TRUSTEE. Except as otherwise
provided in Section 8.1:
(a) The Trustee may conclusively rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper or document believed
by it to be genuine and to have been signed or presented to it pursuant to
any Pooling and Servicing Agreement by the proper party or parties;
(b) The Trustee may consult with counsel (at the Company's expense)
and any Opinion of Counsel or any advice of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by any Pooling and Servicing Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Holders, pursuant
to the provisions of any Pooling and Servicing Agreement, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein
or thereby; PROVIDED, HOWEVER, that nothing contained herein shall relieve
the Trustee of the obligations, upon the occurrence of a Servicer Default
or Early Amortization Event (which the Trustee has written notice thereof
and which has not been cured), to exercise such of the rights and powers
vested in it by any Pooling and Servicing 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 such person's own
affairs. The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or wilful
misconduct in the performance of any such act;
(d) 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
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or rights or powers conferred upon it by any Pooling and Servicing
Agreement; PROVIDED that the Trustee shall be liable for its negligence or
willful misconduct;
(e) 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, direction, order,
approval, bond, note or other paper or document, or to
recompute the amount of any allocations or distributions contained in
any direction from the Servicer provided for under the Agreement, unless
requested in writing so to do by the holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating more than 10% of
the Invested Amount of any Series which could be adversely affected if
the Trustee does not perform such acts; PROVIDED, HOWEVER, that such
holders of Investor Certificates shall reimburse the Trustee for any
expense resulting from any such investigation requested by them to the
extent the Trustee is not otherwise reimbursed hereunder; PROVIDED,
FURTHER, that the Trustee shall be entitled to make such further inquiry
or investigation into such facts or matters as it may reasonably see
fit, and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books and records of
the Company, personally or by agent or attorney, at the sole cost and
expense of the Company;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through affiliates,
agents or attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such affiliate, agent, attorney, custodian or nominee
appointed with due care by it hereunder;
(g) The Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables for the
purpose of establishing the presence or absence of defects, the compliance
by the Company with its representations and warranties or for any other
purpose;
(h) In the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded
to the Trustee pursuant to this Article VIII shall also be afforded to such
Paying Agent or Transfer Agent and Registrar;
(i) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder;
(j) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by Trustee unless it is determined by a
court of competent jurisdiction that the Trustee's negligence or willful
misconduct was the primary cause of such insufficiency;
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(k) The Trustee shall not in any way be liable by reason of any
insufficiency in the Collateral Account resulting from any investment loss
on any Eligible Investment invested pursuant to Section 3.1(c) of this
Agreement; and
(l) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Trustee be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Trustee has been advised of the likelihood of such
loss or damage and regardless of the form of action.
Section VIII.3. TRUSTEE NOT LIABLE FOR RECITALS IN CERTIFICATES.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 8.15,
the Trustee makes no representations as to the validity or sufficiency of any
Pooling and Servicing Agreement or of the Certificates (other than the
certificate of authentication on the Certificates) or of any Receivable or
related document. The Trustee shall not be accountable for the use or
application by the Company of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Company in respect of the Receivables or from the Accounts or other accounts
hereafter established to effectuate the transactions contemplated herein and
in accordance with the terms of any Pooling and Servicing Agreement.
The Trustee shall not be accountable for the use or application by
the Servicer of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Servicer
or any Sub-Servicer in respect of the Receivables or deposited in or
withdrawn from the Accounts or any Lockbox by or at the direction of the
Servicer, any Sub-Servicer or the Lockbox Processor, in each case unless the
Trustee, acting in its capacity as Successor Servicer, itself makes such use
or application. The Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Receivable.
Section VIII.4. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity (a) may become the owner or pledgee of
Investor Certificates with the same rights as it would have if it were not
the Trustee and (b) may transact any banking and trust business with the
Company, the Servicer, any Sub-Servicer or any Seller as it would were it not
the Trustee.
Section VIII.5. TRUSTEE'S FEES AND EXPENSES. The Trustee shall be
entitled to a fee (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 the Trustee in the execution of the trusts hereby created and in
the exercise and performance of any of the powers and duties hereunder of the
Trustee. The Servicer covenants and agrees to pay, but only from funds
available to it as the Servicing Fee paid under the Servicing Agreement, to
the Trustee an annual fee agreed upon in writing between the Servicer and the
Trustee, payable in advance on the Initial Closing Date and on each one-year
anniversary thereof. The Trustee also shall be entitled to reimbursement
from the Servicer or the Company upon the Trustee's request for
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all reasonable expenses (including, without limitation, expenses incurred in
connection with notices, requests for documentation or other communications
to or directions from Holders), disbursements, losses, liabilities, damages
and advances incurred or made by the Trustee in accordance with any of the
provisions of any Pooling and Servicing Agreement or by reason of its status
as Trustee under any Pooling and Servicing Agreement (including the
reasonable fees and expenses of its agents, any co-trustee and counsel)
except any such expense, disbursement, loss, liability, damage or advance as
may arise from its negligence or bad faith or willful misconduct; PROVIDED
that any payments made by the Company in respect of any of the foregoing
items shall be made solely from funds available to the Company which are not
otherwise required to be applied to the payment of any amounts pursuant to
any Pooling and Servicing Agreements (other than to the Company), shall be
non-recourse other than with respect to such funds, and shall not constitute
a claim against the Company to the extent that insufficient funds exist to
make such payment. To the extent that the Trustee has not been paid for any
of the foregoing items (including pursuant to the first sentence of this
Section 8.5), the Trustee shall be entitled to be paid for such items from
amounts which otherwise would be distributable to the Company under Article
III of this Agreement. The Trustee shall be entitled to reimbursement for
any reasonable out-of-pocket costs or expenses incurred in connection with
the review, negotiation, preparation, execution and delivery of any of the
Transaction Documents or in connection with the issuance of any Certificates
on the Initial Closing Date. If the Trustee is appointed Successor Servicer
in accordance with the Servicing Agreement, the Trustee, in its capacity as
Successor Servicer, shall also be entitled to be paid the Servicing Fee and
any other compensation to which the Servicer is expressly entitled under any
Pooling and Servicing Agreement. The provisions of this Section 8.5 shall
apply to the reasonable expenses, disbursements and advances made or incurred
by the Trustee, or any other Person, in its capacity as liquidating agent, to
the extent not otherwise paid. The covenants and agreements contained in
this Section 8.5 (including, without limitation, the covenants to pay the
expenses, disbursements, losses, liabilities, damages and advances provided
for in this Section 8.5) shall survive the termination of any Pooling and
Servicing Agreement and shall be binding, as applicable, on (i) the Servicer
and any Successor Servicer and (ii) the Company.
Section VIII.6. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof and
authorized under such laws to exercise corporate trust powers, having (or
having a holding company parent with) a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation publishes 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 8.6, 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 8.6, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 8.7.
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Section VIII.7. RESIGNATION OR REMOVAL OF TRUSTEE. (a) Subject to
paragraph (c) below, the Trustee may at any time resign and be discharged
from the trust hereby created by giving written notice thereof to the
Company, the Servicer, each Agent and the Rating Agencies. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee 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 8.6 hereof and shall fail to resign
after written request therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent,
or if 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 Company may remove the Trustee and promptly appoint a successor
trustee 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.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.7 shall
not become effective until acceptance of appointment by the successor trustee
as provided in Section 8.8.
(d) The obligations of the Company described in Sections 6.3 and
8.5 hereof and the obligations of the Servicer described in Section 8.5
hereof and Section 5.1 of the Servicing Agreement shall survive the removal
or resignation of the Trustee as provided in this Agreement.
(e) No Trustee under this Agreement shall be personally liable for
any action or omission of any successor trustee.
Section VIII.8. SUCCESSOR TRUSTEE. (a) Any successor trustee
appointed as provided in Section 8.7 shall execute, acknowledge and deliver
to the Company and to its predecessor Trustee an instrument accepting such
appointment hereunder, 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 hereunder,
with like effect as if originally named as Trustee herein. The predecessor
Trustee shall deliver to the successor trustee all documents or copies
thereof, at the expense of the Servicer, and statements held by it hereunder;
and the Company 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, power, duties and obligations. The Servicer shall immediately and,
in any event, no less than ten days prior to any such
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resignation or removal, give notice to each Rating Agency upon the appointment
of a successor trustee.
(b) No successor trustee shall accept appointment as provided in
this Section 8.8 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.6.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 8.8, such successor trustee shall mail notice of
such succession hereunder to all Holders at their addresses as shown in the
Certificate Register.
Section VIII.9. MERGER OR CONSOLIDATION OF TRUSTEE. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 8.6, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Trustee (unless the Trustee is The Chase
Manhattan Bank) shall promptly give notice (except to the extent prohibited
under any Requirement of Law or Contractual Obligation), but in no event less
than ten days prior to any such merger or consolidation, to the Company, the
Servicer and the Rating Agencies upon any such merger or consolidation of the
Trustee.
Section VIII.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of any Pooling and Servicing
Agreement, at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust may at the time be located,
the Trustee shall have the power and may execute and deliver all instruments
to appoint one or more persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust, and
to vest in such Person or Persons, in such capacity and for the benefit of
the Holders, such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 8.6 and no notice to
Holders of the appointment of any co-trustee or separate trustee shall be
required under Section 8.8. The Trustee shall promptly notify each Rating
Agency of the appointment of any co-trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed 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 statute of any jurisdiction in which
any
71
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), 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 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 hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of any Pooling and
Servicing Agreement, specifically including every provision of any Pooling and
Servicing Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer and the Company.
(d) Any separate trustee or co-trustee may at any time constitute
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 to
any Pooling and Servicing Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
Section VIII.11. TAX RETURNS. In the event the Trust shall be
required to file tax returns, the Company shall prepare and file or shall
cause to be prepared and filed (including, without limitation, by the
Servicer) any tax returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature at least five Business Days before
such returns are due to be filed. The Trustee is hereby authorized to sign
any such return on behalf of the Trust. The Company shall also prepare or
shall cause to be prepared (including, without limitation, by the Servicer)
all tax information required by law to be distributed to Holders and shall
deliver such information to the Trustee at least five Business Days prior to
the date it is required by law to be distributed to the Holders. The
Trustee, upon written request, will furnish the Company, or the Company's
designee, 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,
and shall, upon request, execute such returns. In no event shall the Trustee
in its
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individual capacity be liable for any liabilities, costs or expenses
of the Trust, the Holders, the Company or the Servicer arising under any tax
law or regulation, including, without limitation, federal, state or local
income or excise taxes or any other tax imposed on or measured by income (or
any interest or penalty with respect thereto or arising from any failure to
comply therewith).
Section VIII.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under any Pooling and
Servicing Agreement or the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates 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. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders in respect of which
such judgment has been obtained.
Section VIII.13. SUITS FOR ENFORCEMENT. If a Servicer Default
shall occur and be continuing, the Trustee may, as provided in Section 6.1 of
the Servicing Agreement, proceed to protect and enforce its rights and the
rights of the Holders under this Agreement or any other Transaction Document
by 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 any other Transaction Document or in aid of the execution of any
power granted in this Agreement or any other Transaction Document 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 Holders. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Investor Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Investor Certificateholder in any such
proceeding.
Section VIII.14. RIGHTS OF INVESTOR CERTIFICATEHOLDERS TO DIRECT
TRUSTEE. Investor Certificateholders evidencing more than 50% of the
Invested Amount of any Series affected by the conduct of any proceeding or
the exercise of any right conferred on the Trustee 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, subject to Section 8.1, 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 or
Responsible Officers of the Trustee, determine that the proceedings so
directed would be illegal or expose it to personal liability or be unduly
prejudicial to the rights of Investor Certificateholders not party to such
direction; and PROVIDED, FURTHER, that nothing in any Pooling and Servicing
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 of
the Investor Certificateholders.
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Section VIII.15. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
Trustee represents and warrants that:
(a) the Trustee is a banking corporation organized, existing and in
good standing under the laws of the United States or any of its fifty
states and is duly authorized and empowered to exercise trust powers under
applicable law;
(b) the Trustee has the power and authority to enter into this
Agreement and any Supplement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement
and any Supplement; and
(c) each Pooling and Servicing Agreement and each of the Transaction
Documents executed by it have been duly executed and delivered by the
Trustee and, in the case of all such Transaction Documents, are legal,
valid and binding obligations of the Trustee, enforceable in accordance
with their respective terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
Section VIII.16. MAINTENANCE OF OFFICE OR AGENCY. The Trustee
will maintain at its expense in the Borough of Manhattan, The City of New
York, an office or offices or agency or agencies where notices and demands to
or upon the Trustee in respect of the Certificates and the Pooling and
Servicing Agreements may be served. The Trustee will give prompt written
notice to the Company, the Servicer and the Holders of any change in the
location of the Certificate Register or any such office or agency.
Section VIII.17. LIMITATION OF LIABILITY. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee
of the Trust, in the exercise of the powers and authority conferred and
vested in it by this Agreement. Each of the undertaking and agreements made
on the part of the Trustee in the Certificates is made and intended not as a
personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust.
ARTICLE IX
TERMINATION
Section IX.1. TERMINATION OF TRUST; LIQUIDATION OF RECEIVABLES.
(a) The Trust and the respective obligations and responsibilities of the
Company, the Servicer, the Sub-Servicers and the Trustee created hereby
(other than the obligation of the Trustee to make payments to Holders as
hereafter set forth and any indemnification obligations hereunder) shall
terminate, except with respect to any such obligations or responsibilities
expressly stated to survive such termination, on the earliest of (i) ▇▇▇▇▇ ▇,
▇▇▇▇, (▇▇) at the option of
74
the Company, at any time where the Aggregate Invested Amount is zero (unless an
Early Amortization Event as specified in Section 7.1 of this Agreement shall
have occurred and be continuing, in which case the Company shall be deemed to
elect to terminate the Trust pursuant to this clause (ii)) and (iii) upon
completion of distribution of the amounts referred to in subsection 7.2(b) (the
"TRUST TERMINATION DATE").
(b) If on the Distribution Date in the month immediately preceding
the month in which the Trust Termination Date occurs (after giving effect to
all transfers, withdrawals, deposits and drawings to occur on such date and
the payment of principal on any Series of Certificates to be made on the
related Distribution Date pursuant to Article III) the Invested Amount of any
Series would be greater than zero, the Trustee, at the written direction of
the Servicer, shall sell within 30 days of such Distribution Date all of the
Receivables and other Trust Assets. The proceeds of such sale shall be
treated as Collections on the Receivables and shall be allocated in
accordance with Article III. During such 30-day period, the Servicer shall
continue to collect Collections on the Receivables and allocate Collections
in accordance with the provisions of Article III. The costs and expenses
incurred by the Trustee in such sale shall be reimbursable to the Trustee as
provided in Section 8.5.
Section IX.2. CLEAN-UP CALL AND FINAL TERMINATION DATE OF INVESTOR
CERTIFICATES OF ANY SERIES. (a) On the Distribution Date during the
Amortization Period with respect to any Series on which the Invested Amount
(or such other amount as may be set forth in the related Supplement) of such
Series is reduced to an amount equal to or less than the Clean-Up Call
Percentage of the Invested Amount for such Series as of the day preceding the
beginning of such Amortization Period (or such other amount as may be set
forth in the related Supplement), the Company shall have the option to
repurchase, and to the extent set forth in the related Supplement, shall
repurchase, the entire Certificateholders' Interest of such Series, at a
purchase price equal to (i) the outstanding Invested Amount of the Investor
Certificates of such Series PLUS (ii) accrued and unpaid interest through the
date of such purchase (after giving effect to any payment of principal and
monthly interest on such date of purchase) PLUS (iii) all other amounts
payable to all Investor Certificateholders of such Series under the related
Supplement (such purchase price, the "CLEAN-UP CALL REPURCHASE PRICE"). The
amount of the Clean-Up Call Repurchase Price will be deposited into the
Collection Account for credit to the Series Collection Subaccount for such
Series on the Business Day prior to such Distribution Date in immediately
available funds and will be passed through in full to the applicable Investor
Certificateholders. Following any such repurchase, such Certificateholders'
Interest in the Trust Assets shall terminate and such interest therein will
be allocated to the Company Interest and such Holders will have no further
rights with respect thereto. In the event that the Company fails for any
reason to deposit the Clean-Up Call Repurchase Price for such Receivables,
the Certificateholders' Interest in the Receivables and the other Trust
Assets will continue and monthly payments will continue to be made to the
Holders.
(b) The amount deposited pursuant to subsection 9.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Article III on the Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by
75
the Company pursuant to subsection 9.2(a) shall be delivered by the Company
upon such purchase to, and be canceled by (in accordance with the written
directions of the Company), the Transfer Agent and Registrar and be disposed
of in a manner satisfactory to the Trustee and the Company.
(c) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Invested Amount of any Series of
Certificates is greater than zero on its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date), the Trustee will sell or cause to be sold, in accordance with the
directions of Investor Certificateholders representing more than 50% of the
Invested Amount of such Series, and pay the proceeds to all Holders of such
Series PRO RATA (except that unless expressly provided to the contrary in the
related Supplement, no payment shall be made to Holders of any Class of any
Series that is by its terms subordinated to any other Class until such senior
Class of Certificates has been paid in full) in final payment of all
principal of and accrued interest on such Series of Certificates, an amount
of Receivables or interests in Receivables up to the Invested Amount of such
Series at the close of business on such date. Absent such direction from
Investor Certificateholders representing more than 50% of the Invested Amount
of such Series, the Trustee shall continue to hold the Trust Assets in
respect of such Series in accordance with the terms of the Pooling and
Servicing Agreements until the Trust Termination Date (or until Investor
Certificateholders representing more than 50% of the Invested Amount of such
Series shall otherwise direct the Trustee); PROVIDED that the terms of this
Agreement, the related Supplement and the Servicing Agreement shall be deemed
to remain in full force and effect, except that no additional Receivables
shall be allocated with respect to such Series. The reasonable costs and
expenses incurred by the Trustee in such sale shall be reimbursable to the
Trustee as provided in Section 8.5. Any proceeds of such sale in excess of
such principal and interest paid shall be paid to the owner of the
Exchangeable Company Interest, unless and to the extent otherwise specified
in any applicable Supplement. Upon such Series Termination Date with respect
to the applicable Series of Certificates, final payment of all amounts
allocable to any Investor Certificates of such Series shall be made in the
manner provided in this Section 9.2.
Section IX.3. FINAL PAYMENT WITH RESPECT TO ANY SERIES. (a)
Written notice of any termination, specifying the Distribution Date upon
which the Investor Certificateholders of any Series may surrender their
Investor Certificates for payment of the final distribution with respect to
such Series and cancellation, shall be given (subject to at least 30 days'
(or such shorter period as is acceptable to the Trustee) prior written notice
from the Servicer to the Trustee containing all information required for the
Trustee's notice) by the Trustee to Investor Certificateholders of such
Series, mailed not later than the fifth day of the month of such final
distribution and specifying (i) the Distribution Date upon which final
payment of the Investor Certificates will be made upon presentation and
surrender of Investor Certificates at the office or offices therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
76
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. The Servicer's
notice to the Trustee in accordance with the preceding sentence shall be
accompanied by an Officer's Certificate setting forth the information
specified in Section 4.3 of the Servicing Agreement covering the period
during the then current calendar year through the date of such notice. The
Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to such Investor
Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 9.1(a) or the occurrence of the Series Termination Date with
respect to any Series pursuant to Section 9.2, all funds then on deposit in
the Collection Account (but only to the extent necessary to pay all
outstanding and unpaid amounts to Holders) shall continue to be held in trust
for the benefit of the Holders, and the Paying Agent or the Trustee shall pay
such funds to the Holders upon surrender of their Certificates in accordance
with the terms hereof. Any Certificate not surrendered on the date specified
in subsection 9.3(a)(i) shall cease to accrue any interest provided for such
Certificate from and after such date. In the event that all of the Investor
Certificateholders shall not surrender their Certificates for cancellation
within six months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the remaining
Investor Certificateholders of such Series to surrender their Certificates
for cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the Investor Certificates of such
Series shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Investor Certificateholders of such Series concerning
surrender of their Certificates, and the cost thereof shall be paid out of
the funds in the Collection Account held for the benefit of such Investor
Certificateholders. The Trustee and the Paying Agent shall pay to the
Company upon request any monies held by them for the payment of principal or
interest that remains unclaimed for two years. After payment to the Company,
Holders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another
Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a
customary manner satisfactory to the Trustee.
Section IX.4. COMPANY'S TERMINATION RIGHTS. Upon the termination
of the Trust pursuant to Section 9.1 and the cancellation of the Exchangeable
Company Interest and payment to the Trustee (in its capacity as such and/or
in its capacity as Successor Servicer) of all amounts owed to it under any
Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Company (without recourse, representation or warranty) in exchange for the
Exchangeable Company Interest all right, title and interest of the Trust in
the Trust Assets, whether then existing or thereafter created, and all
proceeds thereof except for amounts held by the Trustee pursuant to
subsection 9.3(b). The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, representation or
77
warranty, as shall be reasonably requested by the Company to vest in the
Company all right, title and interest which the Trust had in the Trust
Assets.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section X.1. AMENDMENT. (a) Any Pooling and Servicing Agreement,
including any schedule or exhibit thereto, may be amended in writing from
time to time by the Servicer, the Company and the Trustee, without the
consent of any holder of any outstanding Certificate, to cure any ambiguity,
to correct or supplement any provisions herein or therein which may be
inconsistent with any other provisions herein or therein or to add any other
provisions hereto to change in any manner or eliminate any of the provisions
with respect to matters or questions raised under any Pooling and Servicing
Agreement which shall not be inconsistent with the provisions of any Pooling
and Servicing Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Officer's Certificate from the Company and, to the extent, in
the reasonable view of the Company, a question of law exists, supported by an
Opinion of Counsel delivered to the Trustee, adversely affect in any material
respect the interests of the Investor Certificateholders. The Trustee may,
but shall not be obligated to, enter into any such amendment pursuant to this
paragraph or paragraph (b) below which affects the Trustee's rights, duties
or immunities under any Pooling and Servicing Agreement or otherwise.
(b) Any Pooling and Servicing Agreement and any schedule or exhibit
thereto may also be amended in writing from time to time by the Servicer, the
Company and the Trustee with the consent of Investor Certificateholders
evidencing more than 50% of the Invested Amount of any Series adversely
affected by the amendment (or, if any such Series shall have more than one
Class of Investor Certificates adversely affected by the amendment, 50% or
more of the Invested Amount of each such Class) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Pooling and Servicing Agreement or of modifying in any manner the
rights of holders of any Series then issued and outstanding; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, distributions which are required to be made on any
Investor Certificate of such Series without the consent of such Investor
Certificateholder of such Series; (ii) change the definition of or the manner
of calculating the interest of any Investor Certificateholder of such Series
without the consent of such Investor Certificateholder; or (iii) reduce the
aforesaid percentage of Fractional Undivided Interests the holders of which
are required to consent to any such amendment, in each case without the
consent of all Holders of each Series adversely affected in any material
respect.
(c) Notwithstanding anything in this Section 10.1 to the contrary,
the Supplement with respect to any Series may be amended on the terms and
with the procedures provided in such Supplement.
78
(d) The Company or the Servicer shall deliver any proposed amendment
to each Agent at least five days prior to the execution and delivery thereof.
The Servicer shall furnish written notification of the substance of such
amendment to each Rating Agency. No such amendment (including, without
limitation, the amendment of any Supplement, notwithstanding anything to the
contrary contained in any Supplement) shall be effective until the Rating Agency
Condition has been satisfied with respect thereto.
(e) Promptly after the execution of any such amendment or consent
the Trustee shall furnish written notification of the substance of such
amendment to each Holder of each Outstanding Series (or with respect to an
amendment of a Supplement, of the applicable Series).
(f) It shall not be necessary for the consent of Investor
Certificateholders under this Section 10.1 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(g) In executing or accepting any amendment pursuant to this
Section 10.1, the Trustee shall, upon request, be entitled to receive and
rely upon (i) an Opinion of Counsel (A) stating that such amendment is
authorized pursuant to a specific provision of a Pooling and Servicing
Agreement and complies with such provision, (B) stating that all conditions
precedent to the execution and delivery of such amendment shall have been
satisfied in full, which opinion in the case of this clause (B) may, to the
extent that such opinion concerns questions of fact, rely on an Officer's
Certificate with respect to such questions of fact and (C) to the extent such
amendment modifies Article I, II, III or IV hereof, substantially in the form
of Exhibit C, (ii) a certificate from a Responsible Officer of the Company
stating that such amendment shall not adversely affect the interests of the
holders of any outstanding Certificates in any material respect except for
holders of the Series whose consent to such amendment has been obtained in
accordance with clause (b) of this Section 10.1 and (iii) a Tax Opinion.
Section X.2. PROTECTION OF RIGHT, TITLE AND INTEREST TO TRUST. (a)
The Servicer shall cause this Agreement, any Supplement, all amendments
hereto and/or all financing statements and continuation statements and any
other necessary documents covering the Certificateholders' and the Trustee's
right, title and interest to the Trust and the Trust Assets to be promptly
recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect the right, title and interest
of the Trustee hereunder to all property comprising the Trust. The Servicer
shall deliver to the Trustee file-stamped copies of, or filing receipts for,
any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Company
shall cooperate fully with the Servicer in connection with the obligations
set forth above and will execute any and all documents reasonably required to
fulfill the intent of this subsection 10.2(a).
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(b) With respect to any prospective change in its name, identity
or corporate structure, the Company shall comply fully with subsection 2.8(m)
hereof and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. If the Company determines that no
refiling is required, it shall provide to the Trustee an Opinion of Counsel
so stating.
Section X.3. LIMITATION ON RIGHTS OF HOLDERS. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or the
Trust, nor shall such death or incapacity entitle such Holder's 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, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) Except with respect to the Investor Certificateholders as
expressly provided in any Pooling and Servicing Agreement, no Holder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto. Nor shall
any Investor Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(c) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless
such Investor Certificateholder previously shall have given to the Trustee
written request to institute such action, suit or proceeding in its own name
as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being understood
and intended, and being expressly covenanted by each Investor
Certificateholder with every other Investor Certificateholder and the
Trustee, that no one or more Holders shall have any right in any manner
whatever by virtue of or by availing itself or themselves of any provisions
of the Pooling and Servicing Agreements to affect, disturb or prejudice the
rights of any other of the Investor Certificateholders, or to obtain or seek
to obtain priority over or preference to any other such Investor
Certificateholder, or to enforce any right under this Agreement, except in
the manner herein provided and for the equal, ratable and common benefit of
all Investor Certificateholders. For the protection and enforcement of the
provisions of this Section 10.3, each and every Investor Certificateholder
and the Trustee shall be entitled to such relief as can be given either at
law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement
and the applicable Supplement, the Holders agree to the provisions of this
Section 10.3.
Section X.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
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THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section X.5. NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by facsimile), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or
three days after being deposited in the mail, postage prepaid, or, in the
case of facsimile notice, when received, (i) addressed as follows in the case
of the Company, the Servicer and the Trustee and (ii) in the case of the
Sub-Servicers, as set forth under their signatures in the Receivables Sale
Agreement, or, in either case, to such other address as may be hereafter
notified by the respective parties hereto:
The Company: CM CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇, Room A
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Servicer:
The Servicer: Core-▇▇▇▇ International, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Trustee: The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Services
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Any notice required or permitted to be mailed to an Investor Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Investor Certificateholder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in any Pooling and Servicing Agreement shall
be conclusively presumed to have been duly given, whether or not the Investor
Certificateholder receives such notice.
Section X.6. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of any Pooling and Servicing
Agreement shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of such
81
Pooling and Servicing Agreement and shall in no way affect the validity or
enforceability of the other provisions of any Pooling and Servicing Agreement
or of the Certificates or rights of the Holders.
Section X.7. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.3 of the Servicing Agreement,
no Pooling and Servicing Agreement, nor any rights or interests thereunder, may
be assigned by the Company or the Servicer without the prior written consent of
the Trustee acting at the direction of the holders of 66 2/3% of the Invested
Amount of each Outstanding Series and without the Rating Agency Condition's
having been satisfied with respect to such assignment.
Section X.8. CERTIFICATES NONASSESSABLE AND FULLY PAID. It is the
intention of the parties to each Pooling and Servicing Agreement that the
Investor Certificateholders shall not be personally liable for obligations of
the Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever and that Investor Certificates upon authentication
thereof by the Trustee pursuant to Section 5.2 are and shall be deemed fully
paid.
Section X.9. FURTHER ASSURANCES. The Company and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of each Pooling and Servicing Agreement, including,
without limitation, the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.
Section X.10. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
Section X.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section X.12. THIRD-PARTY BENEFICIARIES. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Holders and their
respective successors and permitted assigns. Except as otherwise provided in
Section 6.3 and this Article X and in any Supplement, no other Person will have
any right or obligation hereunder.
Section X.13. ACTIONS BY HOLDERS. (a) Wherever in any Pooling and
Servicing Agreement a provision is made that an action may be taken or a notice,
demand or instruction given by Investor Certificateholders, such action, notice
or instruction may be
82
taken or given by any Investor Certificateholders of any Series, unless such
provision requires a specific percentage of Investor Certificateholders of a
certain Series or all Series.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Investor Certificateholder shall bind such Investor
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee, the Company or
the Servicer in reliance thereon, whether or not notation of such action is made
upon such Certificate.
Section X.14. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement and the Servicing Agreement sets forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the Servicing Agreement. This Agreement and the Servicing Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section X.15. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section X.16. CONSTRUCTION OF AGREEMENT. (a) The Company hereby
grants to the Trustee, for the benefit of the Holders, a perfected first
priority security interest in all of the Company's right, title and interest in,
to and under the Receivables and the other Trust Assets now existing and
hereafter created, all monies due or to become due and all amounts received with
respect thereto and all "proceeds" thereof (including Recoveries), to secure all
of the Company's and the Servicer's obligations hereunder, including, without
limitation, the Company's obligation to sell or transfer Receivables hereafter
created to the Trust.
(b) This Agreement shall constitute a security agreement under
applicable law.
Section X.17. NO SET-OFF. Except as expressly provided in this
Agreement, the Trustee agrees that it shall have no right of set-off or banker's
lien against, and no right to otherwise deduct from, any funds held in the
Collection Account for any amount owed to it by the Company, the Servicer or any
Investor Certificateholder.
Section X.18. NO BANKRUPTCY PETITION. Each of the Trustee and the
Servicer hereby covenants and agrees that, prior to the date which is one year
and one day after the date of the end of the Amortization Period with respect to
all Outstanding Series, it will not institute against, or join any other Person
in instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law.
Section X.19. LIMITATION OF LIABILITY. It is expressly understood
and agreed by the parties hereto that (a) each Pooling and Servicing Agreement
is executed and delivered by the Trustee, not individually or personally but
solely as Trustee of the Trust, in the
83
exercise of the powers and authority conferred and vested in it, (b) except
with respect to Section 8.15 hereof the representations, undertakings and
agreements herein made on the part of the Trust are made and intended not as
personal representations, undertakings and agreements by the Trustee, but are
made and intended for the purpose of binding only the Trust, (c) nothing
herein contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant of the Trust either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by
any Person claiming by, through or under such parties; PROVIDED, HOWEVER, the
Trustee shall be liable in its individual capacity for its own willful
misconduct or negligence and (d) under no circumstances shall the Trustee be
personally liable for the payment of any indebtedness or expenses of the
Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under
any Pooling and Servicing Agreement; PROVIDED FURTHER, that the foregoing
clauses (a) through (d) shall survive the resignation or removal of the
Trustee.
The Company hereby agrees to indemnify and hold harmless the Trustee
and the Trust for the benefit of the Holders (each, an "INDEMNIFIED PERSON")
from and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions arising
out of, or relating to, activities of the Company pursuant to any Pooling and
Servicing Agreement to which it is a party, including but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other reasonable
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim, except to the extent such loss,
liability, expense, damage or injury resulted from the negligence, bad faith
or wilful misconduct of an indemnified person; PROVIDED that any payments
made by the Company pursuant to this subsection shall be made solely from
funds available to the Company which are not otherwise required to be applied
to the payment of any amounts pursuant to any Pooling and Servicing
Agreements (other than to the Company), shall be non-recourse other than with
respect to such funds, and shall not constitute a claim against the Company
to the extent that insufficient funds exist to make such payment.
Section X.20. CERTAIN INFORMATION. The Servicer and the Company
shall promptly provide to the Trustee such information in computer tape, hard
copy or other form regarding the Receivables as the Trustee may reasonably
request to perform its obligations hereunder.
IN WITNESS WHEREOF, the Company, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
CM CAPITAL CORPORATION, as Company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & CEO
CORE-▇▇▇▇ INTERNATIONAL, INC., as
Servicer
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Sr. VP & CFO
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Second Vice President