EXHIBIT 10.16
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POOLING AND SERVICING AGREEMENT
dated as of June 27, 1997
among
WISCONSIN CIRCLE II FUNDING CORPORATION,
as Transferor,
HCFP FUNDING II, INC.,
as Servicer,
and
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions............................................... 1
ARTICLE II
CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust: Conveyance of Certain Assets....... 1
SECTION 2.2 Acceptance by Trustee..................................... 3
SECTION 2.3 Delivery of Related Security Documents.................... 3
SECTION 2.4 Representations and Warranties of Transferor Relating to
the Transferred Assets.................................. 3
SECTION 2.5 No Assumption of Obligations Relating to Receivables,
Related Transferred Assets or Obligor Loan Agreements... 4
ARTICLE III
ADMINISTRATION, SERVICING AND VERIFICATION
SECTION 3.1 Acceptance of Appointment; Other Matters.................. 4
SECTION 3.2 Duties of Servicer and Transferor......................... 5
SECTION 3.3 Reserved.................................................. 7
SECTION 3.4 Compensation of Servicer.................................. 8
SECTION 3.5 Records of Servicer and Reports to be Prepared by
Servicer................................................ 8
SECTION 3.6 Monthly Servicer's Certificate............................ 10
SECTION 3.7 Servicing Report of Independent Public Accountants........ 10
SECTION 3.8 Rights of Trustee......................................... 10
SECTION 3.9 Ongoing Responsibilities of Servicer...................... 11
SECTION 3.10 Further Action Evidencing Transfers....................... 11
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders.............................. 12
SECTION 4.2 Establishment of Transaction Accounts..................... 13
SECTION 4.3 Trust-Level Calculations and Funds Allocations............ 14
SECTION 4.4 Interest; Additional Amounts.............................. 14
SECTION 4.5 Periodic Calculations and Allocations..................... 14
SECTION 4.6 Allocations During Revolving Period....................... 15
SECTION 4.7 Allocations of Allocable Funds (Other than During the
Revolving Period)....................................... 15
SECTION 4.8 Withdrawals from the Purchase Account..................... 16
SECTION 4.9 Investment of Funds in Transaction Accounts............... 16
SECTION 4.10 Attachment of Transaction Accounts........................ 16
ARTICLE V
DISTRIBUTIONS AND REPORTS
(i)
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SECTION 5.1 Distributions............................................. 17
SECTION 5.2 Payments in Respect of Transferor Certificate............. 17
SECTION 5.3 Weekly Reports and Monthly Reports........................ 18
SECTION 5.4 Annual Tax Information.................................... 18
SECTION 5.5 Periodic Perfection Certificate........................... 18
ARTICLE VI
THE CERTIFICATES
SECTION 6.1 The Certificates.......................................... 18
SECTION 6.2 Authentication of Certificates............................ 19
SECTION 6.3 Registration of Transfer and Exchange of Certificates..... 19
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates......... 22
SECTION 6.5 Persons Deemed Owners..................................... 22
SECTION 6.6 Appointment of Paying Agent............................... 22
SECTION 6.7 Access to List of Certificateholders'
Names and Addresses..................................... 23
SECTION 6.8 Authenticating Agent...................................... 23
SECTION 6.9 Tax Treatment............................................. 25
SECTION 6.10 Issuance of Additional Series of Certificates............. 25
SECTION 6.11 Optional Redemption of Investor Interests................. 27
SECTION 6.12 Rule 144A................................................. 27
SECTION 6.13 Optional Call............................................. 27
ARTICLE VII
TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor Relating to
Transferor and the Transaction Documents................ 27
SECTION 7.2 Covenants of Transferor................................... 30
SECTION 7.3 Indemnification by Transferor............................. 34
ARTICLE VIII
SERVICER
SECTION 8.1 Representations and Warranties of Servicer................ 35
SECTION 8.2 Covenants of Servicer..................................... 36
SECTION 8.3 Merger or Consolidation of or Assumption of the
Obligations of, Servicer................................ 37
SECTION 8.4 Indemnification by Servicer............................... 37
SECTION 8.5 Servicer Liability........................................ 38
SECTION 8.6 Limitation on Liability of Servicer and Others............ 38
ARTICLE IX
EARLY AMORTIZATION EVENTS; TERMINATION BY SELLER
SECTION 9.1 Early Amortization Events................................. 38
SECTION 9.2 Early Amortization Period................................. 40
SECTION 9.3 Remedies.................................................. 40
SECTION 9.4 Additional Rights Upon the Occurrence of Certain Events... 41
ARTICLE X
SERVICER DEFAULTS
(ii)
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SECTION 10.1 Servicer Defaults......................................... 42
SECTION 10.2 Trustee to Act; Appointment of Successor.................. 43
SECTION 10.3 Notification of Servicer Default, Notification of
Appointment of Successor Servicer....................... 45
SECTION 10.4 Waiver of Servicer Defaults............................... 45
ARTICLE XI
TRUSTEE
SECTION 11.1 Duties of Trustee......................................... 45
SECTION 11.2 Certain Matters Affecting Trustee......................... 48
SECTION 11.3 Limitation on Liability of Trustee........................ 49
SECTION 11.4 Trustee May Deal with Other Parties....................... 50
SECTION 11.5 Eligibility Requirements for Trustee...................... 50
SECTION 11.6 Resignation or Removal of Trustee......................... 51
SECTION 11.7 Successor Trustee......................................... 51
SECTION 11.8 Merger or Consolidation of Trustee........................ 52
SECTION 11.9 Appointment of Co-Trustee or Separate Trustee............. 52
SECTION 11.10 Tax Returns............................................... 53
SECTION 11.11 Trustee May Enforce Claims Without Possession of
Certificates............................................ 54
SECTION 11.12 Suits for Enforcement..................................... 54
SECTION 11.13 Rights of Required Person to Direct Trustee............... 54
SECTION 11.14 Representations and Warranties of Trustee................. 54
SECTION 11.15 Maintenance of Office or Agency........................... 55
ARTICLE XII
TERMINATION
SECTION 12.1 Termination of Trust...................................... 55
SECTION 12.2 Final Distribution........................................ 56
SECTION 12.3 Rights Upon Termination of the Trust...................... 57
SECTION 12.4 Optional Repurchase of Investor Interests................. 57
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Consents of Required Person, Etc....... 58
SECTION 13.2 Actions by Certificateholders............................. 59
SECTION 13.3 Limitation on Rights of Certificateholders................ 59
SECTION 13.4 Governing Law............................................. 60
SECTION 13.5 Notices................................................... 60
SECTION 13.6 Severability of Provisions................................ 61
SECTION 13.7 Certificates Nonassessable and Fully Paid................. 61
SECTION 13.8 Nonpetition Covenant...................................... 61
SECTION 13.9 No Waiver; Cumulative Remedies............................ 61
SECTION 13.10 Counterparts.............................................. 61
SECTION 13.11 Third-Party Beneficiaries................................. 61
SECTION 13.12 Integration............................................... 62
SECTION 13.13 Binding Effect; Assignability; Survival of Provisions..... 62
SECTION 13.14 Recourse to Transferred Assets............................ 62
(iii)
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SECTION 13.15 Submission to Jurisdiction................................ 62
SECTION 13.16 Waiver of Jury Trial...................................... 62
(iv)
This POOLING AND SERVICING AGREEMENT, dated as of June __, 1997 (this
"Agreement"), is made among WISCONSIN CIRCLE II FUNDING CORPORATION, a Delaware
corporation ("Transferor"), HCFP FUNDING II, INC., a Delaware corporation, in
its capacity as initial Servicer hereunder ("Servicer"), and FIRST BANK NATIONAL
ASSOCIATION, a national banking association ("Trustee").
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used in this Agreement have
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the meanings that Appendix A assigns to them, and this Agreement shall be
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interpreted in accordance with Part B of Appendix A.
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ARTICLE II
CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust: Conveyance of Certain Assets.
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(a) Transferor hereby transfers, assigns, sets over, grants and otherwise
conveys to Trustee, in its capacity as representative of the Certificateholders,
without recourse (except as expressly provided herein), all of its right, title
and interest in, to and under, (i) all Receivables that have been or are
hereafter transferred or purported to be transferred (whether by sale or
contribution) by Seller to Transferor, (ii) all Related Assets, (iii) all of
Transferor's rights under the Transaction Documents (the property described in
clauses (ii) and (iii) being called the "Related Transferred Assets"), (iv) all
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funds from time to time on deposit in each of the Transaction Accounts and other
proceeds of the foregoing and, in each case, all certificates and instruments,
if any, from time to time evidencing such funds, all investments made with such
funds, all claims thereunder or in connection therewith and all interest,
dividends, monies, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing and (v) all moneys due or to become due and all
amounts received or receivable with respect to any of the foregoing and all
proceeds of the foregoing. Such property, whether now existing or hereafter
acquired, shall constitute the assets of the Trust (collectively, the
"Transferred Assets"). The foregoing transfer, assignment, setover, grant and
conveyance shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, setover and conveyance
shall be construed accordingly.
(b) In connection with the transfer described in subsection (a), with
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respect to the Eligible STL Receivables the Transferor shall deliver to the
Trustee the Mortgage File described in Section 2.3 hereof for each Purchased
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Receivable and all escrowed funds held by the Transferor with respect to such
Receivables and with respect to Eligible ABL Receivables and Eligible SDWW
Receivables, the Trustee shall record and file or cause to be recorded and
filed, at Transferor's expense, Public Notices with respect to the Transferred
Assets meeting the requirements, if any, of applicable law in such manner and in
such jurisdictions as are necessary to perfect the transfer and assignment of
the Transferred Assets to the Trust. In connection with the transfer described
in subsection (a), Transferor further agrees to deliver to Trustee each
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Transferred Asset (including any original documents or instruments included in
the Related Security Documents as are necessary to effect such
transfer) in which the transfer of an interest is perfected under the UCC or
otherwise by possession. Transferor shall deliver each such Transferred Asset to
Trustee, at the expense of Transferor, immediately upon the transfer of any such
Transferred Asset to Trustee pursuant to subsection (a).
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(c) In connection with the transfer described above in subsection (a), with
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respect to Eligible ABL Receivables and Eligible SDWW Receivables Servicer
shall, on behalf of Transferor, on or prior to each Subsequent Closing Date,
deliver a copy of Seller's and Buyer's records evidencing the Receivables to
Trustee and shall ▇▇▇▇ such records and related Obligor Loan Agreements with the
following legend:
THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO WISCONSIN CIRCLE II
FUNDING CORPORATION ("BUYER") PURSUANT TO A PURCHASE AND SALE AGREEMENT,
DATED AS OF JUNE 25, 1997, BETWEEN HEALTHCARE FINANCIAL FUNDING II, L.P.
AND BUYER; AND SUCH RECEIVABLES HAVE BEEN TRANSFERRED TO THE STL 1997-1
TRUST PURSUANT TO A POOLING AND SERVICING AGREEMENT, DATED AS OF THE SAME
DATE, AMONG BUYER, AS TRANSFEROR, HEALTHCARE FINANCIAL PARTNERS, INC. AS
THE INITIAL SERVICER, AND FIRST BANK NATIONAL ASSOCIATION, AS TRUSTEE.
(d) Upon the request of Transferor, Trustee will cause Certificates in
authorized denominations evidencing the entire interest in the Trust to be duly
authenticated and delivered to or upon the order of Transferor pursuant to
Section 6.2. Pursuant to the Transferor Certificate, Transferor shall be
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entitled to receive payments for the Certificates at the times and in the
amounts specified in the related Certificate Purchase Agreements executed from
time to time.
(e) If the transfer, assignment, set-over, grant and conveyance described
in subsection (a) of this Section 2.1 are deemed to create a security interest
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in the property described therein, Transferor hereby grants to Trustee, for the
benefit of Trustee and the Certificateholders, a lien on and security interest
in that property, whether now owned or hereafter acquired (which shall be deemed
to be a first priority perfected lien and security interest and shall secure
Transferor's obligations under the Transaction Documents and the Certificates),
and agrees that this Agreement shall constitute a security agreement under
applicable law.
In connection with each transfer, Transferor shall provide Trustee with a
listing of all Receivables and Related Assets being transferred on such
Subsequent Closing Date, the Records with respect thereto, any required Public
Notices and the actions and/or documentations by which the Trustee shall receive
an ownership interest in such Transferred Assets or a valid and perfected first
priority security interest in such Transferred Assets. The Trustee may relay on
such listing, or may, in its sole discretion seek and rely upon the advice of
its own counsel.
SECTION 2.2 Acceptance by Trustee. Trustee hereby acknowledges its
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acceptance on behalf of the Trust of all right, title and interest to the
Transferred Assets and declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the benefit of all
Certificateholders, on the terms and subject to the conditions hereinafter set
forth.
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SECTION 2.3 Delivery of Related Security Documents. Each Mortgage File
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delivered pursuant to Section 2.1 hereof shall consist of the documents
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described in Section 1.7 of the Purchase and Sale Agreement.
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SECTION 2.4 Representations and Warranties of Transferor Relating to the
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Transferred Assets.
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(a) Representations and Warranties. At the time that any Receivable or
other Transferred Asset is transferred by Transferor to the Trust, Transferor
hereby represents and warrants that:
(i) Quality of Title.
(A) Immediately before each transfer to be made by Transferor
hereunder, each Receivable and other Transferred Asset that was then to be
transferred to the Trust hereunder was owned by Transferor free and clear of
any Adverse Claim (other than any Permitted Adverse Claim); and on or before
the Closing Date, Transferor made, or caused to be made, all filings and
took all other action under applicable law in each relevant jurisdiction in
order to protect and perfect or permit the Trustee to protect and perfect
the Trust's interest in such Receivables and such Transferred Assets against
all creditors of, and purchasers from, Transferor and Seller.
(B) Each transfer of Receivables and other Transferred Assets by
Transferor to the Trust pursuant to this Agreement constitutes a valid
transfer and assignment to Trustee of all right, title and interest of
Transferor in such Receivables and other Transferred Assets, free and clear
of any Adverse Claim (other than any Permitted Adverse Claim), and
constitutes either an absolute transfer of such property to the Trust or a
grant of a first priority perfected security interest in such property to
the Trust. Whenever the Trust accepts a transfer of a Receivable or other
Transferred Asset hereunder, it shall have acquired ownership of or a valid
and perfected first priority security interest in such Receivable or other
Transferred Asset free and clear of any Adverse Claim (other than any
Permitted Adverse Claim).
(C) No effective Public Notice that covers all or part of any
Transferred Asset is on file in any recording office except such as may be
filed (i) in favor of Seller in accordance with the Obligor Loan Agreements,
(ii) in favor of Transferor pursuant to the Purchase Agreement and (iii) in
favor of Trustee, for the benefit of the Investor Certificateholders, in
accordance with this Agreement.
(D) Transferor is, and after the consummation of the transactions
contemplated by this Agreement, will be Solvent.
(ii) Approvals. With respect to each Receivable and other Transferred
Asset, all consents, licenses, approvals or authorizations of, or notices to
or registrations, declarations or filings with, any Governmental Authority
or other Person required to be obtained, effected or made by Transferor in
connection with the conveyance of the Receivable and other Transferred Asset
by Transferor to the Trust, have been duly obtained, effected or given and
are in full force and effect.
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(iii) Eligible Receivables. On the date on which Transferor transfers a
Receivable to the Trust, such Receivable is an Eligible Receivable.
(b) Notice of Breach. The representations and warranties set forth in
subsection (a) shall survive the transfer of the Receivables and the other
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Transferred Assets to the Trust. Upon discovery by Transferor, Servicer or
Trustee of a breach of any of the representations and warranties set forth in
subsection (a), the party discovering the breach shall give written notice to
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the other parties to this Agreement and the Required Person within three
Business Days following the discovery. Trustee's obligations in respect of
discovering any breach are limited as provided in Section 11.2(h).
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SECTION 2.5 No Assumption of Obligations Relating to Receivables, Related
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Transferred Assets or Obligor Loan Agreements. The transfer, assignment, set
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over, grant and conveyance described in Section 2.1 does not constitute and is
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not intended to result in a creation or an assumption by the Trust, Trustee or
any Investor Certificateholder of any obligation of Servicer, Transferor, Seller
or any other Person in connection with the Receivables or the Related
Transferred Assets or under the related Obligor Loan Agreements or any other
agreement or instrument relating thereto. None of Trustee, the Trust or any
Investor Certificateholder shall have any obligation or liability to any
Obligor.
ARTICLE III
ADMINISTRATION, SERVICING AND VERIFICATION
SECTION 3.1 Acceptance of Appointment; Other Matters.
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(a) Designation of Servicer. The collection of the Receivables and the
Related Assets shall be conducted, under the supervision and monitoring of the
Person designated as Servicer hereunder from time to time. Servicer shall
service and administer the Receivables and the Related Transferred Assets.
Until Trustee gives a Termination Notice to Servicer pursuant to Section 10.1,
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HCFP Funding II, Inc. is designated (and agrees to act) as Servicer.
(b) Delegation of Certain Servicing Activities. In the ordinary course of
business, Servicer may at any time delegate its duties hereunder with respect to
the Receivables and the Related Transferred Assets to any Person. Each Person
to whom any such duties are delegated in accordance with this Section is called
a "Sub-Servicer". Notwithstanding any such delegation, Servicer shall remain
liable for the performance of all duties and obligations of Servicer pursuant to
the terms of this Agreement and the other Transaction Documents. The fees and
expenses of any Sub-Servicers shall be as agreed between Servicer and the Sub-
Servicers from time to time and none of the Trust, Trustee or any
Certificateholder shall have any responsibility therefor. Upon any termination
of a Servicer pursuant to Section 10.1, all Sub-Servicers designated pursuant to
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this subsection by such Servicer shall automatically also be terminated.
(c) Termination. The designation of Servicer (and each Sub-Servicer) under
this Agreement shall automatically terminate upon termination of the Trust
pursuant to Section 12.1.
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(d) Resignation of Servicer. Servicer shall not resign as Servicer unless
it determines that (i) the performance of its duties is no longer permissible
under applicable law and (ii) there is no reasonable action that it could take
to make the performance of its duties permissible under applicable
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law. If Servicer determines that it must resign for the reasons stated above, it
shall, prior to the tendering of its resignation, deliver to Trustee an Opinion
of Counsel confirming the satisfaction of the conditions set forth in the
preceding sentence. No resignation by Servicer shall become effective until
Trustee or another Successor Servicer shall have assumed the responsibilities
and obligations of the resigning Servicer in accordance with Section 10.2.
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Trustee shall give prompt notice to the Required Person of the appointment of
any Successor Servicer.
SECTION 3.2 Duties of Servicer and Transferor.
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(a) Duties of Servicer in General. Servicer shall service and administer
the Receivables and the Related Transferred Assets and shall monitor and
supervise the collection of the Receivables and the Related Transferred Assets.
Servicer shall pay all expenses associated with the enforcement and collection
of the Receivables, including without limitation all Servicing Advances.
Subject to the terms and provisions of this Agreement, Servicer shall have full
power and authority, acting alone or through any Sub-Servicer, to do any and all
things in connection with such monitoring, supervision, servicing and
administering that it may deem necessary or appropriate. Trustee shall execute
and deliver to Servicer any powers of attorney or other instruments or documents
that are prepared by Servicer and stated in an Officer's Certificate to be, and
shall furnish Servicer with any documents in its possession, necessary or
appropriate to enable Servicer to carry out its duties. Servicer shall exercise
at least the same care and apply the same policies with respect to the
collection and servicing of the Receivables and the Related Transferred Assets
that it would exercise and apply if it were a prudent person owning and
servicing such Receivables and Related Transferred Assets for its own account,
all in substantial compliance with applicable law and in accordance with the
applicable Credit and Collections Policy in the form of Exhibit G.
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Servicer shall take or cause to be taken (and shall cause each Sub-Servicer
(if any) to take or cause to be taken) all such actions as Servicer deems
necessary or appropriate to collect or cause to be collected each Receivable and
Related Transferred Asset, all in substantial compliance with applicable law,
the standard of care described in the prior paragraph and the applicable Credit
and Collections Policy.
Without limiting the generality of the foregoing and subject to the next
preceding paragraph and Section 10.1, Servicer or its designee is hereby
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authorized and empowered, unless such power and authority is revoked by Trustee
on account of the occurrence of a Servicer Default, (i) to instruct Trustee to
make withdrawals and payments from the Transaction Accounts as set forth in this
Agreement, (ii) to execute and deliver, on behalf of the Trust for the benefit
of the Certificateholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and the Related
Transferred Assets, (iii) to make any filings, reports, notices, applications
and registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or appropriate to comply with any Federal or
state securities laws or reporting requirements or other laws or regulations,
and (iv) to the extent permitted under and in compliance with the Credit and
Collections Policy and with all applicable laws, rules, regulations, judgments,
orders and decrees of courts and other Governmental Authorities (whether
Federal, state, local or foreign) and all other tribunals, to commence or
settle, collection proceedings with respect to the Receivables and otherwise to
enforce the rights and interests of the Trust and the Certificateholders in, to
and under the Receivables or Related Transferred Assets (as applicable). Trustee
shall cooperate in the giving of any releases as shall be reasonably requested
by Servicer.
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(b) Identification and Transfer of Collections. Servicer shall cause
Collections and all other Transferred Assets that consist of cash or cash
equivalents to be deposited into the Transaction Accounts pursuant to the terms
and provisions of Section 3.3 and Article IV. Following discovery by Servicer
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that collections of any receivable or other asset that is not a Collection of a
Purchased Asset, any other Transferred Asset have been deposited into or any
Transaction Accounts, Servicer shall cause all such collections to be
segregated, apart and in different accounts, from the Transaction Accounts.
Servicer and, to the extent applicable, Trustee shall hold all such funds in
trust, separate and apart from such Person's other funds. On each Business Day,
after such misdirected collections have been reasonably identified by Servicer
to Trustee, Servicer shall instruct Trustee to, and Trustee shall, turn over to
the appropriate Bank, Seller or other applicable Related Person (or their
designees) all such misdirected collections less all reasonable and appropriate
out-of-pocket costs and expenses, if any, incurred by Servicer or Trustee in
collecting and otherwise administering such amounts.
Following notification from a Bank that any item earlier paid to the Master
Collection Account has been returned or is uncollected and that such Bank has
not been otherwise reimbursed pursuant to the terms of the applicable Bank
Account Agreement from any amounts it credited to the relevant Bank Account and
that were otherwise to be transferred to the Master Collection Account, Servicer
shall instruct Trustee to, and Trustee shall, turn over to such Bank Collections
in such amount from Collections on deposit in the Master Collection Account.
(c) Modification of Receivables. So long as no Servicer Default shall have
occurred and be continuing, Servicer may adjust, in accordance with Sections
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3.2(a) and 3.2(f) and the Collections Policy, the Unpaid Balance of any
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Receivable, or otherwise modify the terms of any Receivable, all as it may
determine to be appropriate to maximize collection thereof. Servicer shall, or
shall cause the applicable Sub-Servicer to, write-off Receivables from time to
time in accordance with the Credit and Collections Policy.
(d) Identification of Eligible Receivables; Verification Procedures;
Verification Notices. Servicer will establish and maintain such procedures (the
"Verification Procedures") as are necessary for determining on each Subsequent
Closing Date, and otherwise weekly, whether each Receivable qualifies as an
Eligible Receivable, and for identifying weekly all Receivables among Purchased
Assets that are not Eligible Receivables. Without limiting the generality of
the foregoing, the Verification Procedures shall include the following:
(1) verifying that each Receivable is an Eligible Receivable and
producing and delivering to Servicer and the Trustee [RATED CALL
DETAIL TAPES] of all Eligible Receivables;
(2) including with each Purchase Report a notice accompanying such
report (a "Verification Notice") containing information that
shows whether, and to what extent, the Receivables described in
such Monthly Report or Purchase Report are Eligible Receivables
and any other variances discovered by Servicer in its performance
of the Verification Procedures.
(e) Grant of Power of Attorney. Transferor and Trustee hereby each grant
to Servicer a power of attorney, with full power of substitution, to take in the
name of Transferor and Trustee all steps that are necessary or appropriate to
endorse, negotiate, deposit or otherwise realize on any writing of any kind held
or transmitted by Transferor or transmitted or received by Trustee (whether
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or not from Transferor) in connection with any Receivable or Related Transferred
Asset; provided, however, that without Trustee's prior written consent, Servicer
may not take any action pursuant to this Section 3.2(f) that would have the
effect of joining Trustee to any litigation. The power of attorney that
Transferor and Trustee have granted to Servicer may be revoked by Trustee, and
shall be revoked by Transferor, on the date on which Trustee shall be entitled
to exercise the powers granted to Trustee pursuant to Section 3.8(a). In
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exercising its power granted hereby, Servicer shall take directions from
Trustee, if any, arising out of the exercise of the rights granted under Section
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11.14.
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(f) Turnover of Collections. If Servicer, Transferor or any of their
respective agents or representatives shall at any time receive any cash, checks
or other payments constituting Collections, such recipient shall segregate such
payments and hold such payments in trust for Trustee and shall, promptly upon
receipt (and in any event within one Business Day following receipt), remit all
such cash, checks and other payments, duly endorsed or with duly executed
instruments of transfer, if applicable, to the Master Collection Account.
(g) Semi-Annual Statement as to Compliance. Servicer will deliver to
Trustee and the Required Person no later than 45 days after the end of each
semi-annual fiscal period (commencing with the 6-month period ended September
30, 1997), an Officer's Certificate, substantially in the form of Exhibit F,
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stating, as to each signer thereof, that (i) a review of the activities of
Servicer during the preceding 6-month period and of performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof and remedies therefor
being pursued.
SECTION 3.3 Reserved.
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SECTION 3.4 Compensation of Servicer.
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(a) As full compensation for its servicing activities hereunder, and in
consideration for Servicer's incurring expenses associated with the enforcement
and collection of the Receivables, Servicer shall be entitled to receive a
monthly servicing fee (the "Servicing Fee") in respect of each Series, payable
in arrears on each Distribution Date in respect of each Distribution Period (or
portion thereof) during which that Series is outstanding.
The Servicing Fee payable for any Distribution Period with respect to any
Series shall be equal to one-twelfth of the product of (a) 0.75% multiplied by
(b) the aggregate Unpaid Balance of the Receivables as measured on the first
Business Day of that Distribution Period. The fees, costs and expenses of
Trustee, the Paying Agent, any authenticating agent, the Banks and the Transfer
Agent and Registrar, and certain other costs and expenses payable from the
Servicing Fee pursuant to other provisions of this Agreement, and all other fees
and expenses that are not expressly stated in this Agreement to be payable by
the Trust or Transferor, other than Federal, state, local and foreign income and
franchise taxes, if any, or any interest or penalties with respect thereto, of
the Trust, shall be paid out of the Servicing Fee and shall be paid by Servicer
from the funds that constitute the Servicing Fee.
SECTION 3.5 Records of Servicer and Reports to be Prepared by Servicer.
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(a) Keeping of Records and Books of Account. Servicer shall maintain at
all times accurate and complete books, records and accounts relating to the
Receivables, other Transferred Assets and Obligor Loan Agreements of Seller and
all Collections thereon in which timely entries shall be made. Servicer shall,
or shall cause each Sub-Servicer to, maintain and implement administrative and
operating procedures (including an ability to generate duplicates of Records
evidencing Receivables and the other Transferred Assets in the event of the
destruction of the originals thereof), and shall keep and maintain all
documents, books, records and other information that Servicer deems reasonably
necessary for the collection of all Receivables and Related Transferred Assets.
Upon the request of Trustee or any Required Person after the occurrence and
continuance of a Servicer Default, Servicer will deliver copies of all books and
records maintained pursuant to this Section 3.5(a) to such Trustee or Required
--------------
Person.
(b) Receivables Reviews. Servicer, any Sub-Servicer and Transferor (for
purposes of this paragraph, the "Reviewed Party") shall, during regular business
hours, permit Trustee (or such other Person whom Trustee may designate from time
to time), any Required Person or their respective agents or representatives
(including certified public accountants or other auditors, attorneys), whenever
such Person deems it appropriate, (i) to examine and make copies of and
abstracts from, and to conduct accounting reviews of, all Records in the
possession or under the control of the Reviewed Party, including the related
Obligor Loan Agreements and other agreements related thereto, and (ii) to visit
the offices and properties of the Reviewed Party for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
----------
the Receivables or the Related Transferred Assets or the performance by the
Reviewed Party of their respective obligations under any Transaction Document
with any Authorized Officer of the Reviewed Party or with employees of the
Reviewed Party having knowledge of such matters. Each review of a Reviewed
Party shall require not less than five Business Days' prior notice to the
Reviewed Party, unless such Reviewed Party is in default under any Transaction
Document, in which event only one Business Days' prior notice shall be required.
(c) Monthly Report. Prior to 3:00 p.m., New York City time, on each Report
Date, Servicer shall prepare and deliver to Trustee, and the Required Person a
report relating to the following (each such report being a "Monthly Report"):
(i) Eligible Receivables performance data, including aging
reports, pool analytic reports, and static pool reports,
(ii) Eligible Receivables stratification reports providing
information that is at least sufficient to track the Receivable's
eligibility criteria,
(iii) summary of litigation to which Seller, Buyer, or any
Obligor is a party,
(iv) monthly comparisons of budget to actual performance for
Servicer and Seller,
(v) monthly diskette listing of all Purchased Assets to date,
specifying what was purchased during prior month,
(vi) list of Receivables among Transferred Assets that remain
Eligible Receivables as of the end of the most recent Calculation Period and
a list of all Receivables which have become non-Eligible Receivables, with a
description of their disqualifying condition, and
8
(vii) such other information, or modification of the foregoing,
as the Trustee or Required Person may reasonably request.
Servicer shall retain a duplicate of each Monthly Report and shall update
all software as necessary during the term of this Agreement.
(d) On or before 45 days after the end of each calendar year beginning with
1998, Servicer will prepare and deliver to Trustee and the Required Person a
report as to each of the following:
(i) the budget for the subsequent calendar year for Seller and
Servicer,
(ii) two-year projections and strategic business plan for each of
Seller and Servicer,
(iii) a summary of existing licenses for each of Seller and
Servicer.
(e) Servicer shall promptly prepare and deliver to Trustee and the Required
Person such other reports as may be reasonably requested from time to time.
SECTION 3.6 Monthly Servicer's Certificate. On each Report Date, Servicer
------------------------------
shall deliver to Trustee, the Paying Agent, Transferor, and the Required Person
a certificate of an Authorized Officer of Servicer substantially in the form of
Exhibit C, with such additions as may be reasonably required by Trustee or the
---------
Required Person.
SECTION 3.7 Servicing Report of Independent Public Accountants.
--------------------------------------------------
(a) On or before 120 days after the end of each calendar year beginning
with 1998 (each such year being, for the purposes of this paragraph, a
"Servicing Compliance Report Period"), Servicer shall, as an expense of Servicer
paid out of the Servicing Fee, cause a firm of independent certified public
accountants that is generally recognized as being among the "big six" (which may
also render other services to Servicer, Seller or Transferor) or such other
public accounting firm as is acceptable to the Required Person, to furnish a
report to Trustee, Servicer, Transferor and the Required Person (which report
shall be addressed to Trustee and the Required Person and shall relate to the
most recently ended Servicing Compliance Report Period). The accountants'
report shall set forth the results of their performance of the procedures
described in Exhibit D with respect to the Monthly Reports delivered to Trustee
---------
pursuant to Section 3.5 during such prior Servicing Compliance Report Period.
-----------
(b) Each accountants' report shall state that the accountants have compared
the amounts contained in the Monthly Reports and a sample randomly selected from
all Monthly Reports delivered to Trustee during the period covered by the report
with the records (including computer records) from which the amounts were
derived and that, on the basis of such comparison, the amounts are in agreement
with the documents and records, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in the report. A
copy of the report may be obtained by any Investor Certificateholder by a
request in writing to Trustee addressed to the Corporate Trust Office.
9
SECTION 3.8 Rights of Trustee.
-----------------
(a) Trustee has the exclusive dominion and control over the Transaction
Accounts, and Transferor shall take any action that Trustee may reasonably
request to effect or evidence such dominion and control. At any time following
the occurrence of a Servicer Default, Trustee is hereby authorized to give
instructions or take any other actions with respect to the Transaction Accounts
that Servicer would otherwise be authorized to give or to take.
(b) At any time following the occurrence of a Servicer Default, each of
Transferor and Servicer hereby authorizes Trustee to take any and all steps in
Transferor's name and on behalf of Transferor and Servicer that are necessary or
appropriate, in the reasonable determination of Trustee, to collect all amounts
due under any and all Receivables or other Transferred Assets, including
endorsing the name of Transferor or Seller on checks and other instruments
representing Collections and enforcing such Receivables and the other
Transferred Assets.
(c) Transferor hereby irrevocably appoints Trustee to act as Transferor's
attorney-in-fact, with full authority in the place and stead of Transferor and
in the name of Transferor or otherwise, to take upon the occurrence and during
the continuance of a Service Default (subject to Section 11.14 hereof) any
-------------
action and to execute any instrument or document that Trustee, in its reasonable
determination, may deem necessary to accomplish the purposes of this Agreement,
including:
(i) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive
acquittance and receipts for moneys due and to become due under or in
respect of any Receivable or any Related Transferred Asset;
(ii) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i);
----------
(iii) to file any claims or take any action or institute any
proceedings that Trustee in its reasonable determination may deem necessary
or appropriate for the collection of any of the Receivables or any other
Transferred Asset or otherwise to enforce the rights of Trustee and the
Certificateholders with respect to any of the Receivables or any other
Transferred Asset; and
(iv) to exercise the rights or perform the affirmative obligations of
Transferor under any Transaction Document.
Transferor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 3.9 Ongoing Responsibilities of Servicer. Anything herein to the
------------------------------------
contrary notwithstanding, Servicer shall deliver or cause to be delivered all
Collections received by it or any Subservicer to Trustee no later than two
Business Days after receipt thereof. So long as Servicer or any Subservicer
shall hold any Collections required to be paid to Trustee, each of them shall
hold (and Servicer shall cause each of them to hold) such amounts in trust (and
separate and apart from their own funds) and shall clearly ▇▇▇▇ (and Servicer
shall cause each of them to clearly ▇▇▇▇) their records to reflect such trust.
Servicer hereby grants to Trustee an irrevocable power of attorney, with full
power of substitution, coupled with an interest, upon the occurrence of a
Servicer Default, to take
10
in the name of Servicer all steps necessary or appropriate to endorse, negotiate
or otherwise realize on any writing or other right of any kind held or
transmitted by Servicer or transmitted and received by Trustee (whether or not
from Servicer) in connection with any Receivable or other Transferred Asset.
SECTION 3.10 Further Action Evidencing Transfers. To further
-----------------------------------
evidence, secure and perfect the transfer of the Transferred Assets to Trustee,
Transferor, Trustee and Servicer shall do the following:
(a) Servicer and Trustee shall direct all Obligors to pay all amounts
payable under any Receivable or any Related Transferred Assets directly to the
Master Collection Account for the benefit of Trustee or its designee; provided
that Trustee shall provide Seller with a copy of such notice at least one
Business Day prior to sending it to any Obligor and consult in good faith with
Seller as to the text of the notice.
(b) Transferor and Trustee shall direct Seller to make payment of all
amounts payable to Transferor under the Purchase Agreement directly to the
Master Collection Account for the benefit of Trustee or its designee.
(c) Transferor shall give notice of the Trust's ownership of the Receivables
and the other Transferred Assets to each Obligor, and direct that such Persons
may be informed of any change in such ownership interest only by subsequent
written notice from Trustee.
(d) Transferor shall (A) assemble all, or cause the assembly of all, the
Records that are necessary or appropriate to collect the Receivables and other
Transferred Assets, and shall make the same available to Servicer and Trustee at
one or more places selected by Servicer, Trustee or their designees, (B)
segregate all cash, checks and other payments received by it from time to time
constituting Collections in a manner acceptable to Trustee and shall, promptly
upon receipt (and, subject to Section 3.2(f), in no event later than the first
--------------
Business Day following receipt), remit all such cash, checks and other payments,
duly endorsed or with duly executed instruments of transfer, if applicable, to
or the Master Collection Account and (C) permit, upon not less than two Business
Days' prior written notice, any Servicer and its agents, employees and assignees
access to their respective facilities and their respective Records (including
computer programs, tapes and disks, invoices and other agreements related to the
Transferred Assets).
(e) Servicer shall cause all Public Notices, Mortgage File documents and any
other necessary documents relating to the right, title and interest of Trustee
in, to and under the Transferred Assets to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, to the extent
and in such manner and in such places as may be required by law fully to
preserve, maintain and protect the right, title and interest of Trustee
hereunder in and to all property comprising the Transferred Assets. Servicer
shall deliver to 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. Transferor shall cooperate
fully with Servicer in connection with the obligations set forth above and will
execute any and all documents that are reasonably required to fulfill the intent
of this section.
(f) If Transferor or Servicer fails to perform any of its agreements or
obligations under any Transaction Document and does not remedy such failure
within the applicable cure period, if any,
11
then Trustee or its designee may (but shall not be required to) itself perform,
or cause performance of, such agreement or obligation, and the reasonable
expenses of Trustee or its designee incurred in connection therewith shall be
payable by Servicer as provided in Section 11.5 and (if applicable) by
------------
Transferor as provided in Section 7.3.
------------
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders. The Investor Certificates shall
----------------------------
collectively represent a fractional undivided beneficial interest in the Trust,
representing the right to receive, to the extent necessary to make the required
payments with respect to that Certificate at the times and in the amounts
specified in this Article IV, the portion of Collections allocable to Investor
----------
Certificateholders pursuant to this Agreement and funds on deposit in the
Transaction Accounts allocable to Investor Certificateholders. The Transferor
Certificate shall represent an interest in the Trust (the "Transferor Interest")
consisting of the right to receive current and deferred transfer payments in the
amounts specified herein.
SECTION 4.2 Establishment of Transaction Accounts.
-------------------------------------
(a) On or prior to the date of this Agreement, Trustee has established, and
until the Trust is terminated Trustee shall (except as expressly permitted or
required below) maintain, in the name of Trustee and for the benefit of the
Certificateholders, the following accounts:
(i) account no. _________________, which shall be called the
"Master Collection Account" and into which all Collections and all other
Transferred Assets consisting of cash or cash equivalents shall be deposited
or transferred as provided for in this Agreement;
(ii) account no. _________________, which shall be called the
"Carrying Cost Account" and into which funds shall be allocated from the
Master Collection Account from time to time to cover Carrying Costs
(including interest payable on, and the Servicing Fee allocated to the
Investor Certificates);
(iii) account no. ___________________, which shall be called the
"Purchase Account" and into which funds may from time to time be transferred
from the Master Collection Account for the purchase of new Receivables on
Subsequent Closing Dates for the outstanding Series;
(iv) account no. ___________________, which shall be called the
"Principal Funding Account" and into which funds will from time to time be
transferred from the Master Collection Account in anticipation of
distributions to Investor Certificateholders on account of their respective
principal investments;
(v) account no. ___________________, which shall be called the
"Reserve Account" and into which funds will be deposited from the Master
Collection Account to the extent so provided herein; and
12
(vi) account no. ___________________, which shall be called the
"Overcollateralization Account" and into which funds will be deposited from
the Master Collection Account to the extent so provided herein.
(b) The Master Collection Account, the Carrying Cost Account, the Purchase
Account, the Principal Funding Account, the Reserve Account and the
Overcollateralization Account are collectively called the "Transaction
Accounts." Each of the Transaction Accounts shall be established and maintained
as a segregated trust account maintained at a bank with a long-term senior
unsecured debt rating of at least "A" and shall bear a designation clearly
indicating that funds deposited therein are held for the benefit of the
Certificateholders. If any Transaction Account ceases to be a segregated trust
account maintained at a bank with a long-term senior unsecured debt rating of at
least "A", Trustee shall open a substitute Transaction Account that is a
segregated trust account maintained at a bank with a long-term senior unsecured
debt rating of at least "A" and transfer the funds in the existing Transaction
Account to the substitute Transaction Account, and thereafter all references in
any Transaction Document to the original Transaction Account shall be deemed
instead to refer to the substitute Transaction Account.
(c) Trustee shall possess (for its benefit and for the benefit of the
Certificateholders) all right, title and interest in and to all funds on deposit
from time to time in each of the Transaction Accounts and in all proceeds
thereof. The Transaction Accounts shall be under the sole dominion and control
of Trustee for the benefit of the applicable Certificateholders. Each of
Servicer and Trustee agrees that it shall have no right of setoff against, and
no right otherwise to deduct from, any funds held in any of the Transaction
Accounts or the Bank Accounts for any amount owed to it by the Trust, any party
hereto or any Certificateholder unless such right to deduct is expressly
provided for in a Transaction Document.
SECTION 4.3 Trust-Level Calculations and Funds Allocations. On each
----------------------------------------------
Business Day, Servicer shall determine the amount of Collected Funds received
(other than funds that are required to be returned to Related Persons (or their
designees)) since the preceding Business Day and shall allocate the funds to the
Transaction Accounts.
SECTION 4.4 Interest; Additional Amounts.
----------------------------
(a) Accrued and unpaid interest on the Invested Amount shall be calculated
on the basis of actual days over a year of 360 days and shall be payable on each
Distribution Date.
(b) Interest on the Class A Invested Amount shall accrue at a rate per annum
equal to LIBOR in effect on the most recent Distribution Date plus the Class A
Certificate Spread.
(c) Additional Amounts shall also be payable with respect to the Series
1997-1 Certificates, but only to the extent that funds become available for such
Additional Amounts.
SECTION 4.5 Periodic Calculations and Allocations. On each Business Day,
-------------------------------------
Servicer shall calculate the following:
(a) Allocable Funds;
(b) the Class A Invested Amount;
13
(c) the Current Carrying Costs, Additional Amounts, and Servicing Fee owed
to any Related Person;
(d) the Net Invested Amount; and
(e) the Base Amount.
On each Business Day during the Revolving Period or the Amortization Period,
Servicer shall also determine whether the Net Invested Amount is greater than,
equal to or less than the Base Amount.
SECTION 4.6 Allocations During Revolving Period. Prior to each
-----------------------------------
Distribution Date or Subsequent Closing Date occurring in the Revolving Period,
Servicer shall allocate the Allocable Funds and amounts in the
Overcollateralization Account to the following purposes, in the priority
indicated (and to the extent of Allocable Funds and amounts in the
Overcollateralization Account available) for the subaccounts:
first, to the Carrying Cost Account until the amount allocated to the
Carrying Cost Account equals the Current Carrying Costs with respect to the
Investor Certificates;
second, if the Net Invested Amount is greater than the Base Amount, to
the Purchase Account in an amount sufficient to reduce the Net Invested
Amount to an amount equal to the Base Amount;
third, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date all Additional Amounts payable to the
Holders of the Class A Certificates;
fourth, to the Reserve Account, an amount sufficient to raise the
balance of such account to $1,500,000; and
fifth, to the Purchase Account.
SECTION 4.7 Allocations of Allocable Funds (Other than During the
-----------------------------------------------------
Revolving Period). On each Business Day (i) not falling in the Revolving Period
-----------------
and (ii) prior to or on the Fully Funded Date, Servicer shall allocate the
Allocable Funds and amounts in the Reserve Account and Overcollateralization
Account to the following purposes, in the priority indicated (and to the extent
of Allocable Funds and amounts in the Reserve Account and Overcollateralization
Account available) for the respective Accounts:
first, to the Carrying Cost Account to the extent that the balance
therein is less than the amount of Current Carrying Costs payable on the
Distribution Date relating to the Calculation Period during which such
Business Day falls;
second, to the Principal Funding Account up to the Invested Amounts
with respect to the Class A Certificates;
14
third, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date all Additional Amounts payable to the
Holders with respect to the Class A Certificates;
fourth, to pay any then-current indemnity obligations of the
Transferor pursuant to this Agreement;
fifth, to pay the outstanding principal and any accrued and unpaid
interest on the Transferor Certificate; and
sixth, the balance, to the Transferor for application in accordance
with Article XII of this Agreement.
-----------
SECTION 4.8 Withdrawals from the Purchase Account. On any Business Day
-------------------------------------
during the Revolving Period on which no Early Amortization Event or Unmatured
Early Amortization Event exists, Servicer may instruct Trustee in writing (a
"Servicer Report") to withdraw funds from the Purchase Account and apply such
funds as Allocable Funds for such Class, including releasing payments to
Transferor to permit it to purchase new Receivables pursuant to the Purchase
Agreement under clause fifth of Section 4.6, so long as the Net Invested Amount
would not exceed the Base Amount after giving effect to such transfer and
application. On the first day of the Amortization Period or an Early
Amortization Period, Servicer shall instruct Trustee to transfer the entire
balance in the Purchase Account subaccount to the Principal Funding Account.
SECTION 4.9 Investment of Funds in Transaction Accounts. On any day
-------------------------------------------
when funds on deposit in any Transaction Account exceed $10,000 (after giving
effect to the allocations of such funds required by this Article IV), and at
----------
such other times as investment is practicable, Trustee, at the direction of
Transferor, shall invest and reinvest monies on deposit in such Transaction
Account (in the name of Trustee) in such Eligible Investments as are specified
in a notice from Transferor, subject to the restrictions set forth hereinafter.
All Eligible Investments made from funds in any Transaction Account, and the
interest, dividends and income received thereon and therefrom and the net
proceeds realized on the sale thereof, shall be deposited in such Transaction
Account. All Eligible Investments in each Transaction Account shall mature not
later than the next succeeding Distribution Date. Trustee may liquidate an
Eligible Investment prior to maturity if such liquidation would not result in a
loss of all or part of the principal portion of such Eligible Investment or if,
prior to the maturity of such Eligible Investment, a default occurs in the
payment of principal, interest or any other amount with respect to such Eligible
Investment. In the absence of negligence of Trustee or willful misconduct by
Trustee, Trustee shall have no liability in connection with investment losses
incurred on Eligible Investments.
SECTION 4.10 Attachment of Transaction Accounts. If Trustee receives
----------------------------------
written notice that any Transaction Account has or will become subject to any
writ, judgment, warrant of attachment, execution or similar process, Trustee
shall (notwithstanding any other provision of the Transaction Documents)
promptly notify Transferor, Servicer and the Certificateholders thereof, and
shall not deposit or transfer funds into such Transaction Account but shall
cause funds otherwise required to be deposited into such Transaction Account to
be held in another account pending distribution of such funds in the manner
required by the Transaction Documents.
15
ARTICLE V
DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. On each Distribution Date, Trustee shall, in
-------------
accordance with instructions set out in the applicable Monthly Report (following
delivery within the time period required under Section 3.5(c)), distribute first
--------------
to the Class A Holders, at or before 2:00 p.m., New York City time, all accrued
and unpaid interest on the Series 1997-1 Certificates, to the extent funds are
available for such payment in the Carrying Cost Account, and in the event of any
shortfall, first, the Trustee shall be paid its accrued and unpaid fees, and the
Servicer shall be paid any Servicing Fees and Servicing Advances then due and
payable, pro-rata; second, the Holders shall be paid the interest then due and
payable with respect to the Class A Certificates, pro-rata in accordance with
their respective Class Percentages, and third, to the Transferor
Certificateholders, any unpaid current interest. In addition, on each
Distribution Date Trustee shall, in accordance with instructions set out in the
applicable Monthly Report (following delivery within the time period required
under Section 3.5(c) of the Pooling Agreement), distribute to the Holders at or
--------------
before 2:00 p.m., New York City time, the following amounts:
(a) on each Principal Payment Date, all funds deposited in the Principal
Funding Account on or prior to the most recent Cut-Off Date (but in no event in
excess of the Invested Amount) shall be distributed to the Class A Certificate
Holders (subject to any applicable notification period) in reduction of the
Invested Amount (and in the event of any shortfall, such Holders shall be paid
pro-rata to their respective Series Percentages);
(b) if, on the Final Scheduled Payment Date or any Distribution Date
falling in an Early Amortization Period, the Invested Amount is greater than
zero (after giving effect to the distribution required by subsection (a)), then
---------------
an amount equal to the lesser of (i) such remaining Invested Amount and (ii) the
balance of the Carrying Cost Account shall be withdrawn from the Carrying Cost
Account subaccount and distributed in reduction of the Invested Amount (and in
the event of any shortfall, the Holders shall be paid pro-rata to their
respective Series Percentages); and
(d) any Additional Amounts payable with respect to Series 1997-1
Certificates to the extent that funds have been allocated for those Additional
Amounts pursuant to priority third of Section 4.6 (and in the event of any
-----------
shortfall, Additional Amounts shall be paid to the Holders pro-rata to their
respective Series Percentages) in the Master Collection Account.
All distributions pursuant to this Section 5.1 shall be distributed to the
Holders in immediately available funds by wire transfer. Payments received
after 2:00 p.m., New York City time shall be deemed received the following
Business Day.
SECTION 5.2 Payments in Respect of Transferor Certificate. On each day
---------------------------------------------
on which funds are allocated pursuant to Section 4.6 and Section 4.7, Trustee
----------- -----------
shall, in accordance with instructions set out in the applicable Servicer Report
(following delivery required under Section 4.8), distribute to Transferor, in
-----------
respect of the Transferor Certificate, at or before 2:00 p.m., New York City
time, all funds allocated for that purpose in accordance with that Section. In
addition, after the Invested Amount has been repaid in full and all interest and
Additional Amounts owed to the Holders have been paid, any additional funds on
deposit in the Carrying Cost Account, the Purchase Account, the Principal
Funding Account or the Overcollateralization Account shall similarly be paid to
Transferor, at or before 2:00 p.m., New York City time, in respect of the
Transferor Certificate. Any
16
funds otherwise payable to the Transferor pursuant to this Section 5.2 shall be
-----------
subject to any then-current indemnity obligations of the Transferor pursuant to
this Agreement.
SECTION 5.3 Weekly Reports and Monthly Reports. Each Monthly Report
----------------------------------
shall be substantially in the applicable form set out in Exhibit C or in such
---------
other form as may be satisfactory to Servicer and Trustee and consistent with
the terms of this Agreement. Copies of each Monthly Report shall be provided
free of charge by Servicer to the Holders of Certificates.
SECTION 5.4 Annual Tax Information. On or before January 30 of each
----------------------
calendar year, beginning with calendar year 1998, Trustee shall furnish or cause
to be furnished to each Person who at any time during the preceding calendar
year was a Holder the information and forms for the preceding calendar year, or
the applicable portion thereof during which the Person was a Holder, as is
required to be provided by an issuer of indebtedness under the Internal Revenue
Code to the holders of the issuer's indebtedness and such other customary
information as is necessary to enable such Holders to prepare their federal
income tax returns, and file applicable copies with Governmental Authorities as
required by law.
SECTION 5.5 Periodic Perfection Certificate. On or before March 15 of
-------------------------------
each calendar year, beginning with calendar year 1998, Transferor shall furnish
or cause to be furnished to Trustee and the Holders an Officer's Certificate
setting forth a list of all changes in (a) the name, identity or corporate
structure of Transferor and (b) the chief executive office of Transferor (or in
the place of business of Transferor that has only one place of business) that
have taken place since the date of the Officer's Certificate most recently
delivered pursuant to this Section 5.5 (or since the Closing Date, in the case
-----------
of the first such Officer's Certificate to be delivered), or indicating that no
such events have taken place, and stating in each case what filings of UCC
financing statements, or amendments thereto, relating to the Transaction
Documents have been made in connection with each such event (identifying the
date and filing index numbers for each). Any financing statement identified in
such an Officer's Certificate delivered to Trustee shall be deemed to have been
identified to Trustee in writing for purposes of subsection 11.1(c). If any
------------------
such new UCC financing statements are filed, Trustee shall be named as secured
party (in the case of any filing against Transferor) or assignee of the secured
party (in the case of any filing against Seller).
ARTICLE VI
THE CERTIFICATES
SECTION 6.1 The Certificates. The Investor Certificates shall be
----------------
substantially in the form of Exhibit B, and the Transferor Certificate shall be
---------
substantially in the form of Exhibit E. Upon issuance, all Certificates shall
---------
be executed and delivered by Transferor to Trustee for authentication and
redelivery as provided in Sections 6.2 and 6.10. Investor Certificates shall be
------------ ----
issued in minimum denominations of $500,000 and in integral multiples of
$100,000 and shall not be subdivided for resale into Certificates smaller than a
Certificate, the initial offering price for which would have been at least
$500,000.
Notwithstanding any other provision of this Agreement, no transfer,
assignment or other conveyance of, or sale of any interest in a Certificate
shall be made unless, after giving effect thereto, there shall be no more than
100 Private Holders of Subject Instruments, as reasonably determined by the
Transferor. Any attempted transfer, assignment, conveyance, participation or
subdivision in
17
contravention of the preceding restrictions, as reasonably determined by the
Transferor, shall be void ab initio and the purported transferor, seller or
subdivider of such Certificate shall continue to be treated as the
Certificateholder of any such Certificate (or interest therein) for all purposes
of this Agreement.
Each Certificate shall be executed by manual or facsimile signature on
behalf of Transferor by its President or any Vice President or by any attorney-
in-fact duly authorized to execute the Certificate on behalf of any such
officer. The Certificates shall be authenticated on behalf of the Trust by
manual signature of a duly authorized signatory of Trustee. Certificates
bearing the manual or facsimile signature of the individual who was, at the time
when the signature was affixed, authorized to sign on behalf of Transferor or
the Trust (as applicable) shall be valid and binding, notwithstanding that the
individuals or any of them ceased to be so authorized prior to the
authentication and delivery of the Certificates or does not hold such office on
the date of issuance of such Certificates. No Certificates shall be entitled to
any benefit under this Agreement, or be valid for any purpose, unless there
appears on the Certificate a certificate of authentication substantially in the
form provided for herein executed by or on behalf of Trustee by the manual
signature of a duly authorized signatory, and the certificate of authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
the Certificate has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Agreement. All Certificates shall be dated the
date of their authentication.
SECTION 6.2 Authentication of Certificates. Contemporaneously with the
------------------------------
initial assignment and transfer of Receivables and other Transferred Assets to
the Trust, Trustee shall authenticate and deliver the Transferor Certificate to
Transferor. On each Issuance Date, upon the order of Transferor, Trustee shall
authenticate and deliver to Transferor the Series of Certificates that are to be
issued originally on such Issuance Date, provided that no new Certificates may
be issued after the Closing Date (except pursuant to Sections 6.3 and 6.4)
--------------------
without the consent of the Required Person.
SECTION 6.3 Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) Trustee, as agent for Transferor, shall keep, or shall cause to be
kept, at the office or agency to be maintained in accordance with the provisions
of Section 11.16, a register in written form or capable of being converted into
-------------
written form within a reasonable time (the "Certificate Register") in which,
subject to such reasonable regulations as it may prescribe, a transfer agent and
registrar (which may be Trustee) (the "Transfer Agent and Registrar") shall
provide for the registration of the Certificates, transfers and exchanges of the
Certificates and the allocation of payments as herein provided. Transferor
hereby appoints Trustee as the initial Transfer Agent and Registrar.
Transferor, or Trustee as agent for Transferor, may revoke the appointment
as Transfer Agent and Registrar and remove the then-acting Transfer Agent and
Registrar if Trustee or Transferor (as applicable) determines in its sole
discretion that the then-acting Transfer Agent and Registrar has failed to
perform its obligations under this Agreement in any material respect. The then-
acting Transfer Agent and Registrar shall be permitted to resign as Transfer
Agent and Registrar upon 30 days' prior written notice to Trustee, Transferor,
Servicer and the Required Person; provided that such resignation shall not be
effective and the then-acting Transfer Agent and Registrar shall continue to
perform its duties as Transfer Agent and Registrar until Trustee has appointed a
successor Transfer Agent and Registrar reasonably acceptable to Transferor and
the Person so appointed has given Trustee written notice that it accepts the
appointment. The provisions of Sections 11.1 through 11.5
------------- ----
18
shall apply to the Transfer Agent and Registrar as if all references to
"Trustee" in the applicable provisions of Sections 11.1 through 11.5 were
------------- ----
references to the Transfer Agent and Registrar.
It is intended that the registration of Certificates that is described in
this Section comply with the registration requirements contained in Section 163
of the Internal Revenue Code.
(b) No transfer of all or any part of the Transferor Certificate shall be
made unless (i) Transferor shall have given Trustee and the Required Person
prior written notice of the proposed transfer, (ii) Transferor shall have
delivered to Trustee and the Required Person a Tax Opinion.
(c) Subject to the requirements of subsection (e), if applicable, having
--------------
been fulfilled, upon surrender for registration of transfer of any Certificate,
and, in the case of Investor Certificates, at any office or agency of the
Transfer Agent and Registrar maintained for such purpose, Transferor shall
execute, and Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the
appropriate class and Series that are in authorized denominations of like
aggregate fractional interest in the related Series Interest that bear numbers
that are not contemporaneously outstanding.
At the option of an Investor Certificateholder, its Investor Certificates
may be exchanged for other Investor Certificates of the same class and Series
(and bearing the same interest rate as the Investor Certificate surrendered for
registration of exchange) of authorized denominations of like aggregate
fractional interests and bearing numbers that are not contemporaneously
outstanding, upon surrender of the Investor Certificates to be exchanged at any
such office or agency. Whenever any Investor Certificates are so surrendered
for exchange, Transferor shall execute, and Trustee shall authenticate and
deliver, the appropriate number of Investor Certificates of the tenor and
denomination that 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 in a form satisfactory to Trustee or the Transfer Agent
and Registrar duly executed by the Certificateholder thereof or such
Certificateholder's attorney-in-fact duly authorized in a writing delivered to
the Transfer Agent and Registrar.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Transfer Agent and Registrar may require the
Certificateholder to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and disposed of in a manner satisfactory to Trustee.
The Investor Certificateholders may provide notice to Trustee as to whom
and in what manner payment should be made in respect of the Investor
Certificates held by such Investor Certificateholders and Trustee shall make
payment of amounts to which such Investor Certificateholder is entitled in such
manner.
(d) Certificates may be surrendered for registration of transfer or
exchange at the office of the Transfer Agent and Registrar designated in Section
-------
13.5.
----
19
(e) Certificateholders holding Certificates shall not sell, transfer or
otherwise dispose of the Certificates unless the sale, transfer or disposition
is being made pursuant to an exemption from the registration requirements of the
Securities Act and applicable state securities laws and, prior to the proposed
sale, transfer or disposition, the Certificateholder and the proposed transferee
each provide Trustee and Transferor with (i) a Rule 144A Investor Letter in the
form attached to the Certificate Purchase Agreement as Exhibit B or (ii)
---------
representations and, if requested by Trustee or Transferor, an Opinion of
Counsel concerning the proposed sale, transfer or disposition and the
availability of the exemption.
(f) No transfer of a Certificate shall be made unless Trustee and the
Transfer Agent and Registrar shall have received either (i) a representation
letter from the proposed transferee of such Certificate to the effect that such
proposed transferee is not an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Internal Revenue
Code, or a Person acting on behalf of any such plan or using the assets of any
such plan or if the proposed transferee is an insurance company, a
representation that the proposed transferee is an insurance company which is
purchasing such certificates with funds contained in an "insurance company
general account" (as such term is defined in section v(e) of prohibited
transaction class exemption 95-60 ("ptce 95-60")) and that the purchase and
holding of such certificates are covered under ptce 95-60, which representation
letter shall not be an expense of the Trust, Trustee, the Transfer Agent and
Registrar, Servicer or the Transferor, or (ii) in the case of any such
certificate presented for registration in the name of an employee benefit plan
subject to the fiduciary responsibility provisions of ERISA, or Section 4975 of
the Internal Revenue Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other Person who is using the
assets of any such plan to effect such acquisition, an opinion of counsel, in
form and substance reasonably satisfactory to, and addressed and delivered to,
Trustee, the Transfer Agent and Registrar and the Transferor, to the effect that
the purchase or holding of such Certificate will not result in the assets of the
Trust estate being deemed to be "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
the Internal Revenue Code, will not constitute or result in a prohibited
transaction within the meaning of Section 406 or Section 407 of ERISA or Section
4975 of the Internal Revenue Code, and will not subject the Trust, Trustee, the
Transfer Agent and Registrar, Servicer or the Transferor to any obligation or
liability (including obligations or liability under ERISA or Section 4975 of the
Internal Revenue Code) in addition to those explicitly undertaken in this Trust
Agreement which opinion of counsel shall not be an expense of the Trust,
Trustee, the Transfer Agent and Registrar, Servicer or the Transferor.
SECTION 6.4 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 to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and Trustee such security or indemnity as may be
required by them and Transferor to hold each of them, the Trust and Transferor
harmless, then, in the absence of notice to Trustee that such Certificate has
been acquired by a bona fide purchaser, Transferor shall execute and, upon the
request of Transferor, 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, terms and principal amount and bearing a number that
is not contemporaneously outstanding. In connection with the issuance of any
new Certificate under this section, Trustee or the Transfer Agent and Registrar
may require the payment by the Certificateholder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the reasonable fees and expenses of Trustee and
Transfer Agent and ▇▇▇▇▇▇▇▇▇)
▇▇
connected therewith. Any duplicate Certificate issued pursuant to this section
shall constitute conclusive and indefeasible evidence of ownership of an
interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be enforceable by anyone, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all Certificates of the same class and Series that are duly issued hereunder.
SECTION 6.5 Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, Transferor, Trustee, Servicer, the
Paying Agent, the Transfer Agent and Registrar 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
-------
V and for all other purposes whatsoever, and none of Transferor, Trustee,
-
Servicer, the Paying Agent, the Transfer Agent and Registrar or any agent of any
of them shall be affected by any notice to the contrary; provided that, in
determining whether the Holders of the requisite principal amount or stated
amount (as applicable) of Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by Transferor, Servicer or any Affiliate thereof shall be disregarded and
deemed not to be outstanding, except that, in determining whether Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that Trustee knows to be so owned
shall be so disregarded. Certificates so owned that have been pledged in good
faith shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Transferor, Servicer or
an Affiliate thereof.
SECTION 6.6 Appointment of Paying Agent. The Paying Agent initially
---------------------------
shall be Trustee. The Paying Agent shall make distributions to
Certificateholders pursuant to this Agreement and report the amounts of the
distributions to Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Transaction Accounts for the purpose of making the
distributions. Trustee or, at any time when Trustee is also the Paying Agent,
Servicer may revoke such power of the Paying Agent and remove the Paying Agent
if Trustee or Servicer (as applicable) determines in its sole discretion that
the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' prior written notice to Trustee,
Transferor, Servicer and the Investor Certificateholders. Any resignation or
removal of the Paying Agent, and appointment of a successor Paying Agent, shall
not become effective until the appointment has been accepted by the successor
Paying Agent. If no successor Paying Agent shall have been appointed and shall
have accepted appointment within 30 days after the giving of the notice of
resignation, the resigning Paying Agent may petition any court of competent
jurisdiction to appoint a successor Paying Agent. In the event that Trustee
shall no longer be the Paying Agent, Trustee shall appoint a successor Paying
Agent (which shall be a bank or trust company) reasonably acceptable to the
Required Person, which appointment shall be effective on the date on which the
Person so appointed gives Certificateholders written notice that it accepts the
appointment and on which the Required Person gives written consent to such
appointment. Trustee shall cause the successor Paying Agent or any additional
Paying Agent appointed by Trustee to execute and deliver to Trustee an
instrument in which it shall agree with Trustee that, as Paying Agent, it will
hold all sums, if any, held for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until the sums shall be
paid to the Certificateholders. The Paying Agent shall return all unclaimed
funds to Trustee, and upon removal of a Paying Agent such Paying Agent shall
also return all funds in its possession to
21
Trustee. The provisions of Sections 11.1 through 11.5 shall apply to the Paying
------------- ----
Agent as if all references in the applicable provisions thereof to "Trustee"
were references to the Paying Agent.
SECTION 6.7 Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to Transferor, Servicer, Seller or the Paying Agent, within two
Business Days after receipt by Trustee of a written request therefor, a list in
the form the requesting Person may reasonably require of the names and addresses
of the Certificateholders as of the most recent Distribution Date. If any
Holder or group of Holders of Investor Certificates in any Series evidencing not
less than 10% of the aggregate unpaid principal amount of the Series (the
"Applicant") applies in writing to Trustee, and the application states that the
Applicant desires to communicate with other Certificateholders with respect to
their rights under this Agreement Certificates and is accompanied by a copy of
the communication that the Applicant proposes to transmit, then Trustee, after
having been adequately indemnified by the Applicant for its costs and expenses,
shall afford or shall cause the Transfer Agent and Registrar to afford the
Applicant access during normal business hours to the most recent list of
Certificateholders held by Trustee, within five Business Days after the receipt
of the application and indemnification. The list shall be as of a date no more
than 45 days prior to the date of receipt of the Applicant's request.
Every Certificateholder, by receiving and holding a Certificate, agrees
with Trustee that neither Trustee, the Transfer Agent and Registrar, Transferor,
Servicer, Seller nor any of their respective agents shall be held accountable by
reason of the disclosure of any information as to the names and addresses of the
Certificateholders hereunder, regardless of the sources from which the
information was derived.
SECTION 6.8 Authenticating Agent.
--------------------
(a) Trustee may appoint one or more authenticating agents with respect to
the Certificates that shall be authorized to act on behalf of Trustee in
authenticating the Certificates in connection with the issuance, delivery,
registration of transfer, exchange or repayment of the Certificates. Either
Trustee or the authenticating agent, if any, then appointed and acting on behalf
of Trustee shall authenticate the Certificates. Whenever reference is made in
this Agreement to the authentication of Certificates by Trustee or Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of Trustee by an authenticating agent and a certificate
of authentication executed on behalf of Trustee by an authenticating agent.
Each authenticating agent must be acceptable to Transferor.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any document or any further act on the part of Trustee,
the authenticating agent or any other Person.
(c) An authenticating agent may at any time resign by giving written notice
of resignation to Trustee and Transferor. Trustee may at any time terminate the
agency of an authenticating agent by giving notice of termination to the
authenticating agent and Transferor. Upon receiving a notice of resignation or
upon a termination, or in case at any time an authenticating agent shall cease
to be acceptable to Trustee or Transferor, Trustee may promptly appoint a
successor authenticating agent. Any successor authenticating agent, upon
acceptance of its appointment, shall become vested with all the rights, powers
and duties of its predecessor, with like effect as if originally named as an
22
authenticating agent. No successor authenticating agent shall be appointed
unless acceptable to Trustee and Transferor.
(d) Trustee shall, from its own funds, pay to each authenticating agent (if
any), reasonable compensation from time to time for services performed under
this section.
(e) The provisions of Sections 11.1-11.5 shall be applicable to any
------------------
authenticating agent as if the references in the applicable provisions thereof
to "Trustee" were references to the authenticating agent.
(f) Pursuant to an appointment made under this section, the Certificates
may have endorsed thereon, in lieu of 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 and
Servicing Agreement dated as of _______________, 199_.
____________________________, as Trustee
By: ___________________________________________________
as Authenticating Agent
for Trustee,
By: ___________________________________________________
Authorized Officer."
SECTION 6.9 Tax Treatment. It is the intent of Transferor and the
-------------
Investor Certificateholders that, for purposes of Federal, state and local
income and franchise taxes and other taxes measured by or imposed on income,
(i) the Investor Certificates will be treated as evidence of indebtedness
secured by the Transferred Assets, (ii) income and gains earned and expenses and
losses suffered with respect to the Receivables and Transferred Assets and
through investment of funds in the Transaction Accounts shall be treated as
income, gain expense and loss of Transferor, and (iii) the Trust will not be
characterized as an association or publicly traded partnership taxable as a
corporation. Transferor, by entering into this Agreement, and each Investor
Certificateholder, by its acceptance of its Investor Certificate, agrees to
treat the Investor Certificates as indebtedness for purposes of Federal, state
and local income and franchise taxes and any other taxes measured by or imposed
on income. The provisions of this Agreement and all related Transaction
Documents shall be construed to further these intentions of the parties. In
accordance with the foregoing, Transferor agrees that it will report its income
for purposes of Federal, state and local income or franchise taxes, and any
other taxes measured by or imposed on income, on the basis that it is the owner
of the Purchased Assets and related investments in the Transaction Accounts.
Except to the extent otherwise required by applicable law or any Governmental
Authority, Trustee hereby agrees to treat the Trust as a security device only,
and shall not file tax returns or obtain an employer identification number on
behalf of the Trust.
23
SECTION 6.10 Issuance of Additional Series of Certificates.
---------------------------------------------
(a) Transferor may from time to time issue and direct Trustee to
authenticate one or more classes of any newly issued Series of Investor
Certificates (an "Issuance") if the Required Person shall have given its prior
written consent.
(b) Transferor may direct Trustee to authenticate an Issuance by notifying
Trustee, in writing, at least five Business Days (or such shorter period as
shall be acceptable to Trustee) in advance (an "Issuance Notice") of the date
upon which the Issuance is to occur (an "Issuance Date"). Any Issuance Notice
shall state the designation of any Series to be issued on the Issuance Date and,
with respect to each class or Series: (i) its initial invested amount (or the
method for calculating the initial invested amount) and (ii) its interest rate
(or the method for allocating interest payments or other cash flows to the
Series), if any, with respect to the Series.
(c) On the Issuance Date, Transferor shall deliver to Trustee for
authentication under Section 6.2, and Trustee shall authenticate and deliver any
-----------
such class or classes of Series of Investor Certificates only upon delivery to
it (and, in the case of item (iv) below the Required Person) of the following:
(i) a Supplement satisfying the criteria set forth in subsection
----------
(d) and in form reasonably satisfactory to Trustee executed by Transferor
---
and Servicer and specifying the principal terms of the Series;
(ii) a Tax Opinion for each outstanding Series of Investor
Certificates with respect to such Issuance;
(iii) for any Issuance occurring after the Closing Date, an
Officer's Certificate of Transferor that on the Issuance Date, after giving
effect to the Issuance (and the repayment, on the date of the Issuance Date,
of any existing Investor Certificates with funds (including proceeds of sale
of the new Series) on deposit in the Principal Funding Account), any
requirements set out in the Supplement with respect to any then outstanding
Series with respect to the amount of Certificates that may not, by their
terms, be transferred has been satisfied;
(iv) an Officer's Certificate of Servicer stating that no Early
Amortization Event or Unmatured Early Amortization Event has occurred and is
continuing and that there is not a substantial likelihood that the Issuance
would result in an Early Amortization Event or an Unmatured Early
Amortization Event at any time in the future; and
(v) any other documents, certificates and Opinions of Counsel as
may be required by the applicable Supplement.
Upon satisfaction or waiver of the conditions for any Issuance, Trustee shall
cancel any Investor Certificates that are to be cancelled in connection with
such Issuance and issue, as provided above, the new Series of Investor
Certificates dated the Issuance Date. Any such Series of Investor Certificates
shall be substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for the Series to which it belongs, as
selected by Transferor. There is no limit to the number of Issuances that may
be made under this Agreement.
24
(d) In conjunction with an Issuance, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Certificates, which may include: (i) its name or
designation, (ii) the initial invested amount or the method of calculating the
initial invested amount, (iii) the applicable interest rate (or formula for the
determination thereof), (iv) the Issuance Date, (v) the rating agency or
agencies rating the Series, if any, (vi) the interest payment date or dates and
the date or dates from which interest shall accrue, (vii) the method of
allocating Collections with respect to Receivables for the Series and, if
applicable, with respect to any paired Series and the method by which the
principal amount of Investor Certificates of the Series shall amortize or accrue
and the method for allocating write-offs, (viii) the names of any accounts to be
used by the Series and the terms governing the operation of any such account,
(ix) the base rate applicable to the Series, (x) the terms on which the
Certificates of the Series may be repurchased or remarketed to other investors,
(xi) any deposit into any account provided for the Series, (xii) the number of
classes of the Series, and if more than one class, the rights and priorities of
each class, (xiii) whether any fees, breakage payments or early termination
payments will be included in the funds available to be paid for the Series,
(xiv) the subordination of the Series to any other Series, (xv) whether the
Series will be a part of a group or subject to being paired with any other
Series, (xvi) whether the Series will be prefunded and (xvii) any other relevant
terms of the Series. The terms of the Supplement may modify or amend the terms
of this Agreement or the Purchase Agreement (including the related definitions)
solely as applied to the new Series.
(e) Except as specified in any Supplement for the related Series, all
Investor Certificates of any Series shall rank pari passu and 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 related Supplement.
SECTION 6.11 Optional Redemption of Investor Interests. On any
-----------------------------------------
Distribution Date occurring during an Early Amortization Period with respect to
the Series 1997-1 Certificates on or after the date that the Invested Amount is
reduced to ten percent or less of the sum of the initial Stated Amounts for the
Certificates, and provided the Certificates were fully funded to their Stated
Amounts, Transferor shall have the option to redeem the Series 1997-1 Series
Interest.
SECTION 6.12 Rule 144A. So long as any of the Series 1997-1
---------
Certificates are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, Servicer shall, unless it becomes subject to and
complies with the reporting requirements of Section 13 or 15(d) of the
---------- -----
Securities Exchange Act of 1934, as amended, or Rule 12g3-2(b) thereunder,
provide to any Holder of such restricted securities, or to any prospective
purchaser of such restricted securities designated by a Holder, upon the request
of such Holder or prospective purchaser, any information required to be provided
by Rule 144A(d)(4) under the Act.
SECTION 6.13 Optional Call. Upon giving 30 days' prior written notice
-------------
to Trustee, Transferor shall have the right to repurchase all, but not less than
all of the Purchased Assets for a repurchase price equal to the quarter of: (a)
the then outstanding principal amount of the applicable Receivables or (b) the
fair market value of the Purchased Assets, plus, in either case, all accrued and
unpaid interest with respect to the Certificates.
25
ARTICLE VII
TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor Relating to
--------------------------------------------------------
Transferor and the Transaction Documents. On the date hereof, on the date each
----------------------------------------
funding is requested from Investor Certificateholders under the Certificate
Purchase Agreements, and on each Issuance Date, Transferor hereby represents and
warrants for the benefit of Trustee and the Certificateholders that:
(a) Organization and Good Standing. Transferor is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of organization and has all necessary corporate power and authority
to acquire, own and transfer the Receivables and the Related Transferred Assets.
(b) Due Qualification. Transferor is duly qualified to do business and is
in good standing as a corporation (or is exempt from such requirements), and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
qualification, licenses or approvals.
(c) Power and Authority. Transferor has all necessary organizational power
and authority to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to which Transferor is a party when executed and delivered
will constitute, a legal, valid and binding obligation of Transferor,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law.
(e) Authorization, No Conflict or Violation. The execution, delivery and
performance of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents to be signed by Transferor and the
fulfillment of the terms hereof and thereof have been duly authorized by all
necessary action and will not (i) conflict with, violate, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, (A) its articles of incorporation or
bylaws or (B) any indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which Transferor is a party or by which it
or any of its properties is bound, (ii) result in the creation or imposition of
any Adverse Claim upon any of its properties pursuant to the terms of any such
contract, indenture, loan agreement, mortgage, deed of trust, or other agreement
or instrument, other than this Agreement and the other Transaction Documents, or
(iii) conflict with or violate any federal, state, local or foreign law or any
decision, decree, order, rule or regulation applicable to it or any of its
properties of any court or of any federal, state, local or foreign regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(f) Litigation and Other Proceedings. (i) There is no action, suit or
proceeding pending or, to the best knowledge of Transferor, threatened against
it before any court, regulatory body, arbitrator, administrative agency or other
tribunal or governmental instrumentality and (ii) it is not subject to any
order, judgment, decree, injunction, stipulation or consent order of or with any
court
26
or other government authority that, in the case of clauses (i) and (ii), (A)
----------- ----
asserts the invalidity of this Agreement or any other Transaction Document, (B)
seeks to prevent the transfer of any Receivables or Related Transferred Assets
to the Trust, the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document,
(C) seeks any determination or ruling that would materially and adversely affect
the performance by Transferor of its obligations under this Agreement or any
other Transaction Document or the validity or enforceability of this Agreement
or any other Transaction Document, (D) seeks to affect materially and adversely
the income tax attributes of the transfers hereunder or the Trust under the
United States Federal income tax system or any state income tax system or (E)
individually or in the aggregate for all such actions, suits, proceedings and
investigations has, or has a reasonable likelihood of having, a Material Adverse
Effect with respect to Transferor.
(g) Third Party Approvals. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority or other third
party that are required to be obtained by Transferor, and all notices to and
filings with any Governmental Authority or other third party, that are required
to be made by it, in the case of each of the foregoing in connection with the
transfer of Receivables and Related Transferred Assets to the Trust or the
execution, delivery and performance by it of this Agreement and any other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement, have been obtained or made and are
in full force and effect, except where the failure to obtain or make any such
authorization, consent, order, approval, notice or filing, individually or in
the aggregate for all such failures, does not have, and would not have a
reasonable likelihood of having, a Material Adverse Effect with respect to
Transferor.
(h) Offices. Transferor's principal place of business and chief executive
office is, and since the date of its organization has been, located at the
address set forth under Transferor's signature hereto (or at such other
locations, notified to Servicer and Trustee in accordance with Section 7.2(c),
--------------
in jurisdictions where all action required by Section 7.2(c) has been taken and
------- ------
completed).
(i) Reserved.
(j) Investment Company Act. Transferor is not, and is not controlled by, an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
(k) Bulk Sales Act. No transaction contemplated by this Agreement or any
other Transaction Document requires compliance with, or will be subject to
avoidance under, by bulk sales act or similar law.
(l) Margin Regulations. No use of any funds obtained by Transferor under
this Agreement will conflict with or contravene any of Regulations G, T, U and X
promulgated by the Federal Reserve Board from time to time.
(m) Compliance with Applicable Laws. Transferor is in compliance with
requirements of all applicable laws, rules, regulations and orders of all
Governmental Authorities (federal, state, local or foreign, and including
environmental laws), a violation of any of which, individually or in the
aggregate for all such violations, has, or has a reasonable likelihood of
having, a Material Adverse Effect with respect to Transferor.
27
(n) Taxes. Transferor has filed or caused to be filed all tax returns and
reports required by law to have been filed by it and has paid all taxes,
assessments and governmental charges thereby shown to be owing, except any such
taxes, assessments or charges (i) that are being contested in good faith, (ii)
for which adequate reserves in accordance with GAAP shall have been set aside on
its books and (iii) with respect to which no Adverse Claim, except Permitted
Adverse Claims, has been imposed upon any Receivables or Transferred Assets.
The representations and warranties set forth in this section shall survive
the transfer and assignment of the Receivables and the other Transferred Assets
to the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of
any of the foregoing representations and warranties, the party discovering the
breach shall give written notice to the other parties to this Agreement within
two Business Days following the discovery.
SECTION 7.2 Covenants of Transferor. So long as any Investor Certificates
-----------------------
remain outstanding, Transferor shall, unless the Required Person shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations, judgments, decrees and orders (including
those relating to the Receivables, the Related Transferred Assets, the funds in
the Transaction Accounts and the related Transaction Documents and any other
agreements related thereto), in each case to the extent the failure to comply,
individually or in the aggregate for all such failures, has, or has a reasonable
likelihood of having, a Material Adverse Effect with respect to Transferor.
(b) Preservation of Organizational Existence. Preserve and maintain its
status and existence as a limited liability company, rights, franchises and
privileges in the jurisdiction of its organization, and qualify and remain
qualified in good standing as a foreign limited liability company in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualifications has, or has a reasonable likelihood of
having, a Material Adverse Effect with respect to Transferor.
(c) Location of Offices. Keep its principal place of business and chief
executive office at the address referred to in Section 7.1(h) or, upon not less
--------------
than 30 days' (or such shorter number of days as is acceptable to Servicer and
Trustee) prior written notice given by Transferor to Servicer and Trustee, at
such other location in a jurisdiction where all action required pursuant to
Section 3.10 shall have been taken and completed. Transferor will at all times
------------
maintain its principal place of business and chief executive offices within the
United States of America.
(d) Reporting Requirements of Transferor. Furnish to Trustee, Servicer, and
the Investor Certificateholders:
(i) Early Amortization Events. As soon as possible, and in any event
within two Business Days after an Authorized Officer of Transferor has
obtained knowledge of the occurrence of any Early Amortization Event or any
Unmatured Early Amortization Event, a written statement of an Authorized
Officer of Transferor describing the event and the action that Transferor
proposes to take with respect thereto, in each case in reasonable detail,
(ii) Material Adverse Effect. As soon as possible and in any event
within two Business Days after an Authorized Officer of Transferor has
knowledge thereof, written notice
28
that describes in reasonable detail any Adverse Claim, other than any
Permitted Adverse Claim, against the Transferred Assets or any other event
or occurrence that, individually or in the aggregate for all such events or
occurrences, has, or has a reasonable likelihood of having, a Material
Adverse Effect with respect to Transferor,
(iii) Proceedings. As soon as possible and in any event within two
Business Days after an Authorized Officer of Transferor has knowledge
thereof, written notice of (A) any litigation, investigation or proceeding
of the type described in Section 7.1(f) not previously disclosed to Trustee
--------------
and (B) any material adverse development that has occurred with respect to
any such previously disclosed litigation, investigation or proceeding,
(iv) Other. Promptly, from time to time, any other information,
documents, records or reports respecting the Receivables or the Related
Transferred Assets or any other information respecting the condition or
operations, financial or otherwise, of Transferor, in each case as Trustee
or a Required Person may from time to time reasonably request in order to
protect the interests of Trustee, the Trust or the Investor
Certificateholders under or as contemplated by this Agreement.
(e) Adverse Claims. Except for any conveyances under the Transaction
Documents, not permit to exist any Adverse Claim (other than Permitted Adverse
Claims) to or in favor of any Person upon or with respect to, or cause to be
filed any financing statement or equivalent document relating to perfection that
covers, any Transferred Asset or any interest therein. Transferor shall defend
the right, title and interest of the Trust in, to and under the Transferred
Assets, whether now existing or hereafter created, against all claims of third
parties claiming through or under Transferor.
(f) Extension or Amendment of Receivables; Change in Underwriting
Guidelines. Not (i) extend, amend or otherwise modify the terms of any
Receivable (except as permitted by the Collections Policy) in a manner that
would have a Material Adverse Effect on the Investor Certificateholders, Trustee
or Servicer or without the prior written consent of the Required Person, or (ii)
permit Seller to make any change in its Collections Policy that would have a
Material Adverse Effect on the Investor Certificateholders; provided that
Transferor or Servicer, as applicable, may change the terms and provisions of
the Credit and Collections Policy if the change is made with the prior written
approval of the Required Person.
(g) Mergers, Acquisitions, Sales, Etc. Not:
(i) (A) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or (B) except pursuant to the Transaction
Documents, directly or indirectly, sell, transfer, assign, convey, lease,
pledge or grant a security interest in, whether in one transaction or in a
series of transactions, the Transferor Certificate or all or any substantial
portion of its assets, or sell or assign with or without recourse any
Receivables or Related Transferred Assets (other than as provided in the
Transaction Documents);
(ii) except as contemplated in the Purchase Agreement in connection with
Transferor's purchases of Receivables and Related Assets from Seller and its
permitted successors, (A) make, incur or suffer to exist an investment in,
equity contribution to, or
29
payment obligation in respect of the deferred purchase price of property or
services from, any Person, or (B) make any loan or advance to any Person
other than for reasonable and customary operating expenses; or
(iii) create any direct or indirect Subsidiary, joint venture,
partnership or other entity or otherwise acquire direct or indirect
ownership of any equity interests in any other Person, other than Eligible
Investments held in Transaction Accounts.
(h) Change in Name. Not change its corporate name or the name under or by
which it does business, unless prior to the change in name, Transferor (i) shall
have given Servicer and Trustee 30 days' prior written notice thereof, and (ii)
shall have filed (or shall have caused to be filed) any Public Notices as
Servicer or Trustee determines may be necessary to continue the perfection of
the Trust's interest in the Receivables, the Related Transferred Assets and the
proceeds thereof, and taken and completed all other action required by
Section 3.10.
(i) Amendment of Certificate of Formation; Change in Business. Not amend
its articles of incorporation or bylaws in any material respect, or engage in
any business other than as contemplated by the Transaction Documents; provided,
however, that the Transferor shall provide the Required Person with prior
written notice of any amendment.
(j) Amendments to Purchase Agreement. Not (i) cancel or terminate the
Purchase Agreement or consent to or accept any cancellation or termination
thereof, (ii) amend or otherwise modify any term or condition of the Purchase
Agreement or give any consent, waiver or approval thereunder, (iii) waive any
default under or breach of the Purchase Agreement or (iv) take any other action
under the Purchase Agreement not required by the terms thereof.
(k) Enforcement of Transaction Documents. Perform all its obligations under
and otherwise comply with the Transaction Documents and enforce the covenants
and agreements of Seller in the Purchase Agreement and the other Transaction
Documents to which Transferor is a party, unless instructed otherwise by Trustee
or by Trustee at the direction of the Required Person in connection with the
exercise of Trustee's rights pursuant to its security interest in Transferor's
right, title and interest in, to and under the Transaction Documents to which
Transferor is a party.
(l) Other Indebtedness. Not (i) create, incur or permit to exist any
Indebtedness, Guaranty, or liability, except for (A) other liabilities
specifically permitted to be created, incurred or owed by Transferor pursuant to
or in connection with the Transaction Documents and (B) liabilities for
reasonable and customary operating expenses, or (ii) cause or permit to be
issued for its account any letters of credit or bankers' acceptances.
(m) Separate Organization Existence. Take, from and after the Closing Date,
all reasonable steps to maintain its existence as an organization separate and
apart from Servicer, Seller and any other Related Person, Transferor hereby
acknowledging that Trustee and the Investor Certificateholders are, and will be,
entering into the transactions contemplated by the Transaction Documents in
reliance upon Transferor's identity as a legal entity separate from Seller,
Servicer and any other Person. Without limiting the generality of the
foregoing, Transferor shall take such actions as shall be reasonably required in
order that:
30
(i) Transferor will not incur any material indirect or overhead
expenses for items shared between Transferor and any Related Person other
than shared items of expenses such as legal, auditing and other
professional services, that will be allocated to the extent practical on
the basis of actual use or the value of services rendered, and otherwise on
a basis reasonably related to the actual use or the value of services
rendered.
(ii) Transferor will account for and manage its liabilities
separately from those of every other Related Person, including payment of
all payroll and administrative expenses and taxes (other than taxes that
are determined or required to be determined on a consolidated or combined
basis) from its own assets.
(iii) Transferor will maintain corporate or company records,
books of account and stationery separate from those of every Related
Person; provided, however, that Transferor's financial statements may be
prepared on a consolidated basis together with the Guarantor and Seller in
accordance with GAAP.
(iv) Transferor's assets will be maintained in a manner that
facilitates their identification and segregation from those of any Related
Person.
(v) Transferor shall not, directly or indirectly, be named and
shall not enter into an agreement to be named as a direct or contingent
beneficiary or loss payee on any insurance policy with respect to any loss
relating to the property of a Related Person.
(vi) Any transaction between Transferor and any Related Person
will be the type of transaction which would be entered into by a prudent
Person in the position of Transferor with a Related Person, and will be on
terms that are at least as favorable as may be obtained from a Person that
is not a Related Person (it being understood and agreed that the
transactions contemplated in the Transaction Documents meet the
requirements of this clause).
(vii) Transferor will not be and will not hold itself out to be
responsible for the debts of any Related Person.
(viii) Transferor will operate, conduct its business and
otherwise act in a manner that is consistent with the factual assumptions
in any Bankruptcy Opinion delivered in connection with the Certificates.
(n) Taxes. File or cause to be filed all Federal, state and local tax
returns that are required to be filed by it and pay or cause to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, other than any taxes or assessments, the validity of which are being
contested in good faith by appropriate proceedings and with respect to which
Transferor shall have set aside adequate reserves on its books in accordance
with GAAP and which proceedings do not have, or have a reasonable likelihood of
having, a Material Adverse Effect with respect to Transferor.
The covenants set forth in this section shall survive the transfer and
assignment of the Receivables and the other Transferred Assets to the Trust.
Upon discovery by Transferor, Servicer or Trustee of a breach of any of the
foregoing covenants, the party discovering the breach shall give
31
written notice to the other parties to this Agreement within two Business Days
following such discovery.
SECTION 7.3 Indemnification by Transferor. Without limiting any other
-----------------------------
rights which any Indemnified Party may have hereunder or under applicable law,
Transferor hereby agrees to indemnify and hold harmless the Trust, Trustee,
(Servicer, if other than a Related Person) and each Certificateholder and each
of the successors, permitted transferees and assigns of any such Person and all
officers, directors, shareholders, controlling Persons, employees, affiliates
and agents of any of the foregoing (each of the foregoing Persons being
individually called an "Indemnified Party"), forthwith on demand, from and
against any and all damages, losses, claims (whether on account of settlement or
otherwise, and whether or not the relevant Indemnified Party is a party to any
action or proceeding that gives rise to any Indemnified Losses (as defined
below)), judgments, liabilities and related reasonable costs and expenses
(including reasonable attorneys' fees and disbursements) (all of the foregoing
being collectively called "Indemnified Losses") awarded against or incurred by
any of to the extent arising out of or relating to Transferor's performance of,
or failure to perform, any of its obligations under or in connection with this
Agreement, any other Transaction Document or any of the transactions
contemplated herein or therein or the use of proceeds herefrom or therefrom.
Notwithstanding the foregoing (and with respect to clause (b) below,
----------
without prejudice to the rights that Trustee may have pursuant to the other
provisions of this Agreement or the provisions of any of the other Transaction
Documents), in no event shall any Indemnified Party be indemnified against any
Indemnified Losses (a) resulting from gross negligence or willful misconduct on
the part of such Indemnified Party (or the gross negligence or willful
misconduct on the part of any of such Indemnified Party's officers, directors,
employees, affiliates or agents), (b) to the extent the same include Indemnified
Losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to Transferor for the amount of any Receivable or
Related Transferred Asset not paid by the related Obligor, (c) to the extent
such Indemnified Losses are or result from lost profits or other consequential
damage, or (d) to the extent such Indemnified Losses are or result from taxes
asserted with respect to (i) distributions on the Investor Certificates (other
than any withholding taxes, if and to the extent that (A) such withholding taxes
should have been (but in fact were not) withheld and paid over by the Trust to
the relevant taxing authority, (B) such taxing authority asserts a claim for
such withholding taxes against the Trust or the Transferor, and (C) the assets
of the Trust are insufficient to satisfy such claim at the time a final
determination is made that such withholding taxes are due and payable) and (ii)
federal or other income taxes on or measured by the net income of such
Indemnified Party.
If for any reason the indemnification provided in this Section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Transferor shall contribute to the amount paid by the Indemnified Party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and Transferor on the other hand, but also the
relative fault of such Indemnified Party (if any) and Transferor and any other
relevant equitable consideration.
32
ARTICLE VIII
SERVICER
SECTION 8.1 Representations and Warranties of Servicer. On the date
------------------------------------------
hereof and on each Issuance Date, Servicer hereby makes, and any Successor
Servicer (other than Trustee automatically appointed as Successor Servicer
pursuant to Section 10.2) also shall be deemed to make by its acceptance of its
appointment hereunder, the following representations and warranties for the
benefit of Trustee and the Certificateholders:
(a) Organization and Good Standing. Servicer is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to own its properties and to conduct its business as the properties
presently are owned and as the business presently is conducted.
(b) Due Qualification. Servicer is duly qualified to do business and is in
good standing as a foreign corporation (or is exempt from such requirements),
and has obtained all necessary licenses and approvals, in all jurisdictions in
which the servicing of the Receivables and the Related Transferred Assets as
required by this Agreement requires qualification, licenses or approvals.
(c) Power and Authority. Servicer has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to which Servicer is a party when executed and delivered
will constitute, a legal, valid and binding obligation of Servicer, enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law.
(e) Authorization; No Conflict or Violation. The execution and delivery by
Servicer of this Agreement and the other Transaction Documents to which it is a
party, the performance by it of its obligations hereunder and thereunder and the
fulfillment by it of the terms hereof and thereof that are applicable to it have
been duly authorized by all necessary action and will not
(i) conflict with, violate, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, (A) its articles of incorporation or bylaws or (B) any indenture,
loan agreement, mortgage, deed of trust, or other material agreement or
instrument to which it is a party or by which it or any of its properties is
bound (excluding any such agreement that is terminated on or before the Closing
Date or under which Servicer has obtained all necessary consents) or (ii)
conflict with or violate any federal, state, local or foreign law or any
decision, decree, order, rule or regulation applicable to it or any of its
properties of any court or of any federal, state, local or foreign regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(f) Approvals. All authorizations, consents, orders and approvals of, or
other action by, any Governmental Authority that are required to be obtained by
Servicer, and all notices to and filings with any Governmental Authority or
other Person that are required to be made by it, in the case of each of the
foregoing in connection with the execution, delivery and performance by it of
this
33
Agreement and any other Transaction Documents to which it is a party and
the consummation of the transactions contemplated by this Agreement, have been
obtained or made and are in full force and effect, except where the failure to
obtain or make such authorization, consent, order, approval, notice or filing,
individually or in the aggregate for all such failures, do not have, or have a
reasonable likelihood of having, a Material Adverse Effect with respect to
Servicer or Transferor.
(g) Litigation and Other Proceedings. (i) There is no action, suit,
proceeding or investigation pending or, to the best knowledge of Servicer,
threatened against it before any court, regulatory body, arbitrator,
administrative agency or other tribunal or governmental instrumentality and (ii)
it is not subject to any order, judgment, decree, injunction, stipulation or
consent order of or with any court or other government authority that, in the
case of clauses (i) and (ii), (A) seeks to affect adversely the income tax
----------- ----
attributes of the transfers hereunder or the Trust under the United States
federal income tax system or any state income tax system or (B) individually or
in the aggregate for all such actions, suits, proceedings and investigations
has, or has a reasonable likelihood of having, a Material Adverse Effect with
respect to Servicer or Transferor.
(h) [RESERVED.]
The representations and warranties set forth in this section shall survive
the transfer and assignment of the Receivables and the other Transferred Assets
to the Trust. Upon discovery by an Authorized Officer of Transferor, Servicer
or Trustee of a breach of any of the foregoing representations and warranties,
the party discovering the breach shall give written notice to the other parties
to this Agreement and the Required Person within two Business Days following the
discovery.
SECTION 8.2 Covenants of Servicer. So long as any Investor Certificates
---------------------
remain outstanding (other than any Investor Certificates payment for which has
been duly provided for in accordance with this Agreement), Servicer shall:
(a) Compliance with Laws, Etc. Maintain in effect all qualifications
required under applicable law in order to service properly the Receivables and
shall comply with all applicable laws, rules, regulations, judgments, decrees
and orders.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction in which the ownership or lease of
property or the conduct of its business requires such qualification, licenses or
approvals.
(c) Notice. As soon as possible (and in any event within two Business Days
after an Authorized Officer has knowledge thereof), furnish to Transferor,
Trustee and the Investor Certificateholders notice of any of the events
described in clauses (i), (ii) and (iii) of Section 7.2(d).
(d) Location of Offices. Maintain at all times its principal place of
business and chief executive office in the United States of America.
(e) Insurance. If requested by the Purchaser in connection with any
securitization of Receivables, maintain customary errors and omissions and
fidelity insurance coverage in such amounts as shall be requested.
34
The covenants set forth in this section shall survive the transfer and
assignment of the Transferred Assets to the Trust. Upon discovery by an
Authorized Officer of Transferor, Servicer or Trustee of a breach of any of the
foregoing covenants, the party discovering the breach shall give written notice
to the other parties to this Agreement and the Required Person within two
Business Days following the discovery.
SECTION 8.3 Merger or Consolidation of or Assumption of the Obligations
-----------------------------------------------------------
of, Servicer. Except for the Permitted Sale, Servicer shall not consolidate
------------
with or merge into any other Person or convey, transfer or sell all or
substantially all of its properties and assets to any Person, unless (a)
Servicer is the surviving entity or, if it is not the surviving entity, the
Person formed by the consolidation or into which Servicer is merged or the
Person that acquires by conveyance, transfer or sale all or substantially all of
the properties and assets of Servicer shall be a corporation organized and
existing under the laws of the United States of America or any State thereof or
the District of Columbia and such corporation shall expressly assume, by an
agreement supplemental hereto, executed and delivered to Trustee and in form and
substance satisfactory to Trustee, the performance of every covenant and
obligation of Servicer hereunder and under the other Transaction Documents to
which Servicer is a party, and (b) Servicer shall have delivered to Trustee and
the Required Person an Officer's Certificate stating that the consolidation,
merger, conveyance, transfer or sale and the supplemental agreement comply with
this Section and an Opinion of Counsel stating that the supplemental agreement
is a valid and binding obligation of the surviving entity enforceable against it
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity.
SECTION 8.4 Indemnification by Servicer. Servicer hereby agrees to
---------------------------
indemnify each Indemnified Party forthwith on demand, from and against any and
all Indemnified Losses awarded against or incurred by any of them that arise out
of or relate to Servicer's performance of, or failure to perform, any of its
obligations under or in connection with any Transaction Document in breach of
the terms of such Transaction Document.
Notwithstanding the foregoing (and with respect to clause (b) below,
----------
without prejudice to the rights that such Indemnified Party may have pursuant to
the other provisions of this Agreement or the provisions of any of the other
Transaction Documents), in no event shall any Indemnified Party be indemnified
against any Indemnified Losses (a) resulting from gross negligence or willful
misconduct on the part of such Indemnified Party (or the gross negligence or
willful misconduct on the part of any of such Indemnified Party's officers,
directors, employees, affiliates or agents), (b) to the extent the same includes
Indemnified Losses in respect of Receivables and reimbursement therefor that
would constitute credit recourse to Servicer for the amount of any Receivable or
Related Transferred Asset not paid by the related Obligor, (c) to the extent
such Indemnified Losses are or result from lost profits or other consequential
damage, or (d) to the extent such Indemnified Losses are or result from taxes
asserted with respect to (i) distributions on the Investor Certificates (other
than any withholding taxes, if and to the extent that (A) such withholding taxes
should have been (but in fact were not) withheld and paid over by the Trust to
the relevant taxing authority, (B) such taxing authority asserts a claim for
such withholding taxes against the Trust or the Servicer, and (C) the assets of
the Trust are insufficient to satisfy such claim at the time a final
determination is made that such withholding taxes are due and payable) and (ii)
federal or other income taxes on or measured by the net income of such
Indemnified Party; provided, that clause (ii) shall not apply to limit the
-------- -----------
Servicer's liability for Indemnified Losses of that nature of the Trust.
35
If for any reason the indemnification provided in this section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Servicer shall contribute to the amount paid by such Indemnified Party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and Servicer on the other hand, but also the
relative fault of such Indemnified Party (if any) and Servicer and any other
relevant equitable consideration.
SECTION 8.5 Servicer Liability. Servicer shall be liable in accordance
------------------
with this Agreement only to the extent of the obligations specifically
undertaken by Servicer in such capacity herein and as set forth herein.
SECTION 8.6 Limitation on Liability of Servicer and Others. Servicer
----------------------------------------------
shall not be under any obligation to appear in, prosecute or defend any legal
action that is not incidental to its duties to service the Receivables in
accordance with this Agreement that in its reasonable opinion may involve it in
any expense or liability. Servicer may, in its sole discretion, undertake any
legal action relating to the servicing, collection or administration of
Receivables and Related Transferred Assets that it may reasonably deem necessary
or appropriate for the benefit of the Certificateholders with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder.
ARTICLE IX
EARLY AMORTIZATION EVENTS; TERMINATION BY SELLER
SECTION 9.1 Early Amortization Events. Each of the following shall
-------------------------
constitute an "Early Amortization Event":
(a) any of the following shall occur;
(i) failure on the part of Seller, Transferor or Servicer to make
any deposit required by the terms of any Transaction Document within two
Business Day after the date the deposit is required to be made, to
repurchase any Receivable when due, or to make any other payment required
by the terms of any Transaction Document on or before five Business Days
after the date such payment is required to be made; or
(ii) failure on the part of Servicer to deliver a Monthly Report
within the time required under Section 3.5(c) of the Pooling Agreement, and
--------------
continuance of such failure for five (5) Business Days after notice of such
failure has been provided to Services; or
(iii) failure on the part of Seller duly to observe or perform
Section 6.1(f), 6.1(h), 6.1(i), 6.1(j), 6.3(a), 6.3(b), 6.3(c), 6.3(e),
-------------- ------ ------ ------ -------------------------------
6.3(f) or 6.3(g) of the Purchase Agreement or failure on the part of
------ ------
Transferor duly to observe or perform Section 7.2(c), 7.2(d), 7.2(e),
-------------------------------
7.2(f), 7.2(h), 7.2(i), 7.2(j), 7.2(k) or 7.2(m) of this Agreement, which
-------------------------------------- ------
failure continues unremedied for a period of 10 days; or
(iv) failure on the part of Seller, Transferor or Servicer duly
to observe or perform any other covenant or agreement set forth in any
Transaction Document, which failure continues unremedied for a period of 30
days; or
36
(v) failure of the Trust to pay any amount of interest accrued on any
Investor Certificate on any Distribution Date, for whatever reason; or
(b) any representation or warranty made by Seller in subsection 5.1(d),
------------------
5.1(k), 5.1(n), 5.1(o) or 5.1(r) of the Purchase Agreement or by Transferor in
---------------------- ------
subsection 2.4(a)(i), 2.4(a)(ii) or 7.1(i) of the Pooling Agreement shall prove
-------------------- ---------- ------
to have been incorrect in any material respect when made, and continues to be
incorrect in any material respect for a period of five (5) Business Days, or any
other representation or warranty made by Transferor, Servicer, or Seller in any
Transaction Document shall prove to have been incorrect in any material respect
when made, and continues to be incorrect in any material respect for a period of
30 days;
(c) a Bankruptcy Event shall occur with respect to Transferor, Servicer, or
Seller, or Transferor shall become unable, for any reason, to transfer
Receivables or other Transferred Assets to the Trust in accordance with the
provisions of this Agreement; provided that if, at the time any event that
would, with the passage of time, become a Bankruptcy Event occurs as a result of
a bankruptcy proceeding being filed against Transferor or Seller, then, on and
after the day on which the bankruptcy proceeding is filed until the earlier to
occur of the dismissal of the proceeding and the commencement of the Early
Amortization Period, Transferor shall not purchase Receivables and Related
Assets from Seller or, if Transferor is the subject of the proceeding, transfer
Receivables and Related Transferred Assets to the Trust;
(d) Seller, the Trust or Transferor shall be required to be registered as
an "investment company" under and within the meaning of the Investment Company
Act of 1940, as amended;
(e) after the allocation provided in Section 4.6 clause second, the Net
-----------
Invested Amount exceeds the Base Amount for a period of two or more consecutive
Business Days;
(f) a Servicer Default shall have occurred;
(g) Seller shall cease to own, 100% of the equity interests of Transferor;
(h) the Internal Revenue Service or the PBGC files one or more Tax or ERISA
Liens against the assets of Transferor or Seller which is not removed within 30
days;
(i) the cessation of, or the failure to create, either ownership by the
Trustee in, or a valid first-priority perfected security interest in favor of
Trustee in, the Receivables or in the rights of Transferor under the Purchase
Agreement;
(j) any foreclosure or similar proceeding in respect of any adverse claim
on the Transferor shall have been commenced; or title to Transferor's equity
interests shall pass to the holders of such adverse claim which, after 30 days
has not been dismissed;
(k) Report of Seller's independent accountants contains a "going concern"
opinion;
(l) Seller defaults in any of its material debt instruments that singly or
in the aggregate amount to $50,000 or more, and such default is not cured within
the cure periods specified in the defaulted debt instruments;
37
(m) a change in control of Seller occurs other than due to the result of an
initial public offering or a private placement of Seller's common stock occurs;
(n) Seller amends the Credit and Collections Policy in contravention of
Section 6.3(b) of the Purchase and Sale Agreement;
--------------
(o) the Invested Amount is zero for 180 consecutive days;
(p) While the Guarantee is in effect, Guarantor's stockholders' equity
declines below $20,000,000 as shown by any quarterly or annual financial
statement and thereafter, Seller's stockholder's equity declines below
$20,000,000 calculated in accordance with GAAP on a basis that is not
consolidated with Guarantor, as shown by any quarterly or annual financial
statements;
(q) Seller arranges an alternative facility to finance the Receivables;
(r) Delinquent Receivables held by the Trust are equal to or greater than
5% of the Receivables held by the Trust; or
(s) there is a material breach of the structuring fee side letter with
CSFB.
SECTION 9.2 Early Amortization Period. Immediately upon the
-------------------------
occurrence and continuance of any Early Amortization Event, an Early
Amortization Period shall commence without any notice or other action on the
part of Trustee or the Series 1997-1 Certificateholders.
SECTION 9.3 Remedies. Upon the occurrence of an Early Amortization
--------
Event, Trustee shall have, in addition to all other rights and remedies
available to Trustee under this Agreement or otherwise, (a) the right to apply
Collections as provided herein, and (b) all rights and remedies provided under
all other applicable laws, which rights, in the case of each and all of the
foregoing, shall be cumulative. Trustee shall exercise the rights at the
direction of the Investor Certificateholders pursuant to (and subject to the
limitations specified in) Section 11.13.
-------------
SECTION 9.4 Additional Rights Upon the Occurrence of Certain Events.
-------------------------------------------------------
(a) If a Bankruptcy Event shall occur with respect to Transferor, this
Agreement (other than this Section 9.4) and the Trust shall be deemed to have
-----------
terminated on the day of the Bankruptcy Event. Within seven Business Days of
the date of written notice to Trustee of the Bankruptcy Event, Trustee shall:
(i) publish a notice in an Authorized Newspaper that a Bankruptcy
Event has occurred with respect to Transferor, that the Trust has
terminated, and that Trustee intends to sell, dispose of or otherwise
liquidate the Receivables and the Related Transferred Assets pursuant to
this Agreement in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids
(a "Disposition"), and
(ii) send written notice to the Investor Certificateholders
describing the provisions of this section and requesting each Investor
Certificateholder to advise Trustee in writing whether (A) it wishes Trustee
not to effectuate a Disposition, (B) it refuses to advise Trustee as to the
specific action Trustee shall take or (C) it wishes Trustee to effect a
Disposition.
38
If, after 60 days from the day notice pursuant to subsection (a)(i) is first
-----------------
published (the "Publication Date"), Trustee shall not have received the written
instruction described in subsection (a)(ii)(A) from Investor Certificateholders
---------------------
representing at least a majority in interest, Trustee shall instruct Servicer to
effectuate a Disposition, and Servicer shall proceed to consummate a
Disposition. If, however, Holders representing at least a majority of interest
of all Series of Investor Certificates instruct Trustee not to effectuate a
Disposition, the Trust shall be reconstituted and continue pursuant to the terms
of this Agreement.
(b) Notwithstanding the termination of this Agreement and the Trust pursuant
to subsection (a), the proceeds from any Disposition of the Receivables and the
--------------
Related Transferred Assets pursuant to subsection (a) shall be treated as
--------------
Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions of Article IV.
----------
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this section with respect to competitive bids.
(d) Transferor or any of its Affiliates (other than Seller) shall be
permitted to bid for the Receivables and the Related Transferred Assets.
Trustee may obtain a prior determination from any bankruptcy trustee, receiver
or liquidator that the terms and manner of any proposed Disposition are
commercially reasonable.
(e) Notwithstanding the termination of this Agreement and the Trust pursuant
to subsection (a), Trustee shall continue to have the rights described in
--------------
Section 9.3 and Article XI, and be subject to direction on terms consistent with
----------- ----------
those set out in Section 11.14, pending the completion of any Disposition and/or
-------------
the reconstitution of the Trust.
ARTICLE X
SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults. Any of the following events shall
-----------------
constitute a "Servicer Default":
(a) any failure by Servicer to take any action that it is required to take
in its capacity as Servicer to make any payment, transfer or deposit required by
any Transaction Document or to give instructions or to give notice to Trustee to
make such payment, transfer or deposit, which failure continues unremedied for
three Business Days,
(b) failure on the part of Servicer duly to observe or perform any other
covenants or agreements of Servicer set forth in this Agreement or any other
Transaction Document, which failure continues unremedied for a period of 25
Business Days after the date on which written notice of the failure, requiring
the same to be remedied, shall have been given to Servicer by Trustee, or to
Servicer and Trustee by any Investor Certificateholder,
(c) Servicer shall assign its duties under this Agreement, except as
permitted by Sections 3.1(b) and 8.3,
--------------- ---
39
(d) any representation, warranty or certification made by Servicer in any
Transaction Document or in any certificate or other document or instrument
delivered pursuant to any Transaction Document shall prove to have been
incorrect when made or delivered, and continues to be incorrect in any material
respect for a period of 15 Business Days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to
Servicer by Trustee, or to Servicer and Trustee by any Investor
Certificateholder, or
(e) any Bankruptcy Event shall occur with respect to Servicer.
In the event of any Servicer Default, so long as such Servicer Default shall not
have been remedied, Trustee (at the direction of the Required Person), by notice
then given in writing to Servicer (a "Termination Notice"), shall terminate all
the rights and obligations (other than obligations of such Servicer under
Sections 8.4 and 11.5) of Servicer as Servicer under this Agreement.
As soon as possible, and in any event within two Business Days, after an
Authorized Officer of Servicer has obtained knowledge of the occurrence of any
Servicer Default, Servicer shall furnish Transferor, Trustee and the Required
Person, and Trustee shall promptly furnish each other Investor
Certificateholder, notice of such Servicer Default.
SECTION 10.2 Trustee to Act; Appointment of Successor Servicer.
-------------------------------------------------
(a) On and after Servicer's receipt of a Termination Notice pursuant to
Section 10.1, Servicer shall continue to perform all servicing functions under
------------
this Agreement until the date specified in the Termination Notice or otherwise
specified by Trustee in writing or, if no such date is specified in the
Termination Notice, or otherwise specified by Trustee, until a date mutually
agreed upon by Servicer and Trustee. Trustee shall, as promptly as possible
after the giving of a Termination Notice, nominate an Eligible Servicer as
successor servicer (the "Successor Servicer"); provided that (i) in so
appointing any Successor Servicer, Trustee shall give due consideration to any
Successor Servicer proposed by any Required Person, (ii) such Successor Servicer
is approved by the Required Person and (iii) such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to Trustee
and the Required Person. In the event that a Successor Servicer has not been
appointed or has not accepted its appointment at the time when Servicer ceases
to act as Servicer, Trustee without further action shall automatically be
appointed the Successor Servicer. Trustee may delegate any of its servicing
obligations to an affiliate or agent in accordance with Section 3.1(b). If
--------------
Trustee is prohibited by applicable law from performing the duties of Servicer
hereunder, Trustee may appoint, or may petition a court of competent
jurisdiction to appoint, a Successor Servicer hereunder. Trustee shall give
prompt notice to each Investor Certificateholder upon the appointment of a
Successor Servicer.
(b) After Servicer's receipt of a Termination Notice, and on the date that a
Successor Servicer shall have been appointed by Trustee and shall have accepted
the appointment pursuant to subsection (a), all authority and power of Servicer
--------------
under this Agreement shall pass to and be vested in the Successor Servicer (a
"Service Transfer"); and, without limitation, Trustee is hereby authorized and
empowered to execute and deliver, on behalf of Servicer, as attorney-in-fact or
otherwise, all documents and instruments, and to do and accomplish all other
acts or things that Trustee reasonably determines are necessary or appropriate
to effect the purposes of the Service Transfer. Upon the appointment of the
Successor Servicer and its acceptance thereof, Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner that Trustee
indicates will facilitate the
40
transition of the performance of such activities to the Successor Servicer.
Servicer agrees that it shall use best efforts to assist the Successor Servicer
in assuming the obligations to service and administer the Receivables and the
Related Transferred Assets, on the terms and subject to the conditions set forth
herein, and to effect the termination of the responsibilities and rights of
Servicer to conduct servicing hereunder, including the transfer to such
Successor Servicer of all authority of Servicer to service the Receivables and
Related Transferred Assets provided for under this Agreement and all authority
over all cash amounts that shall thereafter be received with respect to the
Receivables or the Related Transferred Assets. Servicer shall, within five
Business Days after the designation of a Successor Servicer, transfer its
electronic records (and any related software and software licenses,
appropriately assigned and prepaid) relating to the Receivables, the related
Obligor Loan Agreements and the Related Transferred Assets to the Successor
Servicer in such electronic form as the Servicer may have maintained the same
and shall promptly transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables and the Related Transferred Assets in the manner and at such times
as the Successor Servicer shall request. To the extent that compliance with this
Section shall require any Servicer to disclose to the Successor Servicer
information of any kind that such Servicer deems to be confidential, prior to
the transfer contemplated by the preceding sentence the Successor Servicer shall
be required to enter into a reasonable confidentiality agreement which shall
permit it to carry out its duties in the best interests of the Investor
Certificateholders. The termination of the Servicer having occurred as a
consequence of a Servicer Default, all reasonable costs and expenses (including
attorneys' fees and disbursements) incurred in connection with transferring the
Receivables, the Related Transferred Assets and all related Records (including
the related Contracts) to the Successor Servicer and amending this Agreement and
the other Transaction Documents to reflect such succession as Servicer pursuant
to this Section shall be paid by the predecessor Servicer within 15 days after
presentation of reasonable documentation of the costs and expenses; provided
that if the predecessor Servicer or preceding Servicer, as the case may be,
fails to make such payment within such time, Transferor shall make such payment
within five days thereafter. The predecessor or Servicer shall be entitled to
any accrued fees.
(c) Upon its appointment and acceptance thereof, the Successor Servicer
shall be the successor in all respects to Servicer with respect to servicing
functions under this Agreement and shall be subject to all the responsibilities
and duties relating thereto placed on Servicer by the terms and provisions
hereof (and shall carry out such responsibilities and duties in accordance with
standards of reasonable commercial prudence), and all references in this
Agreement to Servicer shall be deemed to refer to the Successor Servicer.
(d) All authority and power granted to Servicer or the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.1, and shall pass to and be vested in
------------
Transferor and, without limitation, Transferor is hereby authorized and
empowered, on and after the effective date of such termination, to execute and
deliver, on behalf of Servicer or the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments and to do and accomplish all
other acts or things that Transferor reasonably determines are necessary or
appropriate to effect the purposes of such transfer of servicing rights.
Servicer or Successor Servicer agrees to cooperate with Transferor in effecting
the termination of the responsibilities and rights of Servicer or Successor
Servicer to conduct servicing of the Receivables and the Related Transferred
Assets. Servicer or Successor Servicer shall, within five Business Days after
such termination, transfer its electronic records relating to the Receivables
and the Related Transferred Assets to Transferor in such electronic form as
Transferor may reasonably request and shall transfer all other records,
correspondence and documents relating to the
41
Receivables and the Related Transferred Assets to Transferor in the manner and
at such times as Transferor shall reasonably request. To the extent that
compliance with this Section shall require Servicer or Successor Servicer to
disclose to Transferor information of any kind that Servicer or Successor
Servicer deems to be confidential, Transferor shall be required to enter into
such customary licensing and confidentiality agreements as Servicer or Successor
Servicer shall deem necessary to protect its interests. All reasonable costs and
expenses (including attorneys' fees and disbursements) incurred by Trustee in
connection with the termination shall be paid by Transferor within 15 days after
presentation of reasonable documentation of the costs and expenses. Trustee may
reserve and withhold from distributions to the Transferor such amounts as it
reasonably determines may be required for the payment of such costs and
expenses.
Notwithstanding any provisions contained in any Transaction Document to the
contrary, Transferor shall not, and shall not be obligated to, pay any amount
pursuant to this Section. Any amount which Transferor does not pay pursuant to
the operation of the preceding sentence shall not constitute a claim (as defined
in (S)101 of the Bankruptcy Code) against or company obligation of Transferor
for any such insufficiency.
(e) To the extent that this Agreement or any other Transaction Document
requires Servicer to obtain information from another Person or to cause another
Person to act or abstain from acting, such provision shall be construed only to
require a Successor Servicer to use reasonable efforts to obtain information
from another Person or to cause another Person to act or abstain from acting.
SECTION 10.3 Notification of Servicer Default, Notification of
-------------------------------------------------
Appointment of Successor Servicer. Within two Business Days after an Authorized
---------------------------------
Officer of Servicer becomes aware of any Servicer Default, Servicer shall give
written notice thereof to Transferor, Trustee and the Required Person, and
Trustee shall, promptly upon receipt of the written notice, give notice to the
other Investor Certificateholders at their respective addresses appearing in the
Certificate Register. Upon any termination or appointment of a Successor
Servicer pursuant to this Article X, Trustee shall give prompt written notice
---------
thereof to the Investor Certificateholders at their respective addresses
appearing in the Certificate Register.
SECTION 10.4 Waiver of Servicer Defaults. The Required Person may, on
---------------------------
behalf of the Transferor and all the Holders, waive in writing any Servicer
Default hereunder and its consequences. Upon any such waiver of a Servicer
Default, such Servicer Default shall cease to exist, and shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other Servicer Default or impair any right consequent
thereon except to the extent expressly so waived.
ARTICLE XI
TRUSTEE
SECTION 11.1 Duties of Trustee. Trustee shall have no duty unless it
-----------------
is specifically identified in this Agreement.
(a) Trustee undertakes to perform the duties and only the duties as are
specifically set forth in this Agreement. The provisions of this Article XI
----------
shall apply to Trustee solely in its capacity
42
as Trustee, and not to Trustee in its capacity as Servicer if it is acting as
Servicer. Trustee shall exercise such of the rights and powers vested in it by
this Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs; provided that if Trustee shall assume the duties of
Servicer pursuant to Section 10.2, Trustee in performing the duties shall use
------------
the degree of skill and attention customarily exercised by a servicer with
respect to trade receivables that it services for itself or others. 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, or incidental to the
performance of its duties under, the Transaction Documents.
(b) Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to Trustee
that are specifically required to be furnished to Trustee pursuant to any
provision of this Agreement, shall examine them to determine whether they are
substantially in the form required by this Agreement. Trustee shall give
written notice to the Person who furnished any item of the type listed in the
preceding sentence of any lack of substantial conformity of any such item to the
applicable requirements of this Agreement. In addition, Trustee shall give
prompt written notice to the Investor Certificateholders of any lack of
substantial conformity of any such instrument to the applicable requirements of
this Agreement discovered by Trustee that would entitle a specified percentage
of the Investor Certificateholders or the Holders of any Series of Certificates
or any Required Person to take any action pursuant to this Agreement. During
the first week of each calendar year, Trustee shall provide the Required Person
with a certificate, signed by a Responsible Officer, to the effect that Trustee
is not aware of any Early Amortization Event (or, if it is aware of any Early
Amortization Event, specifying the nature of that event).
(c) Subject to subsection (a), no provision of this Agreement shall be
--------------
construed to relieve Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided that:
(i) Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of Trustee,
unless it shall be proved that Trustee was negligent in ascertaining the
pertinent facts,
(ii) Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the
direction (as applicable) of any Required Person relating to the time,
method and place of conducting any proceeding for any remedy available to
Trustee, or exercising any trust or power conferred upon Trustee, under this
Agreement,
(iii) Trustee shall not be charged with knowledge of (A) any
Servicer Default referred to in subsections (a), (b) or (c) of Section 10.1,
--------------- --- --- ------------
(B) any breach of the representations and warranties of Transferor set forth
in Section 7.1, or the representations and warranties of Servicer set forth
-----------
in Section 8.1, (C) any breach of the covenants of Transferor set forth in
-----------
Section 7.2, or the covenants of Servicer set forth in Section 8.2, or (D)
----------- -----------
the ownership of any Certificate for purposes of Section 6.5, in each case
-----------
unless a Responsible Officer of Trustee obtains actual knowledge of the
matter or Trustee receives written notice of the matter from Servicer, or
from any Holder,
43
(iv) the duties and obligations of Trustee shall be determined
solely by the express provisions of this Agreement, Trustee shall not be
liable except for the performance of the duties and obligations that
specifically shall be set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against Trustee and, in the
absence of bad faith on the part of Trustee, Trustee may conclusively rely
on the truth of the statements and the correctness of the opinions expressed
in any certificates or opinions that are furnished to Trustee and that
conform to the requirements of this Agreement, and
(v) without limiting the generality of this section or Section
-------
11.2, Trustee shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement evidencing a security interest in the Receivables or the
Related Transferred Assets, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof (except that Trustee (x) shall note in its
records the date of filing of each Public Notice identified to it in writing
as having been filed in connection with the Transaction Documents, or filed
in connection with a predecessor receivables securitization and amended
and/or assigned in connection with the Transaction Documents, and naming
Trustee as secured party or assignee of the secured party, (y) shall, unless
it shall have received an Opinion of Counsel to the effect that no such
filing is necessary to continue the perfection of Transferor's or Trustee's
interests in the Receivables and the Related Assets, cause continuation
statements to be filed with respect to each such Public Notice that is a UCC
financing statement not less than four years and six months and not more
than five years after (1) its filing date and (2) the date of filing of any
prior continuation statement and (z) shall, unless it shall have received an
Opinion of Counsel to the effect that no such filing is necessary to
continue the perfection of Transferor's or Trustee's interests in the
Receivables and the Related Assets, cause appropriate Public Notices that
are not UCC financing statements to be filed to continue the perfection of
Transferor's or Trustee's interests in the Receivables and the Related
Assets within the requisite time periods), (B) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any
Adverse Claim or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust, (C) to confirm or verify the contents
of any reports or certificates of Servicer delivered to Trustee pursuant to
this Agreement that are believed by Trustee to be genuine and to have been
signed or presented by the proper party or parties or (D) to ascertain or
inquire as to the performance or observance of any of Transferor's,
Servicer's representations, warranties or covenants, Servicer's duties and
obligations as Servicer.
(d) Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if Trustee
reasonably believes that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require Trustee to
perform, or be responsible for the manner of performance of, any obligations of
Servicer or the Verification Company under this Agreement except during the
time, if any, that Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, Servicer in accordance with the terms
of this Agreement.
Notwithstanding the foregoing, as Successor Servicer, Trustee shall have no
liability arising out of or resulting from any act, omission or breach of this
Agreement and of any other Transaction Document of the terminated Servicer,
Transferor or Seller. The Successor Servicer shall have no
44
liability to any Certificateholder, Trustee, or to any other Person, for any
costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from delays of the terminated Servicer or Transferor in transmitting
Records to the Successor Servicer, permitting inspection of Records or
facilities, or for any other costs, expenses, losses, damages, claims and
liabilities incurred in the servicing transition.
(e) Except for actions expressly authorized by this Agreement, Trustee shall
take no action reasonably likely to impair the interests of the Trust in any
Transferred Asset now existing or hereafter created or to impair the value of
any Transferred Asset now existing or hereafter created.
(f) Except to the extent expressly provided otherwise in this Agreement,
Trustee shall have no power to vary the Transferred Assets.
(g) In the event that the Paying Agent or the Transfer Agent and Registrar
shall fail to perform any obligation, duty or agreement in the manner or on the
day on which such obligation, duty or agreement is required to be performed by
the Paying Agent or the Transfer Agent and Registrar, as the case may be, under
this Agreement, Trustee shall be obligated, promptly upon its actual knowledge
thereof, to perform the obligation, duty or agreement in the manner so required.
SECTION 11.2 Certain Matters Affecting Trustee. Except as otherwise
---------------------------------
provided in Section 11.1:
------------
(a) Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accordance with, any resolution, Officer's
Certificate, opinion of counsel, certificate of auditors or any other
certificate, statement, instrument, instruction, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document and any
information contained therein reasonably believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties including, but not limited to, reports and records required by
Article III,
-----------
(b) Trustee may consult with counsel and any opinion of counsel rendered by
counsel reasonably satisfactory to Transferor the Required Person shall be full
and complete authorization and protection in respect of any action taken or
permitted or omitted by it hereunder in good faith and in accordance with such
opinion of counsel,
(c) Trustee (including in its role as Successor Servicer, if it ever acts in
that capacity) shall be under no obligation to exercise any of the rights or
powers vested in it by this Agreement, or to institute, conduct or defend any
litigation or other proceeding hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; provided that nothing contained herein
shall relieve Trustee of the obligations, upon the occurrence and continuance of
a Servicer Default that has not been cured, to exercise such of the rights and
powers vested in it by this Agreement and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs,
45
(d) Trustee shall not be personally liable for any action taken, permitted
or omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement,
(e) Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Required Person; provided
that if the payment within a reasonable time to Trustee of the costs, expenses,
or liabilities likely to be incurred by it in connection with making such
investigation shall be, in the opinion of Trustee, not reasonably assured to
Trustee by the security afforded to it by the terms of this Agreement, Trustee
may require reasonable indemnity from the Required Person against such cost,
expense, or liability as a condition to proceeding with the investigation. The
reasonable expense of every examination shall be paid by Servicer or, if paid by
Trustee, shall be reimbursed by Servicer upon demand or Transferor if Servicer
fails to make such payment,
(f) Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents, representatives,
attorneys or a custodian, and Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, representative, attorney or
custodian appointed with due care by it hereunder,
(g) except as may be required by Sections 11.1(b) and 11.1(c)(v) hereof,
---------------- ----------
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Transferred Assets for the purpose of
establishing the presence or absence of defects or for any other purpose,
(h) whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to Trustee shall be subject to the provisions of this section,
(i) Trustee shall have no liability with respect to the acts or omissions of
Servicer or the Verification Company (except and to the extent Servicer is
Trustee), including, but not limited to, acts or omissions in connection with:
(A) the servicing, management, administration or verification of the Receivables
or the Related Transferred Assets, (B) calculations made by Servicer or the
Verification Company whether or not reported to Trustee, and (C) deposits into
or withdrawals from Transaction Accounts established pursuant to the terms of
this Agreement, and
(j) in the event that Trustee is also acting as Paying Agent or Transfer
Agent and Registrar hereunder, the rights and protections afforded to Trustee
pursuant to this Article XI shall also be afforded to Trustee acting as Paying
----------
Agent or as Transfer Agent and Registrar.
SECTION 11.3 Limitation on Liability of Trustee. Trustee shall at no
----------------------------------
time have any responsibility or liability for or with respect to the correctness
of the recitals contained herein or in the Certificates (other than the
certificate of authentication on the Certificates). Except as set forth in
Section 11.15, Trustee makes no representations as to the validity or
-------------
sufficiency of this Agreement, the Certificates (other than the certificate of
authentication on the Certificates) any other Transaction Document or any
Transferred Asset or related document. Trustee shall not be accountable for the
use or application (i) by Transferor of any of the Certificates or of the
proceeds of such Certificates, or (ii) for the use or application of any funds
paid to Transferor or to Servicer (other than to Trustee
46
in its capacity as Servicer) in respect of the Transferred Assets or deposited
by Servicer in or withdrawn by Servicer from the Bank Accounts, the Transaction
Accounts or any other accounts hereafter established to effectuate the
transactions contemplated herein or in the other Transaction Documents and in
accordance with the terms hereof or thereof.
Except as provided in Section 11.1(c)(v), Trustee shall at no time have any
------------------
responsibility or liability for or with respect to the legality, validity, or
enforceability of any ownership or security interest in any Transferred Asset,
or the perfection or priority of such a security interest or the maintenance of
any such perfection or priority, or for the generation of the payments to be
distributed to Certificateholders under this Agreement, including: (a) the
existence and substance of any Transferred Asset or any related Record or any
computer or other record thereof, (b) the validity of the transfer of any
Transferred Asset to the Trust or of any preceding or intervening transfer, (c)
the performance or enforcement of any Transferred Asset, (d) the compliance by
Transferor, Servicer with any warranty or representation made under this
Agreement or in any other Transaction Document and the accuracy of any such
warranty or representation prior to Trustee's receipt of actual notice of any
noncompliance therewith or any breach thereof, (e) the acts or omissions of
Transferor, Servicer, Seller or any Obligor, (f) any action of Servicer taken in
the name of Trustee, or (g) any action by Trustee taken at the instruction of
Servicer; provided that the foregoing shall not relieve Trustee of its
obligation to perform its duties (including but not limited to its duties, if
any, to act as Servicer in accordance with Section 10.2) under the Agreement in
------------
accordance with the terms hereof.
Except with respect to a claim based on the failure of Trustee to perform
its duties under this Agreement or based on Trustee's negligence or willful
misconduct, no recourse shall be had against Trustee in its individual capacity
for any claim (a "Non-Recourse Claim") based on any provision of this Agreement,
any other Transaction Document, the Certificates, any Transferred Asset or any
assignment thereof. Trustee shall not have any personal obligation, liability,
or duty whatsoever to any Certificateholder or any other Person with respect to
any Non-Recourse Claim, and any such claim shall be asserted solely against the
Trust or any indemnitor who shall furnish indemnity to the Trust or Trustee as
provided in this Agreement.
SECTION 11.4 Trustee May Deal with Other Parties. Subject to any
-----------------------------------
restrictions that may otherwise be imposed by Section 406 of ERISA or Section
4975(e) of the Internal Revenue Code, Trustee in its individual or any other
capacity may deal with the other parties hereto (other than Transferor) and
their respective affiliates, with the same rights as it would have if it were
not Trustee.
SECTION 11.5 Eligibility Requirements for Trustee. Trustee hereunder
------------------------------------
shall at all times: (a) be (i) a banking institution organized under the laws
of the United States, (ii) a member bank of the Federal Reserve System or (iii)
any other banking institution or trust company, incorporated and doing business
under the laws of any State or of the United States, a substantial portion of
the business of which consists of receiving deposits or exercising fiduciary
powers similar to those permitted to national banks under the authority of the
Comptroller of the Currency, and that is supervised and examined by a state or
federal authority having supervision over banks, (b) have a combined capital and
surplus of at least $250,000,000 and (c) have an unsecured long-term debt rating
of at least "A" or its equivalent. If such corporation or association 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, the combined capital and surplus of the corporation or association
shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time Trustee shall cease to be eligible in
47
accordance with the provisions of this section, Trustee shall resign immediately
in the manner and with the effect specified in Section 11.6.
------------
SECTION 11.6 Resignation or Removal of Trustee.
---------------------------------
(a) Trustee may at any time (a) resign and be discharged from its
obligations hereunder by giving 30 days prior written notice thereof to
Transferor, Servicer, the Verification Company, the Investor Certificateholders
and the Required Person or (b) be removed and discharged from its obligations
hereunder by the Required Person giving 10 days' prior written notice thereof to
Transferor, Servicer, the Investor Certificateholders and Trustee. Upon
receiving the notice of resignation or removal, Transferor shall promptly
appoint a successor Trustee who meets the eligibility requirements set forth in
Section 11.5 by written instrument, in duplicate, one copy of which shall be
------------
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and shall have accepted
appointment within 30 days after the giving of the notice of resignation or
within 10 days after the giving of the notice of removal, the resigning or
removed Trustee, upon notice to the Required Person, may petition any court of
competent jurisdiction to appoint a successor Trustee.
(b) If at any time Trustee shall cease to be eligible to be Trustee
hereunder in accordance with the provisions of Section 11.5 hereof and shall
------------
fail to resign promptly after its receipt of a written request therefor by the
Required Person, or if at any time Trustee shall be legally unable to act, or
shall be adjudged bankrupt or insolvent, or if a receiver for Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then Transferor may remove Trustee and, subject to
the consent of the Required Person (which consent shall not be unreasonably
withheld or delayed), promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which shall be delivered to Trustee so
removed and one copy to the successor Trustee.
(c) Any resignation or removal of Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this section shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.7 hereof. Any resignation or removal of Trustee, when effective,
------------
shall terminate Trustee in all capacities under the Transaction Documents.
SECTION 11.7 Successor Trustee.
-----------------
(a) Any successor Trustee appointed as provided in Section 11.6 shall
------------
execute, acknowledge and deliver to Transferor, Servicer, the Investor
Certificateholders and the predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall, upon payment of its fees and expenses and other
amounts owed to it pursuant to this Agreement become effective and the 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, at the expense of
Servicer, all documents or copies thereof and statements held by it hereunder;
and Transferor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
48
(b) No successor Trustee shall accept appointment as provided in this
section unless at the time of the acceptance the successor Trustee shall be
eligible to become Trustee under the provisions of Section 11.5.
------------
(c) Upon acceptance of appointment by a successor Trustee as provided in
this section, the successor Trustee shall mail notice of the succession
hereunder to all Investor Certificateholders at their addresses as shown in the
Certificate Register and to the Required Person.
SECTION 11.8 Merger or Consolidation of Trustee. Any Person into
----------------------------------
which 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
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of Trustee, shall be the successor of Trustee
hereunder, if the Person meets the requirements of Section 11.5, 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. Trustee shall
promptly give notice to the Required Person upon any merger or consolidation of
Trustee.
SECTION 11.9 Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
(a) Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at the time be located, Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons (who may
be an employee or employees of Trustee) to act as a co-Trustee or co-Trustees,
or separate Trustee or separate Trustees, with respect to all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this section, such powers, duties,
obligations, rights and trusts as Trustee may consider necessary or appropriate;
provided, that such appointment shall be subject to the prior written consent of
Transferor unless an Early Amortization Event or Servicer Default is continuing;
and provided further, that in any event Trustee will give Transferor and
Servicer prior written notice of such appointment. No co-Trustee or separate
Trustee shall be required to meet the terms of eligibility as a successor
Trustee under Section 11.5 and no notice to Certificateholders of the
------------
appointment of any co-Trustee or separate Trustee shall be required under
Section 11.7.
------------
(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 Trustee shall be conferred or imposed upon and exercised or
performed by Trustee and the separate Trustee or co-Trustee jointly (it
being understood that the separate Trustee or co-Trustee is not authorized
to act separately without Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed (whether as Trustee hereunder or as successor to
Servicer hereunder), 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 Trustee,
49
(ii) no Trustee or co-Trustee hereunder shall be personally liable
by reason of any act or omission of any other Trustee or co-Trustee
hereunder, and
(iii) 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 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 XI. 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 Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection or indemnity to,
Trustee. Every such instrument shall be filed with Trustee and a copy thereof
given to Servicer.
(d) Any separate Trustee or co-Trustee may at any time constitute 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 this Agreement or
any other Transaction Document 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 its estates, properties, rights, remedies and trusts shall vest in
and be exercised by Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee or co-Trustee.
SECTION 11.10 Tax Returns. No Federal income tax return shall be
-----------
filed on behalf of the Trust unless required by applicable law or any
Governmental Authority. In the event the Trust shall be required to file tax
returns, Servicer shall prepare or shall cause to be prepared any tax returns
required to be filed by the Trust and shall remit the returns to Trustee for
signature at least five Business Days before the returns are due to be filed.
Trustee shall promptly sign and deliver the returns to Servicer and Servicer
shall promptly file the returns. Servicer shall also prepare or shall cause to
be prepared all tax information required by law to be made available to
Certificateholders and shall deliver the information to Trustee at least five
Business Days prior to the date it is required by law to be made available to
the Certificateholders. Trustee, upon request, will furnish Servicer with all
the information known to 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 as Trustee determines are appropriate.
SECTION 11.11 Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement, the
------------
Certificates or the other Transaction Documents may be prosecuted and enforced
by Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by 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 Trustee, its agents and counsel, be distributed to
the Certificateholders in respect of which such judgment has been obtained in
accordance with Article V of this Agreement.
---------
SECTION 11.12 Suits for Enforcement. If an Early Amortization Event
---------------------
or a Servicer Default shall occur and be continuing, Trustee, in its discretion
may, subject to the provisions of
50
Sections 11.1 and 11.13, proceed to protect and enforce its rights and the
------------- -----
rights of the Certificateholders under this Agreement 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 Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of Trustee or
the Certificateholders. Nothing herein contained shall be deemed to authorize
Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Investor Certificates or the rights of any Holder
thereof, or to authorize Trustee to vote in respect of the claim of any Investor
Certificateholder in any such proceeding.
SECTION 11.13 Rights of Required Person to Direct Trustee. The
-------------------------------------------
Required Person shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to Trustee, or exercising any
trust or power conferred on Trustee; provided that, subject to Section 11.1,
------------
Trustee may decline to follow any such direction if Trustee, being advised by
counsel, determines that the action so directed may not be taken lawfully, or if
a Responsible Officer or Responsible Officers of Trustee shall determine, in
good faith, that the proceedings so directed would be illegal or involve Trustee
in incurring unreimbursed costs and expenses or personal liability or be unduly
prejudicial to the rights of the Investor Certificateholders not giving such
direction; and provided further, that nothing in this Agreement shall impair the
right of Trustee to take any action deemed proper by Trustee and that is not
inconsistent with such direction of the Required Person.
SECTION 11.14 Representations and Warranties of Trustee. Trustee
-----------------------------------------
represents and warrants that:
(a) it is a national banking association, organized existing and in good
standing under the laws of the United States,
(b) it has full power, authority and right to execute, deliver and perform
the Transaction Documents to which it is a party, and has taken all necessary
action to authorize the execution, delivery and performance by it of the
Transaction Documents, and
(c) the Transaction Documents to which it is a party have been duly executed
and delivered by Trustee and, in the case of all such Transaction Documents, are
legal, valid and binding obligations of Trustee, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by general principles
of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
SECTION 11.15 Maintenance of Office or Agency. Trustee will maintain,
-------------------------------
at its address designated pursuant to Section 13.5, an office, offices, agency
------------
or agencies where notices and demands to or upon Trustee in respect of the
Certificates and the Transaction Documents to which it is a party may be served.
Trustee will give prompt written notice to Servicer and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
51
ARTICLE XII
TERMINATION
SECTION 12.1 Termination of Trust.
--------------------
(a) If not earlier terminated pursuant to Section 9.3, the Trust and the
-----------
respective obligations and responsibilities of Transferor, Servicer and Trustee
created hereby (other than the obligation of Trustee to make payments to
Certificateholders as hereinafter set forth and the obligations of Servicer
contained in Section 3.5) shall terminate, except with respect to the duties and
-----------
obligations described in Sections 3.9, 7.3, 8.4, 8.10, 11.5, 12.2(b), 13.8,
------------ --- --- ---- ---- ------- ----
13.13, 13.14 and 13.15 upon the earliest to occur of (i) the day on which the
----- ----- -----
Investor Certificateholders and Trustee shall have been paid all amounts
required to be paid to them pursuant to this Agreement and Trustee has disposed
of all property held hereunder (including pursuant to Section 12.3) and (ii) the
------------
day which is 21 years less one day after the death of the officers and the last
survivor of all the lineal descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ambassador to the
Court of St. ▇▇▇▇▇, who are living on the date hereof.
(b) Notwithstanding the foregoing, the last payment of the principal of and
interest on the Investor Certificates shall be due and payable no later than the
Final Scheduled Payment Date. If, on the Report Date for the Distribution Date
immediately prior to the Final Scheduled Payment Date, Servicer determines that
the Invested Amount for such Series on such Final Scheduled Payment Date plus
all other amounts due Investor Certificateholders (after giving effect to all
distributions from available Collections and investment earnings in Transaction
Accounts on such date) will exceed zero, Servicer shall solicit bids from the
public in the manner of a sale conducted by a creditor under the UCC for the
sale of the Transferred Assets for such Series. Transferor shall be entitled to
participate in and to receive notice of each bid submitted in connection with
the bidding process. Upon the expiration of the bidding period, Servicer shall
determine (x) the Highest Bid and (y) the Available Final Distribution Amount
for such Series. If the Highest Bid is not at least equal to the sum of the
Invested Amount and all other amounts due the Investor Certificateholders of
such Series on the Final Scheduled Payment Date for such Series (after giving
effect to all distributions required to be made on the Final Scheduled Payment
Date for the Series), the written consent of the Required Person shall be
required for the sale. Servicer shall sell the Transferred Assets on the Final
Scheduled Payment Date the bidder with the Highest Bid and shall deposit the
proceeds of such sale in the Master Collection Account for allocation (together
with the Available Final Distribution Amount) to the Certificateholders of such
Series.
SECTION 12.2 Final Distribution.
------------------
(a) Servicer shall give Trustee at least 20 Business Days' prior written
notice of the date on which the Trust is expected to terminate in accordance
with Section 12.1(a). The notice shall be accompanied by a certificate of an
---------------
Authorized Officer of Servicer setting forth the information specified in
Section 3.6 covering the period during the then current calendar year through
-----------
the date of the notice. Upon receiving the notification from Servicer, Trustee
shall give the Certificateholders written notice as soon as practicable after
Trustee's receipt of notice from Servicer, which notice shall specify (i) the
Distribution Date (the "Final Distribution Date") upon which final payment with
respect to the Certificates is expected to be made and (ii) the amount of any
such final payment. Trustee shall give the notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to
Certificateholders. On the Final Distribution Date, Trustee shall, based upon
the Monthly Report relating to the Final Distribution Date, cause to be
distributed to the
52
Certificateholders the amounts distributable to them on the Final
Distribution Date. Each Certificateholder shall present its Certificate
to Trustee and surrender its Certificate for cancellation at the address of
Trustee described in Section 13.5 not more than ten Business Days after the
------------
Final Distribution Date upon which final payment with respect to the
Certificates has been made.
(b) Notwithstanding the termination of the Trust pursuant to Section
-------
12.1(a), all funds then on deposit in the Transaction Accounts shall continue to
be held in trust for the benefit of the Certificateholders and the Paying Agent
or Trustee shall pay such funds to the Certificateholders at the time set forth
in Section 12.2(a). If any Certificateholder does not claim the portion of such
---------------
funds to which it is entitled to receive on the Final Distribution Date,
interest shall cease to accrue on its Certificate and Trustee shall hold such
funds in trust for such Person, subject to the further provisions of this
Section. In the event that any of the Certificateholders shall not have claimed
their final payment with respect to their Certificates within six months after
the Final Distribution Date, Trustee shall give a second written notice to the
remaining Certificateholders concerning payment of the final distribution with
respect thereto and surrender of their Certificates for cancellation. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds in the Master Collection Account held for the benefit of such
Certificateholders. Trustee and the Paying Agent shall pay to Transferor any
monies held by them for the payment of principal of or interest on the
Certificates that remains unclaimed for two years after the termination of the
Trust pursuant to Section 12.1(a). After payment of the monies to Transferor,
---------------
Certificateholders entitled to the money must look to Transferor for payment as
unsecured general creditors unless an applicable abandoned property law
designates another Person.
SECTION 12.3 Rights Upon Termination of the Trust. Upon the
------------------------------------
termination of the Trust pursuant to Section 12.1 and the surrender of the
------------
Transferor Certificate by Transferor to Trustee, Trustee shall transfer, assign,
set over and otherwise convey to Transferor (without recourse, representation or
warranty), all right, title and interest of the Trust in the Receivables,
whether then existing or thereafter created, the Related Transferred Assets and
all of the other property and rights previously conveyed to Trustee hereunder,
except for amounts held by Trustee pursuant to Section 12.2(b) and except for
---------------
the rights of HCFF Indemnified Parties (other than Transferor and its officers,
directors, shareholders, controlling Persons, employees and agents)
to indemnification and contribution under Section 9.1 of the Purchase
-----------
Agreement. Trustee shall execute and deliver the instruments of transfer and
assignment (including any document necessary to release the security interest in
favor of Trustee (for the benefit of the Certificateholders) in such Receivables
and Related Transferred Assets, to release any filing evidencing or perfecting
such security interest and to terminate all powers of attorney created by the
Transaction Documents), in each case without recourse, representation or
warranty, that shall be reasonably requested by Transferor to vest in Transferor
all right, title and interest that Trustee had in the Transferred Assets.
SECTION 12.4 Optional Repurchase of Investor Interests. On any
-----------------------------------------
Distribution Date occurring on or after the date that the Invested Amount of is
reduced to 10% or less of the initial aggregate principal amount of the Investor
Certificates, and no Early Amortization Event exists for any Series, Transferor
or Servicer shall have the option, upon the giving of 45 days prior written
notice to Servicer, Trustee and the Required Person to repurchase the undivided
interest of such Series in the Trust by depositing into the Principal Funding
Account, on such Distribution Date (the "Repurchase Distribution Date") an
amount (the "Repurchase Amount") equal to the unpaid Invested
53
Amount of the Series plus accrued and unpaid interest on the unpaid principal
amount of the Series (and accrued and unpaid interest with respect to interest
amounts that were due but not paid on a prior Distribution Date) through the day
preceding such Distribution Date at the Certificate Rate applicable to such
Series, without the payment of any premium or penalty. Upon tender of all
outstanding Certificates owned by a Certificateholder, Trustee shall then
distribute to such Certificateholder the portion of such amounts owed to such
Certificateholder, together with all other amounts on deposit in the Principal
Funding Account with respect to that Series that are owed to such
Certificateholder, on the next Distribution Date in repayment of the principal
amount and all accrued and unpaid interest owing to such Certificateholder.
Interest shall cease to accrue on the Repurchase Distribution Date and following
the Repurchase Distribution Date, the Certificateholders of the Series shall
have no further rights with respect to the Transferred Assets and Trustee shall
execute and deliver the instruments of transfer and assignment (including any
document necessary to release the security interest in favor of Trustee (for the
benefit of the Certificateholders) in the Transferred Assets and to release any
filing evidencing or perfecting the security interest), in each case without
recourse, representation or warranty, as shall be reasonably requested by
Transferor to vest in Transferor all right, title and interest that Trustee had
in the Transferred Assets. In the event that Transferor fails for any reason to
deposit the Repurchase Amount for in accordance with the terms of this
Agreement, payments shall continue to be made to the Certificateholders of each
Series in accordance with the terms of this Agreement.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Consents of Required Person, Etc.
----------------------------------------------------
(a) Except to the extent provided otherwise hereinafter in clauses (i) and
-----------
(ii), the provisions of this Agreement may be amended, modified or waived from
----
time to time by Servicer, Transferor and Trustee, with the consent of the
Required Person, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; provided, however, that no such
amendment, modification or waiver shall:
(i) reduce in any manner the amount of, or delay the timing of,
allocations, payments or distributions in respect of the portion of the
Invested Amount, yield on any Certificates or other distributions on any
Certificates without the consent of each Certificateholder; or
(ii) amend, modify or waive any provision of this Agreement which
requires the approval or consent of a specified percentage of
Certificateholders without the consent of the same percentage of
Certificateholders.
Trustee shall establish a record date for determining which Certificateholders
may give such waivers and consents. No waiver of any Early Amortization Event
or other default hereunder given at any time shall apply to any other prior or
subsequent Amortization Event or default.
(b) As soon as practicable before the execution and delivery of any
amendment, consent or waiver pursuant to Section 13.1(a), but in no event later
---------------
than twenty Business Days prior to such
54
execution and delivery, Trustee shall deliver a copy of such proposed amendment,
consent or waiver to each Certificateholder.
(c) Promptly after the execution of any such amendment, consent or waiver,
Trustee shall furnish copies of such amendment or consent to each
Certificateholder.
(d) The manner of obtaining any waiver or consent given by the
Certificateholders under this Section 13.1 and of evidencing the authorization
------------
of the execution thereof by the Certificateholders shall be subject to such
reasonable requirements as Trustee may prescribe.
(e) Each consent or waiver given by any Certificateholder in connection with
any matter described in Section 13.1 or in any other provision of this Agreement
------------
shall be conclusive and binding on such Certificateholder and on all future
Certificateholders and of any Certificate issued upon the transfer thereof or in
exchange therefor or in lieu thereof whether or not notation of such consent is
made upon such Certificate.
(f) Any request for approval or consent of the Required Person required
under the Transaction Documents shall be made in writing delivered by facsimile
(confirmed in writing) or overnight courier (with signed receipt evidencing
delivery) to the Required Person. The Required Person shall either approve or
reject any such request within five (5) Business Days of its receipt of such
request. If the Required Person does not respond to any such request within
five (5) Business Days of its receipt of any such request, such request shall be
deemed to have bee approved by the Required Person.
SECTION 13.2 Actions by Certificateholders.
-----------------------------
(a) By its acceptance of Certificates pursuant to this Agreement, each
Certificateholder acknowledges and agrees that, wherever in this Agreement a
provision states that an action may be taken or a notice, demand or instruction
given by any Series of Investor Certificateholders, any class of Investor
Certificateholders or the Investor Certificateholders, the action, notice or
instruction may be taken or given by any Holder of an Investor Certificate of
the Series or class or by any Investor Certificateholder, respectively, unless
the provision requires a specific percentage of the Series or class of Investor
Certificateholders or of all Investor Certificateholders.
(b) By its acceptance of Certificates pursuant to this Agreement, each
Certificateholder acknowledges and agrees that any request, demand,
authorization, direction, notice, consent, waiver or other act by the Holder of
a Certificate shall bind the Holder and every subsequent Holder of the
Certificate and of any 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 Trustee or Servicer in reliance thereon, whether or not
notation of the action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by the Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, the action shall become effective when the instrument or instruments
are delivered to Trustee and, when required, to Servicer. Proof of execution of
any such instrument or of a writing appointing any
55
such agent shall be sufficient for any purpose of this Agreement and conclusive
in favor of Trustee and Servicer, if made in the manner provided in this
section.
(d) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner that Trustee deems
sufficient.
SECTION 13.3 Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, nor shall the death or incapacity entitle
such Certificateholder'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) No Certificateholder shall have any right to vote (except as expressly
provided otherwise in this Agreement) or in any manner otherwise to control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
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 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 the Transaction Documents (except to the extent
any related Certificate Purchase Agreement creates independent and non-
duplicative rights), unless the Certificateholder previously shall have given to
Trustee, and unless the Required Person shall have made, written request upon
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and Trustee, for 30 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 Certificateholder with every other
Certificateholder and Trustee, that no one or more Certificateholders shall have
any right in any manner whatever by virtue of, or by availing itself or
themselves of, any provisions of a Transaction Document to affect, disturb or
prejudice the rights of any other Investor Certificateholder, or to obtain or
seek to obtain priority over or preference to any such other Investor
Certificateholder, except to the extent provided in the Transaction Documents,
or to enforce any right under the Transaction Documents, except in the manner
herein provided and for the equal, ratable and common benefit of, all Investor
Certificateholders (subject to the priorities set forth in the Transaction
Documents). For the protection and enforcement of the provisions of this
section, each and every Certificateholder and 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, the
Certificateholders agree to the provisions of this section.
SECTION 13.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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SECTION 13.5 Notices. All demands, notices, instructions and
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, four Business Days after mailing if mailed
by certified mail, return receipt requested, or sent by facsimile transmission
(a) in the case of Transferor, to its address set forth below its signature
hereto, (b) in the case of Servicer, to its address set forth below its
signature hereto, (c) in the case of the Verification Company, to its address
set forth below its signature hereto, and (d) in the case of Trustee, the Paying
Agent or the Transfer Agent and Registrar, to the address of Trustee set forth
on the signature pages hereof; or, as to each party, at such other address or
facsimile number as shall be designated by it in a written notice to each other
party given in accordance with this section. Any notice required or permitted
to be mailed to a Certificateholder shall be sent by first-class mail, postage
prepaid, to the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given on the fourth Business
Day after the notice is so mailed, whether or not a Certificateholder receives
the notice.
SECTION 13.6 Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement or any of the other
Transaction Documents shall for any reason whatsoever be held invalid, then the
unenforceable covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement or the other Transaction Documents (as applicable) and shall in no way
affect the validity or enforceability of the other provisions of this Agreement,
the Certificates or any of the other Transaction Documents or the rights of the
Certificateholders.
SECTION 13.7 Certificates Nonassessable and Fully Paid. Except to the
-----------------------------------------
extent otherwise expressly provided in Section 7.3 with respect to Transferor,
-----------
it is the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever and that
Certificates upon authentication thereof by Trustee pursuant to Section 6.2 are
-----------
and shall be deemed fully paid.
SECTION 13.8 Nonpetition Covenant. Notwithstanding any prior
--------------------
termination of this Agreement, each of Trustee, Servicer, Transferor, the Paying
Agent, the Authenticating Agent, the Transfer Agent and Registrar, and each
Investor Certificateholder by its acceptance of a Certificate, agrees that it
shall not, with respect to the Trust or Transferor, institute or join any other
Person in instituting any proceeding of the type referred to in the definition
of "Bankruptcy Event" so long as any Certificates issued by the Trust shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Certificates shall have been outstanding. The foregoing
shall not limit the right of Servicer, Transferor, the Paying Agent, the
Authenticating Agent, the Transfer Agent and Registrar and any Certificateholder
to file any claim in or otherwise take any action with respect to any such
insolvency proceeding that was instituted against Transferor or the Trust by any
other Person.
SECTION 13.9 No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of 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
are not exhaustive of any rights, remedies, powers and privileges provided by
law.
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SECTION 13.10 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which together shall constitute one and the same instrument.
SECTION 13.11 Third-Party Beneficiaries. This Agreement will inure to
-------------------------
the benefit of and be binding upon the parties hereto and the Certificateholders
and their respective successors and permitted assigns. Except as otherwise
expressly provided in this Agreement, nothing contained in this Agreement shall
confer any rights upon any Person that is not a party to, or a permitted
assignee of a party to, this Agreement.
SECTION 13.12 Integration. This Agreement and the other Transaction
-----------
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 13.13 Binding Effect; Assignability; Survival of Provisions.
-----------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of Transferor,
Servicer, the Verification Company and Trustee and their respective successors
and permitted assigns; provided, that Transferor shall not delegate any of its
obligations hereunder. This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until the termination of the Trust
pursuant to Section 12.1. The rights and remedies with respect to (a) any breach
------------
of any representation and warranty made by Transferor in Section 2.4 or Section
----------- -------
7.1, (b) any breach of any representation and warranty made by Servicer in
---
Section 8.1, and (c) the indemnification and payment provisions in Sections 3.9,
----------- ------------
7.3, 8.4, 8.10, 11.5 and 12.2(b) shall be continuing and shall survive any
--- --- ---- ---- -------
termination of this Agreement.
SECTION 13.14 Recourse to Transferred Assets. The Certificates do not
------------------------------
represent an obligation of, or an interest in, Transferor, Seller, Servicer,
Trustee or any Affiliate of any of them. Except as expressly provided otherwise
in this Agreement, the Certificates are limited in right of payment to the
Transferred Assets.
SECTION 13.15 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
--------------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND HEREBY (A) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR FEDERAL COURT, (B)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF THE ACTION OR PROCEEDING.
AS AN ALTERNATIVE METHOD OF SERVICE TO PERSONAL DELIVERY, EACH OF BUYER AND
SELLER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF THE PROCESS TO BUYER OR SELLER
(AS APPLICABLE) AT ITS
58
ADDRESS SPECIFIED HEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 13.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY
--------------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR RELATING TO THE TRANSACTION DOCUMENTS, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), ACTIONS OF ANY OF THE PARTIES
HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THE TRANSACTION
DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Agreement to be executed by their respective officers thereunto duty authorized
as of the day and year first above written.
WISCONSIN CIRCLE II FUNDING
CORPORATION, as Transferor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------
Title: Executive Vice President
----------------------------
Address: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
HCFP FUNDING II, INC., as Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------
Title: Executive Vice President
----------------------------
Address: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Address:
-----------------------------
-----------------------------
Telephone:
-----------------------------
Facsimile:
-----------------------------
60
EXHIBITS
EXHIBIT A Reserved
EXHIBIT B Form of Class A Certificate
EXHIBIT C Form of Monthly Servicer's Certificate
EXHIBIT D Annual Agreed-Upon Procedures
EXHIBIT E Form of Transferor Certificate
EXHIBIT F Form of Quarterly Servicer's Certificate
EXHIBIT G Form of Credit and Collections Policy
APPENDIX
APPENDIX A Definitions
61