OH&S DRAFT
12/18/00
EXHIBIT 10.1
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FORM OF
TRANSFER AND SERVICING AGREEMENT
among
CONSECO BANK, INC.,
Transferor AND SERVICER
CONSECO FINANCE CREDIT CARD FUNDING CORP.,
Transferor
and
CONSECO PRIVATE LABEL CREDIT CARd MASTER NOTE TRUST,
ISSUER
Dated as of ____________, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................................1
Section 1.02. Other Definitional Provisions..........................................13
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables..............................................14
Section 2.02. Acceptance by Owner Trustee............................................15
Section 2.03. Representations and Warranties of Each Transferor Relating
to Such Transferor.....................................................16
Section 2.04. Representations and Warranties of each Transferor Relating
to the Agreement and Any Participation Interest Supplement
and the Receivables....................................................17
Section 2.05. Reassignment of Ineligible Receivables.................................18
Section 2.06. Reassignment of Trust Portfolio........................................19
Section 2.07. Covenants of each Transferor...........................................20
Section 2.08. Covenants of each Transferor with Respect to Receivables
Purchase Agreement.....................................................21
Section 2.09. Addition of Accounts...................................................22
Section 2.10. Removal of Accounts and Participation Interests........................25
Section 2.11. Account Allocations....................................................26
Section 2.12. Discount Option........................................................27
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating to the
Servicer...............................................................28
Section 3.02. Servicing Compensation.................................................29
Section 3.03. Representations, Warranties and Covenants of the Servicer..............29
Section 3.04. Reports and Records for the Owner Trustee and the Indenture
Trustee................................................................31
Section 3.05. Annual Certificate of Servicer.........................................32
Section 3.06. Annual Servicing Report of Independent Public Accountants;
Copies of Reports Available............................................32
Section 3.07. Tax Treatment..........................................................33
Section 3.08. Notices to Conseco Bank................................................33
Section 3.09. Adjustments............................................................33
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TABLE OF CONTENTS (cont'd)
Page
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Section 3.10. Reports to the Commission..............................................34
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 4.01. Liability of each Transferor...........................................35
Section 4.02. Merger or Consolidation of, or Assumption of the Obligations
of, a Transferor.......................................................35
Section 4.03. Limitations on Liability of Each Transferor............................36
Section 4.04. Assumption of the Transferor Obligations...............................36
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER
Section 5.01. Liability of the Servicer..............................................38
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer.......................................................38
Section 5.03. Limitation on Liability of the Servicer and Others.....................38
Section 5.04. Servicer Indemnification of the Owner Trustee and the Indenture
Trustee................................................................39
Section 5.05. Resignation of the Servicer............................................39
Section 5.06. Access to Certain Documentation and Information Regarding the
Receivables............................................................39
Section 5.07. Delegation of Duties...................................................40
Section 5.08. Examination of Records.................................................40
ARTICLE VI
INSOLVENCY EVENTS
Section 6.01. Rights upon the Occurrence of an Insolvency Event......................41
ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults......................................................42
Section 7.02. Indenture Trustee To Act; Appointment of Successor.....................44
Section 7.03. Notification to Noteholders............................................45
ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement...............................................46
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.....................................47
Section 9.02. Protection of Right, Title and Interest to Trust.......................48
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TABLE OF CONTENTS (cont'd)
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Section 9.03. Governing Law..........................................................49
Section 9.04. Notices; Payments......................................................49
Section 9.05. Severability of Provisions.............................................50
Section 9.06. Further Assurances.....................................................50
Section 9.07. No Waiver; Cumulative Remedies.........................................50
Section 9.08. Counterparts...........................................................50
Section 9.09. Third-Party Beneficiaries..............................................50
Section 9.10. Actions by Noteholders.................................................51
Section 9.11. Rule 144A Information..................................................51
Section 9.12. Merger and Integration.................................................51
Section 9.13. Headings...............................................................51
EXHIBITS
EXHIBIT A Form of Assignment of Receivables in Additional Accounts.............A-1
EXHIBIT B Form of Reassignment of Receivables in Removed Accounts..............B-1
EXHIBIT C Form of Annual Servicer's Certificate.................................C-1
EXHIBIT D-1 Form of Opinion of Counsel with Respect to Amendments...............D-1-1
EXHIBIT D-2 Form of Opinion of Counsel with Respect to Accounts.................D-2-1
EXHIBIT D-3 Provisions to be Included in Annual Opinion of Counsel..............D-3-1
SCHEDULES
SCHEDULE 1 List of Accounts......................................................I-1
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TRANSFER AND SERVICING AGREEMENT dated as of _________, 2001
among CONSECO BANK, INC., a Utah industrial loan corporation, as Transferor and
as Servicer, CONSECO FINANCE CREDIT CARD FUNDING CORP., a Minnesota corporation,
as Transferor and WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee on behalf of the CONSECO PRIVATE LABEL CREDIT CARD
MASTER NOTE TRUST, a business trust organized and existing under the laws of the
State of Delaware.
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties, the
Noteholders and any Series Enhancer (as defined below) to the extent provided
herein, in the Indenture and in any Indenture Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"Account" shall mean (a) each Initial Account, (b) each
Additional Account (but only from and after the Addition Date with respect
thereto), (c) each Related Account, and (d) each Transferred Account, but shall
exclude (i) any Account that has been closed and terminated in accordance with
the relevant Credit Guidelines and (ii) any Account all the Receivables in which
are (A) after the Removal Date, removed by the Transferor pursuant to Section
2.10, (B) reassigned to the Transferor pursuant to Section 2.05 or (C) assigned
and transferred to the Servicer pursuant to Section 3.03.
"Account Owner" shall mean Retail Services Bank, Conseco Bank,
Conseco Finance and each other entity which is the issuer of credit relating to
an Account pursuant to a Credit Agreement and/or a seller of Receivables
directly or indirectly to a Transferor.
"Addition Date" shall mean (a) with respect to Aggregate
Addition Accounts and New Accounts, the date from and after which such Aggregate
Addition Accounts and New Accounts are to be included as Accounts pursuant to
subsection 2.09(a), (b) or (d), and (b) with respect to Participation Interests,
the date from and after which such Participation Interests are to be included as
assets of the Trust pursuant to subsection 2.09(a) or (b).
"Additional Account" shall mean each New Account and each
Aggregate Addition Account.
"Additional Cut-Off Date" shall mean (a) with respect to
Aggregate Addition Accounts or Participation Interests, the date specified as
such in the notice delivered with respect thereto pursuant to subsection 2.09(c)
and (b) with respect to New Accounts, the later of the dates on which such New
Accounts are originated or designated pursuant to subsection 2.09(d).
"Additional Transferor" shall have the meaning specified in
subsection 2.09(g).
"Adverse Effect" shall mean, with respect to any action, that
such action will (a) result in the occurrence of an Amortization Event, a
Reinvestment Event or an Event of Default or (b) materially adversely affect the
amount or timing of distributions to be made to the Noteholders of any Series or
Class pursuant to this Agreement, the Indenture or the related Indenture
Supplement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Addition" shall mean the designation of additional
Eligible Accounts, other than New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets pursuant to subsection
2.09(a) or (b).
"Aggregate Addition Account" shall mean each Eligible Account
designated pursuant to subsection 2.09(a) or (b) to be included as an Account
and identified in the computer file or microfiche list delivered to the Owner
Trustee by the Transferor pursuant to Sections 2.01 and 2.09(h).
"Agreement" shall mean this Transfer and Servicing Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Amortization Event" shall have the meaning specified in the
Indenture.
"Appointment Date" shall have the meaning specified in Section
6.01.
"Assignment" shall have the meaning specified in subsection
2.09(h).
"Authorized Newspaper" shall mean any newspaper or newspapers
of general circulation in the Borough of Manhattan, City of New York, printed in
the English language (and, with respect to any Series or Class, if and so long
as the Notes of such Series are listed on the Luxembourg Stock Exchange and such
Exchange shall so require, in Luxembourg, printed in any language satisfying the
requirements of such Exchange) and customarily published on each business day at
such place, whether or not published on Saturdays, Sundays or holidays.
"Bankruptcy Code" shall have the meaning specified in
subsection 4.02(a)(i)(x).
"Bearer Notes" shall have the meaning specified in the
Indenture.
"Business Day" shall mean any day other than (a) a Saturday or
Sunday or (b) any other day on which national banking associations or state
banking institutions in New York City, New York, South Dakota, Utah, Arizona or
any other State in which the principal executive offices of the Transferors, the
Servicer, the Owner Trustee, the Indenture Trustee or other Account Owner, as
the case may be, are located, are authorized or obligated by law, executive
order or governmental decree to be closed or (c) for purposes of any particular
Series, any other day specified in the related Indenture Supplement.
"Cash Advance Fees" shall mean cash advance transaction fees
and cash advance late fees, if any, as specified in the Credit Agreement
applicable to each Account.
"Class" shall have the meaning specified in the Indenture.
"Closing Date" shall mean, with respect to any Series, the
closing date specified in the related Indenture Supplement.
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"Collections" shall mean all payments by or on behalf of
Obligors (including Insurance Proceeds) received in respect of the Receivables,
in the form of cash, checks, wire transfers, electronic transfers, ATM transfers
or any other form of payment in accordance with a Credit Agreement in effect
from time to time and all other amounts specified by this Agreement, the
Indenture or any Indenture Supplement as constituting Collections. As specified
in any Participation Interest Supplement or Indenture Supplement, Collections
shall include amounts received with respect to Participation Interests. All
Recoveries with respect to Receivables previously charged-off as uncollectible
will be treated as Collections of Finance Charge Receivables.
"Commission" shall mean the Securities and Exchange Commission
and its successors in interest.
"Conseco Bank" shall mean, Conseco Bank, Inc., a Utah
industrial loan corporation and its successors and assigns.
"Conseco Finance" shall mean Conseco Finance Corp. and its
successors and assigns.
"Corporate Trust Office" shall have the meaning (a) when used
in respect of the Owner Trustee, specified in the Trust Agreement and (b) when
used in respect of the Indenture Trustee, specified in the Indenture.
"Coupon" shall have the meaning specified in the Indenture.
"Credit Agreement" shall mean, with respect to a credit
account, the agreements between an Account Owner and the Obligor governing the
terms and conditions of such account, as such agreements may be amended,
modified or otherwise changed from time to time and as distributed (including
any amendments and revisions thereto) to holders of such account.
"Credit Guidelines" shall mean the respective policies and
procedures of [Conseco Bank and Retail Services Bank and/or any other Account
Owner] as the case may be, as such policies and procedures may be amended from
time to time, (a) relating to the operation of its private label credit
business, which generally are applicable to its portfolio of credit accounts or,
in the case of an Account Owner that has only a specific portion of its
portfolio designated to the trust, applicable to such portion of its portfolio,
and, in each case, which are consistent with prudent practice, including the
policies and procedures for determining the creditworthiness of Obligors and the
extension of credit to Obligors, and (b) relating to the maintenance of credit
accounts and collection of receivables created thereunder.
"Date of Processing" shall mean, with respect to any
transaction or receipt of Collections, the date on which such transaction is
first recorded on the Servicer's computer file of credit card accounts (without
regard to the effective date of such recordation).
"Defaulted Amount" shall mean, with respect to any Due Period,
an amount (which shall not be less than zero) equal to (a) the amount of
Principal Receivables which became Defaulted Receivables in such Due Period,
minus (b) the amount of any Defaulted Receivables of which the Transferor or the
Servicer became obligated to accept reassignment or assignment in accordance
with the terms of this Agreement during such Due Period; provided, however,
that, if an Insolvency Event occurs with respect to the Transferor, the amount
of such Defaulted Receivables which are subject to reassignment to the
Transferor in accordance with the terms of this Agreement shall not be added to
the sum so subtracted and, if any of the events described in subsection 7.01(d)
occur with respect to the
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Servicer, the amount of such Defaulted Receivables which are subject to
reassignment or assignment to the Servicer in accordance with the terms of this
Agreement shall not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Due
Period and any Pool and related Group, all Principal Receivables which are
charged off as uncollectible in such Due Period in accordance with the Credit
Guidelines and the Servicer's customary and usual servicing procedures for
servicing credit card accounts. A Principal Receivable shall become a Defaulted
Receivable on the day on which such Principal Receivable is recorded as
charged-off on the Servicer's computer file of credit card accounts.
"Discount Option Date" shall mean each date on which a
Discount Percentage designated by the Transferor pursuant to Section 2.12 takes
effect.
"Discount Option Receivable Collections" shall mean on any
Date of Processing occurring after a Discount Option Date occurs, the product of
(a) a fraction the numerator of which is the Discount Option Receivables and the
denominator of which is the sum of the Principal Receivables and the Discount
Option Receivables in each case (for both the numerator and the denominator) at
the end of the preceding Due Period and (b) Collections of Principal Receivables
on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables).
"Discount Option Receivables" shall have the meaning specified
in Section 2.12. The aggregate amount of Discount Option Receivables outstanding
on any Date of Processing occurring on or after the Discount Option Date shall
equal the sum of (a) the aggregate Discount Option Receivables at the end of the
prior Date of Processing (which amount, prior to the Discount Option Date, shall
be zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables on any Date of Processing
shall mean the product of the amount of any Principal Receivables outstanding on
such Date of Processing (without giving effect to the proviso in the definition
of Principal Receivables) and the Discount Percentage.
"Discount Percentage" shall mean the percentages, if any,
designated by the Transferor pursuant to Section 2.12.
"Distribution Date" shall mean, with respect to any Series,
the date specified in the applicable Indenture Supplement.
"Document Delivery Date" shall have the meaning specified in
subsection 2.09(h).
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Due Period" shall have the meaning specified in the
Indenture.
"Eligible Account" shall mean a credit card account owned by
Conseco Bank, Retail Services Bank or Conseco Finance in the case of the Initial
Accounts on the Initial Cut-Off Date, or Conseco Bank, Retail Services Bank,
Conseco Finance or another Account Owner, in the case of Additional Accounts
which, as of the Initial Cut-Off Date with respect to an Initial Account or as
of the Additional Cut-Off Date with respect to an Additional Account meets the
following requirements:
(a) is a credit account in existence and
maintained by Conseco Bank, Retail Services Bank, Conseco
Finance or another Account Owner, as the case may be;
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(b) is payable in Dollars;
(c) has an Obligor who has provided, as his
most recent billing address, an address located in the United
States or its territories, possessions or military bases
[provided, however, that as of any date of determination, up
to ___% of the credit card accounts (calculated by number of
accounts) may have account obligors who have provided as their
billing addresses, addresses outside of the United States;]
(d) except as provided below, has an Obligor
who has not been identified by the Servicer in its computer
files as being currently involved in a voluntary or
involuntary bankruptcy proceeding;
(e) has not been identified as an account
with respect to which (i) the related card, if any, has been
lost or stolen or (ii) the related account number has been
stolen;
(f) has not been sold or pledged to any
other party except for any sale to another Account Owner that
has either entered into a Receivables Purchase Agreement or is
an Additional Transferor;
(g) does not have receivables which have
been sold or pledged by the Account Owner to any other party
other than any Transferor pursuant to a Receivables Purchase
Agreement;
(h) with respect to the Initial Accounts, is
an account in existence and maintained by Conseco Bank, Retail
Services Bank or Conseco Finance or another Account Owner as
of the Initial Cut-Off Date, or as of the Additional Cut-Off
Date with respect to Additional Accounts;
(i) except as provided below, does not have
any Receivables that are Defaulted Receivables; and
(j) does not have any Receivables that have
been identified by the Servicer or the relevant Obligor as
having been incurred as a result of fraudulent use of any
related credit card, if any, or related account number.
Eligible Accounts may include Accounts, the Receivables of
which have been charged off, or with respect to which the Servicer believes the
related Obligor is bankrupt, in each case as of the Initial Cut-Off Date, with
respect to the Initial Accounts, and as of the related Additional Cut-Off Date,
with respect to Additional Accounts; provided, that (a) the balance of all
Receivables included in such Accounts is reflected on the books and records of
such Transferor (and is treated for purposes of this Agreement) as "zero" and
(b) charging privileges with respect to all such Accounts have been canceled in
accordance with the relevant Credit Guidelines.
"Eligible Receivable" shall mean each Receivable, including,
where applicable, the underlying receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all
material respects with all Requirements of Law applicable to
the institution which owned such Receivable at the time of its
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creation and pursuant to a Credit Agreement which complies in
all material respects with all Requirements of Law applicable
to the appropriate Account Owner;
(c) with respect to which all material
consents, licenses, approvals or authorizations of, or
registrations with, any Governmental Authority required to be
obtained, effected or given in connection with the creation of
such Receivable or the execution, delivery and performance by
the Account Owner of the Credit Agreement pursuant to which
such Receivable was created, have been duly obtained, effected
or given and are in full force and effect;
(d) as to which at the time of the transfer
of such Receivable to the Trust, the Transferor or the Trust
will have good and marketable title thereto and which itself
is, and the underlying receivables are, free and clear of all
Liens (other than any Lien for municipal or other local taxes
if such taxes are not then due and payable or if the
Transferor is then contesting the validity thereof in good
faith by appropriate proceedings and has set aside on its
books adequate reserves with respect thereto) [arising under
or through the Transferor];
(e) which has been the subject of either a
valid transfer and assignment from a Transferor to the Trust
of all the Transferor's right, title and interest therein
(including any proceeds thereof), or the grant of a first
priority perfected security interest therein (and in the
proceeds thereof), effective until the termination of the
Trust;
(f) which at all times will be the legal,
valid and binding payment obligation of the Obligor thereon
enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(g) which, at the time of transfer to the
Trust, has not been waived or modified except as permitted in
accordance with the Credit Guidelines and which waiver or
modification is reflected in the Servicer's computer file of
credit card accounts;
(h) which, at the time of transfer to the
Trust, is not subject to any right of rescission, setoff,
counterclaim or any other defense (including defenses arising
out of violations of usury laws) of the Obligor, other than
defenses arising out of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general;
(i) as to which, at the time of transfer to
the Trust, Conseco Bank, Retail Services Bank, Conseco Finance
or another Account Owner, as the case may be, has satisfied
all of its obligations required to be satisfied by such time;
(j) as to which, at the time of transfer to
the Trust, none of the Transferor, Conseco Bank, Retail
Services Bank, Conseco Finance or any other Account Owner, as
the case may be, has taken any action which would impair, or
omitted to take any action the omission of which would impair,
the rights of the Trust or the Noteholders therein; and
(k) which constitutes either an "account" or
a "general intangible" under and as defined in Article 9 of
the UCC as then in effect in the State of [South Dakota, Utah
and
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Delaware] and any other state where the filing of a financing
statement is required to perfect the Trust's interest in the
Receivables and the proceeds thereof.
"Eligible Servicer" shall mean the Indenture Trustee or, if
the Indenture Trustee is not acting as Servicer, an entity which, at the time of
its appointment as Servicer, (a) is servicing a portfolio of credit accounts
substantially similar to the Accounts, (b) is legally qualified and has the
capacity to service the Accounts, (c) in the sole determination of the Indenture
Trustee, which determination shall be conclusive and binding, has demonstrated
the ability to service professionally and competently a portfolio of similar
accounts in accordance with high standards of skill and care, (d) is qualified
to use the software that is then being used to service the Accounts or obtains
the right to use or has its own software which is adequate to perform its duties
under this Agreement and (e) has a net worth of at least $50,000,000 as of the
end of its most recent fiscal quarter.
"Event of Default" shall have the meaning specified in the
Indenture.
"FDIA" shall mean the Federal Deposit Insurance Act, as
amended by the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and as further amended from time to time.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Finance Charge Receivables" shall mean with respect to any
Pool, all amounts billed to the Obligors on any Account in respect of (a) all
Periodic Rate Finance Charges, (b) Cash Advance Fees, (c) annual membership fees
and annual service charges, (d) Late Fees, (e) Overlimit Fees, (f) Discount
Option Receivables and (g) any other fees with respect to the Accounts
designated by the Transferor at any time and from time to time to be included as
Finance Charge Receivables. Finance Charge Receivables shall also include the
interest portion of Participation Interests as shall be determined pursuant to,
and only if so provided in, the applicable Participation Interest Supplement or
Indenture Supplement for any Series.
"Fitch" shall mean Fitch, Inc. or its successors.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall have the meaning set forth in the Indenture.
"Indenture" shall mean the Master Indenture, dated as of
___________, 2001 between the Issuer and the Indenture Trustee, as the same may
be amended, supplemented or otherwise modified from time to time.
"Indenture Supplement" shall have the meaning specified in the
Indenture.
"Indenture Trustee" shall mean U.S. Bank Trust National
Association, a national banking association, in its capacity as trustee under
the Indenture, its successors in interest and any successor indenture trustee
under the Indenture.
"Ineligible Receivables" shall have the meaning specified in
subsection 2.05(a).
"Initial Account" shall mean each credit account established
pursuant to a Credit Agreement between Conseco Bank or Retail Services Bank and
any Person, which account is identified in
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the computer file or microfiche list delivered to the Owner Trustee by the
Transferor pursuant to Section 2.01 on the Initial Issuance Date.
"Initial Cut-Off Date" shall mean _____________ __, 2001.
"Initial Issuance Date" shall mean __________, 2001, the date
the Transferor's Certificate is issued by the Trust to the Transferor pursuant
to the Trust Agreement.
"Insolvency Event" shall have the meaning specified in Section
6.01.
"Insurance Proceeds" shall mean any amounts received pursuant
to the payment of benefits under any credit life insurance policies, credit
disability or unemployment insurance policies covering any Obligor with respect
to Receivables under such Obligor's Account.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount or adjusted invested
amount, as applicable, specified in the related Indenture Supplement.
"Issuer" shall mean the Trust.
"Late Fees" shall have the meaning specified in the Credit
Agreement applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment permitted by subsection 3.06(b) of the Trust Agreement or grant
provided in the granting clauses of the Indenture, and the lien created by this
Agreement shall not be deemed to constitute a Lien.
"Merchant" shall mean a business entity organized under or
qualified to do business under the laws of one of the states of the United
States which sells, produces, installs, services, provides or manufacturer
retail goods and or services.
"Merchant Agreement" shall mean one or more agreements between
an Account Owner and a Merchant pursuant to which the Account Owner agrees to
extend credit accounts to customers of the Merchant and the Merchant agrees to
allow purchasers of its goods and services under such accounts.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.02.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor.
"New Account" shall mean each credit card account established
pursuant to a Credit Agreement, which account is designated pursuant to
subsection 2.09(d) to be included as an Account and is identified in the
computer file or microfiche list delivered to the Owner Trustee by the
Transferor pursuant to Section 2.01 and subsection 2.09(h).
"Note Owner" shall have the meaning specified in the
Indenture.
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"Note Register" shall have the meaning specified in the
Indenture.
"Noteholder" or "Holder" shall have the meaning specified in
the Indenture.
"Notices" shall have the meaning specified in subsection
9.04(a).
"Obligor" shall mean, with respect to any Account, the Person
or Persons obligated to make payments with respect to such Account, including
any guarantor thereof, but excluding any merchant.
"Officer's Certificate" shall have the meaning specified in
the Indenture.
"Opinion of Counsel" shall have the meaning specified in the
Indenture.
"Overlimit Fees" shall have the meaning specified in the
Credit Agreement applicable to each Account for overlimit fees or similar terms
if such fees are provided for with respect to such Account.
"Owner Trustee" shall mean Wilmington Trust Company in its
capacity as owner trustee under the Trust Agreement, its successors in interest
and any successor owner trustee under the Trust Agreement.
"Participation Interest Supplement" shall mean a supplement to
this Agreement entered into pursuant to subsection 2.09(a)(ii) or (b) in
connection with the conveyance of Participation Interests to the Trust.
"Participation Interests" shall have the meaning specified in
subsection 2.09(a)(ii).
"Paying Agent" shall have the meaning specified in the
Indenture.
["Periodic Rate Finance Charges" shall have the meaning
specified in the Credit Agreement applicable to each Account for finance charges
(due to periodic rate) or any similar term.]
"Person" shall mean any legal person, including any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Pool" shall have the meaning specified in the Indenture.
["Preferred Stock" shall mean the preferred shares of Conseco
Finance Credit Card Funding Corp.. designated as such, with a par value of $1.00
per share and a liquidation value of $1.00 per share.]
"Principal Receivables" shall mean with respect to any Pool
all Receivables other than Finance Charge Receivables or Defaulted Receivables;
provided, however, that after a Discount Option Date, Principal Receivables on
any Date of Processing thereafter shall mean Principal Receivables as otherwise
determined pursuant to this definition minus the amount of any Discount Option
Receivables. Principal Receivables shall also include the principal portion of
Participation Interests as shall be determined pursuant to, and only if so
provided in, the applicable Participation Interest Supplement or Indenture
Supplement for any Series. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by
the aggregate amount of credit balances
9
in the Accounts on such day. Any Principal Receivables which the Transferor is
unable to transfer as provided in Section 2.11 shall not be included in
calculating the amount of Principal Receivables.
"Rating Agency" shall have the meaning specified in the
Indenture.
"Rating Agency Condition" shall have the meaning specified in
the Indenture.
"Reassignment" shall have the meaning specified in Section
2.10.
"Receivables" shall mean all amounts shown on the Servicer's
records as amounts payable by Obligors on any Account from time to time,
including amounts payable for Principal Receivables and Finance Charge
Receivables. Receivables which become Defaulted Receivables will cease to be
included as Receivables as of the day on which they become Defaulted
Receivables. Receivables, where applicable, shall include also the interest and
principal portion of Participation Interests. Unless the context otherwise
requires (whether or not there is a specific reference to the underlying
receivable), any reference in this Agreement, the Indenture or any Indenture
Supplement to a Receivable (including any Principal Receivable, Finance Charge
Receivable or Defaulted Receivable) and any Collections thereon or other amounts
recoverable with respect thereto (including any Insurance Proceeds or Recoveries
with respect thereto) shall refer to only the fractional undivided interest in
the amounts paid or payable by Obligors on the Accounts that are transferred by
Conseco Bank, Retail Services Bank, Conseco Finance or another Account Owner to
a Transferor or directly to the Issuer, which undivided interest may be less
than a 100% undivided interest therein. Any reference in this Agreement, the
Indenture or any Indenture Supplement to the "underlying receivable" with
respect to a Receivable shall refer to the receivable in which such Receivable
represents an undivided interest.
"Receivables Purchase Agreements" shall mean the receivables
purchase agreement dated as of __________ 2001, between Retail Services Bank and
Conseco Bank and the receivables purchase agreement dated as of _________, 2000
between Conseco Bank and Conseco Finance Corp. and the receivables purchase
agreement between Conseco Finance Corp. and Conseco Finance Credit Card Funding
Corp., each as amended from time to time, and any receivables purchase agreement
entered into between the Transferor and an Account Owner or other Affiliated
entity in the future.
"Recoveries" shall mean all amounts received (net of
out-of-pocket costs of collection) including Insurance Proceeds, which is
reasonably estimated by the Servicer to be attributable to Defaulted
Receivables, including the net proceeds of any sale of such Defaulted
Receivables by the Transferor.
"Registered Notes" shall have the meaning specified in the
Indenture.
"Reinvestment Event" shall have the meaning specified in the
Indenture.
"Related Account" shall mean an Account with respect to which
a new account number has been issued by the applicable Account Owner or Servicer
or the applicable Transferor under circumstances resulting from a lost or stolen
credit card or account number, and not requiring standard application and credit
evaluation procedures under the Credit Guidelines.
"Removal Date" shall have the meaning specified in Section
2.10.
"Removed Accounts" shall have the meaning specified in Section
2.10.
"Removed Participation Interests" shall have the meaning
specified in Section 2.10.
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"Required Delivery Date" shall have the meaning specified in
subsection 2.01(c).
"Required Designation Date" shall have the meaning specified
in subsection 2.09(a).
"Required Minimum Principal Balance" shall mean, unless
otherwise provided in an Indenture Supplement relating to a Series having a
Paired Series, with respect to any date and any Pool (a) the sum of the Series
Adjusted Invested Amounts for each Series outstanding on such date in such Pool
plus the Required Transferor Amount on such date, minus (b) the Special Funding
Amount.
"Required Transferor Amount" shall have the meaning specified
in the Indenture.
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or Governmental Authority, whether
Federal, state or local (including usury laws, the Federal Truth in Lending Act
and Regulation B and Regulation Z of the Board of Governors of the Federal
Reserve System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person.
"Retail Services Bank" shall mean Green Tree Retail Services
Bank Inc., a South Dakota banking corporation and it successors and assigns.
["Revolving Credit Agreement" shall mean the revolving credit
agreement by and between the [Transferor] and . __________________________ ,
dated as of __________, 2001, as such agreement may be amended from time to time
in accordance therewith, and any substantially similar agreement entered into
between any lender and the [Transferor] or any [Additional Transferor] in the
future in accordance with the provisions hereof.]
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Series" shall have the meaning specified in the Indenture.
"Series Account" shall have the meaning specified in the
Indenture.
"Series Adjusted Invested Amount" shall have the meaning
specified in the related Indenture Supplement.
"Series Enhancement" shall have the meaning specified in the
Indenture.
"Series Enhancer" shall have the meaning specified in the
Indenture.
"Series Portfolio Yield" shall have the meaning specified in
the related Indenture Supplement.
"Service Transfer" shall have the meaning specified in Section
7.01.
"Servicer" shall mean Conseco Bank, in its capacity as
Servicer pursuant to this Agreement, and, after any Service Transfer, the
Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
7.01.
"Servicing Fee" shall have the meaning specified in Section
3.02.
"Special Funding Account" shall have the meaning specified in
the Indenture.
11
"Special Funding Amount" shall have the meaning specified in
the Indenture.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Group, or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 7.02(a).
"Supplemental Certificate" shall have the meaning specified in
the Trust Agreement.
"Tax Opinion" shall have the meaning specified in the
Indenture.
"Termination Notice" shall have the meaning specified in
subsection 7.01(d).
"Transfer Agent and Registrar" shall have the meaning
specified in the Indenture.
"Transfer Restriction Event" shall have the meaning specified
in Section 2.11.
"Transferors" shall mean (a) Conseco Bank or its successor,
Conseco Finance Credit Card Funding Corp.. or its successor in each case for so
long as such entity is a transferor under this Agreement and (b) any Additional
Transferor or Additional Transferors. References to "each Transferor" shall
refer to each entity mentioned in the preceding sentence and references to "the
Transferors" shall refer to all of such entities.
"Transferor Amount" shall have the meaning specified in the
Indenture.
"Transferor Certificate" shall have the meaning specified in
the Trust Agreement.
"Transferor Certificates" shall mean, collectively, each
Transferor Certificate and any outstanding Supplemental Certificates.
"Transferred Account" shall mean each account into which an
Account shall be transferred provided that (i) such transfer was made in
accordance with the Credit Guidelines and (ii) such account can be traced or
identified as an account into which an Account has been transferred.
"Trust" shall mean the Conseco Private Label Credit Card
Master Note Trust, acting by and through Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee.
"Trust Agreement" shall mean the Trust Agreement relating to
the Trust, dated as of _____________, 2001, between Conseco Bank, Conseco
Finance Credit Card Funding Corp.. and the Owner Trustee, as the same may be
amended, supplemented or otherwise modified from time to time.
"Trust Assets" shall have the meaning specified in Section
2.01.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified jurisdiction.
"Zero Balance Account" shall have the meaning established in
accordance with the Credit Guidelines.
12
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not
otherwise defined herein shall have meanings ascribed to them in the Trust
Agreement, the Indenture or the related Indenture Supplement, as applicable.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable and as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall control.
(d) The agreements, representations and warranties of Conseco
Bank in this Agreement in its respective capacities as Transferor and Servicer
shall be deemed to be the agreements, representations and warranties of Conseco
Bank solely in each such capacity for so long as Conseco Bank act in each such
capacity under this Agreement.
(e) The agreements, representations and warranties of Conseco
Finance Credit Card Funding Corp.. in this Agreement in its capacity as
Transferor shall be deemed to be the agreements, representations and warranties
of Conseco Finance Credit Card Funding Corp.. solely in such capacity for so
long as Conseco Finance Credit Card Funding Corp.. acts in such capacity under
this Agreement.
(f) Any reference to each Rating Agency shall only apply to
any specific rating agency if such rating agency is then rating any outstanding
Series.
(g) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(h) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; references to any
subsection, Section, Schedule or Exhibit are references to subsections,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" means "including without limitation."
[END OF ARTICLE I]
13
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables. (a) By execution of
this Agreement, each of Conseco Bank and Conseco Finance Credit Card Funding
Corp.. and, in the case of Additional Accounts, Conseco Bank, Conseco Finance
Credit Card Funding Corp.. or, if applicable, any Additional Transferor does
hereby transfer, assign, set over and otherwise convey to the Owner Trustee on
behalf of the Trust, without recourse except as provided herein, all its right,
title and interest in, to and under the Receivables existing at the close of
business on the Initial Cut-Off Date, in the case of Receivables arising in the
Initial Accounts, and on each Additional Cut-Off Date, in the case of
Receivables arising in the Additional Accounts, and in each case thereafter
created from time to time until the termination of the Trust, all Recoveries
allocable to the Trust as provided herein, all monies due or to become due and
all amounts received or receivable with respect thereto and all proceeds
(including "proceeds" as defined in the UCC) thereof. Such property, together
with all monies and other property credited to the Collection Account, the
Series Accounts and the Special Funding Account (including any subaccounts of
such account), the Preferred Stock of Conseco Finance Credit Card Funding Corp.,
the property conveyed to the Owner Trustee on behalf of the Trust under any
Participation Interest Supplement and the right to receive Recoveries attributed
to Obligor charges for merchandise and services in the Accounts shall constitute
the assets of the Trust (the "Trust Assets"). The foregoing does not constitute
and is not intended to result in the creation or assumption by the Trust, the
Owner Trustee, the Indenture Trustee or any Noteholder of any obligation of
Conseco Bank, Retail Services Bank, Conseco Finance, or any other Account Owner
or the Transferor, any Additional Transferors, the Servicer or any other Person
in connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, Merchants,
merchant banks, merchants clearance systems or insurers. The Obligors shall not
be notified in connection with the creation of the Trust of the transfer,
assignment, set-over and conveyance of the Receivables to the Transferors or to
the Owner Trustee on behalf of the Trust.
(b) Each Transferor agrees to record and file, at its own
expense, financing statements (and continuation statements when applicable) with
respect to the Receivables conveyed by such Transferor existing on the Initial
Cut-Off Date and thereafter created meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect, and
maintain the perfection of, the transfer and assignment of its interest in such
Receivables to the Owner Trustee on behalf of the Trust, and to deliver a file
stamped copy of each such financing statement or other evidence of such filing
to the Owner Trustee as soon as practicable after the first Closing Date, in the
case of Receivables arising in the Initial Accounts, and (if any additional
filing is so necessary) as soon as practicable after the applicable Addition
Date, in the case of Receivables arising in Additional Accounts. The Owner
Trustee shall be under no obligation whatsoever to file such financing or
continuation statements or to make any other filing under the UCC in connection
with such transfer and assignment.
(c) Each Transferor further agrees, at its own expense, on or
prior to (A) the first Closing Date, in the case of the Initial Accounts, (B)
the applicable Addition Date, in the case of Additional Accounts, and (C) the
applicable Removal Date, in the case of Removed Accounts, (i) to indicate in the
appropriate computer files that Receivables created (or reassigned, in the case
of Removed Accounts) in connection with the Accounts have been conveyed to the
Owner Trustee on behalf of the Trust pursuant to this Agreement (or conveyed to
each such Transferor or its designee in accordance with Section 2.10, in the
case of Removed Accounts) by including (or deleting in the case of Removed
Accounts) in such computer files the code that identifies each such Account and
(ii) on or prior to (A) the Closing Date, in the case of the Initial Accounts,
(B) the date that is five Business Days after the applicable Addition Date, in
the case of designation of Aggregate Addition Accounts, (C) the Distribution
Date on which the Opinion of Counsel is required to be delivered with respect to
the Due Period which
14
includes the applicable Additional Date, in the case of New Accounts, and (D)
the date that is five Business Days after the applicable Removal Date, in the
case of Removed Accounts (the "Required Delivery Date"), to deliver to the Owner
Trustee a computer file or microfiche list containing a true and complete list
of all such Accounts specifying for each such Account, as of the Initial Cut-Off
Date, in the case of the Initial Accounts, the applicable Additional Cut-Off
Date in the case of Additional Accounts, and the applicable Removal Date in the
case of Removed Accounts, (1) its account number, (2) the aggregate amount
outstanding in such Account, and (3) the aggregate amount of Principal
Receivables outstanding in such Account. Each such file or list, as
supplemented, from time to time, to reflect Additional Accounts and Removed
Accounts, shall be marked as Schedule 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement. Each Transferor further
agrees not to alter the code referenced in this paragraph with respect to any
Account during the term of this Agreement unless and until such Account becomes
a Removed Account.
(d) If the arrangements with respect to the Receivables
hereunder shall constitute a loan and not a purchase and sale of such
Receivables, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that each Transferor
shall be deemed to have granted and does hereby grant to the Owner Trustee on
behalf of the Trust a first priority perfected security interest in all of such
Transferor's right, title and interest, whether now owned or hereafter acquired,
in, to and under the Receivables and the other Trust Assets conveyed by such
Transferor to secure its obligations hereunder.
Section 2.02. Acceptance by Owner Trustee.
(a) The Owner Trustee hereby acknowledges its acceptance on
behalf of the Trust of all right, title and interest to the property, now
existing and hereafter created, conveyed pursuant to Section 2.01. The Owner
Trustee further acknowledges that, prior to or simultaneously with the execution
and delivery of this Agreement, the Transferor delivered to the Owner Trustee
the computer file or microfiche list relating to the Initial Accounts described
in subsection 2.01(c). The Owner Trustee shall maintain a copy of Schedule 1, as
delivered from time to time, at the Corporate Trust Office.
(b) The Owner Trustee hereby agrees not to disclose to any
Person any of the account numbers or other information contained in the computer
files or microfiche lists marked as Schedule 1 and delivered to the Owner
Trustee, from time to time, except (i) to a Successor Servicer or as required by
a Requirement of Law applicable to the Owner Trustee, (ii) in connection with
the performance of the Owner Trustee's duties hereunder, (iii) to the Indenture
Trustee in connection with its duties in enforcing the rights of Noteholders or
(iv) to bona fide creditors or potential creditors of any Account Owner or any
Transferor for the limited purpose of enabling any such creditor to identify
Receivables or Accounts subject to this Agreement or the Receivables Purchase
Agreements. The Owner Trustee agrees to take such measures as shall be
reasonably requested by any Transferor to protect and maintain the security and
confidentiality of such information and, in connection therewith, shall allow
each Transferor or its duly authorized representatives to inspect the Owner
Trustee's security and confidentiality arrangements as they specifically relate
to the administration of the Trust from time to time during normal business
hours upon prior written notice. The Owner Trustee shall provide the applicable
Transferor with notice five Business Days prior to disclosure of any information
of the type described in this subsection 2.02(b).
(c) The Owner Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement and the Indenture.
15
Section 2.03. Representations and Warranties of Each
Transferor Relating to Such Transferor. Each Transferor hereby severally
represents and warrants to the Owner Trustee and the Trust (and agrees that the
Indenture Trustee may conclusively rely on each such representation and warranty
in authenticating the Notes) as of each Closing Date (but only if it was a
Transferor on such date) that:
(a) Organization and Good Standing. Such Transferor is a
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full power and
authority to own its properties and conduct its business as presently owned or
conducted, and to execute, deliver and perform its obligations under this
Agreement, any Receivables Purchase Agreement to which it is a party and each
applicable Participation Interest Supplement.
(b) Due Qualification. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render any Credit
Agreement relating to an Account specified in the applicable Receivables
Purchase Agreement with such Transferor or any Receivable conveyed to the Trust
by such Transferor unenforceable by such Transferor or the Trust or (ii) have a
material adverse effect on the Noteholders.
(c) Due Authorization. The execution and delivery of this
Agreement and, if it is a party to a Receivables Purchase Agreement, such
Receivables Purchase Agreement, and each applicable Participation Interest
Supplement by such Transferor and the order to the Owner Trustee to have the
Notes authenticated and delivered and the consummation by such Transferor of the
transactions provided for in this Agreement, if it is a party to a Receivables
Purchase Agreement, such and each applicable Participation Interest Supplement
have been duly authorized by such Transferor by all necessary corporate action
on the part of such Transferor.
(d) No Conflict. The execution and delivery by such Transferor
of this Agreement, the Receivables Purchase Agreement, if applicable, and each
applicable Participation Interest Supplement, and the performance of the
transactions contemplated by this Agreement, the Receivables Purchase Agreement,
if applicable, and each applicable Participation Interest Supplement and the
fulfillment of the terms hereof and thereof applicable to such Transferor, will
not conflict with or violate any Requirements of Law applicable to such
Transferor or conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which such Transferor is a party or by
which it or its properties are bound.
(e) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of such Transferor, threatened
against such Transferor before any Governmental Authority (i) asserting the
invalidity of this Agreement any Receivables Purchase Agreement or any
applicable Participation Interest Supplement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any
Receivables Purchase Agreement or any applicable Participation Interest
Supplement, (iii) seeking any determination or ruling that, in the reasonable
judgment of such Transferor, would materially and adversely affect the
performance by such Transferor of its obligations under this Agreement, any
Receivables Purchase Agreement or any applicable Participation Interest
Supplement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement, any
Receivables Purchase Agreement or any applicable Participation Interest
Supplement or (v) seeking to affect adversely the income or franchise tax
attributes of the Trust under the United States Federal or any State income or
franchise tax systems.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by such
16
Transferor in connection with the execution and delivery by such Transferor of
this Agreement, Receivables Purchase Agreement, if applicable, and each
applicable Participation Interest Supplement and the performance of the
transactions contemplated by this Agreement, the Receivables Purchase Agreement
and each applicable Participation Interest Supplement by such Transferor have
been duly obtained, effected or given and are in full force and effect.
Section 2.04. Representations and Warranties of each
Transferor Relating to the Agreement and Any Participation Interest Supplement
and the Receivables.
(a) Representations and Warranties. Each Transferor hereby
severally represents and warrants to the Owner Trustee and the Trust as of the
Initial Issuance Date, each Closing Date and, with respect to Additional
Accounts, as of the related Addition Date (but only if, in either case, it was a
Transferor on such date and only with respect to Accounts it has designated on
such date and Receivables arising therein) that:
(i) this Agreement, any Receivables Purchase
Agreement to which it is a party, each applicable
Participation Interest Supplement and, in the case of
Additional Accounts, the related Assignment, each constitutes
a legal, valid and binding obligation of such Transferor
enforceable against such Transferor 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
from time to time in effect or general principles of equity;
(ii) as of the Initial Cut-Off Date with
respect to the Initial Accounts and as of the related
Additional Cut-Off Date with respect to Additional Accounts,
the portion of Schedule 1 to this Agreement under such
Transferor's name, as supplemented to such date, is, or will
be on the Required Delivery Date in the case of Additional
Accounts, an accurate and complete listing in all material
respects of all the Accounts the Receivables in which were
transferred by such Transferor on the first Closing Date or
the Addition Date, as the case may be, and the information
contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is, or will
be on the Required Delivery Date in the case of Additional
Accounts, true and correct in all material respects as of the
Initial Cut-Off Date or such Additional Cut-Off Date, as the
case may be;
(iii) on the date each Receivable is
conveyed to the Trust by such Transferor, such Receivable has
been conveyed to the Trust free and clear of any Lien and, on
such date, any related underlying receivable is free and clear
of all Liens;
(iv) all authorizations, consents, orders or
approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected or
given by such Transferor in connection with the conveyance by
such Transferor of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
(v) either this Agreement or, in the case of
Additional Accounts, the related Assignment constitutes a
valid sale, transfer and assignment to the Trust of all right,
title and interest of such Transferor in the Receivables
conveyed to the Trust by such Transferor and the proceeds
thereof and Recoveries identified as relating to the
Receivables conveyed to the Trust by such Transferor which
have become Defaulted Receivables or, if this Agreement or, in
the case of Additional Accounts, the related Assignment does
not constitute a sale of such property, it constitutes a grant
of a first priority perfected "security interest" (as defined
in the UCC) in such property to the Trust, which, in the case
of existing Receivables and the proceeds thereof and said
17
Recoveries, is enforceable upon execution and delivery of this
Agreement, or, with respect to then existing Receivables in
Additional Accounts, as of the applicable Addition Date, and
which will be enforceable with respect to such Receivables
hereafter and thereafter created and the proceeds thereof upon
such creation. Upon the filing of the financing statements
and, in the case of Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall
have a first priority perfected security or ownership interest
in such property and proceeds;
(vi) on the Initial Cut-Off Date, each
Initial Account specified in Schedule 1 with respect to such
Transferor is an Eligible Account and, on the applicable
Additional Cut-Off Date, each related Additional Account
specified in Schedule 1 with respect to such Transferor is an
Eligible Account;
(vii) on the Initial Cut-Off Date, each
Receivable then existing and conveyed to the Trust by such
Transferor is an Eligible Receivable, and, on the applicable
Additional Cut-Off Date, each Receivable contained in the
related Additional Accounts and conveyed to the Trust by such
Transferor is an Eligible Receivable;
(viii) as of the date of the creation of any
new Receivable in an Account specified in the applicable
Receivables Purchase Agreement, such Receivable is an Eligible
Receivable; and
(ix) no selection procedures believed by
such Transferor to be materially adverse to the interests of
the Noteholders have been used in selecting such Accounts.
(b) Notice of Breach. The representations and warranties set
forth in Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive
the transfers and assignments of the Receivables to the Trust, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to the Indenture Trustee
within three Business Days following such discovery, provided that the failure
to give notice within three Business Days does not preclude subsequent notice.
Section 2.05. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any
representation or warranty contained in subsection 2.04(a)(ii), (iii), (iv),
(vi), (vii), (viii) or (ix) is not true and correct in any material respect as
of the date specified therein with respect to any Receivable or the related
Account and such breach has a material adverse effect on any Receivable (which
determination shall be made without regard to whether funds are then available
pursuant to any Series Enhancement) unless cured within 60 days (or such longer
period, not in excess of 120 days, as may be agreed to by the Indenture Trustee
and the Servicer) after the earlier to occur of the discovery thereof by the
Transferor which conveyed such Receivables to the Trust or receipt by the
Transferor of written notice thereof given by the Owner Trustee, the Indenture
Trustee or the Servicer, or (ii) it is so provided in subsection 2.07(a) with
respect to any Receivables conveyed to the Trust by such Transferor, then such
Transferor shall accept reassignment of all Receivables in the related Account
("Ineligible Receivables") on the terms and conditions set forth in paragraph
(b) below.
(b) Price of Reassignment. The Servicer shall deduct the
portion of such Ineligible Receivables reassigned to each Transferor which are
Principal Receivables from the aggregate amount of the Principal Receivables
used to calculate the Transferor Amount. In the event that, following the
18
exclusion of such Principal Receivables from the calculation of the Transferor
Amount, the Transferor Amount would be less than the Required Transferor Amount,
not later than 1:00 P.M., New York City time, on the first Distribution Date
following the Due Period in which such reassignment obligation arises, the
applicable Transferor shall make a deposit into the Special Funding Account in
immediately available funds in an amount equal to the amount by which the
Transferor Amount would be below the Required Transferor Amount (up to the
amount of such Principal Receivables).
Upon reassignment of any Ineligible Receivable, the Trust
shall automatically and without further action be deemed to transfer, assign,
set over and otherwise convey to the applicable Transferor or its designee,
without recourse, representation or warranty, all the right, title and interest
of the Owner Trustee and the Trust in and to such Ineligible Receivable, all
Interchange and Recoveries related thereto, all monies and amounts due or to
become due and all proceeds thereof and such reassigned Ineligible Receivable
shall be treated by the Owner Trustee and the Trust as collected in full as of
the date on which it was transferred. The obligation of each Transferor to
accept reassignment of any Ineligible Receivables conveyed to the Trust by such
Transferor, and to make the deposits, if any, required to be made to the Special
Funding Account as provided in this Section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to Noteholders (or
the Indenture Trustee on behalf of the Noteholders) or any Series Enhancer.
Notwithstanding any other provision of this subsection 2.05(b), a reassignment
of an Ineligible Receivable in excess of the amount that would cause the
Transferor Amount to be less than the Required Transferor Amount shall not occur
if the applicable Transferor fails to make any deposit required by this
subsection 2.05(b) with respect to such Ineligible Receivable. The Owner Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested and provided by the
applicable Transferor to effect the conveyance of such Ineligible Receivables
pursuant to this subsection 2.05(b), but only upon receipt of an Officer's
Certificate from such Transferor that states that all conditions set forth in
this Section 2.05 have been satisfied.
Section 2.06. Reassignment of Trust Portfolio. In the event
any representation or warranty of a Transferor set forth in subsection 2.03(a)
or (c) or subsection 2.04(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on the Receivables or
Participation Interests conveyed to the Trust by such Transferor or the
availability of the proceeds thereof to the Trust (which determination shall be
made without regard to whether funds are then available pursuant to any Series
Enhancement), then either the Owner Trustee, the Indenture Trustee or the
Holders of Notes evidencing not less than 50% of the aggregate unpaid principal
amount of all outstanding Notes, by notice then given to such Transferor and the
Servicer (and to the Owner Trustee and Indenture Trustee if given by the
Noteholders), may direct such Transferor to accept a reassignment of the
Receivables and any Participation Interests conveyed to the Trust by such
Transferor if such breach and any material adverse effect caused by such breach
is not cured within 60 days of such notice (or within such longer period, not in
excess of 120 days, as may be specified in such notice), and upon those
conditions such Transferor shall be obligated to accept such reassignment on the
terms set forth below; provided, however, that such Receivables and
Participation Interests will not be reassigned to such Transferor if, on any day
prior to the end of such 60-day or longer period (i) the relevant representation
and warranty shall be true and correct in all material respects as if made on
such day and (ii) such Transferor shall have delivered to the Owner Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which the relevant representation and warranty has become true and
correct.
The applicable Transferor shall deposit in the Collection
Account in immediately available funds not later than 1:00 P.M., New York City
time, on the first Distribution Date following the Due Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Indenture Supplement. Notwithstanding anything
to the contrary in this Agreement, such amounts shall
19
be distributed to the Noteholders on such Distribution Date in accordance with
the terms of each Indenture Supplement. If the Owner Trustee, the Indenture
Trustee or the Noteholders give notice directing the applicable Transferor to
accept a reassignment of the Receivables and Participation Interests as provided
above, the obligation of such Transferor to accept such reassignment pursuant to
this Section 2.06 and to make the deposit required to be made to the Collection
Account as provided in this paragraph shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.06 available to the Noteholders (or the Indenture Trustee on behalf of the
Noteholders) or any Series Enhancer. Upon reassignment of the Receivables and
Participation Interests on such Distribution Date, the Trust shall automatically
and without further action be deemed to transfer, assign, set over and otherwise
convey to the applicable Transferor, without recourse, representation or
warranty, all of the right, title and interest of the Owner Trustee and the
Trust in and to the Receivables and Participation Interests, all Interchange and
Recoveries allocable to the Trust, all monies and amounts due or to become due
with respect thereto and all proceeds thereof. The Owner Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by the applicable Transferor to effect
the conveyance of such property pursuant to this subsection.
Section 2.07. Covenants of each Transferor. Each Transferor
hereby severally covenants that:
(a) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of an Account, such
Transferor will take no action to cause any Receivable conveyed by it to the
Trust to be evidenced by any instrument (as defined in the UCC) and if any such
Receivable (or any underlying receivable) is so evidenced it shall be deemed to
be an Ineligible Receivable in accordance with Section 2.05(a) and shall be
reassigned to such Transferor in accordance with Section 2.05(b).
(b) Security Interests. Except for the conveyances hereunder,
such Transferor will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any Lien on, any Receivable
(or any underlying receivable) or Participation Interest conveyed by it to the
Trust, whether now existing or hereafter created, or any interest therein, and
such Transferor shall defend the right, title and interest of the Trust and the
Indenture Trustee in, to and under the Receivables and any Participation
Interest, whether now existing or hereafter created, against all claims of third
parties claiming through or under such Transferor.
(c) Transferor Amount. Except for (i) the conveyances
hereunder, in connection with any transaction permitted by subsection 4.02(a)(i)
and as provided in subsection 2.09(g) of this Agreement or Section 2.12 of the
Indenture or (ii) conveyances with respect to which the Rating Agency Condition
shall have been satisfied and a Tax Opinion shall have been delivered, such
Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in the Transferor
Amount, the Transferor Certificate or any Supplemental Certificate or the
Transferor's interest in the Trust and any such attempted transfer, assignment,
exchange, conveyance, pledge, hypothecation, grant or sale shall be void;
provided, however, that nothing in this subsection 2.07(c) shall prevent the
owner of an interest in the Transferor Amount from granting to an Affiliate a
participation interest or other beneficial interest in the rights to receive
cash flows related to the Transferor Amount, if (i) such interest does not grant
such Affiliate any rights hereunder or delegate to such Affiliate any
obligations or duties hereunder, (ii) the transferor of such interest obtains
the prior written consent of such Transferor and (iii) after giving effect to
such transfer, the interest in the Transferor Amount owned directly by such
Transferor represents an undivided ownership interest in [two percent (2.0%) or
more of the Trust Assets].
20
(d) Delivery of Collections or Recoveries. In the event that
such Transferor receives Collections or Recoveries, such Transferor agrees to
pay the Servicer all such Collections and Recoveries as soon as practicable
after receipt thereof.
(e) Notice of Liens. Such Transferor shall notify the Owner
Trustee, the Indenture Trustee and each Series Enhancer promptly after becoming
aware of any Lien on any Receivable (or on the underlying receivable) or
Participation Interest conveyed by it to the Trust other than the conveyances
hereunder and any Receivables Purchase Agreement to which it is a party and the
Indenture.
(f) Amendment of the Certificate of Incorporation. Such
Transferor will not amend in any material respect its certificate of
incorporation without providing the Rating Agency with notice no later than the
fifth Business Day prior to such amendment (unless the right to such notice is
waived by the Rating Agency) and satisfying the Rating Agency Condition.
(g) Other Indebtedness. Such Transferor if it is an entity
subject to the Bankruptcy Code shall not incur any additional debt, unless (i)
such debt is incurred pursuant to the Revolving Credit Agreement or (ii) the
Rating Agency is provided with notice no later than the fifth Business Day prior
to the incurrence of such additional debt (unless the right to such notice is
waived by the Rating Agency) and the Rating Agency Condition is satisfied with
respect to the incurrence of such debt.
Section 2.08. Covenants of each Transferor with Respect to
Receivables Purchase Agreement. Each Transferor which is a transferee of
Receivables under a Receivables Purchase Agreement, in such capacity hereby
covenants that such Transferor will at all times enforce the covenants and
agreements of the transferring party under such Receivables Purchase Agreement,
including covenants substantially to the effect set forth below:
(a) Periodic Rate Finance Charges. (i) Except (A) as otherwise
required by any Requirements of Law or (B) as is deemed the applicable Account
Owner to be necessary in order for it to maintain its credit business or a
program operated by such credit business on a competitive basis based on a good
faith assessment by it of the nature of the competition with respect to the
credit business or such program, it shall not at any time take any action which
would have the effect of reducing the Series Portfolio Yield to a level that
could be reasonably expected to result in an Adverse Effect with respect to any
Series based on the insufficiency of the Series Portfolio Yield or any similar
test.
(b) Credit Agreements and Guidelines. Subject to compliance
with all Requirements of Law and paragraph (a) above, the Account Owner may
change the terms and provisions of the applicable Credit Agreements or the
applicable Credit Guidelines in any respect (including the calculation of the
amount or the timing of charge-offs and the Periodic Rate Finance Charges to be
assessed thereon). Notwithstanding the above, unless required by Requirements of
Law or as permitted by paragraph (a) above, no Account Owner will take any
action unless (i) at the time of such action the Account Owner reasonably
believes that such action will not cause an Amortization Event, Reinvestment
Event or Event of Default to occur, and (ii) such change is made applicable to
the comparable segment of the credit card accounts owned by such Account Owner
which have characteristics the same as, or substantially similar to, the
Accounts that are the subject of such change, except as otherwise restricted by
an endorsement, sponsorship, or other agreement between the Account Owner and an
unrelated third party or by the terms of the Credit Agreements.
21
Section 2.09. Addition of Accounts.
(a) Required Aggregate Additions.
(i) Required Additional Accounts. If, as of
the close of business on the last Business Day of any calendar
month, the aggregate amount of the Principal Receivables is
less than the Required Minimum Principal Balance (as adjusted
for any Series having a Paired Series as described in the
Indenture Supplement for such Series) on such date, the
Transferors shall on or prior to the close of business on the
last Business Day of the next succeeding Due Period (the
"Required Designation Date"), unless the aggregate amount of
the Principal Receivables exceeds the Required Minimum
Principal Balance as of the close of business on any day after
the last Business Day of such calendar month and prior to the
Required Designation Date, effect the addition of Eligible
Accounts to be included as Accounts as of the Required
Designation Date or any earlier date in a sufficient amount
(or such lesser amount as shall represent all Eligible
Accounts constituting credit card accounts then available to
one or more Transferors under the Receivables Purchase
Agreement) such that, after giving effect to such addition and
the addition by each other Transferor, the aggregate amount of
the Principal Receivables is at least equal to the Required
Minimum Principal Balance on such date.
(ii) Optional Participation Interests. In
lieu of, or in addition to, causing the designation of
Additional Accounts pursuant to clause (i) above, the
Transferors may (but shall not be required), subject to the
conditions specified in paragraph (c) below, convey to the
Trust participations (including 100% participations)
representing undivided interests in a pool of assets primarily
consisting of credit card receivables and any interests in any
of the foregoing, including securities representing or backed
by such receivables and collections, together with all
earnings, revenue, dividends, distributions, income, issues
and profits thereon ("Participation Interests"). The addition
of Participation Interests in the Trust pursuant to this
paragraph (a) or paragraph (b) below shall be effected by a
Participation Interest Supplement, dated the applicable
Addition Date and entered into pursuant to subsection 9.01(a).
(iii) Any Additional Accounts or
Participation Interests designated to be included as Trust
Assets pursuant to clauses (i) or (ii) above may only be so
included if the applicable conditions specified in paragraph
(c) below have been satisfied.
(b) Permitted Aggregate Additions. Each Transferor may from
time to time, in its sole discretion, subject to the conditions specified in
paragraph (c) below, voluntarily cause the designation of additional Eligible
Accounts to be included as Accounts or Participation Interests to be included as
Trust Assets, in either case as of the applicable Addition Date.
(c) Conditions to Aggregate Additions. On the Addition Date
with respect to any Aggregate Additions, the Trust shall acquire the Receivables
in such Aggregate Addition Accounts (and such Aggregate Addition Accounts shall
be deemed to be Accounts for purposes of this Agreement) or shall acquire such
Participation Interests existing as of the close of business on the applicable
Additional Cut-Off Date, subject to the satisfaction of the following
conditions:
(i) on or before the fifth Business Day
immediately preceding the Addition Date, the applicable
Transferor or Transferors shall have given the Owner Trustee,
the Indenture Trustee, the Servicer and each Rating Agency
notice (unless such notice requirement is otherwise waived)
that the Aggregate Addition Accounts or Participation
Interests will be included and specifying the applicable
Addition Date and Additional Cut-Off Date;
22
(ii) as of the applicable Additional Cut-Off
Date, such Aggregate Addition Accounts shall be Eligible
Accounts;
(iii) on or before the Required Delivery
Date, the applicable Transferor or Transferors shall have
delivered to the Owner Trustee and the Indenture Trustee
copies of UCC-1 financing statements covering such Aggregate
Addition Accounts or Participation Interests, if necessary to
perfect the Owner Trustee's and the Trust's interest in the
Receivables arising therein and a schedule of such Aggregate
Addition Accounts;
(iv) to the extent required by Section 8.04
of the Indenture, such Transferor or Transferors shall have
deposited in the Collection Account all Collections with
respect to such Aggregate Addition Accounts or Participation
Interests since the Additional Cut-Off Date;
(v) as of each of the Additional Cut-Off
Date and the Addition Date, no Insolvency Event with respect
to any Account Owner of any of the Aggregate Addition
Accounts, or such Transferor shall have occurred nor shall the
transfer to the Trust of the Receivables arising in the
Aggregate Addition Accounts or of the Participation Interests
have been made in contemplation of the occurrence thereof;
(vi) solely with respect to Aggregate
Additions designated pursuant to subsection 2.09(b), the
Rating Agency Condition shall have been satisfied;
(vii) each Transferor transferring
Receivables in the Additional Accounts on such Addition Date
shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate, dated the Addition Date,
confirming, to the extent applicable, the items set forth in
clauses (ii) through (vi) above;
(viii) the addition to the Trust of the
Receivables arising in the Aggregate Addition Accounts or of
the Participation Interests will not result in an Adverse
Effect and, in the case of Aggregate Additions, each
Transferor transferring Receivables in the Additional Accounts
on such Addition Date shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate,
dated the Addition Date, stating that such Transferor
reasonably believes that the addition to the Trust of the
Receivables arising in the Aggregate Addition Accounts or of
the Participation Interests will not have an Adverse Effect;
and
(ix) the Transferors shall have delivered to
the Owner Trustee, the Indenture Trustee and each Rating
Agency an Opinion of Counsel, dated the Addition Date, in
accordance with subsection 9.02(d)(ii) or (iv), as applicable.
(d) New Accounts. Each Transferor may from time to time, at
its sole discretion, subject to the conditions specified in paragraph (e) below,
voluntarily designate additional Eligible Accounts to be included as New
Accounts. For purposes of this paragraph, Eligible Accounts shall be deemed to
include only credit card accounts [of the same nature as those included as
Initial Accounts or which have previously been included in any Aggregate
Addition if the Assignment related to such Aggregate Addition expressly provides
that such type of credit card account is permitted to be designated as a New
Account].
(e) Conditions to Addition of New Accounts. On the Addition
Date with respect to any New Accounts, the Trust shall acquire the Receivables
in such New Accounts (and such New Accounts shall be deemed to be Accounts for
purposes of this Agreement) as of the close of business on the applicable
Addition Date, subject to the satisfaction of the following conditions:
23
(i) the New Accounts shall all be Eligible
Accounts;
(ii) on or before the Required Delivery
Date, the applicable Transferor shall have delivered to the
Owner Trustee and Indenture Trustee copies of UCC-1 financing
statements covering such New Accounts, if necessary to perfect
the Owner Trustee's and the Trust's interest and the Indenture
Trustee's interest in the Receivables arising therein and a
schedule of such New Accounts;
(iii) to the extent required by Section 8.04
of the Indenture, the applicable Transferor shall have
deposited in the Collection Account all Collections with
respect to such New Accounts since the Additional Cut-Off
Date;
(iv) as of each of the Additional Cut-Off
Date and the Addition Date, no Insolvency Event with respect
to any Account Owner of any of the New Accounts or any
Merchant under any Merchant Agreement related to any of the
New Accounts or such Transferor shall have occurred nor shall
the transfer to the Trust of the Receivables arising in the
New Accounts have been made in contemplation of the occurrence
thereof;
(v) such Transferor shall have delivered to
the Owner Trustee and the Indenture Trustee an Officer's
Certificate, dated the Addition Date, confirming, to the
extent applicable, the items set forth in clauses (ii) through
(vi) above;
(vi) the addition of the Receivables arising
in the New Accounts to the Trust will not result in an Adverse
Effect and such Transferor shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate,
dated the Addition Date, stating that such Transferor
reasonably believes that the addition to the Trust of the
Receivables arising in the New Accounts will not have an
Adverse Effect; and
(vii) with respect to each Distribution Date
following a Due Period ending in March, June, September, and
December, the applicable Transferor shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency, an
Opinion of Counsel substantially in the form of Exhibit D-2
with respect to the New Accounts, if any, included as Accounts
during the three consecutive Due Periods ending prior to such
Distribution Date. The opinion delivery requirement set forth
in the immediately preceding sentence may be modified provided
that the Rating Agency Condition is satisfied.
(f) Representations and Warranties. Each Transferor conveying
Additional Accounts or Participation Interests hereby represents and warrants to
the Owner Trustee and the Trust as of the related Addition Date as to the
matters set forth in clauses (v) and (viii) of subsection 2.09(c) above and
that, in the case of Additional Accounts, the list delivered pursuant to
subsection 2.09(h) is, as of the applicable Additional Cut-Off Date, true and
complete in all material respects.
(g) Additional Transferors. Conseco Bank may designate
Affiliates of Conseco Bank to be included as Transferors ("Additional
Transferors") under this Agreement in an amendment hereto pursuant to subsection
9.01(a) and, in connection with such designation, the Transferors shall (i)
surrender the Transferor Certificates to the Owner Trustee in exchange for a
newly issued Transferor Certificate modified to reflect such Additional
Transferor's interest or (ii) if the Transferor Certificates are uncertificated,
direct the Indenture Trustee to make the appropriate entries in its books and
records to reflect such Additional Transferor's interest in the Transferor
Certificates; provided, however, that prior to any such designation and exchange
the conditions set forth in clauses (iii) and (v) of subsection 3.06 of the
Trust Agreement shall have been satisfied with respect thereto.
24
(h) Delivery of Documents. In the case of the designation of
Additional Accounts, the Transferor designating such Accounts shall deliver to
the Indenture Trustee and the Owner Trustee (i) the computer file or microfiche
list required to be delivered pursuant to Section 2.01 with respect to such
Additional Accounts on the date such file or list is required to be delivered
pursuant to Section 2.01 (the "Document Delivery Date") and (ii) a duly
executed, written Assignment (including an acceptance by the Trust),
substantially in the form of Exhibit A (the "Assignment"), on the Document
Delivery Date.
Section 2.10. Removal of Accounts and Participation Interests.
(a) On any day of any Due Period each Transferor shall have the right to (x)
designate Zero Balance Accounts, specific terminated merchant or co-branding
participant accounts and randomly chosen removed accounts and to remove
participations from the trust and (y) require the reassignment to it or its
designee of all the Owner Trustee's and the Trust's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
Recoveries related thereto after the Removal Date, all monies due or to become
due and all amounts received or receivable with respect thereto and all proceeds
thereof in or with respect to the Accounts (the "Removed Accounts") or
Participation Interests conveyed to the Trust by such Transferor (the "Removed
Participation Interests") (unless otherwise set forth in the applicable
Participation Interest Supplement or Indenture Supplement) and designated for
removal by the Transferor, upon satisfaction of the conditions in clauses (i)
through (v) below; provided, however, that the conditions listed in clauses (iv)
and (v) below need not be satisfied if the Removed Accounts (x) are Zero Balance
Accounts or (y) relate to a terminated Merchant Agreement and the related
Merchant has elected to purchase the Receivables in such Removed Accounts:
(i) on or before the fifth Business Day
immediately preceding the Removal Date, such Transferor shall
have given written notice to the Owner Trustee, the Indenture
Trustee, the Servicer, the Rating Agency and each Series
Enhancer (unless such notice requirement is otherwise waived)
of such removal and specifying the date for removal of the
Removed Accounts and removed Participation Interests (the
"Removal Date");
(ii) on or prior to the date that is five
Business Days on or before the Removal Date, such Transferor
shall amend Schedule 1 by delivering to the Owner Trustee a
computer file or microfiche list containing a true and
complete list of the Removed Accounts specifying for each such
Account, as of the date notice of the Removal Date is given,
its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables
outstanding in such Account;
(iii) such Transferor shall have represented
and warranted as of the Removal Date that the list of Removed
Accounts delivered pursuant to paragraph (ii) above, as of the
Removal Date, is true and complete in all material respects;
(iv) the Rating Agency Condition shall have
been satisfied with respect to the removal of the Removed
Accounts and removed Participation Interests; and
(v) such Transferor shall have delivered to
the Owner Trustee and the Indenture Trustee an Officer's
Certificate, dated the Removal Date, to the effect that such
Transferor reasonably believes that (A) such removal will not
have an Adverse Effect and (B) no selection procedures
believed by such Transferor to be materially adverse to the
interests of the Noteholders have been used in selecting the
Removed Accounts.
Upon satisfaction of the above conditions, the Owner Trustee
shall execute and deliver to such Transferor a written reassignment in
substantially the form of Exhibit B (the "Reassignment") and shall, without
further action, be deemed to transfer, assign, set over and otherwise convey to
such
25
Transferor or its designee, effective as of the Removal Date, without recourse,
representation or warranty, all the right, title and interest of the Owner
Trustee and the Trust in and to the Receivables arising in the Removed Accounts
and Removed Participation Interests, all Recoveries related thereto, all monies
due and to become due and all amounts received or receivable with respect
thereto after the Removal Date and all proceeds thereof and any Insurance
Proceeds relating thereto. The Owner Trustee may conclusively rely on the
Officer's Certificate delivered pursuant to this Section 2.10 and shall have no
duty to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
In addition to the foregoing, on the date when any Receivable
in an Account becomes a Defaulted Receivable, the Trust shall automatically and
without further action or consideration be deemed to transfer, set over and
otherwise convey to the Transferor with respect to such Account, without
recourse, representation or warranty, all right, title and interest of the Owner
Trustee and the Trust in and to the Defaulted Receivables in such Account, all
monies and amounts due or to become due with respect thereto, all proceeds
thereof and any Insurance Proceeds relating thereto; provided, that Recoveries
of such Account shall be applied as provided herein.
(b) Anything to the contrary herein notwithstanding, the
Transferor shall be entitled to purchase all Receivables in Accounts designated
for purchase or re-purchase by a Merchant pursuant to the termination of a
Merchant Agreement to which such Merchant is a party. Any repurchase of
Receivables pursuant to this subsection 2.10(b) shall be effected in the manner,
and at a price determined in accordance with subsection 2.05(b) as if the
Receivables being repurchased were Ineligible Receivables. Amounts deposited in
the Collection Account in connection therewith shall be deemed to be Collections
of Principal Receivables and shall be applied in accordance with Article VIII of
the Indenture and the terms of each Indenture Supplement [Provisions to be added
for deposit into the Special Funding Account].
Section 2.11. Account Allocations. In the event that any
Transferor is unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement, including by reason of the
application of the provisions of Section 6.01 or any order of any Governmental
Authority (a "Transfer Restriction Event"), then, (a) such Transferor and the
Servicer agree (except as prohibited by any such order) to allocate and pay to
the Trust, after the date of such inability, all Collections, including
Collections of Receivables transferred to the Trust prior to the occurrence of
such event, and all amounts which would have constituted Collections but for
such Transferor's inability to transfer Receivables (up to an aggregate amount
equal to the amount of Receivables transferred to the Trust by such Transferor
in the Trust on such date), (b) such Transferor and the Servicer agree that such
amounts will be applied as Collections in accordance with Article VIII of the
Indenture and the terms of each Indenture Supplement and (c) for so long as the
allocation and application of all Collections and all amounts that would have
constituted Collections are made in accordance with clauses (a) and (b) above,
Principal Receivables and all amounts which would have constituted Principal
Receivables but for such Transferor's inability to transfer Receivables to the
Trust which are charged off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article VIII of the Indenture
and the terms of each Indenture Supplement. For the purpose of the immediately
preceding sentence, such Transferor and the Servicer shall treat the first
received Collections with respect to the Accounts as allocable to the Trust
until the Trust shall have been allocated and paid Collections in an amount
equal to the aggregate amount of Principal Receivables in the Trust as of the
date of the occurrence of such event. If such Transferor and the Servicer are
unable pursuant to any Requirements of Law to allocate Collections as described
above, such Transferor and the Servicer agree that, after the occurrence of such
event, payments on each Account with respect to the principal balance of such
Account shall be allocated first to the oldest principal balance of such Account
and shall have such payments applied as Collections in accordance with Article
VIII of the Indenture and the terms of each Indenture Supplement. The parties
hereto agree that Finance Charge Receivables, whenever created,
26
accrued in respect of Principal Receivables which have been conveyed to the
Trust shall continue to be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the Trust and Collections
with respect thereto shall continue to be allocated and paid in accordance with
Article VIII of the Indenture and the terms of each Indenture Supplement.
Section 2.12. Discount Option.
(a) The Transferors shall have the option to designate at any
time and from time to time a percentage or percentages, which may be a fixed
percentage or a variable percentage based on a formula (the "Discount
Percentage"), of all or any specified portion of Principal Receivables existing
on and after a Discount Option Date to be treated as Finance Charge Receivables
("Discount Option Receivables"). The Transferors shall also have the option of
increasing, reducing or withdrawing the Discount Percentage, at any time and
from time to time; provided that the Discount Percentage shall be reduced or
withdrawn on the date which the Transferors shall deliver to the Indenture
Trustee and the Owner Trustee an Officer's Certificate to the effect that, in
the reasonable belief of the Transferors, the continued discounting of Principal
Receivables would have an adverse regulatory implication with respect to the
Transferors. The Transferors shall provide to the Servicer, the Owner Trustee,
the Indenture Trustee and the Rating Agency 30 days' prior written notice of a
Discount Option Date and such designation shall become effective on a Discount
Option Date only if, (i) the Transferors deliver an Officer's Certificate to the
effect that such designation in the reasonable belief of the Transferors, would
not cause an Adverse Effect and (ii) the Rating Agency Condition shall have been
satisfied with respect to such designation.
(b) Discount Option Receivable Collections shall be treated as
Collections of Finance Charge Receivables.
[END OF ARTICLE II]
27
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer.
(a) Conseco Bank agrees to act as the Servicer under this
Agreement and the Noteholders by their acceptance of Notes consent to Conseco
Bank acting as Servicer.
(b) As agent for each Transferor, the Owner Trustee and the
Trust, the Servicer shall service and administer the Receivables (including the
underlying receivables) and any Participation Interests, shall collect and
deposit into the Collection Account amounts received under the Receivables
(including the underlying receivables) and any Participation Interests and shall
charge-off as uncollectible Receivables, all in accordance with its customary
and usual servicing procedures for servicing credit card receivables comparable
to the Receivables and in accordance with the Credit Guidelines. As agent for
each Transferor, the Owner Trustee and the Trust, the Servicer shall have full
power and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing and subject to Section 7.01, the Servicer or its
designee is hereby authorized and empowered, unless such power is revoked by the
Indenture Trustee on account of the occurrence of a Servicer Default pursuant to
Section 7.01, (i) to instruct the Owner Trustee or the Indenture Trustee to make
withdrawals and payments from the Collection Account, the Special Funding
Account and any Series Account, as set forth in this Agreement, the Indenture or
any Indenture Supplement, (ii) to take any action required or permitted under
any Series Enhancement, as set forth in this Agreement, the Indenture or any
Indenture Supplement, (iii) to execute and deliver, on behalf of the Trust, 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, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable Requirements of Law, to
commence collection proceedings with respect to such Receivables and (iv) to
make any filings, reports, notices, applications and registrations with, and to
seek any consents or authorizations from, the Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any Federal or state securities or reporting requirements or other
laws or regulations. Each of the Owner Trustee and the Indenture Trustee shall
furnish the Servicer with any documents in such Person's possession reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(c) The Servicer shall not, and no Successor Servicer shall,
be obligated to use separate servicing procedures, offices, employees or
accounts for servicing the Receivables from the procedures, offices, employees
and accounts used by the Servicer or such Successor Servicer, as the case may
be, in connection with servicing other credit card receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Credit Agreements relating to the Accounts and the Credit Guidelines, except
insofar as any failure to so comply or perform would not materially and
adversely affect the Trust or the Noteholders.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and the
servicing activities hereunder including expenses related to enforcement of the
Receivables, fees and disbursements of the Owner Trustee and the Indenture
Trustee (including the reasonable fees and expenses of its outside counsel) and
independent accountants and all
28
other fees and expenses, including the costs of filing UCC continuation
statements, and the costs and expenses relating to obtaining and maintaining the
listing of any Notes on any stock exchange. The Transferor shall pay out of its
own funds, without reimbursement, the costs and expenses relating to any stamp,
documentary, excise, property (whether on real, personal or intangible property)
or any similar tax levied on the Trust or the Trust's assets that are not
expressly stated in this Agreement to be payable by the Trust or the Transferor
(other than federal, state, local and foreign income and franchise taxes, if
any, or any interest or penalties with respect thereto, assessed on the Trust).
Section 3.02. Servicing Compensation. As full compensation for
its servicing activities hereunder and as reimbursement for any expense incurred
by it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") with respect to each Monthly Period, payable
monthly on the related Distribution Date, in an amount equal to one-twelfth of
the product of (a) the weighted average of the Servicing Fee Rates with respect
to each outstanding Series (based upon the Servicing Fee Rate for each Series
and the Invested Amount (or such other amount as specified in the related
Indenture Supplement) of such Series, in each case as of the last day of the
prior Monthly Period prior to the termination of the Trust pursuant to 8.01 of
the Trust Agreement. The share of the Servicing Fee allocable to a particular
Series with respect to any Due Period (the "Monthly Servicing Fee") will each be
determined in accordance with the relevant Indenture Supplement. The portion of
the Servicing Fee with respect to any Due Period not so allocated to any
particular Series shall be paid by the Holders of the Transferor Certificates on
the related Distribution Date and in no event shall the Trust, the Owner
Trustee, the Indenture Trustee, the Noteholders of any Series or any Series
Enhancer be liable for the share of the Servicing Fee with respect to any Due
Period to be paid by the Holders of the Transferor Certificates.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Conseco Bank, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, with respect to itself, on
each Closing Date (and on the date of any such appointment), the following
representations, warranties and covenants on which the Owner Trustee and the
Indenture Trustee shall be deemed to have relied in accepting the Receivables in
trust and in entering into the Indenture:
(a) Organization and Good Standing. The Servicer is a
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full
power and authority to own its properties and conduct its credit
servicing business as presently owned or conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation or other
foreign entity (or is exempt from such requirements) and has obtained
all necessary licenses and approvals in each jurisdiction in which the
servicing of the Receivables (including the underlying receivables) and
any Participation Interests as required by this Agreement requires such
qualification except where the failure to so qualify or obtain licenses
or approvals would not have a material adverse effect on its ability to
perform its obligations as Servicer under this Agreement.
(c) Due Authorization. The execution, delivery, and
performance of this Agreement and the other agreements and instruments
executed or to be executed by the Servicer as contemplated hereby, have
been duly authorized by the Servicer by all necessary action on the
part of the Servicer.
29
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable 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 from time to time in
effect or by general principles of equity.
(e) No Conflict. The execution and delivery of this Agreement
by the Servicer, and the performance of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof and thereof
applicable to the Servicer, will not conflict with, violate or result
in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which
it or its properties are bound.
(f) No Violation. The execution and delivery of this Agreement
by the Servicer, the performance of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof and thereof
applicable to the Servicer will not conflict with or violate any
Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against
the Servicer before any Governmental Authority seeking to prevent the
consummation of any of the transactions contemplated by this Agreement
or seeking any determination or ruling that, in the reasonable judgment
of the Servicer, would materially and adversely affect the performance
by the Servicer of its obligations under this Agreement.
(h) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with each Receivable (and the underlying receivable) and the
related Account, if any, will maintain in effect all qualifications
required under Requirements of Law in order to service properly each
Receivable and the related Account, if any, and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable and the related Account the failure to comply
with which would have an Adverse Effect.
(i) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of any Receivable (or the
underlying receivable) except in accordance with the Credit Guidelines
or as ordered by a court of competent jurisdiction or other
Governmental Authority.
(j) Protection of Rights. The Servicer shall take no action
which, nor omit to take any action the omission of which, would impair
the rights of the Trust, the Owner Trustee, the Indenture Trustee or
the Noteholders in any Receivable (or the underlying receivable) or the
related Account or any Participation Interest, if any, nor shall it
reschedule, revise or defer payments due on any Receivable except in
accordance with the Credit Guidelines.
(k) Receivables Not To Be Evidenced by Promissory Notes.
[Except in connection with its enforcement or collection of an Account,
the Servicer will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the UCC) and if any
Receivable is so evidenced it shall be reassigned or assigned to the
Servicer as provided in this Section.]
30
(l) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Servicer in connection with
the execution and delivery of this Agreement by the Servicer and the performance
of the transactions contemplated by this Agreement by the Servicer, have been
duly obtained, effected or given and are in full force and effect.
(m) Subject to compliance with all Requirements of Law, [the
Servicer may change the terms and provisions of the applicable Credit Guidelines
of the Servicer] in any respect (including the calculation of the amount or the
timing of charge-offs and the Periodic Rate Finance Charges to be assessed
thereon). Notwithstanding the above, unless required by Requirements of Law, the
Servicer will not take any action unless (i) at the time of such action, the
Servicer reasonably believes that such action will not cause an Amortization
Event, Reinvestment Event or Event of Default to occur, and (ii) such change is
made applicable to the comparable segment of the credit card accounts owned by
the relevant Account Owner which have characteristics the same as, or
substantially similar to, the Accounts that are the subject of such change,
except as otherwise restricted by an endorsement, sponsorship, or other
agreement between the Account Owner and an unrelated third party or by the terms
of the Credit Agreements.
In the event (x) any of the representations, warranties or
covenants of the Servicer contained in subsection 3.03(h), (i) or (j) with
respect to any Receivable or the related Account is breached, and such breach
has a material adverse effect on such Receivable (which determination shall be
made without regard to whether funds are then available to any Noteholders
pursuant to any Series Enhancement) and is not cured within 60 days (or such
longer period, not in excess of 120 days, as may be agreed to by the Indenture
Trustee and the Transferor) of the earlier to occur of the discovery of such
event by the Servicer, or receipt by the Servicer of notice of such event given
by the Indenture Trustee or the Transferor, or (y) as provided in subsection
3.03(k) with respect to any Receivable, all Receivables in the Account or
Accounts to which such event relates shall be assigned and transferred to the
Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by making a deposit
into the Collection Account in immediately available funds on the Distribution
Date following the Due Period in which such assignment obligation arises in an
amount equal to the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the
Trust shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Servicer, without
recourse, representation or warranty, all right, title and interest of the Owner
Trustee and the Trust in and to such Receivables, all Recoveries related
thereto, all monies due or to become due and all amounts received or receivable
with respect thereto and all proceeds thereof. The Owner Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall be reasonably requested by the Servicer to effect the
conveyance of any such Receivables pursuant to this Section but only upon
receipt of an Officer's Certificate of the Servicer that states that all
conditions set forth in this section have been satisfied. The obligation of the
Servicer to accept reassignment or assignment of such Receivables, and to make
the deposits, if any, required to be made to the Collection Account as provided
in the preceding paragraph, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Noteholders (or the Indenture
Trustee on behalf of Noteholders) or any Series Enhancer, except as provided in
Section 5.04.
Section 3.04. Reports and Records for the Owner Trustee and
the Indenture Trustee.
(a) Daily Records. On each Business Day, the Servicer shall
make or cause to be made available at the office of the Servicer for inspection
by the Owner Trustee and the Indenture Trustee
31
upon request a record setting forth (i) the Collections in respect of Principal
Receivables and in respect of Finance Charge Receivables processed by the
Servicer on the second preceding Business Day in respect of each Account and
(ii) the amount of Receivables as of the close of business on the second
preceding Business Day in each Account. The Servicer shall, at all times,
maintain its computer files with respect to the Accounts in such a manner so
that the Accounts may be specifically identified and shall make available to the
Owner Trustee and the Indenture Trustee at the office of the Servicer on any
Business Day any computer programs necessary to make such identification. The
Owner Trustee and the Indenture Trustee shall enter into such reasonable
confidentiality agreements as the Servicer shall deem necessary to protect its
interests and as are reasonably acceptable in form and substance to the Owner
Trustee and the Indenture Trustee.
(b) Monthly Servicer's Certificate. Not later than the second
Business Day preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency a certificate of an Authorized Officer in substantially
the form set forth in the related Indenture Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer
shall deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency
on or before March 31 of each calendar year, beginning with March 31, 2002, an
Officer's Certificate substantially in the form of Exhibit C.
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
(a) On or before March 31 of each calendar year, beginning
with March 31, 2002, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Owner Trustee)
to the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency
to the effect that they have applied certain procedures agreed upon with the
Servicer and examined certain documents and records relating to the servicing of
Accounts under this Agreement, the Indenture and each Indenture Supplement and
that, on the basis of such agreed-upon procedures, nothing has come to the
attention of such accountants that caused them to believe that the servicing
(including the allocation of Collections) has not been conducted in compliance
with the terms and conditions as set forth in Article III and Section 5.08 of
this Agreement and the applicable provisions of the Indenture and each Indenture
Supplement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement. Such report shall set
forth the agreed-upon procedures performed. In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(b) On or before March 31 of each calendar year, beginning
with March 31, 2002, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Owner Trustee)
to the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency
to the effect that they have applied certain procedures agreed upon with the
Servicer to compare the mathematical calculations of certain amounts set forth
in the Servicer's certificates delivered pursuant to subsection 3.04(b) during
the period covered by such report with the Servicer's computer reports that were
the source of such amounts and that on the basis of such agreed-upon procedures
and comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement. Such report
32
shall set forth the agreed-upon procedures performed. In the event such firm
requires the Indenture Trustee to agree to the procedures performed by such
firm, the Servicer shall direct the Indenture Trustee in writing to so agree; it
being understood and agreed that the Indenture Trustee will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(c) A copy of each certificate and report provided pursuant to
subsection 3.04(b), or Section 3.05 or 3.06 may be obtained by any Noteholder or
Note Owner by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office.
Section 3.07. Tax Treatment. Unless otherwise specified in the
Indenture or an Indenture Supplement with respect to a particular Series, the
Transferor has entered into this Agreement, and the Notes will be issued, with
the intention that, for federal, state and local income and franchise tax
purposes, (i) the Notes of each Series which are characterized as indebtedness
at the time of their issuance will qualify as indebtedness secured by the
Receivables and (ii) the Trust shall not be treated as an association or
publicly traded partnership taxable as a corporation. The Transferor, by
entering into this Agreement, and each Noteholder, by the acceptance of any such
Note (and each Note Owner, by its acceptance of an interest in the applicable
Note), agree to treat such Notes for federal, state and local income and
franchise tax purposes as indebtedness of the Transferor. Each Holder of such
Note agrees that it will cause any Note Owner acquiring an interest in a Note
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07. The parties hereto agree
that they shall not cause or permit the making, as applicable, of any election
under Treasury Regulation Section 301.7701-3 whereby the Trust or any portion
thereof would be treated as a corporation for federal income tax purposes and,
except as required by Section 6.13 of the Indenture, shall not file tax returns
or obtain any federal employer identification number for the Trust but shall
treat the Trust as a security device for such purposes. The provisions of this
Agreement shall be construed in furtherance of the foregoing intended tax
treatment.
Section 3.08. Notices to Conseco Bank. In the event that
Conseco Bank is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to Conseco Bank each certificate and report required
to be provided thereafter pursuant to subsection 3.04(b) and Sections 3.05 and
3.06.
Section 3.09. Adjustments.
(a) If the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing error to
an Obligor, because such Receivable was created in respect of merchandise which
was refused or returned by an Obligor, or if the Servicer otherwise adjusts
downward the amount of any Receivable without receiving Collections therefor or
charging off such amount as uncollectible, then, in any such case, the amount of
Principal Receivables used to calculate the Transferor Amount, and (unless
otherwise specified) any other amount required herein or in the Indenture or any
Indenture Supplement to be calculated by reference to the amount of Principal
Receivables, will be reduced by the amount of the adjustment. Similarly, the
amount of Principal Receivables used to calculate the Transferor Amount and
(unless otherwise specified) any other amount required herein or in any
Indenture Supplement to be calculated by reference to the amount of Principal
Receivables will be reduced by the principal amount of any Receivable which was
discovered as having been created through a fraudulent or counterfeit charge or
with respect to which the covenant contained in subsection 2.07(b) was breached.
Any adjustment required pursuant to either of the two preceding sentences shall
be made on or prior to the end of the Due Period in which such adjustment
obligation arises. In the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor Amount, the
33
Transferor Amount would be less than the Required Transferor Amount, not later
than 1:00 p.m., New York City time, on the Distribution Date following the Due
Period in which such adjustment obligation arises, one or more of the
Transferors shall make a deposit into the Special Funding Account in immediately
available funds and the total amount of such deposit shall be in an amount equal
to the amount by which the Transferor Amount would be less than the Required
Transferor Amount, due to adjustments with respect to Receivables conveyed by
the Transferors (up to the amount of such Principal Receivables).
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the first two
sentences of this paragraph, adjustments made pursuant to this Section shall not
require any change in any report previously delivered pursuant to subsection
3.04(a).
Section 3.10. Reports to the Commission. The Servicer shall,
on behalf of the Trust, cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferor shall, at its own expense, cooperate in any reasonable request of
the Servicer in connection with such filings.
[END OF ARTICLE III]
34
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 4.01. Liability of each Transferor. Each Transferor
shall be severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement. Except as provided in the preceding sentence, each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.
Section 4.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor.
(a) No Transferor shall dissolve, liquidate, consolidate with
or merge into any other corporation or convey, transfer or sell its properties
and assets substantially as an entirety to any Person unless:
(i) (x) the corporation formed by such
consolidation or into which such Transferor is merged or the
Person which acquires by conveyance, transfer or sale the
properties and assets of the Transferor substantially as an
entirety shall be, if such Transferor is not the surviving
entity, organized and existing under the laws of the United
States of America or any State or the District of Columbia,
and shall be a savings association, a national banking
association, a bank or other entity which is not eligible to
be a debtor in a case under Title 11 of the United States Code
(the "Bankruptcy Code") or is a special purpose corporation
whose powers and activities are limited to substantially the
same degree as provided in the certificate of incorporation of
such Transferor and, if such Transferor is not the surviving
entity, shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee, in form reasonably satisfactory to the
Owner Trustee and the Indenture Trustee, the performance of
every covenant and obligation of such Transferor hereunder;
and (y) such Transferor or the surviving entity, as the case
may be, has delivered to the Owner Trustee and the Indenture
Trustee (with a copy to each Rating Agency) an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or sale and such
supplemental agreement comply with this Section, that such
supplemental agreement is a valid and binding obligation of
such surviving entity enforceable against such surviving
entity 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 from time to time in
effect or general principles of equity, and that all
conditions precedent herein provided for relating to such
transaction have been complied with; and
(ii) the Rating Agency Condition shall have
been satisfied with respect to such consolidation, merger,
conveyance or transfer.
(b) Except as permitted by subsection 2.07(c), the
obligations, rights or any part thereof of each Transferor hereunder shall not
be assignable nor shall any Person succeed to such obligations or rights of any
Transferor hereunder except (i) for conveyances, mergers, consolidations,
assumptions, sales or transfers in accordance with the provisions of the
foregoing paragraph and (ii) for conveyances, mergers, consolidations,
assumptions, sales or transfers to other entities (1) which such Transferor and
the Servicer determine will not result in an Adverse Effect, (2) which meet the
requirements of clause (ii) of the preceding paragraph and (3) for which such
purchaser, transferee, pledgee or entity shall expressly assume, in an agreement
supplemental hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee in writing in form satisfactory to the Owner Trustee and the
35
Indenture Trustee, the performance of every covenant and obligation of such
Transferor thereby conveyed.
Section 4.03. Limitations on Liability of Each Transferor.
Subject to Section 4.01, no Transferor nor any of the directors, officers,
employees, incorporators or agents of any Transferor acting in such capacities
shall be under any liability to the Trust, the Owner Trustee, the Indenture
Trustee, the Noteholders, any Series Enhancer, any other Transferor or any other
Person for any action taken or for refraining from the taking of any action in
good faith in such capacities pursuant to this Agreement, it being expressly
understood that such liability is expressly waived and released as a condition
of, and consideration for, the execution of this Agreement, the Indenture and
any Indenture Supplement and the issuance of the Notes; provided, however, that
this provision shall not protect any Transferor or any such person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Each Transferor and any director,
officer, employee or agent of such Transferor may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than such Transferor) respecting any matters arising hereunder.
Section 4.04. Assumption of the Transferor Obligations.
Notwithstanding the provisions of Section 4.02, each Transferor may assign,
convey and transfer its credit accounts and the receivables arising thereunder,
which may include all, but not less than all, of the Accounts and such
Transferor's remaining interest in the Receivables arising thereunder and the
Transferor Amount (collectively, the "Assigned Assets"), together with all
servicing functions and other obligations under this Agreement or relating to
the transactions contemplated hereby (collectively, the "Assumed Obligations"),
to other entities (such entity or entities, the "Assuming Entity"), which may be
entities that are not affiliated with such Transferor, and such Transferor may
assign, convey and transfer the Assigned Assets and the Assumed Obligations to
such Assuming Entity, without the consent or approval of the Holders of the
Notes, upon satisfaction of the following conditions:
(a) such Assuming Entity, such Transferor and the Trust shall
have entered into an assumption agreement (the "Assumption Agreement")
providing for the Assuming Entity to assume the Assumed Obligations,
including the obligation under this Agreement to transfer the
Receivables arising under the Accounts to the Trust, and such
Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such transfer and assumption comply with this Section, that such
Assumption Agreement is a valid and binding obligation of such Assuming
Entity enforceable against such Assuming Entity in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws affecting creditors' rights
generally or creditors of national banking associations, from time to
time, in effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity), and that all conditions precedent herein provided for relating
to such transaction have been complied with;
(b) such Transferor or such Assuming Entity shall have
delivered to the Owner Trustee and the Indenture Trustee copies of
UCC-1 financing statements covering such Accounts to perfect the Owner
Trustee's and the Trust's interest and the Indenture Trustee's interest
in the Receivables arising herein;
(c) if such Assuming Entity shall be eligible to be a debtor
in a case under the Bankruptcy Code, such Transferor shall have
delivered to the Rating Agency (with a copy to the Servicer and the
Indenture Trustee) notice of such transfer and assumption, and that
each Rating Agency that has rated an Outstanding Series of Notes
confirm in writing that such transfer will
36
not result in a reduction or withdrawal of its rating of any Class of any
Outstanding Series of Notes or, if such Assuming Entity shall not be eligible to
be a debtor under the Bankruptcy Code, such Transferor shall have delivered to
the Rating Agency notice of such transfer and assumption;
(d) the Owner Trustee and the Indenture Trustee shall have
received an Opinion of Counsel to the effect that (i) the transfer of such
Receivables by such Assuming Entity shall constitute either a sale of, or the
granting of a security interest in, such Receivables by such Assuming Entity to
the Trust, (ii) the condition specified in clause (b) shall have been satisfied,
and (iii) if such Assuming Entity shall be subject to the FDIA, the interest of
the Trust in such Receivables should not be subject to reclamation or recovery
by the FDIC if the FDIC were to become the receiver or conservator of such
Assuming Entity;
(e) such Transferor shall have received written notice that
the Rating Agency Condition has been satisfied with respect to such transfer and
assumption and shall have delivered copies of each such written notice to the
Servicer and the Owner Trustee and the Indenture Trustee; and
(f) the Indenture Trustee shall have received a Tax Opinion.
Upon any such transfer to and assumption by an Assuming Entity, the Transferors
shall surrender Transferor Certificate to the Transfer Agent and Registrar for
registration of transfer and the Owner Trustee shall issue a new Transferor
Certificate in the name of such Assuming Entity and any non-assigning
Transferor. Notwithstanding such assumption, such assigning Transferor shall
continue to be liable for all representations and warranties and covenants made
by it and all obligations performed or to be performed by it in its capacity as
Transferor prior to such transfer.
Notwithstanding the provisions of this Section 4.04 to the
contrary, any Transferor may transfer, from time to time, Assigned Assets to any
other Transferor upon the satisfaction of subsections (a) and (b), above. Such
Transferor shall promptly provide notice to the Rating Agency indicating the
occurrence of any such transfer.
[END OF ARTICLE IV]
37
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER
Section 5.01. Liability of the Servicer. The Servicer shall be
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person, unless:
(a) (i) the corporation formed by such
consolidation or into which the Servicer is merged or the
Person which acquires by conveyance, transfer or sale the
properties and assets of the Servicer substantially as an
entirety shall be, if the Servicer is not the surviving
entity, a corporation or a national banking association
organized and existing under the laws of the United States of
America or any State or the District of Columbia, and, if the
Servicer is not the surviving entity, such corporation shall
expressly assume, by an agreement supplemental hereto,
executed and delivered to the Owner Trustee and the Indenture
Trustee, in form satisfactory to the Owner Trustee and the
Indenture Trustee, the performance of every covenant and
obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or sale comply with this Section
and that all conditions precedent herein provided for relating
to such transaction have been complied with;
(iii) the Servicer shall have given the
Rating Agencies notice of such consolidation, merger or
transfer or assets; and
(b) the corporation formed by such consolidation or
into which the Servicer is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Servicer
substantially as an entirety shall be an Eligible Servicer.
Section 5.03. Limitation on Liability of the Servicer and
Others. Except as provided in Section 5.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken or for refraining from the taking of any action in good faith
in its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties as Servicer in accordance with this
Agreement and which in its reasonable judgment may involve it in any expense or
liability. The Servicer may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the
Noteholders with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Noteholders hereunder.
38
Section 5.04. Servicer Indemnification of the Owner Trustee
and the Indenture Trustee. The Servicer shall indemnify and hold harmless , the
Owner Trustee and the Indenture Trustee and any trustees predecessor thereto
(including the Indenture Trustee in its capacity as Transfer Agent and Registrar
or as Paying Agent) and their respective directors, officers, employees and
agents from and against any and all loss, liability, claim, action, suit, cost,
expense, damage or injury of any kind or nature whatsoever suffered or sustained
by reason of (a) any acts or omissions of the Servicer with respect to the Trust
pursuant to this Agreement or (b) the administration by the Owner Trustee of the
Trust (in the case of clause (a) or (b), other than such as may arise from the
negligence or willful misconduct of the Owner Trustee or the Indenture Trustee,
as applicable), including any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of any
action, proceeding or claim. Indemnification pursuant to this Section shall not
be payable from the Trust Assets. The Servicer's obligations under this Section
5.04 shall survive the termination of this Agreement or the Trust or the earlier
removal or resignation of the Owner Trustee or the Indenture Trustee, as
applicable.
Section 5.05. Resignation of the Servicer. The Servicer shall
not resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee, in form satisfactory to the Owner Trustee and the Indenture
Trustee, of the obligations and duties of the Servicer hereunder by any of its
Affiliates that is a direct or indirect wholly owned subsidiary of Conseco
Finance Corp. or by any other entity the appointment of which shall have
satisfied the Rating Agency Condition and, in either case, qualifies as an
Eligible Servicer. Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (a) above by an Opinion of Counsel to such
effect delivered to the Owner Trustee and the Indenture Trustee. No resignation
shall become effective until the Indenture Trustee or a Successor Servicer shall
have assumed the responsibilities and obligations of the Servicer in accordance
with Section 7.02 hereof. If within 120 days of the date of the determination
that the Servicer may no longer act as Servicer under clause (a) above the
Indenture Trustee is unable to appoint a Successor Servicer, the Indenture
Trustee shall serve as Successor Servicer. Notwithstanding the foregoing, the
Indenture Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder. The Indenture Trustee
shall give prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer. [Notwithstanding anything in this Agreement
to the contrary, Conseco Bank may assign part or all of its obligations and
duties as Servicer under this Agreement to an Affiliate of Conseco Finance Corp.
so long as [Conseco Bank or Conseco Finance Corp.] shall have fully guaranteed
the performance of such obligations and duties under this Agreement.]
Section 5.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Owner Trustee or
the Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Owner Trustee or the
Indenture Trustee, as applicable, is required in connection with the enforcement
of the rights of Noteholders or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Owner Trustee, the Indenture Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
39
Section 5.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate its duties hereunder with
respect to the Accounts and the Receivables to any Person that agrees to conduct
such duties in accordance with the Credit Guidelines and this Agreement. Such
delegation shall not relieve the Servicer of its liability and responsibility
with respect to such duties, and shall not constitute a resignation within the
meaning of Section 5.05.
Section 5.08. Examination of Records. Each Transferor and the
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Owner Trustee,
on behalf of the Trust, pursuant to this Agreement. Each Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any receivable
held in its custody, examine its computer records and other records to determine
that such receivable is not, and does not include, a Receivable.
[END OF ARTICLE V]
40
ARTICLE VI
INSOLVENCY EVENTS
Section 6.01. Rights upon the Occurrence of an Insolvency
Event. If any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver, liquidator or similar official in
any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to any
Transferor or of or relating to all or substantially all of such Transferor's
property, or the commencement of an action seeking a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of such entity's
affairs, or notwithstanding an objection by such Transferor any such action
shall have remained undischarged or unstayed for a period of 60 days or upon
entry of any order or decree providing for such relief; or such Transferor shall
admit in writing its inability to pay its debts generally as they become due,
file, or consent or fail to object (or object without dismissal of any such
filing within 30 days of such filing) to the filing of, a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship or similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations (any
such act or occurrence with respect to any Person being an "Insolvency Event"),
such Transferor shall on the day any such Insolvency Event occurs (the
"Appointment Date"), immediately cease to transfer Principal Receivables to the
Owner Trustee or the Trust and shall promptly give notice to the Indenture
Trustee and the Owner Trustee thereof. Notwithstanding any cessation of the
transfer to the Owner Trustee or the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event, Collections in respect of such Principal Receivables and
Finance Charge Receivables (whenever created) accrued in respect of such
Principal Receivables shall continue to be a part of the Trust Assets and shall
be allocated and distributed to Noteholders in accordance with the terms of the
Indenture and each Indenture Supplement.
[END OF ARTICLE VI]
41
ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or to give notice to the Indenture
Trustee to make such payment, transfer or deposit on or before the date
occurring five Business Days after the date such payment, transfer or
deposit or such instruction or notice is required to be made or given,
as the case may be, under the terms of this Agreement, the Indenture or
any Indenture Supplement;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement which has an Adverse Effect
and which continues unremedied for a period of 60 days after the date
on which notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Owner Trustee or the
Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by Holders of Notes evidencing not less than 10% of
the aggregate unpaid principal amount of all Notes (or, with respect to
any such failure that does not relate to all Series, 10% of the
aggregate unpaid principal amount of all Series to which such failure
relates); or the Servicer shall assign or delegate its duties under
this Agreement, except as permitted by Sections 5.02 and 5.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been incorrect when made, which has
an Adverse Effect on the rights of the Noteholders of any Series (which
determination shall be made without regard to whether funds are then
available pursuant to any Series Enhancement) and which Adverse Effect
continues for a period of 60 days after the date on which notice
thereof, requiring the same to be remedied, shall have been given to
the Servicer by the Owner Trustee or the Indenture Trustee, or to the
Servicer, the Owner Trustee and the Indenture Trustee by the Holders of
Notes evidencing not less than 10% of the aggregate unpaid principal
amount of all Notes (or, with respect to any such representation,
warranty or certification that does not relate to all Series, 10% of
the aggregate unpaid principal amount of all Series to which such
representation, warranty or certification relates); or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee, conservator, receiver, liquidator or similar
official in any bankruptcy proceeding or other insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for
the appointment of a bankruptcy trustee, conservator, receiver,
liquidator or similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or the winding-up or liquidation of its affairs, shall
have been entered against the Servicer; or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations;
Then, in the event of any Servicer Default, so long as the
Servicer Default shall not have been remedied, either the Indenture Trustee or
the Holders of Notes evidencing more than 50% of the
42
aggregate unpaid principal amount of all Notes, by notice then given to the
Servicer and the Owner Trustee (and to the Indenture Trustee if given by the
Noteholders) (a "Termination Notice"), may terminate all but not less than all
the rights and obligations of the Servicer as Servicer under this Agreement;
provided, however, if within 60 days of receipt of a Termination Notice the
Indenture Trustee does not receive any bids from Eligible Servicers in
accordance with subsection 7.02(c) to act as a Successor Servicer and receives
an Officer's Certificate of the Servicer to the effect that the Servicer cannot
in good faith cure the Servicer Default which gave rise to the Termination
Notice, the Indenture Trustee shall grant a right of first refusal to the
Transferors which would permit the Transferors at their option to acquire the
Notes on the Distribution Date in the next calendar month.
The price for the Notes shall be equal to the sum of the
amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. The Transferors shall notify the Indenture Trustee
prior to the Record Date for the Distribution Date of the acquisition if it is
exercising such right of first refusal. If the Transferors exercise such right
of first refusal, the Transferors shall deposit the price into the Collection
Account not later than 1:00 p.m., New York City time, on such Distribution Date
in immediately available funds. The price shall be allocated and distributed to
Noteholders in accordance with the terms of the Indenture and each Indenture
Supplement.
After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer is appointed by the Indenture Trustee
pursuant to Section 7.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Successor Servicer (a "Service
Transfer"); and, without limitation, the Indenture Trustee is hereby authorized
and empowered (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such Service
Transfer. The Servicer agrees to cooperate with the Indenture Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder, including the transfer to
such Successor Servicer of all authority of the Servicer to service the
Receivables provided for under this Agreement, including all authority over all
Collections which shall on the date of transfer be held by the Servicer for
deposit, or which have been deposited by the Servicer, in the Collection
Account, or which shall thereafter be received with respect to the Receivables,
and in assisting the Successor Servicer. The Servicer shall within 20 Business
Days transfer its electronic records relating to the Receivables to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer deems to be confidential, the
Successor Servicer shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem reasonably necessary to
protect its interests. The Servicer shall pay to the Indenture Trustee and any
Successor Servicer the reasonable transition expenses incurred by such person
and the agents in connection with any transition of Servicing.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in paragraph (a) above for a period of 10 Business Days
after the applicable grace period or under paragraph (b) or (c) above for a
period of 60 Business Days after the applicable grace period, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding sentence
shall not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in
43
accordance with the terms of this Agreement and the Servicer shall provide the
Indenture Trustee, Owner Trustee, each Transferor and any Series Enhancer with
an Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts so to perform its obligations.
Section 7.02. Indenture Trustee To Act; Appointment of
Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 7.01, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Indenture Trustee or until a
date mutually agreed upon by the Servicer and the Indenture Trustee. The
Indenture Trustee shall as promptly as possible after the giving of a
Termination Notice appoint an Eligible Servicer as a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Indenture Trustee. In the
event that a Successor Servicer has not been appointed or has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the
Indenture Trustee without further action shall automatically be appointed the
Successor Servicer. The Indenture Trustee may delegate any of its servicing
obligations to an Affiliate or agent in accordance with subsection 3.01(b) and
Section 5.07. Notwithstanding the foregoing, the Indenture Trustee shall, if it
is legally unable so to act, petition at the expense of the Servicer a court of
competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder. The Indenture Trustee
shall give prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.
(c) In connection with any Termination Notice, the Indenture
Trustee will review any bids which it obtains from Eligible Servicers and shall
be permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation not in excess of the aggregate
Monthly Servicing Fees for all Series plus the sum of the amounts with respect
to each Series and with respect to each Distribution Date equal to any
Collections of Finance Charge Receivables allocable to Noteholders of such
Series which are payable to the holders of the Transferor Certificates after
payment of all amounts owing to the Noteholders of such Series with respect to
such Distribution Date or required to be deposited in the applicable Series
Accounts with respect to such Distribution Date and any amounts required to be
paid to any Series Enhancer for such Series with respect to such Distribution
Date pursuant to the terms of any Enhancement Agreement; provided, however, that
the Holders of the Transferor Certificate shall be responsible for payment of
the Transferors' portion of such aggregate Monthly Servicing Fees and all other
such amounts in excess of such aggregate Monthly Servicing Fees. Each Holder of
the Transferors' Certificate agrees that, if Conseco Bank (or any Successor
Servicer) is terminated as Servicer hereunder, the portion of the Collections in
respect of Finance Charge Receivables that the Transferors are entitled to
receive pursuant to this Agreement, the Indenture or any Indenture Supplement
shall be reduced by an amount sufficient to pay the Transferors' share of the
compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 8.01 of the Trust Agreement, and shall pass to and be vested
in the Transferors and, without limitation, the Transferors are hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorneys-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things
44
necessary or appropriate to effect the purposes of such transfer of servicing
rights. The Servicer agrees to cooperate with the Transferors in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing of the Receivables. The Servicer shall transfer its electronic records
relating to the Receivables to the Transferors or its designee in such
electronic form as it may reasonably request and shall transfer all other
records, correspondence and documents to it in the manner and at such times as
it shall reasonably request. To the extent that compliance with this Section
shall require the Servicer to disclose to the Transferors information of any
kind which the Servicer deems to be confidential, the Transferors shall be
required to enter into such customary licensing and confidentiality agreements
as the Servicer shall deem necessary to protect its interests.
Section 7.03. Notification to Noteholders. Within five
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Owner Trustee, the Indenture Trustee,
each Rating Agency and each Series Enhancer and the Indenture Trustee shall give
notice to the Noteholders. Upon any termination or appointment of a Successor
Servicer pursuant to this Article, the Indenture Trustee shall give prompt
notice thereof to the Noteholders.
[END OF ARTICLE VII]
45
ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement. This Agreement and the
respective obligations and responsibilities of the Trust, the Owner Trustee, the
Transferors and the Servicer under this Agreement shall terminate, except with
respect to the duties described in Section 5.04, on the Trust Termination Date.
[END OF ARTICLE VIII]
46
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.
(a) This Agreement may be amended by the parties hereto from
time to time prior to, or in connection with, the issuance of the first Series
of Notes hereunder without the requirement of any consents or the satisfaction
of any conditions set forth below. This Agreement may be amended from time to
time by the Servicer, the Transferors and the Owner Trustee, by a written
instrument signed by each of them, without the consent of the Indenture Trustee
or any of the Noteholders, provided that (i) the Transferors shall have
delivered to the Indenture Trustee and the Owner Trustee an Officer's
Certificate, dated the date of any such Amendment, stating that the Transferors
reasonably believe that such amendment will not have an Adverse Effect and (ii)
the Rating Agency Condition shall have been satisfied with respect to any such
amendment; provided, however, the Servicer, the Transferors and the Owner
Trustee, may enter into one or more amendments, without the consent of the
Indenture Trustee or the Holders of any Notes or prior notice to the Rating
Agencies (provided that a final amendment to this Agreement signed by the
parties hereto shall be delivered to each Rating Agency within 10 days of its
execution) in order to (A) cure any ambiguity, to correct or supplement any
provision herein or in any amendment hereto that may be inconsistent with any
other provision herein or in any amendment hereto, (B) to make any other
provisions with respect to matters or questions arising under this Agreement or
in any amendment hereto or (C) qualify for sale treatment under generally
accepted accounting principles; provided, that such amendment shall not have an
Adverse Effect and, in the case of clause (C), the Transferors shall have
delivered a Tax Opinion to the Indenture Trustee with respect to such amendment.
Additionally, notwithstanding the preceding sentence, this Agreement will be
amended by the Servicer and the Owner Trustee at the direction of the
Transferors without the consent of the Indenture Trustee or any of the
Noteholders or Series Enhancers to add, modify or eliminate such provisions as
may be necessary or advisable in order to enable all or a portion of the Trust
(i) to qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code, and (ii) to avoid the imposition of
state or local income or franchise taxes imposed on the Trust's property or its
income; provided, however, that (i) the Transferor delivers to the Indenture
Trustee and the Owner Trustee an Officer's Certificate to the effect that the
proposed amendments meet the requirements set forth in this subsection, (ii)
each Rating Agency will have notified the Transferors, the Servicer, the
Indenture Trustee and the Owner Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class as to which it is a Rating Agency and (iii) such amendment does not affect
the rights, duties or obligations of the Indenture Trustee or the Owner Trustee
hereunder. The amendments which the Transferors may make without the consent of
Noteholders or Series Enhancers pursuant to the preceding sentence may include,
without limitation, the addition of a sale of Receivables.
(b) This Agreement may also be amended from time to time by
the Servicer, the Transferors and the Owner Trustee, with the consent of the
Holders of Outstanding Notes evidencing not less than 66-2/3% of the aggregate
unpaid principal amount of the Outstanding Notes of all affected Series for
which the Transferors have not delivered an Officer's Certificate stating that
there is no Adverse Effect, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount of or delay the
timing of any distributions (changes in Amortization Events or Reinvestment
Events that decrease the likelihood of the occurrence thereof shall not be
considered delays in the timing of distributions for purposes of this clause) to
be made to Noteholders or deposits of amounts to be so distributed or the amount
available under any Series Enhancement without the consent of each affected
Holder of
47
Outstanding Notes, (ii) change the definition of or the manner of calculating
the interest of any Noteholder without the consent of each affected Holder of
Outstanding Notes, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Holder of Outstanding Notes or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Outstanding Notes of such Series or Class
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of the
Outstanding Notes of such Series or Class.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the Owner Trustee
shall furnish notification of the substance of such amendment to the Indenture
Trustee and each Noteholder, and the Servicer shall furnish notification of the
substance of such amendment to each Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Noteholders
under this Section 9.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe.
(e) Notwithstanding anything in this Section 9.01 to the
contrary, no amendment may be made to this Agreement or any Participation
Interest Supplement which would adversely affect in any material respect the
interests of any Series Enhancer without the consent of such Series Enhancer.
(f) Any Indenture Supplement executed in accordance with the
provisions of Article X of the Indenture shall not be considered an amendment of
this Agreement for the purposes of this Section 9.01.
(g) The Holders of Outstanding Notes evidencing more than
66-2/3% of the aggregate unpaid principal amount of the Outstanding Notes of
each Series or, with respect to any Series with two or more Classes, of each
Class (or, with respect to any default that does not relate to all Series,
66-2/3% of the aggregate unpaid principal amount of the Outstanding Notes of
each Series to which such default relates or, with respect to any such Series
with two or more Classes, of each Class) may, on behalf of all Noteholders,
waive any default by the Transferors or the Servicer in the performance of their
obligations hereunder and its consequences, except the failure to make any
distributions required to be made to Noteholders or to make any required
deposits of any amounts to be so distributed. Upon any such waiver of a past
default, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
(h) The Owner Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Owner Trustee's rights, duties
or immunities under this Agreement or otherwise. In connection with the
execution of any amendment hereunder, the Owner Trustee shall be entitled to
receive the Opinion of Counsel described in subsection 9.02(d).
Section 9.02. Protection of Right, Title and Interest to
Trust.
(a) The Transferors shall cause this Agreement, all amendments
and supplements hereto and all financing statements and continuation statements
and any other necessary documents covering the Indenture Trustee's and the Owner
Trustee's right, title and interest to the Trust to be promptly recorded,
registered and filed, and at all times to be kept recorded, registered and
filed, all in such manner and in such places as may be required by law fully to
preserve and protect the right, title and
48
interest of the Indenture Trustee, Noteholders and the Owner Trustee hereunder
to all property comprising the Trust. The Transferors shall deliver to the Owner
Trustee and Indenture Trustee file-stamped copies of, or filing receipts for,
any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Servicer shall
cooperate fully with the Transferors in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this paragraph.
(b) Within 30 days after any Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
seriously misleading within the meaning of Section 9-402(7) (or any comparable
provision) of the UCC, such Transferor shall give the Owner Trustee and the
Indenture Trustee notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection of the
Owner Trustee's and the Trust's security interest or ownership interest in the
Receivables and the proceeds thereof.
(c) Each Transferor shall give the Owner Trustee and the
Indenture Trustee prompt notice of any relocation of its chief executive office
or any change in the jurisdiction of its organization and whether, as a result
of such relocation or change, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Owner Trustee's and the Trust's security interest in the
Receivables and the proceeds thereof. Each Transferor shall at all times
maintain its chief executive offices within the United States and shall at all
times be organized under the laws of a jurisdiction located within the United
States.
(d) The Transferors shall deliver to the Owner Trustee and the
Indenture Trustee (i) upon the execution and delivery of each amendment of this
Agreement, an Opinion of Counsel to the effect specified in Exhibit D-1; (ii) on
each date specified in subsection 2.09(c)(ix) with respect to Aggregate
Additions to be designated as Accounts, an Opinion of Counsel substantially in
the form of Exhibit D-2, (iii) on each date specified in subsection
2.09(e)(vii), with respect to any New Accounts included as Accounts, an Opinion
of Counsel substantially in the form of Exhibit D-2, (iv) on each Addition Date
on which any Participation Interests are to be included in the Trust pursuant to
subsection 2.09(a) or (b), an Opinion of Counsel covering the same substantive
legal issues addressed by Exhibits D-1 and D-2 but conformed to the extent
appropriate to relate to Participation Interests; and (v) on or before April 30
of each year, beginning with April 30, 2002, an Opinion of Counsel substantially
in the form of Exhibit D-3.
Section 9.03. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.04. Notices; Payments.
(a) All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of the Transferors, to
_____________________________________________________, _______________,
Attention: __________________________ (facsimile no. (___) ___-____), (ii) in
the case of Conseco Bank, to
___________________________________________________________ Attention:
__________________________ (facsimile no. (___) ___-____), (iii) in the case of
the Servicer, to
49
Conseco Bank, at ______________________________________,
_______________________________, Attention: __________________________
(facsimile no. (___) ___-____), (iv) in the case of the Owner Trustee, to
_____________________, at ______________________________________,
_____________________, Attention: _________________________ (facsimile no. (___)
___-____), (v) in the case of the Rating Agency for a particular Series, the
address, if any, specified in the Indenture Supplement relating to such Series,
and (vi) to any other Person as specified in the Indenture or any Indenture
Supplement; or, as to each party, at such other address or facsimile number as
shall be designated by such party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder
of Registered Notes shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Note Register. No Notice shall be
required to be mailed to a Holder of Bearer Notes or Coupons but shall be given
as provided below. Any Notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder receives such Notice. In addition, (a) if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange and such Exchange
shall so require, any Notice to Noteholders shall be published in an Authorized
Newspaper of general circulation in Luxembourg within the time period prescribed
in this Agreement and (b) in the case of any Series or Class with respect to
which any Bearer Notes are outstanding, any Notice required or permitted to be
given to Noteholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
Section 9.05. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.
Section 9.06. Further Assurances. The Transferors and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Owner Trustee and the Indenture Trustee more fully to effect the purposes of
this Agreement, including the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
Section 9.07. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Owner Trustee, the
Indenture Trustee or the Noteholders, any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
provided under this Agreement are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 9.08. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
Section 9.09. Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the Indenture
Trustee, the Noteholders, any Series Enhancer and their respective successors
and permitted assigns. Except as otherwise expressly provided in this Agreement,
no other Person will have any right or obligation hereunder.
50
Section 9.10. Actions by Noteholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a Notice given by Noteholders, such action or Notice may
be taken or given by any Noteholder, unless such provision requires a specific
percentage of Noteholders.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Note shall bind such Holder and every
subsequent Holder of such Note and of any Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Owner Trustee, the Transferors or the
Servicer in reliance thereon, whether or not notation of such action is made
upon such Note.
Section 9.11. Rule 144A Information. For so long as any of the
Notes of any Series or Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act, each of the Transferor, the Owner
Trustee, the Indenture Trustee, the Servicer and any Series Enhancer agree to
cooperate with each other to provide to any Noteholders of such Series or Class
and to any prospective purchaser of Notes designated by such Noteholder, upon
the request of such Noteholder or prospective purchaser, any information
required to be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act.
Section 9.12. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 9.13. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
[END OF ARTICLE IX]
51
IN WITNESS WHEREOF, the Transferors, the Servicer and the
Owner Trustee have caused this Transfer and Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
Dated: ___________, 2001 CONSECO BANK, INC.
Transferor
By:
---------------------------------------
Name:
Title:
CONSECO FINANCE CREDIT CARD FUNDING CORP.,
Transferor
By:
---------------------------------------
Name:
Title:
CONSECO BANK INC.,
Servicer
By:
---------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee on behalf of
the CONSECO PRIVATE LABEL
CREDIT CARD MASTER NOTE
TRUST
By:
---------------------------------------
Name:
Title:
Acknowledged and Accepted:
By: U.S. Bank Trust National Association
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------------
Name:
Title:
EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.09 of
the Transfer and Servicing Agreement)
ASSIGNMENT No. _________ OF RECEIVABLES IN ADDITIONAL ACCOUNTS
dated as of ____________,1 by and among ___________________________________, a
__________________________________ as Transferor (the "Transferor"),
____________________________________, a __________________________________ as
Servicer (the "Servicer"), and ____________________________________, not in its
individual capacity but solely as owner trustee (the "Owner Trustee") of the
CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST (the "Trust"), a Delaware
business trust, pursuant to the Transfer and Servicing Agreement referred to
below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Owner Trustee are
parties to the Transfer and Servicing Agreement dated as of ____________ __,
2001 (as amended and supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Transferor wishes to
designate Additional Accounts to be included as Accounts and to convey the
Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Owner Trustee on behalf of the Trust; and
WHEREAS the Owner Trustee on behalf of the Trust is willing to
accept such designation and conveyance subject to the terms and conditions
hereof;
NOW, THEREFORE, the Transferor, the Servicer and the Owner
Trustee hereby agree as follows:
1. Defined Terms. All capitalized terms used herein shall have
the meanings ascribed to them in the Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional
Accounts designated hereby, ____________, _______.
"Additional Cut-Off Date" shall mean, with respect to the
Additional Accounts designated hereby, __________, ____.
2. Designation of Additional Accounts. On or before the
Document Delivery Date, the Transferor will deliver to the Owner Trustee a
computer file, microfiche list or printed list containing a true and complete
schedule identifying all Additional Accounts designated hereby (the "Additional
Accounts") specifying for each such Account, as of the Additional Cut-Off Date,
its account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in such Account, which
computer file, microfiche list or printed list shall be marked as Schedule 1 to
this Assignment and shall supplement Schedule 1 to the Agreement.
------------------
1/ To be dated as of the applicable Addition Date.
A-1
3. Conveyance of Receivables. (a) The Transferor does hereby
sell, transfer, assign, set over and otherwise convey, without recourse except
as set forth in the Transfer and Servicing Agreement, to the Owner Trustee on
behalf of the Trust, all its right, title and interest in, to and under the
Receivables of such Additional Accounts existing on the Additional Cut-Off Date
and thereafter created from time to time until the termination of the Trust, all
Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all proceeds (including
"proceeds" as defined in the UCC) thereof. The foregoing does not constitute and
is not intended to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer of any
obligation of the Servicer, the Transferor or any other Person in connection
with the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, Merchants, merchant banks,
merchants clearance systems or insurers.
(b) The Transferor agrees to record and file, at its own
expense, financing statements (and continuation statements when applicable) with
respect to the Receivables existing on the Additional Cut-Off Date and
thereafter created in Additional Accounts, meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect, and maintain perfection of, the sale and assignment of its interest
in such Receivables to the Owner Trustee on behalf of the Trust, and to deliver
a file-stamped copy of each such financing statement or other evidence of such
filing to the Owner Trustee on or prior to the Addition Date. The Owner Trustee
shall be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
sale and assignment.
(c) In connection with such sale, the Transferor further
agrees, at its own expense, on or prior to the date of this Assignment, to
indicate in the appropriate computer files that Receivables created in
connection with the Additional Accounts and designated hereby have been conveyed
to the Owner Trustee on behalf of the Trust pursuant to the Agreement and this
Assignment.
(d) The Transferor does hereby grant to the Owner Trustee on
behalf of the Trust a security interest in all of its right, title and interest,
whether now owned or hereafter acquired, in and to the Receivables of the
Additional Accounts existing on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Interchange
and Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all "proceeds" (including
"proceeds" as defined in the UCC) thereof. This Assignment constitutes a
security agreement under the UCC.
4. Acceptance by Owner Trustee on behalf of the Trust. The
Owner Trustee on behalf of the Trust hereby acknowledges its acceptance of all
right, title and interest to the property, now existing and hereafter created,
conveyed to the Owner Trustee on behalf of the Trust pursuant to Section 3 of
this Assignment. The Trust further acknowledges that, prior to or simultaneously
with the execution and delivery of this Assignment, the Transferor delivered to
the Owner Trustee the computer file, microfiche list or printed list described
in Section 2 of this Assignment.
5. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Owner Trustee on behalf of the
Trust, as of the date of this Assignment and as of the Addition Date that:
(a) Legal Valid and Binding Obligation. This
Assignment constitutes a legal, valid and binding obligation
of the Transferor enforceable against the Transferor in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect affecting
A-2
the enforcement of creditors' rights in general and except as
such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity);
(b) Eligibility of Accounts. As of the
Additional Cut-Off Date, each Additional Account designated
hereby is an Eligible Account;
(c) Insolvency. As of each of the Additional
Cut-Off Date and the Addition Date, no Insolvency Event with
respect to the Transferor has occurred and the transfer by the
Transferor of Receivables arising in the Additional Accounts
to the Trust has not been made in contemplation of the
occurrence thereof;
(d) Amortization Event; Event of Default.
The Transferor reasonably believes that (A) the addition of
the Receivables arising in the Additional Accounts will not,
based on the facts known to the Transferor, then or thereafter
cause an Amortization Event or Event of Default to occur with
respect to any Series and (B) no selection procedure was
utilized by the Transferor which would result in the selection
of Additional Accounts (from among the available Eligible
Accounts available to the Transferor) that would be materially
adverse to the interests of the Noteholders of any Series as
of the Addition Date;
(e) Security Interest. This Assignment
constitutes a valid sale, transfer and assignment to the Trust
of all right, title and interest, whether now owned or
hereafter acquired, of the Transferor in the Receivables
existing on the Additional Cut-Off Date and thereafter created
in the Additional Accounts, all Interchange and Recoveries
related thereto, all monies due or to become due and all
amounts received or receivable with respect thereto and the
"proceeds" (including "proceeds" as defined in the UCC)
thereof, or, if this Assignment does not constitute a sale of
such property, it constitutes a grant of a "security interest"
(as defined in the UCC) in such property to the Owner Trustee
on behalf of the Trust, which, in the case of existing
Receivables and the proceeds thereof, is enforceable upon
execution and delivery of this Assignment, and which will be
enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. Upon the filing
of the financing statements described in Section 3 of this
Assignment and, in the case of the Receivables hereafter
created and the proceeds thereof, upon the creation thereof,
the Trust shall have a first priority perfected security or
ownership interest in such property;
(f) No Conflict. The execution and delivery
by the Transferor of this Assignment, the performance of the
transactions contemplated by this Assignment and the
fulfillment of the terms hereof applicable to the Transferor,
will not conflict with or violate any Requirements of Law
applicable to the Transferor or conflict with, result in any
breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the
Transferor is a party or by which it or its properties are
bound;
(g) No Proceedings. There are no proceedings
or investigations, pending or, to the best knowledge of the
Transferor, threatened against the Transferor before any
court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (i) asserting the
invalidity of this Assignment, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Assignment, (iii) seeking any determination or ruling that, in
the reasonable judgment of the Transferor, would materially
and adversely affect the performance by the Transferor of its
obligations under this Assignment or (iv) seeking any
determination or ruling that would materially and adversely
affect the validity or enforceability of this Assignment; and
A-3
(h) All Consents. All authorizations,
consents, orders or approvals of any court or other
governmental authority required to be obtained by the
Transferor in connection with the execution and delivery of
this Assignment by the Transferor and the performance of the
transactions contemplated by this Assignment by the
Transferor, have been obtained.
6. Ratification of Agreement. As supplemented by this
Assignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Assignment shall be read, taken and
construed as one and the same instrument.
7. Counterparts. This Assignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-4
IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner
Trustee have caused this Assignment to be duly executed by their respective
officers as of the day and year first above written.
__________________________________________,
Transferor,
By:
---------------------------------------
Name:
Title:
CONSECO BANK INC.,
Servicer,
By:
---------------------------------------
Name:
Title:
---------------------------------------
not in its individual
capacity but solely as
Owner Trustee on behalf of
the CONSECO PRIVATE LABEL
CREDIT CARD MASTER NOTE
TRUST, Issuer
By:
---------------------------------------
Name:
Title:
A-5
EXHIBIT B
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Transfer and Servicing Agreement)
REASSIGNMENT No. ___________ OF RECEIVABLES dated as of
___________,1 by and among _________________________________________, a
_________________________________, as Transferor (the "Transferor"),
____________________________________________, a
_________________________________, as Servicer and
____________________________________________, not in its individual capacity
but solely as owner trustee (the "Owner Trustee") of the CONSECO PRIVATE LABEL
CREDIT CARD MASTER NOTE TRUST, (the "Trust"), a Delaware business trust,
pursuant to the Transfer and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Owner Trustee are
parties to the Transfer and Servicing Agreement dated as of ___________, 2001
(as amended and supplemented, the "Agreement");
WHEREAS pursuant to the Agreement, the Bank wishes to remove
from the Trust all Receivables owned by the Owner Trustee on behalf of the Trust
in certain designated Accounts and to cause the Owner Trustee on behalf of the
Trust to reconvey the Receivables of such Removed Accounts, whether now existing
or hereafter created to the Transferor; and
WHEREAS the Owner Trustee on behalf of the Trust is willing to
accept such designation and to reconvey the Receivables in the Removed Accounts
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trust hereby agree as
follows:
1. Defined Terms. All terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, ______________, _______.
"Removal Notice Date" shall mean, with respect to the Removed
Accounts, _______________, _______.
2. Designation of Removed Accounts. On or before the Document
Delivery Date, the Transferor will deliver to the Owner Trustee a computer file,
microfiche list or printed list containing a true and complete schedule
identifying all Accounts (the "Removed Accounts") the Receivables of which are
being removed from the Trust, specifying for each such Account, as of the
Removal Notice Date, its account number, the aggregate amount outstanding in
such Account and the aggregate amount of Principal Receivables in such Account,
which computer file, microfiche list or printed list shall be marked as Schedule
1 of this Reassignment and shall supplement Schedule 1 to the Agreement.
------------------
1/ To be dated as of the Removal Date.
B-1
3. Conveyance of Receivables. (a) The Owner Trustee on behalf
of the Trust does hereby transfer, assign, set over and otherwise convey to the
Transferor, without recourse, on and after the Removal Date, all right, title
and interest of the Owner Trustee and the Trust in, to and under the Receivables
existing at the close of business on the Removal Notice Date and thereafter
created from time to time in the Removed Accounts designated hereby, all
Interchange and Recoveries related thereto, all monies due or to become due and
all amounts received or receivable with respect thereto and all proceeds
thereof.
(b) In connection with such transfer, the Owner Trustee agrees
to execute and deliver to the Transferor on or prior to the date this
Reassignment is delivered, applicable termination statements prepared by the
Transferor with respect to the Receivables existing at the close of business on
the Removal Notice Date and thereafter created from time to time in the Removed
Accounts reassigned hereby and the proceeds thereof evidencing the release by
the Owner Trustee and the Trust of its interest in the Receivables in the
Removed Accounts, and meeting the requirements of applicable state law, in such
manner and such jurisdictions as are necessary to terminate such interest.
4. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Owner Trustee and the Trust as
of the Removal Date:
(a) Legal Valid and Binding Obligation. This
Reassignment constitutes a legal, valid and binding obligation
of the Transferor enforceable against the Transferor, in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in
a suit at law or in equity); and
(b) Amortization Event; Event of Default.
The Transferor reasonably believes that (A) the removal of the
Receivables existing in the Removed Accounts will not, based
on the facts known to the Transferor, then or thereafter cause
an Amortization Event or Event of Default to occur with
respect to any Series and (B) no selection procedure was
utilized by the Transferor which would result in a selection
of Removed Accounts that would be materially adverse to the
interests of the Noteholders of any Series as of the Removal
Date.
(c) List of Removed Accounts. The list of
Removed Accounts delivered pursuant to subsection 2.10(a)(ii)
of the Agreement, as of the Removal Notice Date, is true and
complete in all material respects.
5. Ratification of Agreement. As supplemented by this
Reassignment, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Reassignment shall be read, taken and
construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-2
IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner
Trustee have caused this Reassignment to be duly executed by their respective
officers as of the day and year first above written.
-------------------------------------------
Transferor,
By:
---------------------------------------
Name:
Title:
CONSECO BANK INC.,
Servicer,
By:
---------------------------------------
Name:
Title:
-------------------------------------------
not in its individual
capacity but solely as
Owner Trustee on behalf of
the CONSECO PRIVATE LABEL
CREDIT CARD MASTER NOTE
TRUST, Issuer
By:
---------------------------------------
Name:
Title:
B-3
EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before April 30 of
each calendar year beginning with April 30, 2001,
pursuant to Section 3.05 of the Transfer and
Servicing Agreement referred to below)
CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST
The undersigned, a duly authorized representative of Conseco
Bank Inc., as Servicer ("Conseco Bank"), pursuant to the Transfer and Servicing
Agreement dated as of _________, 2001 (as amended and supplemented, the
"Agreement"), among ___________________________________________, as transferor,
____________________________________, and Conseco Private Label Credit Card
Master Note Trust, does hereby certify that:
1. Conseco Bank is, as of the date hereof, the Servicer under
the Agreement. Capitalized terms used in this Certificate have their respective
meanings as set forth in the Agreement.
2. The undersigned is an Authorized Officer who is duly
authorized pursuant to the Agreement to execute and deliver this Certificate to
the Trust.
3. A review of the activities of the Servicer during the year
ended December 31, ____, and of its performance under the Agreement was
conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the Agreement
known to me to have been made by the Servicer during the year ended December 31,
_____ which sets forth in detail (i) the nature of each such default, (ii) the
action taken by the Servicer, if any, to remedy each such default and (iii) the
current status of each such default: [If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _____________, 20___.
CONSECO BANK INC.,
By:
---------------------------------------
Name:
Title:
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FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
to Section 9.02(d)(i)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions Of Counsel delivered on any applicable Closing Date.
(i) The amendment to the Transfer and
Servicing Agreement, attached hereto as Schedule 1 (the
"Amendment" ), has been duly authorized, executed and
delivered by the Transferor and constitutes the legal, valid
and binding agreement of the Transferor, enforceable in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws from time to time in
effect affecting creditors' rights generally. The
enforceability of the Transferor's obligations is also subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(ii) The Amendment has been entered into in
accordance with the terms and provisions of Section 9.01 of
the Transfer and Servicing Agreement.
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FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
subsection 9.02(d)(ii) or (iii)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
1. To the extent that Article 9 of the New York UCC applies to
the transfer of the Additional Receivables and the proceeds thereof by [the
Account Owner] to the Transferor pursuant to the Supplemental Conveyance, the
Supplemental Conveyance creates in favor of the transferor a security interest
in the rights of [the Account Owner] in such Additional Receivables and the
proceeds thereof.
2. To the extent that the transfer of Additional Receivables
by the Transferor to the Owner Trustee pursuant to the Assignment does not
constitute an absolute assignment by the Transferor to the Owner Trustee of such
Additional Receivables or the proceeds thereof, the Assignment creates in favor
of the Owner Trustee a security interest in the rights of the Transferor in such
Additional Receivables and the proceeds thereof.
3. The security interests described in paragraphs 1 and 2
above are perfected and of first priority.
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PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date. Unless otherwise
indicated, all capitalized terms used herein shall have the meanings ascribed to
them in the Transfer and Servicing Agreement and in the Assignment.
1. The Transfer and Servicing Agreement, together with the
Assignments, create in favor of the Owner Trustee a security interest in each of
the relevant Transferor's rights in the Receivables identified in Schedule 1 to
the Transfer and Servicing Agreement. Such security interest is perfected and of
first priority.
D-3-1
SCHEDULE I
List of Accounts
[Original list delivered to Owner Trustee]
I-1