1
EXHIBIT 4.1
--------------------------------------------------------------------------------
FREMONT FUNDING INC.,
Transferor,
FREMONT FINANCIAL CORPORATION,
Servicer,
and
LASALLE NATIONAL BANK,
Trustee
on behalf of the Certificateholders
--------------------------------------------------------------------------------
FREMONT SMALL BUSINESS LOAN MASTER TRUST
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 1997
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Calculations and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVEYANCE OF ADVANCES; ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02 Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03 Representations and Warranties of the Transferor Relating to the
Transferor . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04 Representations and Warranties of the Transferor Relating to this
Agreement and any Supplement and the Advances; Reassignment of Advances . . . 8
Section 2.05 Addition of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.06 Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.07 Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.08 Removal of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.09 Cancellation of the Certificates of any Series . . . . . . . . . . . . . . . . 19
ARTICLE III
ADMINISTRATION AND SERVICING
OF ADVANCES
Section 3.01 Acceptance of Appointment and Other Matters Relating to the
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.02 Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.03 Representations, Warranties, and Covenants of the Servicer . . . . . . . . . . 23
Section 3.04 Reports and Records for the Trustee . . . . . . . . . . . . . . . . . . . . . . 27
- i -
3
Page
----
Section 3.05 Annual Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.06 Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . 28
Section 3.07 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.08 Notices to Fremont Financial . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.09 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.10 Covenant to Maintain Privileges . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.01 Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.02 Establishment of Collection Account . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.03 Daily Deposits and Collections . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.04 Payments to Investor Certificateholders, the Holder of the
Variable Funding Certificate, and the Holder of the Transferor Certificate. . . 35
Section 4.05 Determination and Allocation of Charge-Off Amounts . . . . . . . . . . . . . . 36
Section 4.06 Return of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.07 Defaulted Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.02 Monthly Investor Certificateholders' Statement; Annual Tax
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.02 Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.03 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . 41
- ii -
4
Page
----
Section 6.04 Mutilated, Destroyed, Lost, or Stolen Certificates . . . . . . . . . . . . . . 44
Section 6.05 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.06 Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.07 Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . 45
Section 6.08 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.09 Delivery of Additional Series of Investor Certificates or the
Variable Funding Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.10 Issuer Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.11 Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.13 Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.01 Liability of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.02 Merger or Consolidation of or Assumption of the Obligations of
the Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.03 Limitation on Liability of the Transferor . . . . . . . . . . . . . . . . . . . 52
Section 7.04 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.01 Liability of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.02 Merger or Consolidation of or Assumption of the Obligations of
the Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.03 Limitation on Liability of the Servicer and Others . . . . . . . . . . . . . . 53
Section 8.04 Servicer Indemnification of the Trust and the Trustee . . . . . . . . . . . . . 54
Section 8.05 The Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.06 Access to Certain Documentation and Information Regarding the
Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.07 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.08 Examination of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.09 Successor Servicer Indemnification of Transferor . . . . . . . . . . . . . . . 55
- iii -
5
Page
----
ARTICLE IX
EVENTS OF TERMINATION
Section 9.01 Events of Termination with Respect to any Series . . . . . . . . . . . . . . . 55
Section 9.02 Events of Termination with Respect to the Variable Funding
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.03 Additional Rights Upon the Occurrence of Certain Events . . . . . . . . . . . . 61
ARTICLE X
SERVICER DEFAULTS
Section 10.01 Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.02 Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . 65
Section 10.03 Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.04 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.02 Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . 70
Section 11.03 Trustee Not Liable for Recitals in Certificates . . . . . . . . . . . . . . . . 71
Section 11.04 Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.05 The Servicer to Pay Trustee's Fees and Expenses . . . . . . . . . . . . . . . . 72
Section 11.06 Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . 72
Section 11.07 Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.08 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.09 Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.10 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . 74
Section 11.11 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 11.12 Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . 76
Section 11.13 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 11.14 Rights of Certificateholders to Direct Trustee . . . . . . . . . . . . . . . . 76
Section 11.15 Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . 77
Section 11.16 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . 77
- iv -
6
Page
----
Section 11.17 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XII
TERMINATION
Section 12.01 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.02 Optional Purchase and Series Termination Date of Investor
Certificates of any Series or the Variable Funding Certificate. . . . . . . . . 78
Section 12.03 Final Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.04 Transferor's Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.02 Protection of Right, Title and Interest of Trust . . . . . . . . . . . . . . . 83
Section 13.03 Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . 84
Section 13.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 13.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 13.06 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 13.07 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 13.08 Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . 86
Section 13.09 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 13.10 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 13.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 13.12 Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 13.13 Actions by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 13.14 Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 13.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
- v -
7
EXHIBITS
Exhibit A: Form of Investor Certificate
Exhibit B: Form of Variable Funding Certificate
Exhibit C: Form of Transferor Certificate
Exhibit D: Form of Supplement
Exhibit E: Form of Daily Report, Payment Instructions, and Notification
to the Trustee
Exhibit F: Form of Annual Servicer's Certificate
Exhibit G: Credit and Collection Policy
Exhibit H: Form of Settlement Statement, Payment Instructions, and
Notification to the Trustee
Exhibit H-1: Form of Payment Date Statement
Exhibit I: Concentration Bank Agreement
Exhibit J: Form of Lock-Box and Block Account Agreements
Exhibit K: List of Lock-Box Banks and Concentration Banks
Exhibit L: Form of Power of Attorney
Exhibit M: Form of Annual Opinion of Counsel
Exhibit N: Form of Assignment
Exhibit O: Form of Opinion of Counsel with respect to Assignment
Exhibit P: Form of Reassignment
SCHEDULES
Schedule 1: List of Advances
Schedule 2: Identification of the Collection Account
Schedule 3: List of Days in 1997 on Which Fremont Financial is Closed
Schedule 4: List of Contracts
ANNEX
Annex X: Definitions
- vi -
8
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of
April 1, 1997, by and among FREMONT FUNDING INC., a Delaware corporation, as
Transferor, FREMONT FINANCIAL CORPORATION, a California corporation, as
Servicer, and LASALLE NATIONAL BANK, a national banking association, as Trustee
(the "Pooling and Servicing Agreement"), amending and restating in its entirety
the POOLING AND SERVICING AGREEMENT, dated as of March 1, 1993, as amended by
Amendment No. 1 thereto, dated as of November 9, 1993, Amendment No. 2 thereto,
dated as of March 1, 1995, and Amendment No. 3 thereto, dated as of February 1,
1996 (collectively, the "Original Agreement"), each by and among the
Transferor, the Servicer, and as the Trustee.
PRELIMINARY STATEMENT
Sections 13.01(a) and (b) of the Original Agreement provides that the
Original Agreement or any Supplement may be amended from time to time by the
Servicer, the Transferor and the Trustee, without the consent of any of the
Certificateholders to cure any ambiguity or add any provisions to, or change in
any manner or eliminate any of the provisions of, the Original Agreement upon
delivery of an Officer's Certificate, Rating Agency confirmations and an
Opinion of Counsel, each as specified in section 13.01(b) of the Original
Agreement.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit of
the Certificateholders to the extent provided herein:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the definitions attached hereto as Annex X
which is incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
"Agreement" shall mean this Amended and Restated Pooling and Servicing
Agreement as it may from time to time be further amended, supplemented, or
otherwise modified in accordance with the terms hereof, including by any
Supplement.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement
shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein.
9
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting
terms not defined in Annex X or otherwise defined herein, and
accounting terms partly defined in Annex X or otherwise defined
herein, to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of
accounting terms herein or in Annex X are inconsistent with the
meanings of such terms under GAAP, the definitions contained herein or
in Annex X shall control.
(c) The agreements, representations, and warranties of
Fremont Financial in this Agreement in its capacity as Servicer shall
be deemed to be the agreements, representations, and warranties of
Fremont Financial solely in such capacity.
(d) The words "hereof," "herein," and "hereunder" and
words of similar import when used in this Agreement or any Supplement
shall refer to such Supplement or this Agreement, as the case may be,
as a whole and not to any particular provision of such Supplement or
this Agreement, as the case may be; and Section, Schedule, and Exhibit
references contained in this Agreement or any Supplement are
references to Sections, Schedules, and Exhibits in or to this
Agreement or such Supplement unless otherwise specified.
Section 1.03 Calculations and Payments. All computations of
Finance Charges shall be made on the basis of a 360 day year and the actual
number of days elapsed (including the first and excluding the last day) in the
period for which such calculations are being made. Unless otherwise specified
herein or in a related Supplement, expressions of a time of day refer to such
time in Los Angeles, California. All amounts payable hereunder shall be paid
in immediately available funds. Whenever any reference is made to an amount or
time the determination or calculation of which is governed by this Section
1.03, the provisions of this Section 1.03 shall be applicable to such
determination or calculation, whether or not reference is specifically made to
this Section 1.03, unless some other method of determination or calculation is
expressly specified in the particular provision.
ARTICLE II
CONVEYANCE OF ADVANCES; ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Advances. By execution of this
Agreement, the Transferor does hereby confirm that it has assigned,
transferred, and otherwise conveyed and will assign, transfer, and otherwise
convey to the Trust from time to time, without recourse (except as specifically
provided herein), all right, title, and interest in, to, and under (a) all
Advances outstanding on the Cut-Off Date and all Advances thereafter created by
Fremont Financial and sold or otherwise transferred to the Transferor pursuant
to the Purchase Agreement, in all cases, prior to the Final Trust Termination
Date as the parties hereto shall agree upon in writing, (b) all
2
10
Related Security and all other instruments and all rights under the Advance
Documents relating to such Advances and all rights (but not the obligations)
relating to such Advances, (c) all monies due or to become due with respect
thereto, and (d) all proceeds of any of the foregoing. Such property, together
with all monies relating to the Advances on deposit in the Concentration
Accounts or the Collection Account (other than net investment earnings) shall
constitute the assets of the Trust (the "Trust Assets"). The foregoing
transfer, assignment, set-over, and conveyance do not constitute and are not
intended to result in the creation, or an assumption by the Trust, the Trustee,
any Investor Certificateholder, or the CP Issuer, of any obligation of Fremont
Financial, or any recourse obligation of the Transferor or any other Person in
connection with the Advances or under any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligors,
insurers, or any Affiliate of or other Person to whom the Servicer may delegate
servicing duties hereunder.
In connection with such transfer, the Transferor agrees to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) required to be filed
with respect to the Advances now existing and hereafter created and other Trust
Assets meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary under the applicable UCC to perfect the
transfer and assignment of the Advances and the other Trust Assets to the
Trust, and the Transferor has delivered a file-stamped copy of each of such
financing statements or other evidence of such filings to the Trustee on or
prior to the date hereof (excluding such continuation and similar statements
created after the date hereof, which shall be delivered promptly after filing).
The Trustee shall be under no obligation whatsoever to file such financing or
continuation statements or make any other filings under the UCC in connection
with such conveyance.
In connection with such transfer, the Transferor further agrees, at
its own expense, on or prior to the date hereof and each Addition Date (d) to
indicate on its books and records (including, without limitation, any computer
files and microfiche lists) that all Advances have been transferred to the
Trustee pursuant to this Agreement for the benefit of the Certificateholders
and (e) to deliver on the Initial Closing Date, or the related Determination
Date with respect to Additional Contracts, to the Trustee a computer file,
microfiche list, or hard copy list containing a true and complete list of all
such Contracts and the related Advances specifying for each such Advance, as of
the Cut-Off Date or Determination Date, as applicable, (i) the name of the
Obligor thereunder and (ii) the aggregate Unpaid Balance of such Advance. Such
file or list shall be marked as Schedule 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement. In addition, (a) on the
Business Day following the date on which the Servicer receives a Termination
Notice pursuant to Section 10.01 and (b) on the Business Day following the
first day of any Amortization Period, the Servicer shall deliver to the Trustee
a true and complete file or list of all Advances outstanding on such date,
specifying for each such Advance the name of the Obligor thereunder and its
aggregate Unpaid Balance as of the date on which the Termination Notice is
delivered or the first day of such Amortization Period, as appropriate, each
such additional file or list shall be marked as Schedule 1 hereto, shall
replace the then existing Schedule 1 hereto, and shall be incorporated into and
made a part hereof.
3
11
Section 2.02 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance on
behalf of the Trust of all right, title, and interest to the property,
now existing and hereafter created, conveyed to the Trust pursuant to
Section 2.01, and declares that, subject to the terms and conditions
hereof and of any Supplement, it shall maintain such right, title, and
interest, upon the trust herein set forth, for the benefit of all
Certificateholders. The Trustee further acknowledges that, prior to
or simultaneously with the execution and delivery of this Agreement,
the Transferor delivered to the Trustee a file or list that was
represented as being the computer file, microfiche list or hard copy
list described in the last paragraph of Section 2.01.
(b) The Trustee hereby agrees not to disclose, except as
may be required by law, to any Person any of the information contained
in the computer files, microfiche lists, or hard copy list marked as
Schedule 1 or otherwise delivered to the Trustee by the Transferor
pursuant to Section 2.01 or 2.06(c) except as is required in
connection with the performance of its duties hereunder or in
enforcing the rights of the Certificateholders or to a Successor
Servicer appointed pursuant to Section 10.02 or to a prospective
Successor Servicer that could be appointed pursuant to Section 10.02.
The Trustee agrees to take such measures as shall be reasonably
requested by the Transferor to protect and maintain the security and
confidentiality of such information and in connection therewith, shall
allow the Transferor to inspect the Trustee's security and
confidentiality arrangements from time to time during normal business
hours. The Trustee shall use its best efforts to provide the
Transferor with written notice at least five Business Days prior to
any disclosure pursuant to this Section 2.02(b).
(c) It is intended by the Transferor that the Original
Agreement and this Agreement constitute a security agreement under the
UCC (as defined in the UCC as in effect in the State of California).
The Transferor hereby grants to the Trustee, on the terms and
conditions of this Agreement, a first priority security interest in
and against all of the Transferor's right, title, and interest in the
Advances and the other Trust Assets for the purpose of securing the
rights of the Trustee for the benefit of the Certificateholders under
this Agreement.
(d) The Trustee hereby agrees not to use any information
it obtains pursuant to this Agreement, including without limitation,
any of the information contained in the computer files or microfiche
lists marked as Schedule 1 or otherwise delivered by the Transferor to
the Trustee pursuant to Sections 2.01 or 2.06(c), to compete or assist
any Person in competing with the Transferor or the Seller in their
respective businesses.
Section 2.03 Representations and Warranties of the Transferor
Relating to the Transferor. The Transferor hereby represents and warrants as
of the date of this Agreement, and with respect
4
12
to any Series, as of the date of any Supplement and the related Closing Date,
unless otherwise stated in such Supplement and with respect to any Assignment,
as of the related Designated Date, that:
(a) Organization and Good Standing. The Transferor is a
corporation duly organized and validly existing in good standing under
the laws of the State of Delaware and has full corporate power,
authority, and legal right to execute, deliver, and perform its
obligations under the Purchase Agreement, this Agreement, any
Assignment, and any Supplement and to execute and deliver to the
Trustee pursuant hereto the Certificates, to conduct its business as
such business is presently conducted, and in all material respects, to
own its property and conduct its other businesses as such properties
are presently owned and as such businesses are presently conducted.
(b) Due Qualification. The Transferor is duly qualified
to do business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals with respect to the Transferor, in each
jurisdiction in which failure to so qualify or to obtain such licenses
and approvals would render any Contract or any Advance unenforceable
by the Transferor or the Trust or would have a material adverse effect
on the Certificateholders.
(c) Due Authorization. The execution, delivery, and
performance of the Purchase Agreement, this Agreement, any Assignment,
and any Supplement, the execution and delivery to the Trustee of the
Certificates by the Transferor, and the consummation of the
transactions provided for in this Agreement, any Assignment, and any
Supplement, have been duly authorized by the Transferor by all
necessary corporate action on the part of the Transferor and all such
documents have been duly executed and delivered.
(d) Binding Obligation. Each of the Purchase Agreement,
this Agreement, any Assignment, and each Supplement constitutes the
legal, valid, and binding obligation of the Transferor, enforceable
against it in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereinafter in effect,
affecting the enforcement of creditors' rights in general and except
as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(e) No Conflicts. The execution, delivery and
performance of this Agreement, any Assignment, and any Supplement and
the Certificates, the performance of the transactions contemplated by
this Agreement and any Supplement, and the fulfillment of the terms
hereof by the Transferor, do not (i) contravene its charter or
By-Laws, (ii) violate any provision of, or require any filing (except
for the filings under the UCC required by this Agreement, each of
which has been duly made and is in full force and effect),
registration, consent, or approval under, any law, rule, regulation,
order, writ, judgment, injunction, decree, determination, or award
presently in effect having
5
13
applicability to the Transferor, except for such filings,
registrations, consents, or approvals as have already been obtained
and are in full force and effect, (iii) result in a breach of or
constitute a default or require any consent under any indenture, loan,
credit agreement, or any other agreement, lease, or instrument to
which the Transferor is a party or by which it or its properties may
be bound or affected except those as to which a consent or waiver has
been obtained and is in full force and effect and an executed copy of
which has been delivered to the Trustee, or (iv) result in or require,
the creation or imposition of any lien upon or with respect to any of
the properties now owned or hereafter acquired by the Transferor other
than as specifically contemplated by this Agreement.
(f) Taxes. The Transferor has filed all tax returns
(federal, state, and local) required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments, and
other governmental charges due from the Transferor or is contesting
any such tax, assessment, or other governmental charge in good faith
through appropriate proceedings. The Transferor knows of no basis for
any material additional tax assessment for any fiscal year for which
adequate reserves have not been established.
(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 the Purchase
Agreement, this Agreement, any Assignment, or any Supplement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement or any Supplement, or the Certificates, (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 the Purchase Agreement, this
Agreement, any Assignment, or any Supplement, (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of the Purchase Agreement, this Agreement,
any Supplement, or the Certificates, or (v) seeking to assert any tax
liability against the Trust under the United States federal or
California state income or franchise tax systems.
(h) All Consents Required. All approvals,
authorizations, consents, orders, or other actions of any Person or of
any Governmental Authority required in connection with the execution
and delivery by the Transferor of the Original Agreement, this
Agreement, any Supplement, any Assignment, the Purchase Agreement, and
the Certificates, the performance by the Transferor of the
transactions contemplated by the Original Agreement, this Agreement,
and any Supplement, and the fulfillment by the Transferor of the terms
hereof, have been obtained and are in full force and effect; provided,
however, that the Transferor makes no representation or warranty
regarding state securities or "blue sky" laws in connection with the
distribution of the Certificates.
6
14
(i) Eligible Contracts. Each Advance is or will be an
advance arising out of Fremont Financial's performance in accordance
with the terms of an Eligible Contract giving rise to such Advance.
The Transferor does not have any knowledge of any fact which should
have led it to expect at the time of the initial creation of an
interest in any Advance hereunder that such Advance would not be paid
in full when due.
(j) Place of Business. The principal place of business
of the Transferor and its chief executive office (as that term is used
in the UCC) is in Santa Monica, California, and there are no other
such locations, and the offices where the Transferor keeps its records
concerning the Advances and related Contracts are in Santa Monica,
California, and there are no other such locations.
(k) Use of Proceeds. No proceeds of the issuance of any
Certificate will be used by the Transferor to acquire any security in
a transaction that is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended, or to purchase or carry any margin
security.
(l) Lock-Box Banks, Concentration Banks, and Accounts.
The Lock-Box Banks and Concentration Banks are the only institutions
holding any lock-box accounts, blocked-deposit accounts or
concentration accounts for the receipt of payments from Obligors in
respect of Advances (subject to such changes as may be made from time
to time in accordance with Section 2.06(i)) and all Obligors have been
instructed to make payments only to Lock-Box Accounts, Concentration
Accounts, or directly to the Servicer and such instructions are in
full force and effect.
(m) Event of Termination. As of the date hereof, no
Event of Termination and no condition that with the giving of notice
and/or the passage of time would constitute an Event of Termination (a
"Prospective Event of Termination"), has occurred and is continuing.
(n) Not an Investment Company. The Transferor is not an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, or is exempt from all provisions of such Act.
(o) ERISA. No Plan maintained by the Transferor or any
of its ERISA Affiliates has any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. The Transferor and each ERISA Affiliate
of the Transferor has timely made all contributions required to be
made by it to any Plan and Multiemployer Plan to which contributions
are or have been required to be made during the preceding five years
by the Transferor or such ERISA Affiliate, and no event requiring
notice to the PBGC under Section 302(f) of ERISA has occurred and is
continuing or could reasonably be expected to occur with respect to
any such Plan, in any case, that could reasonably be expected to
result, directly or indirectly, in any lien
7
15
being imposed on the property of the Transferor or the payment of any
material amount to avoid such lien. No Plan Event with respect to the
Transferor or any of its ERISA Affiliates has occurred or could
reasonably be expected to occur that could reasonably be expected to
result, directly or indirectly, in any lien being imposed on the
property of the Transferor or the payment of any material amount to
avoid such lien.
(p) Compliance With Laws. The Transferor is in
compliance in all material respects with all laws, regulations, rules
and orders applicable to it, its business and properties, and all
Trust Assets.
(q) Legal Name. The legal name of the Transferor is
"Fremont Funding Inc." and it does not do business under any different
or additional names.
(r) Transferor's Activities. The Transferor has no
subsidiaries and engages in no activities other than as contemplated
under this Agreement, any Supplements hereto, and the Purchase
Agreement.
The representations and warranties set forth in this Section 2.03
shall survive the transfer and assignment of the Advances to the Trust, and
termination of the rights and obligations of the Servicer pursuant to Section
10.01. Upon discovery by the Transferor, the Servicer, or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice thereof
to the others within three Business Days of such discovery.
Section 2.04 Representations and Warranties of the Transferor
Relating to this Agreement and any Supplement and the Advances; Reassignment of
Advances.
(a) Representations and Warranties. The Transferor (1)
hereby represents and warrants, as of the date of this Agreement with
respect to the Advances created on or prior to, and outstanding on,
such date, and with respect to Advances arising under Additional
Contracts created on or prior to, and outstanding on, the related
Addition Date and (2) shall be deemed to represent and warrant on each
day that any Advance is created with respect to the Advance or
Advances created on such date, that:
(i) the Transferor is not insolvent and will
not become insolvent after giving effect to the transactions
contemplated hereby, the Transferor is paying its debts when
they are due, and the Transferor will have adequate capital to
conduct its business after the consummation of the
transactions contemplated hereby;
(ii) The Transferor is the legal and beneficial
owner of all right, title, and interest in and to each such
Advance and each such Advance has been or will be transferred
to the Trust free and clear of any Lien other than Permitted
Liens;
8
16
(iii) all consents, licenses, approvals, or
authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected, or
given by the Transferor in connection with the transfer of
Trust Assets to the Trust have been duly obtained, effected,
or given and are in full force and effect;
(iv) The Transferor has clearly and
unambiguously marked all its computer records regarding such
Advances as the property of the Trust and shall maintain such
records in a manner such that the Trust shall have a perfected
interest in the Advances. This Agreement either constitutes a
valid transfer and assignment to the Trust of all right,
title, and interest of the Transferor in the Advances now
existing and hereafter created and in the Related Security and
Collections with respect thereto, all proceeds (as defined in
the UCC) of each Advance and such funds as are deposited from
time to time in the Collection Account and the Concentration
Accounts, upon the filing of the financing statements
described in Section 2.01 and upon notice to the Concentration
Banks and such property will be free and clear of any Adverse
Claim or interest of any Person (other than Permitted Liens),
subject to the interest conveyed to the Transferor as owner of
the Transferor Certificate or, if this Agreement does not
constitute a valid transfer and assignment of such property,
it constitutes a grant of a "security interest" (as defined in
the UCC as in effect in the State of California) in such
property to the Trust as provided in Section 2.02(c), which,
in the case of existing Advances and the Related Security and
Collections with respect thereto and the proceeds thereof, is
enforceable upon execution and delivery of this Agreement, and
which will be enforceable with respect to such Advances
hereafter created and the proceeds thereof upon such creation.
Upon the filing of any financing statements described in
Section 2.01 and, in the case of the Advances hereafter
created or transferred to the Trust and the proceeds thereof,
upon the creation or transfer thereof, the Trust shall have a
first priority perfected security or ownership interest in
such property except for Permitted Liens; provided, however,
that such security interest in proceeds shall remain perfected
after 10 days from their receipt by the Transferor only to the
extent that such proceeds are identifiable cash proceeds or
they come into the Trust's possession within the applicable
10-day period; and provided, further, that the Transferor
makes no representation or warranty with respect to the effect
of Section 9306(4) of the UCC on the rights of the Trust to
proceeds held by the Transferor at the time insolvency
proceedings are instituted by or against the Transferor of the
Advances to which the proceeds relate. Except as otherwise
provided in this Agreement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim
to or interest in the Collection Account;
(v) as of the beginning of business on each of:
the date hereof, each Designation Date, the Business Day
following the date the Servicer receives a
9
17
Termination Notice pursuant to Section 10.01, and the Business
Day following any Amortization Period Commencement Date,
Schedule 1 to this Agreement is and will be an accurate and
complete listing of all the Advances in all material respects
as of such day and the information contained therein with
respect to the identity of each Advance and the Unpaid Balance
existing thereunder is and will be true and correct in all
material respects as of such day;
(vi) each such Advance and Related Security and
Collections with respect thereto has been or will be
transferred to the Trust free and clear of any Adverse Claim
or interest of any Person except for Permitted Liens and
subject to the interest conveyed to the Transferor as owner of
the Transferor Certificate; and
(vii) each advance conveyed pursuant to Section
2.01 hereof is on the date of creation of such advance an
Advance and each Advance used to calculate Aggregate Eligible
Principal Advances will satisfy the requirements contained in
the definition of Eligible Advance.
(b) Notice of Breach. The representations and warranties
set forth in this Section 2.04 shall survive the transfer and
assignment of the Trust Assets to the Trust. Upon discovery by the
Transferor, the Servicer, or a Responsible Officer of the Trustee of a
breach of any of the representations and warranties set forth in this
Section 2.04, the party discovering such breach shall give written
notice to the others within three Business Days of such discovery.
(c) Transfer Upon Breach of Warranty. In the event of an
uncured breach with respect to an Advance of any of the
representations and warranties set forth in Sections 2.03(i) and
2.04(a)(ii) through (vi) above, such Advance (a "Reconveyed Advance")
shall be removed from the Trust (without further action) by deducting
the Unpaid Balance of each such Reconveyed Advance from the Advances
in the Trust and decreasing the Transferor Amount. On and after the
date of such removal, each Reconveyed Advance so removed shall not be
included in the calculation of any Invested Percentage, the Issuer
Percentage, the Transferor Percentage, any Invested Amount, the Issuer
Amount, or the Transferor Amount. To the extent that the exclusion of
a Reconveyed Advance from the calculation of the Transferor Amount
would cause the Transferor Eligible Amount to be reduced below the
Aggregate Subordinated Minimum Transferor Amount or would otherwise
not be permitted by any Requirement of Law, the Transferor shall make
or cause to be made a deposit in the Collection Account in immediately
available funds in an amount equal to the related Transfer Deposit
Amount remaining due by the close of business on the Business Day
following the first day the Transferor has knowledge of the existence
of a Reconveyed Advance. Such deposit shall be considered a payment
in full of the Reconveyed Advance during the Settlement Period to
which such payment relates and shall be treated as a Collection and
allocated in accordance with Section 4.03. Upon each removal of a
Reconveyed Advance from the Trust, the Trust shall automatically and
10
18
without further action be deemed to transfer, assign, set-over, and
otherwise convey to or upon the order of the Transferor, without
recourse, representation, or warranty, all the right, title, and
interest of the Trust in and to such Reconveyed Advance, all Related
Security and Collections with respect thereto and all proceeds thereof
(except for the deposit made pursuant to the preceding sentence). The
Trustee shall execute such documents and instruments of transfer or
assignment as shall be prepared by the Transferor, and shall take such
other actions as shall reasonably be requested by the Transferor, to
effect the conveyance of such Reconveyed Advance pursuant to this
Section. The obligation of the Transferor set forth in this Section,
or the automatic removal of such Advance from the Trust, as the case
may be, shall constitute the sole remedy respecting any breach of the
representations and warranties set forth in the above-referenced
Section with respect to any Advance available to the CP Issuer, the
Investor Certificateholders, or the Trustee on behalf of the Investor
Certificateholders.
(d) Reassignment of Trust Portfolio. In the event of a
breach in any material respect of any of the representations and
warranties set forth in Sections 2.03(a), (b), (c), or (d) or Section
2.04(a)(i), any of (i) the Trustee, (ii) the Liquidity Agent or the
Holder of the Variable Funding Certificate, or (iii) the Holders of
Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Undivided Interests held by Investor
Certificateholders of any Series, by notice then given in writing to
the Transferor and each Rating Agency (and to the Trustee and the
Servicer (and to Fremont Financial if Fremont Financial is not the
Servicer at that time) if given by such Certificateholders, the
Liquidity Agent or the Holder of the Variable Funding Certificate),
may direct the Transferor to purchase (A) all Series and the Variable
Funding Certificate (if notice is given by the Trustee), (B) the
Series of Certificates the Certificateholders of which have so
elected, or (C) the Variable Funding Certificate if the Liquidity
Agent or the Holder of the Variable Funding Certificate has so
elected, respectively, on or prior to the first Payment Date next
succeeding 60 days after such notice, or within such longer period as
may be specified in such notice, and the Transferor shall be obligated
to make such purchase or cause such purchase to be made on such
Payment Date on the terms and conditions set forth below; provided,
however, that no such purchase shall be required to be made if during
such period the representations and warranties contained in Section
2.03(a), (b), (c), or (d) or Section 2.04(a)(i) are true and correct
in all material respects as if made at such time. The Transferor
shall deposit in the Collection Account on the date of such
reassignment an amount equal to the Trust Fund Repurchase Price (as
described in the succeeding sentence) for the Investor Interest and
the Issuer Interest for distribution to the Certificateholders on the
next succeeding Payment Date applicable to each Certificate. The
Trust Fund Repurchase Price for such acquisition will be equal to, in
the case of the acquisition of the Variable Funding Certificate, the
sum of (1) the Issuer Amount at the end of the day on the Record Date
preceding the date such deposit is made, plus (2) an amount equal to
interest accrued but unpaid on the Variable Funding Certificate
through the Payment Date on which the distribution of such deposit is
scheduled to be made pursuant to Section 12.03; and in the case of the
acquisition of any Series of Investor Certificates, the sum of
11
19
(3) the Invested Amount with respect to such Series at the end of the
day on the Record Date preceding the date such deposit is made, plus
(4) an amount equal to interest at the applicable Certificate Rate
accrued but unpaid on the Investor Certificates of such Series through
the Payment Date on which the distribution of such deposit is
scheduled to be made pursuant to Section 12.03; provided, however,
that such deposit amount shall not be reduced by any reduction in such
price which results from such breach. Notwithstanding anything to the
contrary in this Agreement, the entire amount deposited in the
Collection Account shall be distributed to such Certificateholders on
such Payment Date pursuant to Section 12.03. Payment of such deposit
amount into the Collection Account in immediately available funds
shall otherwise be considered a payment in full of all or a portion of
the Advances, as applicable. If the Trustee or any Certificateholders
give notice directing the Transferor to purchase the Certificates as
provided above, the obligation of the Transferor to purchase such
Certificates pursuant to this Section 2.04(d) shall constitute the
sole remedy respecting an event of the type specified in the first
sentence of this Section 2.04(d) available to such Certificateholders
(or the Trustee on behalf of the Certificateholders).
Section 2.05 Addition of Contracts.
(a) The Transferor may, but shall not be obligated to,
designate from time to time during the Non-Amortization Period
additional contracts ("Additional Contracts") to be included as
Contracts.
(b) The Transferor agrees that any transfers of Advances
from Additional Contracts under subsection 2.05(a) shall satisfy the
following conditions:
(i) Any Additional Contract shall be an
Eligible Contract;
(ii) No selection process believed by the
Transferor to be materially adverse to the interests of the
Certificateholders, the CP Issuer or the Liquidity Banks was
used in selecting the Additional Contracts;
(iii) The Daily Report for the date any
Additional Contract is to be included in the Trust (each, an
"Addition Date") shall indicate the amount of Advances in
respect of such Contract;
(iv) On or prior to the Determination Date next
following any Settlement Period during which any Additional
Contracts have been included as Contracts (the "Designation
Date"), the Transferor shall have delivered to the Trustee a
written assignment (and the Trustee shall have accepted such
assignment on behalf of the Trust for the benefit of the
Certificateholders) in substantially the form of Exhibit N
(the "Assignment") and the Servicer shall have delivered to
the Trustee a computer file or microfiche list in the form of
Schedule 4 thereto
12
20
containing a true and complete list of all Additional
Contracts identified by account number and by Advance balance
in such Additional Contract as of the Addition Date, which
computer file, microfiche, or hard copy list shall be as of
the date of such Assignment incorporated into and made a part
of such Assignment and this Agreement and shall automatically,
without the need of any further action by any Person, replace
the then existing Schedule 4 thereto, and the Servicer shall
have clearly indicated on the related Addition Date in its
computer files that the Advances created in connection with
the Additional Contracts have been transferred to the Trust;
and
(v) The Transferor shall, on May 1 and November
1 of each year, deliver to the Trustee an Opinion of Counsel
with respect to the applicable Advances in the Additional
Contracts substantially in the form of Exhibit O; provided
however, that if the Advances from Contracts added since the
last Opinion of Counsel was delivered constitute 10% or more
of the Aggregate Eligible Advances at the end of a Settlement
Period, the Transferor shall also deliver such Opinion of
Counsel within 10 days of the end of such Settlement Period.
Section 2.06 Covenants of the Transferor. The Transferor hereby
covenants that:
During the term of this Agreement, and until (A) the Invested Amount
and the Issuer Amount are reduced to zero, (B) the Investor Certificateholders
and the Holder of the Variable Funding Certificate shall have received all
accrued interest, and (C) all amounts owed by the Transferor pursuant to this
Agreement have been paid:
(a) Compliance with Laws, etc. The Transferor shall duly
satisfy all obligations to be fulfilled on its part under or in
connection with the Advances, will maintain in effect all
qualifications required under Requirements of Law in order to properly
purchase and convey the Advances and other Trust Assets and will
comply in all material respects with all Requirements of Law in
connection with purchasing and conveying the Advances the failure to
comply with which would have a material adverse effect on the Trust or
its interests in the Advances.
(b) Preservation of Corporate Existence. The Transferor
(i) shall preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation,
and (ii) shall qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would, if not remedied, materially and adversely affect
the interests of the CP Issuer and the Investor Certificateholders
hereunder or in the Advances, or the ability of the Transferor or the
Servicer to perform its obligations hereunder and where such failure
shall remain unremedied for a period of 30 days or such failure shall
have a material adverse effect on the interests of the Trust or the
13
21
Certificateholders or the Trust's interests in the Advances, or the
ability of the Transferor or the Servicer to perform its obligations
hereunder.
(c) Audits. At any time and from time to time during the
Transferor's regular business hours, on reasonable prior notice and
for a purpose reasonably related to this Agreement, the Transferor
shall, in response to any reasonable request of the Trustee or the
Liquidity Agent, permit such Person, or its agents or representatives,
(i) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of the Transferor
relating to the Advances, the Related Security and the related
Contracts and (ii) to visit the offices and properties of the
Transferor for the purpose of examining such materials and to discuss
matters relating to the Advances or the Transferor's performance
hereunder with any of the officers or employees of the Transferor
having knowledge thereof. Any such examination or visit made pursuant
to this Section 2.06(c) shall be at the cost and expense of the party
or parties making such examination or visit; provided, however, that
each of (A) the Trustee or (B) the Liquidity Agent shall be entitled
to make one examination and visit annually each at the cost and
expense of the Transferor; provided, further, that after the
occurrence of a default under the Liquidity Agreement, the Trustee or
the Liquidity Agent shall be entitled to act in accordance with
Section 2.06(c)(i) and (ii) at the cost and expense of the Transferor,
without regard to the number of such actions taken.
(d) Continuous Perfection. The Transferor shall not
change its name, identity, or structure in any manner which might make
any financing or continuation statement filed hereunder misleading
within the meaning of Section 9402(7) of the UCC (or any other then
applicable provision of the UCC) unless the Transferor shall have
given the Trustee at least 90 days' prior written notice thereof and
shall have taken all action 60 days prior to making such change (or
made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance)
necessary or advisable to amend such financing statement or
continuation statement so that it is not misleading. The Transferor
shall not change its chief executive office or change the location of
its principal records concerning the Advances, the Related Security or
the Collections from the location specified in Section 2.03(j) unless
it has given the Trustee at least 60 days' prior written notice of its
intention to do so and has taken such action as is necessary or
advisable to cause the interest of the Trustee in the Advances and the
other Trust Assets to continue to be perfected with the priority
required by this Agreement. The Transferor will at all times maintain
its principal executive office and any other office at which it
maintains records relating to the Advances and the Related Security
within the United States of America.
(e) Extension or Amendment of Advances. The Transferor
shall not extend, amend, or otherwise modify the terms of any Advance,
or amend, modify, or waive any
14
22
term or condition of any Contracts related thereto in any manner which
would have a material adverse effect on the interests of the
Certificateholders.
(f) Reports. The Transferor shall furnish to the Trustee
and to each Rating Agency as soon as possible and in any event within
five Business Days after the occurrence of each Event of Termination
or the Transferor's knowledge of a Prospective Event of Termination,
the statement of a senior financial officer of the Transferor setting
forth the details of such Event of Termination or Prospective Event of
Termination and the action taken, or which the Transferor proposes to
take with respect thereto.
(g) Certain Documentation. The Transferor shall hold for
the account of the Trust (to the extent of its interest therein) any
document evidencing or securing an Advance and the related Contract,
other than instruments (as such term is used in the UCC), if any, that
shall have been delivered to the Trustee contemporaneously with the
conveyance to the Trust hereunder. Such holding by the Transferor
shall be deemed to be the holding thereof by the Trustee for purposes
of perfecting the Trust's rights therein as provided in the UCC.
(h) Assessments. The Transferor will promptly pay and
discharge all taxes, assessments, levies, and other governmental
charges imposed on it which may adversely affect any of the Advances
or the Trust's rights with respect thereto, unless such tax,
assessment, levy, or other government charge is being contested in
good faith and for which appropriate reserves are being maintained.
(i) Change in Lock-Box Banks, Concentration Banks, or
Instructions. The Transferor may permit Fremont Financial to add or
terminate any bank as a Lock-Box Bank or a Concentration Bank from
those listed in Exhibit K hereto or, make any change in the Lock-Box
Agreements or in its existing instructions to Obligors regarding
payments to be made to any Lock-Box Bank (so long as an Obligor
remains instructed to make payments on an Advance to a Lock-Box
Account, a Concentration Account or directly to the Servicer), but in
each case only upon execution of a new Lock-Box Agreement that directs
payments to be delivered to one of the Concentration Accounts. In the
event that the Transferor or Fremont Financial enters into a
Concentration Bank Agreement with a Concentration Bank with which the
Transferor or Fremont Financial had not entered into a Concentration
Bank Agreement at the date hereof, the Transferor shall deliver, or
cause Fremont Financial to deliver, to the Trustee and the Liquidity
Agent a copy of the executed Concentration Bank Agreement within three
Business Days of its execution. The Transferor shall not deposit any
of its funds in the Collection Account or any Concentration Account at
any time except for funds unconditionally required to be paid to, or
held for the benefit of, the Certificateholders hereunder or as
otherwise specifically provided pursuant to this Agreement.
15
23
(j) Further Action. The Transferor shall, from time to
time, execute and deliver to the Trustee any instruments, financing,
or continuation statements or other writings reasonably necessary or
desirable to maintain the perfection or priority of its ownership or
security interest in the Advances, the Related Security, and the
Collections under the UCC or other applicable law. The Transferor
shall, from time to time, execute and deliver or cause to be delivered
to the Obligors on the Advances any bills, statements and letters or
other writings necessary to carry out the terms and provisions of this
Agreement and to facilitate the collection of the Advances.
(k) Additional Indebtedness. The Transferor shall not
create, incur, assume, or suffer to exist any indebtedness (including,
without limitation, any guaranty) or expense (whether or not accounted
for as a liability) except (i) indebtedness hereunder, under the
Purchase Agreement, the Investor Certificates, Variable Funding
Certificates, or any agreements, contracts, or instruments which
relate thereto, (ii) indebtedness or other expense to its professional
advisers and its counsel, (iii) where that Person to whom such
indebtedness or expense will be owing has delivered to the Transferor
an undertaking that it will not institute against, or join any other
Person in instituting against, the Transferor any, bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or
other proceeding under any federal or state bankruptcy or similar law,
for one year and a day after the Variable Funding Certificate and all
Investor Certificates are paid in full; and (iv) other indebtedness
and expenses, not exceeding $4,750 at any one time outstanding, on
account of incidentals or services supplied or furnished to the
Transferor; provided, that the obligations of the Transferor to
Certificateholders shall be payable solely from the Trust Assets in
accordance herewith and that the Certificateholders shall not look to
any other property or assets of the Transferor in respect of such
obligations and that such obligations shall not constitute a claim
against the Transferor in the event that the Trust Assets are
insufficient to pay in full such obligations and that such obligations
are fully subordinated to the Transferor's obligations under the
Certificates.
(l) No Transfer. The Transferor agrees that it shall not
sell, assign, pledge, convey, or otherwise transfer any Advance or any
interest therein or any other Trust Asset, except for the transfer of
the Trust Assets to the Trust as provided herein.
(m) No Other Business. The Transferor agrees to engage
in no business other than the business contemplated hereunder, under
the Liquidity Agreement and under the Purchase Agreement.
(n) Enforcement and No Modification of Purchase
Agreement. The Transferor agrees to take all action necessary and
appropriate to enforce its rights and claims under the Purchase
Agreement. The Transferor agrees not to amend or modify the Purchase
Agreement without the prior written consent of the CP Issuer and of
the Holders of Investor Certificates evidencing fractional undivided
interests aggregating not less than a majority of the Invested Amount.
16
24
(o) Separate Business. The Transferor will not permit
its assets to be commingled with those of Fremont Financial or any
Affiliate of Fremont Financial, the Transferor shall maintain separate
corporate records and books of account from those of Fremont Financial
and its Affiliates, and the Transferor shall conduct its business from
an office separate from that of Fremont Financial. The Transferor
will conduct its business solely in its own name and will cause
Fremont Financial and its Affiliates to conduct their business solely
in their own names so as not to mislead others as to the identity of
the entity with which those others are concerned. The Transferor will
provide for its own operating expenses and liabilities from its own
funds, except that the organizational expenses of the Transferor may
be paid by Fremont Financial. The Transferor will not hold itself out
or permit itself to be held out as having agreed to pay or as being
liable for the debts of Fremont Financial or any of its Affiliates.
The Transferor shall not allow Fremont Financial and its Affiliates to
hold themselves out or permit themselves to be held out as having
agreed to pay or as being liable for the debts of the Transferor. The
Transferor will maintain an arm's length relationship with Fremont
Financial and its Affiliates with respect to any transactions between
the Transferor, on the one hand, and Fremont Financial or its
Affiliates, on the other. The Transferor will not permit Fremont
Financial to be involved with its "day-to-day" management and will not
provide for or allow to exist an agency relationship between the
Transferor and Fremont Financial, other than Fremont Financial's
obligations as Servicer hereunder. The Transferor shall at all times
maintain at least one director who shall not be an officer or
affiliate of Fremont Financial, which independent director's vote
shall be required for all fundamental changes and material policy
decisions of the Transferor, including the filing for relief under any
bankruptcy or insolvency laws. The Transferor's financial statements
shall reflect the separate corporate existence of the Transferor.
(p) Corporate Documents. The Transferor shall not amend
Articles Third, Fourth, or Fifth of its Certificate of Incorporation
or Article III, Section 14 or Article IV, Section 12 of its By-laws
without the prior consent of the CP Issuer and the Holders of Investor
Certificates evidencing fractional undivided interests aggregating not
less than 50% of the Investor Amount and the Transferor shall notify
each Rating Agency of the occurrence thereof.
(q) ERISA. The Transferor shall promptly give the
Trustee and the Liquidity Agent notice of the following events, as
soon as possible and in any event within 30 days after the Transferor
or any of its ERISA Affiliates knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan to which the Transferor or any of its ERISA
Affiliates contributed, or any withdrawal from, or the termination,
Reorganization, or Insolvency of any Multiemployer Plan to which the
Transferor or any of its ERISA Affiliates contributes or to which
contributions have been required to be made by the Transferor or such
ERISA Affiliate during the preceding five years or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Transferor or any of its ERISA Affiliates or any such
Multiemployer
17
25
Plan with respect to the withdrawal from, or the termination,
Reorganization, or Insolvency of, any such Plan or Multiemployer Plan.
(r) Purchase Agreement Notices, Waivers, Etc. The
Transferor (i) shall promptly give the Trustee and the Liquidity Agent
copies of any notices, reports, or certificates given or delivered to
the Transferor under the Purchase Agreement and (ii) shall not,
without the prior consent of the Liquidity Agent, the CP Issuer, and
Holders of Investor Certificates evidencing fractional undivided
interests aggregating not less than a majority of the Invested Amount,
enter into any amendment, supplement, or other modification to or
waiver of any provision of the Purchase Agreement except for any
extension of the Termination Date pursuant to the terms thereof.
Section 2.07 Authentication of Certificates. Pursuant to the
request of the Transferor, the Trustee has caused Certificates in authorized
denominations evidencing the entire beneficial ownership of the Trust to be
duly authenticated and delivered to or upon the order of the Transferor
pursuant to Section 6.02.
Section 2.08 Removal of Contracts.
(a) During the Non-Amortization Period, the Trustee shall
be deemed, during each Settlement Period, to have offered to the
Transferor automatically and without any notice to or action by or on
behalf of the Trustee the right to remove from the Trust all of the
Trust's right, title and interest in, to and under the Advances now
existing and hereafter created, all monies due or to become due and
all amounts received with respect thereto and all proceeds thereof in
or with respect to those Contracts designated by the Transferor (the
"Removed Contracts") at such time; provided, however, that the
Transferor may not make more than one such designation in any
Settlement Period. To accept such offer, the Transferor shall be
required to furnish to the Trustee written notice specifying the
approximate aggregate amount of Principal Advances covered by the
offer that the Transferor intends to accept.
(b) The Transferor shall be permitted to accept
reassignment of the Advances from Removed Contracts only upon
satisfaction of (1) the restrictions, conditions and requirements set
forth in Section 2.08(a), and (2) the following conditions:
(i) On the date specified by the Transferor for
removal of the Advances in Removed Contracts (the "Removal
Date") the Transferor shall deliver to the Trustee for
execution a written reassignment in substantially the form of
Exhibit P (the "Removal") and the Transferor shall deliver to
the Trustee, within three Business Days thereafter, a list
containing a true and complete list of all Removed Contracts
the Advances of which have been transferred to the Trust
specifying for each such Contract, as of the Removal Date, its
account number, its accrual status, the aggregate amount
available for borrowing with respect to such
18
26
Contract and the aggregate amount of Advances made under such
Contract. Such computer file, hard copy or microfiche list
shall be as of the date of such Removal incorporated into and
made part of this Agreement;
(ii) The Principal Advances of the Removed
Contracts shall not equal or exceed 10% of the aggregate
amount of Principal Advances in the Trust at such time;
(iii) The Transferor shall represent and warrant
as of each Removal Date that no selection procedures believed
by the Transferor to be materially adverse to the interests of
the Certificateholders, the CP Issuer or the Liquidity Banks
were utilized in selecting the Removed Contracts;
(iv) The removal of any Advances of any Removed
Contracts on any Removal Date shall not, in the reasonable
belief of the Transferor, cause an Event of Termination or a
Prospective Event of Termination to occur;
(v) The Transferor shall have delivered 20 days
prior written notice of the proposed Removal to each Rating
Agency and each Rating Agency shall not have notified the
Transferor that such Removal would result in a downgrading or
withdrawal of its then current rating of the Certificates; and
(vi) The Transferor shall have delivered to the
Trustee an Officer's Certificate confirming the items set
forth in (i) through (v) above. The Trustee may conclusively
rely on such Certificate, shall have no duty to make inquiries
with regard to the matters set forth therein and shall incur
no liability in so relying.
Upon satisfaction of the above conditions, and, upon notice to the
Trustee by the Transferor, the Trustee shall execute and deliver the Removed
Contracts to the Transferor, and the Advances from the Removed Contracts shall
no longer constitute a part of the Trust.
Section 2.09 Cancellation of the Certificates of any Series. The
Transferor may acquire any Certificate of any Series and deliver it to the
Trustee for cancellation under this Section. Upon such delivery, the Trustee
shall cancel such Investor Certificate as provided in Section 12.03(c). As a
result of such delivery and cancellation, the Transferor Amount shall be
increased by the principal amount of such Investor Certificate, and the
Invested Percentages with respect to such Series, the Minimum Aggregate
Principal Advances, and any other defined term herein or in the applicable
Supplement, the definition of which depends upon an assumption that such
Investor Certificate had been issued as a part of such Series, shall be
recomputed on the basis of the assumption that such Investor Certificate had
not been issued as part of such Series. Upon such delivery, such Certificate
shall be accompanied by an Officer's Certificate of the Transferor stating the
recomputed amounts of the defined terms referred to in the preceding sentence.
19
27
ARTICLE III
ADMINISTRATION AND SERVICING
OF ADVANCES
Section 3.01 Acceptance of Appointment and Other Matters Relating
to the Servicer.
(a) Fremont Financial agrees to act, and is hereby
appointed by the Trustee and the Transferor to act, as the Servicer
under this Agreement, and all Certificateholders, including the CP
Issuer and the Transferor, by their acceptance of the Certificates
consent to Fremont Financial acting as Servicer. The Servicer
services and administers the Advances and collects payments due under
the Advances for the benefit of the Transferor and in accordance with
its customary and usual servicing procedures for servicing advances
owned by it and comparable to the Advances and in accordance with the
Credit and Collection Policy and has the 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; provided,
however, that if Fremont Financial is no longer the Servicer, the
Servicer shall service the Advances in accordance with the standards
that would be employed by a prudent institution in servicing
comparable advances for its own account. Without limiting the
generality of the foregoing and subject to Section 10.01, the Servicer
is authorized and empowered: (i) to instruct the Trustee to make
withdrawals and payments from the Collection Account as set forth in
this Agreement or any Supplement, (ii) to execute and deliver, on
behalf of the Trust for the benefit of the Certificateholders, any and
all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with
respect to the Advances and, after the delinquency of any Advance and
to the extent permitted under and in compliance with applicable law
and regulations, to commence enforcement proceedings with respect to
such Advance, and (iii) to make any filings, reports, notices,
applications, registrations with, and to seek any consent or
authorizations from, the Securities and Exchange 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 laws.
(b) The Servicer will not and no Successor Servicer shall
be obligated to use separate servicing procedures, offices, employees,
or accounts for servicing the Advances 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
advances of the same type.
(c) The Servicer shall maintain fidelity bond coverage
insuring against losses through wrongdoing of its officers and
employees who are involved in the servicing of
20
28
Advances covering such actions and in such amounts as the Servicer
believes to be reasonable from time to time.
(d) Each of the Transferor and the Trustee hereby
appoints the Servicer as its agent to enforce its respective rights
and interests in and under the Advances, the related Contracts and the
Related Security. If Fremont Financial is not the Servicer, Fremont
Financial shall promptly deliver to the Servicer, and the Servicer
shall hold in trust for the Transferor and the Trustee in accordance
with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) that
evidence or relate to Advances.
(e) Provided no Event of Termination shall have occurred
and be continuing, the Servicer may, in accordance with the Credit and
Collection Policy, (i) extend the maturity or adjust the Unpaid
Balance of any Advance as the Servicer may determine to be appropriate
to maximize Collections thereof so long as, in the reasonable belief
of the Servicer, such action will not have a material adverse effect
on the Holders, and (ii) adjust the Unpaid Balance of any Advance to
reflect Credits relating to such Advance.
(f) Except as otherwise required by law, Credits and
Collections shall be applied to the Advances to which they relate.
(g) The Servicer has and shall provide all reports and
documentation required by Section 3.04.
(h) In the event that the Transferor is unable for any
reason to transfer Advances to the Trust in accordance with the
provisions of this Agreement (including, without limitation, by reason
of any court of competent jurisdiction ordering that the Transferor
not transfer any additional Advances to the Trust) then, in any such
event, (i) the Servicer hereby agrees to allocate and pay to the
Trust, after the date of such inability, all Collections with respect
to Advances transferred to the Trust prior to the occurrence of such
event, including all amounts received in respect of Contracts,
Advances under which have been transferred to the Trust, unless the
amounts received were specifically designated by the Obligor thereon
as payments in respect of obligations not constituting Advances (up to
an aggregate amount equal to the amount of Advances in the Trust as of
such date) and (ii) the Servicer hereby agrees to have such amounts
applied as Collections in accordance with Section 4.03. For the
purpose of the immediately preceding sentence of this Section 3.01(h),
the Servicer shall treat the first received Collections with respect
to the Advances as allocable to the Trust for the benefit of all
Certificateholders until the Trust shall have been allocated and paid
Collections in an amount sufficient to pay the aggregate amount of
Advances in the Trust as of the date of occurrence of such event.
(i) Obligors shall be instructed by the Transferor or the
Servicer to make all payments on the Advances to Lock-Box Accounts,
Concentration Accounts, or directly to
21
29
the Servicer. With respect to each Series of Investor Certificates
and the Variable Funding Certificate, on each Business Day during the
related Non-Amortization Period, the Servicer will (with respect to
all Gross Collections other than Gross Collections allocated pursuant
to the following sentence): first, withdraw the amounts from such
Concentration Accounts that are required to be deposited pursuant to
4.03(b) and deposit such amounts into the Collection Account; second,
the Servicer will withdraw any Gross Collections remaining after the
deposit into the Collection Account of such amounts to be used by the
Transferor to purchase, on behalf of the Trust, new Advances from the
Seller; and third, any amounts remaining after withdrawal for such
deposits and payments for such new Advances (such remaining amounts,
together with the amounts deposited to the Collection Account,
"Collections"), will be held for the benefit of the Trust in the
Concentration Accounts and shall be available for withdrawal on any
succeeding Business Day. With respect to each Series of Investor
Certificates and the Variable Funding Certificate during the related
Amortization Period, the related Invested Percentage or Issuer
Percentage of Gross Collections held in the Concentration Accounts of
each Series of Investor Certificates, or Variable Funding Certificate
then in its Amortization Period will, pending remittance by the
Servicer to the Collection Account, be held for the benefit of the
Trust and shall be deposited in the Collection Account not later than
the Business Day on which funds are available following receipt
thereof. Any payments on the Advances made by Obligors directly to
the Servicer shall be deposited by the Servicer to the appropriate
Concentration Bank not later than the Business Day following receipt
thereof. In connection with the purchase of new Advances pursuant to
clause second hereof, the purchase price payable by the Trust for any
new Advance is limited to the lesser of (i) an amount equal to the
unpaid principal balance of that portion of such new Advance that
constitutes an Eligible Advance and (ii) the portion of Gross
Collections available for investment in additional Advances and not
allocated for a Series of Investor Certificates or the Variable
Funding Certificate during the related Amortization Period.
(j) The Transferor and the Trustee shall provide to
Servicer a statement in the form of Exhibit L setting forth the powers
granted in the foregoing subsections (a) and (d) to be used by
Servicer in the performance of the duties contained in such subsection
(a).
Section 3.02 Servicing Compensation. As compensation for its
servicing activities hereunder and as reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be entitled to
receive a servicing fee in respect of each day prior to the termination of the
Trust pursuant to Section 12.01 (the "Servicing Fee"), payable in arrears on
each date specified in the applicable Supplement, equal to the product of: (i)
a fraction, the numerator of which is the actual number of days
22
30
in the measuring period specified in the applicable Supplement and the
denominator of which is 360, (ii) the greater of (A) the Weighted Average
Servicing Fee Percentage and (B) 2%, and (iii) the aggregate Unpaid Balances of
all Advances on the first day of the related Settlement Period. The share of
the Servicing Fee allocable to each Series or the Variable Funding Certificate
with respect to any date of payment shall be equal to the product of: (i) a
fraction, the numerator of which is the actual number of days in the measuring
period specified in the applicable Supplement and the denominator of which is
360, (ii) the applicable Servicing Fee Percentage for such Series or the
Variable Funding Certificate, and (iii) the Issuer Amount or the Invested
Amount of such Series, as appropriate, as of the date of determination for such
payment as specified in the applicable Supplement. The remainder of the
Servicing Fee shall be paid by the Transferor, or retained by the Servicer as
provided in Article IV, and in no event shall the Trust, the Trustee, the CP
Issuer, or the Investor Certificateholders be liable for the share of the
Servicing Fee to be paid by the Transferor. Any Servicing Fees are payable to
the Servicer solely pursuant to the terms of and to the extent amounts are
available for payment as provided in the related Supplement. In the event that
a Successor Servicer is appointed pursuant to Section 10.02 hereto, the
Servicing Fee with respect to such Successor Servicer shall, unless otherwise
agreed, be at least 2.0%.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.05, the reasonable fees and disbursements of independent
accountants, all other expenses incurred by the Servicer in connection with its
activities hereunder, and all other fees and expenses of the Trust not
expressly stated herein to be for the account of the Certificateholders;
provided that in no event is the Servicer, in its capacity as Servicer, liable
for any federal, state, or local income or franchise tax, or any interest or
penalties with respect thereto, assessed on the Trust, the Trustee, or the
Certificateholders except as expressly provided herein. In the event that the
Servicer fails to pay the amounts due to the Trustee pursuant to Section 11.05,
the Trustee shall be entitled to deduct and receive such amounts from the
Servicing Fee prior to the payment thereof to the Servicer. The Servicer shall
be required to pay expenses for its own account and shall not be entitled to
any payment or reimbursement therefor other than the Servicing Fee.
Section 3.03 Representations, Warranties, and Covenants of the
Servicer. Fremont Financial, as initial Servicer, and any Successor Servicer
by its appointment hereunder, hereby represents, warrants and covenants (except
that no representation, warranty or covenant is made by any Successor Servicer
with respect to paragraphs (l), (o), and (r) below), in the case of the initial
Servicer, as of the date of this Agreement, with respect to any Series and the
Variable Funding Certificate, as of the date of any Supplement and the related
Closing Date, and in the case of any Successor Servicer, as of the date of its
appointment and, with respect to any Series issued after such date, as of the
date of the related Supplement and the related Closing Date, in each case
unless otherwise stated in such Supplement:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing, and in good standing
under the laws of its state of incorporation, and has full corporate
power, authority, and legal right to execute, deliver, and perform its
obligations under this Agreement, and any Supplement and, in all
material respects, to own its property and conduct its business as
such properties are presently owned and as such business is presently
conducted.
(b) Due Qualification. The Servicer is duly qualified to
do business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has
23
31
obtained all necessary licenses and approvals in each jurisdiction in
which the failure to obtain such license or approval would have a
material adverse affect upon the Certificateholders or upon the
ability of the Servicer to perform its obligations under this
Agreement.
(c) Due Authorization. The execution, delivery, and
performance of this Agreement, and any Supplement, and the
consummation of the transactions provided in this Agreement and any
Supplement, have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
(d) Binding Obligation. This Agreement and any
Supplement constitute legal, valid, and binding obligations of the
Servicer, enforceable in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereinafter
in effect, relating to the enforcement of creditors' rights in
general, and with respect to any Successor Servicer which is a
national banking association, the rights of creditors of national
banks under United States law and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(e) No Violation. The execution and delivery of this
Agreement and any Supplement by the Servicer, the performance of the
transactions contemplated by this Agreement and any Supplement, and
the fulfillment of the terms hereof applicable to the Servicer, will
not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, or require any
consent, approval, or registration under, any Requirement of Law
applicable to the Servicer or any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Servicer is
a party or by which it is bound.
(f) No Proceeding. There are no proceedings or
investigations, pending or to the best knowledge of the Servicer,
threatened against the Servicer before any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality: (i) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or any Supplement, (ii) 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 or any Supplement, or
(iii) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or
any Supplement.
(g) Compliance with Requirements of Law. The Servicer
shall duly satisfy all obligations on its part to be fulfilled under
or in connection with the Advances and the Related Security, will
maintain in effect all qualifications required under Requirements of
Law in order to service properly the Advances and the Related Security
and will comply
24
32
in all material respects with all Requirements of Law in connection
with servicing the Advances and the Related Security the failure to
comply with which would have a material adverse effect on
Certificateholders.
(h) No Rescission or Cancellation. The Servicer shall
not permit any rescission or cancellation of an Advance or a Contract
except (i) as ordered by a court of competent jurisdiction or other
Governmental Authority or (ii) in the ordinary course of its business
and in accordance with the Credit and Collection Policy.
(i) Protection of Certificateholders' Rights. Except as
contemplated by Section 3.01(e), the Servicer shall take no action
which, nor omit to take any action the omission of which, would
substantially impair the rights of Certificateholders in any Advance
or the Related Security.
(j) All Consents Required. All approvals,
authorizations, consents, orders, or other actions of any Person or of
any Governmental Authority required in connection with the execution
and delivery by the Servicer of this Agreement and any Supplement, the
performance by the Servicer of the transactions contemplated by this
Agreement and any Supplement and the fulfillment by the Servicer of
the terms hereof and thereof, have been obtained; provided, however,
that the Servicer makes no representation or warranty regarding state
securities or "blue sky" laws in connection with the distribution of
the Certificates.
(k) Credit and Collection Policy. The Servicer: (i)
except as otherwise permitted in Section 3.01(e), shall not extend,
amend or otherwise modify the terms of any Advance, or amend, modify
or waive any term or condition of any Contract related thereto, in any
manner which would have a material adverse effect on the interests of
the Certificateholders or the Trust, including, but not limited to,
extending the due date, or impairing the collectibility of such
Advance, (ii) shall comply in all material respects with the Credit
and Collection Policy in regard to each Advance and the related
Contract, and (iii) shall not make any change in the Credit and
Collection Policy that could reasonably be expected to have a material
adverse effect on the collectibility of the Advances taken as a whole,
or the ability of the Servicer to perform its obligations hereunder.
(l) No Change in Ability to Service. With respect only
to the initial Servicer, since December 31, 1992, there has been no
material adverse change in the ability of the Servicer to service and
collect the Advances and the Related Security.
(m) Modification of Systems. The Servicer agrees to,
promptly after the replacement or any material modification of any
computer, automation, or other operating systems (in respect of
hardware or software) used to provide the Servicer's services as
Servicer or to make any calculations or reports hereunder, give notice
of any such replacement or modification to the Trustee and the
Liquidity Agent.
25
33
(n) Business Days. No later than December 1, of each
year, the Servicer shall furnish the Trustee with a list of days other
than Saturday and Sunday, on which the Servicer shall be closed during
the immediately succeeding year.
(o) Payments from Lock-Box Accounts. The Servicer or, if
Fremont Financial is no longer the Servicer, Fremont Financial, (i)
shall promptly, but in no event more than five days following the date
of deposit of any Gross Collections into the Lock-Box Accounts, remit
or cause to be remitted the payments on the Advances to a
Concentration Account and (ii) shall cause each Concentration Account
to be subject to a Concentration Bank Agreement.
(p) Keeping of Records and Books of Account. The
Servicer shall maintain and implement administrative and operating
procedures (including, without limitation, the ability to recreate
records evidencing the Advances in the event of the destruction of the
originals thereof), and keep and maintain all documents, books,
microfiche, computer records, and other information reasonably
necessary or advisable for the collection of all the Advances and the
Related Security. Such books, microfiche, and computer records shall
reflect all facts giving rise to the Advances and the Related
Security, all payments and credits with respect thereto, and the
computer records shall be clearly marked to show the interests of the
Trust in the Advances.
(q) Fidelity Bond. The Servicer shall maintain fidelity
bond coverage insuring against losses through wrongdoing of its
officers and employees who are involved in the servicing of the
Advances covering such actions and in such amounts as the Servicer
believes to be reasonable from time to time.
(r) Performance and Compliance with Fremont Financial's
Contracts. The Servicer shall or, if Fremont Financial is no longer
the Servicer, Fremont Financial shall timely and fully perform and
comply with all material provisions, covenants and other promises
required to be observed by it under the Contracts related to the
Advances.
(s) No Servicer Default. No Servicer Default has
occurred or is continuing.
(t) No Event of Termination. The Servicer represents and
warrants that no Event of Termination has occurred or is continuing.
In the event there is any breach of any of the representations,
warranties or covenants of the Servicer contained in Section 3.03(g), (h), (i),
or (o) with respect to any Advance and as a result thereof the rights of the
Trust in, to or under any such Advance or its proceeds are impaired or the
proceeds of any such Advance are not available to the Trust, then upon the
expiration of 60 days from the earlier to occur of the discovery of any such
event by the Servicer or receipt by the Servicer of written notice of such
event given by the Trustee (such notice to be given within three Business Days
of the discovery thereof by a Responsible Officer of the Trustee), the Servicer
26
34
shall accept the transfer of all the Advances as to which such event relates on
the terms and conditions set forth below; provided, however, that proceeds
shall not be deemed to be impaired hereunder for the sole reason that the
proceeds are held by the Servicer for more than the applicable period under
Section 9306(3) of the UCC; provided, further, that no such removal shall be
required to be made with respect to an Advance if, within such 60-day period,
such representations, warranties, or covenants with respect to such Advance
shall be true and correct or shall have been complied with, in all material
respects; and provided, further, that no Successor Servicer shall have any
obligation to repurchase any Advance as a result of any breach of the
representations, warranties, or covenants set forth in Section 3.03(o) or as a
result of any breach of the representations, warranties, or covenants due to
the actions or omissions of any prior Servicer. The Servicer shall accept the
reconveyance of an Advance and the Related Security and Collections with
respect thereto by making or causing to be made a deposit into the Collection
Account in immediately available funds on or prior to the Transfer Date
following the expiration of the 60-day period set forth in this Section in an
amount equal to the Transfer Deposit Amount for such Advances, which deposit
shall be treated as a Collection and allocated in accordance with Section 4.03.
Upon each such transfer of an Advance to the Servicer, the Trustee shall
automatically and without further action be deemed to transfer, assign, and set
over, and otherwise convey to or upon the order of the Servicer, without
recourse, representation or warranty, all right, title, and interest of the
Trust in and to such Advance, the Related Security, and Collections with
respect thereto and all proceeds thereof; and such Advance shall be treated by
the Trustee as collected in full as of the Settlement Period to which such
Transfer Deposit Amount relates. The Trustee shall execute such documents and
instruments of transfer or assignment as shall be prepared by the Servicer, and
shall take such other actions as shall be reasonably requested by the Servicer,
to effect the conveyance of any Advance pursuant to this Section. The
obligation of the Servicer to accept the transfer of any such Advances, the
Related Security, and Collections shall constitute the sole remedy respecting
any breach of the representations, warranties and covenants set forth in
Section 3.03(g), (h), (i), or (o) with respect to such Advances, the Related
Security and Collections available to Certificateholders or the Trustee on
behalf of Certificateholders.
Section 3.04 Reports and Records for the Trustee.
(a) Daily Records. Upon reasonable prior notice by the
Trustee, the Servicer shall make available at an office of the
Servicer selected by the Servicer for the inspection by the Trustee on
a Business Day during the Servicer's normal business hours a record
setting forth (i) the Gross Collections and the Collections on each
Advance and (ii) the amount of Advances for the Business Day preceding
the date of the inspection. The Servicer shall, at all times,
maintain its computer files with respect to the Advances in such a
manner so that the Advances may be specifically identified and, upon
reasonable prior request of the Trustee, shall make available to the
Trustee at an office of the Servicer selected by the Servicer on any
Business Day during the Servicer's normal business hours any computer
programs necessary to make such identification.
27
35
(b) Daily Report.
(i) On each Business Day other than a
Determination Date, the Servicer shall prepare, or if Fremont
Financial is not the Servicer, Fremont Financial shall prepare
on behalf of the Successor Servicer, a completed Daily Report.
(ii) The Servicer shall deliver to the Trustee,
the CP Issuer, the Depositary, the CP Dealer, and the
Liquidity Agent, the Daily Report by 12:00 noon (Los Angeles
time) on each Business Day with respect to activity in the
Advances for the prior Business Day (or, in the case of a
Daily Report delivered on the second Business Day following a
Saturday, Sunday, or other non-Business Day, the aggregate
activity for the preceding Business Day and such non-Business
Days).
(iii) Upon discovery of any error or receipt of
notice of any error in any Daily Report, the Servicer, the
Transferor, the Trustee, and the CP Issuer shall arrange to
confer and shall agree upon any adjustments necessary to
correct any such errors. Until correction of such error, the
Servicer or the Trustee, as the case may be, shall retain a
portion of such Collections equal to the amount of such error
as reported by the Servicer or Trustee (which amount may be
increased to the extent that the Trustee shall determine that
an additional amount would be necessary to cover any error) in
the Collection Account. Unless the CP Issuer, the Trustee,
the Liquidity Agent, or the Depositary has received actual
notice of any discrepancy, the CP Issuer, the Trustee, the
Liquidity Agent, and the Depositary may rely on such Daily
Report for all purposes hereunder.
(c) Settlement Statement. On each Determination Date,
the Servicer shall, or if Fremont Financial is not the Servicer, the
Successor Servicer shall with information provided by Fremont
Financial prior to 12:00 noon (Los Angeles time) on such day, deliver
to the Trustee, the CP Insurer, the Liquidity Agent, the Depositary,
and any CP Dealer the Settlement Statement for the related Settlement
Period.
Section 3.05 Annual Servicer's Certificate. The Servicer will
deliver to the Trustee, each Rating Agency then rating any Series, the
Liquidity Agent, and the Depositary on or before March 31 of each calendar
year, beginning with March 31, 1994, an Officers' Certificate substantially in
the form of Exhibit F stating that (a) a review of the activities of the
Servicer during the preceding fiscal year of the Servicer and of its
performance under this Agreement and any Supplement was made under the
supervision of the officers signing such certificate and (b) to the best of
such officers' knowledge, based on such review, the Servicer has fully
performed or has caused to be fully performed all of its obligations under this
Agreement and any Supplement throughout such year, or, if there has been a
default in the performance of any such obligation, specifying each such default
known to such officer and the nature and status thereof. A copy of
28
36
such certificate may be obtained by any Certificateholder by a request in
writing to the Trustee addressed to the Corporate Trust Office.
Section 3.06 Annual Independent Public Accountants' Servicing
Report. On or before March 31 of each calendar year, the Servicer will 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
(which report shall cover the period from March 1 of the prior calendar year to
and including December 31 of such prior calendar year) to the Trustee, the CP
Issuer, the Liquidity Agent, and each Rating Agency to the effect that: (a)
they have applied certain procedures agreed upon with the Servicer and examined
certain documents and records relating to the servicing of Advances under this
Agreement, and that, based upon such agreed-upon procedures, nothing has come
to the attention of such accountants that caused them to believe that the
servicing (including without limitation, the allocation of Collections) has not
been conducted in compliance with the terms and conditions set forth in
Sections 3.04, 3.05, 4.02, 4.03, 4.04, 4.05, and 12.01 of this Agreement and in
any Supplement, except for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such statement, and (b) they
have compared the mathematical calculations of the amount set forth in the
Settlement Statements forwarded by the Servicer pursuant to Section 3.04(c)
during the period covered by such report with the Servicer's monthly computer
reports which were the source of such amounts and that on the basis of such
comparison, such accountants have found 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. The Servicer shall
promptly forward a copy of such report to each Rating Agency. A copy of such
report may be obtained by any Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.07 Tax Treatment.
(a) The Transferor has entered into this Agreement, and
the Variable Funding Certificate and the Investor Certificates have
been (or will be) issued, with the intention that such Investor
Certificates and Variable Funding Certificate will qualify under
applicable tax law as indebtedness of the Transferor. The Transferor,
the Servicer, the CP Issuer by acceptance of the Variable Funding
Certificate, each Investor Certificateholder by acceptance of its
Investor Certificate, and each Certificate Owner by acquiring an
interest in an Investor Certificate agrees to treat the Variable
Funding Certificate or the Investor Certificates, as the case may be,
as indebtedness of the Transferor for purposes of federal, state, and
local income or franchise tax purposes and for purposes of any other
tax imposed on or measured by income. In accordance with the
foregoing, the Transferor agrees that it will report its income for
such federal, state, and local income or franchise tax purposes, or
for such other tax purposes, on the basis that it is the owner of the
Advances. Furthermore, the Trustee hereby agrees to treat the Trust
as a security device only, and shall not file income, franchise or
similar tax returns or obtain an employer identification number on
behalf of the Trust.
29
37
(b) Neither the Trustee nor the Transferor will make an
affirmative election to treat the arrangement between the Transferor
and the Certificateholders as an association taxable as a corporation
under Treasury Regulation Section 301.7701-3.
Section 3.08 Notices to Fremont Financial. The Servicer shall
deliver or make available to the Transferor each certificate and report
required to be prepared, forwarded, or delivered pursuant to Sections 3.04,
3.05, and 3.06.
Section 3.09 Adjustments. If the Unpaid Balance of any Eligible
Advance is adjusted by the Servicer for any Credit, the Transferor Eligible
Amount with respect to the Business Day following the Business Day on which
such adjustment takes place will be reduced by the amount of the adjustment.
In connection with such reduction, the amount of Principal Advances used in the
calculation of the Invested Percentage with respect to any Series and the
Issuer Percentage for the Business Day following the Business Day on which such
adjustment occurs shall also be reduced. In the event that such adjustment
would not be permitted by any Requirement of Law, the Transferor shall make or
cause to be made by the close of business on the Business Day following the
Business Day on which such adjustment occurs a deposit in the Collection
Account in immediately available funds in an amount equal to the amount of such
adjustment. Such amount shall be treated as a Collection and allocated in
accordance with Section 4.03.
Section 3.10 Covenant to Maintain Privileges. The Servicer shall
maintain all of its rights, powers and privileges material to the
collectibility of the Advances.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.01 Rights of Certificateholders. Each Series of
Investor Certificates shall represent an interest in the Trust and the right to
receive Collections and other amounts at the times and in the amounts specified
in this Article IV to be deposited in the Collection Account or paid to or on
behalf of the Investor Certificateholders (the "Investor Interest"). The
Variable Funding Certificate shall represent an interest in the Trust and the
right to receive Collections and other amounts at the times and in the amounts
specified in this Article IV to be deposited in the Collection Account or paid
to or on behalf of the Holder of the Variable Funding Certificate (the "Issuer
Interest"). The Transferor Certificate shall represent the remaining interest
in the Trust, including the right to receive Collections and other amounts at
the times and in the amounts specified in this Article IV to be paid to or on
behalf of the Holder of the Transferor Certificate (the "Transferor Interest");
provided, however, that such certificate shall not represent any interest in
the Collection Account (except to the extent provided in this Agreement), and
neither the Transferor nor the Servicer shall have the right to withdraw funds
from the Collection Account or to receive funds on deposit therein except as
and when provided by this Agreement.
30
38
Section 4.02 Establishment of Collection Account.
(a) The Collection Account. The Trustee, for the benefit
of Certificateholders, has caused to be established and maintained
with an Eligible Institution (which may be the Trustee) in the name of
the Trustee, on behalf of the Trust, a segregated trust account (the
"Collection Account"), bearing a designation clearly indicating that
the funds deposited therein are held in trust for the benefit of the
Certificateholders. The Collection Account shall be under the sole
dominion and control of the Trustee for the benefit of the
Certificateholders. If at any time the institution holding the
Collection Account ceases to be an Eligible Institution, the Trustee
shall within 30 days establish a new Collection Account meeting the
conditions specified above with an Eligible Institution, transfer any
cash and/or any investments to such new Collection Account and from
the date such new Collection Account is established, it shall be the
"Collection Account". Neither the Transferor nor the Servicer, nor
any person or entity claiming by, through, or under the Transferor or
Servicer, shall have any right, title, or interest in, or any right to
withdraw any amount from, the Collection Account except to the extent
provided in this Agreement. Pursuant to the authority granted to the
Servicer pursuant to Section 3.01(a), the Servicer shall have the
revocable power to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purposes of carrying out
the Servicer's duties hereunder. The Collection Account shall have
three ledger sub-accounts, consisting of a general account, a cash
collateral account with respect to any Series or the Variable Funding
Certificate (the "Cash Collateral Account") and an excess funding
account (the "Excess Funding Account"). Unless otherwise specified,
all references to the Collection Account herein shall be references to
the general account.
(b) Administration of the Collection Account. Funds on
deposit in the Collection Account, including the Excess Funding
Account and the Cash Collateral Account, shall at the direction of the
Servicer be invested by the Trustee in Permitted Investments that will
mature so that such funds will be available prior to the Payment Date
following such investment, except that in the case of funds
representing Collections, or, during the Amortization Period, Gross
Collections with respect to any Settlement Period, Permitted
Investments must mature so that such funds will be available no later
than the Business Day prior to the Payment Date for such Settlement
Period. Any funds on deposit in the Collection Account to be so
invested shall be invested solely in Permitted Investments. Any
request by the Servicer to invest funds on deposit in the Collection
Account shall be in writing and shall certify that the requested
investment is a Permitted Investment which matures at or prior to the
time required hereby. The Trustee shall not be liable for any loss
incurred in connection with any investment made hereunder, except with
respect to any investment in any Permitted Investment issued or
guaranteed by the Trustee in its individual capacity or with respect
to losses caused by the gross negligence or willful misconduct of the
Trustee with respect to such Permitted Investments. The Trustee shall
maintain possession of the negotiable instruments or securities, if
any, evidencing the Permitted Investments described in clause (a) of
the definition thereof from
31
39
the time of purchase thereof until maturity and shall maintain any
other form of Permitted Investment in the name of the Trust. All
interest and earnings (net of losses and investment expenses) on funds
on deposit in the Collection Account shall be paid by the Trustee to
the Servicer on each Payment Date. Neither the Transferor nor the
Servicer shall deposit any of their funds in the Collection Account at
any time except for funds unconditionally required to be paid on
account of the purchase price of Certificates or as specifically
provided pursuant to this Agreement.
(c) Identification of Collection Account. Schedule 2,
which is hereby incorporated into and made part of this Agreement,
identifies the Collection Account by setting forth the account number
of such account, the account designation of such account and the name
and location of the institution with which such account, has been
established.
Section 4.03 Daily Deposits and Collections.
(a) Collections. The Servicer may use any amounts in the
Concentration Accounts from time to time in excess of (i) the amounts
required to be deposited pursuant to Section 4.03(b)(I), and (ii) if
an Amortization Period has commenced with respect to any Series or
Variable Funding Certificate, the amounts required to be deposited
with respect to such Series pursuant to Section 4.03(b)(II), to
purchase additional Advances for the Transferor from the Seller on
behalf of the Trust, as set forth in Section 3.01(i) hereof. Payments
for such additional Advances shall be made to, or at the direction of,
the Seller directly from the respective Concentration Accounts. The
Servicer shall make all required deposits of Collections, or in the
event that an Amortization Period has commenced with respect to any
Series or Variable Funding Certificate, Gross Collections, to the
Collection Account for each Business Day as set forth in this Article
IV no later than the Business Day following the availability of such
Collections or Gross Collections.
(b) Deposits to Collection Account. On each Business
Day, the Servicer shall determine with respect to each Series and the
Variable Funding Certificate whether an Amortization Period has
commenced on or prior to such day.
(I) For each Series or the Variable Funding
Certificate that is in its Non-Amortization Period, the
Servicer shall determine the amounts required to be deposited
to the Collection Account with respect to such Series or
Variable Funding Certificate and shall deposit to the
Collection Account from amounts held in the Concentration
Accounts and available for deposit on such day an amount equal
to:
(i) the Daily Interest Amount for each
Series determined as set forth in each related
Supplement;
32
40
(ii) the Excess Funding Amount, as set
forth in Section 4.03(d) hereof;
(iii) the Daily Variable Funding
Certificate Deposit Amount with respect to the
Variable Funding Certificate;
(iv) the required deposit for payment to
or on behalf of any Enhancement, as set forth in
Section 4.03(e) hereof; and
(v) any amounts deposited for the benefit
of the Holder of the Transferor Certificate,
pursuant to Section 4.03(f) hereof.
(II) For each Series or the Variable Funding
Certificate in its Amortization Period, the Servicer shall
deposit to the Collection Account all amounts representing the
proportional interest in Gross Collections available on such
day for such Series or Variable Funding Certificate, which
shall be equal to the product of the related Invested
Percentage or Issuer Percentage, as applicable, and the Gross
Collections. Notwithstanding the foregoing, in the event that
the aggregate deposits with respect to any Series or Variable
Funding Certificate for any Settlement Period equals or
exceeds the amount necessary to pay in full the principal and
interest on such Series or Variable Funding Certificate on the
next Payment Date, the amounts of Gross Collections that would
otherwise be deposited for the benefit of such Series or
Variable Funding Certificate shall be deposited instead for
the benefit of any other Series or Variable Funding
Certificate in its Amortization Period, if any, and otherwise
such amounts shall be allocated as set forth in paragraph I of
this Section 4.03(b). The portion of Gross Collections not
allocated to a Series of Investor Certificates or the Variable
Funding Certificate shall be allocated to the Transferor
Interest; provided that all distributions to the Transferor
shall be subject to the restrictions set forth in Section
4.03(f).
(III) With respect to any deposits or withdrawals to
be made pursuant to this Section 4.03(b), the Servicer shall
direct the Trustee, in writing, to take such actions as may be
necessary and appropriate to effectuate such deposits or
withdrawals.
(c) Withdrawals and Payments From Collection Account. On
each Business Day, with respect to (1) the amounts on deposit in the
Collection Account and the Excess Funding Account, as of the beginning
of business on such day, and (2) the amounts to be deposited pursuant
to Section 4.03(b) with respect to the Variable Funding Certificate or
the Transferor Certificate, the Servicer shall determine the
following:
(i) the amount to be withdrawn from the Excess
Funding Account to be deposited into one or more Concentration
Accounts for the purchase of
33
41
Advances, which amount may not exceed the amount on deposit in
the Excess Funding Account that is in excess of the Excess
Funding Amount for such day;
(ii) the amount to be withdrawn from the
Collection Account and paid to the Holder of the Variable
Funding Certificate or the amount to be withdrawn from the
Collection Account to be deposited into one or more
Concentration Accounts, either as set forth in the related
Variable Funding Supplement; and
(iii) the amount to be withdrawn from the
Collection Account and paid to the Holder of the Transferor
Certificate.
The Servicer shall direct the Trustee, in writing, to take
such actions as may be necessary and appropriate to effectuate such
deposits or payments.
(d) Excess Funding Account. On each Business Day, the
Servicer shall allocate to the Excess Funding Account all amounts
being deposited on such day (minus that portion of such amounts being
deposited with respect to the Daily Interest Amounts and the Variable
Funding Certificate) until the Excess Funding Amount is equal to zero.
In the event of a Partial Amortization Event with respect to, and
during the Amortization Period for, any Senior Series as set forth in
the related Supplement, the applicable Excess Funding Account
Percentage of funds on deposit in the Excess Funding Account shall be
payable to the Investor Certificateholders of such Senior Series pro
rata (and, to the extent the Senior Series have been paid in full, to
the Investor Certificateholders of any Subordinated Series, pro rata).
During the Amortization Period for any Subordinate Series, payments of
the applicable Excess Funding Account Percentage of deposited funds
shall first be made to any Senior Series then entitled to payments of
principal prior to the release of any funds on deposit in the Excess
Funding Account to any such Subordinate Series; provided, however,
that funds shall be released from the Excess Funding Account for the
payment of principal of a Subordinate Series only in accordance with
the subordination provisions of this paragraph and the related Series
Supplement. In the event of a Partial Amortization Event with respect
to, and during the Amortization Period for, any other Series as set
forth in the related Supplement, the applicable Excess Funding Account
Percentage of funds on deposit in the Excess Funding Account shall be
payable to the applicable Investor Certificateholder of such Series,
pro rata or as otherwise provided in the applicable Supplement.
(e) Payments With Respect to Enhancements. To the extent
provided in the related Supplement or Variable Funding Supplement,
withdrawals or payments from the Concentration Accounts may be made on
a daily basis to fund, reimburse, or otherwise provide payment for any
Enhancement as provided in the related Supplement or Variable Funding
Supplement. As more fully provided in the applicable Supplement or
Variable Funding Supplement, the terms of a related Enhancement may
provide for deposits to,
34
42
and/or withdrawals from, the Collection Account to provide for the
full and timely payment of a Series or the Variable Funding
Certificate.
(f) Transferor Certificate. On each Business Day, unless
an Event of Termination has occurred and is continuing, the Transferor
may, but is not obligated to, direct the Servicer to deposit into the
Collection Account an amount not to exceed the excess of the
Transferor Eligible Amount (calculated after giving effect to the
deposits and payments set forth in clauses (i), (ii), (iii), and (iv)
of Section 4.03(b)(I)) over the sum of the Aggregate Subordinated
Minimum Transferor Amount and the aggregate of the Defaulted Amounts
for the current Settlement Period. Notwithstanding the foregoing, at
no time (whether during an Amortization Period or a Non- Amortization
Period for any Series) shall any distribution be made to the
Transferor if after giving effect to such distribution, either (i) the
Excess Funding Amount would be greater than zero or (ii) the total
amount on deposit in the Collection Account and the Concentration
Accounts is less than the sum of (1) an amount equal to two months of
interest on the outstanding Investor Certificates and the Variable
Funding Certificate based on the then-current Invested Amounts, Issuer
Amount, and Certificate Rates, and (2) an amount equal to two months
of Servicing Fees based on the then-current Invested Amounts and
Issuer Amount. If the Excess Funding Amount is greater than zero,
amounts otherwise distributable to Transferor shall be deposited into
the Excess Funding Account. To the extent that the Transferor elects
not to direct the Servicer to deposit such amounts, such amounts shall
be retained in the Concentration Accounts.
Section 4.04 Payments to Investor Certificateholders, the Holder
of the Variable Funding Certificate, and the Holder of the Transferor
Certificate.
(a) Daily Payments. The Trustee, acting in accordance
with written instructions from the Servicer, shall make the following
payments on each Business Day to the extent that there are amounts
sufficient therefore in the Collection Account:
(i) to the Holder of the Variable Funding
Certificate, payments on the Variable Funding Certificate
pursuant to the Variable Funding Supplement; and
(ii) to the Holder of the Transferor
Certificate, the amounts deposited into the Collection Account
at the direction of the Transferor pursuant to Section
4.03(b)(I)(v).
Payments with respect to the Variable Funding Certificate
shall be allocated to principal and interest in accordance with the
relevant provisions of the Variable Funding Supplement. Payments
under this Section 4.04(a) shall be made on each Business Day directly
to the Holder of the Variable Funding Certificate or the Transferor
Certificate, as appropriate.
35
43
(b) Monthly Payments. On each Determination Date, the
Servicer shall deliver written instructions to the Trustee to make the
following payments on the related Payment Date in the priorities set
forth below and to the extent that there are amounts sufficient
therefore in the Collection Account including for this purpose,
amounts allocated to the Cash Collateral Account and the Excess
Funding Account:
(i) to the Investor Certificateholders of each
Series, interest in an amount equal to the product of the
Monthly Certificate Rate in effect for the related Interest
Accrual Period and the Investor Interest as of the immediately
preceding Payment Date, as set forth in the related
Supplement;
(ii) to the Servicer, the Servicing Fee for the
related Settlement Period; and
(iii) with respect to the Payment Date relating
to a Settlement Period for which a Series of Investor
Certificates is in an Amortization Period, or relating to a
Settlement Period in which a Partial Amortization has occurred
the Trustee shall in accordance with the instructions from the
Servicer withdraw from the Collection Account and pay as
principal to the appropriate Certificateholders, either (A)
the amount allocated to such Series pursuant to Section
4.03(b)(II) above, plus the pro-rata portion of the amount
then on deposit in the Excess Funding Account, minus the
interest and the allocable portion of the Servicing Fee
payable on the related Payment Date, or (B) upon the
occurrence of a Partial Amortization Event, the amount then on
deposit in the Excess Funding Account.
Principal paid under this section shall reduce Invested
Interest for the related Series by a corresponding amount as of the
related Payment Date (referred to herein as "Amortization" or, in the
event of a payment from the Excess Funding Account pursuant to Section
4.04(b)(iii)(B), a "Partial Amortization"). The Trustee shall make
all requested withdrawals under this Section 4.04(b) on the related
Transfer Date and shall pay such amounts to the Paying Agent. On each
Payment Date, the Paying Agent shall distribute such amount to the
Certificateholders of such Series.
Section 4.05 Determination and Allocation of Charge-Off Amounts.
(a) Determination of Charge-Off Amount. On each
Determination Date, the Servicer shall determine with respect to the
related Settlement Period, the amount by which the Finance Charge
Collections plus Recoveries realized for the related Settlement Period
exceeds (or is less) than the sum of: (i) the interest payable or paid
on each Series and the Variable Funding Certificate with respect to
the related Interest Accrual Period or Settlement Period, (ii) the
Servicing Fee payable for such Settlement Period and, (iii) the
Defaulted Amount with respect to the related Settlement Period. To
the extent that such amount is a positive number, such amount is
referred to as "Excess Finance Charge
36
44
Collections," and, to the extent that such amount is a negative
number, such amount is referred to as the "Charge-Off Amount."
(b) Allocation of Charge-Off Amounts. On each
Determination Date the Servicer shall allocate pro-rata the Charge-Off
Amount with respect to the related Settlement Period based upon (1)
with respect to each Series, the Invested Percentage of such
Charge-Off Amount, (2) with respect to the Issuer Interest, the Issuer
Percentage of such Charge-Off Amount, and (3) with respect to the
Transferor Interest, the Transferor Percentage of such Charge-Off
Amounts, and shall apply such amounts as follows:
(i) With respect to the Charge-Off Amounts
allocated to each Series and the Variable Funding Certificate
to reduce the Subordinated Amount for such Investor or
Variable Funding Certificate until each such Subordinated
Amount is equal to zero;
(ii) then, to reduce the Investor Amount for
each Series, the Issuer Amount and the Transferor Amount, by
an amount equal to the portion of Charge-Off Amounts allocated
to such Series, Variable Funding Certificate or Transferor
Certificate, to the extent not allocated to the applicable
Subordinated Amount in clause (i) of this Section 4.05.
(c) Allocation of Excess Finance Charge Collections. On
each Determination Date the Servicer shall allocate with respect to
the related Settlement Period any Excess Finance Charge Collections as
follows:
(i) first, to reinstate the Investor Amount for
each Series and the Issuer Amount for the Variable Funding
Certificate (only to the extent that such amounts have been
reduced on a prior Determination Date and have not been
previously reinstated), up to an amount equal to the
proportional interest of Excess Finance Charge Collections
based upon the outstanding Investor Amount or Issuer Amount
of such Series or Variable Funding Certificate;
(ii) then to reinstate the Subordinated Amount
for each Series and the Variable Funding Certificate (only to
the extent that such amounts have been reduced on a prior
Determination Date and have not been previously reinstated),
until the Subordinated Amount for such Series and the Variable
Funding Certificate is equal to the Subordinated Minimum
Amount applicable to such Series or the Variable Funding
Certificate; and
(iii) then, to the extent of any remaining Excess
Finance Charge Collections, to reinstate the Transferor Amount.
37
45
Notwithstanding the foregoing, to the extent that any
Subordinated Amount, Investor Amount, Issuer Amount, or Transferor
Amount has not been reimbursed pursuant to this paragraph with its
proportional share of the Excess Finance Charge Collections available
on a Determination Date and there are additional Excess Finance Charge
Collections available due to the full reimbursement of the Investor
Amount of a Series, any excess amounts allocated to such reimbursed
Series shall be available for the reimbursement of the remaining
Subordinated Amounts, Investor Amount or Issuer Amount that have not
been reimbursed, in the proportions and priorities set forth above.
Section 4.06 Return of Funds. In the event that the Trustee shall
have received amounts in respect of payments made by any Person on an advance
or other obligation which has not been transferred to the Trust, the Trustee
shall, as soon as practicable and as instructed in the most recently delivered
Daily Report or Settlement Statement, forward such amounts in the manner
specified in writing by Fremont Financial to Fremont Financial or such other
Person as Fremont Financial designates and, pending the forwarding of such
amounts, hold such amounts in trust for Fremont Financial or such other Person
designated by Fremont Financial. The Trustee will, if requested in writing by
Fremont Financial acknowledge and confirm the foregoing to any Person
designated by Fremont Financial.
Section 4.07 Defaulted Amount. On each Business Day, the Servicer
will calculate the principal amount of: (i) Eligible Advances and (ii) Advances
that have been recorded as "non-accrual" in accordance with the Servicer's
normal servicing procedures, but which would be Eligible Advances if they were
not recorded as "non-accrual," for the then current, or related Settlement
Period, as appropriate, that will be charged off as uncollectible in accordance
with the Servicer's customary and usual policies and procedures (such amount
referred to as the "Defaulted Amount"); provided however, that if an Event of
Termination has occurred and is continuing, Defaulted Amounts shall not include
the principal amount of Advances that are attributable to loans classified as
non-accrual at the time the Event of Termination occurred. A portion of the
Defaulted Amount will be allocated to each Series of Certificateholders and the
Holder of the Variable Funding Certificate in an amount equal to the product of
that Series' Invested Percentage applicable during the related Settlement
Period and the amount of the Defaulted Amount for such Settlement Period in
accordance with Section 4.05 hereof. Notwithstanding the foregoing, if there
is a charge-off with respect to Advances under a Contract which have been
recorded as non-accrual in accordance with the Servicer's normal servicing
procedure, and (i) all of such Advances would be Eligible Advances if they were
not recorded as non-accrual, then the entire amount of such charge-off shall be
included in the Defaulted Amount, or (ii) a portion of such Advances would be
Eligible Advances if they were not recorded as non-accrual, then such
charge-off shall be allocated proportionately between (a) the portion of
Advances under such Contract which would be Eligible Advances (which allocation
will be included in the Defaulted Amount) and (b) the portion of Advances under
such Contract which would not be Eligible Advances (which allocation will not
be included in the Defaulted Amount) or (iii) none of such Advances would be
Eligible Advances if they were not recorded as non-accrual, then no portion of
such charge-off will be included in the Defaulted Amount.
38
46
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01 Distributions. On each Payment Date, the Paying
Agent shall distribute (in accordance with the Settlement Statement delivered
by the Servicer to the Trustee on the preceding Determination Date pursuant to
Section 3.04(c)): (i) to the Holder of the Variable Funding Certificate the
amount on deposit in the Collection Account and payable to the Holder of the
Variable Funding Certificate pursuant to Section 4.04(a)(i), and (ii) to each
Investor Certificateholder of record of any Series on the preceding Record Date
(other than as provided in Section 2.04(d) or in Section 12.03(b) hereof
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate Undivided Interests represented by Investor Certificates of
such Series held by such Certificateholder) of amounts on deposit in the
Collection Account as are payable to the Investor Certificateholders of such
Series pursuant to Sections 4.04(b)(i) and 4.04(b)(iii). Such distribution
shall be made by check mailed to each Certificateholder or, if so stated in any
Supplement, by wire transfer to each Certificateholder so qualified as stated
therein, except that if all Investor Certificates are registered in the name of
CEDE & Co., the nominee registrar for The Depository Trust Company, such
distribution to Investor Certificateholders shall be made in immediately
available funds to The Depository Trust Company. All payments on account of
principal and interest to Certificateholders shall be made from amounts on
deposit in the Collection Account.
Section 5.02 Monthly Investor Certificateholders' Statement;
Annual Tax Statement.
(a) On each Payment Date (or such other day of each
calendar month specified in the related Supplement), the Paying Agent
shall forward to each Investor Certificateholder of each Series, a
statement prepared by the Servicer substantially in the form of the
"Payment Date Statement" attached hereto as Exhibit H-1 prepared by
the Servicer setting forth the following information for the related
Settlement Period (which, in the case of (i), (ii), and (iv) below,
will be stated on the basis of an original principal amount of $1,000
per Certificate if the Amortization Period for such Series has
commenced):
(i) the aggregate amount of Collections and Gross
Collections, allocated to such Series during the related
Settlement Period;
(ii) the total amount distributed on the
Certificates;
(iii) the amount of such payment, if any, allocable
to principal on the Certificates;
39
47
(iv) the amount of such payment allocable to
interest on the Certificates;
(v) the Defaulted Amount for the related Settlement
Period;
(vi) the amount of Recoveries for the related
Settlement Period;
(vii) the amount of the Servicing Fee for the
related Settlement Period;
(viii) the "pool factor" for the Certificates as of
such Payment Date (consisting of an eleven-digit decimal
expressing the Invested Amount as of such Payment Date
(determined after taking into account any reduction in the
Invested Amount which will occur on such Payment Date) as a
proportion of the initial Invested Amount);
(ix) the Subordinated Amount as of the end of the
related Settlement Period;
(x) the Cash Collateral Account balance, if any, as
of the end of the related Settlement Period; and
(xi) the Excess Funding Account Balance as of the
end of the related Settlement Period.
(b) Annual Certificateholders' Tax Statement. On or
before January 31 of each calendar year, the Paying Agent shall
furnish, on behalf of the Transferor, a Form 1099 to each
Certificateholder for whom a Form 1099 is required to be filed under
the requirements of the Code. The Servicer shall provide to the
Paying Agent any information (including Original Issue Discount, as
defined in the Code, calculations) needed by the Paying Agent to
prepare a Form 1099 for any Certificateholder.
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates. The Investor Certificates of each
Series, the Variable Funding Certificate, and the Transferor Certificate shall
be substantially in the form of Exhibits A, B, and C, respectively, hereto
(with such changes as may be specified in the relevant Supplement) and shall,
upon issuance pursuant hereto or to Section 6.09, be executed and delivered by
the Transferor to the Trustee for authentication and redelivery as provided in
Section 6.02. Investor Certificates shall be issued in the minimum
denominations indicated in the related Supplement. The Variable Funding
Certificate and the Transferor Certificate shall each initially be issued in
one certificate to the CP Issuer and to the Transferor, respectively. Each
Certificate
40
48
shall be executed by manual or facsimile signature on behalf of the Transferor
by its Chairman of the Board, its President, its Vice Chairman of the Board, or
any Vice President. Certificates bearing the manual or facsimile signature of
the individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Transferor or the Trustee shall not be rendered
invalid, notwithstanding that such individual has ceased to be so authorized
prior to the authentication and delivery of such Certificates or does not hold
such office at the date of such Certificates. No Certificate shall be entitled
to any benefit under this Agreement or any applicable Supplement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by or on
behalf of the Trustee by the manual signature of a duly authorized signatory,
and such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Section 6.02 Authentication of Certificates. Contemporaneously
with the assignment and transfer of the Advances, whether now existing or
hereafter created and the other components of the Trust to the Trust, the
Trustee shall authenticate and deliver the Transferor Certificate to the
Transferor and upon the execution of any Supplement and the satisfaction of the
conditions provided in Section 6.09, shall authenticate and deliver the Series
of Investor Certificates or the Variable Funding Certificate to be issued
thereunder as provided in Section 6.09. The Certificates of each Series shall
be duly authenticated by or on behalf of the Trustee as provided for herein and
in the applicable Supplement, in authorized denominations equal to (in the
aggregate) the Initial Invested Amount of such Series specified in such
Supplement. As provided in any Supplement, Investor Certificates of any Series
may be issued and sold pursuant to an effective registration statement under
the Securities Act or pursuant to an exemption therefrom. In such former case,
such Series of Certificates may be delivered in book-entry form as provided in
Sections 6.11 through 6.12 and, in the latter case, may not be so delivered;
provided, however, that any non-registered Series may be delivered in
book-entry form to the extent that transfers of such book-entry certificates
are limited to transfers in accordance with Rule 144A under the Securities Act.
Further, if any such Series is sold pursuant to an exemption from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act or its
substantial equivalent (the "Private Placement Exemption") as stated in the
applicable Supplement, the Certificates of such Series may only be transferred
as provided in Section 6.03(e).
Section 6.03 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or
agency to be maintained by a transfer agent and registrar (which may
be the Trustee) (the "Transfer Agent and Registrar") in accordance
with the provisions of Section 6.03(c) a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may
prescribe, the Transfer Agent and Registrar shall provide for the
registration of each Series of the Investor Certificates, the
Transferor Certificate and the Variable Funding Certificate and of
transfers and exchanges of such Certificates as herein provided. The
Trustee is hereby
41
49
initially appointed Transfer Agent and Registrar for the purpose of
registering each Series of Investor Certificates, the Transferor
Certificate, and the Variable Funding Certificate and of registering
transfers and exchanges of the Investor Certificates, the Transferor
Certificate, and the Variable Funding Certificate as herein provided.
The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' written notice to the Transferor and the
Servicer; provided, however, that such resignation shall not be
effective and the Trustee shall continue to perform its duties as
Transfer Agent and Registrar until the Servicer has appointed a
successor Transfer Agent and Registrar acceptable to the Transferor.
The Trustee shall initially register the Transferor Certificate in the
name of the Transfer and the Variable Funding Certificate in the name
of the CP Issuer.
Upon surrender for registration of transfer of any Investor
Certificate of a Series at any office or agency of the Transfer Agent
and Registrar maintained for such purpose, the Transferor shall
execute, and the Trustee shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Investor
Certificates of such Series in authorized denominations of like
aggregate Undivided Interests in the Trust; provided, however, that
any Investor Certificate of any Series sold pursuant to the Private
Placement Exemption shall satisfy the conditions provided in Section
6.03(e) prior to such registration of transfer.
At the option of an Investor Certificateholder, Investor
Certificates of a Series may be exchanged for other Investor
Certificates of such Series of authorized denominations of like
aggregate Undivided Interests in the Trust upon surrender of the
Investor Certificates to be exchanged at any office or agency of the
Transfer Agent and the Registrar maintained for such purpose.
Whenever any Investor Certificates are so surrendered for exchange,
the Transferor shall execute, and the Trustee shall authenticate and
deliver, the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every
Investor Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent
and Registrar duly executed by the Certificateholder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer or exchange of Investor Certificates.
All Investor Certificates surrendered for registration of
transfer or exchange shall be canceled by the Transfer Agent and
Registrar and disposed of in a manner satisfactory to the Trustee.
(b) It is the understanding of the parties to this
Agreement that Fremont Financial has particular expertise in
performing the functions given by this Agreement to
42
50
the Servicer and that the Certificateholders will be purchasing the
Certificates relying on Fremont Financial's exercising such expertise
in performing such functions. Except as provided in Sections 6.09,
6.10, and 7.02 hereof, neither the Transferor Certificate nor any
interest represented thereby shall be sold, transferred, assigned,
exchanged, pledged, or otherwise conveyed.
(c) Notwithstanding anything herein to the contrary,
except for a pledge to one ore more financial institutions (or a
collateral agent acting on their behalf) providing liquidity or credit
support for the Commercial Paper as described in the Supplement
relating to the Variable Funding Certificate (which pledge, or the
exercise by the pledgee of its remedies pursuant thereto, shall not be
required to meet the conditions set forth in clauses (i) or (ii)
below), the Variable Funding Certificate may not be transferred,
assigned, exchanged, pledged, or otherwise conveyed unless (i) the
Trustee shall have received an Opinion of Counsel addressed to the
Trustee to the effect that the Certificates and the Commercial Paper
shall continue to be treated as debt for federal, California, and
Illinois income tax purposes and (ii) the Transferor has given its
written consent to such transfer, assignment, exchange, pledge, or
other conveyance. Notwithstanding anything herein to the contrary,
the Trustee shall not exchange the Variable Funding Certificate for
other Variable Funding Certificates of like aggregate Undivided
Interests in the Trust or register any transfer of the Variable
Funding Certificate except upon receipt of (A) certification of the
Liquidity Agreement upon notice to the Liquidity Agent that an event
of default has occurred under any credit agreement so specified or (B)
written instructions form the Transferor to effect such exchange or
registration of transfer upon receipt by the Transferor of reasonable
assurances that such proposed exchange or transfer complies with the
provisions of the Securities Act.
(d) In the event and for so long as any Investor
Certificate is issued as a Definitive Certificate, the Transfer Agent
and Registrar will maintain at its expense in the Borough of
Manhattan, the City of New York, an office or offices or agency or
agencies where Certificates may be surrendered for registration of
transfer or exchange.
(e) Unless a Series of Investor Certificates has been
registered under the Securities Act and qualified under all applicable
state securities laws, neither the Trustee nor the Transfer Agent and
Registrar shall register a transfer of any Investor Certificates of
such Series or any interest therein unless such transfer is to be made
in a transaction that does not require such registration or
qualification. Until such time as such Series of Investor
Certificates shall be registered pursuant to an effective registration
statement filed under the Securities Act, such Series of Investor
Certificates shall bear a legend to the effect set forth in the
preceding sentence. In the event that registration of a transfer is
to be made in reliance upon an exemption of the transfer from the
Securities Act, (i) the Trustee shall require, in order to assume
compliance with the Securities Act the transferee to deliver to the
Trustee and the Transferor an Opinion of Counsel reasonably
satisfactory to the Transferor and the Trustee that such transfer may
be made pursuant to an exemption
43
51
from the Securities Act and applicable state securities laws and (ii)
the Trustee shall require, in order to assure compliance with the
Securities Act, that the transferee certify to the Trustee in writing
the facts surrounding such transfer. The Holder of a Certificate
desiring to effect such transfer shall, and does hereby agree to
indemnify the Trustee, the Servicer, the Transferor, and the Trust
against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws. Any
such Opinion of Counsel and certification shall be obtained at the
expense of the prospective transferor or transferee, and not at the
expense of the Trustee or the Transferor, and shall be delivered to
the Trustee and the Transferor prior to or contemporaneously with any
such transfer. Neither the Transferor nor the Trustee shall be
obligated to register any Series of Investor Certificates under any
state securities laws or under the Securities Act or to take any other
action not otherwise required under this Agreement to permit the
transfer of such Series without registration. Notwithstanding the
foregoing, any Series of Certificates held in book-entry form that was
originally issued pursuant to a Private Placement Exemption may be
transferred in accordance with Rule 144A of the Securities Act without
the delivery of an Opinion of Counsel or the certification of the
transferee.
Notwithstanding anything to the contrary contained herein, in
no event shall an Investor Certificate of any Series which is either
(A) not sold pursuant to an effective registration statement under the
Securities Act or (B) not intended to be sold to more than 100
Persons, as evidenced by disclosure in the disclosure document with
respect thereto or any interest therein, be transferred to an employee
benefit plan, trust, or account subject to ERISA, or described in
Section 4975(e)(1) of the Code. Each Holder of an Investor
Certificate of any such Series, by its acceptance thereof, represents
and warrants that it is not: (1) an employee benefit plan (as defined
in Section 3(3) of ERISA) subject to the provisions of Title I of
ERISA, (2) a plan described in Section 4975(e)(1) of the Code, or (3)
an entity which is using assets to purchase such Investor Certificate
which constitute plan assets by reason of a plan's investment in such
Holder.
Section 6.04 Mutilated, Destroyed, Lost, or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss, or theft of any such Certificate and (b)
there is delivered to the Transfer Agent and Registrar, the Trustee and the
Transferor such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Transferor shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost, or stolen Certificate, a new
Certificate of like tenor and aggregate Undivided Interest, if applicable. In
connection with the issuance of any new Certificate under this Section 6.04,
the Trustee or the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other expenses
(including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.04 shall constitute complete
44
52
and indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.05 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar, and any agent of any of them shall treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.01
and for all other purposes whatsoever, and neither the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of them shall be
affected by any notice to the contrary; provided, however, that in determining
whether the holders of the requisite Undivided Interests have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Transferor, the Servicer, or any affiliate (as
defined in Rule 405 under the Securities Act) thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Certificates which a Responsible
Officer of the Trustee knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates and that the pledge is not the Transferor, the Servicer or an
affiliate (as defined above) thereof.
Section 6.06 Appointment of Paying Agent. The Paying Agent shall
have a rating of at least A by Standard & Poor's, and shall be a depositary
institution organized under the laws of the United States or any one of the
states thereof, including the District of Columbia. The Paying Agent shall
make distributions to Certificateholders from the Collection Account pursuant
to Section 5.01. Any Paying Agent shall have the revocable power to withdraw
funds from the Collection Account for the purpose of making distributions
referred to above. The Trustee may revoke such power and remove any Paying
Agent if the Trustee determines in its sole discretion that the Paying Agent
shall have failed to perform its obligations under this Agreement in any
material respect. The Paying Agent shall initially be the Trustee. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Trustee, the Servicer and the Transferor; provided, however, that such
resignation shall not be effective and the Paying Agent shall continue to
perform its duties until the Trustee has appointed, and such appointment has
been accepted by, a successor Paying Agent. The Trustee shall cause the
resigning Paying Agent and each successor Paying Agent to execute and deliver
to the Trustee an instrument in which such resigning or successor Paying Agent
or additional Paying Agent shall agree with the Trustee that, as Paying Agent,
such resigning or successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Trustee and upon removal shall also return all funds in its
possession to the Trustee. The provisions of Sections 11.01, 11.02, and 11.03
shall apply to the Paying Agent in its role as Paying Agent.
45
53
Section 6.07 Access to List of Certificateholders' Names and
Addresses. The Trustee shall furnish or instruct the Transfer Agent and
Registrar to furnish to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor from the Servicer or
the Paying Agent, respectively, in writing, a list in such form as the Servicer
or the Paying Agent may reasonably require, of the names and addresses of the
Certificateholders. If three or more Holders of Investor Certificates of any
Series or holders representing Undivided Interests in the Trust aggregating not
less than 5% of the Invested Amount of the Investor Certificates of any Series
(the "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Investor
Certificateholders of any Series with respect to their rights under this
Agreement or under the Investor Certificates and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the Trustee,
after having been indemnified to its satisfaction by such Applicants for its
costs and expenses, shall afford or shall instruct the Transfer Agent and
Registrar to afford such Applicants access during normal business hours to the
most recent list of Certificateholders held by the Trustee, within five
Business Days after the receipt of such application and indemnification. Such
list shall be as of a date no more than 30 days prior to the date of receipt of
such Applicants' request. Every Certificateholder agrees with the Trustee that
neither the Trustee, the Transfer Agent and Registrar, nor any of their
respective agents shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Certificateholders
hereunder, regardless of the sources from which such information was derived.
Section 6.08 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating
agents with respect to the Certificates, which authenticating agents
shall be authorized to act on behalf of the Trustee in authenticating
the Certificates in connection with the issuance, delivery,
registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an authenticating agent and
a certificate of authentication executed on behalf of the Trustee by
an authenticating agent. Each authenticating agent must be acceptable
to the Transferor.
(b) Any institution succeeding to all or substantially
all of the corporate agency business of an authenticating agent shall
continue to be an authenticating agent without the execution or filing
of any paper or any further act on the part of the Trustee or such
authenticating agent.
(c) An authenticating agent may at any time resign by
giving written notice of resignation to the Trustee and to the
Transferor. The Trustee may at any time terminate the agency of an
authenticating agent by giving notice of termination to such
authenticating agent and to the Transferor. Upon receiving such a
notice of resignation or upon such a termination, or in case at any
time an authenticating agent shall cease to be acceptable to
46
54
the Trustee or the Transferor, the Trustee promptly may appoint a
successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with
all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent. No
successor authenticating agent shall be appointed unless acceptable to
the Trustee and the Transferor.
(d) The Servicer agrees to pay, on behalf of the Trust,
to each authenticating agent from time to time reasonable compensation
for its services under this Section 6.08.
(e) The provisions of Sections 11.01, 11.02 and 11.03
shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section
6.08, the Certificates may have endorsed thereon, in lieu of the
Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
_________________________________
_________________________________
as Authenticating Agent
for the Trustee,
by
_________________________________
Authorized Officer
Section 6.09 Delivery of Additional Series of Investor
Certificates or the Variable Funding Certificate.
(a) Upon delivery to the Trustee of an Officer's
Certificate of the Transferor (i) requesting the authentication of a
new Series of Investor Certificates or requesting the authentication
of the Variable Funding Certificate and (ii) stating the date upon
which such Series or the Variable Funding Certificate is to be issued
(such date, the "Issuance Date" and such notice, the "Issuance
Notice") and certifying the satisfaction of the conditions stated in
this Section and Section 6.01, the Trustee shall, subject to Section
6.09(b), authenticate pursuant to Section 6.02 and deliver to or upon
the order of the Transferor on
47
55
such Issuance Date such new Series of Investor Certificates or the
Variable Funding Certificate. Any such Series of Investor
Certificates shall be substantially in the form of Exhibit A hereto
and shall bear, upon its face, the designation for such Series to
which it belongs so selected by the Transferor and set forth in the
related Supplement. The Variable Funding Certificate shall be in
substantially the form of Exhibit B hereto. All Investor Certificates
of any Series shall be identical in all respects except for the
denominations thereof and shall be equally and ratably entitled among
themselves and with the Variable Funding Certificate as provided
herein to the benefits of this Agreement and any Supplement thereof
without preference, priority or distinction on account of the actual
time or times of authentication and delivery, all in accordance with
the terms and provisions of this Agreement and such Supplement.
Notwithstanding anything contained in any Supplement, no new Series of
Investor Certificates issued pursuant to the provisions of this
Section shall adversely affect the method of allocating Gross
Collections or Collections of any other Series of Certificates or the
Variable Funding Certificate for any period over which such Series or
the Variable Funding Certificate shall be outstanding.
(b) On the Issuance Date, the Trustee shall authenticate
and deliver any such new Series (which may be subordinated to any
existing Series) or the Variable Funding Certificate upon delivery to
it of the following: (i) a Supplement substantially in the form of
Exhibit D and in form reasonably satisfactory to the Trustee executed
by the Transferor and the Servicer and specifying the items provided
in Section 6.09(c) and any other terms (the "Principal Terms"), (ii)
an Opinion of Counsel to the effect that for federal, California, and
Illinois income or franchise tax purposes (A) the newly issued
Certificates or the Variable Funding Certificate, as the case may be,
would either (1) be treated as indebtedness or (2) not cause the Trust
to be taxed as a corporation and (B) such issuance will not have a
material adverse effect on the tax characterization of the Trust, any
outstanding Series or the Variable Funding Certificate, (iii) written
confirmation from each Rating Agency that the issuance of such new
Series or the Variable Funding Certificate, as the case may be, will
not result in the Rating Agency's reducing or withdrawing its rating
on any then outstanding Series rated by it or would result in the
Rating Agency's reducing or withdrawing its rating on any then
outstanding Commercial Paper, and (iv) such other closing documents,
certificates and Opinions of Counsel as may be required by the
applicable Supplement. Notwithstanding the foregoing, the Trustee
shall not authenticate and deliver any new Series or the Variable
Funding Certificate, as the case may be, hereunder unless it also
receives an Officer's Certificate of the Transferor on or prior to the
Issuance Date stating: (a) the size of the Transferor Amount prior to
such issuance, (b) the Initial Invested Amount of the new Series or
Initial Issuer Amount in the case of the issuance of the Variable
Funding Certificate, and (c) the size of the Transferor Amount and the
Overcollateralization Enhancement Amount, in each case after giving
effect to such issuance, which amounts must be at least equal to the
Aggregate Subordinated Minimum Transferor Amount and the sum of
Subordinated Minimum Amounts for all outstanding Series of Senior
Certificates and the Variable Funding Certificate, respectively.
48
56
(c) The Principal Terms of any Series or the Variable
Funding Certificate shall include: (i) with respect to any Series, the
name or designation of the Series, (ii) the Initial Invested Amount
thereof or the Initial Issuer Amount, in the case of the issuance of
the Variable Funding Certificate, (iii) the Certificate Rate of such
Series (or the formula for the determination thereof, which may
provide that such rate is a floating rate) in the case of the issuance
of a Series of Investor Certificates, (iv) the method of allocating
Gross Collections for such Series or the Variable Funding Certificate,
as the case may be, (v) the Servicing Fee Percentage for such Series
or the Variable Funding Certificate, as the case may be, (vi) the
Series Termination Date, (vii) with respect to any Series, the Cash
Collateral Maintenance Amount, if any, (viii) the Repurchase Terms, if
any, (ix) with respect to such Series, the Subordinated Minimum
Amount, (x) the priority of such Series with respect to any other
Series, and (xi) with respect to any Series, the scheduled
Amortization Period Commencement Date.
(d) Any Supplement relating to an additional Series or
the Variable Funding Certificate may define or make provision with
respect to the Series or the Variable Funding Certificate to be issued
pursuant thereto for the following Principal Terms: (i) the
establishment of one or more accounts held at an Eligible Institution
for holding Collections on the Advances as specified in the Supplement
or for other purposes specified therein, (ii) the deposit of funds
into any such accounts, (iii) the use of any Enhancement with respect
to the Series, (iv) any extension or other evergreen feature with
respect to the Series, (v) any amendments or modifications of any
Events of Termination relating to such Series or the Variable Funding
Certificate, as the case may be, (vi) the closing date, (vii) the
rating agency or agencies, if any, rating the Series, (viii) the
interest payment date or dates and the date or dates from which
interest shall accrue, (ix) the name of the clearing agency, if any,
(x) the method for allocating collections to Certificateholders of
such Series and the method by which the principal amount of such
Series shall amortize or accrete, (xi) the names of any contracts to
be used by such Series and the terms governing the operation of any
such contracts, (xii) the base rate applicable to such Series, (xiii)
any deposit into any account provided for such Series, (xiv) the
rights, if any, of the holder of the Transferor Certificate that have
been transferred to the holders of such Series, (xv) the Pool Factor,
(xvi) whether such Series will be part of a group, (xvii) and any
other relevant terms, and (xviii) such other provisions which the
Transferor may, in its sole discretion, wish to incorporate and which
shall be acceptable to the Trustee insofar as they affect the rights,
duties and obligations of the Trustee hereunder or under any
Supplement.
Section 6.10 Issuer Additional Amounts. The CP Issuer will agree,
by its acceptance of the Variable Funding Certificate, that the Transferor may
from time to time prior to the commencement of the Amortization Period for the
Variable Funding Certificate require that the CP Issuer acquire as of any
Business Day an additional undivided interest in the Trust in a specified
amount (the "Issuer Additional Amount") in the manner set forth in the Variable
Funding Supplement. Any new Series or Issuer Additional Amounts shall be in an
amount not to exceed, after giving effect thereto, an amount equal to the
Aggregate Eligible Principal
49
57
Advances plus amounts on deposit in the Excess Funding Account minus the
Minimum Aggregate Principal Advances.
Section 6.11 Book-Entry Certificates. If provided in any
Supplement, the Investor Certificates of any Series, upon original issuance,
will be issued in the form of one or more typewritten Certificates representing
the Book-Entry Certificates, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Transferor. The Investor
Certificates of such Series shall initially be registered on the Certificate
Register in the name of CEDE & Co., the nominee of the Clearing Agency, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Investor Certificates, except as provided
in Section 6.13. Unless and until definitive, fully registered Investor
Certificates (the "Definitive Certificates") have been issued to Certificate
Owners pursuant to Section 6.13:
(a) the provisions of this Section 6.11 shall be in full
force and effect;
(b) the Transferor, the Servicer, the Paying Agent, the
Transfer Agent and Registrar and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Investor Certificates)
as the authorized representatives of the Certificate Owners;
(c) to the extent that the provisions of this Section 6.11
conflict with any other provisions of this Agreement, the provisions
of this Section 6.11 shall control; and
(d) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Pursuant to the Letter of Representations,
unless and until Definitive Certificates are issued pursuant to
Section 6.13, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Investor
Certificates to such Clearing Agency Participants.
Section 6.12 Notices to Clearing Agency. Whenever notice or other
communication to the Investor Certificateholders of any Series delivered as
provided in Section 6.11 is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant
to Section 6.13, the Trustee, the Servicer and the Paying Agent shall give all
such notices and communications specified herein to be given to Holders of the
Investor Certificates of such Series to the Clearing Agency.
Section 6.13 Definitive Certificates. If (a)(i) the Transferor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities under any Letter of
Representations, and (ii) the Transferor is unable to locate a qualified
50
58
successor, (b) the Transferor, at its option, advises the Trustee in writing
that, with respect to any Series, it elects to terminate the book-entry system
through the Clearing Agency, or (iii) after the occurrence of a Servicer
Default of any Series, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Invested Amount of such Series advise the
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Certificate Owners of such
Series, the Trustee shall notify the Clearing Agency of the occurrence of any
such event and of the availability of Definitive Certificates of such Series to
Certificate Owners of such Series requesting the same. Upon surrender to the
Trustee of the Investor Certificates of such Series by the Clearing Agency,
accompanied by registration instructions from such Clearing Agency for
registration, the Trustee shall authenticate and deliver Definitive
Certificates of such Series. Neither the Transferor, the Transfer Agent and
Registrar nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates of any
Series, all references herein to obligations with respect to such Series
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.01 Liability of the Transferor. The Transferor shall be
liable for each obligation, covenant, representation and warranty of the
Transferor arising under or related to this Agreement or any Supplement and
shall be liable only to such extent.
Section 7.02 Merger or Consolidation of or Assumption of the
Obligations of the Transferor.
(a) The Transferor shall not consolidate with or merge
into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person unless:
(i) the corporation formed by such consolidation
or into which the Transferor is merged or the Person which
acquires by conveyance or transfer the properties and assets
of the Transferor substantially as an entirety shall be
organized and existing under the laws of the United States of
America or any state or the District of Columbia, and, if the
Transferor is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and
delivered
51
59
to the Trustee, in form satisfactory to the Trustee, the
performance of every covenant and obligation of the Transferor
hereunder;
(ii) the Transferor shall have delivered to the
Trustee an Officers' Certificate of the Transferor and an
Opinion of Counsel addressed to the Trustee and each Rating
Agency, each stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply
with this Section 7.02 and that all conditions precedent
herein provided for relating to such transaction have been
complied with; and
(iii) each Rating Agency shall confirm in writing
that the rating of any outstanding Commercial Paper or Series
shall not have been reduced or withdrawn.
(b) The obligations of the Transferor hereunder shall not
be assignable nor shall any Person succeed to the obligations of the
Transferor hereunder except in each case in accordance with the
provisions of Section 7.02(a).
Section 7.03 Limitation on Liability of the Transferor. Subject
to Sections 7.01 and 7.04 with respect to the Transferor, except as
specifically provided herein or in any Supplement, neither the Transferor nor
any of the directors or officers or employees or agents of the Transferor in
its capacity as Transferor shall be under any liability to the Trust, the
Trustee, the Certificateholders or any other Person for any action taken or for
refraining from the taking of any action in the capacity as Transferor pursuant
to this Agreement whether arising from express or implied duties under this
Agreement or any Supplement or otherwise; provided, however, that this
provision shall not protect the 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. The Transferor and any
director or officer or employee or agent of the Transferor may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. Each of the Trustee
and the Servicer agrees that the obligations of the Transferor to the Trustee,
the Servicer, the Certificateholders and the Trust hereunder, other than the
obligation of the Transferor in respect of indemnities pursuant to Section 7.04
hereof, shall be payable solely from its interests in the Trust Assets in
accordance with the provisions of this Agreement and any Supplement and that
the Trustee, the Servicer, the Certificateholders and the Trust shall not look
to any other property or assets of the Transferor in respect of such
obligations, and that such obligations shall not constitute a claim against the
Transferor in the event that the Transferor's assets are insufficient to pay in
full such obligations, and that such obligations are fully subordinated to the
Transferor's obligations hereunder.
Section 7.04 Liabilities. By entering into this Agreement, the
Transferor agrees to pay, directly to the injured party, the entire amount of
any losses, claims, damages, or liabilities other than (a) those incurred by a
Certificateholder in the Investor Certificates of any Series or the Holder of
the Variable Funding Certificate, as a result of defaults or other losses
(including,
52
60
without limitation, Charge-Off Amounts attributable to the Certificateholders)
with respect to the Advances not specifically indemnified or represented to
hereunder and (b) any losses, claims, damages, or liabilities arising out of
the imposition by any taxing authority of any federal, state or local income or
franchise taxes or any other taxes imposed on or measured by income (including
any interest, penalties or additions with respect thereto) upon the Investor
Certificateholders or the Certificate Owners (including any liabilities, costs
or expenses with respect thereto) arising out of or based on the arrangements
created by this Agreement or any Supplement as though this Agreement and each
Supplement created a limited partnership among the Transferor and the
Certificateholders under the Revised Uniform Limited Partnership Act in effect
in the State of California in which the Transferor is a general partner. The
Transferor agrees to pay, indemnify, and hold harmless each Investor
Certificateholder of any Series and the Holder of the Variable Funding
Certificate against and from any and all such losses, claims, damages and
liabilities except to the extent that they arise from any action by such
Investor Certificateholder or the Holder of the Variable Funding Certificate
causing such losses, claims, damages or liabilities.
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.01 Liability of the Servicer. The Servicer shall be
liable under this Agreement only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.02 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 or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) 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 a corporation 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 qualify as an Eligible Servicer and
shall expressly assume, by an agreement supplemental hereto executed
and delivered to the Trustee in a form satisfactory to the Trustee,
the performance of every covenant and obligation of the Servicer
hereunder; and
(b) the Servicer has delivered to the Trustee an
Officer's Certificate of the Servicer and an Opinion of Counsel
addressed to the Trustee and each Rating Agency, each stating that
such consolidation, merger, conveyance or transfer complies with this
53
61
Section 8.02 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 8.03 Limitation on Liability of the Servicer and Others.
Subject to Section 8.04 with respect to the Servicer, except as otherwise
specifically provided herein or in any Supplement, neither the Servicer nor any
of the directors or officers or employees or agents of the Servicer shall be
under any liability to the Trust, the Trustee, the Certificateholders or any
other Person for taking any action or for refraining from taking of any action
in its capacity as Servicer, whether arising from express or implied duties
under this Agreement or any Supplement or otherwise; 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 or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
is not required by its duties to service the Advances in accordance with this
Agreement or any Supplement which in its reasonable opinion may involve it in
any expense or liability.
Section 8.04 Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trustee,
individually and in its capacity as trustee, (and each of its directors,
officers, employees, and agents) and the Trust, from and against any loss,
liability, expense, damage, or injury suffered or sustained by reason of any
acts, omissions, or alleged acts or omissions arising out of activities of the
Servicer pursuant to this Agreement and any Supplement, or arising out of the
Trustee's acceptance or performance of its duties hereunder, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and
other costs, or expenses incurred in connection with, or as a result of, any
actual or threatened action, proceeding or claim; provided, however, that the
Servicer shall not indemnify the Trustee or the Trust if such acts or omissions
or alleged acts or omissions constitute fraud, negligence, breach of fiduciary
duty, or willful misconduct by the Trustee; and provided, further, that the
Servicer shall not indemnify the Trust, the Investor Certificateholders or the
CP Issuer (1) for any liabilities, costs or expenses of the Trust with respect
to any action taken by the Trustee at the request of any Investor
Certificateholder or the Holder of the Variable Funding Certificate or (2) with
respect to any federal, state, or local income or franchise taxes or any other
taxes imposed on or measured by income (or any interest or penalties or
additions with respect thereto) required to be paid by the Trust or the
Investor Certificateholders or the Holder of the Variable Funding Certificate
in connection herewith to any taxing authority, or (3) with respect to any
liabilities, losses, costs, or expenses incurred by any Certificateholder in
the Investor Certificates of any Series or, in the case of the CP Issuer, the
Variable Funding Certificate as a result of defaults or other losses
(including, without limitation, Charge-Off Amounts attributable to the
Certificateholders) with respect to the Advances not specifically indemnified
or represented to hereunder arising out of or based on the arrangement created
by this Agreement or any Supplement. Subject to Sections 7.01 and 10.02(b),
any indemnification pursuant to this Section
54
62
shall only be from the assets of the Servicer. The provisions of such
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof. The provisions of this Section shall survive the
resignation or removal of the Trustee and the termination of the Trust.
Section 8.05 The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that: (a) the performance of its duties hereunder is no longer
permissible under applicable law and (b) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such 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 Trustee. No such
resignation shall become effective until the Trustee or a Successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 10.02 hereof; provided, that if within one hundred
twenty (120) days of the date that the Servicer notifies the Trustee of its
resignation in accordance with this Section 8.05 the Trustee does not receive
any bids from Eligible Servicers in accordance with Section 10.02(c) to act as
Successor Servicer, then the Trustee shall automatically be appointed Successor
Servicer in accordance with Section 10.02.
Section 8.06 Access to Certain Documentation and Information
Regarding the Advances. If access to the documents, books, microfiche,
computer records and other information regarding the Advances and the other
Trust Assets would be necessary or helpful to the Trustee, the Liquidity Agent
or their respective representatives in connection with the enforcement of the
rights of the Certificateholders or compliance with applicable statutes or
regulations, they shall have access without charge to such items 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 the
offices of the Servicer in Santa Monica, California. Nothing in this Section
8.06 shall derogate from the obligation of the Transferor, the Trustee or 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 8.06 as a result of such obligation shall not
constitute a breach of this Section 8.06.
Section 8.07 Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit and
Collection Policy and this Agreement or any Supplement; provided, however, if
any significant delegation is to a Person other than Fremont Financial or
another Affiliate of the Transferor or a Lock-Box Bank or is not in the
ordinary course of the Servicer's business, written notice shall be given to
each Rating Agency, the Trustee, the Liquidity Agent of such delegation. Any
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 8.05 hereof.
Section 8.08 Examination of Records. The Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any advance,
contract, or invoice held in its custody,
55
63
examine its computer and other records to determine that such advance,
contract, or invoice is not part of the Trust Assets.
Section 8.09 Successor Servicer Indemnification of Transferor. In
the event of a Service Transfer, the Successor Servicer will indemnify and hold
harmless the Transferor for any losses, claims, damages and liabilities of the
Transferor from fraud, negligence, breach of fiduciary duty, or any willful
misconduct of such Successor Servicer.
ARTICLE IX
EVENTS OF TERMINATION
Section 9.01 Events of Termination with Respect to any Series. If
any one of the following events shall occur at such time as there shall be at
least one outstanding Investor Certificate:
(i) to the extent set forth in the related
Supplement the Subordinated Amount for a Series falls below
percentage specified for such Series in such related
Supplement;
(ii) the Subordinated Amount for a Series is less
than the Subordinated Minimum Amount for such Series for any
three consecutive Settlement Periods as set forth in the
related Supplement;
(iii) to the extent set forth in the related
Supplement the Certificate Rate for a Series equals or exceeds
a maximum rate set forth in such Supplement for more than
three consecutive Interest Accrual Periods;
(iv) to the extent set forth in the related
Supplement the three month rolling average of the Accounts
Receivable Percentage falls below the percentage specified for
such Series in the related Supplement;
(v) A Partial Amortization Event shall have
occurred and be continuing, as set forth in the related
Supplement;
(vi) failure (A) on the part of the Transferor or
the Servicer to make any payment or deposit required by the
terms of this Agreement or any Supplement on or before five
Business Days after the date such payment or deposit is
required to be made herein; provided that on any day such a
failure shall be deemed not to constitute an event which may
be declared an Event of Termination if (1) no Servicing
Officer shall have actual knowledge of such failure and (2)
the aggregate amount which remains unpaid or has not been
deposited at least five Business Days
56
64
after the date such payments or deposits were required to be
made does not exceed $20,000; provided, further, a delay in or
failure to make a payment or deposit for a period of not more
than 10 Business Days shall not constitute an Event of
Termination until the expiration of such 10 Business Days if
such delay or failure could not be prevented by the exercise
of reasonable diligence by the Servicer and was caused by an
Act of God, acts of public enemies, acts of declared or
undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods, or similar causes, or (B) on the part of
the Transferor to duly observe or perform in any material
respect the covenant of the Transferor set forth in Section
2.06(b), or (C) on the part of the Transferor to duly to
observe or perform in any material respect any other covenants
or agreements of the Transferor set forth in this Agreement or
any Supplement, which, in the case of clause (C), continues
unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the
Trustee, or to the Transferor and the Trustee by the Holders
of Investor Certificates evidencing Undivided Interests
aggregating not less than 10% of the Invested Amount of the
applicable Series;
(vii) any representation or warranty made by the
Transferor in this Agreement or any Supplement or any
information contained in a computer file, microfiche list or
hard copy list required to be delivered by the Transferor
pursuant to Section 2.01 shall prove to have been incorrect in
any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period
of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Transferor by the Trustee, or to the Transferor
and the Trustee by the Servicer or Holders of Investor
Certificates evidencing Undivided Interests aggregating not
less than 10% of the Invested Amount of the related Series and
as a result of which the interests of the Certificateholders
of such Series are materially and adversely affected;
provided, however, that an Event of Termination pursuant to
this Section 9.01(vii) shall not be deemed to have occurred
hereunder with respect to any such Series if the Transferor
has accepted the transfer of the related Advance, or all of
such Advances, if applicable, in accordance with Section
2.04(c) during such 30-day period (or such longer period as
the Trustee may specify) in accordance with the provisions
hereof;
(viii) Fremont Financial or the Transferor
voluntarily seeks, consents to or acquiesces in the benefit or
benefits of any Debtor Relief Law or becomes a party to (or is
made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the
event such proceeding is involuntary, the petition instituting
same is not dismissed within 60 days of its filing; or the
Transferor shall become unable for any reason to transfer
Advances
57
65
to the Trust in accordance with the provisions of this
Agreement, or Fremont Financial shall become unable for any
reason to sell Advances to the Transferor in accordance with
the provisions of the Purchase Agreement;
(ix) the Trust shall become subject to registration
as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(x) the Trustee has not accepted a bid from an
Eligible Servicer within 60 days after any Servicer Default
with respect to which a Termination Notice has been issued;
(xi) Fremont Financial shall fail to make any
payment or deposit required to be made pursuant to the terms
of the Purchase Agreement on or before three Business Days
after the date such payment or deposit is required to be made
thereunder; provided that on any day such a failure shall be
deemed not to constitute an event which may be declared an
Event of Termination if (A) no Servicing Officer of Fremont
Financial shall have actual knowledge of such failure and (B)
the aggregate amount which remains unpaid or has not been
deposited at least three Business Days after the date such
payments or deposits were required to be made does not exceed
$20,000; provided, further, a delay in or failure to make a
payment or deposit for a period of five Business Days, shall
not constitute an Event of Termination until the expiration of
such five Business Days if such delay or failure could not be
prevented by the exercise of reasonable diligence by Fremont
Financial and was caused by an Act of God, acts of public
enemies, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes and no funds
shall have been remitted to Fremont Financial, the Servicer,
or the Transferor;
(xii) the Lien created in favor of the Trust shall
cease to be a perfected, first priority enforceable Lien
thereon, or the Transferor or Fremont Financial shall so
assert in writing (and the Advances are not reconveyed
pursuant to Section 2.04(c)); and
(xiii) the Servicer shall fail to deliver the Daily
Report or Settlement Statement to the Trustee and such failure
continues for a period of three Business Days after the date
on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the
Trustee or the Liquidity Agreement; provided, however, that a
delay in or failure to deliver any such Daily Report or
Settlement Statement for a period of five Business Days shall
not constitute an Event of Termination until the expiration of
such five Business Days if such delay or failure could not be
prevented by the exercise of reasonable
58
66
diligence by the Servicer and was caused by an Act of God,
public enemies, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricane, earthquakes, floods or similar
causes;
then, (1) in the case of any event described in subparagraph (x), (xi) or
(xiii), either the Trustee or the Holders of Investor Certificates of the
related Series evidencing Undivided Interests aggregating more than 50% of the
related Invested Amount of such Series by notice then given in writing to the
Transferor and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that an Event of Termination has occurred (A)
with respect to all Series of Certificates (in the case of notice given by the
Trustee) or (B) such Series (in the case of notice given by Investor
Certificateholders) as of the date of such notice, or (2) in the case of any
event described in subparagraphs (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii), (ix), or (xii) an Event of Termination with respect to all Series shall
occur without any notice or other action on the part of the Trustee or any
Certificateholder immediately upon the occurrence of such event. Upon the
occurrence of an Event of Termination with respect to a Series, the
Amortization Period for such Series shall commence and principal shall be due
and payable in accordance with Article IV hereof and the related Supplement.
Section 9.02 Events of Termination with Respect to the Variable
Funding Certificate. If any one of the following events shall occur during the
Non-Amortization Period with respect to the Variable Funding Certificate:
(i) failure (A) on the part of the Transferor or
the Servicer to make any payment or deposit required by the
terms of this Agreement or the related Supplement on or before
three Business Days after the date such payment or deposit is
required to be made herein or in such Supplement; provided
that on any day such a failure shall be deemed not to
constitute an event which may be declared an Event of
Termination if (1) no Servicing Officer shall have actual
knowledge of such failure and (2) the aggregate amount which
remains unpaid or has not been deposited at least three
Business Days after the date such payments or deposits were
required to be made does not exceed $20,000; provided,
further, a delay in or failure to make a payment or deposit
for a period of five Business Days, shall not constitute an
Event of Termination until the expiration of such five
Business Days if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Transferor or
the Servicer and was caused by an Act of God, acts of public
enemies, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes and no funds
shall have been remitted to Fremont Financial or the
Transferor, or (B) on the part of the Transferor to duly
observe or perform in any material respect the covenant of the
Transferor set forth in Section 2.06(b), or (C) on the part of
the Transferor to duly observe or perform in any material
respect any other covenants or agreements of the Transferor
set forth in this Agreement or the related Supplement, which,
in the case of clause (C),
59
67
continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the
Trustee, the CP Issuer or the Liquidity Agent;
(ii) any representation or warranty made by the
Transferor in this Agreement or the Variable Funding
Supplement or any information contained in a computer file,
microfiche list or hard copy list required to be delivered by
the Transferor pursuant to Section 2.01 shall prove to have
been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material
respect for a period of 30 days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the
Trustee, or to the Transferor and the Trustee by the Servicer,
CP Issuer or the Liquidity Agent, and as a result of which the
interests of such Person giving such notice are materially and
adversely affected; provided, however, that an Event of
Termination pursuant to this Section 9.02(ii) shall not be
deemed to have occurred hereunder with respect to the Variable
Funding Certificate if the Transferor has accepted the
transfer of the related Advance, or all of such Advances, if
applicable, in accordance with Section 2.04(c) during such
30-day period (or such longer period as the Trustee may
specify) in accordance with the provisions hereof;
(iii) Fremont Financial or the Transferor
voluntarily seeks, consents to or acquiesces in the benefit or
benefits of any Debtor Relief Law or becomes a party to (or is
made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as creditor or claimant, and in the
event such proceeding is involuntary, the petition instituting
same is not dismissed within 60 days of its filing; or the
Transferor shall become unable for any reason to transfer
Advances to the Trust in accordance with the provisions of
this Agreement, or Fremont Financial shall become unable for
any reason to sell Advances to the Transferor in accordance
with the provisions of the Purchase Agreement;
(iv) the occurrence of a "program termination
event" under the Liquidity Agreement, if any;
(v) the CP Issuer or the Trust shall become
subject to registration as an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(vi) the Trustee has not accepted a bid from an
Eligible Servicer within 60 days after any Servicer Default
with respect to which a Termination Notice has been issued;
60
68
(vii) Fremont Financial shall fail to make any
payment or deposit required to be made pursuant to the terms
of the Purchase Agreement on or before three Business Days
after the date such payment or deposit is required to be made
thereunder; provided that on any day such a failure shall be
deemed not to constitute an event which may be declared an
Event of Termination if (x) no Servicing Officer shall have
actual knowledge of such failure and (y) the aggregate amount
which remains unpaid or has not been deposited at least three
Business Days after the date such payments or deposits were
required to be made does not exceed $20,000; provided,
further, a delay in or failure to make a payment or deposit
for a period of five Business Days, shall not constitute an
Event of Termination until the expiration of such five
Business Days if such delay or failure could not be prevented
by the exercise of reasonable diligence by Fremont Financial
and such delay or failure was caused by an Act of God, acts of
public enemies, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar
causes and no funds shall have been remitted to Fremont
Financial, the Servicer, or the Transferor;
(viii) the Liquidity Agreement (or any provision
thereof material to the Holders of the Variable Funding
Certificate) shall fail to be in full force and effect or the
security interest purported to be created by the Security
Agreement shall fail to be a valid and enforceable perfected
first priority security interest in favor of the collateral
agent thereunder in any of the collateral thereunder or the CP
Issuer, Fremont Financial or any of its Affiliates shall so
assert in writing;
(ix) the Lien created in favor of the Trust on all
the Trust Assets shall cease to be a perfected, first priority
enforceable Lien thereon, or the Transferor, the CP Issuer or
Fremont Financial shall so assert in writing (and the Advances
are not reconveyed pursuant to Section 2.04(c)); and
(x) the Servicer shall fail to deliver the Daily
Report or Settlement Statement to the Trustee and such failure
continues for a period of three Business Days after the date
on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the
Trustee or the Liquidity Agreement; provided, however, that a
delay in or failure to deliver any such Daily Report or
Settlement Statement for a period of five Business Days shall
not constitute an Event of Termination until the expiration of
such five Business Days if such delay or failure could not be
prevented by the exercise of reasonable diligence by the
Servicer and was caused by an Act of God, public enemies, acts
of declared or undeclared war, public disorder, rebellion or
sabotage, epidemics, landslides, lightning, fire, hurricane,
earthquakes, floods or similar causes;
61
69
then, (1) after any applicable grace period, in the case of any event described
in subparagraph (i), (ii), (vi), or (vii), or (x), any of the Trustee, the
Holder of the Variable Funding Certificate or the Liquidity Agent by notice
then given in writing to the Transferor and the Servicer (and to the Trustee if
given by the Holder of the Variable Funding Certificate or the Liquidity
Agreement) may declare that an Event of Termination has occurred as of the next
succeeding Payment Date with respect to the Variable Funding Certificate, or
(2) in the case of any event described in subparagraphs (iii), (iv), (v),
(viii), or (ix), an Event of Termination with respect to the Variable Funding
Certificate shall occur as of the next succeeding Payment Date without any
notice or other action on the part of the Trustee or any other Person,
immediately upon the occurrence of such event. Notice of any Event of
Termination with respect to the Variable Funding Certificate known to a
Responsible Officer of the Trustee shall be given by the Trustee to the Persons
specified in the applicable Supplement. Upon the occurrence of an Event of
Termination with respect to the Variable Funding Certificate, the Amortization
Period for the Variable Funding Certificate shall commence and principal shall
be due and payable in accordance with Article IV hereof and the related
Supplement.
Section 9.03 Additional Rights Upon the Occurrence of Certain
Events.
(a) If an event specified in Section 9.01(viii) or
9.02(iii) shall occur (a "Dissolution Event"), the Transferor shall on
the day of such Dissolution Event (the "Appointment Date") immediately
cease to transfer Advances to the Trust and shall within 5 days of
such Appointment Date give notice to the Trustee of such Dissolution
Event. Notwithstanding any cessation of the transfer to the Trust of
additional Advances, Advances transferred to the Trust prior to the
occurrence of such Dissolution Event and Gross Collections in respect
of Advances whenever created, and amounts accrued in respect of
Advances, shall continue to be a part of the Trust. Within 15 days of
the day on which a Responsible Officer of the Trustee first receives
written notice of the occurrence of the Appointment Date, the Trustee
shall (i) publish a notice in Authorized Newspapers that a Dissolution
Event has occurred and that the Trustee intends to sell, dispose of or
otherwise liquidate the Advances on commercially reasonable terms and
in a commercially reasonable manner and (ii) send written notice to
the Holder of the Variable Funding Certificate and the Investor
Certificateholders describing the provisions of this Section 9.03 and
requesting instructions from such Holders. Unless within 60 days from
the day written notice pursuant to clause (ii) above is first sent,
the Trustee shall have received written instructions from (a) the
Holder of the Variable Funding Certificate and (b) with respect to
each outstanding Series, the Holders of Investor Certificates
representing Undivided Interests aggregating more than 51% of the
Certificates of such Series, to the effect that such
Certificateholders disapprove of the liquidation of the Advances and
wish to continue receiving Advances under the Trust as before such
appointment, or unless the Trustee shall have received an Opinion of
Counsel addressed to the Trustee to the effect that any such sale,
disposition or liquidation is prohibited by law, the Trustee shall
proceed to sell, dispose of, or otherwise liquidate the Advances in a
commercially reasonable manner and, to the best of its ability, on
commercially
62
70
reasonable terms, which shall include the solicitation of competitive
bids. The Trustee may obtain, and shall be fully protected in relying
on, a prior determination from a bankruptcy trustee or receiver that
the terms and manner of any proposed sale, disposition or liquidation
hereunder are commercially reasonable. The provisions of Section
9.01, 9.02, and 9.03 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or
liquidation of the Advances pursuant to subsection (a) above, net of
all reasonable expenses incurred by the Trustee in connection with
such sale, liquidation or other disposition, which shall be paid to
the Trustee from such process, shall be treated as Gross Collections
and shall be allocated in accordance with the provisions of Section
4.03. On the day following the Payment Date on which such proceeds
are distributed to the Holder of the Variable Funding Certificate, any
class of subordinated certificates and the Investor
Certificateholders, the Trustee shall distribute all remaining amounts
to the Transferor and the Trust shall terminate.
(c) Upon the occurrence of a Dissolution Event, if the
Trustee has not sold the Advances as provided herein within 120 days
after the Appointment Date, the Trustee, upon the written instructions
of the Holder of the Variable Funding Certificate or all of the
Holders of Investor Certificates of any Series shall sell, dispose of
or otherwise liquidate Advances on a best efforts basis in an amount
equal to (i) in the case of any such Series of Investor Certificates,
the product of the Aggregate Principal Advances and the aggregate
percentage Undivided Interest in the Trust represented by all Series
so instructing the Trustee and (ii) in the case of the Variable
Funding Certificate, the product of the Aggregate Principal Advances
and the Undivided Interest in the Trust represented by the Variable
Funding Certificate; provided that the Rating Agency has advised the
Transferor and the Trustee in writing that such sale shall not
adversely affect the then existing rating of any such Series or the
Commercial Paper, if the Holder of the Variable Funding Certificate
has not so instructed the Transferor. The proceeds from such sale,
net of all reasonable expenses incurred by the Trustee in connection
with such sale, liquidation or other disposition, which shall be paid
to the Trustee, shall be deposited in the Collection Account by the
Trustee and shall be treated as Collections of Advances allocable to
the Series or to the Variable Funding Certificate so instructing the
Transferor and shall be allocated in accordance with Section 4.03.
Upon distribution of such proceeds in accordance with Article IV, such
Series or the Variable Funding Certificate shall be deemed paid in
full and no further amounts shall be allocated thereto under Section
4.03.
ARTICLE X
SERVICER DEFAULTS
Section 10.01 Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
63
71
(a) failure by the Servicer to make any payment,
transfer, or deposit or to give instructions or notice to the 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 or any
Supplement;
(b) failure on the part of the Servicer duly to observe
or perform any other covenants or agreements of the Servicer set forth
in this Agreement or any Supplement which has a material adverse
effect on the Certificateholders, which continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee, or to the Servicer and the Trustee by the
CP Issuer, if any (or the Liquidity Agent), if the Holder of the
Variable Funding Certificate is adversely affected thereby, or by the
Holders of Investor Certificates evidencing Undivided Interests in the
Trust aggregating not less than 50% of the Invested Amount of any
Series adversely affected thereby; or assignment by the Servicer of
its duties under this Agreement, except as permitted by Sections 8.02,
8.05 and 8.07;
(c) any representation, warranty, or certification made
by the Servicer in this Agreement, any Supplement or in any
certificate delivered pursuant to this Agreement or any Supplement
shall prove to have been incorrect when made and the failure of such
representation, warranty or certification has a material adverse
effect on the rights of the Certificateholders for a period of 45 days
after the date on which written notice thereof, requiring the same to
be remedied, was given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the CP Issuer, the Liquidity Agent, or by
the Holders of Investor Certificates evidencing Undivided Interests in
the Trust aggregating not less than 50% of the Invested Amount of any
Series adversely affected thereby; or
(d) the Servicer shall voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law or
becomes a party to (or be made the subject of) any proceeding provided
for under any Debtor Relief Law, other than as creditor or claimant,
and in the event such proceeding is involuntary, the petition
instituting same is not dismissed within 60 days of its filing;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either (i) the Trustee, (ii) the CP Issuer (but
not if the CP Issuer is a subsidiary, or other Affiliate of the Servicer),
(iii) the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Invested Amount of all outstanding Series, or
(iv) the Liquidity Agent, by notice then given in writing to the Servicer and
the Transferor (with a copy thereof to each Rating Agency) and to the Trustee
if given by a Person other than the Trustee (a "Termination Notice"), may
terminate the rights and obligations of the Servicer as Servicer under this
Agreement and in and to the Advances and the proceeds thereof.
64
72
After receipt by the Servicer of a Termination Notice, and on the date
that a Successor Servicer shall have been appointed pursuant to Section 10.02,
all authority and power of the Servicer under this Agreement and each
Supplement shall pass to and be vested in a Successor Servicer (a "Service
Transfer"); and, without limitation, the 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 Trustee, the Transferor
and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder,
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Advances and the Related Security
provided for under this Agreement, including, without limitation, 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
Advances and the Related Security, and in assisting the Successor Servicer.
The Servicer shall promptly transfer its electronic records relating to the
Advances and the Related Security to the Successor Servicer, 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 Advances and the Related Security in the manner and
at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section 10.01 shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Successor Servicer shall be required
to enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interests.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.01(a) for a period of five Business Days, or under Section
10.01(b) or Section 10.01(c) for a period of 30 Business Days shall not
constitute a Servicer Default until the expiration of such five or 30 Business
Days 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, acts of public enemies, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, or similar causes and no funds have been
remitted to Fremont Financial or the Transferor. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its obligations
in a timely manner in accordance with the terms of this Agreement and each
Supplement, and the Servicer shall provide the Trustee, if any, the Liquidity
Agent, the Rating Agencies, the Transferor, the CP Issuer, and the Investor
Certificateholders with an Officer's Certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations. The Servicer shall immediately notify the Trustee in
writing of any Servicer Default. In connection with any Service Transfer, all
reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Advances and the Related Security to the
Successor Servicer and amending this Agreement to reflect such succession as
Successor Servicer pursuant to this Section 10.01 and
65
73
Section 10.02 shall be paid by the Servicer upon presentation of reasonable
documentation of such costs and expenses.
Section 10.02 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a
Termination Notice pursuant to Section 10.01, the Servicer shall
continue to perform all servicing functions under this Agreement and
any Supplement until the date specified in the Termination Notice or
as otherwise specified by the Trustee in writing or, if no such date
is specified in such Termination Notice, or as otherwise specified by
the Trustee, until a date mutually agreed upon by the Servicer and
Trustee. The Trustee shall as promptly as possible after the giving
of a Termination Notice appoint with the consent of the Liquidity
Agent, each Rating Agency (which consent shall not be unreasonably
withheld), an Eligible Servicer as a successor servicer (the
"Successor Servicer") and shall accept its appointment by a written
assumption and agreement to perform all of the duties, obligations and
liabilities of the Servicer hereunder in a form acceptable to the
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, or upon the occurrence of the
events specified in Section 8.05, the Trustee without further action
shall automatically be appointed the Successor Servicer. The Trustee
may delegate any or all of its servicing obligations to an affiliate
or agent of the Servicer in accordance with Section 3.01(a).
Notwithstanding the above, the Trustee shall, if it is legally unable
so to act, petition a court of competent jurisdiction to appoint any
established institution having a net worth of not less than
$25,000,000. The Trustee shall promptly give notice to each Rating
Agency and the Liquidity Agent of the appointment of a Successor
Servicer upon such appointment.
If the Trustee is unable to obtain any bids from Eligible
Servicers and the Servicer delivers an Officer's Certificate to the
effect that it cannot in good faith cure the Servicer Default which
gave rise to a transfer of servicing, and if the Trustee is legally
unable to act as Successor Servicer, then the Trustee shall give the
Transferor the right of first refusal to purchase the Advances on
terms equivalent to the best purchase offer as determined by the
Trustee.
(b) Upon its appointment, the Successor Servicer shall be
entitled to all of the rights and privileges of the Servicer hereunder
and 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 and any Supplement to the Servicer
shall be deemed to refer to the Successor Servicer except for the
references in Section 3.03, as applicable, which shall continue to
refer to Fremont Financial.
(c) In connection with any Termination Notice, the
Trustee will review any bids which it obtains from Eligible Servicers
and shall be permitted to appoint any Eligible
66
74
Servicer submitting such a bid as a Successor Servicer for servicing
compensation not in excess of the Servicing Fee permitted for a
Successor Servicer pursuant to Section 3.02; provided, however, that
Fremont Financial shall be responsible for payment of all servicing
compensation in excess of the Servicing Fee, and that no such monthly
compensation paid out of Collections shall be in excess of the
Servicing Fee permitted to a Successor Servicer pursuant to Section
3.02.
(d) All authority and power granted to the Successor
Servicer under this Agreement shall automatically cease and terminate
upon termination of the Trust pursuant to Section 12.01, and shall
pass to and be vested in the Transferor and, without limitation, the
Transferor is hereby authorized and empowered to execute and deliver,
on behalf of the Successor Servicer, as attorney-in-fact or otherwise,
all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes
of such transfer of servicing rights. The Successor Servicer agrees
to cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct
servicing of the Advances and the Related Security, including, without
limitation, all authority over Collections then held by the Successor
Servicer or which shall thereafter be received by the Successor
Servicer. The Successor Servicer shall promptly transfer its
electronic records relating to the Advances to the Transferor in such
electronic form as the Transferor may reasonably request and shall
promptly transfer all other records, correspondence and documents to
the Transferor in the manner and at such times as the Transferor shall
reasonably request. To the extent that compliance with this Section
10.02 shall require the Successor Servicer to disclose to the
Transferor information of any kind which the Successor Servicer deems
to be confidential, the Transferor shall be required to enter into
such customary licensing and confidentiality agreements as the
Successor Servicer shall deem necessary to protect its interests.
Section 10.03 Notification to Certificateholders. Upon the
occurrence of any Servicer Default, the Servicer shall give prompt written
notice thereof to the Trustee and, upon receipt of such written notice, the
Trustee shall give notice to the CP Issuer, each Rating Agency, and the
Investor Certificateholders at their respective addresses appearing in the
Certificate Register and to the Liquidity Agent. Upon any termination or
appointment of a Successor Servicer pursuant to this Article X, the Trustee
shall give prompt written notice thereof to the Liquidity Agent and to the CP
Issuer and the Investor Certificateholders at their respective addresses
appearing in the Certificate Register.
Section 10.04 Waiver of Past Defaults. The CP Issuer, if it is
adversely affected by any default by the Servicer or the Transferor, and the
Holders of Investor Certificate evidencing Undivided Interests aggregating more
than 50% of the Invested Amount of any Series materially adversely affected by
any default by the Servicer or Transferor may, on behalf of the CP Issuer or
all Certificateholders of such affected Series, respectively, waive any default
by the Servicer or the Transferor in the performance of their obligations
hereunder and its consequences, except a default in the failure to make any
required deposits or payments of interest or principal
67
75
with respect to any Series of Certificates. 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.
ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee.
(a) The Trustee, prior to the occurrence of a Servicer
Default of which a Responsible Officer of the Trustee has knowledge
and after the curing of all Servicer Defaults which may have occurred,
undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If to the knowledge of a
Responsible Officer of the Trustee a Servicer Default has occurred
(which has not been cured or waived), the Trustee shall exercise such
of the rights and powers vested in it by this Agreement or any
Supplement, as the case may be, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such prudent person's own
affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders, or
other instruments furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of this Agreement
or any Supplement, shall examine them to determine whether they
substantially conform on their face to the requirements of this
Agreement or any Supplement. The Trustee shall give prompt written
notice to the Certificateholders of any material lack of conformity of
any such instrument to the applicable requirements of this Agreement
or any Supplement discovered by the Trustee which would entitle a
specified percentage of the Certificate-holders to take any action
pursuant to this Agreement or any Supplement; provided, however, that
the Trustee shall not have any duty to recalculate or verify any
information provided to it by the Servicer (except that the (i)
Trustee shall provide notice to the Servicer of any error in any such
document of which it has actual knowledge, and (ii) the Trustee shall
verify the mathematical accuracy of the total "Eligible Assets" set
forth in each Settlement Statement), nor shall it be bound to make any
investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, or other paper or document, unless
requested in writing so to do by the CP Issuer if it could be
adversely affected if the Trustee does not perform such acts, or by
Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Invested Amount of any Series which
could be adversely affected if the Trustee does not perform such acts;
and provided, further, that if the payment with a reasonable time to
the Trustee of the costs, expenses or
68
76
liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination under this Section
11.01(b) shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand.
(c) Subject to Section 11.01(a), no provision of this
Agreement or any Supplement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable
for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(ii) The Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with, unless otherwise
specified herein, the direction of the CP Issuer (if it is
adversely affected thereby) or the Holders of Investor
Certificates evidencing Undivided Interests in the Trust
aggregating more than 50% of the Invested Amount of any Series
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement or any Supplement;
(iii) The Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the
obligations of the Servicer referred to in clauses (a), (b) or
(c) of Section 10.01, or of the occurrence of any Event of
Termination, unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer, the
CP Issuer or any Holders of Investor Certificates evidencing
Undivided Interests aggregating not less than 10% of the
Invested Amount of any Series adversely affected thereby; and
(iv) Prior to the occurrence of a Servicer Default
of which a Responsible Officer has knowledge, and after the
curing or waiver of such Servicer Defaults that may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement
and any Supplements, the Trustee shall not be liable except
for the performance of such duties and obligations as shall be
specifically set forth in this Agreement and any Supplement,
no implied covenants or obligations shall be read into this
Agreement or any Supplement against the Trustee and, in the
absence of bad faith on the part
69
77
of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and, if specifically required to be furnished
pursuant to any provision of this Agreement or any Supplement,
conforming to the requirements of this Agreement or such
Supplement;
(d) The Trustee shall not be required, to expend or risk
its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if there is reasonable ground for believing
that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement or any Supplement shall in any
event require the Trustee to perform, or be responsible for the manner
of performance of, any obligations of the Servicer under this
Agreement or any Supplement except during such time, if any, as the
Trustee shall be the successor to, and vested with the rights, duties,
powers and privileges of, the Servicer in accordance with the terms of
this Agreement or any Supplement.
(e) Except for actions expressly authorized by this
Agreement or any Supplement, the Trustee shall take no action
reasonably likely to impair the interests of the Trust in any Advance
now existing or hereafter created or to impair the value of any
Advance now existing or hereafter created.
(f) Except as specifically provided in this Agreement or
any Supplement, the Trustee shall have no power to vary the corpus of
the Trust.
(g) If, to the knowledge of a Responsible Officer of the
Trustee, the Paying Agent or the Transfer Agent and Registrar shall
fail to perform any obligation, duty or agreement in the manner or on
the day required to be performed by the Paying Agent or the Transfer
Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated as soon as possible after such Responsible
Officer obtains knowledge thereof and receives appropriate records, if
any, to perform such obligation, duty or agreement in the manner so
required.
(h) If the Transferor has agreed to transfer any of its
advances (other than the Advances) to another Person, upon the written
request of the Seller, the Trustee will enter into such intercreditor
agreements with the transferee of such advances as are customary and
necessary to identify separately the rights of the Trust and such
other Person in the Transferor's advances; provided that the Trustee
shall not be required to enter into any intercreditor agreement which
could adversely affect the interests of the Certificateholders or the
Trustee and, upon the request of the Trustee, the Transferor will
deliver an Opinion of Counsel on any matters relating to such
intercreditor agreement, reasonably requested by the Trustee.
70
78
(i) Except as specifically otherwise provided in this
Agreement, any action, suit or proceeding brought in respect of one or
more particular Series or the Variable Funding Certificate shall have
no effect on the Trustee's rights, duties and obligations hereunder
with respect to any one or more Series or the Variable Funding
Certificate not the subject of such action, suit or proceeding.
Section 11.02 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) The Trustee may rely on and shall be protected in
acting on, or in refraining from acting in accordance with, any
resolution, Officers' Certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented to
it pursuant to this Agreement or any Supplement by the proper party or
parties;
(b) The Trustee may consult with counsel and any advice
or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(c) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or any
Supplement, or to institute, conduct or defend any litigation
hereunder or in relation hereto or any Supplement, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement or any Supplement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the
occurrence of a Servicer Default (which has not been cured) of which a
Responsible Officer has knowledge, to exercise such of the rights and
powers vested in it by this Agreement or any Supplement, and to use
the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of
such prudent person's own affairs;
(d) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement or any Supplement;
(e) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or custodians, and the Trustee shall not
be responsible for any misconduct or negligence on the part of any
such agent, attorney or custodian appointed with due care by it
hereunder;
71
79
(f) Except as may be required by Section 11.01(a) hereof,
the Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Advances for
the purpose of establishing the presence or absence of defects, the
compliance by the Transferor or the Servicer with their
representations and warranties or for any other purpose;
(g) The right of the Trustee to perform any discretionary
act enumerated in this Agreement or any Supplement shall not be
construed as a duty, and the Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any
such act; and
(h) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement or any Supplement.
Section 11.03 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Advance or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Advances or
deposited in the Collection Account or other accounts now or hereafter
established to effectuate the transactions contemplated herein and in
accordance with the terms hereof.
The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Advance by the Transferor or the Servicer pursuant to this Agreement or any
Supplement or the eligibility of any Advance for purposes of this Agreement or
any Supplement. The Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the Successor
Servicer) or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Supplement.
Section 11.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates and may deal with the Transferor and the Servicer in banking
transactions with the same rights as it would have if it were not the Trustee.
Section 11.05 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard
72
80
to the compensation of a trustee of an express trust) for all services rendered
by it in the execution of the trust hereby created and in the exercise and
performance of any of the powers and duties hereunder or under any Supplement
of the Trustee, and, subject to Section 8.04, the Servicer will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement or any Supplement (including the
reasonable fees and expenses of its agents and counsel) except any such
expense, disbursements or advance as may arise from its negligence or bad faith
and except as provided in the following sentence. If the Trustee is appointed
Successor Servicer pursuant to Section 10.02, the provisions of this Section
11.05 shall not apply to expenses, disbursements and advances made or incurred
by the Trustee in its capacity as Successor Servicer, which shall be covered
out of the Servicing Fee. The provisions of this paragraph and Sections 8.04
and 8.09 shall survive the termination of the Trust and the resignation or
removal of the Trustee.
Section 11.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States or any state thereof, including the
District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 11.06, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 11.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 11.07.
Section 11.07 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged
from the trust hereby created by giving written notice thereof to the
Transferor, the Servicer and the Liquidity Agent. Upon receiving such
notice of resignation, the Servicer shall promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 11.06 hereof and shall
fail to resign after written request therefor by the Servicer, or if
at any time the Trustee shall be legally unable to act, or shall be
adjudged a bankrupt or insolvent, or if a receiver of the Trustee or
of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the
73
81
Servicer may remove the Trustee and promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee.
(c) Any resignation or removal of the Trustee and
appointment of successor trustee pursuant to any of the provisions of
this Section 11.07 shall not become effective until acceptance of
appointment by the successor trustee as provided in Section 11.08
hereof.
Section 11.08 Successor Trustee.
(a) Any successor trustee appointed as provided in
Section 11.07 hereof shall execute, acknowledge and deliver to the
Transferor and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder and under any Supplement with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the
successor trustee all documents or copies thereof, at the expense of
the Servicer, and statements held by it hereunder; and the Transferor
and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor trustee all such
rights, powers, duties, and obligations. The Servicer shall
immediately give notice to the Rating Agency upon the appointment of a
successor trustee.
(b) No successor trustee shall accept appointment as
provided in this Section 11.08 unless at the time of such acceptance
such successor trustee shall be eligible under the provisions of
Section 11.06 hereof.
(c) Upon acceptance of appointment by a successor trustee
as provided in this Section 11.08 hereof, such successor trustee shall
mail notice of such succession hereunder to all Certificateholders at
their addresses as shown in the Certificate Register.
Section 11.09 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any Person succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation
shall be eligible under the provisions of Section 11.06 hereof, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
74
82
(a) Notwithstanding any other provisions of this
Agreement or any Supplement, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the
Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more persons
to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers,
duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor
trustee under Section 11.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required
under Section 11.08 hereof. Any such appointment of a co-trustee
shall not relieve the Trustee of its duties under this Agreement.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding
of title to the Trust Assets or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
(iii) The Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request, or other writing given to the
Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each
of them. Every instrument appointing any separate trustee or co-
trustee shall refer to this Agreement and the conditions of this
Article XI. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement or any Supplement, specifically including
every provision of this Agreement or any
75
83
Supplement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be
filed with the Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful
act under or in respect to this Agreement or any Supplement on its
behalf and in its name. If any separate trustee or co-trustee shall
die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 11.11 Tax Returns. No federal income tax return shall be
filed on behalf of the Trust unless either (a) the Trustee or the Servicer
shall receive an Opinion of Counsel that the Code requires such a filing or (b)
the Internal Revenue Service shall determine that the Trust is required to file
such a return. In the event the Trust shall be required to file tax returns,
the Servicer shall prepare or shall cause to be prepared any tax returns
required to be filed by the Trust and shall remit such returns to the Trustee
for signature at least five days before such returns are due to be filed; the
Trustee shall promptly sign such returns and deliver such returns after
signature to the Trustee and such returns shall be filed by the Servicer. The
Trustee in accordance with Section 5.02(b) shall also prepare or shall cause to
be prepared all tax information required by law to be distributed to Investor
Certificateholders and the CP Issuer. The Trustee, upon request, will furnish
the Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of
the Trust, and shall, upon request, execute such returns. In no event shall
the Trustee, the Servicer or the Transferor be liable for any liabilities,
costs or expenses of the CP Issuer, the Investor Certificateholders or the
Certificate Owners arising out of the application of any tax law, including
without limitation federal, state, or local income or excise taxes or any other
tax imposed on or measured by income (or any interest, penalty or addition with
respect thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Supplement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default of
which a Responsible Officer has knowledge shall occur and be continuing, the
Trustee, in its discretion may, subject to the provisions of Section 10.01,
proceed to protect and enforce its rights and the rights of the
76
84
Certificateholders under this Agreement or any Supplement by suit, action, or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Supplement or in aid of the execution of any power granted in this Agreement or
any Supplement or for the enforcement of any other legal, equitable or other
remedy as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Certificateholder any plan of
reorganization, arrangement, adjustment, or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
Section 11.14 Rights of Certificateholders to Direct Trustee. The
CP Issuer with respect to matters affecting the Variable Funding Certificate,
Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series with respect to matters
affecting the related Series, or both the CP Issuer and the Holders of
Certificates aggregating together more than 50% of the affected Undivided
Interests with respect to matters affecting more than one Series or one or more
Series and the Variable Funding Certificate, shall have the right to direct the
time, method and place at or by which the Trustee conducts any proceeding for
any remedy available to the Trustee, or exercises any such trust or power
conferred upon the Trustee; provided, however, that, subject to Section 11.01,
the Trustee shall have the right to decline to follow any such direction if the
Trustee being advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer or Responsible Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and provided further that nothing in this Agreement or any Supplement shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction of the Certificateholders.
Section 11.15 Representations and Warranties of Trustee. The
Trustee represents and warrants, as of the date hereof and, with respect to any
Series, as of the related Closing Date, that:
(a) The Trustee is a national banking association
organized, existing and in good standing under the laws of the United
States of America;
(b) The Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement;
(c) This Agreement has been duly executed and delivered
by the Trustee;
(d) The Trustee is not required to obtain, other than
those that have already been obtained, any authorization, consent,
approval, exemption or license from, or to file
77
85
any registration with, any Governmental Authority, as a condition to
the validity of, or for the execution and delivery of, this Agreement,
or to the performance by the Trustee of its obligations under this
Agreement; and
(e) This Agreement constitutes the legal, valid and
binding obligation of the Trustee, enforceable in accordance with its
terms (subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditors' rights
generally).
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in Chicago, Illinois, an office or offices or agency or
agencies where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially appoints
the Corporate Trust Office as its office for such purposes in Illinois. The
Trustee will give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 11.17 Notices. The Trustee shall promptly deliver to the
Transferor and the Servicer any notices it receives in connection with the
Advance Documents which are not otherwise delivered to such parties unless a
Responsible Officer of the Trustee reasonably believes that a copy of such
notice has previously been so delivered.
ARTICLE XII
TERMINATION
Section 12.01 Termination of Trust.
(a) The respective obligations and responsibilities of
the Transferor, the Servicer and the Trustee created hereby (other
than the obligation of the Trustee to make payments to
Certificateholders as hereafter set forth) shall terminate, except
with respect to the duties described in Sections 8.04, 11.05, and
12.03(b) upon the earlier of (i) the Business Day on which funds shall
be deposited in the Collection Account at the times and in the amounts
provided for in this Agreement (including, without limitation,
Sections 2.04, 12.01(b), 12.02, and Article IV hereof) sufficient to
pay the Aggregate Invested Amount plus the Issuer Amount plus interest
accrued at the applicable Certificate Rates or Issuer's Interest Rate
through the last day of the month preceding the next Payment Date in
full with respect to each Series of Certificates and the Variable
Funding Certificate, the Variable Funding Supplement, and the Loans;
and (ii) December 31, 2013 (the "Final Trust Termination Date").
(b) If on the Transfer Date in the month immediately
preceding the month in which the Final Trust Termination Date occurs
(after giving effect to all transfers,
78
86
withdrawals, deposits and drawings to occur on such date and the
payment of principal on the Variable Funding Certificate or any Series
of Investor Certificates to be made on the related Payment Date
pursuant to Section 4.04) the sum of the Issuer Amount and Invested
Amount of any Series would be greater than zero, the Servicer on
behalf of the Trust shall sell in a commercially reasonable manner
within 30 days of such Transfer Date all of the Advances and the
Related Security. The proceeds of such sale, net of all reasonable
expenses of the Trustee incurred in connection with such sale, which
shall be paid to the Trustee from such proceeds, shall be treated as
Gross Collections of the Advances and shall be allocated in accordance
with Section 4.03. During such 30-day period, the Servicer shall
continue to collect Gross Collections on the Advances and allocate
such payments in accordance with the provisions of Section 4.03.
Section 12.02 Optional Purchase and Series Termination Date of
Investor Certificates of any Series or the Variable Funding Certificate.
(a) If provided in any Supplement, on a Payment Date the
Transferor may, but shall not be obligated to, purchase any Series of
Investor Certificates or the Variable Funding Certificate by
depositing into the Collection Account, on the preceding Transfer
Date, an amount equal to the Invested Amount thereof or the Issuer
Amount, as the case may be, plus interest accrued and unpaid thereon
at the applicable Certificate Rate or Issuer's Interest Rate, as
applicable through the Record Date preceding the Payment Date on which
the purchase will be made; provided, however, that no such purchase of
any Certificates shall occur unless the Transferor shall deliver to
the Trustee an Opinion of Counsel (which may rely on certificates of
third parties, such as the Transferor or the Servicer, as to factual
matters necessary thereto) reasonably acceptable to the Trustee to the
effect that such purchase of any Certificates would not constitute a
fraudulent conveyance of the Transferor.
(b) The amount deposited pursuant to Section 12.02(a)
shall be paid to the Investor Certificateholders of the related Series
or the CP Issuer, as applicable, pursuant to Sections 4.04 on the
Payment Date following the date of such deposit. All Certificates
which are purchased by the Transferor pursuant to Section 12.02(a)
shall be delivered by the Transferor upon such purchase to, and be
canceled by, the Transfer Agent and Registrar and be disposed of in a
manner satisfactory to the Trustee and the Transferor. The Variable
Funding Certificate once retired may be reissued under Section 6.09
hereof as if it had never been issued prior to its reissuance.
(c) All principal or interest with respect to any Series
of Investor Certificates and the Variable Funding Certificate shall be
due and payable no later than the Series Termination Date with respect
to such Series or the Variable Funding Certificate. Unless otherwise
provided in a Supplement, in the event that (i) the Invested Amount of
any Series of Certificates or (ii) the Issuer Amount is greater than
zero on its Series Termination Date, the Trustee will use its best
efforts to sell or cause to be sold in a
79
87
commercially reasonable manner, and pay the proceeds (net of all
reasonable expenses of the Trustee incurred in connection with such
sale, which shall be paid to the Trustee from such proceeds), to the
extent necessary, to all Certificateholders of such Series pro rata or
to the CP Issuer, as applicable, in final payment of all principal of
and accrued interest on such Series of Certificates or the Variable
Funding Certificate, an amount of Advances and Related Security up to
110% of (i) the Invested Amount of such Series or (ii) the Issuer
Amount, as applicable, at the close of business on such date; but in
no event shall the amount of Advances and Related Security sold cause
the Aggregate Subordinated Minimum Transferor Amount to be less than
(i) the Subordinated Minimum Amount if any other Series or the
Variable Funding Certificate shall remain outstanding after such sale
or (ii) if no such Series or the Variable Funding Certificate shall
remain outstanding after such sale, zero. Any proceeds of such sale
in excess of such principal and interest paid and the expenses of the
Trustee shall be paid to the Transferor. Upon payment of the proceeds
of such sale as provided in this Section 12.02(c), all principal of
and accrued interest on such Series or the Variable Funding
Certificate shall be deemed for all purposes to have been paid in
full. Upon such Series Termination Date, or (if applicable) on the
first Payment Date following the sale of Advances and Related Security
called for above in this Section 12.02(c), with respect to the
applicable Series of Certificates or the Variable Funding Certificate,
final payment of all amounts allocable to any Investor Certificates of
such Series or the Variable Funding Certificate, as applicable, shall
be made in the manner provided in Section 12.03.
Section 12.03 Final Payment.
(a) Written notice of any termination, specifying the
Payment Date upon which the CP Issuer or the Investor
Certificateholders of any Series may surrender their Certificates for
payment of the final distribution and cancellation with respect to the
Variable Funding Certificate or such Series, shall be given (subject
to at least ten days' prior notice from the Servicer to the Trustee)
by the Trustee to the CP Issuer or the Investor Certificateholders of
such Series mailed not later than the fifth day of the month of such
final distribution specifying (i) the Payment Date (which shall be the
Payment Date in the month in which the deposit is made pursuant to
Section 12.01(a) or 12.02(a)) upon which final payment of the Variable
Funding Certificate or such Investor Certificates will be made upon
presentation and surrender of such Certificates at the office or
offices therein designated, (ii) the amount of any such final payment,
and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and
surrender of the Investor Certificates at the office or offices
therein specified. The Servicer's notice to the Trustee in accordance
with the preceding sentence shall be accompanied by an Officers'
Certificate setting forth the information specified in Section
5.02(a), as applicable, covering the period during the then current
calendar year through the date of such notice and setting forth the
date of such final distribution. The Trustee shall give such notice
to the Transfer Agent and Registrar and the Paying Agent at the time
such notice is given to such Certificateholders. Any final
80
88
payment of the Variable Funding Certificate shall be made upon
presentation thereof by wire transfer in immediately available funds.
(b) Notwithstanding the termination of the Trust pursuant
to Section 12.01(a) or the occurrence of the Series Termination Date
with respect to any Series pursuant to Section 12.02, all funds then
on deposit in the Collection Account shall continue to be held in
trust for the benefit of the Certificateholders and the Paying Agent
or the Trustee shall pay such funds to the Certificateholders upon
surrender of their Certificates. In the event that all of the
Investor Certificateholders of all, or the applicable, Series, shall
not surrender their Certificates for cancellation within six months
after the date specified in the above-mentioned written notice, the
Trustee shall give a second written notice to the remaining Investor
Certificateholders, upon receipt of the appropriate records from the
Transfer Agent and Registrar to surrender their Certificates for
cancellation and receive the final distribution with respect thereto.
If within one year after the second notice all, or the applicable,
Investor Certificates of such Series shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Investor Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds in
the Collection Account held for the benefit of such Investor
Certificateholders.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation, shall
be canceled by the Transfer Agent and Registrar and be disposed of in
a manner satisfactory to the Trustee. Upon the termination of the
Trust, the Transferor shall return the Transferor Certificate to the
Trustee, and the Trustee shall dispose of such Certificates in a
manner satisfactory to the Trustee.
Section 12.04 Transferor's Termination Rights. Upon the
termination of the Trust pursuant to Section 12.01 and the surrender of the
Transferor Certificate, the Trustee shall return to the Transferor (without
recourse, representation or warranty) all right, title and interest of the
Trust in the Advances and the other Trust Assets, whether then existing or
thereafter created, all moneys due or to become due with respect thereto, and
all proceeds thereof except for amounts held by the Trustee pursuant to Section
12.03(b). The Trustee shall execute and deliver such instruments of transfer
and assignment, in each case prepared by the Transferor and without recourse,
representation or warranty, as shall be reasonably requested by the Transferor
to vest in the Transferor all right, title and interest which the Trust had in
the Advances and other Trust Assets.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment.
81
89
(a) This Agreement or any Supplement may be amended from
time to time by the Servicer, the Transferor, and the Trustee, without
the consent of any of the Certificateholders, to cure any ambiguity,
to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, or to add any other
provisions with respect to matters or questions raised under this
Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trustee, adversely affect in
any material respect the interests of the CP Issuer or the Investor
Certificateholders.
(b) This Agreement or any Supplement may be amended from
time to time by the Servicer, the Transferor, and the Trustee, without
the consent of any of the Certificateholders, to add any provisions to
or change in any manner or eliminate any of the provisions of this
Agreement or modify in any manner the rights of the
Certificateholders; provided, however, that (i) the Servicer provides
an Officer's Certificate to the effect that such action will not
affect in any material respect the interests of such
Certificateholders; (ii) the Rating Agencies initially contracted to
rate any Series of Certificates confirms that such action will not
result in a reduction or withdrawal of its rating of such
Certificates, and (iii) such action will not, in the opinion of
Counsel reasonably satisfactory to the Trustee, result in adverse tax
consequences to the Certificateholders.
(c) This Agreement or any Supplement may be amended from
time to time by the Transferor, the Servicer, and the Trustee, without
the consent of Certificateholders, to add to or change any of the
provisions of this Agreement to provide that bearer certificates
issued with respect to any other Series may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal of or any interest on such bearer certificates, to permit
such bearer certificates to be issued in exchange for registered
certificates or bearer certificates of other authorized denominations,
or to permit the issuance of uncertificated certificates.
(d) This Agreement and any Supplement may also be amended
from time to time by the Servicer, the Transferor and the Trustee with
the prior consent of (i) the CP Issuer, if it would be adversely
affected by such amendment, (ii) the Holders of Investor Certificates
evidencing Undivided Interests aggregating more than 50% of the
Invested Amount of all Series materially adversely affected thereby,
and (iii) the Liquidity Agent, 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 Variable Funding Certificate or the Investor Certificateholders
of any Series then issued and outstanding; provided, however, no such
consent shall be necessary for amendments to this Agreement solely to
provide for the issuance of any Series, and provided further that no
such amendment under this subsection shall (i) reduce in any manner
the amount of, or delay the timing of, distributions which are
required to be made (A) on the Variable Funding Certificate or (B) any
Investor Certificate of such Series without the consent of
82
90
the CP Issuer or the related Investor Certificateholder, respectively;
(ii) change the definition of or the manner of calculating the
interest of (A) the Variable Funding Certificate or (B) any Investor
Certificate without the consent of the CP Issuer or the related
Investor Certificateholders, respectively or (iii) reduce the
aforesaid percentage required to consent to any such amendment by the
Investor Certificateholders, in each case without the consent of all
such Investor Certificateholders.
(e) Promptly after the execution of any such amendment or
consent the Trustee shall furnish written notification of the
substance of such amendment to the CP Issuer and each Investor
Certificateholder, and the Servicer shall furnish written notification
of the substance of such amendment to the Liquidity Agent and any
Rating Agency.
(f) It shall not be necessary for the consent of the
Investor Certificateholders under this Section 13.01 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 the Persons required to consent under Section
13.01 shall be subject to such reasonable requirements as the Trustee
may prescribe.
(g) Any Supplement and any amendments necessary to
effectuate the addition or removal of Advances or Contracts made in
accordance with Sections 2.04, 2.05 or 2.08 executed in accordance
with the provisions hereof shall not be considered amendments to this
Agreement, including, without limitation, for the purpose of Sections
13.01(a) and (b).
(h) Prior to the execution of any amendment to this
Agreement or any Supplement, the Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee
may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties, or immunities under
this Agreement, any Supplement, or otherwise.
Section 13.02 Protection of Right, Title and Interest of Trust.
(a) The Servicer shall cause this Agreement, any
Supplement, all amendments hereto or thereto and/or all financing
statements and continuation statements and any other necessary
documents or filings covering the Certificateholders and the Trustee's
right, title and interest to the Trust Assets to be promptly recorded,
registered and filed, and at all times to be kept recorded, registered
and filed, all in such manner and in such places as may be required by
law fully to preserve and protect the right, title and interest of the
Trustee hereunder to all property comprising the Trust Assets. The
Servicer shall deliver to the Trustee file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording,
83
91
registration or filing. The Transferor shall cooperate fully with the
Servicer in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the
intent of this Section 13.02(a).
(b) The Servicer will give the Trustee and the Liquidity
Agent prompt written notice of any relocation of any office from which
it services Advances or keeps records concerning the Advances of or
its principal place of business or chief executive office and whether,
as a result of such relocation, 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 Trust's
ownership or security interest in the Advances and the other Trust
Assets. The Servicer will at all times maintain each office from
which it services Advances and the Related Security and its principal
executive office within the United States of America.
(c) The Servicer will deliver to the Trustee and
Liquidity Agent: (i) upon the execution and delivery of each
amendment of Articles I, II, III or IV hereto other than amendments
pursuant to Section 13.01(a), and (ii) on or before March 31 of each
year, beginning with March 31, 1994, an Opinion of Counsel,
substantially in the form of Exhibit M hereto, dated as of a date
between January 1 and March 31 of such year.
(d) If at any time the Servicer is no longer Fremont
Financial, the Transferor shall deliver to the Successor Servicer
powers-of-attorney such that such Successor Servicer may perform the
obligations set forth in Sections 13.02(a), 13.02(b), and 13.02(c).
Section 13.03 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder
shall not operate to terminate this Agreement or the Trust, nor shall
such death or incapacity entitle such Certificateholders' legal
representatives or heirs to claim an accounting or to take any action
or commence any proceeding in any court for a partition or winding up
of the Trust, nor otherwise affect the rights, obligations, and
liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote
(except as specifically provided in this Agreement or any Supplement)
or in any manner otherwise control the operation and management of the
Trust, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time
as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any
provision hereof.
84
92
(c) No Certificateholder shall have any right by virtue
of any provisions of this Agreement or any Supplement to institute any
suit, action or proceeding in equity or at law upon or under or with
respect to this Agreement, unless the CP Issuer if it may be adversely
affected but for the institution of such suit, action or proceeding,
or the Holders of Investor Certificates evidencing Undivided Interests
in the Trust aggregating more than 50% of the Invested Amount of any
Series which may be materially adversely affected but for the
institution of such suit, action or proceeding shall have made written
request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and
being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more
Certificateholders shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this
Agreement or any Supplement to affect, disturb or prejudice the rights
of the Certificateholders of any other of the Certificates, or to
obtain or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement or any
Supplement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section 13.03,
each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 13.04 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, 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.
Section 13.05 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or five days after mailing by certified or registered
mail, return receipt requested: (a) in the case of Fremont Financial to Fremont
Financial Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇; (b) in the case of the
Trustee, to the Corporate Trust Office; (c) in the case of the Transferor to
Fremont Funding Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: President, with a copy to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇; (d) in the case of the CP Issuer, at its address as specified in the
Liquidity Agreement; and (e) in the case of Liquidity Agent, at its address
specified in the Liquidity Agreement; or, as to each party, at such other
address as shall be designed by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Notwithstanding any
other provision
85
93
hereof, any notice or consent hereunder to be given or made by or with respect
to the Variable Funding Certificate shall be effective if made to the related
collateral agent. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or
not the Certificateholder receives such notice.
Copies of all notices, reports, certificates and amendments required
to be delivered to the Rating Agencies hereunder shall be mailed to the Rating
Agencies as follows: Duff and ▇▇▇▇▇▇ Credit Rating Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇; and
Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
Asset-Backed Surveillance Group.
Section 13.06 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 covenants, agreements provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or rights of the Certificateholders thereof.
Section 13.07 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.02 or 8.05, this Agreement,
including any Supplement, may not be assigned by the Servicer without the prior
consent of the CP Issuer, the Liquidity Agent, and the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3%
of the Invested Amount of the Investor Certificates of each Series.
Section 13.08 Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall
not be personally liable for obligations of the Trust, that the interests in
the Trust represented by the Certificates upon authentication thereof by the
Trustee pursuant to Sections 2.07 and 6.02 are and shall be deemed fully paid.
Section 13.09 Further Assurances. The Transferor and the Servicer
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments required or reasonably requested by the Trustee
more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation
statements relating to the Advances and the other Trust Assets for filing under
the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power, or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power, or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power, or
privilege. The rights, remedies, powers and
86
94
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers, and privileges provided by law.
Section 13.11 Counterparts. This Agreement and any Supplement 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 13.12 Third-Party Beneficiaries. This Agreement and any
Supplement will inure to the benefit of and be binding upon the parties hereto,
and, in addition, shall inure to the benefit of the Certificateholders and
their respective successors and permitted assigns. Except as otherwise
provided in this Article XIII or Section 7.04, no other Person will have any
right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement or any Supplement, a provision
is made that an action may be taken or a notice, demand or instruction
given by Investor Certificateholders, such action, notice or
instruction may be taken or given by any Investor Certificateholder of
any Series, unless such provision requires a specific percentage of
Investor Certificateholders of a certain Series or all Series.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to
be done by the Trustee or the Servicer in reliance thereon, whether or
not notation of such action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Certificateholders may be embodied
in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by agent duly
appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, when required, to the
Transferor or the Servicer. Proof of execution of any such instrument
or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement or any Supplement and conclusive in favor of
the Trustee, the Transferor and the Servicer, if made in the manner
provided in this Section.
(d) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in
any reasonable manner which the Trustee deems sufficient.
87
95
(e) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
Section 13.14 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 13.15 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
88
96
IN WITNESS WHEREOF, Fremont Funding Inc., Fremont Financial
Corporation, and the Trustee have caused this Agreement to be duly executed by
their respective officers as of the day and year first above written.
FREMONT FUNDING INC.,
as Transferor
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer
and Treasurer
FREMONT FINANCIAL CORPORATION,
as Servicer
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Senior Vice President
and General Counsel
LASALLE NATIONAL BANK,
as Trustee
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: First Vice President
89
97
Annex X
FREMONT SMALL BUSINESS LOAN MASTER TRUST
DEFINITIONS
As used herein the following terms shall include in the singular
number the plural and in the plural number the singular:
"Accounts Receivable Percentage" means the percentage of the Aggregate
Principal Advances for which accounts receivable are the Primary Collateral.
"Addition Date" has the meaning set forth in Section 2.05(b)(iii) of
the Pooling and Servicing Agreement.
"Additional Contracts" has the meaning set forth in Section 2.05(a) of
the Pooling and Servicing Agreement.
"Advance" means all rights to repayment in respect of each advance
arising under the Contracts set forth on Schedule 4 to the Pooling and
Servicing Agreement on the Initial Closing Date and each advance arising under
an Additional Contract added pursuant to Section 2.05 of the Pooling and
Servicing Agreement that is owing to Fremont Financial by an Obligor located in
the United States of America under such Contract or Additional Contract,
including all obligations of such Obligor with respect thereto and all rights
of a secured party (as such term is defined in the UCC) with respect to the
Unpaid Balance thereof, including, without limitation, all proceeds of the
foregoing, provided, however, that an Advance shall not include a Defaulted
Advance or a Reconveyed Advance. An Advance shall be deemed to have been
created at the end of the day on the Date of Processing of such Advance.
"Advance Documents" means all Contracts giving rise to the Advances
and other evidences of Advances including, without limitation, tapes, discs,
punch cards and related property and rights.
"Advance Rate" means, for each Advance, the "advance rate" set forth
in the related Contract with respect to each type of Primary Collateral.
"Adverse Claim" means any lien, claim, security interest, mortgage,
deed of trust, priority, pledge, charge, conditional sale, title retention
agreement, financing lease, encumbrance, or similar right of any other Person
or any agreement to give any of the foregoing other than as expressly permitted
under the Advance Documents.
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such Person or, in any event, a
Person which has the power to vote 25%
98
or more of the securities having ordinary voting power for the election of
directors of the specified Person. As used herein, "control" of a specified
Person shall mean the ability to direct or cause the direction of the
management and policies of the specified Person, whether through the direct or
indirect ownership of the voting securities of such specified Person, by
contract or otherwise.
"Aggregate Eligible Principal Advances" means, for any Business Day,
the dollar amount of the Aggregate Principal Advances that are Eligible
Advances at the end of the prior Business Day.
"Aggregate Invested Amount" means the sum of the Invested Amounts with
respect to all Series of Investor Certificates then issued and outstanding.
"Aggregate Principal Advances" means, on any Business Day, the
aggregate dollar amount of Principal Advances in the Trust at the end of the
prior Business Day.
"Aggregate Subordinated Minimum Transferor Amount" means the sum of
(a) the greater of (i) the excess, if any, of (A) the Senior Enhancement
Percentage of the aggregate Initial Invested Amount of each outstanding Senior
Series over (B) the aggregate Initial Invested Amount of the Series 1995-1
Certificates (so long as it remains outstanding) and (ii) the Subordinate
Enhancement Percentage of the sum of the aggregate Initial Invested Amounts for
each outstanding Senior Series and the Series 1995-1 Certificates (so long as
it remains outstanding), and (b) the Subordinate Enhancement Percentage of the
sum of the Initial Invested Amount of each other outstanding Series of Investor
Certificates (including the Series D Certificates and each subsequently issued
Series).
"Aggregate Subordinated Transferor Amount" means the Aggregate
Subordinated Minimum Transferor Amount, which amount will be (a) decreased due
to allocations of Charge-Off Amounts, and (b) increased due to (i) allocations
of Excess Finance Charge Collections, (ii) repayment of one or more Series of
Subordinate Certificates, and (iii) subordination of an additional portion, if
available, of the Transferor Interest upon the commencement of an Amortization
Period with respect to a Series of Subordinate Certificates in accordance with
related Series Supplement.
"Amortization" has, with respect to each Series or the Variable
Funding Certificate, the meaning specified in Section 4.04(b) of the Pooling
and Servicing Agreement.
"Amortization Period" means: (a) with respect to any Series, the
period following the Non-Amortization Period beginning on the earlier of the
Amortization Commencement Date specified in the applicable Supplement or the
occurrence of an Event of Termination with respect to such Series; and (b) with
respect to the Variable Funding Certificate, the period beginning on the
earlier of the Amortization Commencement Date specified in the Variable Funding
Supplement or the occurrence of an Event of Termination with respect to the
Variable Funding Certificate.
2
99
"Amortization Period Commencement Date" means with respect to any
Series of the Variable Funding Certificate, the date specified in the related
Supplement on which the Amortization Period with respect thereto commences.
"Applicants" has the meaning specified in Section 6.07 of the Pooling
and Servicing Agreement.
"Appointment Date" has the meaning specified in Section 9.03 of the
Pooling and Servicing Agreement.
"Assignment" has the meaning set forth in Section 2.05(b)(iv) of the
Pooling and Servicing Agreement.
"Authorized Newspaper" means any one or more newspapers of general
circulation in Chicago, Illinois and in Los Angeles, California, and printed in
the English language and customarily published on each Business Day, whether or
not published on Saturdays, Sundays, and holidays.
"Benefit Plan" means, at a particular time and with respect to any
Person, any employee benefit plan which is covered by ERISA and in respect of
which such Person or an ERISA Affiliate of such Person is (or, if such Plan
were terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"Book-Entry Certificates" means certificates evidencing a beneficial
interest in the Investor Certificates, ownership and transfers of which shall
be made through book entries by a Clearing Agency as described in Section 6.11
of the Pooling and Servicing Agreement; provided, that after the occurrence of
a condition whereupon book-entry registration and transfer are no longer
permitted and Investor Certificates are to be issued to the Certificate Owners,
such certificates shall no longer be "Book-Entry Certificates."
"Business Day" means any day other than (a) a Saturday or a Sunday,
(b) another day on which Fremont Financial is closed, as set forth on the list
furnished by the Servicer pursuant to Section 3.03(n) of the Pooling and
Servicing Agreement or (c) another day on which banking institutions or trust
companies in the State of Illinois generally or the City of Chicago, Illinois,
are authorized or obligated by law, execute order or governmental decree to be
closed.
"Buyer" means Fremont Funding Inc., a corporation incorporated in the
State of Delaware.
"Cash Collateral Account" has the meaning specified in Section 4.02 of
the Pooling and Servicing Agreement.
"Cash Collateral Maintenance Amount" has the meaning specified in the
related Supplement.
3
100
"Certificate" means one of any Series of Investor Certificates, the
Variable Funding Certificate or the Transferor Certificate.
"Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
"Certificate Rate" means, with respect to any Series of Certificates,
the percentage (or formula on the basis of which such rate shall be determined)
stated in the applicable Supplement.
"Certificate Register" means the register maintained pursuant to
Section 6.03 of the Pooling and Servicing Agreement, providing for the
registration of the Certificates and transfer and exchanges thereof.
"Certificateholder" means the person in whose name a Certificate is
registered in the Certificate Register.
"Charge-Off Amounts" has the meaning set forth in Section 4.05(a) of
the Pooling and Servicing Agreement.
"Class" means with respect to any Series, the classification of
Investor Certificates within such Series as set forth in the related Series
Supplement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means with respect to any Series or Commercial Paper,
the date of issuance of such Series or such Commercial Paper.
"Code" means the Internal Revenue Code of 1986, as amended, and
applicable regulations promulgated thereunder.
"Collection Account" has the meaning set forth in Section 4.02 of the
Pooling and Servicing Agreement.
"Collections" has the meaning set forth in Section 3.01(i) of the
Pooling and Servicing Agreement.
4
101
"Commercial Paper" means commercial paper which is secured by the
Variable Funding Certificate.
"Concentration Account" means an account maintained at a Concentration
Bank.
"Concentration Bank" means any of the banks listed in Exhibit B to the
Purchase Agreement and Exhibit K to the Pooling and Servicing Agreement
(including their successors) and any other bank which becomes a Concentration
Bank pursuant to Section 2.06(i) of the Pooling and Servicing Agreement and
which is a party to a Lock-Box Agreement and pursuant thereto holds or may in
the future hold one or more Concentration Accounts for receiving Gross
Collections from a Lock-Box Bank, the Servicer or an Obligor.
"Concentration Bank Agreement" means an agreement among Fremont
Financial, the Trustee and a Concentration Bank substantially in the form of
Exhibit I-2 to the Pooling and Servicing Agreement.
"Concentration Limit" means at any time with respect to each Advance,
the maximum Unpaid Balance for all Advances of a single Obligor that may be
included in the calculation of "Eligible Advances" and shall be an amount equal
to three percent of the Aggregate Eligible Principal Advances (determined, for
purposes of this definition, based on all of the provisions of the definition
of "Eligible Advance" other than paragraphs (xii) and (xiii) thereof) for the
date of determination.
"Contract" means a written agreement between Fremont Financial and
another Person, as such may be amended in accordance with the Credit and
Collection Policy pursuant to which such Person is obligated to pay for
advances taken pursuant to such Contract, together with interest on such
advances, that is in compliance in all material respects with the requirements
of the Credit and Collection Policy, but which shall exclude any portion of a
Contract sold, pledged, assigned or conveyed by Fremont Financial to a
participant or any Contract to which Fremont Financial has purchased a
participation in from another originator.
"Contract Termination Date" means the date on which a Contract shall
become due and payable.
"Conveyance Papers" has the meaning specified in Section 4.1(b) of the
Purchase Agreement.
"Conveyed Property" has the meaning given that term in the Purchase
Agreement.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of the Pooling and
Servicing Agreement is located at ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Attention: Corporate Trust Department).
5
102
"CP Dealer" has the meaning set forth in the Variable Funding
Supplement.
"CP Dealer Agreement" has the meaning set forth in the Variable
Funding Supplement.
"CP Issuer" has the meaning set forth in the Variable Funding
Supplement.
"Credit and Collection Policy" means the Servicer's credit extension
policies and procedures and collection practices relating to the Advances and
Contracts as in effect on the Initial Closing Date, as set forth in Exhibit G
to the Pooling and Servicing Agreement, and as the same may be modified from
time to time in accordance with Section 3.03(k) of the Pooling and Servicing
Agreement.
"Credits" means an amount equal to the sum, without duplication, of
(a) the aggregate reduction effected on such date in any Advances resulting
from any set off in respect of any claim by any Obligor thereunder against
Fremont Financial (whether or not such claim is related to the transaction
giving rise to the related Advance) and (b) the aggregate amount of any
Advances which on such date become subject to an Adverse Claim or with respect
to which the Buyer, pursuant to the Purchase Agreement, or the Trustee,
pursuant to the Pooling and Servicing Agreement does not acquire or ceases to
have a valid transfer and assignment of all right, title and interest therein.
"Cut-Off Date" means with respect to the initial Advances, March 1,
1993, and with respect to any Addition Advances, the date of the transfer of
such Advance to the Transferor and the Trust.
"D&P" or "DCR" means Duff and ▇▇▇▇▇▇ Credit Rating Co.
"Daily Interest Amount" means the sum of the Daily Interest Amounts
set forth in each Supplement.
"Daily Report" means a form of the Daily Report is attached as Exhibit
E to the Pooling and Servicing Agreement.
"Daily Variable Funding Certificate Deposit Amount" has the meaning
given to such term in the Variable Funding Supplement.
"Date of Processing" means, with respect to any transaction by Fremont
Financial, the date that such transaction has been or should have been first
recorded on the computer master file of Advances maintained by the Servicer in
accordance with its normal servicing procedures (without regard to the
effective date of such recordation).
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership insolvency, reorganization, suspension
of payments, readjustment of debt, marshaling
6
103
of assets or similar debtor relief laws of the United States, any state or any
foreign country from time to time in effect affecting the rights of creditors
generally.
"Defaulted Advance" means an Advance, or any portion of an Obligor's
Unpaid Balance, which is recorded as a "loss" in accordance with the Servicer's
normal servicing procedures.
"Defaulted Amount" has the meaning given to such term in Section 4.07
of the Pooling and Servicing Agreement.
"Definitive Certificates" has the meaning specified in Section 6.11 of
the Pooling and Servicing Agreement.
"Depositary" has the meaning set forth in the Depositary Agreement.
"Depositary Agreement" has the meaning set forth in the Variable
Funding Supplement.
"Designation Date" has the meaning set forth in Section 2.05(b)(iv) of
the Pooling and Servicing Agreement.
"Determination Date" means, with respect to any Settlement Period, the
seventh day of the next calendar month or if such day is not a Business Day,
the next succeeding Business Day.
"Dissolution Event" has the meaning set forth in Section 9.03(a) of
the Pooling and Servicing Agreement.
"Eligible Advance" means an Advance:
(i) that has arisen in the ordinary course of business of
Fremont Financial;
(ii) with respect to which the Obligor's obligation to pay
is evidenced by a Contract and such Contract provides for full payment
of the amount thereof;
(iii) that is not an Advance that is recorded as a
"non-accrual" Advance in accordance with the Servicer's normal
servicing procedures (it being understood that, without limiting the
foregoing, the Servicer will classify as non-accrual all Advances
under a Contract if either (A) the Servicer determines in accordance
with the Credit and Collection Policy that amounts due under that
Contract will not be collected because the value of the underlying
collateral is insufficient, or (B) the independent auditors of the
Servicer classify any Advance under that Contract as being "impaired"
within the meaning of financial accounting standard 114 (or any
successor financial accounting standard));
(iv) which does not constitute an obligation of the United
States, any state or other political subdivision thereof, or any
agency, instrumentality or subdivision of any of the foregoing;
7
104
(v) that was created in compliance, in all material
respects, with the Credit and Collection Policy and all Requirements
of Law applicable to Fremont Financial and pursuant to a Contract that
complies, in all material respects, with the Credit and Collection
Policy and all Requirements of Law applicable to Fremont Financial
and, as of the date of conveyance under the Purchase Agreement and the
Pooling and Servicing Agreement, the terms of which have not been
extended or modified except in accordance with the Credit and
Collection Policy;
(vi) with respect to which all consents, licenses,
approvals or authorizations of, or registrations or declarations with,
any Governmental Authority required to be obtained, effected or given
by Fremont Financial in connection with the creation of such Advance
or the execution, delivery and performance by Fremont Financial of the
related Contract, have been duly obtained, effected or given and are
in full force and effect as of such date of creation;
(vii) as to which, at the time of and at all times after
the creation of such Advance, Fremont Financial had good and
marketable title thereto free and clear of all Liens other than
Permitted Liens;
(viii) that arises under a Contract which has been duly
authorized and which, together with such Advance, is in full force and
effect and such Contract, together with such Advance, constitutes the
legal, valid and binding payment obligation of the Obligor with
respect thereto, enforceable against such Obligor in accordance with
it 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 there are no conditions precedent to the
enforceability or validity of a Contract or Advance that have not been
satisfied;
(ix) neither such Advance nor the related Contract is
subject to any dispute, rescission, set-off, recoupment, defense or
counterclaim with respect to the underlying obligation which has been
communicated to the Seller or about which the Seller has knowledge;
(x) that is denominated and payable only in United States
dollars and payable to a Lock-Box Account, a Concentration Account, or
the Servicer as payments in kind for deposit by the Servicer in a
Concentration Account;
(xi) the Obligor of which (A) is not bankrupt, insolvent,
undergoing composition or adjustment or debts or is unable to make
payment of its obligations when due (unless such Advance is made by
Fremont Financial pursuant to a bankruptcy court approved
debtor-in-possession contract or other contract entitled to
superpriority expense of administration status under Section 364(c) of
the Bankruptcy Code), (B) is located
8
105
(within the meaning of Section 9103 of the applicable UCC) within the
United States of America, and (C) is not an Affiliate of Fremont
Financial;
(xii) that, together with all other Advances outstanding
under the related Contract, have an aggregate outstanding principal
amount that is less than or equal to the amount of the Advance Rate
for each such Advance multiplied by the eligible amount of Primary
Collateral available to support such Advance (as determined by the
Servicer in accordance with its normal servicing procedures);
provided, however, that to the extent that the aggregate principal
amount of such Advances exceed the amount of such Advance Rate
multiplied by the eligible amount of Primary Collateral (an
"Over-advance"), the excess will be an "Eligible Advance" only to the
extent it is an Eligible Over-advance and; provided further, to the
extent that any Contract has an associated Over-advance for a period
of 180 consecutive days, none of the Advances under that Contract will
be an "Eligible Advance" unless and until a period of 60 consecutive
days has passed during which there is no Over-advance associated with
that Contract;
(xiii) that conforms with the applicable Concentration
Limit; and
(xiv) that constitutes a "general intangible" or
"instrument" under and as defined in Sections 9106 and 9105 of the UCC
as then in effect in the State of California; provided, that if such
Advance is an instrument, it has been delivered to, and is the
possession of, the Trustee for the benefit of the Trust.
"Eligible Assets" means for any date of determination, the sum of (a)
the Aggregate Eligible Principal Advances, (b) all amounts on deposit in the
Collection Account (other than amounts allocated for interest payments or
servicing expenses) and the Excess Funding Account, and (c) the amounts on
deposit in the Concentration Accounts up to a maximum amount not to exceed an
amount equal to (3%) three percent of the Aggregate Eligible Principal
Advances.
"Eligible Contract" means, as of the Cut-Off Date (or, with respect to
Additional Contracts, as of their date of designation for inclusion in the
Trust), each Contract owned by Fremont Financial (a) which was in existence and
maintained with Fremont Financial, (b) which is payable in United States
dollars, (c) which has not been sold or pledged in full or part to any other
party, (d) which does not have advances which have been sold or pledged to any
other party, (e) for which the address of the principal executive office of the
Obligor is in the United States, (f) is a revolving commercial loan with an
original term of up to 2-3 years (plus any accompanying term loan), (g) was
originated or purchased by Fremont Financial and complies with Fremont
Financial's origination standards, (h) is not a Terminated Contract and (i)
which provides that any funding of Advances by Fremont Financial will be in its
"sole and absolute discretion" or the terms of which otherwise provide that any
funding of Advances by Fremont Financial will be discretionary.
"Eligible Institution" means a depository institution (which may be
the Trustee) organized under the laws of the United States or any one of the
states thereof, including the District of
9
106
Columbia, which at all times has a rating of at least "BBB" by Standard &
Poor's and which is a member of the FDIC.
"Eligible Over-advance" means, at any time with respect to a Contract,
the portion of the aggregate Advances outstanding under such Contract that is
in excess of the product of the Advance Rate for each such Advance multiplied
by the eligible amount of Primary Collateral available to support such Advance
(as determined by the Servicer in accordance with its normal servicing
procedures); provided, the aggregate Advances outstanding under such Contract
are less than an amount equal to 100% of the total eligible amount of Primary
Collateral with respect to such Contract (as determined by the Servicer in
accordance with its normal servicing procedures); provided, however, that (a)
to the extent that any Contract has an associated Over-advance for a period of
120 consecutive days, no Over-advance with respect to that Contract will be an
"Eligible Over-advance" unless and until a period of 60 consecutive days has
passed during which there is no Over-advance associated with that Contract, and
(b) to the extent that the aggregate amount of Eligible Over-advances
(determined in accordance with the foregoing provisions) with respect to all
the Contracts shall at any time exceed three percent of the Aggregate Eligible
Principal Advances (determined, for purposes of this definition, (1) based on
all the provisions of the definition of "Eligible Advance" other than
paragraphs (xii) and (xiii) thereof) and (2) subject to the provisions of the
definition of "Eligible Assets"), no portion of the excess shall be an
"Eligible Over-advance."
"Eligible Servicer" means Fremont Financial, the Trustee or an entity
which, at the time of its appointment as Servicer, (a) is servicing a portfolio
of commercial finance loans, (b) is legally qualified and has the capacity to
service the Advances, (c) has demonstrated the ability to service
professionally and completely a portfolio of similar accounts in accordance
with high standards of skill and care, (d) shall have a net worth of at least
$50,000,000, and (e) is qualified to use the software that the Servicer is then
currently using to service the Advances or obtains the right to use or has
software which is adequate to perform it duties under the Pooling and Servicing
Agreement (including pursuant to a license from or other agreement with Fremont
Financial or any of its Affiliates).
"Enhancement" means any reserve fund, insurance policy, guaranty,
letter of credit, subordination or other form of enhancement designed to
provide for the full and/or timely payment of any Series, the Variable Funding
Certificate of the Transferor Certificate, each as set forth in the related
Supplement.
"Enhancement Provider" means any person that provides the Enhancement
pursuant to the related agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means with respect to any Person, at any time, each
trade or business (whether or not incorporated) that would, at the time, be
treated together with such Person as a
10
107
single employer under Section 4001 of ERISA or Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code.
"Event of Termination" means, with respect to any Series or the
Variable Funding Certificate, that any of the events specified in Section 9.01
or 9.02 of the Pooling and Servicing Agreement has occurred, and any applicable
grace period has passed and requisite notice has been given.
"Excess Finance Charge Collections" has the meaning given to such term
in Section 4.05(a) of the Pooling and Servicing Agreement.
"Excess Funding Account" has the meaning specified in Section 4.02(a)
of the Pooling and Servicing Agreement.
"Excess Funding Account Percentage" means, on any date of
determination, (a) with respect to the then outstanding Senior Series and
Subordinate Series, the percentage equal to (i) the sum of the Invested Amounts
and Issuer Amount for such Senior Series and Subordinate Series, divided by
(ii) the sum of the Aggregate Invested Amount and the Issuer Amount, and (b)
with respect to any other Series, the percentage equal to (i) the Invested
Amount for such Series divided by (ii) the sum of the Aggregate Invested Amount
and the Issuer Amount.
"Excess Funding Amount" means, for any date of determination, the
amount, if any, by which (a) the sum of the Invested Amount for each Series,
the Issuer Amount and the Aggregate Subordinated Minimum Transferor Amount
exceeds (b) the sum of (i) the Aggregate Eligible Principal Advances, (ii) the
amounts on deposit in the Excess Funding Account, (iii) the amounts on deposit
in Collection Account in excess of any amounts allocated for the payment of
interest or the Servicing Fee with respect to any Series or the Variable
Funding Certificate, and (iv) the amounts on deposit in the Concentration
Accounts, up to a maximum amount not to exceed an amount equal to (3%) three
percent of the Aggregate Eligible Principal Advances.
"Final Trust Termination Date" has the meaning specified in Section
12.01 of the Pooling and Servicing Agreement.
"Finance Charge" means with respect to any Settlement Period, all
amounts charged to an Obligor which do not have a corresponding out- of-pocket
expense to the Seller or Servicer including, but not limited to, interest, late
fees, and other items customarily included as "finance charges."
"Finance Charge Collections" means, for any Determination Date for the
related Settlement Period, the amount of Gross Collections that represent
Finance Charges including, but not limited to interest, late fees, and other
items customarily included as "finance charges."
"Fiscal Year" means each fiscal year of the CP Issuer.
11
108
"Fremont Financial" means Fremont Financial Corporation, a California
corporation.
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Authority" means 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.
"Gross Collections" means, with respect to the Advances on any
Business Day, all amounts received by the Servicer (and on deposit in a
Concentration Account or the Collection Account) since the prior Business Day
in collected funds in payment of or in respect of the Advances, whether
denominated as interest, principal, or otherwise, and including, without
limitation, all cash proceeds (as such term is defined in the UCC) of any
Related Security therefor.
"Holders" means, in the case of the Certificates, the Person in whose
name a Certificate is registered as owner in the Certificate Register.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
property other than accounts payable arising in the ordinary course of such
Person's business on terms customary in the trade, (c) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (d) obligations
which are evidenced by notes, acceptances, or other instruments, (e)
obligations for which such Person is obligated pursuant to a guaranty, and (f)
obligations in respect of a lease of property which is required to be
capitalized in accordance with GAAP.
"Initial Closing Date" means April 8, 1993.
"Initial Invested Amount" means (a) with respect to any Series of
Investor Certificates, the initial Invested Amount of such Series plus the
amount of any additional issuance with respect to such Series and (b) with
respect to the Variable Funding Certificate, the initial Invested Amount of the
Variable Funding Certificate, plus the amount of any increase in such Invested
Amount in accordance with the terms thereof and minus the aggregate amount of
principal payments made with respect thereto (other than any principal payment
made after the occurrence of an Event of Termination with respect to the
Variable Funding Certificate); provided, however, in the event of a Partial
Amortization Event, the Initial Invested Amount of any Series or the Variable
Funding Certificates shall be reduced, in each case, by the amount of the
corresponding principal distribution made with respect thereto.
"Initial Issuer Amount" means, with respect to the Variable Funding
Certificate, the amount stated in the applicable Supplement.
"Insolvency" means, with respect to any Multiemployer Plan, that such
Plan is insolvent within the meaning of Section 4245 of ERISA.
12
109
"Insolvent" means having the condition of Insolvency.
"Interest Accrual Period" has the meaning specified in the related
Supplement.
"Invested Amount" means, for any day when used with respect to any
Series, an amount equal to (a) the Initial Invested Amount minus (b) the
aggregate amount of payments of principal paid with respect to such Series of
Certificates prior to such day minus, after the Subordinated Amount applicable
to such Series has been reduced to zero, (c) the excess, if any, of the
aggregate Charge-off Amounts allocated to such Series over the Excess Finance
Charge Collections which have been allocated to such Series.
"Invested Percentage" means, with respect to any Series for any day,
unless otherwise specified in any Supplement with respect to a particular
Series as provided in Section 6.09 of the Pooling and Servicing Agreement, (a)
when used with respect to a Series during its related Non-Amortization Period,
the decimal equivalent of a fraction the numerator of which is the Invested
Amount as of the end of the preceding Business Day and the denominator of which
is the Eligible Assets for such preceding Business Day; and (b) when used with
respect to a Series during its related Amortization Period, the decimal
equivalent of a fraction the numerator of which is the Invested Amount as of
the opening of business on the first day of the related Amortization Period and
the denominator of which is the greater of (i) the Eligible Assets on the last
day of the prior Settlement Period and (ii) the sum of the numerators then
being used to determine the Invested Percentage for each outstanding Series and
the Issuer Percentage for the Variable Funding Certificate.
"Investor Certificate" means a certificate issued under Section 6.01
of the Pooling and Servicing Agreement hereof by the Transferor and
authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A to the Pooling and Servicing Agreement.
"Investor Certificateholder" means the Holder of record of an Investor
Certificate as indicated in the Certificate Register.
"Investor Interest" has the meaning specified in Section 4.01 of the
Pooling and Servicing Agreement.
"Issuance Date" has the meaning, with respect to the Variable Funding
Certificate or any Series issued pursuant to Section 6.09 of the Pooling and
Servicing Agreement, stated in such Section.
"Issuance Notice" has the meaning, with respect to the Variable
Funding Certificate or any Series issued pursuant to Section 6.09 of the
Pooling and Servicing Agreement, stated in such Section.
"Issuer Additional Amount" has the meaning specified in Section 6.10
of the Pooling and Servicing Agreement.
13
110
"Issuer Amount" means for any day when used with respect to the
Variable Funding Certificate, an amount equal to (a) the Initial Issuer Amount,
plus (b) the aggregate principal amount of the purchases by the Holder of the
Variable Funding Certificate of any Issuer Additional Amounts through the end
of the preceding Business Day pursuant to Section 6.10 of the Pooling and
Servicing Agreement, minus (c) the aggregate amount of payments of principal
paid to the Holder of the Variable Funding Certificate prior to such day,
minus, after the Subordinated Amount with respect to the Variable Funding
Certificate has been reduced to zero, (d) the excess, if any, of the Charge-Off
Amounts allocated to the Variable Funding Certificate over the Excess Finance
Charge Collections which have been allocated to the Variable Funding
Certificate.
"Issuer Interest" has the meaning specified in Section 4.01 of the
Pooling and Servicing Agreement.
"Issuer's Interest Rate" has the meaning set forth in the related
Supplement.
"Issuer Percentage" means with respect to the Variable Funding
Certificate for any day, unless otherwise specified in the Supplement pursuant
to which the Variable Funding Certificate is issued as provided in Section 6.09
of the Pooling and Servicing Agreement, (a) when used during the related
Non-Amortization Period, the decimal equivalent of a fraction the numerator of
which is the Issuer Amount as of the end of the preceding Business Day and the
denominator of which is the Eligible Assets for such preceding Business Day;
and (b) when used during the related Amortization Period, the decimal
equivalent of a fraction the numerator of which is the Issuer Amount as of the
last day prior to the related Amortization Period Commencement Date and the
denominator of which is the greater of (i) the Eligible Assets on the last day
of the prior Settlement Period and (ii) the sum of the numerators then being
used to determine the Invested Percentage for each outstanding Series and the
Issuer Percentage for the Variable Funding Certificate.
"Letter of Representations" means the agreement among the Transferor,
the Trustee and the initial Clearing Agency, with respect to any Book-Entry
Certificates or book-entry Commercial Paper.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, 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 Section 7.02 or 7.04 of the Pooling and Servicing Agreement shall
not be deemed to constitute a Lien; provided, further, however, that the lien
created by the Pooling and Servicing Agreement shall not be deemed to
constitute a Lien.
"Liquidity Agent" has the meaning set forth in the Liquidity
Agreement.
14
111
"Liquidity Agreement" has the meaning set forth in the Variable
Funding Supplement.
"Liquidity Banks" has the meaning set forth in the Liquidity
Agreement.
"Liquidity Loan" has the meaning set forth in the Liquidity Agreement.
"Loan Documents" means the Liquidity Agreement and the Loan Notes.
"Loan Notes" means all the Revolving Loan Notes and the Refunding Loan
Notes.
"Loans" means the Revolving Loans and the Refunding Loans.
"Lock-Box Account" means an account maintained at a Lock-Box Bank.
"Lock-Box Agreements" means the collective reference to each agreement
substantially attached as Exhibit I-1 to the Pooling and Servicing Agreement,
among an Obligor, Fremont Financial and a Lock-Box Bank, pursuant to which such
Lock-Box Bank receives or will receive Gross Collections from time to time as
provided therein, and any other future agreement substantially in the form of
Exhibit J (and which do not differ substantively in form) to the Pooling and
Servicing Agreement with any other Lock-Box Bank.
"Lock-Box Banks" means any of the banks, including banks with blocked
accounts, listed in Exhibit B to the Purchase Agreement and Exhibit K to the
Pooling and Servicing Agreement (including their successors) and any other bank
which becomes a Lock-Box Bank pursuant to Section 2.06(i) of the Pooling and
Servicing Agreement and which is a party to a Lock-Box Agreement and pursuant
thereto holds or may in the future hold one or more lock-box or blocked
accounts for receiving Gross Collections.
"Minimum Aggregate Principal Advances" has the meaning given such term
in the Variable Funding Supplement.
"Monthly Certificate Rate" has the meaning specified in the related
Supplement.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which contributions are or have been made during
the preceding five (5) years by any Person or any ERISA Affiliate of such
Person.
"Non-Amortization Period" means, with respect to each Series or the
Variable Funding Certificate, the period from and including the Closing Date
for such Series or the Variable Funding Certificate, up to and including the
day prior to the Amortization Period Commencement Date for such Series or the
Variable Funding Certificate.
"Obligor" means, with respect to any Advance the Person or Persons
obligated to make payments with respect to such Advance under a Contract.
15
112
"Officer's Certificate" means a certificate signed by a Chairman of
the Board, President, Controller or any Vice President of the Transferor or the
Servicer or, in the case of a Successor Servicer, a certificate signed by a
Vice President (or an officer holding an office with equivalent or more senior
responsibilities) of such Successor Servicer, and delivered to the Trustee.
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department, or
instrumentality thereof, or any court, tribunal, grand jury, or arbitrator, in
each case whether foreign or domestic.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Transferor or the Servicer and who shall be reasonably
acceptable to the Trustee.
"Overcollateralization Enhancement Amount" for any date of
determination, shall be the sum of (a) the Aggregate Subordinated Transferor
Amount and (b) the Invested Amount with respect to all then outstanding
Subordinate Series of Investor Certificates.
"Partial Amortization" has, with respect to each Series or the
Variable Funding Certificate, the meaning specified in the related Supplement
or Variable Funding Supplement.
"Partial Amortization Event" has the meaning specified in the related
Supplement.
"Paying Agent" means any paying agent appointed pursuant to Section
6.06 of the Pooling and Servicing Agreement and shall initially be the Trustee.
"Payment Date" means with respect to any Series or the Variable
Funding Certificate the date specified as such in the applicable Supplement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Investments" means: (a) negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence (i) obligations fully guaranteed as to timely payment by the United
States of America; (ii) certificates of deposit of, or bankers' acceptances
(having original maturities of not more than 180 days) issued by, any
depository institution or trust company and subject to supervision and
examination by federal or state banking or depository institution authorities;
provided, however, that at the time of the Trust's investment or contractual
commitment to invest therein, such depository institution or trust company
shall have a commercial paper credit rating, if any, and a long-term unsecured
debt obligation (other than such obligations whose rating is based on the
credit of a person or entity other than such institution or trust company)
credit rating from S&P of at least "A-l+" in the case of commercial paper, and
a rating not lower than "AAA" in the case of long-term unsecured debt
obligations, or such deposits are fully insured by the FDIC; (iii) commercial
paper (having original maturities of not more than 180 days) having, at the
time of the Trust's investment or contractual commitment to invest therein, a
rating of at least A-l+ by S&P; (iv) investments in money market funds rated
in, a rating of at least "AAA" by S&P; and (v) any other investment, if the
applicable
16
113
Rating Agency confirms in writing that such investment will not adversely
affect any ratings with respect to any Series of Investor Certificates or the
Commercial Paper, and which shall be acceptable to the Trustee and (b) demand
deposits or time deposits in the name of the Trust or the Trustee in any
depository institution or trust company referred to in (a)(ii) above. In
addition to the required ratings by S&P, to the extent that D&P has also
assigned a rating for any proposed investment, the proposed investment must
also have a rating from D&P that is equivalent to the rating assigned by S&P.
"Permitted Liens" means (a) Liens for municipal or other local taxes
if such taxes shall not at the time be due and payable or if the Transferor
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves in
accordance with GAAP with respect thereto; provided, that no notice of lien or
similar filing shall have been made by the relevant taxing authority with
respect thereto and (b) Liens arising under the Purchase Agreement and this
Agreement.
"Person" means any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Plan" means, with respect to any Person, any employee pension benefit
plan that (a) is maintained by such Person or any ERISA Affiliate of such
Person, or to which contributions by any such Person are required to be made or
under which such Person has or could have any liability, (b) is subject to the
provisions of Title IV of ERISA and (c) is not a Multiemployer Plan.
"Plan Event" means, with respect to any Person, (a) the provision of a
notice of intent to terminate any Plan under Section 4041 of ERISA other than
in a "standard termination," (b) the receipt of any notice by any Plan to the
effect that the PBGC intends to apply for the appointment of a trustee to
administer any Plan, (c) the termination of any Plan which results in any
material liability of such Person, (d) the withdrawal of such Person or any
ERISA Affiliate of such Person from any Plan described in Section 4063 of ERISA
which could be reasonably expected to result in a material liability of such
Person, (e) the complete or partial withdrawal of such Person or any ERISA
Affiliate of such Person from any Multiemployer Plan which can be reasonably
anticipated to result in a material liability of such Person, (f) a Reportable
Event or an event described in Section 4068(f) of ERISA which may result in a
material liability of such Person, and (g) any other event or condition which
under ERISA or the Code could be reasonably expected to constitute grounds for
the imposition of a lien on the assets of such Person in respect of any Plan or
Multiemployer Plan.
"Pool Factor" means, with respect to any Series and any Record Date, a
number carried out to eleven decimals representing the ratio of the related
Invested Amount as of such Record Date (determined after taking into account
any reduction in the applicable Invested Amount which will occur on the
following Payment Date) to the related Initial Invested Amount.
17
114
"Pooling and Servicing Agreement" means the Amended and Restated
Pooling and Servicing Agreement, dated as of April 1, 1997, by and among
Fremont Funding Inc., as Transferor, Fremont Financial, as Servicer, and
LaSalle National Bank, as Trustee, and all amendments thereof and supplements
thereto, including any Supplement.
"Primary Collateral" means the type of collateral securing an Advance
that is used to determine the maximum amount to be advanced under a Contract.
"Principal Advances" means the Unpaid Balance of Advances.
"Principal Terms" has the meaning specified in Section 6.09(b) of the
Pooling and Servicing Agreement.
"Private Placement Exemption" has the meaning specified in Section
6.02 of the Pooling and Servicing Agreement.
"Prospective Event of Termination" has the meaning specified in
Section 2.03(m) of the Pooling and Servicing Agreement.
"Purchase Agreement" means the Asset Sale and Contribution Agreement,
dated as of March 1, 1993 by and between Fremont Funding Inc., as buyer, and
Fremont Financial, as seller, and all amendments and supplements thereto.
"Purchase Date" means the date on which an Advance is conveyed to the
Buyer and the Purchase Price therefore is due and payable.
"Purchase Price" has the meaning assigned to such term in Section 3.1
of the Purchase Agreement.
"Rating Agency" means, with respect to each Series, the Variable
Funding Certificate or the Commercial Paper, the rating agency or rating
agencies that rated the Series, the Variable Funding Certificate or the
Commercial Paper, as the case may be, at the request of the Servicer.
"Reassignment" has the meaning specified in Section 2.04 of the
Pooling and Servicing Agreement.
"Reconveyed Advance" has the meaning specified in Section 2.04(c) of
the Pooling and Servicing Agreement.
"Record Date" has the meaning specified in the applicable Supplement.
"Recoveries" means all amounts (including proceeds of credit
insurance) received by the Servicer with respect to Advances which have
previously become Defaulted Advances.
18
115
"Refunding Loan" has the meaning set forth in the Liquidity Agreement.
"Refunding Loan Note" has the meaning set forth in the Liquidity
Agreement.
"Related Security" means with respect to any Advance, (a) all of the
right, title and interest of the Seller, when such term is used in the Purchase
Agreement and of the Transferor, when such term is used in the Pooling and
Servicing Agreement, in such Advance, (b) all other Liens and property subject
thereto from time to time purporting to secure payment of such Advance, whether
pursuant to the Contract related to such Advance or otherwise, (c) the
assignment for the benefit of the Buyer, when such term is used in the Purchase
Agreement, or the Trustee, when such term is used in the Pooling and Servicing
Agreement, of all UCC financing statements or similar instruments covering any
collateral securing payment of such Advance, (d) all of the Transferor's right,
title, and interest in, to and under the Purchase Agreement, (e) all
guarantees, insurance, and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Advance
whether pursuant to the Contract related to such Advance or otherwise, and (f)
all other instruments and all rights under the Advances Documents relating to
such Advances and all rights (but not obligations) relating to such Advances.
"Removal" has the meaning set forth in Section 2.08(b)(i) of the
Pooling and Servicing Agreement.
"Removal Date" has the meaning set forth in Section 2.08(b)(i) of the
Pooling and Servicing Agreement.
"Removed Contract" has the meaning set forth in Section 2.08(a) of the
Pooling and Servicing Agreement.
"Reorganization" means, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19, or .20 of PBGC
Regulation Section 2615.
"Repurchase Terms" means, with respect to any Series or the Variable
Funding Certificate, the terms and conditions, if any, under which the
Transferor may repurchase such Series or the Variable Funding Certificate
pursuant to Section 12.02 of the Pooling and Servicing Agreement as stated as
such in the applicable Supplement.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether
19
116
federal, state or local (including, without limitation, usury laws, the Federal
Truth in Lending Act, and Regulation Z and Regulation B of the Board).
"Responsible Officer" when used with respect to the Trustee means any
officer within the Corporate Trust Office (or any successor group of the
Trustee) including any vice president, assistant vice president, assistant
secretary or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred at the Trustee's Corporate Trust Office because of his knowledge of
and familiarity with the particular subject.
"Revolving Loan" has the meaning set forth in the Liquidity Agreement.
"Revolving Loan Note" has the meaning set forth in the Liquidity
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Pledge and Security Agreement, if any,
with respect to the Variable Funding Certificate.
"Seller" means Fremont Financial Corporation, a corporation organized
and existing under the laws of the State of California.
"Senior Enhancement Percentage" means the weighted average of the
Subordinated Percentage for each Senior Series and the Variable Funding
Certificate, as set forth in the related Series Supplement.
"Senior Series" means, with respect to the Series 1995-1 Certificates,
the Series B, Series C and Variable Funding Certificates and any other Series
that (a) has been designated as a "senior" or "non-subordinate" Series with
respect to the Series 1995-1 Certificates in the applicable Series Supplement,
(b) is issued prior to the May 2000 Payment Date, (c) has an Amortization
Period Commencement Date no later than the May 2000 Payment Date, and (d) has a
Series Termination Date on or before the May 2002 Payment Date; provided,
however, that any increase in the Invested Amount or Issuer Amount of a Senior
Series after the May 2000 Payment Date shall not be deemed part of any "Senior
Series."
"Series" means any series of Investor Certificates issued under
Section 6.09 of the Pooling and Servicing Agreement but not the Variable
Funding Certificate.
"Series Termination Date" means, with respect to any Series, the date
stated as such in the applicable Supplement.
"Service Transfer" has the meaning specified in Section 10.01(d) of
the Pooling and Servicing Agreement.
20
117
"Servicer" means Fremont Financial Corporation and thereafter any
Person appointed as successor as provided in the Pooling and Servicing
Agreement to service the Advances.
"Servicer Default" has the meaning specified in Section 10.01 of the
Pooling and Servicing Agreement.
"Servicing Fee" has the meaning specified in Section 3.02 of the
Pooling and Servicing Agreement.
"Servicing Fee Percentage" means, with respect to any specific Series
or the Variable Funding Certificate, the percentage specified as such in the
applicable Supplement.
"Servicing Officer" means any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of the
Advances whose name appears on a list furnished to the Trustee and the
Liquidity Agent by the Servicer, as such list may from time to time be amended.
"Settlement Period" means a calendar month; provided, however, that,
in the case of the initial Settlement Period, "Settlement Period" shall mean
the period from and including the date hereof to and including the last day of
the calendar month in which the Closing Date occurs.
"Settlement Statement" means a report substantially in the form
attached as Exhibit H to the Pooling and Servicing Agreement.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Subordinated Amount" means, with respect to each Series and the
Variable Funding Certificate, the amount, if any, set forth in the applicable
Supplement.
"Subordinate Enhancement Percentage" means a fraction the numerator of
which is 11.5% and the denominator of which is 88.5%, which fraction may be
reduced by the Transferor upon confirmation from each Rating Agency that such
reduction would not result in a withdrawal or downgrading of any outstanding
Series of Investor Certificates or the Variable Funding Certificate.
"Subordinated Minimum Amount" means with respect to any Business Day
and with respect to each Series and the Variable Funding Certificate, either
the Subordinated Minimum Amount set forth in the related Supplement or, if the
context so requires, the sum of the Subordinated Minimum Amounts for all
outstanding Series and the Variable Funding Certificate.
"Subordinate Series" means any Series that is designated as
subordinated in the related Series Supplement.
21
118
"Successor Servicer" has the meaning specified in Section 10.02 of the
Pooling and Servicing Agreement.
"Supplement" means, with respect to any Series or the Variable Funding
Certificate, a supplement to the Pooling and Servicing Agreement complying with
the terms of Section 6.09 thereof.
"Terminated Contract" means a Contract which has reached its Contract
Termination Date and has not been renewed or extended or any Contract
terminated pursuant to its terms.
"Termination Date" has the meaning set forth in Section 8.1 of the
Purchase Agreement.
"Termination Notice" has the meaning specified in Section 10.01 of the
Pooling and Servicing Agreement.
"Transfer Agent and Registrar" has the meaning specified in Section
6.03(a) of the Pooling and Servicing Agreement and shall initially be the
Trustee.
"Transfer Date" means, with respect to any Payment Date, the Business
Day next preceding such Payment Date.
"Transfer Deposit Amount" means, with respect to any Reconveyed
Advance for any Business Day, an amount equal to the amount of the Unpaid
Balance of the Reconveyed Advance at the end of the preceding Business Day.
"Transferor" means Fremont Funding Inc., a Delaware corporation.
"Transferor Amount" means for, any day, the excess, if any, of (a)
Aggregate Principal Advances for the prior Business Day (or the Initial Closing
Date) plus all amounts then on deposit in the Collection Account, the Excess
Funding Account, the Cash Collateral Account, and each Concentration Account
over (b) the sum of the Issuer Amount and the Aggregate Invested Amounts for
such day.
"Transferor Certificate" means the certificate executed by the
Transferor and authenticated by the Trustee, substantially in the form of
Exhibit C to the Pooling and Servicing Agreement.
"Transferor Eligible Amount" means for any day the excess, if any, of
(a) the Eligible Assets over (b) the sum of the Issuer Amount and the Aggregate
Invested Amount.
"Transferor Interest" has the meaning specified in Section 4.01 of the
Pooling and Servicing Agreement.
22
119
"Transferor Percentage" means, with respect to the Transferor
Certificate for any day, the excess on such day, if any, of (a) 100% over (b)
the sum of (i) the sum of the Invested Percentages of each outstanding Series
of Investor Certificates, and (ii) the Issuer Percentage.
"Trust" means the trust created by the Pooling and Servicing
Agreement.
"Trust Assets" has the meaning specified in Section 2.01 to the
Pooling and Servicing Agreement.
"Trust Fund Repurchase Price" has the meaning assigned to such term in
Section 2.04(d) of the Pooling and Servicing Agreement.
"Trustee" means the institution executing the Pooling and Servicing
Agreement as trustee, or its successor in interest, or any successor trustee
appointed as provided in the Pooling and Servicing Agreement.
"UCC" means the Uniform Commercial Code, as amended from time to time,
as in effect in any specified or applicable jurisdiction.
"Undivided Interest" means the undivided interest of any Investor
Certificateholder or the CP Issuer, as the Holder of the Variable Funding
Certificate, in the Trust. Such Undivided Interest is to be measured, in the
case of any Investor Certificateholder, by such Holder's pro rata share of the
Invested Amount of the related Series, and in the case of the CP Issuer, the
Issuer Amount.
"Unpaid Balance" means at any time, with respect to the Variable
Funding Certificate, the Issuer Amount as of such day without reference to
clause (d) of the definition of "Issuer Amount" and, with respect to an
Advance, the outstanding amount of the indebtedness of the related Obligor
incurred in connection with a particular loan under or evidenced by the related
Contract.
"Variable Funding Certificate" means a certificate issued pursuant to
Section 6.09 to the Pooling and Servicing Agreement, held by the CP Issuer or
other person specified in the related Supplement and substantially in the form
of Exhibit B to the Pooling and Servicing Agreement.
"Variable Funding Servicing Fee" has the meaning specified in the
Variable Funding Supplement.
"Variable Funding Supplement" means, with respect to the Variable
Funding Certificate, if any, a Supplement with the Pooling and Servicing
Agreement complying with the terms of Section 6.09 thereof.
"Vice President" when used with respect to the Transferor or the
Servicer means any vice president whether or not designated by a number or word
or words added before or after the title "vice president."
23
120
"Weighted Average Servicing Fee Percentage" means the weighted average
of the Servicing Fee Percentages of each outstanding Series and the Variable
Funding Certificate calculated based on the then outstanding Investor or Issuer
Interest.
"written" or "in writing" means any form of written communication,
including, without limitation, by means of telex, telecopier device, telegraph,
or cable.
24