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EXHIBIT 4.1
EXECUTION COPY
COLONIAL NATIONAL BANK USA,
Seller and Servicer,
and
BANKERS TRUST COMPANY,
Trustee
ADVANTA CREDIT CARD MASTER TRUST II
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1993
As Amended and Restated on May 23, 1994
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TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.01. Definitions................................................ 1
Section 1.02. Other Definitional Provisions.............................. 21
ARTICLE II
Conveyance of Receivables
Section 2.01. Conveyance of Receivables.................................. 23
Section 2.02. Acceptance by Trustee...................................... 24
Section 2.03. Representations and Warranties of the Sellers
Relating to the Sellers.................................... 25
Section 2.04. Representations and Warranties of the Sellers
Relating to the Agreement and Any Supplement
and the Receivables........................................ 27
Section 2.05. Reassignment of Ineligible Receivables..................... 29
Section 2.06. Reassignment of Receivables in Trust Portfolio............. 30
Section 2.07. Covenants of the Sellers................................... 31
Section 2.08. Addition of Accounts....................................... 33
Section 2.09. Removal of Accounts and Participation Interests............ 37
Section 2.10. Account Allocations........................................ 38
Section 2.11. Discount Option............................................ 39
ARTICLE III
Administration and Servicing
of Receivables
Section 3.01. Acceptance of Appointment and Other Matters Relating
to the Servicer............................................ 41
Section 3.02. Servicing Compensation..................................... 42
Section 3.03. Representations, Warranties and Covenants of the
Servicer................................................... 42
Section 3.04. Reports and Records for the Trustee........................ 46
Section 3.05. Annual Certificate of Servicer............................. 46
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available................... 46
Section 3.07. Tax Treatment.............................................. 47
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Section 3.08. Notices to Colonial........................................ 47
Section 3.09. Adjustments................................................ 47
Section 3.10. Reports to the Commission.................................. 48
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
Section 4.01. Rights of Certificateholders............................... 49
Section 4.02. Establishment of Collection Account and Excess
Funding Account............................................ 49
Section 4.03. Collections and Allocations................................ 51
Section 4.04. Shared Principal Collections............................... 52
Section 4.05. Allocation of Trust Assets to Series or Groups
ARTICLE V
Distributions and Reports to
Certificateholders
ARTICLE VI
The Certificates
Section 6.01. The Certificates........................................... 55
Section 6.02. Authentication of Certificates............................. 55
Section 6.03. New Issuances.............................................. 56
Section 6.04. Registration of Transfer and Exchange of Certificates...... 57
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates.......... 60
Section 6.06. Persons Deemed Owners...................................... 61
Section 6.07. Appointment of Paying Agent................................ 61
Section 6.08. Access to List of Registered Certificateholders'
Names and Addresses........................................ 62
Section 6.09. Authenticating Agent....................................... 62
Section 6.10. Book-Entry Certificates.................................... 63
Section 6.11. Notices to Clearing Agency................................. 64
Section 6.12. Definitive Certificates.................................... 64
Section 6.13. Global Certificate; Exchange Date.......................... 65
Section 6.14. Meetings of Certificateholders............................. 66
Section 6.15. Uncertificated Classes..................................... 69
ARTICLE VII
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Other Matters Relating to the Sellers
Section 7.01. Liability of the Sellers................................... 70
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Sellers................................ 70
Section 7.03. Limitations on Liability of the Sellers.................... 71
Section 7.04. Liabilities................................................ 71
ARTICLE VIII
Other Matters Relating to the Servicer
Section 8.01. Liability of the Servicer.................................. 73
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer............................... 73
Section 8.03. Limitation on Liability of the Servicer and Others......... 73
Section 8.04. Servicer Indemnification of the Trust and the Trustee...... 74
Section 8.05. The Servicer Not To Resign................................. 74
Section 8.06. Access to Certain Documentation and Information
Regarding the Receivables.................................. 75
Section 8.07. Delegation of Duties....................................... 75
Section 8.08. Examination of Records..................................... 76
ARTICLE IX
Pay Out Events
Section 9.01. Trust Pay Out Events....................................... 77
Section 9.02. Additional Rights Upon the Occurrence of Certain Events.... 77
ARTICLE X
Servicer Defaults
Section 10.01. Servicer Defaults.......................................... 79
Section 10.02. Trustee To Act, Appointment of Successor................... 81
Section 10.03. Notification to Certificateholders......................... 83
ARTICLE XI
The Trustee
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Section 11.01. Duties of Trustee.......................................... 84
Section 11.02. Certain Matters Affecting the Trustee...................... 85
Section 11.03. Trustee Not Liable for Recitals in Certificates............ 87
Section 11.04. Trustee May Own Certificates............................... 87
Section 11.05. The Servicer To Pay Trustee's Fees and Expenses............ 87
Section 11.06. Eligibility Requirements for Trustee....................... 87
Section 11.07. Resignation or Removal of Trustee.......................... 88
Section 11.08. Successor Trustee.......................................... 88
Section 11.09. Merger or Consolidation of Trustee......................... 89
Section 11.10. Appointment of Co-Trustee or Separate Trustee.............. 89
Section 11.11. Tax Returns................................................ 90
Section 11.12. Trustee May Enforce Claims Without Possession
of Certificates............................................ 91
Section 11.13. Suits for Enforcement...................................... 91
Section 11.14. Rights of Certificateholders To Direct Trustee............. 92
Section 11.15. Representations and Warranties of Trustee.................. 92
Section 11.16. Maintenance of Office or Agency............................ 93
ARTICLE XII
Termination
Section 12.01. Termination of Trust....................................... 94
Section 12.02. Final Distribution......................................... 94
Section 12.03. Sellers' Termination Rights................................ 95
Section 12.04. Defeasance................................................. 95
Section 12.05. Optional Purchase.......................................... 97
ARTICLE XIII
Miscellaneous Provisions
Section 13.01. Amendment; Waiver of Past Defaults......................... 99
Section 13.02. Protection of Right, Title and Interest to Trust........... 100
Section 13.03. Limitation on Rights of Certificateholders................. 101
Section 13.04. Governing Law.............................................. 102
Section 13.05. Notices; Payments.......................................... 102
Section 13.06. Rule 144A Information...................................... 103
Section 13.07. Severability of Provisions................................. 103
Section 13.08. Assignment................................................. 104
Section 13.09. Certificates Nonassessable and Fully Paid.................. 104
Section 13.10. Further Assurances......................................... 104
Section 13.11. Nonpetition Covenant....................................... 104
Section 13.12. No Waiver; Cumulative Remedies............................. 104
Section 13.13. Counterparts............................................... 104
Section 13.14. Third-Party Beneficiaries.................................. 105
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Section 13.15. Actions by Certificateholders.............................. 105
Section 13.16. Merger and Integration..................................... 105
Section 13.17. Headings................................................... 105
Section 13.18. Construction of Agreement.................................. 105
EXHIBITS
Exhibit A Form of Bank Certificate
Exhibit B Form of Assignment of Receivables in Additional Accounts
Exhibit C Form of Reassignment of Receivables in Removed Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Private Placement Legend
Exhibit E-2 Representation Letter
Exhibit E-3 ERISA Legend
Exhibit F-1 Form of Certificate of Foreign Clearing Agency
Exhibit F-2 Form of Alternate Certificate to be delivered to Foreign
Clearing Agency
Exhibit F-3 Form of Certificate to be delivered to Foreign Clearing Agency
Exhibit G-1 Form of Opinion of Counsel with respect to Amendments
Exhibit G-2 Form of Opinion of Counsel with respect to Accounts
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT dated and effective
as of December 1, 1993, as amended and restated on May 23, 1994, among
COLONIAL NATIONAL BANK USA, a national banking association, as Seller and
Servicer, and BANKERS TRUST COMPANY, a New York banking corporation, as
Trustee.
WHEREAS, Colonial National Bank USA ("Colonial"), as Seller and Servicer,
and the Trustee entered into that certain Pooling and Servicing Agreement dated
as of December 1, 1993 (the "Original Pooling and Servicing Agreement"); and
WHEREAS, Colonial, as Seller and Servicer, and the Trustee desire to amend
and restate the Original Pooling and Servicing Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Original Pooling and Servicing Agreement is hereby amended and
restated in its entirety as follows and each party agrees as follows for the
benefit of the other parties, the Certificateholders and any Series Enhancer (to
the extent provided herein and in any Supplement):
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings, and the definitions of such
terms are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of such
terms.
"Account" shall mean each Initial Account and each Additional Account, but
shall exclude any Account all the Receivables in which are either reassigned or
assigned to a Seller or its designee or the Servicer in accordance with the
terms of this Agreement. The definition of Account shall include each account
into which an Account is transferred (a "Transferred Account"); provided that
(i) such transfer is made in accordance with the Credit Card Guidelines and (ii)
such Transferred Account can be traced or identified, by reference to or by way
of the computer files or microfiche lists delivered to the Trustee pursuant to
Section 2.01 or 2.08, as an account into which an Account has been transferred.
The term "Account" shall be deemed to refer to an Additional Account only from
and after the Addition Date with respect thereto, and the term "Account" shall
be deemed to refer to any Removed Account only prior to the Removal Date with
respect thereto.
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"Accumulation Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period, which shall be the
accumulation or other period in which Collections of Principal Receivables are
accumulated in an account for the benefit of the Investor Certificateholders of
such Series, or a Class within such Series, in each case as defined for such
Series in the related Supplement.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition" shall mean the designation of additional Eligible Accounts to
be included as Accounts or of Participation Interests to be included as Trust
Assets pursuant to subsection 2.08(a), (b) or (d).
"Additional Account" shall mean each consumer revolving credit card
account or other revolving credit account established pursuant to a Cardholder
Agreement, which account is designated pursuant to subsection 2.08(a), (b) or
(d) to be included as an Account and is identified in a computer file or
microfiche list delivered to the Trustee by the applicable Seller pursuant to
Sections 2.01 and 2.08.
"Additional Seller" shall have the meaning specified in subsection
2.08(e).
"Addition Cut-Off Date" shall mean, with respect to any Additional
Accounts or Participation Interests to be included in the Trust, the date
specified in the related Assignment.
"Addition Date" shall mean (a) with respect to Additional Accounts, the
date on which the Receivables in such Additional Accounts are conveyed to the
Trust pursuant to subsection 2.08(a), (b) or (d) and (b) with respect to
Participation Interests, the date from and after which such Participation
Interests are to be included as Trust Assets pursuant to subsection 2.08(a) or
(b).
"Adverse Effect" shall mean, with respect to any action, that such action
will (a) result in the occurrence of a Pay Out Event with respect to any Series
or (b) materially adversely affect the amount or timing of distributions to be
made to the Investor Certificateholders of any Series or Class pursuant to this
Agreement and the related Supplement.
"Affiliate" shall mean, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Investor Amount" shall mean, as of any date of determination,
the sum of (i) the aggregate Investor Amounts of all Series of Certificates
issued and outstanding on such date of determination and (ii) the sum of the
Enhancement Investor Amounts, if any, for all outstanding Series on such date of
determination.
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"Aggregate Series Percentage" shall mean, with respect to Principal
Receivables, Defaulted Receivables and Finance Charge Receivables and any date
of determination, the sum of the Series Percentages for such categories of
Receivables for all outstanding Series on such date of determination; provided,
however, that the Aggregate Series Percentage shall not exceed 100%.
"Agreement" shall mean this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto, including, with respect to any Series
or Class, the related Supplement.
"Amortization Period" shall mean, with respect to any Series, or any Class
within a Series, a period following the Revolving Period, which shall be the
controlled amortization period, the principal amortization period, the rapid
amortization period, the optional amortization period, the limited amortization
period or other amortization period, in each case as defined with respect to
such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.08.
"Appointment Date" shall have the meaning specified in subsection 9.02(a).
"Assignment" shall have the meaning specified in subsection 2.08(c)(vii).
"Authorized Newspaper" shall mean any newspaper or newspapers of general
circulation in the Borough of Manhattan, The City of New York, or Philadelphia,
Pennsylvania, printed in the English language (and, with respect to any Series
or Class, if and so long as the Investor Certificates of such Series or Class
are listed on the Luxembourg Stock Exchange and such exchange shall so require,
in Luxembourg, printed in any language satisfying the requirements of such
exchange) and customarily published on each business day at such place, whether
or not published on Saturdays, Sundays or holidays.
"Automatic Additional Account" shall have the meaning specified in
subsection 2.08(d)(i).
"Bank Certificate" shall mean the certificate executed by Colonial and
authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A, as the same may be modified in accordance with subsection 2.08(e).
"Bearer Certificates" shall have the meaning specified in Section 6.01.
"Benefit Plan" shall have the meaning specified in subsection 6.04(c).
"Book-Entry Certificates" shall mean beneficial interests in the Investor
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 6.10.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or
(b) any other day on which banks in New York, New York, Philadelphia,
Pennsylvania, or Claymont,
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Delaware (or, with respect to any Series, any additional city specified in the
related Supplement) or any other State in which the principal executive offices
of Colonial or any Additional Seller are located, are authorized or obligated by
law, executive order or governmental decree to be closed.
"Cardholder Agreement" shall mean, with respect to an Account, the
agreements between Colonial or any Additional Seller, as the case may be, and
the related Obligor, governing the terms and conditions of such Account, as such
agreements may be amended, modified or otherwise changed from time to time and
as distributed (including any amendments and revisions thereto) to holders of
such Account.
"Cash Advance Fees" shall have the meaning specified in the Cardholder
Agreement applicable to each Account for cash advance fees or similar terms.
"CEDEL" shall mean Centrale de Livraison de Valeurs Mobilieres S.A.
"Certificate" shall mean any one of the Investor Certificates or the
Seller Certificates.
"Certificateholder" or "Holder" shall mean an Investor Certificateholder
or a Person in whose name any one of the Seller Certificates is registered.
"Certificateholders' Interest" shall have the meaning specified in Section
4.01.
"Certificate Owner" shall mean, 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" shall mean, with respect to any Series or Class, the
certificate rate specified therefor in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.04, providing for the registration of the Registered Certificates and
the Seller Certificates and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the classes of
Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the closing date
specified in the related Supplement.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Account" shall have the meaning specified in Section 4.02.
"Collections" shall mean all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks (to the extent collected), wire transfers, electronic
transfers, ATM transfers or other form of payment in accordance with the
Cardholder Agreement in effect from time to time. All Recoveries will be treated
as Collections of Finance Charge Receivables. Collections with respect to any
Monthly Period shall include a portion, calculated pursuant to subsection
2.07(i), of Interchange paid to the Trust with respect to such Monthly Period,
to be applied as if such amount were Collections of Finance Charge Receivables
for all purposes. As specified in any Participation Interest Supplement or
Supplement, Collections shall include amounts received with respect to
Participation Interests.
"Colonial" shall mean Colonial National Bank USA, a national banking
association.
"Commission" shall have the meaning specified in subsection 3.01(b).
"Companion Series" shall mean (i) each Series which has been paired with
another Series (which Series may be prefunded or partially prefunded), such that
the reduction of the Investor Amount of such Series results in the increase of
the Investor Amount of such other Series, as described in the related
Supplements, and (ii) such other Series.
"Contractually Delinquent" with respect to an Account, shall mean an
Account as to which the required minimum payment set forth on the related
billing statement has not been received by the due date thereof.
"Corporate Trust Office" shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Agreement is located at Four
Albany Street, New York, New York, 10006, Attention: Corporate Trust and Agency
Group/Structured Finance Group.
"Coupon" shall have the meaning specified in Section 6.01.
"Credit Card Guidelines" shall mean the written policies and procedures of
Colonial or any Additional Seller, as the case may be, relating to the operation
of its consumer revolving lending business, including, without limitation, the
written policies and procedures for determining the creditworthiness of credit
card account customers, the extension of credit to credit card account customers
and relating to the maintenance of credit card accounts and collection of
receivables with respect thereto, as such policies and procedures may be
amended, modified, or otherwise changed from time to time.
"Date of Processing" shall mean, with respect to any transaction or
receipt of Collections, the Business Day such transaction or receipt of
Collections is first recorded on the Servicer's computer file of consumer
revolving credit card accounts (without regard to the effective date of such
recordation).
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"Defaulted Amount" shall mean, with respect to any Monthly Period, an
amount (which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Monthly Period, minus (b)
the amount of any Defaulted Receivables included in any Account the Receivables
in which a Seller or the Servicer became obligated to accept reassignment or
assignment in accordance with the terms of this Agreement during such Monthly
Period; provided, however, that, if an Insolvency Event occurs with respect to
any Seller, the amount of such Defaulted Receivables which are subject to
reassignment to such Seller in accordance with the terms of this Agreement shall
not be added to the sum so subtracted and, if any of the events described in
subsection 10.01(d) occur with respect to the Servicer, the amount of such
Defaulted Receivables which are subject to reassignment or assignment to the
Servicer in accordance with the terms of this Agreement shall not be added to
the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Monthly Period,
all Principal Receivables which are charged off as uncollectible in such Monthly
Period in accordance with the Credit Card Guidelines and the Servicer's
customary and usual servicing procedures for servicing consumer revolving credit
card and other revolving credit account receivables comparable to the
Receivables. A Principal Receivable shall become a Defaulted Receivable on the
day on which such Principal Receivable is recorded as charged off on the
Servicer's computer master file of consumer revolving credit card accounts but,
in any event, shall be deemed a Defaulted Receivable no later than the day the
related Account becomes 186 days Contractually Delinquent unless the Obligor
cures such default by making a partial payment which satisfies the criteria for
curing delinquencies set forth in the applicable Credit Card Guidelines.
"Defeasance" shall have the meaning specified in subsection 12.04(a).
"Defeased Series" shall have the meaning specified in subsection 12.04(a).
"Definitive Certificates" shall have the meaning specified in Section
6.10.
"Definitive Euro-Certificates" shall have the meaning specified in Section
6.13.
"Depositaries" shall mean the Person specified in the applicable
Supplement, in its capacity as depositary for the respective accounts of any
Clearing Agency or any Foreign Clearing Agencies.
"Depository Agreement" shall mean, if applicable with respect to any
Series or Class, the agreement among the Sellers, the Trustee and a Clearing
Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in the related
Supplement, with respect to any Distribution Date, the third Business Day
preceding such Distribution Date.
"Discount Option Date" shall mean each date on which a Discount Percentage
designated by the Sellers pursuant to Section 2.11 takes effect.
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"Discount Option Receivables" shall have the meaning specified in Section
2.11. The aggregate amount of Discount Option Receivables outstanding on any
Date of Processing occurring on or after the Discount Option Date shall equal
the sum of (a) the aggregate Discount Option Receivables at the end of the prior
Date of Processing (which amount, prior to the Discount Option Date, shall be
zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables created on any Date of
Processing shall mean the product of the amount of any Principal Receivables
created on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables) and the Discount Percentage.
"Discount Option Receivable Collections" shall mean on any Date of
Processing occurring in any Monthly Period succeeding the Monthly Period in
which the Discount Option Date occurs, the product of (a) a fraction the
numerator of which is the Discount Option Receivables and the denominator of
which is the sum of the Principal Receivables and the Discount Option
Receivables in each case (for both the numerator and the denominator) at the end
of the preceding Monthly Period and (b) Collections of Principal Receivables on
such Date of Processing (without giving effect to the proviso in the definition
of Principal Receivables).
"Discount Percentage" shall mean the percentages, if any, designated by
the Sellers pursuant to Section 2.11.
"Distribution Date" shall mean, unless otherwise defined in a Supplement
with respect to a Series, the fifteenth day of each calendar month or, if such
fifteenth day is not a Business Day, the next succeeding Business Day.
"Dollars", "$" or "U.S. $" shall mean United States Dollars.
"Eligible Account" shall mean a revolving credit card account owned by
Colonial, in the case of the Initial Accounts, or Colonial or any Additional
Seller, in the case of Additional Accounts, which accounts are identified by
Colonial as of the Trust Cut-Off Date with respect to an Initial Account or by
Colonial or any Additional Seller as of the related Addition Cut-Off Date with
respect to an Additional Account as having the following characteristics:
is in existence and maintained by Colonial, in the case of the
Initial Accounts, or Colonial or any Additional Seller, in the case of
Additional Accounts;
is payable in Dollars;
except as provided below, has not been identified as an account the
credit card or cards with respect to which have been reported to Colonial
or the applicable Additional Seller as having been lost or stolen;
the Obligor of which has provided, as his or her billing address, an
address located in the United States (or its territories or possessions or
a military address);
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has an Obligor who has not been identified by Colonial or the
applicable Additional Seller as an employee of Colonial or such Additional
Seller or any Affiliate of either thereof;
except as provided below, does not have any Receivables which are
Defaulted Receivables; and
except as provided below, does not have any Receivables which have
been identified by Colonial or the applicable Additional Seller or the
relevant Obligor as having been incurred as a result of fraudulent use of
any related credit card.
Eligible Accounts may include Accounts, the Receivables of which have been
written off, or with respect to which the related Seller believes the related
Obligor is bankrupt, or as to which certain Receivables have been identified by
the Obligor as having been incurred as a result of fraudulent use of any credit
cards, or as to which any credit cards have been reported to such Seller as lost
or stolen, in each case as of the Trust Cut-Off Date, with respect to the
Initial Accounts, and as of the related Addition Cut-Off Date, with respect to
Additional Accounts; provided that (a) the balance of all Receivables included
in such Accounts is reflected on the books and records of such Seller (and is
treated for purposes of this Agreement) as "zero", and (b) charging privileges
with respect to all such Accounts have been canceled in accordance with the
relevant Credit Card Guidelines.
"Eligible Deposit Account" shall mean either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its generic credit rating categories which signifies investment grade.
"Eligible Institution" shall mean (I) 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 Columbia (or any domestic branch of a
foreign bank) which at all times (a) has either (i) a long-term unsecured debt
rating of A1 or better by Moody's or (ii) a certificate of deposit rating of P-1
by Moody's, (b) has either (i) a long-term unsecured debt rating of AAA by
Standard & Poor's or (ii) a certificate of deposit rating of A-1+ by Standard &
Poor's and (c) is a member of the FDIC or (II) any other institution that is
acceptable to each Rating Agency. If so qualified, the Trustee or the Servicer
may be considered an Eligible Institution for the purposes of this definition.
"Eligible Investments" shall mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America;
demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions
or trust companies
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incorporated under the laws of the United States of America or any state
thereof (or domestic branches of foreign banks) and subject to supervision
and examination by federal or state banking or depository institution
authorities; provided, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of
such depository institution or trust company shall be in the highest
investment category of each Rating Agency;
commercial paper or other short-term obligations having, at the time
of the Trust's investment or contractual commitment to invest therein, a
rating from each Rating Agency in its highest investment category;
notes or bankers' acceptances (having original maturities of no more
than 365 days) issued by any depository institution or trust company
referred to in (b) above;
investments in money market funds rated in the highest investment
category by each Rating Agency or otherwise approved in writing by each
Rating Agency;
time deposits, other than as referred to in clause (e) above, with a
Person the commercial paper of which has a credit rating from each Rating
Agency in its highest investment category; or
any other investments approved in writing by each Rating Agency.
"Eligible Receivable" shall mean each Receivable:
which has arisen under an Eligible Account;
which was created in compliance with all Requirements of Law
applicable to the Seller that transferred such Receivable to the Trust,
the failure to comply with which would have a material adverse effect on
Investor Certificateholders, and pursuant to a Cardholder Agreement which
complies with all Requirements of Law applicable to such Seller, the
failure to comply with which would have a material adverse effect on
Investor Certificateholders;
with respect to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained or given by such Seller in connection
with the creation of such Receivable or the execution, delivery and
performance by such Seller of its obligations, if any, under the related
Cardholder Agreement have been duly obtained or given and are in full
force and effect as of such date of creation of such Receivable;
as to which, at the time of its transfer to the Trust, such Seller
or the Trust will have good and marketable title thereto, free and clear
of all Liens (other than any Lien for municipal or other local taxes if
such taxes are not then due and payable or if such Seller is then
contesting the validity thereof in good faith by appropriate proceedings
and has set aside on its books adequate reserves with respect thereto);
16
which has been the subject of either a valid transfer and assignment
from such Seller to the Trust of all such Seller's right, title and
interest therein or the grant of a first priority perfected security
interest therein (and in the proceeds thereof), effective until the
termination of the Trust;
which at and after the time of transfer to the Trust is the legal,
valid and binding payment obligation of the Obligor thereon, legally
enforceable against such Obligor in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in
effect, affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity);
which constitutes either an "account" or a "general intangible"
under and as defined in Article 9 of the UCC;
which, at the time of its transfer to the Trust, has not been waived
or modified except as permitted in accordance with the Credit Card
Guidelines and which waiver or modification is reflected in the Servicer's
computer file of revolving credit card accounts;
which, at the time of its transfer to the Trust, is not subject to
any right of rescission, setoff, counterclaim or any other defense of the
Obligor (including the defense of usury), other than defenses arising out
of applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws 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 equity) or as to which the
Servicer is required by Section 3.09 to make an adjustment;
as to which, at the time of its transfer to the Trust, such Seller
has satisfied all obligations to be fulfilled by such Seller at the time
it is transferred to the Trust; and
as to which, at the time of its transfer to the Trust, such Seller
has not taken any action which, or failed to take any action the omission
of which, would, at the time of its transfer to the Trust, impair the
rights of the Trust or the Certificateholders therein.
"Eligible Servicer" shall mean the Trustee, or if the Trustee is not
acting as Servicer, an entity which, at the time of its appointment as Servicer,
(a) is servicing a portfolio of revolving credit card accounts, (b) is legally
qualified and has the capacity to service the Accounts, (c) is qualified to use
the software that is then being used to service the Accounts or obtains the
right to use, or has its own software, which is adequate to perform its duties
under this Agreement, (d) has demonstrated the ability to professionally and
competently service a portfolio of similar accounts in accordance with high
standards of skill and care, and (e) has a net worth of at least $50,000,000 as
of the end of its most recent fiscal quarter.
"Enhancement Agreement" shall mean any agreement, instrument or document
governing the terms of any Series Enhancement or pursuant to which any Series
Enhancement is issued or outstanding.
17
"Enhancement Investor Amount" shall have the meaning, if applicable with
respect to any Series, specified in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in Section 4.02.
"Excess Funding Amount" shall mean the amount on deposit in the Excess
Funding Account.
"Exchange Date" shall mean, with respect to any Series, any date that is
after the related Closing Date, in the case of Definitive Euro-Certificates in
registered form, or upon presentation of certification of non-United States
beneficial ownership (as described in Section 6.13), in the case of Definitive
Euro-Certificates in bearer form.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge Receivables" shall mean all amounts billed to the Obligors
on any Account in respect of (i) Periodic Finance Charges, (ii) annual
membership fees and annual service charges, (iii) Late Fees, (iv) Overlimit
Fees, (v) Cash Advance Fees, (vi) Discount Option Receivables, if any, and (vii)
all other fees and charges with respect to the Accounts designated by the Seller
to be included as Finance Charge Receivables. All Recoveries will be treated as
Collections of Finance Charge Receivables. Collections of Finance Charge
Receivables with respect to any Monthly Period shall be deemed to include
Interchange as calculated pursuant to the related Supplement for any Series.
Finance Charge Receivables shall also include the interest portion of
Participation Interests as shall be determined pursuant to the applicable
Participation Interest Supplement or Supplement.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"Foreign Clearing Agency" shall mean CEDEL and the Euroclear Operator.
"Global Certificate" shall have the meaning specified in subsection
6.13(a).
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall mean, with respect to any Series, the group of Series, if
any, in which the related Supplement specifies such Series is to be included.
"Ineligible Receivables" shall have the meaning specified in subsection
2.05(a).
18
"Initial Account" shall mean each MasterCard(R) and VISA(R)(1) account
established pursuant to a Cardholder Agreement between Colonial and any Person,
and identified by account number and by the Receivable balance in a computer
file or microfiche list delivered to the Trustee by Colonial on or prior to the
Initial Closing Date pursuant to Section 2.01.
"Initial Closing Date" shall mean December 9, 1993.
"Insolvency Event" shall have the meaning specified in subsection
9.01(a)(i).
"Insolvency Proceeds" shall have the meaning specified in subsection
9.02(b).
"Insurance Proceeds" shall mean any amounts recovered by the Servicer
pursuant to any credit insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Interchange" shall mean interchange fees payable to any Seller, in its
capacity as credit card issuer, through VISA or MasterCard in connection with
cardholder charges for goods, services, and cash advances, as calculated
pursuant to the related Supplement for any Series.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended from time to time.
"Investor Amount" shall mean, with respect to any Series and for any date,
an amount equal to the Investor Amount specified in the related Supplement.
"Investor Certificateholder" shall mean the Person in whose name a
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case may be) or
Coupon.
"Investor Certificates" shall mean any certificated or uncertificated
interest in the Trust designated as, or deemed to be, an "Investor Certificate"
in the related Supplement.
"Late Fees" shall have the meaning specified in the Cardholder Agreement
applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, participation or equity interest, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the
(1) MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and of VISA USA, Inc., respectively.
19
foregoing, excluding any lien or filing pursuant to this Agreement; provided,
however, that any assignment or transfer pursuant to subsection 6.03(c) or (d)
or Section 7.02 shall not be deemed to constitute a Lien.
"Manager" shall mean the lead manager, manager or co-manager or Person
performing a similar function with respect to an offering of Definitive
Euro-Certificates.
"MasterCard" shall mean MasterCard International Incorporated.
"Monthly Period" shall mean, with respect to each Distribution Date,
unless otherwise provided in a Supplement, the period from and including the
first day of the preceding calendar month to and including the last day of such
calendar month; provided, however, that the initial Monthly Period with respect
to any Series will commence on the Closing Date with respect to such Series.
"Monthly Servicing Fee" shall have the meaning specified in Section 3.02.
"Moody's" shall mean Moody's Investors Service, Inc., or its successor.
"Notices" shall have the meaning specified in subsection 13.05(a).
"Obligor" shall mean, with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any guarantor
thereof, but excluding any merchant.
"Officer's Certificate" shall mean, unless otherwise specified in this
Agreement, a certificate delivered to the Trustee signed by the Chairman of the
Board, President, any Vice President or the Treasurer of a Seller or the
Servicer, as the case may be.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
counsel for, or an employee of, the Person providing the opinion and who shall
be reasonably acceptable to the Trustee.
"Overlimit Fees" shall have the meaning specified in the Cardholder
Agreement applicable to each Account for overlimit fees or similar terms if such
fees are provided for with respect to such Account.
"Participating Seller" shall have the meaning specified in subsection
2.08(c)(i).
"Participation Interests" shall have the meaning specified in subsection
2.08(a)(ii).
"Participation Interest Supplement" shall mean a Supplement entered into
pursuant to subsections 2.08(a)(ii) and 13.01(a) in connection with the
conveyance of Participation Interests to the Trust.
20
"Paying Agent" shall mean any paying agent and co-paying agent appointed
pursuant to Section 6.07 and shall initially be the Trustee; provided, that if
the Supplement for a Series so provides, a Paying Agent may be appointed with
respect to such Series.
"Pay Out Event" shall mean, with respect to each Series, a Trust Pay Out
Event or a Series Pay Out Event.
"Periodic Finance Charges" shall have the meaning specified in the
Cardholder Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Principal Receivable" shall mean all amounts charged by Obligors for
merchandise and services and cash advances, but shall not include Finance Charge
Receivables or Defaulted Receivables; provided, however, that after the Discount
Option Date, Principal Receivables on any Date of Processing thereafter shall
mean Principal Receivables as otherwise determined pursuant to this definition
minus the amount of any Discount Option Receivables. Principal Receivables shall
also include the principal portion of Participation Interests as shall be
determined pursuant to the applicable Participation Interest Supplement or
Supplement. In calculating the aggregate amount of Principal Receivables on any
day, the amount of Principal Receivables shall be reduced by the aggregate
amount of credit balances in the Accounts on such day. Any Receivables which the
related Seller is unable to transfer as provided in Section 2.10 shall not be
included in calculating the aggregate amount of Principal Receivables, except to
the extent so provided in Section 2.10.
"Principal Sharing Series" shall mean a Series that, pursuant to the
Supplement therefor, is entitled to receive Shared Principal Collections.
"Principal Shortfalls" shall have the meaning specified in Section 4.04.
"Principal Terms" shall mean, with respect to any Series, (i) the name or
designation; (ii) the Initial Investor Amount, the Series Investor Amount and
the Series Invested Amount (or method for calculating such amounts); (iii) the
Certificate Rate (or method for the determination thereof); (iv) the payment
date or dates and the date or dates from which interest shall accrue; (v) the
method for allocating Collections to Certificateholders of such Series; (vi) the
designation of any Series Accounts and the terms governing the operation of any
such Series Accounts; (vii) the method of calculating the servicing fee with
respect thereto; (viii) the terms of any form of Series Enhancement with respect
thereto; (ix) the terms on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased by the
Sellers or remarketed to other investors; (x) the Series Termination Date; (xi)
the number of Classes of Investor Certificates of such Series and, if such
Series consists of more than one Class, the rights and priorities of each such
Class; (xii) the extent to which the Investor Certificates of such Series will
be issuable in temporary or permanent global form (and, in such case, the
depositary for such Global Certificate or Certificates, the terms and
conditions, if any, upon which such Global
21
Certificate may be exchanged, in whole or in part, for Definitive Certificates,
and the manner in which any interest payable on a temporary or Global
Certificate will be paid); (xiii) whether the Investor Certificates of such
Series may be issued as Bearer Certificates and any limitations imposed thereon;
(xiv) the priority of such Series with respect to any other Series; (xv) the
Group, if any, to which such Series belongs; (xvi) whether or not such Series is
a Principal Sharing Series; and (xvii) any other terms of such Series.
"Rating Agency" shall mean, with respect to any outstanding Series or
Class, each statistical rating agency selected by the Sellers to rate the
Investor Certificates of such Series or Class, as specified in the related
Supplement.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have notified the Sellers in writing that such action
will not result in a reduction or withdrawal of the rating of any outstanding
Series or Class with respect to which it is a Rating Agency.
"Reassignment" shall have the meaning specified in Section 2.09.
"Receivable" shall mean any amount owing by the Obligor under an Account
from time to time, including amounts owing for Principal Receivables and Finance
Charge Receivables. A Receivable shall be deemed to have been created at the end
of the day on the Date of Processing of such Receivable. Receivables which
become Defaulted Receivables shall not be shown on the Servicer's records as
amounts payable (and shall cease to be included as Receivables) on the day on
which they become Defaulted Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the last
Business Day of the preceding Monthly Period, except as otherwise provided with
respect to a Series in the related Supplement.
"Recoveries" shall mean all amounts, including Insurance Proceeds,
received by the Servicer with respect to Receivables which have previously
become Defaulted Receivables, net of any out-of-pocket costs and expenses of
collection (including attorneys fees and expenses deducted therefrom).
"Registered Certificateholder" shall mean the Holder of a Registered
Certificate.
"Registered Certificates" shall have the meaning specified in Section
6.01.
"Removal Cut-Off Date" shall have the meaning specified in subsection
2.09(b).
"Removal Date" shall have the meaning specified in subsection 2.09(a).
"Removal Notice Date" shall have the meaning specified in subsection
2.09(a).
"Removed Accounts" shall have the meaning specified in Section 2.09.
"Required Designation Date" shall have the meaning specified in subsection
2.08(a).
22
"Required Principal Balance" shall mean, as of any date of determination,
(a) the sum of the Series Investor Amounts for each Series outstanding on such
date, minus (b) the Excess Funding Amount.
"Required Seller Amount" shall mean, with respect to any date, an amount
equal to the product of the Required Seller Percentage and the aggregate amount
of Principal Receivables.
"Required Seller Percentage" shall mean 7%; provided, however, that the
Sellers may reduce the Required Seller Percentage upon (x) 30 days' prior notice
to the Trustee and each Rating Agency, (y) satisfaction of the Rating Agency
Condition with respect thereto and (z) delivery to the Trustee of a certificate
of a Vice President or more senior officer of each Seller stating that such
Seller reasonably believes that such reduction will not, based on the facts
known to such officer at the time of such certification, then or thereafter have
an Adverse Effect; provided further, that the Required Seller Percentage shall
not at any time be less than 2%.
"Requirements of Law" with respect to any Person shall mean 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 Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the Corporate Trust
Office (or any successor group of the Trustee) including any Vice President, any
Assistant Secretary, any Assistant Treasurer, or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above-designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Revolving Period" shall mean, with respect to any Series, the period
specified as such in the related Supplement.
"RTC" shall mean the Resolution Trust Corporation or any successor.
"Rule 144A" shall mean Rule 144A under the Act, as such Rule may be
amended from time to time.
"Sellers" shall mean Colonial and any Additional Seller, and their
successors and permitted assigns.
"Seller Amount" shall mean, on any date of determination, an amount equal
to (i) the sum of (a) the aggregate amount of Principal Receivables at the end
of the day immediately prior to such date of determination, and (b) the Excess
Funding Amount at the end of the day immediately prior to such date of
determination, and minus the sum of the Series Invested Amounts for each Series
outstanding on such date at the end of such day.
23
"Seller Certificates" shall mean, collectively, the Bank Certificate and
any outstanding Supplemental Certificates.
"Sellers' Interest" shall have the meaning specified in Section 4.01.
"Seller Percentage" shall mean, on any date of determination, when used
with respect to Principal Receivables, Finance Charge Receivables and Defaulted
Receivables, a percentage equal to 100% minus the Aggregate Series Percentage
with respect to such categories of Receivables.
"Series" shall mean any series of Investor Certificates established
pursuant to a Supplement.
"Series Account" shall mean any deposit, trust, escrow or similar account
maintained for the benefit of any Series or Class, as specified in any
Supplement.
"Series Enhancement" shall mean the rights and benefits provided to the
Investor Certificateholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, cash collateral guaranty, spread
account, guaranteed rate agreement, maturity liquidity facility, tax protection
agreement, interest rate swap agreement, interest rate cap agreement or other
similar arrangement. The subordination of any Series or Class to another Series
or Class shall be deemed to be a Series Enhancement.
"Series Enhancer" shall mean the Person or Persons providing any Series
Enhancement, other than the Investor Certificateholders of any Series or Class
which is subordinated to another Series or Class.
"Series Invested Amount" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Series Investor Amount" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Series Pay Out Event" shall mean, with respect to any Series, each event,
if any, specified in the Supplement as a Series Pay Out Event with respect to
such Series.
"Series Percentage" shall have, with respect to Principal Receivables,
Finance Charge Receivables and Defaulted Receivables, and any Series of
Certificates, the meaning stated in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series, the
termination date for such Series specified in the related Supplement.
"Servicer" shall mean initially Colonial and its permitted successors and
assigns, in its capacity as Servicer pursuant to this Agreement, and thereafter
any Person appointed Successor Servicer as herein provided.
"Servicer Default" shall have the meaning specified in Section 10.01.
24
"Servicing Fee" shall have the meaning specified in Section 3.02.
"Servicing Fee Rate" shall mean, with respect to any Series, the servicing
fee rate specified in the related Supplement.
"Servicing Officer" shall mean any officer of the Servicer, or any
attorney-in-fact of the Servicer, involved in, or responsible for, the
administration and servicing of the Receivables whose name appears on a list of
servicing officers furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
"Shared Principal Collections" shall have the meaning specified in Section
4.04.
"Standard & Poor's" shall mean Standard & Poor's Corporation or its
successor.
"Successor Servicer" shall have the meaning specified in subsection
10.02(a).
"Supplement" shall mean, with respect to any Series, a Supplement to this
Agreement, executed and delivered in connection with the original issuance of
the Investor Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in subsection
6.03(c).
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, (a) for Federal income tax purposes, such action
will not adversely affect the tax characterization as debt of Investor
Certificates of any outstanding Series or Class that were characterized as debt
at the time of their issuance, (b) following such action the Trust will not be
deemed to be an association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an event in which
gain or loss would be recognized by any Investor Certificateholder or the Trust.
"Termination Notice" shall have the meaning specified in Section 10.01.
"Transfer Agent and Registrar" shall have the meaning specified in Section
6.04.
"Transfer Date" shall mean the Business Day immediately preceding each
Distribution Date.
"Transfer Restriction Event" shall have the meaning specified in Section
2.10.
"Transferred Account" shall have the meaning set forth in the definition
of "Account."
"Trust" shall mean the ADVANTA Credit Card Master Trust II created by this
Agreement.
"Trust Assets" shall have the meaning specified in Section 2.01.
25
"Trust Cut-Off Date" shall mean October 31, 1993.
"Trustee" shall mean Bankers Trust Company, in its capacity as trustee on
behalf of the Trust, or its successor in interest, or any successor trustee
appointed as herein provided.
"Trust Pay Out Event" shall mean each event specified in subsection
9.01(a).
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in the State of Delaware or any other state or states where
the filing of a financing statement is required to perfect the Trust's interest
in the Receivables and the proceeds thereof or in any other specified
jurisdiction.
"United States" shall mean the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"Vice President" when used with respect to the Sellers or the Servicer
shall mean any vice president thereof whether or not designated by a number or
word or words added before or after the title "vice president".
"VISA" shall mean VISA USA, Inc.
Section 1.02. Other Definitional Provisions.
With respect to any Series, all terms used herein and not otherwise
defined herein shall have meanings ascribed to them in the related Supplement.
All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
The agreements, representations and warranties of Colonial and any
Additional Seller in this Agreement in each of their respective capacities as
Sellers and, in the case of Colonial, as Servicer, shall be deemed to be the
agreements, representations and warranties of Colonial and such Additional
Seller solely in each such capacity for so long as Colonial and such Additional
Seller act in each such capacity under this Agreement.
26
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" means "including
without limitation."
Unless otherwise specifically provided herein, the failure of this
Agreement to specify the meaning of a term or the applicability of a provision
to any Series shall not preclude the meaning of such term or the applicability
of such provision with respect to such Series being set forth in the Supplement
therefor.
[END OF ARTICLE I]
27
ARTICLE II
Conveyance of Receivables
Section 2.01. Conveyance of Receivables. By execution of this
Agreement, Colonial, as Seller, does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, all its right, title and interest in, to and under the
Receivables existing at the close of business on the Initial Closing Date, in
the case of Receivables arising in the Initial Accounts, and on each Addition
Date, in the case of Receivables arising in the Additional Accounts, and in each
case thereafter created from time to time until the termination of the Trust,
all Interchange and Recoveries allocable to the Trust as provided herein, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in the UCC) thereof. Such
property, together with all moneys on deposit in the Collection Account, the
Excess Funding Account, the Series Accounts and any Series Enhancement shall
constitute the assets of the Trust (the "Trust Assets"). The foregoing does not
constitute and is not intended to result in the creation or assumption by the
Trust, the Trustee, any Investor Certificateholder or any Series Enhancer of any
obligation of the Servicer, Colonial, any Additional Seller or any other Person
in connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchant clearance systems, VISA, MasterCard or insurers. The foregoing
sale, transfer, assignment, set over and conveyance to the Trust shall be made
to the Trustee, on behalf of the Trust, and each reference in this Agreement to
such sale, transfer, assignment set over and conveyance shall be construed
accordingly.
The Sellers agree to record and file, at their own expense, financing
statements (and continuation statements when applicable) with respect to the
Receivables now existing and hereafter created meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect, and maintain the perfection of, the sale and assignment of the
Receivables to the Trust, and to deliver a file stamped copy of each such
financing statement or other evidence of such filing (which may, for purposes of
this Section 2.01, consist of telephone confirmation of such filing) to the
Trustee on or prior to the Initial Closing Date, in the case of Receivables
arising in the Initial Accounts, and (if any additional filing is so necessary)
the applicable Addition Date, in the case of Receivables arising in Additional
Accounts. The Trustee shall be under no obligation whatsoever to file such
financing or continuation statements or to make any other filing under the UCC
in connection with such sale and assignment.
The Sellers further agree, at their own expense, (a) on or prior to (x)
the Initial Closing Date, in the case of the Initial Accounts, (y) the
applicable Addition Date, in the case of Additional Accounts, and (z) the
applicable Removal Date, in the case of Removed Accounts, to indicate in the
appropriate computer files that Receivables created in connection with the
Accounts (other than Removed Accounts) have been conveyed to the Trust pursuant
to this Agreement for the benefit of the Certificateholders (or conveyed to the
Sellers or their designees in the case of Removed Accounts) by including (or
deleting in the case of Removed Accounts) in such computer files the code "13,"
(or any other code specified in an Assignment) in the PORTF_CD field of such
computer files, and (b) on or prior to the Initial Closing Date, each
28
Addition Date and each Removal Date, as applicable, to deliver to the Trustee a
computer file or microfiche list containing a true and complete list of all such
Accounts specifying for each such Account, as of the Trust Cut-Off Date, in the
case of the Initial Accounts, the applicable Addition Cut-Off Date, in the case
of Additional Accounts, and the applicable Removal Cut-Off Date, in the case of
Removed Accounts, its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables outstanding in such
Account. Such file or list, as supplemented from time to time to reflect
Additional Accounts and Removed Accounts, shall be marked as Schedule 1 to this
Agreement and is hereby incorporated into and made a part of this Agreement. The
Seller agrees not to alter the codes or field referenced in clause (a) above
with respect to any Account during the term of this Agreement unless and until
such Accounts become Removed Accounts or unless and until (i) the Sellers shall
give written notice of any such alteration to the Trustee, such written notice
to be as of the date of its receipt by the Trustee incorporated into and made
part of this Agreement, and (ii) the Trustee and the Sellers shall execute and
file any UCC financing statement or amendment thereof necessitated by such
alteration.
Section 2.02. Acceptance by Trustee.
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 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 Seller delivered to the Trustee the computer file or microfiche
list relating to the Initial Accounts described in the last paragraph of Section
2.01.
The Trustee hereby agrees not to disclose to any Person (or to any
other department or operating division of the Trustee, other than the corporate
trust department of the Trustee or, if the Trustee shall be appointed the
Successor Servicer, such other departments or operating divisions of the Trustee
as shall be necessary to fulfill its duties as Servicer), any of the account
numbers or other information contained in the computer files or microfiche lists
marked as Schedule 1 or otherwise delivered to the Trustee from time to time,
except (i) to a Successor Servicer or as required by a Requirement of Law
applicable to the Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder, (iii) in enforcing the rights of Certificateholders
or (iv) after consultation with the Sellers, as requested by any Person in
connection with the financing statements filed pursuant to this Agreement. The
Trustee also agrees not to use any of the foregoing information for any purpose
other than for the purposes provided for in this Agreement. The Trustee agrees
to take such measures as shall be reasonably requested by the Sellers to protect
and maintain the security and confidentiality of such information and, in
connection therewith, will allow the Sellers to inspect the Trustee's security
and confidentiality arrangements from time to time during normal business hours.
The Trustee shall provide the Sellers with notice five Business Days prior to
any disclosure pursuant to this subsection 2.02(b).
The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement or any Supplement.
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Section 2.03. Representations and Warranties of the Sellers Relating to
the Sellers. Each of the Sellers hereby represents and warrants to the Trust as
of each Closing Date that:
Organization and Good Standing. Such Seller is a national banking
association or corporation duly organized and validly existing in good standing
under the laws of the jurisdiction of its organization or incorporation, and has
full corporate power, authority and legal right to own its properties and
conduct its consumer revolving lending business as such properties are presently
owned and such business is presently conducted, to execute, deliver and perform
its obligations under this Agreement and each Supplement and to execute and
deliver to the Trustee the Certificates pursuant hereto.
Due Qualification. Such Seller 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 such Seller, in each jurisdiction in which failure to so qualify or
to obtain such licenses and approvals would render any Cardholder Agreement
relating to an Account owned by such Seller or any Receivable transferred to the
Trust by such Seller unenforceable by such Seller, the Servicer or the Trustee
or would have a material adverse effect on the interests of the
Certificateholders hereunder or under any Supplement; provided, however, that no
representation or warranty is made with respect to any qualification, licenses
or approvals which the Trustee has or may be required at any time to obtain, if
any, in connection with the transactions contemplated hereby.
Due Authorization. The execution, delivery and performance of this
Agreement and each Supplement by such Seller and, in the case of Colonial, the
execution and delivery to the Trustee of the Certificates and the consummation
by such Seller of the transactions provided for in this Agreement and each
Supplement have been duly authorized by such Seller by all necessary corporate
action on the part of such Seller and this Agreement and each Supplement will
remain, from the time of its execution, an official record of such Seller.
No Conflict. The execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
thereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which such Seller is a party or by which
it or any of its properties are bound.
No Violation. The execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
thereof will not conflict with or violate any Requirements of Law applicable to
such Seller.
No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of such Seller, threatened against such Seller, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement, any
Supplement or the Certificates, (ii) seeking to prevent the
30
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, any Supplement or the Certificates, (iii)
seeking any determination or ruling that, in the reasonable judgment of such
Seller, would materially and adversely affect the performance by such Seller of
its obligations under this Agreement or any Supplement, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement, any Supplement or the Certificates or (v)
seeking to affect adversely the income tax attributes of the Trust under the
Federal or Delaware income or franchise tax systems.
All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by such Seller of this
Agreement, each Supplement and, in the case of Colonial, the Certificates, the
performance by such Seller of the transactions contemplated by this Agreement
and each Supplement and the fulfillment by such Seller of the terms hereof and
thereof, have been obtained; provided, however, that such Seller makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Certificates.
Insolvency. No Insolvency Event with respect to such Seller has
occurred and the transfer of the Receivables by such Seller to the Trust has not
been made in contemplation of the occurrence thereof.
FDIC Insurance. Such Seller is either an insured institution
for purposes of the Federal Deposit Insurance Act or is a bankruptcy-remote
entity.
The representations and warranties of each Seller set forth in this
Section 2.03 shall survive the transfer and assignment by such Seller of the
respective Receivables to the Trust. Upon discovery by such Seller, the Servicer
or the Trustee of a breach of any of the representations and warranties by such
Seller set forth in this Section 2.03, the party discovering such breach shall
give prompt written notice to the others. Such Seller agrees to cooperate with
the Servicer and the Trustee in attempting to cure any such breach. For purposes
of the representations and warranties set forth in this Section 2.03, each
reference to a Supplement shall be deemed to refer only to those Supplements in
effect as of the relevant Closing Date.
Section 2.04. Representations and Warranties of the Sellers Relating to
the Agreement and Any Supplement and the Receivables.
Representations and Warranties. Each of the Sellers hereby represents
and warrants to the Trust as of each Closing Date and, with respect to
Additional Accounts the Receivables in which are being transferred by such
Seller to the Trust, as of the related Addition Date that:
this Agreement, each Supplement and, in the case of
Additional Accounts the Receivables in which are being transferred by
such Seller to the Trust, the related Assignment, each constitutes a
legal, valid and binding obligation of such Seller enforceable against
such Seller in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights
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in general and the rights of creditors of national banking associations
and except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity);
as of the Initial Closing Date and as of the related
Addition Date with respect to Additional Accounts the Receivables in
which are being transferred by such Seller to the Trust, Schedule 1 to
this Agreement, as supplemented on such date, is an accurate and
complete listing in all material respects of all the Accounts owned by
such Seller as of the Trust Cut-Off Date or such Addition Cut-Off Date,
as the case may be, and the information contained therein with respect
to the identity of such Accounts and the Receivables existing in such
Accounts is true and correct in all material respects as of the Trust
Cut-Off Date or such Addition Cut-Off Date, as the case may be;
each Receivable conveyed to the Trust by such Seller has
been conveyed to the Trust free and clear of any Lien of any Person
claiming through or under such Seller or any of its Affiliates (other
than Liens permitted under subsection 2.07(b)) and in compliance, in
all material respects, with all Requirements of Law applicable to such
Seller;
all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by such Seller in connection with the
conveyance by such Seller of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
either this Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of such Seller
in the Receivables conveyed to the Trust by such Seller and the
proceeds thereof or, if this Agreement or, in the case of Additional
Accounts, the related Assignment does not constitute a sale of such
property, it constitutes a grant of a "security interest" (as defined
in the UCC) in such property to the Trust, which, in the case of
existing Receivables and the proceeds thereof, is enforceable upon
execution and delivery of this Agreement or, with respect to then
existing Receivables in Additional Accounts, as of the applicable
Addition Date, and which will be enforceable with respect to such
Receivables hereafter and thereafter created and the proceeds thereof
upon such creation. Upon the filing of the financing statements
pursuant to Sections 2.01 and 2.08 and, in the case of Receivables
hereafter created and the proceeds thereof, upon the creation thereof,
the Trust shall have a first priority perfected security or ownership
interest in such property and proceeds except for (x) Liens permitted
under subsection 2.07(b), (y) the interests of the Sellers as Holders
of the Bank Certificate or any Supplemental Certificate, and (z) the
Sellers' right, if any, to interest accruing on and investment
earnings, if any, in respect of the Collection Account or any Series
Account, as provided in this Agreement or the related Supplement;
provided, however, that the Sellers make no representation or warranty
with respect to the effect of Section 9-306 of the UCC on the rights of
the Trustee to proceeds held by any Seller;
except as otherwise expressly provided in this Agreement
or any Supplement, neither such Seller nor any Person claiming through
or under such Seller has any claim to
32
or interest in the Collection Account, the Excess Funding Account, any
Series Account or any Series Enhancement;
on the Trust Cut-Off Date, each Initial Account owned by
such Seller is an Eligible Account and, on the applicable Addition
Cut-Off Date, each related Additional Account owned by such Seller is
an Eligible Account;
on the Trust Cut-Off Date, each Receivable then existing
in an Account owned by such Seller is an Eligible Receivable and, on
the applicable Addition Cut-Off Date, each Receivable contained in any
related Additional Accounts owned by such Seller is an Eligible
Receivable;
as of the date of the creation of any new Receivable in an
Account owned by such Seller, such Receivable is an Eligible
Receivable; and
no selection procedure has been utilized by such Seller
which such Seller reasonably believes would result in a selection of
Initial Accounts or Additional Accounts (from among the available
Eligible Accounts owned by such Seller on the Trust Cut-Off Date or the
applicable Addition Cut-Off Date, as the case may be) that would be
materially adverse to the interests of the Investor Certificateholders.
Notice of Breach. The representations and warranties of each Seller
set forth in this Section 2.04 shall survive the transfer and assignment by such
Seller of Receivables to the Trust. Upon discovery by such Seller, the Servicer
or the Trustee of a breach of any of the representations and warranties by such
Seller set forth in this Section 2.04, the party discovering such breach shall
give prompt written notice to the others. Such Seller agrees to cooperate with
the Servicer and the Trustee in attempting to cure any such breach. For purposes
of the representations and warranties set forth in this Section 2.04, each
reference to a Supplement shall be deemed to refer only to those Supplements in
effect as of the date of the relevant representations or warranties.
Section 2.05. Reassignment of Ineligible Receivables.
Reassignment of Receivables. In the event (i) any representation or
warranty of a Seller contained in subsection 2.04(a)(ii), (iii), (iv), (vii),
(viii), (ix) or (x) is not true and correct in any material respect as of the
date specified therein with respect to any Receivable transferred to the Trust
by such Seller or an Account owned by such Seller and as a result of such breach
any Receivables in the related Account become Defaulted Receivables or the
Trust's rights in, to or under such Receivables or the proceeds of such
Receivables are impaired or such proceeds are not available for any reason to
the Trust free and clear of any Lien, unless cured within 60 days (or such
longer period, not in excess of 150 days, as may be agreed to by the Trustee)
after the earlier to occur of the discovery thereof by such Seller or receipt by
such Seller of notice thereof given by the Trustee, or (ii) it is so provided in
subsection 2.07(a) with respect to any Receivables transferred to the Trust by
such Seller, then such Seller shall accept reassignment of all Receivables in
the related Account ("Ineligible Receivables") on the terms and conditions set
forth in paragraph (b) below; provided, however, that such Receivables will not
be deemed to be Ineligible Receivables and will not be reassigned to such Seller
if, on any day prior to the end of
33
such 60-day or longer period, (x) either (A) in the case of an event described
in clause (i) above the relevant representation and warranty shall be true and
correct in all material respects as if made on such day or (B) in the case of an
event described in clause (ii) above the circumstances causing such Receivable
to become an Ineligible Receivable shall no longer exist and (y) such Seller
shall have delivered to the Trustee an Officer's Certificate describing the
nature of such breach and the manner in which the relevant representation and
warranty became true and correct.
Price of Reassignment. The Servicer shall deduct the portion of the
Ineligible Receivables reassigned to a Seller which are Principal Receivables
from the aggregate amount of Principal Receivables used to calculate the Seller
Amount, the Series Percentages and any other percentage used to allocate within
or among Series that is applicable to any Series. In the event that, following
the exclusion of such Principal Receivables from the calculation of the Seller
Amount, the Seller Amount would be less than the Required Seller Amount, not
later than 12:00 noon, New York City time, on the first Distribution Date
following the Monthly Period in which such reassignment obligation arises, the
relevant Seller shall make a deposit into the Excess Funding Account in
immediately available funds in an amount equal to the amount by which the Seller
Amount would be reduced below the Required Seller Amount (up to the amount of
such Principal Receivables).
Upon the deposit, if any, required to be made to the Excess Funding
Account as provided in this Section and the reassignment of Ineligible
Receivables, the Trustee, on behalf of the Trust, shall automatically and
without further action be deemed to sell, transfer, assign, set over and
otherwise convey to the relevant Seller or its designee, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to such Ineligible Receivables, all moneys due or to become due and all
amounts received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested by the relevant Seller to
effect the conveyance of Ineligible Receivables pursuant to this Section. The
obligation of a Seller to accept reassignment of any Ineligible Receivables, and
to make the deposits, if any, required to be made to the Excess Funding Account
as provided in this Section, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of the Certificateholders).
Section 2.06. Reassignment of Receivables in Trust Portfolio. In the
event any representation or warranty of a Seller set forth in subsection 2.03(a)
or (c) or subsection 2.04(a)(i), (v) or (vi) is not true and correct in any
material respect and such breach has a material adverse effect on the
Certificateholders' Interest in the Receivables transferred to the Trust by such
Seller, then either the Trustee or the Holders of Investor Certificates
evidencing more than 50% of the Aggregate Investor Amount, by notice then given
to such Seller and the Servicer (and to the Trustee if given by the Investor
Certificateholders), may direct such Seller to accept a reassignment of the
Receivables transferred to the Trust by such Seller if such breach and any
material adverse effect caused by such breach is not cured within 60 days of
such notice (or within such longer period, not in excess of 150 days, as may be
specified in such notice), and upon those conditions such Seller shall be
obligated to accept such reassignment on the terms set forth below; provided,
however, that such Receivables will not be reassigned to such Seller if, on any
day prior to the end of such 60-day or longer period (i) the relevant
representation and
34
warranty shall be true and correct in all material respects as if made on such
day and (ii) such Seller shall have delivered to the Trustee a certificate of an
authorized officer describing the nature of such breach and the manner in which
the relevant representation and warranty became true and correct.
The relevant Seller shall deposit in the Collection Account in
immediately available funds not later than 12:00 noon, New York City time, on
the first Distribution Date following the Monthly Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Supplement. Notwithstanding anything to the
contrary in this Agreement, such amounts shall be distributed on such
Distribution Date in accordance with Article IV and the terms of each
Supplement.
Upon the deposit, if any, required to be made to the Collection Account
as provided in this Section and the reassignment of the Receivables, the
Trustee, on behalf of the Trust, shall automatically and without further action
be deemed to sell, transfer, assign, set over and otherwise convey to the
relevant Seller or its designee, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to such Receivables, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds thereof. The Trustee shall execute such documents and instruments
of transfer or assignment and take such other actions as shall reasonably be
requested by the relevant Seller to effect the conveyance of such Receivables
pursuant to this Section. The obligation of a Seller to accept reassignment of
any Receivables, and to make the deposits, if any, required to be made to the
Collection Account as provided in this section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of the Certificateholders) or any
Series Enhancer.
Section 2.07. Covenants of the Sellers. Each Seller hereby covenants as
follows:
Receivables to be Accounts or General Intangibles. Except in
connection with the enforcement or collection of a Receivable, such Seller will
take no action to cause any Receivable transferred by it to the Trust to be
evidenced by any instrument or chattel paper (as defined in the UCC) and, if any
such Receivable is so evidenced, it shall be deemed to be an Ineligible
Receivable in accordance with subsection 2.05(a) and shall be reassigned to such
Seller in accordance with subsection 2.05(b); provided, however, that
Receivables evidenced by notes taken from Obligors in the ordinary course of
business of the Servicer's collection efforts shall not be deemed Ineligible
Receivables solely as a result thereof.
Security Interests. Except for the conveyances hereunder, such Seller
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Receivable transferred by it to
the Trust, whether now existing or hereafter created, or any interest therein;
such Seller will immediately notify the Trustee of the existence of any Lien on
any such Receivable; and such Seller shall defend the right, title and interest
of the Trust in, to and under such Receivables, whether now existing or
hereafter created, against all claims of third parties claiming through or under
such Seller; provided, however, that nothing in this subsection 2.07(b) shall
prevent or be deemed to prohibit such Seller from suffering to exist upon any of
the Receivables transferred by it to the Trust any Liens for municipal or other
local taxes if such taxes shall not at the time be due and payable or if such
Seller shall currently be
35
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
Sellers' Interest. Except for the conveyances hereunder, in
connection with any transaction permitted by Section 7.02 and as provided in
Sections 2.08(e) and 6.03, such Seller agrees not to transfer, assign, exchange
or otherwise convey or pledge, hypothecate or otherwise grant a security
interest in the Sellers' Interest represented by the Bank Certificate or any
Supplemental Certificate and any such attempted transfer, assignment, exchange,
conveyance, pledge, hypothecation or grant shall be void.
Notwithstanding the foregoing paragraph, the Sellers may pledge,
hypothecate or otherwise grant a security interest in any (or any portion of)
the Seller Certificates to the Federal Reserve Bank of Philadelphia and the
Federal Home Loan Bank of Pittsburgh; provided, however, that such pledge,
hypothecation, or grant may not be used as an artifice or device to avoid or
limit the foregoing prohibition on transfer; provided further that under no
circumstances may the Sellers pledge, hypothecate, or otherwise grant a security
interest in any of their rights in the Seller Certificates other than the right
to receive cash payments in respect of such Seller Certificates as provided in
this Agreement or any Supplement.
Delivery of Collections. In the event that such Seller receives
Collections, such Seller agrees to pay the Servicer all such Collections as soon
as practicable after receipt thereof but in no event later than two Business
Days after the Date of Processing by the Seller.
Notice of Liens. Such Seller shall notify the Trustee promptly after
becoming aware of any Lien on any Receivable other than the conveyances
hereunder or Liens permitted under subsection 2.07(b).
Periodic Finance Charges and Other Fees. Such Seller hereby agrees
that, except as otherwise required by any Requirement of Law, or as is deemed by
such Seller in its sole discretion to be necessary in order for such Seller to
maintain its lending business on a competitive basis based on a good faith
assessment by such Seller of the nature of its competition in the lending
business, it shall not at any time reduce the annual percentage rate of the
Periodic Finance Charges assessed on the Receivables transferred by it to the
Trust or other fees charged on any of the Accounts owned by it if, as a result
of any such reduction, either (i) such Seller's reasonable expectation is that
such reduction will cause a Series Pay Out Event to occur or (ii) such reduction
is not also applied to any comparable segments of consumer revolving credit card
accounts owned by such Seller which have characteristics the same as, or
substantially similar to, such Accounts.
Cardholder Agreements and Credit Card Guidelines. Such Seller shall
comply with and perform its obligations under the Cardholder Agreements relating
to the Accounts owned by it and the Credit Card Guidelines and all applicable
rules and regulations of MasterCard and VISA or their respective substantial
equivalents except insofar as any failure so to comply or perform would not
materially and adversely affect the rights of the Trust or the
Certificateholders hereunder. Subject to compliance with all Requirements of
Law, such Seller may change the terms and provisions of the Cardholder
Agreements or the Credit Card Guidelines with respect to any of the Accounts
owned by it in any respect (including the calculation of the amount, or the
36
timing, of charge-offs and the Periodic Finance Charges and other fees to be
assessed thereon) only if in the reasonable judgment of such Seller such change
is made applicable to any comparable segment of the consumer revolving credit
card accounts owned by such Seller which have characteristics the same as, or
substantially similar to, such Accounts.
(h) MasterCard and VISA. Such Seller, to the extent applicable to
Accounts owned or serviced by such Seller, shall use its best efforts to remain,
either directly or indirectly, a member in good standing of the MasterCard
system, the VISA system and any other similar entity's or organization's system
relating to any other type of consumer revolving credit card accounts included
as Accounts.
(i) Interchange. With respect to any Distribution Date, on or prior to
the last day of the preceding Monthly Period, the Seller shall notify the
Servicer of the amount of Interchange required to be included as Collections of
Finance Charge Receivables with respect to such Monthly Period, which amount for
any Series shall be specified in the related Supplement. Not later than 12:00
noon, New York City time, on the Business Day immediately preceding such
Distribution Date, the Seller shall deposit into the Collection Account, in
immediately available funds, the amount of Interchange to be so included as
Collections of Finance Charge Receivables with respect to such Monthly Period.
Section 2.08. Addition of Accounts.
Required Additions. (i) If on any Determination Date, as
of the close of business on the last Business Day of the preceding
Monthly Period, either (x) the Seller Amount is less than the Required
Seller Amount or (y) the aggregate amount of Principal Receivables is
less than the Required Principal Balance, the Sellers shall on or prior
to the close of business on the 10th Business Day following such
Determination Date (the "Required Designation Date"), unless the Seller
Amount exceeds the Required Seller Amount or the aggregate amount of
Principal Receivables exceeds the Required Principal Balance, as the
case may be, in either case as of the close of business on any day
after the last Business Day of such Monthly Period and prior to the
Required Designation Date, designate additional Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier
date in a sufficient amount such that, after giving effect to such
addition, the Seller Amount as of the close of business on the
applicable Addition Date is at least equal to the Required Seller
Amount on such date and the aggregate amount of Principal Receivables
exceeds the Required Principal Balance on such date. The failure of any
condition set forth in paragraph (c) below, as the case may be, shall
not relieve the Sellers of their obligation pursuant to this paragraph;
provided, however, that the failure of the Sellers to transfer
Receivables to the Trust as provided in this clause (i) solely as a
result of the unavailability of a sufficient amount of Eligible
Receivables shall not constitute a breach of this Agreement; provided
further, that any such failure which has not been timely cured may
nevertheless result in the occurrence of a Pay Out Event.
(ii) In lieu of, or in addition to, designating Additional
Accounts pursuant to clause (i) above, the Sellers may, subject to the
conditions specified in paragraph (c) below, convey to the Trust
participations (including 100% participations) representing undivided
interests in a pool of assets primarily consisting of revolving credit
card
37
receivables, consumer loan receivables (secured and unsecured), and any
interests in any of the foregoing, including securities representing or
backed by such receivables, and other self-liquidating financial assets
(including any "Eligible Assets" as such term is defined in Rule 3a-7
under the Investment Company Act (or any successor to such Rule)) owned
by a Seller or any Affiliate of any Seller and collections thereon
("Participation Interests"). The addition of Participation Interests in
the Trust pursuant to this paragraph (a) or paragraph (b) below shall
be effected by a Participation Interest Supplement, dated the
applicable Addition Date and entered into pursuant to subsection
13.01(a).
Restricted Additions. Each Seller may from time to time, at its sole
discretion, subject to the conditions specified below, designate additional
Eligible Accounts to be included as Accounts or Participation Interests to be
included as Trust Assets, in either case as of the applicable Addition Date.
Conditions to Required and Restricted Additions. On the Addition Date
with respect to any Additional Accounts or Participation Interests designated
pursuant to subsection 2.08(a) or (b), the Trust shall purchase the Receivables
in such Additional Accounts (and such Additional Accounts shall be deemed to be
Accounts for purposes of this Agreement) or shall purchase such Participation
Interests, in each case as of the close of business on the applicable Addition
Date, subject to the satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately
preceding the Addition Date, each Seller which owns any such Additional
Account or is transferring any such Participation Interest to the Trust
(a "Participating Seller") shall have given the Trustee, the Servicer
and each Rating Agency written notice that the Additional Accounts or
Participation Interests will be included and specifying the applicable
Addition Date, the Addition Cut-Off Date, and the approximate number of
accounts expected to be added and the approximate aggregate balances
expected to be outstanding in the accounts to be added (in the case of
Additional Accounts);
(ii) in the case of Additional Accounts, the Participating
Sellers shall have delivered to the Trustee copies of UCC-1 financing
statements covering such Additional Accounts, if necessary to perfect
the Trust's interest in the Receivables arising therein;
(iii) as of each of the Addition Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the Participating
Seller shall have occurred nor shall the transfer of the Receivables
arising in the Additional Accounts or of the Participation Interests to
the Trust have been made in contemplation of the occurrence thereof;
(iv) except in the case of an Addition pursuant to
subsection 2.08(a)(i), the Rating Agency Condition shall have been
satisfied;
(v) each Participating Seller shall have delivered to the
Trustee an Officer's Certificate, dated the Addition Date, stating that
(x) in the case of Additional Accounts, as of the applicable Addition
Cut-Off Date, the Additional Accounts are all Eligible Accounts, (y) to
the extent applicable, the conditions set forth in clauses (ii) through
(iv) above have been satisfied and (z) such Participating Seller
reasonably believes that (A)
38
the addition by such Participating Seller of the Receivables arising in
the Additional Accounts or of the Participation Interests to the Trust
will not, based on the facts known to such officer at the time of such
addition, then or thereafter cause a Pay Out Event to occur with
respect to any Series and (B) in the case of Additional Accounts, no
selection procedure was utilized by such Participating Seller which
would result in a selection of Additional Accounts (from among the
available Eligible Accounts owned by such Participating Seller) that
would be materially adverse to the interests of the Investor
Certificateholders of any Series as of the Addition Date;
(vi) the Participating Sellers shall have delivered to the
Trustee and each Rating Agency an Opinion of Counsel, which counsel
shall be outside counsel, dated the Addition Date, in accordance with
subsection 13.02(d);
(vii) in the case of designation of Additional Accounts, the
Participating Sellers shall have delivered to the Trustee (x) the
computer file or microfiche list required to be delivered pursuant to
Section 2.01 with respect to such Additional Accounts and (y) a duly
executed, written assignment (including an acceptance by the Trustee
for the benefit of the Certificateholders), substantially in the form
of Exhibit B (the "Assignment"); and
(viii) unless each Rating Agency otherwise consents, the
number of Additional Accounts designated pursuant to subsection 2.08(a)
with respect to any of the three consecutive Monthly Periods commencing
in January, April, July and October of each calendar year, commencing
in January 1994, shall not exceed 15% of the number of Accounts as of
the first day of the calendar year during which such Monthly Periods
commence and the number of Additional Accounts designated pursuant to
subsection 2.08(a) during any calendar year shall not exceed 20% of the
number of Accounts as of the first day of such calendar year.
Automatic Account Additions.
(i) Each Seller may from time to time, at its sole
discretion, subject to and in compliance with the limitations specified
in clause (ii) below and the applicable conditions specified in clauses
(iii) through (vii) below, designate Eligible Accounts ("Automatic
Additional Accounts") to be included as Accounts as of the applicable
Addition Date. For purposes of this paragraph, Eligible Accounts shall
be deemed to include only consumer revolving credit card accounts which
are originated by a Seller or any Affiliate of a Seller.
(ii) Unless each Rating Agency otherwise consents, the
number of Automatic Additional Accounts designated with respect to any
of the three consecutive Monthly Periods commencing in January, April,
July and October of each calendar year, commencing in January 1994,
shall not exceed 15% of the number of Accounts as of the first day of
the calendar year during which such Monthly Periods commence and the
number of Automatic Additional Accounts designated during any such
calendar year shall not exceed 20% of the number of Accounts as of the
first day of such calendar year.
(iii) Within 30 days after the Addition Date with respect to
any Automatic Additional Accounts, the Sellers shall have delivered to
the Trustee and each Rating
39
Agency an Opinion of Counsel (which counsel shall be outside counsel)
in accordance with subsection 13.02(d), with respect to the Automatic
Additional Accounts included as Accounts on such Addition Date,
confirming the validity and perfection of the transfer of such
Automatic Additional Accounts. If such Opinion of Counsel with respect
to any Automatic Additional Accounts is not so received, the ability of
the Sellers to designate Automatic Additional Accounts will be
suspended until such time as each Rating Agency otherwise consents in
writing. If the Sellers are unable to deliver an Opinion of Counsel
with respect to any Automatic Additional Account, such inability shall
be deemed to be a breach of the representation in subsection
2.04(a)(viii) with respect to the Receivables in such Automatic
Additional Account for purposes of Section 2.05; provided, that the
cure period for such breach shall not exceed 30 days.
(iv) The Participating Sellers shall have delivered to the
Trustee copies of UCC-1 financing statements covering such Automatic
Additional Accounts, if necessary to perfect the Trust's interest in
the Receivables arising therein.
(v) As of each of the Addition Cut-Off Date and the Addition
Date, no Insolvency Event with respect to any Participating Seller
shall have occurred nor shall the transfer of the Receivables arising
in the Automatic Additional Accounts to the Trust have been made in
contemplation of the occurrence thereof.
(vi) Each Participating Seller shall have delivered to the
Trustee an Officer's Certificate, dated the Addition Date, stating that
(x) as of the applicable Addition Cut-Off Date, such Automatic
Additional Accounts are all Eligible Accounts, (y) to the extent
applicable, the conditions set forth in clauses (ii) through (v) above
have been satisfied and (z) such Participating Seller reasonably
believes that (A) the addition by such Participating Seller of the
Receivables arising in such Automatic Additional Accounts will not,
based on the facts known to such officer at the time of such addition,
then or thereafter cause a Pay Out Event to occur with respect to any
Series and (B) no selection procedure was utilized by such
Participating Seller which would result in a selection of Automatic
Additional Accounts (from among the available Eligible Accounts owned
by such Participating Seller) that would be materially adverse to the
interests of the Investor Certificateholders of any Series as of the
Addition Date.
(vii) The Participating Sellers shall have delivered to the
Trustee (x) the computer file or microfiche list required to be
delivered pursuant to Section 2.01 with respect to such Automatic
Additional Accounts and (y) a duly executed Assignment.
Additional Sellers. Colonial may designate Affiliates of Colonial to
be included as Sellers ("Additional Sellers") under this Agreement by an
amendment hereto pursuant to subsection 13.01(a) and, in connection with such
designation, the Sellers shall surrender the Bank Certificate to the Trustee in
exchange for a newly issued Bank Certificate modified to reflect such Additional
Seller's interest in the Sellers' Interest; provided, however, that prior to any
such designation and exchange the conditions set forth in subsection 6.03(c) or
6.03(d), as applicable, shall have been satisfied with respect thereto.
40
Section 2.09. Removal of Accounts and Participation Interests. On any
day of any Monthly Period each Seller shall have the right to require the
reassignment to it or its designee of all the Trust's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds thereof in or with respect to the Accounts owned and designated by
such Seller (the "Removed Accounts") or Participation Interests designated by
the Seller, upon satisfaction of the following conditions:
on or before the fifth Business Day immediately preceding the Removal
Date (the "Removal Notice Date"), such Seller shall have given the Trustee, the
Servicer, each Rating Agency and any Series Enhancer written notice of such
removal, specifying the date for removal of the Removed Accounts or
Participation Interests (the "Removal Date");
with respect to Removed Accounts, on or prior to the date that is ten
Business Days after the Removal Date, such Seller shall have amended Schedule 1
by delivering to the Trustee a computer file or microfiche list containing a
true and complete list of the Removed Accounts specifying for each such Account,
as of the last day of the Monthly Period preceding the Removal Notice Date (the
"Removal Cut-Off Date"), its account number, the aggregate amount outstanding in
such Account and the aggregate amount of Principal Receivables outstanding in
such Account;
with respect to Removed Accounts, such Seller shall have represented
and warranted as of the Removal Date that the list of Removed Accounts delivered
pursuant to paragraph (b) above, as of the Removal Cut-Off Date, is true and
complete in all material respects;
the Rating Agency Condition shall have been satisfied with respect to
such removal;
such Seller shall have delivered to the Trustee an Officer's
Certificate, dated the Removal Date, to the effect that such Seller reasonably
believes that (i) such removal will not, based on the facts known to such
officer at the time of such certification, then or thereafter cause a Pay Out
Event to occur with respect to any Series and (ii) no selection procedure was
utilized by such Seller which would result in a selection of Removed Accounts or
Participation Interests that would be materially adverse to the interests of the
Investor Certificateholders of any Series as of the Removal Date; and
as of the Removal Cut-Off Date, no more than 10% of the Receivables
outstanding are more than thirty days Contractually Delinquent.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver to the relevant Seller or its designee a written reassignment in
substantially the form of Exhibit C (the "Reassignment") and shall, without
further action, be deemed to sell, transfer, assign, set over and otherwise
convey to such Seller or its designee, effective as of the Removal Date, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to the Participation Interests or Receivables arising in the
Removed Accounts, all moneys due and to become due and all amounts received with
respect thereto and all proceeds thereof. In addition, the Trustee shall execute
such other documents and instruments of transfer or assignment and
41
take such other actions as shall reasonably be requested by the relevant Seller
to effect the conveyance of Participation Interests or Receivables pursuant to
this Section 2.09.
Section 2.10. Account Allocations. In the event that any Seller is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 9.02 or any order of any Governmental Authority (a
"Transfer Restriction Event"), then, in any such event, (a) such Seller and the
Servicer agree (except as prohibited by any such order) to allocate and pay to
the Trust, after the date of such inability, all Collections of Receivables
transferred to the Trust by such Seller, including Collections of Receivables
transferred to the Trust by such Seller prior to the occurrence of such event,
and all amounts which would have constituted Collections but for such Seller's
inability to transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Seller in the Trust on such
date), (b) such Seller and the Servicer agree that such amounts will be applied
as Collections in accordance with Article IV and the terms of each Supplement
and (c) for so long as the allocation and application of all Collections and all
amounts that would have constituted Collections are made in accordance with
clauses (a) and (b) above, Principal Receivables and all amounts which would
have constituted Principal Receivables but for such Seller's inability to
transfer Receivables to the Trust which are written off as uncollectible in
accordance with this Agreement shall continue to be allocated in accordance with
Article IV and the terms of each Supplement. For the purpose of the immediately
preceding sentence, such Seller and the Servicer shall treat the first received
Collections with respect to the Accounts owned by such Seller as allocable to
the Trust until the Trust shall have been allocated and paid Collections in an
amount equal to the aggregate amount of Principal Receivables in such Accounts
as of the date of the occurrence of such event. If such Seller or the Servicer
is unable pursuant to any Requirements of Law to allocate Collections as
described above, such Seller and the Servicer agree that, after the occurrence
of such event, payments on each Account owned by such Seller with respect to the
principal balance of such Account shall be allocated first to the oldest
principal balance of such Account and shall have such payments applied as
Collections in accordance with Article IV and the terms of each Supplement. The
parties hereto agree that Finance Charge Receivables, whenever created, accrued
in respect of Principal Receivables which have been conveyed to the Trust shall
continue to be a part of the Trust notwithstanding any cessation of the transfer
of additional Principal Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article IV
and the terms of each Supplement.
Section 2.11. Discount Option. The Sellers shall have the option to
designate at any time and from time to time a percentage or percentages, which
may be a fixed percentage or a variable percentage based on a formula (the
"Discount Percentage"), of all or any specified portion of Principal Receivables
created after the Discount Option Date to be treated as Finance Charge
Receivables ("Discount Option Receivables"). The Seller shall also have the
option of reducing or withdrawing the Discount Percentage, at any time and from
time to time, on and after such Discount Option Date. The Sellers shall provide
to the Servicer, the Trustee and any Rating Agency 30 days prior written notice
of the Discount Option Date, and such designation shall become effective on the
Discount Option Date (i) unless such designation in the reasonable belief of the
Sellers would cause a Pay Out Event with respect to any Series to occur, or an
event which, with notice or lapse of time or both, would constitute a Pay Out
Event with respect to any
42
Series and (ii) only if the Rating Agency Condition shall have been satisfied
with respect to such designation.
After the Discount Option Date, the Sellers shall treat Discount
Option Receivable Collections as Collections of Finance Charge Receivables.
[END OF ARTICLE II]
43
ARTICLE III
Administration and Servicing
of Receivables
Section 3.01. Acceptance of Appointment and Other Matters Relating to
the Servicer.
Colonial agrees to act as the Servicer under this Agreement and the
Certificateholders by their acceptance of Certificates consent to Colonial
acting as Servicer.
The Servicer shall service and administer the Receivables, shall
collect payments due under the Receivables and shall charge off as uncollectible
Receivables, all in accordance with its customary and usual servicing procedures
for servicing credit card receivables comparable to the Receivables and in
accordance with the Credit Card Guidelines. The Servicer shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, subject to Section 10.01 and provided Colonial is
the Servicer, the Servicer or its designee (rather than the Trustee) is hereby
authorized and empowered (i) to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Collection Account, the Excess
Funding Account and any Series Account, as set forth in this Agreement or any
Supplement, and (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement or any Supplement. Without limiting
the generality of the foregoing and subject to Section 10.01, the Servicer or
its designee is hereby authorized and empowered to make any filings, reports,
notices, applications and registrations with, and to seek any consents or
authorizations from, the Securities and Exchange Commission (the "Commission")
and any state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or state securities laws or reporting
requirements. The Trustee shall furnish the Servicer with any powers of attorney
or other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder.
The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other credit card receivables.
The Servicer shall comply with and perform its servicing obligations
with respect to the Accounts and Receivables in accordance with the Cardholder
Agreements relating to the Accounts and the Credit Card Guidelines and all
applicable rules and regulations of VISA, MasterCard and any other similar
entity or organization relating to any other type of consumer revolving credit
card accounts included as Accounts, except insofar as any failure to so comply
or perform would not materially and adversely affect the Trust or the Investor
Certificateholders.
The Servicer shall pay out of its own funds, without reimbursement,
all expenses incurred in connection with the Trust and the servicing activities
hereunder including expenses related to enforcement of the Receivables, fees and
disbursements of the Trustee, any Paying Agent and any Transfer Agent and
Registrar (including the reasonable fees and expenses of its
44
counsel) and independent accountants and all other fees and expenses, including
the costs of filing UCC financing and continuation statements and the costs and
expenses relating to obtaining and maintaining the listing of any Investor
Certificates on any stock exchange, that are not expressly stated in this
Agreement to be payable by the Trust or the Sellers (other than Federal, state,
local and foreign income, franchise and other taxes, if any, or any interest or
penalties with respect thereto, assessed on the Trust).
The Servicer agrees that upon a request by the Sellers it will use
its reasonable best efforts to obtain and maintain the listing of the Investor
Certificates of any Series or Class on any specified security exchange. If any
such request is made, the Servicer shall give notice to the Sellers and the
Trustee on the date on which such Investor Certificates are approved for such
listing and within three Business Days following receipt of notice by the
Servicer of any actual, proposed or contemplated delisting of such Investor
Certificates by any such securities exchange. The Trustee or the Servicer, each
in its sole discretion, may terminate any listing on any such securities
exchange at any time subject to the notice requirements set forth in the
preceding sentence.
Section 3.02. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") with respect to each Monthly Period, payable
monthly on the related Distribution Date, in an amount equal to one-twelfth of
the product of (a) the weighted average of the Servicing Fee Rates with respect
to each outstanding Series (based upon the Servicing Fee Rate for each Series
and the Investor Amount (or such other amount as specified in the related
Supplement) of such Series, in each case as of the last day of the prior Monthly
Period) and (b) the amount of Principal Receivables on the last day of the prior
Monthly Period. The share of the Servicing Fee allocable to (i) the
Certificateholders' Interest of a particular Series with respect to any Monthly
Period (the "Monthly Servicing Fee") and (ii) the Enhancement Investor Amount,
if any, of a particular Series with respect to any Monthly Period will each be
determined in accordance with the relevant Supplement. The portion of the
Servicing Fee with respect to any Monthly Period not so allocated to the
Certificateholders' Interest or the Enhancement Investor Amount, if any, of a
particular Series shall be paid by the Holders of the Seller Certificates on the
related Distribution Date and in no event shall the Trust, the Trustee, the
Investor Certificateholders of any Series or any Series Enhancer be liable for
the share of the Servicing Fee with respect to any Monthly Period to be paid by
the Holders of the Seller Certificates.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Colonial, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, on each Closing Date (and on
the date of any such appointment), the following representations, warranties and
covenants:
Organization and Good Standing. The Servicer is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America or 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 each Supplement and, in all
material respects,
45
to own its properties and conduct its business as such properties are presently
owned and as such business is presently conducted.
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 obtained all necessary licenses and approvals in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the interests of the Investor
Certificateholders hereunder or under any Supplement.
Due Authorization. The execution, delivery, and performance of this
Agreement and each Supplement have been duly authorized by the Servicer by all
necessary corporate action on the part of the Servicer and this Agreement and
each Supplement will remain, from the time of its execution, an official record
of the Servicer.
Binding Obligation. This Agreement and each Supplement constitutes a
legal, valid and binding obligation 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
hereafter in effect, affecting the enforcement of creditors' rights in general
and the rights of creditors of national banking associations and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
No Violation. The execution and delivery of this Agreement and each
Supplement by the Servicer, the performance of the transactions contemplated by
this Agreement and each Supplement and the fulfillment of the terms hereof and
thereof 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, 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 or any of its properties are bound.
No Proceedings. 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 seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement or
any Supplement, 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
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of this Agreement or any Supplement.
Compliance with Requirements of Law. The Servicer shall duly satisfy
all obligations on its part to be fulfilled under or in connection with the
Receivables and the related Accounts, will maintain in effect all qualifications
required under Requirements of Law in order to service the Receivables and the
related Accounts properly and will comply in all material respects with all
other Requirements of Law in connection with servicing the Receivables and the
related Accounts, the failure to comply with which would have a material adverse
effect on the interests of the Certificateholders.
46
No Rescission or Cancellation. Subject to Section 3.09, the Servicer
shall not permit any rescission or cancellation of a Receivable except as
ordered by a court of competent jurisdiction or other Governmental Authority or
in the ordinary course of its business and in accordance with the Credit Card
Guidelines.
Protection of Certificateholders' Rights. 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 Receivable or
Account, nor shall it, except in the ordinary course of its business and in
accordance with the Credit Card Guidelines, reschedule, revise or defer
Collections due on the Receivables.
Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of a Receivable, the Servicer will
take no action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC) and, if any Receivable is so evidenced, it shall be
reassigned or assigned to the Servicer as provided in this Section; provided,
however, that Receivables evidenced by notes taken from Obligors in the ordinary
course of business of the Servicer's collection efforts shall not be deemed
Ineligible Receivables solely as a result thereof.
All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery by the Servicer of this
Agreement and each Supplement, the performance by the Servicer of the
transactions contemplated by this Agreement and each 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.
For purposes of the representations and warranties set forth in this
Section 3.03, each reference to a Supplement shall be deemed to refer only to
those Supplements in effect as of the relevant Closing Date or the date of
appointment of a Successor Servicer, as applicable.
In the event any of the representations, warranties or covenants of the
Servicer contained in paragraph (g), (h), (i) or (j) with respect to any
Receivable or the related Account is breached, and as a result of such breach
the Trust's rights in, to or under any Receivable in the related Account or the
proceeds of such Receivable are impaired or such proceeds are not available for
any reason to the Trust free and clear of any Lien, then no later than the
expiration of 60 days (or such longer period, not in excess of 150 days, as may
be agreed to by the Trustee) from the earlier to occur of the discovery of such
event by the Servicer, or receipt by the Servicer of notice of such event given
by the Trustee, all Receivables in the Account or Accounts to which such event
relates shall be reassigned or assigned to the Servicer on the terms and
conditions set forth below; provided, however, that such Receivables will not be
reassigned or assigned to the Servicer if, on any day prior to the end of such
60-day or longer period, (i) the relevant representation and warranty shall be
true and correct, or the relevant covenant shall have been complied with, in all
material respects and (ii) the Servicer shall have delivered to the Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which such breach was cured.
47
If Colonial is the Servicer, such reassignment or assignment shall be
accomplished in the manner set forth in subsection 2.05(b) as if the reassigned
or assigned Receivables were Ineligible Receivables (including the requirement,
if applicable, to reduce the aggregate amount of Principal Receivables used to
calculate the Seller Amount, the Series Percentages and any other percentage
used to allocate within or among Series applicable to any Series and to make
deposits into the Excess Funding Account). If Colonial is not the Servicer, the
Servicer shall effect such assignment by making a deposit into the Collection
Account in immediately available funds on the Transfer Date following the
Monthly Period in which such assignment obligation arises in an amount equal to
the amount of such Receivables, which deposit shall be considered a Collection
of Principal Receivables and shall be applied in accordance with Article IV and
the terms of each Supplement.
Upon each such reassignment or assignment to the Servicer, the Trustee,
on behalf of the Trust, shall automatically and without further action be deemed
to sell, transfer, assign, set over and otherwise convey to the Servicer,
without recourse, representation or warranty, all right, title and interest of
the Trust in and to such Receivables, all moneys due or to become due and all
amounts received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall be reasonably requested by the Servicer to effect
the conveyance of any such Receivables pursuant to this Section. The obligation
of the Servicer to accept reassignment or assignment of such Receivables, and to
make the deposits, if any, required to be made to the Collection Account or the
Excess Funding Account as provided in the preceding paragraph, shall constitute
the sole remedy respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of Certificateholders) or any
Series Enhancer.
Section 3.04. Reports and Records for the Trustee.
Daily Records. On each Business Day, the Servicer, with prior written
notice by the Trustee shall make or cause to be made available at the office of
the Servicer on any Business Day during normal business hours for inspection by
the Trustee a record setting forth (i) the Collections in respect of Principal
Receivables and in respect of Finance Charge Receivables processed by the
Servicer on the second preceding Business Day in respect of the Accounts and
(ii) the amount of Receivables as of the close of business on the second
preceding Business Day. The Servicer shall, at all times, maintain its computer
files with respect to the Accounts in such a manner so that the Accounts may be
specifically identified.
Monthly Servicer's Certificate. Not later than the Determination Date
immediately preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Trustee, the Paying Agent and each
Rating Agency a certificate of a Servicing Officer in substantially the form set
forth in the related Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer shall
deliver to the Trustee and each Rating Agency, on or before November 30 of each
calendar year, beginning with November 30, 1994, an Officer's Certificate (with
appropriate insertions) substantially in the form of Exhibit D.
48
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
On or before November 30 of each calendar year, beginning with
November 30, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Sellers) to furnish a report (addressed to the Trustee) to the
Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer and examined certain
documents and records relating to the servicing of Accounts under this Agreement
and each Supplement and that, on the basis of such agreed-upon procedures,
nothing has come to the attention of such accountants that caused them to
believe that the servicing (including the allocation of Collections) has not
been conducted in compliance with the terms and conditions set forth in Articles
III and Article IV and Section 8.08 of this Agreement and the applicable
provisions of each Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
Such report shall set forth the agreed upon procedures performed.
On or before November 30 of each calendar year, beginning with
November 30, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Sellers) to furnish a report (addressed to the Trustee) to the
Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer to compare the
mathematical calculations of certain amounts set forth in the Servicer's
certificates delivered pursuant to subsection 3.04(b) during the period covered
by such report with the Servicer's computer reports which were the source of
such amounts and that on the basis of such agreed-upon procedures and
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement.
A copy of each certificate and report provided pursuant to Section
3.04(b), 3.05 or 3.06 may be obtained by any Investor Certificateholder or
Certificate Owner by a request to the Trustee addressed to the Corporate Trust
Office.
Section 3.07. Tax Treatment. Unless otherwise specified in a Supplement
with respect to a particular Series, the Sellers have entered into this
Agreement, and the Certificates will be issued, with the intention that, for
Federal, state and local income and franchise tax purposes only, the Investor
Certificates of each Series which are characterized as indebtedness at the time
of their issuance will qualify as indebtedness secured by the Receivables. The
Sellers, by entering into this Agreement, and each Certificateholder, by the
acceptance of any such Certificate (and each Certificate Owner, by its
acceptance of an interest in the applicable Certificate), agree to treat such
Investor Certificates for Federal, state and local income and franchise tax
purposes as indebtedness. Each Holder of such Investor Certificate agrees that
it will cause any Certificate Owner acquiring an interest in a Certificate
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07.
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Section 3.08. Notices to Colonial. In the event that Colonial is no
longer acting as Servicer, any Successor Servicer shall deliver to Colonial each
certificate and report required to be provided thereafter pursuant to Section
3.04(b), 3.05 or 3.06.
Section 3.09. Adjustments.
If the Servicer adjusts downward the amount of any Receivable because
of a rebate, refund, unauthorized charge or billing error to an account holder,
or because such Receivable was created in respect of merchandise which was
refused or returned by an account holder, or if the Servicer otherwise adjusts
downward the amount of any Receivable without receiving Collections therefor or
charging off such amount as uncollectible, then, in any such case, the amount of
Principal Receivables used to calculate the Seller Amount, the Series
Percentages and any other percentage used to allocate within or among Series
applicable to any Series will be reduced by the amount of the adjustment.
Similarly, the amount of Principal Receivables used to calculate the Seller
Amount, the Series Percentages and any other percentage used to allocate within
or among Series applicable to any Series will be reduced by the amount of any
Receivable which was discovered as having been created through a fraudulent or
counterfeit charge. Any adjustment required pursuant to either of the two
preceding sentences shall be made on or prior to the end of the Monthly Period
in which such adjustment obligation arises. In the event that, following the
exclusion of such Principal Receivables from the calculation of the Seller
Amount, the Seller Amount would be less than the Required Seller Amount, not
later than 12:00 noon, New York City time, on the Distribution Date following
the Monthly Period in which such adjustment obligation arises, the Seller which
transferred such Principal Receivables to the Trust shall make a deposit into
the Excess Funding Account in immediately available funds in an amount equal to
the amount by which the Seller Amount would be below the Required Seller Amount
(up to the amount of such Principal Receivables).
If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Receivable and such Collection was received by the
Servicer in the form of a check which is not honored for any reason or (ii) the
Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid.
Section 3.10. Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
The Sellers shall, at the expense of the Servicer, cooperate in any reasonable
request of the Servicer in connection with such filings.
[END OF ARTICLE III]
50
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
Section 4.01. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust, which, with respect
to each Series, shall consist of the right to receive, to the extent necessary
to make the required payments with respect to the Investor Certificates of such
Series at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Collection Account and the Excess Funding Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Series Enhancement (collectively, with respect to all
Series, the "Certificateholders' Interest"), it being understood that the
Investor Certificates of any Series or Class shall not represent any interest in
any Series Account or Series Enhancement for the benefit of any other Series or
Class. The Seller Certificates shall represent the ownership interest in the
remainder of the Trust Assets not allocated pursuant to this Agreement or any
Supplement to the Certificateholders' Interest, including the right to receive
Collections with respect to the Receivables and other amounts at the times and
in the amounts specified in this Agreement or any Supplement to be paid to the
Holders of the Seller Certificates (the "Sellers' Interest"); provided, however,
that the Seller Certificates shall not represent any interest in the Collection
Account, the Excess Funding Account, any Series Account or any Series
Enhancement, except as specifically provided in this Agreement or any
Supplement; provided further, that the foregoing shall not be construed to limit
the Trustee's obligations to make payments to the Holders of the Seller
Certificates, the Sellers and the Servicer as and when required under this
Agreement and any Supplement.
Section 4.02. Establishment of Collection Account and Excess Funding
Account. The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (or Eligible Deposit Accounts) bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders (the "Collection Account"). The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Collection Account and in all proceeds thereof. The Collection Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Certificateholders. Except as expressly provided in this Agreement, the Servicer
agrees that it shall have no right of setoff or banker's lien against, and no
right to otherwise deduct from, any funds held in the Collection Account for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Collection Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within ten
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Collection Account meeting
the conditions specified above, transfer any cash or any investments to such new
Collection Account and from the date such new Collection Account is established,
it shall be the "Collection Account."
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Unless otherwise agreed to by each Rating Agency, if at any time
neither Colonial nor any Affiliate of Colonial is the Servicer, the Collection
Account will be moved from Colonial if then maintained there.
Funds on deposit in the Collection Account (other than amounts
deposited pursuant to Section 2.06, 9.02, 10.01 or 12.02) shall at the direction
of the Servicer be invested by the Trustee in Eligible Investments selected by
the Servicer. All such Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders. The Trustee shall maintain for the benefit of
the Certificateholders possession of the negotiable instruments or securities,
if any, evidencing such Eligible Investments. Investments of funds representing
Collections collected during any Monthly Period shall be invested in Eligible
Investments that will mature so that funds will be available at the close of
business on the Transfer Date following such Monthly Period. Unless directed by
the Servicer, funds deposited in the Collection Account on a Transfer Date with
respect to the next following Distribution Date are not required to be invested
overnight. For purposes of determining the availability of funds or the balances
in the Collection Account for any reason under this Agreement, all investment
earnings net of investment expenses and losses on such funds shall be deemed not
to be available or on deposit.
The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Excess Funding Account"). The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Excess Funding Account
and in all proceeds thereof. The Excess Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders.
Except as expressly provided in this Agreement, the Servicer agrees that it
shall have no right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds held in the Excess Funding Account for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Excess Funding Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Excess Funding Account
meeting the conditions specified above, transfer any cash or any investments to
such new Excess Funding Account and from the date such new Excess Funding
Account is established, it shall be the "Excess Funding Account."
Unless otherwise agreed by each Rating Agency, if at any time neither
Colonial nor any other Affiliate of Colonial is the Servicer, the Excess Funding
Account will be moved from Colonial if then maintained there.
Funds on deposit in the Excess Funding Account shall at the direction
of the Servicer be invested by the Trustee in Eligible Investments selected by
the Servicer. All such Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders. The Trustee shall maintain for the benefit of
the Certificateholders possession of the negotiable instruments or securities,
if any, evidencing such Eligible Investments. Funds on deposit in the Excess
Funding Account on any date (after giving effect to any withdrawals from the
Excess Funding Account on such date) will be invested in Eligible Investments
that will mature so that funds will be available at the close of business on the
Transfer Date following such date. Unless
52
directed by the Servicer, funds deposited in the Excess Funding Account on a
Transfer Date with respect to the next following Distribution Date are not
required to be invested overnight. On each Transfer Date, the Servicer shall
instruct the Trustee to withdraw on the related Distribution Date from the
Excess Funding Account and deposit in the Collection Account all interest and
other investment earnings (net of losses and investment expenses) on funds on
deposit in the Excess Funding Account, for application as Collections of Finance
Charge Receivables with respect to the prior Monthly Period. Interest (including
reinvested interest) and other investment income and earnings on funds on
deposit in the Excess Funding Account shall not be considered part of the Excess
Funding Amount for purposes of this Agreement. On any Transfer Date on which no
Series is in an Accumulation Period or Amortization Period, the Servicer shall
determine the amount by which the Seller Amount exceeds the Required Seller
Amount on such date and shall instruct the Trustee to withdraw such amount from
the Excess Funding Account on the related Distribution Date and pay such amount
to the Holders of the Seller Certificates. On any Transfer Date on which one or
more Series is in an Accumulation Period or Amortization Period, the Servicer
shall determine the aggregate amount of Principal Shortfalls, if any, with
respect to each such Series that is a Principal Sharing Series (after giving
effect to the allocation and payment provisions in the Supplement with respect
to each such Series), and the Servicer shall instruct the Trustee to withdraw
such amount (up to the Excess Funding Amount) from the Excess Funding Account on
the succeeding Distribution Date and allocate such amount among each such Series
as Shared Principal Collections as specified herein and in each related
Supplement.
Section 4.03. Collections and Allocations.
Collections. The Servicer will apply or will instruct the Trustee to
apply all funds on deposit in the Collection Account as described in this
Article IV and in each Supplement. Except as otherwise provided below or as
expressly provided in any Supplement with respect to Collections allocated to
the related Series, the Servicer shall deposit Collections into the Collection
Account no later than the second Business Day following the Date of Processing
of such Collections. Subject to the express terms of any Supplement, but
notwithstanding anything else in this Agreement to the contrary, for so long as
Colonial remains the Servicer and (x) maintains a certificate of deposit rating
of A-1 or better by Standard & Poor's and P-1 by Moody's (or such other rating
below A-1 or P-1, as the case may be, which is satisfactory to each Rating
Agency), or (y) Colonial has provided to the Trustee a letter of credit covering
collection risk of the Servicer acceptable to each Rating Agency (as evidenced
by a letter from each Rating Agency), the Servicer need not make the daily
deposits of Collections into the Collection Account as provided in the preceding
sentence, but may make a single deposit in the Collection Account in immediately
available funds not later than 12:00 noon, New York City time, on the Transfer
Date following the Monthly Period with respect to which such deposit was made.
Subject to the express terms of any Supplement, but notwithstanding anything
else in this Agreement to the contrary, with respect to any Monthly Period,
whether the Servicer is required to make deposits of Collections pursuant to the
first or the second preceding sentence, (i) the Servicer will only be required
to deposit Collections into the Collection Account up to the aggregate amount of
Collections required to be deposited into any Series Account or, without
duplication, distributed on or prior to the related Distribution Date to
Investor Certificateholders or to any Series Enhancer pursuant to the terms of
any Supplement or Enhancement Agreement and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the
53
Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from the
Collection Account.
Allocations for the Seller Certificates. Throughout the existence of
the Trust, unless otherwise stated in any Supplement, the Servicer shall
allocate to the Holders of the Seller Certificates an amount equal to the
product of (A) the Seller Percentage and (B) the aggregate amount of such
Collections allocated to Principal Receivables and Finance Charge Receivables,
respectively, in respect of each Monthly Period. Notwithstanding anything in
this Agreement to the contrary, unless otherwise stated in any Supplement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Seller Certificates pursuant to any Supplement into the Collection Account and
shall pay, or be deemed to pay, such amounts as collected to the Holders of the
Seller Certificates.
The payments to be made to the Holders of the Seller Certificates
pursuant to this subsection 4.03(c) do not apply to deposits to the Collection
Account or other amounts that do not represent Collections, including payment of
the purchase price for Receivables pursuant to Section 2.06 or 10.01, proceeds
from the sale, disposition or liquidation of Receivables pursuant to Section
9.02 or 12.02 or payment of the purchase price for the Certificateholders'
Interest of a specific Series pursuant to the related Supplement.
Section 4.04. Shared Principal Collections. On each Distribution Date,
(a) the Servicer shall allocate Shared Principal Collections to each Principal
Sharing Series, pro rata, in proportion to the Principal Shortfalls, if any,
with respect to each such Series and (b) the Servicer shall withdraw from the
Collection Account and pay to the Holders of the Seller Certificates an amount
equal to the excess, if any, of (x) the aggregate amount for all outstanding
Series of Collections of Principal Receivables which the related Supplements or
this Agreement specify are to be treated as "Shared Principal Collections" for
such Distribution Date over (y) the aggregate amount for all outstanding
Principal Sharing Series which the related Supplements specify are "Principal
Shortfalls" for such Distribution Date; provided, however, that if, on any
Distribution Date the Seller Amount is less than or equal to the Required Seller
Amount, the Servicer will not distribute to the Holders of the Seller
Certificates any Shared Principal Collections that otherwise would be
distributed to the Holders of the Seller Certificates, but shall deposit such
funds in the Excess Funding Account.
Section 4.05. Allocation of Trust Assets to Series or Groups. To the
extent so provided in the Supplement for any Series or in an amendment to the
Pooling and Servicing Agreement executed pursuant to subsection 13.01(a),
Receivables conveyed to the Trust pursuant to Section 2.01 and Receivables or
Participation Interests conveyed to the Trust pursuant to Section 2.08 or any
Participation Interest Supplement, and all Collections received with respect to
such Receivables or Participation Interests, may be allocated in whole or in
part to one or more Series or Groups as may be provided in such Supplement or
amendment, provided, however, that any such allocation shall be effective only
upon satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately
preceding such allocation, the Servicer shall have given the Trustee
and each Rating Agency written notice of such allocation;
54
(ii) the Rating Agency Condition shall have been satisfied
with respect to such allocation; and
(iii) the Servicer shall have delivered to the Trustee an
Officer's Certificate, dated the date of such allocation, to the effect
that the Servicer reasonably believes that such allocation will not
have an Adverse Effect.
Any such Supplement or amendment may provide that (i) such
allocation to one or more particular Series or Groups may terminate upon the
occurrence of certain events specified therein and (ii) that upon the occurrence
of any such event, such assets and any Collections with respect thereto, shall
be reallocated to other Series or Groups or to all Series, all as shall be
provided in such Supplement or amendment.
[END OF ARTICLE IV]
55
ARTICLE V
Distributions and Reports to
Certificateholders
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
[END OF ARTICLE V]
56
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates of any Series
or Class may be issued in bearer form ("Bearer Certificates") with attached
interest coupons and any other applicable coupon (collectively, the "Coupons")
or in fully registered form ("Registered Certificates") and shall be
substantially in the form of the exhibits with respect thereto attached to the
applicable Supplement. The Bank Certificate will be issued in registered form,
substantially in the form of Exhibit A, and shall upon issue be executed and
delivered by Colonial to the Trustee for authentication and redelivery as
provided in Section 6.02. Except as otherwise provided in Section 6.03 or in any
Supplement, Bearer Certificates shall be issued in minimum denominations of
$100,000 and Registered Certificates shall be issued in minimum denominations of
$1,000 and in integral multiples of $1,000 in excess thereof. If specified in
any Supplement, the Investor Certificates of any Series or Class shall be issued
upon initial issuance as a single certificate evidencing the aggregate original
principal amount of such Series or Class as described in Section 6.13. The Bank
Certificate shall be a single certificate and shall initially represent the
entire Sellers' Interest. Each Certificate shall be executed by manual or
facsimile signature on behalf of Colonial by its respective President or any
Vice President. Certificates bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of Colonial shall not be rendered invalid, notwithstanding that
such individual 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 Certificates shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. Bearer Certificates shall be dated the
related Closing Date. All Registered Certificates and Seller Certificates shall
be dated the date of their authentication.
Section 6.02. Authentication of Certificates. The Trustee shall
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Sellers against
payment to the Sellers of the purchase price therefor. The Trustee shall
authenticate and deliver the Bank Certificate to Colonial simultaneously with
its delivery of the Investor Certificates of the first Series to be issued
hereunder. If specified in the related Supplement for any Series or Class, the
Trustee shall authenticate and deliver outside the United States the Global
Certificate that is issued upon original issuance thereof.
Section 6.03. New Issuances.
The Sellers may from time to time direct the Trustee, on behalf of
the Trust, to authenticate one or more new Series of Investor Certificates. The
Investor Certificates of all outstanding Series shall be equally and ratably
entitled as provided herein to the benefits of this Agreement without
preference, priority or distinction, all in accordance with the terms and
57
provisions of this Agreement and the applicable Supplement except, with respect
to any Series or Class, as provided in the related Supplement.
On or before the Closing Date relating to any new Series, the parties
hereto will execute and deliver a Supplement which will specify the Principal
Terms of such new Series. The terms of such Supplement may modify or amend the
terms of this Agreement solely as applied to such new Series. The obligation of
the Trustee to authenticate the Investor Certificates of such new Series and to
execute and deliver the related Supplement is subject to the satisfaction of the
following conditions:
on or before the fifth day immediately preceding the
Closing Date, the Sellers shall have given the Trustee and the Servicer
notice of such issuance and the Closing Date; and on or before the
tenth day immediately preceding the Closing Date, the Sellers shall
have given each Rating Agency notice of such issuance;
the Sellers shall have delivered to the Trustee the
related Supplement, in form satisfactory to the Trustee, executed by
each party thereto;
the Sellers shall have delivered to the Trustee any
related Enhancement Agreement executed by each of the parties thereto,
other than the Trustee;
the Rating Agency Condition shall have been satisfied with
respect to such issuance;
the Sellers shall have delivered to the Trustee an
Officer's Certificate, dated the Closing Date, to the effect that such
Seller reasonably believes that such issuance will not, based on the
facts known to such officer at the time of such certification, then or
thereafter cause a Pay Out Event to occur with respect to any Series;
and
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
Sellers shall have delivered to the Trustee and each Rating Agency a
Tax Opinion, dated the Closing Date, with respect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and authenticate the Investor Certificates of such Series upon
execution thereof by Colonial.
(c) The Sellers may surrender the Bank Certificate to the Trustee in
exchange for a newly issued Bank Certificate and one or more additional
certificates (each a "Supplemental Certificate"), the terms of which shall be
defined in a supplement to this Agreement (which supplement shall be subject to
subsection 13.01(a) only to the extent that it amends any of the terms of this
Agreement), to be delivered to or upon the order of the Sellers (or the Holder
of a Supplemental Certificate, in the case of the transfer or exchange thereof,
as provided below), upon satisfaction of the following conditions:
The Sellers shall have given written notice to each
Rating Agency of such exchange;
58
the Seller Amount (excluding the interest represented by
any Supplemental Certificate) shall not be less than 2% of the total
amount of Principal Receivables as of the date of, and after giving
effect to, such exchange; and
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
Sellers shall have delivered to the Trustee and each Rating Agency a
Tax Opinion, dated the date of such exchange (or transfer or exchange
as provided below), with respect thereto.
Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clause (ii) above.
(d) The Bank Certificate (or any interest therein) may be transferred
to a Person which is a member of the "affiliated group" of which ADVANTA Corp.
is the "common parent" (as such terms are defined in Section 1504(a) of the
Code); provided that (i) if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the Sellers shall
have delivered to the Trustee and each Rating Agency a Tax Opinion, dated the
date of such transfer, with respect thereto, and (ii) any such transferee shall
be deemed to be a "Seller" for purposes of Sections 7.04 and 9.02.
Section 6.04. Registration of Transfer and Exchange of Certificates.
The Trustee shall cause to be kept at the office or agency to be
maintained in accordance with the provisions of Section 11.16 a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, a transfer agent and registrar (which may be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration of the
Registered Certificates and of transfers and exchanges of the Registered
Certificates as herein provided. The Transfer Agent and Registrar shall
initially be the Trustee and any co-transfer agent and co-registrar chosen by
the Sellers and acceptable to the Trustee, including, if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange and such exchange
shall so require, a co-transfer agent and co-registrar in Luxembourg. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
The Trustee may revoke such appointment and remove any Transfer Agent
and Registrar if the Trustee determines in its sole discretion that such
Transfer Agent and Registrar failed to perform its obligations under this
Agreement in any material respect. Any Transfer Agent and Registrar shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' notice to the
Sellers, the Trustee and the Servicer; provided, however, that such resignation
shall not be effective and such Transfer Agent and Registrar shall continue to
perform its duties as Transfer Agent and Registrar until the Trustee has
appointed a successor Transfer Agent and Registrar reasonably acceptable to the
Sellers.
Subject to paragraph (c) below, upon surrender for registration of
transfer of any Registered Certificate at any office or agency of the Transfer
Agent and Registrar maintained for such purpose, one or more new Registered
Certificates (of the same Series and Class) in authorized denominations of like
aggregate fractional undivided interests in the
59
Certificateholders' Interest shall be executed, authenticated and delivered, in
the name of the designated transferee or transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange for Bearer
Certificates, may not be exchanged for Bearer Certificates. At the option of the
Holder of a Bearer Certificate, subject to applicable laws and regulations,
Bearer Certificates may be exchanged for other Bearer Certificates or Registered
Certificates (of the same Series and Class) of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office or agency
of the Transfer Agent and Registrar located outside the United States. Each
Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided that any Bearer Certificate, so
surrendered after the close of business on the Record Date preceding the
relevant payment date after the expected final payment date need not have
attached the Coupon relating to such payment date (in each case, as specified in
the applicable Supplement).
Whenever any Investor Certificates are so surrendered for exchange,
Colonial shall execute, the Trustee shall authenticate and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States) 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 or the
Transfer Agent and Registrar duly executed by the Investor Certificateholder or
the attorney-in-fact thereof 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 such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall cancel
and destroy any Global Certificate upon its exchange in full for Definitive
Euro-Certificates and shall deliver a certificate of destruction to the Sellers.
Such certificate shall also state that a certificate or certificates of a
Foreign Clearing Agency to the effect referred to in Section 6.13 was received
with respect to each portion of the Global Certificate exchanged for Definitive
Euro-Certificates.
Colonial shall execute and deliver to the Trustee Bearer Certificates
and Registered Certificates in such amounts and at such times as are necessary
to enable the Trustee to fulfill its responsibilities under this Agreement, each
Supplement and the Certificates.
60
The Transfer Agent and Registrar will maintain at its expense in each
of the Borough of Manhattan, The City of New York, and, if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange, Luxembourg, an
office or agency where Investor Certificates may be surrendered for registration
of transfer or exchange (except that Bearer Certificates may not be surrendered
for exchange at any such office or agency in the United States).
a) (i) Registration of transfer of Investor Certificates
containing a legend substantially to the effect set forth on Exhibit
E-1 shall be effected only if such transfer (x) is made pursuant to an
effective registration statement under the Act, or is exempt from the
registration requirements under the Act, and (y) is made to a Person
which is not an employee benefit plan, trust or account, including an
individual retirement account, that is subject to ERISA or that is
described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment
in such entity (a "Benefit Plan"). In the event that registration of a
transfer is to be made in reliance upon an exemption from the
registration requirements under the Act, the transferor or the
transferee shall deliver, at its expense, to the Sellers, the Servicer
and the Trustee, an investment letter from the transferee,
substantially in the form of the investment and ERISA representation
letter attached hereto as Exhibit E-2, and no registration of transfer
shall be made until such letter is so delivered.
Investor Certificates issued upon registration or transfer
of, or Investor Certificates issued in exchange for, Investor
Certificates bearing the legend referred to above shall also bear such
legend unless the Sellers, the Servicer, the Trustee and the Transfer
Agent and Registrar receive an Opinion of Counsel, satisfactory to each
of them, to the effect that such legend may be removed.
Whenever an Investor Certificate containing the legend
referred to above is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall
promptly seek instructions from the Servicer regarding such transfer
and shall be entitled to receive instructions signed by a Servicing
Officer prior to registering any such transfer. The Sellers hereby
agree to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense
incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by them in relation to
any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates
containing a legend to the effect set forth on Exhibit E-3 shall be
effected only if such transfer is made to a Person which is not a
Benefit Plan. By accepting and holding any such Investor Certificate,
an Investor Certificateholder shall be deemed to have represented and
warranted that it is not a Benefit Plan. By acquiring any interest in a
Book-Entry Certificate which contains such legend, a Certificate Owner
shall be deemed to have represented and warranted that it is not a
Benefit Plan.
(iii) If so requested by the Sellers, the Trustee will make
available to any prospective purchaser of Investor Certificates who so
requests, a copy of a letter provided
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to the Trustee by or on behalf of the Sellers relating to the
transferability of any Series or Class to a Benefit Plan.
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If any
mutilated Certificate (together, in the case of Bearer Certificates, with all
unmatured Coupons (if any) appertaining thereto) is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and there
is delivered to the Transfer Agent and Registrar and the Trustee 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, Colonial shall execute, the Trustee shall authenticate
and the Transfer Agent and Registrar shall deliver (in the case of Bearer
Certificates, outside the United States), in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and aggregate fractional undivided interest. In connection with the
issuance of any new Certificate under this Section, 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 governmental charge that may be imposed in
relation thereto and any 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 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.06. Persons Deemed Owners. The Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may (a) prior to due
presentation of a Registered Certificate for registration of transfer, treat the
Person in whose name any Registered Certificate is registered as the owner of
such Registered Certificate for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever,
and (b) treat the bearer of a Bearer Certificate or Coupon as the owner of such
Bearer Certificate or Coupon for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever;
and, in any such case, 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. Notwithstanding the foregoing, in determining whether the Holders
of the requisite Investor Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by any of the Sellers, the Servicer, any other Holder of a Seller
Certificate, the Trustee or any Affiliate thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates which the Trustee
actually 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 pledgee is not any Seller, the Servicer, any other Holder of a Seller
Certificate or any Affiliate thereof.
Section 6.07. Appointment of Paying Agent. The Paying Agent shall make
distributions to Investor Certificateholders from the Collection Account or any
applicable Series Account pursuant to the provisions of the applicable
Supplement and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw
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funds from the Collection Account or any applicable Series Account for the
purpose of making the distributions referred to above. The Trustee may revoke
such power and remove the Paying Agent if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement or any Supplement in any material respect. The Paying Agent
shall initially be the Trustee and any co-paying agent chosen by the Sellers and
acceptable to the Trustee, including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange so requires, a
co-paying agent in Luxembourg or another western European city. Any Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' notice to the
Trustee. In the event that any Paying Agent shall resign, the Trustee shall
appoint a successor to act as Paying Agent. The Trustee shall cause each
successor or additional Paying Agent to execute and deliver to the Trustee an
instrument in which such successor or additional Paying Agent shall agree with
the Trustee that it will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Investor 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, 11.03 and 11.05 shall
apply to the Trustee also in its role as Paying Agent, for so long as the
Trustee shall act as Paying Agent. Any reference in this Agreement to the Paying
Agent shall include any co-paying agent unless the context requires otherwise.
Section 6.08. Access to List of Registered Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor, a list in such form as
the Servicer or the Paying Agent may reasonably require, of the names and
addresses of the Registered Certificateholders. If any Holder or group of
Holders of Investor Certificates of any Series or all outstanding Series, as the
case may be, evidencing not less than 10% of the aggregate unpaid principal
amount of such Series or all outstanding Series, as applicable (the
"Applicants"), apply to the Trustee, and such application states that the
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent and Registrar to afford such Applicants
access during normal business hours to the most recent list of Registered
Certificateholders of such Series or all outstanding Series, as applicable, held
by the Trustee, within five Business Days after the receipt of such application.
Such list shall be as of a date no more than 45 days prior to the date of
receipt of such Applicants' request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, 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 Registered Certificateholders hereunder, regardless of the
sources from which such information was derived.
Section 6.09. Authenticating Agent. The Trustee may appoint one or more
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of the Trustee in authenticating the Certificates in connection
with the issuance, delivery,
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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 certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Sellers and the Servicer.
Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Trustee
or such authenticating agent. An authenticating agent may at any time resign by
giving notice of resignation to the Trustee and to the Sellers. 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 Sellers. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or the Sellers,
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
Sellers. The Sellers agree to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section. The provisions of
Sections 11.01, 11.02 and 11.03 shall be applicable to any authenticating agent.
Pursuant to an appointment made under this Section, 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 6.10. Book-Entry Certificates. Unless otherwise specified in
the related Supplement for any Series or Class, the Investor Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Investor Certificates representing the Book-Entry Certificates, to be delivered
to the Clearing Agency, by, or on behalf of, the Sellers. The Investor
Certificates shall initially be registered on the Certificate Register in the
name of the Clearing Agency or its nominee, and no Certificate Owner will
receive a definitive certificate
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representing such Certificate Owner's interest in the Investor Certificates,
except as provided in Section 6.12. Unless and until definitive, fully
registered Investor Certificates ("Definitive Certificates") have been issued to
the applicable Certificate Owners pursuant to Section 6.12 or as otherwise
specified in any such Supplement:
the provisions of this Section shall be in full force and effect;
the Sellers, the Servicer and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes (including the
making of distributions) as the authorized representatives of the respective
Certificate Owners;
to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control; and
the rights of the respective 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 or the Clearing Agency Participants. Pursuant to
the Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.12, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the related Investor Certificates to such Clearing
Agency Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Investor Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
Investor Certificates, such direction or consent may be given by Certificate
Owners (acting through the Clearing Agency and the Clearing Agency Participants)
owning Investor Certificates evidencing the requisite percentage of principal
amount of Investor Certificates.
Section 6.11. Notices to Clearing Agency. Whenever any notice or other
communication is required to be given to Investor Certificateholders of any
Series or Class with respect to which Book-Entry Certificates have been issued,
unless and until Definitive Certificates shall have been issued to the related
Certificate Owners, the Trustee shall give all such notices and communications
to the applicable Clearing Agency.
Section 6.12. Definitive Certificates. If Book Entry Certificates have
been issued with respect to any Series or Class and the Sellers advise the
Trustee that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Sellers are unable to locate a
qualified successor, the Sellers, at their option, advise the Trustee that they
elect to terminate the book-entry system with respect to such Series or Class
through the Clearing Agency or after the occurrence of a Servicer Default,
Certificate Owners of such Series or Class evidencing more than 50% of the
aggregate unpaid principal amount of such Series or Class advise the Trustee and
the Clearing Agency through the Clearing Agency Participants that the
continuation of a book-entry system with respect to the Investor Certificates of
such Series or Class through the Clearing Agency is no longer in the best
interests of the Certificate Owners with respect to such Certificates, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
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Clearing Agency, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of any such Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, Colonial shall execute and the Trustee shall authenticate and
deliver such Definitive Certificates. Neither the Sellers 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 such Definitive Certificates, all references herein to obligations
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
such Definitive Certificates as Investor Certificateholders hereunder.
Section 6.13. Global Certificate; Exchange Date.
If specified in the related Supplement for any Series or Class, the
Investor Certificates for such Series or Class will initially be issued in the
form of a single temporary global Certificate (the "Global Certificate") in
bearer form, without interest coupons, in the denomination of the entire
aggregate principal amount of such Series or Class and substantially in the form
set forth in the exhibit with respect thereto attached to the related
Supplement. The Global Certificate will be executed by Colonial and
authenticated by the Trustee upon the same conditions, in substantially the same
manner and with the same effect as the Definitive Certificates. The Global
Certificate may be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive Euro-Certificates").
The Manager shall, upon its determination of the date of completion
of the distribution of the Investor Certificates of such Series or Class, so
advise the Trustee, the Sellers, the Depositaries, and each Foreign Clearing
Agency forthwith. Without unnecessary delay, but in any event not prior to the
Exchange Date, Colonial will execute and deliver to the Trustee at its London
office or its designated agent outside the United States definitive Bearer
Certificates in an aggregate principal amount equal to the entire aggregate
principal amount of such Series or Class. All Bearer Certificates so issued and
delivered will have Coupons attached. The Global Certificate may be exchanged
for an equal aggregate principal amount of Definitive Euro-Certificates only on
or after the Exchange Date. An institutional investor that is a U.S. Person may
exchange the portion of the Global Certificate beneficially owned by it only for
an equal aggregate principal amount of Registered Certificates bearing the
applicable legend set forth in the form of Registered Certificates attached to
the related Supplement and having a minimum denomination of $500,000, which may
be in temporary form if the Sellers so elect. The Sellers may waive the $500,000
minimum denomination requirement if they so elect. Upon any demand for exchange
for Definitive Euro-Certificates in accordance with this paragraph, the Sellers
shall cause the Trustee to authenticate and deliver the Definitive
Euro-Certificates to the Holder (x) outside the United States, in the case of
Bearer Certificates, and (y) according to the instructions of the Holder, in the
case of Registered Certificates, but in either case only upon presentation to
the Trustee of a written statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof being exchanged, signed by
a Foreign Clearing Agency and dated on the Exchange Date or a subsequent date,
to the effect that it has received in writing or by tested telex a certification
substantially in the form of (i) in the case of beneficial ownership of the
Global Certificate or a portion thereof being exchanged by a United States
institutional
66
investor pursuant to the second preceding sentence, the certificate in the form
of Exhibit F-2 signed by the Manager which sold the relevant Certificates or
(ii) in all other cases, the certificate in the form of Exhibit F-3, the
certificate referred to in this clause (ii) being dated on the earlier of the
first actual payment of interest in respect of such Certificates and the date of
the delivery of such Certificate in definitive form. Upon receipt of such
certification, the Trustee shall cause the Global Certificate to be endorsed in
accordance with paragraph (d) below. Any exchange as provided in this Section
shall be made free of charge to the Holders and the beneficial owners of the
Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such person does not receive such Definitive
Euro-Certificates in person at the offices of a Foreign Clearing Agency.
The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Sellers and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
Upon any such exchange of all or a portion of the Global Certificate
for a Definitive Euro-Certificate or Certificates, such Global Certificate shall
be endorsed by or on behalf of the Trustee to reflect the reduction of its
principal amount by an amount equal to the aggregate principal amount of such
Definitive Euro-Certificate or Certificates. Until so exchanged in full, such
Global Certificate shall in all respects be entitled to the same benefits under
this Agreement as Definitive Euro-Certificates authenticated and delivered
hereunder except that the beneficial owners of such Global Certificate shall not
be entitled to receive payments of interest on the Certificates until they have
exchanged their beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
Section 6.14. Meetings of Certificateholders.
If at the time any Bearer Certificates are issued and outstanding
with respect to any Series or Class to which any meeting described below
relates, the Servicer or the Trustee may at any time call a meeting of Investor
Certificateholders of any Series or Class or of all Series, to be held at such
time and at such place as the Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of or amendment to, or
obtaining a waiver of any covenant or condition set forth in, this Agreement,
any Supplement or the Investor Certificates or of taking any other action
permitted to be taken by Investor Certificateholders hereunder or under any
Supplement. Notice of any meeting of Investor Certificateholders, setting forth
the time and place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in accordance with Section 13.05, the
first mailing and publication to be not less than 20 nor more than 180 days
prior to the date fixed for the meeting. To be entitled to vote at any meeting
of Investor Certificateholders a person shall be (i) a Holder of one or more
Investor Certificates of the applicable Series or Class or (ii) a person
appointed by an instrument in writing as proxy by the Holder of one or more such
Investor Certificates. The only persons who shall be entitled to be present or
to speak at any meeting of Investor Certificateholders shall be the persons
entitled to vote at such meeting and their counsel and any representatives of
the Sellers, the Servicer and the Trustee and their respective counsel.
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At a meeting of Investor Certificateholders, persons entitled to vote
Investor Certificates evidencing a majority of the aggregate unpaid principal
amount of the applicable Series or Class or all outstanding Series, as the case
may be, shall constitute a quorum. No business shall be transacted in the
absence of a quorum, unless a quorum is present when the meeting is called to
order. In the absence of a quorum at any such meeting, the meeting may be
adjourned for a period of not less than 10 days; in the absence of a quorum at
any such meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days; at the reconvening of any meeting further adjourned
for lack of a quorum, the persons entitled to vote Investor Certificates
evidencing at least 25% of the aggregate unpaid principal amount of the
applicable Series or Class or all outstanding Series, as the case may be, shall
constitute a quorum for the taking of any action set forth in the notice of the
original meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided above except that such notice must be given not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the aggregate principal amount of the outstanding applicable
Investor Certificates which shall constitute a quorum.
Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
Investor Certificateholder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Subject to the
provisions of Section 13.01, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
The holding of Bearer Certificates shall be proved by the production
of such Bearer Certificates or by a certificate, satisfactory to the Servicer,
executed by any bank, trust company or recognized securities dealer, wherever
situated, satisfactory to the Servicer. Each such certificate shall be dated and
shall state that on the date thereof a Bearer Certificate bearing a specified
serial number was deposited with or exhibited to such bank, trust company or
recognized securities dealer by the Person named in such certificate. Any such
certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by having
the signature of the Person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
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Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
Section 6.15. Uncertificated Classes. Notwithstanding anything to the
contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement, any provisions contained in this Article VI and in
Article XII relating to the registration, form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
[END OF ARTICLE VI]
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ARTICLE VII
Other Matters Relating to the Sellers
Section 7.01. Liability of the Sellers. Each Seller (including any
Additional Sellers) shall be jointly liable in all respects for the obligations,
covenants, representations and warranties of the Sellers arising under or
related to this Agreement or any Supplement. A Seller shall be liable only to
the extent of the obligations specifically undertaken by it in its capacity as
Seller. Each other Seller hereby authorizes and empowers Colonial to execute and
deliver, on behalf of such Seller, as attorney-in-fact or otherwise, all
documents and other instruments required or permitted to be delivered by such
Seller under this Agreement or any Supplement, and to do and accomplish all
other acts and things required or permitted to be done or accomplished by such
Seller hereunder or thereunder.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Sellers.
None of the Sellers shall consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person unless:
(x) the corporation formed by such consolidation or into
which such Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of such Seller substantially as
an entirety shall be, if such Seller is not the surviving entity, a
corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia, and shall be a
savings and loan association, a national banking association, a bank or
other entity which is not subject to Title 11 of the United States Code
or a bankruptcy remote corporation and, if such Seller is not the
surviving entity, such corporation shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the performance of every covenant
and obligation of such Seller hereunder, including its obligations
under Section 7.04; and (y) such Seller has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section, that such supplemental agreement is
a valid and binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such transaction
have been complied with;
the Rating Agency Condition shall have been satisfied with
respect to such consolidation, merger, conveyance or transfer; and
70
if any Series of Investor Certificates are outstanding
that were characterized as debt at the time of their issuance, the
relevant Seller shall have delivered to the Trustee and each Rating
Agency a Tax Opinion, dated the date of such consolidation, merger,
conveyance or transfer, with respect thereto.
(b) The obligations of the Sellers hereunder shall not be assignable
nor shall any Person succeed to the obligations of the Sellers hereunder except
in each case in accordance with the provisions of the foregoing paragraph.
Section 7.03. Limitations on Liability of the Sellers. Subject to
Sections 7.01 and 7.04, none of the Sellers nor any of the directors, officers,
employees or agents of any of the Sellers acting in their capacities as Sellers
shall be under any liability to the Trust, the Trustee, the Certificateholders,
the Certificate Owners, any Series Enhancer or any other Person for any action
taken or for refraining from the taking of any action in good faith in their
capacities as Sellers pursuant to this Agreement, it being expressly understood
that such liability is expressly waived and released as a condition of, and
consideration for, the execution of this Agreement and any Supplement and the
issuance of the Certificates; provided, however, that this provision shall not
protect any Seller 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 Sellers and any director, officer,
employee or agent of any of the Sellers may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person (other
than the Sellers) respecting any matters arising hereunder.
Section 7.04. Liabilities. The Sellers shall indemnify and hold
harmless the Trust and the Trustee, its officers, directors, employees and
agents from and against any reasonable loss, liability, expense, damage or
injury suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of or based upon the arrangement created by this Agreement
or any Supplement, as though this Agreement or such Supplement created a
partnership under the Delaware Uniform Partnership Law in which the Sellers are
general partners; provided, however, that the Sellers shall not indemnify the
Trustee if such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee; provided
further, that the Sellers shall not indemnify the Trust, the Investor
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust with respect to any action taken by the Trustee at the
request of the Investor Certificateholders; provided, further, that the Sellers
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including, without limitation, losses incurred
as a result of Defaulted Receivables; and provided further, that the Sellers
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners for any liabilities, costs
or expenses of the Trust, the Trustee or the Investor Certificateholders arising
under any tax law relating to any Federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust, the Investor Certificateholders or
the Certificate Owners in connection herewith to any taxing authority. Any such
indemnification shall not be payable
71
from the Trust Assets. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof.
[END OF ARTICLE VII]
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ARTICLE VIII
Other Matters Relating to the Servicer
Section 8.01. Liability of the Servicer. The Servicer shall be liable
under this Article only to the extent of the obligations specifically undertaken
by the Servicer in its capacity as Servicer.
Section 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:
(i) 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, if the Servicer is not the surviving entity, 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 expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the performance of
every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section, that such supplemental agreement is
a valid and binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and except as
such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such transaction
have been complied with;
the Rating Agency Condition shall have been satisfied with respect to
such assignment and succession; and
the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall be an
Eligible Servicer.
Section 8.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 8.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders, any Series Enhancer or any other Person for any action taken
or for refraining from the taking of any action in good faith in its capacity as
Servicer pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such Person against
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any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person (other than the Servicer) respecting any matters arising hereunder. The
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its duties as Servicer in accordance
with this Agreement and which in its reasonable judgment may involve it in any
expense or liability. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
the Certificateholders with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder.
Section 8.04. Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of any acts or omissions of the Servicer with respect to the Trust
pursuant to this Agreement, including any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any action, proceeding or claim; provided, however, that the
Servicer shall not indemnify the Trustee if such acts, omissions or alleged acts
or omissions constitute or are caused by fraud, negligence, or willful
misconduct by the Trustee; provided further, that the Servicer shall not
indemnify the Trust, the Investor Certificateholders or the Certificate Owners
for any liabilities, costs or expenses of the Trust with respect to any action
taken by the Trustee at the request of the Investor Certificateholders; provided
further, that the Servicer shall not indemnify the Trust, the Investor
Certificateholders or the Certificate Owners as to any losses, claims or damages
incurred by any of them in their capacities as investors, including without
limitation losses incurred as a result of Defaulted Receivables; and provided
further, that the Servicer shall not indemnify the Trust, the Investor
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust, the Investor Certificateholders or the Certificate Owners
arising under any tax law, including without limitation, any Federal, state,
local or foreign income or franchise taxes or any other tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) required to be paid by the Trust, the
Investor Certificateholders or the Certificate Owners in connection herewith to
any taxing authority. Indemnification pursuant to this Section shall not be
payable from the Trust Assets. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
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 (i) the performance of its duties hereunder is no longer permissible under
any Requirement of Law and (ii) there is no reasonable action which the Servicer
could take to make the performance of its duties hereunder permissible under any
such Requirements of Law. Any determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee. No 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. If within 120 days of the date of
the determination that the Servicer may no longer act as Servicer the Trustee is
unable to appoint a Successor Servicer, the Trustee shall serve as Successor
Servicer. Notwithstanding the foregoing, the Trustee shall, if it is legally
74
unable so to act, petition a court of competent jurisdiction to appoint any
established institution that is an Eligible Servicer as the Successor Servicer
hereunder. The Trustee shall give prompt notice to each Rating Agency upon the
appointment of a Successor Servicer.
Section 8.06. Access to Certain Documentation and Information Regarding
the Receivables. The Servicer shall provide to the Trustee access to the
documentation regarding the Accounts and the Receivables in such cases where the
Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Sellers, the
Trustee and the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
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 Card Guidelines and
this Agreement; provided, however, in the case of significant delegation to a
Person other than ADVANTA Corp., a Seller, any Affiliate of a Seller, or First
Data Corporation, (i) at least 30 days prior written notice shall be given to
the Trustee and each Rating Agency of such delegation and (ii) at or prior to
the end of such 30-day period the Servicer shall have determined that the Rating
Agency Condition has been met. Any such delegations 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.
Section 8.08. Examination of Records. The Servicer shall clearly and
unambiguously indicate in its computer files or other records that the
Receivables arising in the Accounts have been conveyed to the Trustee, on behalf
of the Trust, pursuant to this Agreement for the benefit of the
Certificateholders. The Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
[END OF ARTICLE VIII]
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ARTICLE IX
Pay Out Events
Section 9.01. Trust Pay Out Events. If any one of the following events
shall occur with respect to the Trust ("Trust Pay Out Events"):
(i) any of the Sellers shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to such Seller or of or relating to all or substantially
all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against such Seller; or any of the
Sellers shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations (any such event, an "Insolvency Event");
(ii) the Trust shall become subject to regulation by the
Commission as an "investment company" within the meaning of the
Investment Company Act; or
(iii) a Transfer Restriction Event shall occur;
then, a Pay Out Event shall occur with respect to each Series without any notice
or other action on the part of the Trustee or the Investor Certificateholders,
immediately upon the occurrence of such event.
Section 9.02. Additional Rights Upon the Occurrence of Certain Events.
If an Insolvency Event occurs with respect to any of the
Sellers, the Sellers shall on the day any such Insolvency Event occurs (the
"Appointment Date"), immediately cease to transfer Principal Receivables to the
Trust and shall promptly give notice to the Trustee thereof. Notwithstanding any
cessation of the transfer to the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event and Collections in respect of such Principal Receivables and
Finance Charge Receivables whenever created, accrued in respect of such
Principal Receivables, shall continue to be a part of the Trust. Within 15 days
after receipt of such notice by the Trustee of the occurrence of such Insolvency
Event, the Trustee shall (i) publish a notice in an Authorized Newspaper that an
Insolvency Event has occurred and that the Trustee intends to sell, dispose of
or otherwise liquidate the Receivables on commercially reasonable terms and in a
commercially reasonable manner and (ii) give notice to the Investor
Certificateholders describing the provisions of this Section and requesting
instructions from such Holders. Unless the Trustee shall have received
instructions within 90 days from the date notice pursuant to clause (i) above
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is first published from (x) Holders of Investor Certificates evidencing more
than 50% of the Investor Amount of each Series or, with respect to any Series
with two or more Classes, of each Class, to the effect that such Investor
Certificateholders disapprove of the liquidation of the Receivables and wish to
continue having Principal Receivables transferred to the Trust as before such
Insolvency Event, and (y) each of the Sellers (other than the Seller that is the
subject of such Insolvency Event), including any Additional Seller, any Holder
of a Supplemental Certificate and any permitted assignee or successor under
Section 7.02, to such effect, the Trustee shall promptly sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.01 and 9.02 shall not be deemed to be mutually exclusive.
The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a) ("Insolvency Proceeds") shall be
immediately deposited in the Collection Account. The Trustee shall determine
conclusively the amount of the Insolvency Proceeds which are deemed to be
Finance Charge Receivables and Principal Receivables. The Insolvency Proceeds
shall be allocated and distributed to Investor Certificateholders in accordance
with Article IV and the terms of each Supplement and the Trust shall terminate
immediately thereafter.
The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive bids.
[END OF ARTICLE IX]
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ARTICLE X
Servicer Defaults
Section 10.01. Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
any failure by the Servicer to make any payment, transfer or deposit
or to give instructions or notice to the Trustee pursuant to the terms of this
Agreement or any Supplement 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;
failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement or any Supplement which has a material adverse effect on the
interests hereunder of the Investor Certificateholders of any Series or Class
and 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
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Investor Amount (or, with respect to any such failure that does not relate to
all Series, 50% of the aggregate Investor Amount of all Series to which such
failure relates); or the Servicer shall delegate its duties under this
Agreement, except as permitted by Section 8.02 or 8.07, a Responsible Officer of
the Trustee has actual knowledge of such delegation and such delegation
continues unremedied for 15 days after the date on which written notice thereof,
requiring the same to be remedied, shall have been given to the Servicer by the
Trustee, or to the Servicer and the Trustee by Holders of Investor Certificates
evidencing more than 50% of the Aggregate Investor Amount;
any representation, warranty or certification made by the Servicer in
this Agreement or any Supplement or in any certificate delivered pursuant to
this Agreement or any Supplement shall prove to have been incorrect when made,
which has a material adverse effect on the rights of the Investor
Certificateholders of any Series or Class and which continues to be incorrect in
any material respect 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
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Investor Amount (or, with respect to any such representation, warranty or
certification that does not relate to all Series, 50% of the aggregate Investor
Amount of all Series to which such representation, warranty or certification
relates); or
the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer, and such decree or order shall have
78
remained in force undischarged or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make any assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Trustee or the Holders of Investor
Certificates evidencing more than 50% of the Aggregate Investor Amount, by
notice then given to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all but not less
than all the rights and obligations of the Servicer as Servicer under this
Agreement and in and to the Receivables and the proceeds thereof; provided,
however, if within 60 days of receipt of a Termination Notice the Trustee does
not receive any bids from Eligible Servicers in accordance with subsection
10.02(c) to act as a Successor Servicer and receives an Officer's Certificate of
the Servicer to the effect that the Servicer cannot in good faith cure the
Servicer Default which gave rise to the Termination Notice, the Trustee shall
offer the Sellers the right at their option to purchase the Certificateholders'
Interest on the Distribution Date next succeeding 60 days after the receipt by
the Servicer of a Termination Notice. The purchase price for the
Certificateholders' Interest shall be equal to the sum of the amounts specified
therefor with respect to each outstanding Series in the related Supplement. The
Sellers shall notify the Trustee prior to the Record Date for the Distribution
Date of the purchase if they are exercising such option. If any of the Sellers
exercise such option, such Sellers shall (x) if such Sellers' short-term
deposits or long-term unsecured debt obligations are not rated at the time at
least P-3 or Baa3, respectively, by Moody's, deliver to the Trustee an Opinion
of Counsel (which must be an independent outside counsel) to the effect that, in
reliance on certain certificates to the effect that the Receivables constitute
fair value for consideration paid therefor and as to the solvency of such
Sellers, the purchase would not be considered a fraudulent conveyance and (y)
deposit the purchase price into the Collection Account not later than 12:00
noon, New York City time, on such Distribution Date in immediately available
funds. The purchase price shall be allocated and distributed to Investor
Certificateholders in accordance with Article IV and the terms of each
Supplement.
After receipt by the Servicer of such Termination Notice, and on the
date that a Successor Servicer shall have been appointed by the Trustee pursuant
to Section 10.02, all authority and power of the Servicer under this Agreement
shall pass to and be vested in a Successor Servicer; 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 transfer of servicing rights. The Servicer agrees to
cooperate with the Trustee 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 Receivables
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 Receivables,
and in assisting the Successor Servicer and in enforcing all rights to Insurance
Proceeds. The Servicer shall promptly transfer its electronic records
79
relating to the Receivables to the Successor Servicer in such electronic form as
the Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such times as
the Successor Servicer shall reasonably request. To the extent that compliance
with this Section 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, any delay in or failure of performance
under subsection 10.01(a) for a period of 5 Business Days or under subsection
10.01(b) or (c) for a period of 60 days (in addition to any period provided in
subsection 10.01(a), (b) or (c)) shall not constitute a Servicer Default until
the expiration of such additional 5 Business Days or 60 days, respectively, if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war, terrorism, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and any Supplement and the Servicer shall provide the Trustee, each Rating
Agency, the Holders of the Seller Certificates 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.
Section 10.02. Trustee To Act, Appointment of Successor.
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 until the date specified in the Termination
Notice or otherwise specified by the Trustee or 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 an Eligible Servicer as a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Servicer has not been appointed or has
not accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Trustee without further action shall automatically be appointed
the Successor Servicer. The Trustee may delegate any of its servicing
obligations to an Affiliate of the Trustee or agent in accordance with Section
3.01(b) and 8.07. Notwithstanding the foregoing, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established institution qualifying as an Eligible Servicer as the Successor
Servicer hereunder. The Trustee shall give prompt notice to each Rating Agency
upon the appointment of a Successor Servicer.
Upon its appointment, the Successor Servicer shall be the successor
to the Servicer with respect to servicing functions under this Agreement and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to the
Successor Servicer.
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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 Servicer submitting such a bid as a Successor Servicer for
servicing compensation not in excess of the aggregate Servicing Fees for all
Series; provided, however, that the Holders of the Seller Certificates shall be
responsible for payment of the Sellers' portion of such aggregate Servicing Fees
and that no such monthly compensation paid out of Collections shall be in excess
of such aggregate Servicing Fees. Each Holder of a Seller Certificate agrees
that, if Colonial (or any Successor Servicer) is terminated as Servicer
hereunder, the portion of the Collections in respect of Finance Charge
Receivables that such Holders are entitled to receive pursuant to this Agreement
or any Supplement shall be reduced by an amount sufficient to pay such Holders'
share (determined by reference to the Supplements with respect to any
outstanding Series) of the compensation of the Successor Servicer.
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 Sellers and,
without limitation, the Sellers are 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 Sellers in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Sellers in such electronic form as the Sellers may reasonably request and
shall transfer all other records, correspondence and documents to the Sellers in
the manner and at such times as the Sellers shall reasonably request. To the
extent that compliance with this Section 10.02 shall require the Successor
Servicer to disclose to the Sellers information of any kind which the Successor
Servicer deems to be confidential, the Sellers 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. Within two Business
Days after the Servicer becomes aware of any Servicer Default, the Servicer
shall give notice thereof to the Trustee and each Rating Agency and the Trustee
shall give notice to the Investor Certificateholders. Upon any termination or
appointment of a Successor Servicer pursuant to this Article, the Trustee shall
give prompt notice thereof to the Investor Certificateholders.
[END OF ARTICLE X]
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ARTICLE XI
The Trustee
Section 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default 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 a Responsible Officer has received written notice that 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, and use
the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of such man's own
affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
Subject to subsection 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
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;
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 the direction of the Holders of Investor
Certificates evidencing more than 50% of the Investor 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 in relation to such Series,
under this Agreement; and
the Trustee shall not be charged with knowledge of any
failure by the Servicer referred to in clauses (a) and (b) of Section
10.01 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 or any Holders of Investor Certificates
evidencing not less than 10% of the Investor Amount of any Series
adversely affected thereby.
(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 shall in any event require
the Trustee to perform, or be
82
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to (i) impair the interests of
the Trust in any Receivable now existing or hereafter created or (ii) impair the
value of any Receivable now existing or hereafter created.
(f) The Trustee shall have no power to vary the corpus of the Trust,
except as expressly provided in this Agreement.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day 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 upon knowledge of a Responsible Officer thereof
and receipt of appropriate records, if any, to perform such obligation, duty or
agreement in the manner so required.
(h) If any of the Sellers has agreed to transfer any of its consumer
revolving credit card receivables (other than the Receivables) to another
Person, upon the written request of such Seller, the Trustee will enter into
such intercreditor agreements with the transferee of such receivables as are
customary and necessary to separately identify the rights, if any, of the Trust
and such other Person in such Seller's consumer revolving credit card
receivables; provided, that the Trustee shall not be required to enter into any
intercreditor agreement which could adversely affect the interests of the
Certificateholders and, upon the request of the Trustee, such Seller will
deliver an Opinion of Counsel on any matters relating to such intercreditor
agreement, reasonably requested by the Trustee.
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 accord with, any Assignment, the initial report, the
annual Servicer's certificate, the monthly payment instructions and notification
to the Trustee, the monthly Certificateholder's statement, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(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 Enhancement Agreement, or
to institute, conduct or defend any litigation hereunder or in relation hereto,
at the request, order or direction of any of the
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Certificateholders, or any Enhancement Provider, pursuant to the provisions of
this Agreement or any Enhancement Agreement, unless such Certificateholders or
any Enhancement Provider 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 obligations, upon the occurrence of any Servicer Default (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement and any Series Enhancement, and to use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his 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;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any Assignment, the initial report, the annual
Servicer's certificate, the monthly payment instructions and notification to the
Trustee, the monthly Certificateholder's statement, 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 Holders of Investor Certificates evidencing more than 50% of the Investor
Amount of any Series which could be adversely affected if the Trustee does not
perform such acts;
(f) 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 a custodian, 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; and
(g) except as may be required by subsection 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 Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the Seller
with its representations and warranties or for any other purpose.
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 Receivable or related document. The Trustee shall
not be accountable for the use or application by the Sellers of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Sellers or the Holders of the Seller
Certificates in respect of the Receivables or deposited in or withdrawn from the
Collection Account, the Excess Funding Account or any Series Account by the
Servicer.
Section 11.04. Trustee May Own Certificates. Subject to Section 6.06,
the Trustee in its individual or any other capacity may become the owner or
pledgee of Investor Certificates or Supplemental Certificates with the same
rights as it would have if it were not the Trustee.
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Section 11.05. The Sellers To Pay Trustee's Fees and Expenses. The
Sellers 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 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 of the Trustee, and, subject to Section 7.04, the Sellers will
pay or reimburse the Trustee (without reimbursement from the Collection Account
or otherwise) upon its request for all reasonable expenses, disbursements and
advances (if any) incurred or made by the Trustee (including the fees and
expenses of Trustee's counsel) in accordance with any of the provisions of this
Agreement except any such expense, disbursement or advance as may arise from its
own 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.
The obligations of the Sellers under Section 7.04 and this Section 11.05 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 bank or a corporation organized and doing
business under the laws of the United States of America or any state thereof and
subject to supervision or examination by Federal or state authority and
authorized under such laws to exercise corporate trust powers that either (x)
has a long-term unsecured debt rating of at least Baa3 by Moody's and BBB- by
Standard & Poor's and, in the case of an entity that is subject to risk-based
capital adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, a combined capital and surplus of at least $50,000,000 or (y)
shall otherwise be acceptable to each Rating Agency. If such bank or 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 bank or
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 Servicer. 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 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 and shall fail to resign after written
request therefor by the Servicer or the Sellers, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the
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purpose of rehabilitation, conservation or liquidation, then the Servicer or
Sellers may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08 and any liability of the Trustee arising hereunder
shall survive such appointment of a successor trustee.
Section 11.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.07 shall
execute, acknowledge and deliver to the Sellers, to the Servicer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder, and the Sellers 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.
(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.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.08, such successor trustee shall provide notice of such
succession hereunder to all Investor Certificateholders and the Servicer shall
provide such notice to each Rating Agency and any Series Enhancer entitled
thereto pursuant to the relevant Supplement.
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
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, 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.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust may at the time be located, 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
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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; provided, however, that the Trustee
shall exercise due care in the appointment of any co-trustee. 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.
(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 laws 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 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,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee as 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 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.
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Section 11.11. Tax Returns. In the event the Trust shall be required to
file tax returns, the Servicer, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared any tax returns required
to be filed by the Trust and, to the extent possible, shall file such returns at
least five days before such returns are due to be filed. The Trustee is hereby
authorized to sign any such return on behalf of the Trust. The Servicer shall
prepare or shall cause to be prepared all tax information required by law to be
distributed to Certificateholders and shall deliver such information to the
Trustee at least five days prior to the date it is required by law to be
distributed to Certificateholders. The Servicer, upon request, will furnish the
Trustee with all such information known to the Servicer as may be reasonably
required in connection with the preparation of all tax returns of the Trust. In
no event shall the Trustee or the Servicer be liable for any liabilities, costs
or expenses of the Trust, the Investor Certificateholders or the Certificate
Owners arising under any tax law, including without limitation federal, state,
local or foreign income or excise taxes or any other tax imposed on or measured
by income (or any interest or penalty with respect thereto or arising from 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 Series
of 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 any Series of Certificates in respect of which such judgment
has been obtained.
Section 11.13. Suits for Enforcement.
(a) If a Servicer Default shall occur and be continuing, the Trustee,
in its discretion may, subject to the provisions of Sections 10.01 and 11.14,
proceed to protect and enforce its rights and the rights of any Series of
Certificates under this Agreement by a suit, action or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee or any Series
of Certificates.
(b) If the FDIC, the RTC or any equivalent governmental agency or
instrumentality or any designee of any of them shall have been appointed as
receiver, conservator, assignee, trustee in bankruptcy or reorganization,
liquidator, sequestrator or custodian with respect to any Seller (the
"Receiver"), the Trustee shall, irrespective of whether the principal of any
Series or Class of Certificates shall then be due and payable;
(i) unless prohibited by applicable law or regulation or
unless under FIRREA the Receiver is required to participate in the
process as a defendant or otherwise, promptly take or cause to be taken
any and all necessary or advisable commercially reasonable action as a
secured creditor on behalf of the Certificateholders to recover,
repossess, collect or liquidate the Receivables or any other Trust
Assets on a "self-help"
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basis or otherwise and exercise any rights or remedies of a secured
party under the applicable UCC and take any other appropriate action to
protect and enforce the rights and remedies of the Trustee and the
Certificateholders;
(ii) promptly, and in any case within any applicable claims
bar period specified under FIRREA or otherwise, file and prove a claim
or claims under FIRREA or otherwise, by filing proofs of claim,
protective proofs of claim or otherwise, for the whole amount of unpaid
principal and interest in respect of the Certificates and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee and the Certificateholders allowed in
any judicial, administrative, corporate or other proceedings relating
to such Seller, its creditors or its property, including any actions
relating to the preservation of deficiency claims or for the protection
against loss of any claim in the event the Trustee's or the
Certificateholders' status as secured creditors are successfully
challenged; and
(iii) collect and receive any moneys or other property
payable or deliverable on any such claims and distribute all amounts
with respect to the claims of the Certificateholders to the
Certificateholders.
(c) 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 to 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. Holders
of Investor Certificates evidencing more than 50% of the Aggregate Investor
Amount (or, with respect to any remedy, trust or power that does not relate to
all Series, 50% of the aggregate Investor Amount of all Series to which such
remedy, trust or power relates) shall have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided, however,
that, subject to Section 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 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 such Holders
of Investor Certificates.
Section 11.15. Representations and Warranties of Trustee. The Trustee
represents and warrants as of each Closing Date that:
(a) the Trustee is a banking corporation organized, existing and
authorized to engage in the business of banking under the laws of the State of
New York;
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(b) the Trustee has full power, authority and right to execute, deliver
and perform this Agreement and each Supplement, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement and each Supplement; and
(c) this Agreement and each Supplement has been duly executed and
delivered by the Trustee.
Section 11.16. Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or agency (the "Corporate Trust Office") where
notices and demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served (a) in the Borough of Manhattan, The City of New
York, in the case of Registered Certificates and Holders thereof, and (b) in
London or Luxembourg, in the case of Bearer Certificates and Holders thereof, if
and for so long as any Bearer Certificates are outstanding. The Corporate Trust
Office shall initially be located at Four Albany Street, New York, New York
10006. The Trustee will give prompt notice to the Servicer and to Investor
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
[END OF ARTICLE XI]
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ARTICLE XII
Termination
Section 12.01. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Sellers, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties described in Sections 7.04, 8.04 and 12.02(b), upon
the earliest of (i) December 31, 2024, (ii) the day following the payment date
on which the Investor Amount and the Enhancement Investor Amount, if any, for
each Series is zero (provided that the Sellers have delivered a written notice
to the Trustee electing to terminate the Trust) and (iii) the time provided in
subsection 9.02(b).
Section 12.02. Final Distribution.
The Servicer shall give the Trustee at least 30 days prior notice of
the payment date on which the Investor Certificateholders of any Series or Class
may surrender their Investor Certificates for payment of the final distribution
on and cancellation of such Investor Certificates (or, in the event of a final
distribution resulting from the application of Section 2.06, 9.02 or 10.01,
notice of such payment date promptly after the Servicer has determined that a
final distribution will occur, if such determination is made less than 30 days
prior to such payment date). Such notice shall be accompanied by an Officer's
Certificate setting forth the information specified in Section 3.05 covering the
period during the then-current calendar year through the date of such notice.
Not later than the fifth day of the month in which the final distribution in
respect of such Series or Class is payable to Investor Certificateholders, the
Trustee shall provide notice to Investor Certificateholders of such Series or
Class specifying (i) the date upon which final payment of such Series or Class
will be made upon presentation and surrender of Investor Certificates of such
Series or Class 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 such Investor Certificates at the office or offices therein
specified (which, in the case of Bearer Certificates, shall be outside the
United States). The Trustee shall give such notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to Investor
Certificateholders.
Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates (and any excess shall be paid in accordance with the terms of any
relevant Enhancement Agreement). In the event that all such Investor
Certificateholders shall not surrender their Investor Certificates for
cancellation within six months after the date specified in the notice from the
Trustee described in paragraph (a), the Trustee shall give a second notice to
the remaining such Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto
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(which surrender and payment, in the case of Bearer Certificates, shall be
outside the United States). If within one year after the second notice all such
Investor Certificates 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 such Investor Certificateholders concerning
surrender of their Investor Certificates, and the cost thereof shall be paid out
of the funds in the Collection Account or any Series Account held for the
benefit of such Investor Certificateholders. The Trustee and the Paying Agent
shall pay to the Sellers any moneys held by them for the payment of principal or
interest that remains unclaimed for two years. After payment to the Sellers,
Investor Certificateholders entitled to the money must look to the Sellers for
payment as general creditors unless an applicable abandoned property law
designates another Person.
In the event that the Investor Amount with respect to any Series is
greater than zero on its Series Termination Date or such earlier date as is
specified in the related Supplement (after giving effect to deposits and
distributions otherwise to be made on such date), the Trustee will sell or cause
to be sold on such Series Termination Date, in accordance with the procedures
and subject to the conditions described in such Supplement, Principal
Receivables and the related Finance Charge Receivables (or interests therein) in
an amount equal to 100% of the Investor Amount and accrued and unpaid interest
thereon with respect to such Series on such date (after giving effect to such
deposits and distributions; provided, however, that in no event shall such
amount exceed such Series' Series Percentages of Receivables on such Series
Termination Date). The proceeds from any such sale shall be allocated and
distributed in accordance with the terms of the applicable Supplement.
Section 12.03. Sellers' Termination Rights. Upon the termination of the
Trust pursuant to Section 12.01 and the surrender of the Seller Certificates,
the Trustee shall sell, assign and convey to the Holders of the Seller
Certificates or their designee, without recourse, representation or warranty,
all right, title and interest of the Trust in the Receivables, whether then
existing or thereafter created, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof, except for amounts held
by the Trustee pursuant to subsection 12.02(b). The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Holders of the Seller
Certificates to vest in the Holders of the Seller Certificates or their designee
all right, title and interest which the Trust had in the Receivables and such
other related assets.
Section 12.04. Defeasance. Notwithstanding anything to the contrary in
this Agreement or any Supplement:
The Seller may at its option be discharged from its obligations
hereunder with respect to any Series or all outstanding Series (the "Defeased
Series") on the date the applicable conditions set forth in subsection 12.04(c)
are satisfied (a "Defeasance"); provided, however, that the following rights,
obligations, powers, duties and immunities shall survive with respect to the
Defeased Series until otherwise terminated or discharged hereunder: (i) the
rights of the Holders of Investor Certificates of the Defeased Series to
receive, solely from the trust fund provided for in subsection 12.04(c),
payments in respect of principal of and interest on such Investor Certificates
when such payments are due; (ii) the Sellers' obligations with respect to such
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Certificates under Sections 6.04 and 6.05; (iii) the rights, powers, trusts,
duties, and immunities of the Trustee, the Paying Agent and the Registrar
hereunder; and (iv) this Section 12.04.
Subject to subsection 12.04(c), the Sellers at their option may cause
Collections allocated to the Defeased Series and available to purchase
additional Receivables to be applied to purchase Eligible Investments rather
than additional Receivables.
The following shall be the conditions to Defeasance under subsection
12.04(a):
the Sellers irrevocably shall have deposited or caused to
be deposited with the Trustee (such deposit to be made from other than
the Sellers' or any Affiliate of the Sellers' funds), under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, as trust funds in trust for making the payments described
below, (A) Dollars in an amount, or (B) Eligible Investments which
through the scheduled payment of principal and interest in respect
thereof will provide, not later than the due date of payment thereon,
money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge (without relying on income or gain from
reinvestment of such amount), and which shall be applied by the Trustee
to pay and discharge, all remaining scheduled interest and principal
payments on all outstanding Investor Certificates of the Defeased
Series on the dates scheduled for such payments in this Agreement and
the applicable Supplements and all amounts owing to the Series
Enhancers with respect to the Defeased Series;
a statement from a firm of nationally recognized
independent public accountants (who may also render other services to
the Sellers) to the effect that such deposit is sufficient to pay the
amounts specified in clause (i) above;
prior to its first exercise of its right pursuant to this
Section 12.04 with respect to a Defeased Series to substitute money or
Eligible Investments for Receivables, if any Series of Investor
Certificates are outstanding that were characterized as debt at the
time of their issuance, the Seller shall have delivered to the Trustee
a Tax Opinion with respect to such deposit and termination of
obligations, and (in any case) an Opinion of Counsel to the effect that
(A) such deposit and termination of obligations will not result in the
Trust being required to register as an "investment company" within the
meaning of the Investment Company Act and (B) if the Sellers'
short-term deposit or long-term unsecured debt obligations are not
rated at least P-3 or Baa3, respectively, by Moody's, such deposit and
termination of obligations would not be a fraudulent conveyance (based
in reliance on certain certificates to the effect that the Receivables
and termination of obligations constitute fair value for consideration
paid therefor and as to the solvency of the Sellers);
the Sellers shall have delivered to the Trustee an
Officer's Certificate of the Sellers stating the Sellers reasonably
believe that such deposit and termination of obligations will not,
based on the facts known to such officer at the time of such
certification, then cause a Pay Out Event with respect to any Series or
any event that, with the giving of notice or the lapse of time, would
result in the occurrence of a Pay Out Event with respect to any Series;
and
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the Rating Agency Condition shall have been satisfied and
the Sellers shall have delivered copies of such written notice to the
Servicer and the Trustee.
Section 12.05. Optional Purchase.
If so provided in any Supplement, the Sellers may, but shall
not be obligated to, cause a final distribution to be made in respect of the
related Series of Investor Certificates on a specified Distribution Date or when
the Investor Amount reaches a specified level or under any circumstances
specified in such Supplement by depositing into the Collection Account or the
applicable Series Account, not later than the Transfer Date preceding such
Distribution Date, for application in accordance with Section 12.02, the amount
specified in such Supplement; provided, however that if the short-term deposits
or long-term unsecured debt obligations of the Sellers are not rated at the time
of such purchase of Receivables at least P-3 or Baa3, respectively, by Moody's,
no such event shall occur unless the Sellers shall deliver an Opinion of Counsel
reasonably acceptable to the Trustee that such deposit into the Collection
Account or any Series Account as provided in the related Supplement would not
constitute a fraudulent conveyance of the Sellers (based in reliance on
certificates to the effect that the Receivables constitute fair value for
consideration paid therefor and as to the solvency of the Sellers).
The amount deposited pursuant to subsection 12.05(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Section 12.02 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Sellers
pursuant to subsection 12.05(a) shall be delivered by the Sellers upon such
purchase to, and be cancelled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Seller. The Investor
Amount of each Series which is purchased by the Sellers pursuant to subsection
12.05(a) shall, for the purposes of the definitions of "Series Invested Amount"
and "Seller Amount," be deemed to be equal to zero on the Distribution Date
following the making of the deposit, and the Seller Amount shall thereupon be
deemed to have been increased by the Series Invested Amount of such Series.
[END OF ARTICLE XII]
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ARTICLE XIII
Miscellaneous Provisions
Section 13.01. Amendment; Waiver of Past Defaults.
This Agreement or any Supplement may be amended from time to time
(including in connection with (x) the provision of additional Series Enhancement
for the benefit of the Certificateholders of any Series (or the reduction of
such Series Enhancement), (y) the addition of a Participation Interest to the
Trust or (z) the designation of an Additional Seller) by the Servicer, the
Sellers (including, if applicable, any Additional Seller being designated) and
the Trustee without the consent of any of the Certificateholders, provided that
(i) each Seller shall have delivered to the Trustee an Officer's Certificate to
the effect that such Seller reasonably believes that such action will not have
an Adverse Effect and (ii) the Rating Agency Condition shall have been satisfied
with respect to any such amendment.
This Agreement or any Supplement may also be amended from time to
time by the Servicer, the Sellers and the Trustee, with the consent of the
Holders of Investor Certificates evidencing not less than 66-2/3% of the
aggregate Investor Amount of the Investor Certificates of all adversely affected
Series, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Supplement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount of or delay the
timing of any distributions to be made to Investor Certificateholders or
deposits of amounts to be so distributed or the amount available under any
Series Enhancement without the consent of each affected Certificateholder, (ii)
change the definition of or the manner of calculating the interest of any
Investor Certificateholder without the consent of each affected Investor
Certificateholder, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Investor Certificates of such Series or
Class evidencing not less than 66-2/3% of the aggregate Investor Amount of the
Investor Certificates of such Series or Class. Any amendment to be effected
pursuant to this paragraph shall be deemed not to adversely affect any
outstanding Series with respect to which the Sellers shall deliver an Opinion of
Counsel, addressed and delivered to the Trustee, that such action will not, in
such counsel's reasonable opinion, have an Adverse Effect with respect to such
Series. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities under this
Agreement or otherwise.
Promptly after the execution of any such amendment or consent (other
than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency.
It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such
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consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Investor Certificateholders shall be subject to such reasonable requirements as
the Trustee may prescribe.
Any Supplement executed in accordance with the provisions of
subsection 6.03(b) shall not be considered an amendment to this Agreement for
the purposes of this Section.
(f) The Holders of Investor Certificates evidencing more than 66-2/3%
of the aggregate Investor Amount of the Investor Certificates of each Series, or
with respect to any Series with two or more Classes, of each Class (or with
respect to any default that does not relate to all Series, 66-2/3% of the
aggregate Investor Amount of the Investor Certificates of each Series to which
such default relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Certificateholders, waive any
default by the Sellers or the Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make any distributions
required to be made to Investor Certificateholders or to make any required
deposits of any amounts to be so distributed. Upon any such waiver of a past
default, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section 13.02. Protection of Right, Title and Interest to Trust.
The Servicer shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Certificateholders' and the Trustee's
right, title and interest to the Trust 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 Certificateholders and the Trustee
hereunder to all property comprising the Trust. The Servicer shall deliver to
the Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available following
such recording, registration or filing. The Sellers 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
paragraph.
Within 30 days after any of the Sellers makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, such Seller shall give the Trustee notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables and
the proceeds thereof.
Each Seller and the Servicer will give the Trustee prompt notice of
any relocation of any office from which it services Receivables or keeps records
concerning the Receivables or of its principal 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
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security interest in the Receivables and the proceeds thereof. Each Seller and
the Servicer will at all times maintain each office from which it services
Receivables and its principal executive offices within the United States.
The Servicer will deliver to the Trustee: (i) upon the execution and
delivery of each amendment of this Agreement or any Supplement, an Opinion of
Counsel to the effect specified in Exhibit G-1; (ii) on each Addition Date on
which any Additional Accounts (other than Automatic Additional Accounts) are to
be designated as Accounts pursuant to subsection 2.08(a) or (b) and on each date
specified in subsection 2.08(d)(iii) with respect to the designation of
Automatic Additional Accounts as Accounts, an Opinion of Counsel substantially
in the form of Exhibit G-2, and on each Addition Date on which any Participation
Interests are to be included in the Trust pursuant to subsection 2.08(a) or (b),
an Opinion of Counsel covering the same substantive legal issues addressed by
Exhibit G-2 but conformed to the extent appropriate to relate to Participation
Interests; and (iii) on or before March 31 of each year, beginning with March
31, 1995, an Opinion of Counsel substantially in the form of Exhibit G-2.
Section 13.03. Limitation on Rights of Certificateholders.
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.
No Investor Certificateholder shall have any right to vote (except as
expressly provided in this Agreement) or in any manner otherwise control the
operation and management of the Trust, 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 Investor Certificateholders
from time to time as partners or members of an association, nor shall any
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
No Investor Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such action, suit
or proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to 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 such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of
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this Agreement to affect, disturb or prejudice the rights of the Holders of any
other of the Investor Certificates, or to obtain or seek to obtain priority over
or preference to any other such Investor Certificateholder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Investor Certificateholders except as
otherwise expressly provided in this Agreement. For the protection and
enforcement of the provisions of this Section, each and every Investor
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 NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.05. Notices; Payments.
All demands, notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Sellers or the Servicer, to Colonial National Bank USA, Five Horsham
Business Center, 300 Welsh Road, Horsham, Pennsylvania 19044, Attn: General
Counsel (facsimile no. (215) 657-3610), (ii) in the case of the Trustee, to the
Corporate Trust Office (facsimile no. (212) 251-6439), (iii) in the case of
Moody's, to 99 Church Street, New York, New York 10007, Attn: ABS Monitoring
Department, 4th Floor (facsimile no. 212-553-4600), (iv) in the case of Standard
& Poor's, to 26 Broadway, New York, New York 10004, Attn: Asset Backed Group,
15th Floor (facsimile no. 212-412-0323), (v) in the case of the Paying Agent or
the Transfer Agent and Registrar, to the Corporate Trust Office, New York, New
York 10006, Attn: Corporate Trust and Agency Group/Structured Finance Group
(facsimile no. (212) 250-6439) and (vi) to any other Person as specified in any
Supplement; or, as to each party, at such other address or facsimile number as
shall be designated by such party in a written notice to each other party.
Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. No Notice shall
be required to be mailed to a Holder of Bearer Certificates or Coupons but shall
be given as provided below. Any Notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Investor Certificateholder receives such Notice. In addition, (a) if
and so long as any Series or Class is listed on the Luxembourg Stock Exchange
and such Exchange shall so require, any Notice to Investor Certificateholders
shall be published in an Authorized Newspaper of general circulation in
Luxembourg within the time period prescribed in this Agreement and (b) in the
case of any Series or Class with respect to which any Bearer Certificates are
outstanding, any Notice required or permitted to be given to Investor
Certificateholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
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All Notices to be given to Colonial, as a Seller, or Colonial, as
Servicer, shall be deemed given if one Notice is provided to the address of
Colonial. All Notices to be made to the Sellers shall be deemed given if one
Notice is provided to the address of Colonial. All payments hereunder to
Colonial, whether as a Seller or as Servicer shall be made to such account as
Colonial may specify in writing. All payments hereunder to the Sellers shall be
deemed made if made to the account of Colonial as provided above.
Section 13.06. Rule 144A Information. For so long as any of the
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Sellers, the Trustee,
the Servicer and any Series Enhancer agree to cooperate with each other to
provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
Section 13.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.08. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.02, this Agreement may not be
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing not less than 66-2/3% of the Aggregate Investor Amount.
Section 13.09. 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 shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by the Trustee pursuant to Section 6.02 are and shall be
deemed fully paid.
Section 13.10. Further Assurances. The Sellers 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 the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer, the Trustee, each Seller, each
Series Enhancer and each Holder of a Seller Certificate shall not, prior to the
date which is one year and one day after the termination of this Agreement with
respect to the Trust, acquiesce, petition or otherwise invoke or cause the Trust
to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Trust under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar
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official of the Trust or any substantial part of its property or ordering the
winding-up or liquidation of the affairs of the Trust.
Section 13.12. 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 under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 13.13. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 13.14. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
any Series Enhancer (to the extent provided in this Agreement and the related
Supplement) and their respective successors and permitted assigns. Except as
otherwise expressly provided in this Agreement, no other Person will have any
right or obligation hereunder.
Section 13.15. Actions by Certificateholders. Wherever in this
Agreement a provision is made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or given by any
Certificateholder, unless such provision requires a specific percentage of
Certificateholders.
Any Notice, request, authorization, direction, consent, waiver or
other act by the Holder of a Certificate shall bind such Holder and every
subsequent Holder of such Certificate and of any Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.16. 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 13.17. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.18. Construction of Agreement. The Sellers hereby grant a
security interest to (i) the Trustee for the benefit of the Certificateholders
and (ii) any Series Enhancer to the extent of the Enhancement Investor Amount,
if any, provided for in the relevant Supplement (which interest, in the case of
any Series Enhancer will be subordinated to the interest of the Investor
Certificateholders), in all of the Sellers' right, title and interest in, to and
under the Receivables now existing and hereafter created, all moneys due or to
become due and all amounts received with respect thereto and all "proceeds"
thereof and any other Trust Assets, to
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secure all the Sellers' and Servicer's obligations hereunder, including, without
limitation, the Sellers' obligation to sell or transfer Receivables hereafter
created to the Trust and the Servicer's obligation to remit Collections
hereunder (collectively, the "Obligations"). This Agreement shall constitute a
security agreement under applicable law.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
COLONIAL NATIONAL BANK USA,
Seller and Servicer,
by /s/ MICHAEL COCO
-----------------------------------
Name: Michael Coco
Title: Assistant Vice President
BANKERS TRUST COMPANY,
Trustee,
by /s/ MELISSA J. KAYE
-----------------------------------
Name:
Title: