EXHIBIT 10.6
EXECUTION COPY
LFI RECEIVABLES MASTER TRUST
POOLING AGREEMENT
Among
LFI RECEIVABLES CORPORATION
LFI SERVICING CORPORATION
as Master Servicer
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of August 5, 1996
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Definitions . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . 33
ARTICLE II
Conveyance of Receivables;
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Issuance of Certificates
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SECTION 2.01. Conveyance of Receivables . . . . . 35
SECTION 2.02. Acceptance by Trustee . . . . . . . 39
SECTION 2.03. Representations and Warranties of
the Company Relating to the
Company . . . . . . . . . . . . 39
SECTION 2.04. Representations and Warranties of
the Company Relating to the
Receivables . . . . . . . . . . 44
SECTION 2.05. Adjustment Payment for Ineligible
Receivables . . . . . . . . . . 45
SECTION 2.06. Purchase of Investor
Certificateholders' Interest in
Trust Portfolio . . . . . . . . 46
SECTION 2.07. Affirmative Covenants of the
Company . . . . . . . . . . . . 47
SECTION 2.08. Negative Covenants of the Company . 52
Contents, p. 2
Page
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ARTICLE III
Rights of Certificateholders and
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Allocation and Application of Collections
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SECTION 3.01. Establishment of Collection
Account; Certain Allocations . . 57
ARTICLE IV
ARTICLE IV IS RESERVED AND MAY BE
SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO THE SERIES RELATING THERETO.
ARTICLE V
The Certificates
----------------
SECTION 5.01. The Certificates . . . . . . . . . 63
SECTION 5.02. Authentication of Certificates . . 64
SECTION 5.03. Registration of Transfer and
Exchange of Certificates . . . . 65
SECTION 5.04. Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . 68
SECTION 5.05. Persons Deemed Owners . . . . . . . 68
SECTION 5.06. Appointment of Paying Agent . . . . 69
SECTION 5.07. Access to List of
Certificateholders' Names and
Addresses . . . . . . . . . . . 70
SECTION 5.08. Authenticating Agent . . . . . . . 71
SECTION 5.09. Tax Treatment . . . . . . . . . . . 73
SECTION 5.10. Tender of Exchangeable Company
Certificate . . . . . . . . . . 73
SECTION 5.11. Book-Entry Certificates . . . . . . 76
SECTION 5.12. Notices to Clearing Agency . . . . 77
SECTION 5.13. Definitive Certificates . . . . . . 77
Contents, p. 3
Page
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ARTICLE VI
Other Matters Relating to the Company
-------------------------------------
SECTION 6.01. Liability of the Company . . . . . 78
SECTION 6.02. Limitation on Liability of the
Company . . . . . . . . . . . . 78
SECTION 6.03. Liabilities . . . . . . . . . . . . 79
ARTICLE VII
Early Amortization Events
-------------------------
SECTION 7.01. Early Amortization Events . . . . . 79
SECTION 7.02. Additional Rights upon the
Occurrence of Certain Events . . 81
SECTION 7.03. Expense Account . . . . . . . . . . 82
ARTICLE VIII
The Trustee
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SECTION 8.01. Duties of Trustee . . . . . . . . . 83
SECTION 8.02. Rights of the Trustee . . . . . . . 86
SECTION 8.03. Trustee Not Liable for Recitals . . 88
SECTION 8.04. Trustee May Own Certificates . . . 89
SECTION 8.05. Trustee's Fees and Expenses . . . . 89
SECTION 8.06. Eligibility Requirements for
Trustee . . . . . . . . . . . . 90
SECTION 8.07. Resignation or Removal of
Trustee . . . . . . . . . . . . 91
SECTION 8.08. Successor Trustee . . . . . . . . . 92
SECTION 8.09. Merger or Consolidation of
Trustee . . . . . . . . . . . . 92
SECTION 8.10. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . 93
SECTION 8.11. Tax Returns . . . . . . . . . . . . 95
SECTION 8.12. Trustee May Enforce Claims Without
Contents, p. 4
Page
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Possession of Certificates . . . 95
SECTION 8.13. Suits for Enforcement . . . . . . . 96
SECTION 8.14. Rights of Investor Certificate-
holders To Direct Trustee . . . 96
SECTION 8.15. Representations and Warranties of
Trustee . . . . . . . . . . . . 97
SECTION 8.16. Maintenance of Office or Agency . . 97
SECTION 8.17. Limitation of Liability . . . . . . 97
ARTICLE IX
Termination
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SECTION 9.01. Termination of Trust . . . . . . . 98
SECTION 9.02. Optional Purchase and Final
Termination Date of Investor
Certificates of Any Series . . . 98
SECTION 9.03. Final Payment with Respect to Any
Series . . . . . . . . . . . . . 101
SECTION 9.04. Company's Termination Rights . . . 102
ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.01. Amendment . . . . . . . . . . . . . 103
SECTION 10.02. Protection of Right, Title and
Interest to Trust . . . . . . . 105
SECTION 10.03. Limitation on Rights of
Certificateholders . . . . . . . 105
SECTION 10.04. Governing Law . . . . . . . . . . . 107
SECTION 10.05. Notices . . . . . . . . . . . . . . 107
SECTION 10.06. Severability of Provisions . . . . 108
SECTION 10.07. Assignment . . . . . . . . . . . . 108
SECTION 10.08. Certificates Nonassessable and
Fully Paid . . . . . . . . . . . 108
SECTION 10.09. Further Assurances . . . . . . . . 109
SECTION 10.10. No Waiver; Cumulative Remedies . . 109
Contents, p. 5
Page
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SECTION 10.11. Counterparts . . . . . . . . . . . 109
SECTION 10.12. Third-Party Beneficiaries . . . . . 109
SECTION 10.13. Actions by Certificateholders . . . 109
SECTION 10.14. Merger and Integration . . . . . . 110
SECTION 10.15. Headings . . . . . . . . . . . . . 110
SECTION 10.16. Construction of Agreement . . . . . 110
SECTION 10.17. No Setoff . . . . . . . . . . . . . 110
SECTION 10.18. No Bankruptcy Petition . . . . . . 110
SECTION 10.19. Limitation of Liability . . . . . . 111
SECTION 10.20. Certain Information . . . . . . . . 112
5
EXHIBITS
Exhibit A Form of Exchangeable Company Certificate
Exhibits B-1 Forms of Lockbox Agreements
through B-15
Exhibit C Form of Annual Opinion of Counsel
Exhibit D Internal Operating Procedures Memorandum
Exhibit E Depository Agreement with BayBank
SCHEDULES
Schedule 1 Receivables
Schedule 2 Identification of the Trust Accounts
Schedule 3 Location of Chief Executive Office of the Company
APPENDICES
Appendix A Description of Servicer Site Review Procedures
Appendix B Description of Standby Liquidation System
EXECUTION COPY
POOLING AGREEMENT dated as of August 5, 1996, among LFI
RECEIVABLES CORPORATION, a Delaware corporation (the
"Company"); LFI SERVICING CORPORATION, a Delaware
corporation (in its capacity as master servicer, the "Master
Servicer"); and THE CHASE MANHATTAN BANK, a New York banking
corporation, not in its individual capacity, but solely as
trustee (in such capacity, the "Trustee").
W I T N E S S E T H :
WHEREAS, as of the date hereof, (i) the Company, the Sellers and the
Servicers are entering into a Receivables Sale Agreement (as amended,
supplemented or otherwise modified from time to time, the "Receivables Sale
Agreement") and (ii) the Company, the Master Servicer, the Servicers and the
Trustee are entering into a Servicing Agreement (as amended, supplemented or
otherwise modified from time to time, the "Servicing Agreement"); and
WHEREAS, the parties hereto wish to enter into this Agreement in order
to create a master trust to which the Company will transfer all its right, title
and interest in, to and under the Receivables and other Trust Assets now or
hereafter owned by the Company and such master trust shall, from time to time at
the direction of the Company, issue one or more Series of Investor Certificates,
which shall represent interests in the Receivables and such other Trust Assets
as specified in the Supplement related to such Series.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
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ARTICLE I
Definitions
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SECTION 1.01. Definitions. Whenever used in this Agreement, the
------------
following words and phrases shall have the following meanings:
"Accounts" shall have the meaning specified in subsection 2.01(a)(vi)
--------
of this Agreement.
"Accrual Period" shall mean, for any Series, the period from and
--------------
including a Settlement Report Date, or, in the case of the initial Accrual
Period for such Series, the Issuance Date for such Series, to but excluding the
succeeding Settlement Report Date.
"Adjusted Invested Amount" shall mean, with respect to any Outstanding
------------------------
Series, the definition assigned to such term in the related Supplement.
"Adjustment Payments" shall mean the collective reference to payments
-------------------
of Transfer Deposit Amounts and Cash Dilution Payments.
"Affiliate" shall mean, with respect to any specified Person, any
---------
other Person which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such specified Person. For purposes of this
definition "control" of a Person means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" shall mean, with respect to any Series, the Person, if any, so
-----
designated in the related Supplement.
3
"Aggregate Adjusted Invested Amount" shall mean, with respect to any
----------------------------------
date of determination, the sum of the Adjusted Invested Amounts with respect to
all Outstanding Series on such date of determination.
"Aggregate Allocated Receivables Amount" shall mean, with respect to
--------------------------------------
any date of determination, the sum of the Allocated Receivables Amounts with
respect to all Outstanding Series on such date of determination.
"Aggregate Daily Collections" shall mean, with respect to any Business
---------------------------
Day, the aggregate amount of all Collections deposited into the Collection
Account on such day.
"Aggregate Invested Amount" shall mean, at any date of determination,
-------------------------
the sum of the Invested Amounts with respect to all Outstanding Series on such
date of determination.
"Aggregate Overconcentration Amount" shall mean, with respect to any
----------------------------------
date of determination, the sum of the Overconcentration Amounts of all Eligible
Obligors at the end of the preceding Business Day.
"Aggregate Receivables Amount" shall mean, with respect to any date of
----------------------------
determination, (i) the aggregate Principal Amount of all Eligible Receivables in
the Trust at the end of the Business Day immediately preceding such date minus
(ii) the Aggregate Overconcentration Amount for such date.
"Aggregate Target Receivables Amount" shall mean, with respect to any
-----------------------------------
date of determination, the sum of the Target Receivables Amounts with respect to
all Outstanding Series on such date of determination.
"Agreement" shall mean this Pooling Agreement and all amendments
---------
hereof and supplements hereto, and including, unless expressly stated otherwise,
each Supplement.
4
"Allocable Charged-Off Amount" shall have, with respect to any Series,
----------------------------
the meaning specified in subsection 3.01(e) and in any Supplement for such
Series.
"Allocable Recoveries Amount" shall have, with respect to any Series,
---------------------------
the meaning specified in subsection 3.01(e) and in any Supplement for such
Series.
"Allocated Receivables Amount" shall have, with respect to any
----------------------------
Outstanding Series, the meaning specified in the related Supplement for such
Outstanding Series.
"Amortization Period" shall have, with respect to any Outstanding
-------------------
Series, the definition assigned to such term in the related Supplement.
"Applicable Insolvency Laws" shall have the meaning specified in
--------------------------
subsection 7.01(a).
"Authorized Newspaper" shall have the meaning specified in
--------------------
subsection 7.02(a).
"Bankruptcy Code" shall mean the United States Federal Bankruptcy
---------------
Code, 11 U.S.C. Sec.Sec. 101-1330, as amended.
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"BayBank Depository Agreement" shall mean the depository agreement
----------------------------
attached as Exhibit E hereto.
"Board" shall mean the Board of Governors of the Federal Reserve
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System of the United States of America.
"Book-Entry Certificates" shall mean certificates evidencing a
-----------------------
beneficial interest in the Certificates, ownership and transfers of which shall
be made through book entries by a Clearing Agency as described in Section 5.11;
provided, however, that after the occurrence of a condition whereupon book-entry
- -------- -------
registration and transfer are no longer permitted and Definitive Certificates
are issued to the Certificate Book-Entry Holders, such Certificates shall no
longer be "Book-Entry Certificates".
5
"Business Day" shall mean any day other than (i) a Saturday or a
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Sunday or (ii) another day on which commercial banking institutions or trust
companies in the State of New York or in the city where the Corporate Trust
Office is located, are authorized or obligated by law, executive order or
governmental decree to be closed; provided that, when used in connection with
--------
the calculation of Certificate Rates which are determined by reference to LIBOR,
"Business Day" shall mean any Business Day banks are open for dealings in dollar
deposits in the London interbank market.
"Business Day Received" shall mean, except as otherwise set forth in
---------------------
the applicable Supplement, (i) with respect to funds deposited in the Collection
Account (a) if funds are deposited in the Collection Account by 1:30 p.m., New
York City time, such day of deposit and (b) if funds are deposited in the
Collection Account after 1:30 p.m., New York City time, the Business Day
immediately following such day of deposit and (ii) with respect to funds
deposited in any Lockbox Account (a) if funds are deposited in such Lockbox
Account by the cut-off time established by the related Lockbox Processor for
same-day processing of deposits, such day of deposit and (b) if funds are
deposited in such Lockbox Account after such cut-off time, the Business Day
immediately following such day of deposit.
"Cash Dilution Payment" shall have the meaning specified in
---------------------
subsection 4.05(a) of the Servicing Agreement.
"Certificate" shall mean any Investor Certificate, the Exchangeable
-----------
Company Certificate or, if applicable, any Subordinated Company Certificate.
"Certificate Book-Entry Holder" shall mean, with respect to a Book-
-----------------------------
Entry Certificate, the Person who is listed on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such Clearing Agency, as
the beneficial owner of such Book-Entry Certificate (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
6
"Certificate Rate" shall mean with respect to any Series and Class of
----------------
Certificates, the percentage interest rate (or formula on the basis of which
such interest rate shall be determined) stated in the applicable Supplement.
"Certificate Register" shall mean the register maintained pursuant to
--------------------
Section 5.03, providing for the registration of the Certificates and transfers
and exchanges thereof.
"Certificateholder" shall mean the Person in whose name a Certificate
-----------------
is registered in the Certificate Register.
"Certificateholders' Interest" shall have the meaning specified in
----------------------------
subsection 3.01(b).
"Charged-Off Receivables" shall mean, with respect to any Settlement
-----------------------
Period, all Receivables which, in accordance with the Policies of the applicable
Seller, have or should have been written off during such Settlement Period as
uncollectible, including without limitation the Receivables of any Obligor which
becomes the subject of any voluntary or involuntary bankruptcy proceeding.
"Class" shall mean, with respect to any Series, any one of the classes
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of Certificates of that Series as specified in the related Supplement.
"Clean-Up Call Repurchase Price" shall have the meaning set forth in
------------------------------
subsection 9.02(a).
"Clearing Agency" shall mean each organization registered as a
---------------
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934.
"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-
7
entry transfers and pledges of securities deposited with such Clearing Agency.
"Collection Account" shall have the meaning specified in
------------------
subsection 3.01(a).
"Collections" shall mean all collections and all amounts received in
-----------
respect of the Receivables transferred to the Trust, including Recoveries,
Adjustment Payments, indemnification payments made by the Master Servicer, any
Servicer or the Company and payments received in respect of Dilution
Adjustments, together with all collections received in respect of the Related
Property in the form of cash, checks, wire transfers or any other form of cash
payment, and all proceeds of Receivables and collections thereof (including,
without limitation, collections evidenced by an account, note, instrument,
letter of credit, security, contract, security agreement, chattel paper, general
intangible or other evidence of indebtedness or security, whatever is received
upon the sale, exchange, collection or other disposition of, or any indemnity,
warranty or guaranty payable in respect of, the foregoing and all "proceeds" as
defined in Section 9-306 of the UCC as in effect in the State of New York).
"Company" shall mean LFI Receivables Corporation, a Delaware
-------
corporation.
"Company Collection Subaccount" shall have the meaning specified in
-----------------------------
subsection 3.01(a).
"Company Exchange" shall have the meaning specified in
----------------
subsection 5.10(a).
"Company Interest" shall have the meaning specified in
----------------
subsection 3.01(b).
"Company Material Adverse Effect" shall mean (i) any material
-------------------------------
impairment of the Company's ability to perform any of its material obligations
or to comply with or
8
conduct its business in accordance with any of its material representations,
warranties, covenants or agreements under any Transaction Document or (ii) any
material impairment of the interests, rights or remedies of the Trustee or the
Investor Certificateholders against or with respect to the Company under any
Transaction Document.
"Company Subordinated Obligation" shall mean any payment obligation or
-------------------------------
other liability designated as such in any Pooling and Servicing Agreement, each
of which payment obligations and other liabilities shall (i) be subordinated and
subject to the prior payment in full of all Company Unsubordinated Obligations
then due, (ii) be made solely from funds available to the Company that are not
required to be applied to Company Unsubordinated Obligations then due, (iii) not
constitute a general recourse claim against the Company, but only a claim
against the Company to the extent of funds available to the Company after
satisfying all Company Unsubordinated Obligations then due.
"Company Unsubordinated Obligations" shall mean all payment
----------------------------------
obligations and other liabilities of the Company under any Pooling and Servicing
Agreement that are not designated as Company Subordinated Obligations.
"Contractual Obligation" shall mean, as to any Person, any provision
----------------------
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"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 The Chase Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York,
New York 10001 (Attention of Advanced Structured Products Group).
9
"Credit Enhancer" shall mean, with respect to any Series, that Person,
---------------
if any, designated as such in the applicable Supplement.
"Cut-Off Date", shall mean the close of business on July 30, 1996.
------------
"D&P" shall mean Duff & Phelps Credit Rating Co. or any successor
---
thereto.
"Daily Report" shall have the meaning specified in subsection 4.01 of
------------
the Servicing Agreement.
"Defaulted Receivable" shall mean any Receivable (a) which is unpaid
--------------------
in whole or in part for more than 61 days after its original due date or
(b) which is a Charged-Off Receivable.
"Definitive Certificates" shall have the meaning specified in
-----------------------
Section 5.11.
"Depository" shall mean, with respect to any Series, the Clearing
----------
Agency designated as the "Depository" in the related Supplement.
"Depository Agreement" shall mean, with respect to any series an
--------------------
agreement among the Company, the Trustee and a Clearing Agency, in a form
reasonably satisfactory to the Trustee and the Company.
"Dilution Adjustment" shall mean any payments, rebates, discounts,
-------------------
refunds or adjustments (including without limitation, as a result of the
application of any special or other discounts or any reconciliations) of any
Receivable, the amount owing for any returns (including, without limitation, as
a result of the return of any defective goods) or cancelations and the amount of
any other reduction of any payment under any Receivable, in each case granted or
made by the Seller to the related Obligor;
10
provided, however, a "Dilution Adjustment" does not include any Charged-Off
- -------- -------
Receivable.
"Distribution Date" shall mean, except as otherwise set forth in the
-----------------
applicable Supplement, the 15th day of the month, beginning in the month
immediately following the month of the Initial Closing Date, or if such 15th day
is not a Business Day, the next succeeding Business Day.
"Dollars", "U.S. Dollars" and "$" shall mean dollars in lawful
------- ------------ -
currency of the United States of America.
"Early Amortization Event" shall have, with respect to any Series, the
------------------------
meaning specified in Section 7.01 of this Agreement (without taking into account
any Supplements) and in any Supplement for such Series.
"Early Amortization Period" shall have, with respect to any Series,
-------------------------
the definition assigned to such term in Section 7.01 of this Agreement and in
any Supplement for such Series.
"Eligible Institution" shall mean a depositary institution or trust
--------------------
company (which may include the Trustee and its Affiliates) organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia; provided, however, that at all times (i) such depositary
-------- -------
institution or trust company is a member of the Federal Deposit Insurance
Corporation, (ii) the unsecured and uncollateralized debt obligations of such
depositary institution or trust company are rated in one of the two highest
long-term or short-term rating categories by each Rating Agency and (iii) such
depositary institution or trust company has a combined capital and surplus of at
least $100,000,000.
11
"Eligible Investments" shall mean any book-entry securities,
--------------------
negotiable instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) Federal funds, demand deposits, time deposits or certificates of
deposit of any depositary institution or trust company incorporated under
the laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depositary institution
authorities; provided, however, that at the time of the investment or
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contractual commitment to invest therein the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies rating such investment in the highest
investment category granted thereby;
(c) commercial paper rated, at the time of the investment or
contractual commitment to invest therein, in the highest rating category by
each Rating Agency rating such commercial paper;
(d) investments in money market funds (including funds for which the
Trustee or any of its Affiliates is investment manager or adviser) rated in
the highest rating category by each Rating Agency rating such money market
fund (provided that, if such Rating Agency is S&P, such rating shall be
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AAAm-G);
(e) bankers acceptances issued by any depository institution or trust
company referred to in clause (b) above;
12
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b) above; or
(g) any other investment upon satisfaction of the
Rating Agency Condition with respect thereto.
"Eligible Letter of Credit" shall mean any irrevocable documentary
-------------------------
credit (a direct-pay letter of credit) or any irrevocable standby letter of
credit supporting a Receivable, or two or more Receivables sold to the Company
by the same Seller, that is (a) either (i) issued in favor of such Seller or the
Company and the right to draw under which is, or the proceeds of which are,
legally transferable and assignable to the Trustee or (ii) issued in favor of
the Trustee, (b) governed by the UCC of a state of the United States of America,
governed by the UCP 500 or governed as to certain terms by the UCP 500 and as to
any remaining terms by the UCC of a state of the United States of America,
(c) issued by a commercial bank that (i) has a combined capital and surplus of
at least $50,000,000 and (ii) has (or the holding company parent of which has)
either a long-term or a short-term senior unsecured debt rating in the highest
rating category by each Rating Agency and (d) permits the beneficiary to draw,
upon notice to the issuing bank, an amount equal to the entire Principal Amount
of any Receivable supported thereby in U.S. Dollars payable by the issuing bank
to the Trustee, as assignee or as original beneficiary, in the case of a
documentary credit (a direct-pay letter of credit), on or before the due date of
such Receivable and, in the case of a standby letter of credit, on or before the
fifth day following the due date of such Receivable.
13
"Eligible Obligor" shall mean, as of any date of determination, each
----------------
Obligor in respect of a Receivable that satisfies the following eligibility
criteria:
(a) it is "located" (within the meaning of Section 9-103(3)(d) of the
UCC as in effect in the State of New York) in the United States; provided,
--------
however, that Obligors that are not so located within the United States
-------
shall be deemed Eligible Obligors if (i) the Receivables of such Obligor
would satisfy the definition of "Eligible Receivable" in all respects if
they were owing by an Eligible Obligor, (ii) each Receivable of such
Obligor is supported by an Eligible Letter of Credit (and all necessary
actions are taken for the perfection of the transfer of such Eligible
Letter of Credit to the Trust, including the delivery requirement set forth
in subsection 2.01(b)) and (iii) as of any date of determination after
giving effect to any proposed transfer of Receivables to the Trust owing by
Obligors that would be deemed Eligible Obligors pursuant to this proviso,
the aggregate Principal Amount of all Receivables included in the Trust
Assets that have been or would be transferred to the Trust on the basis of
this proviso does not exceed 5% of the aggregate Principal Amount of all
Receivables then included in the Trust Assets;
(b) if it is a Federal Government Obligor or if it is a State/Local
Government Obligor, then such Obligor shall be subject to the first proviso
contained in the definition of "Overconcentration Amount";
(c) it is not a Seller or an Affiliate of a Seller; and
(d) it is either (i) not the subject of any voluntary or involuntary
bankruptcy proceeding or (ii) a Qualifying DIP Obligor;
14
provided, however, that, if 25% or more of the Principal Amount of
-------- -------
Receivables of an Obligor (measured by the Principal Amount of Receivables
in the Trust) is reported as being aged 91 days or more after the
respective due dates of such Receivables as at the end of the Settlement
Period immediately preceding the most recent Settlement Report Date
(commencing with the September 10, 1996 Settlement Report Date), such
Obligor shall not be deemed an Eligible Obligor until such time as the
Master Servicer or the responsible Servicer furnishes the Rating Agencies
with a report (which may be part of a Daily Report or a Monthly Settlement
Statement) indicating that less than 25% of the Principal Amount of
Receivables of such Obligor then in the Trust are aged 91 days or more
after the respective original invoice dates of such Receivables.
"Eligible Receivable" shall mean, as of any date of determination,
-------------------
each Receivable owing by an Eligible Obligor in existence as of such date that
satisfies the following eligibility criteria:
(a) it constitutes either (i) an account within the meaning of
Section 9-106 of the UCC of the state the law of which governs the
perfection of the interest granted in it, (ii) an instrument within the
meaning of Section 9-105 of such UCC, which shall be subject to compliance
with the delivery requirement set forth in subsection 2.01(b),
(iii) chattel paper within the meaning of Section 9-105 of such UCC, which
shall be subject to compliance with the delivery requirement set forth in
subsection 2.01(b), or (iv) a general intangible (including to the extent
that such Receivable includes interest, finance charges, returned check or
late charges on sales or similar charges) within the meaning of
Section 9-106 of such UCC;
(b) it is not a Defaulted Receivable;
15
(c) the goods related to it shall have been shipped or the services
related to it shall have been performed and such Receivable shall have been
billed to the related Obligor;
(d) it is denominated and payable only in U.S. Dollars in the United
States;
(e) it arose in the ordinary course of business from the sale of
goods, products or services of a Seller and in accordance with the Policies
of such Seller and, at such date of determination, the Receivables Sale
Agreement has not been terminated;
(f) it does not contravene any applicable law, rule or regulation and
the related Seller is not in violation of any law, rule or regulation in
connection with it, in each case which in any way renders such Receivable
unenforceable or would otherwise impair in any material respect the
collectibility of such Receivable;
(g) it is not a Receivable with an original repayment term in excess
of 180 days from the invoice date;
(h) if the Company and the Trust are not excluded from the definition
of "investment company" pursuant to Rule 3a-7 under the 1940 Act, it is an
account receivable representing all or part of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of
the 1940 Act;
(i) it is not a Receivable purchased by a Seller from any Person;
(j) it is not a Receivable for which a Seller has established an
offsetting specific reserve;
16
(k) it is not a Receivable in respect of which a Seller has
(i) entered into an arrangement with the Obligor pursuant to which payment
of any portion of the purchase price has been extended or deferred, whether
by means of a promissory note or by any other means, to a date more than
60 days from the due date or (ii) altered the basis of the aging from the
initial due date for payment such that the final due date extends to a date
more than 60 days from the invoice date or (iii) otherwise made any
modification except in the ordinary course of business and consistent with
the Policies of such Seller;
(l) all required consents, approvals or authorizations necessary for
the creation and enforceability of such Receivable and the effective
assignment and sale thereof by a Seller to the Company and by the Company
to the Trust shall have been obtained with respect to the Receivable;
(m) a Seller is not in default in any material respect under the terms
of the contract, if any, from which such Receivable arose;
(n) all right, title and interest in it has been validly sold by a
Seller to the Company pursuant to the Receivables Sales Agreement;
(o) the Company or the Trust will have legal and beneficial ownership
therein free and clear of all Liens other than such Liens described in
clause (i) of the definition of Permitted Liens and such Receivable has
been the subject of either a valid transfer from the Company to the Trust
or, alternatively, the grant of a first priority perfected security
interest therein to the Trust free and clear of all Liens other than such
Liens described in clause (i) of the definition of Permitted Liens;
17
(p) it represents an enforceable obligation of the related Obligor to
pay the full Principal Amount thereof and it is not subject to any dispute
in whole or in part or to any offset, counterclaim or defense;
(q) it is at all times the legal, valid and binding obligation of the
Obligor thereon, enforceable against such Obligor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or law);
(r) as of the related Receivables Purchase Date, neither the Company
nor a Seller has (i) taken any action in contravention of the terms of any
Transaction Document or (ii) failed to take any action required to be taken
by the terms of any Transaction Document that, in either case, is likely to
impair the rights therein of the Trustee or Investor Certificateholders
with respect to such Receivable;
(s) each of the representations and warranties with respect to such
Receivable made in the Receivables Sale Agreement by the related Seller is
true and correct in all material respects; and
(t) at the time such Receivable was sold by the related Seller to the
Company under the Receivables Sale Agreement, no event described in
subsection 7.01(d) of the Receivables Sale Agreement (without giving effect
to any requirement as to the passage of time) had occurred with respect to
such Seller;
provided that a Receivable which would otherwise not qualify as an Eligible
- --------
Receivable because of a failure to comply with clause (j) or (p) above shall
constitute an Eligible
18
Receivable to the extent of the Principal Amount of such Receivable minus the
amount of such Receivable which fails to comply with such clause (j) or (p);
provided further that with respect to Receivables owing by Government Obligors,
- ----------------
such Receivables shall constitute Eligible Receivables notwithstanding the
failure of such Receivables to satisfy clause (l) above except to the extent
such failure adversely affects the actual collection of such Receivables by the
Company or the Trust.
"Eligible Successor Servicer" shall mean a Person which, at the time
---------------------------
of its appointment as Servicer (i) is legally qualified and has the corporate
power and authority to service the Receivables transferred to the Trust,
(ii) has demonstrated the ability to service a portfolio of similar receivables
in accordance with high standards of skill and care in the sole determination of
the Master Servicer and (iii) has a combined capital and surplus of at least
$5,000,000.
"Enhancement" shall mean, with respect to any Series (i) the funds on
-----------
deposit in or credited to any bank account (or subaccount thereof) of the Trust,
(ii) any surety arrangement, any letter of credit, guaranteed rate agreement,
maturity guaranty facility, tax protection agreement, interest rate swap,
currency swap or other contract, agreement or arrangement, in each case for the
benefit of any Certificateholders of such Series, as designated in the
applicable Supplement and (iii) the subordination of one Class of Certificates
in a Series to another class in such Series or the subordination of any
Certificate held by the Company to the Investor Certificates of such Series.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Exchange Date" shall have the meaning, with respect to any Series
-------------
issued pursuant to an Exchange, specified in Section 5.10.
19
"Exchange Notice" shall have the meaning, with respect to any Series
---------------
issued pursuant to an Exchange, specified in Section 5.10.
"Exchangeable Company Certificate" shall mean the certificate executed
--------------------------------
by the Company and authenticated by the Trustee, substantially in the form of
Exhibit A and exchangeable as provided in Section 5.10.
"Excluded Note" shall mean any Receivable (i) which originally
-------------
represented obligations owing by the account debtor thereon to more than one
Seller, (ii) which is or will be evidenced by an instrument payable to the
Seller who will administer such Receivable, (iii) which will be treated as an
account receivable on the books and records of such Sellers until an instrument
is executed in favor of the Seller who will administer such Receivable and
thereafter will be treated as a note receivable on the books of such
administering Seller and (iv) for which payments are not at any time to be made
to a Lockbox or Lockbox Account.
"Excluded Receivable" shall mean, as of any date of determination, any
-------------------
indebtedness and payment obligations of any Person to any Seller arising from a
sale of merchandise or services by such Seller that has the attributes set forth
in any of the following paragraphs:
(a) it is owing by an Obligor that is an Affiliate of any Seller;
(b) it is owing by an Obligor that is not "located" (within the
meaning of Section 9-103(3)(d) of the UCC as in effect in the State of New
York) in the United States and it is not supported by an Eligible Letter of
Credit;
(c) it is an Excluded Note; or
(d) it is a Receivable originated by the Beacon Hill division of
Robert Allen Fabrics, Inc.
20
"Expense Account" shall have the meaning specified in
---------------
subsection 7.03(a).
"Expense Account Limit" shall mean $500,000.
---------------------
"Federal Government Obligor" shall mean the United States Federal
--------------------------
government or any subdivision thereof or any agency, department or
instrumentality thereof.
"Force Majeure Delay" shall mean, with respect to any Servicer, any
-------------------
cause or event which is beyond the control and not due to the negligence of such
Servicer which delays, prevents or prohibits such Servicer's delivery of Daily
Reports and/or Monthly Settlement Statements, including, without limitation,
acts of God or the elements and fire, but shall not include strikes; provided
--------
that no such cause or event shall be deemed to be a Force Majeure Delay unless
such Servicer shall have given the Company and the Trustee written notice
thereof as soon as reasonably possible after the beginning of such delay.
"Fractional Undivided Interest" shall mean a fractional undivided
-----------------------------
interest, which, with respect to any Investor Certificate, can be expressed as a
percentage of the interest in the Trust Assets represented by the Series or
Class in which it was issued by taking the percentage equivalent of a fraction
the numerator of which is the principal amount of such Investor Certificate and
the denominator of which is the aggregate principal amount of all Investor
Certificates of such Series or Class.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America as in effect from time to time.
"General Opinion" shall mean, with respect to any action, an Opinion
---------------
of Counsel to the effect that (i) such action has been duly authorized by all
necessary corporate action on the part of the Servicers or the Company, as the
case may be and (ii) any agreement executed in connection
21
with such action constitutes a legal, valid and binding obligation of the
Servicers or the Company, as the case may be, enforceable in accordance with the
terms thereof, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors' rights and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
"Government Obligor" shall mean any Federal Government Obligor or any
------------------
State/Local Government Obligor.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness" shall mean, with respect to any Person at any date,
------------
(a) all indebtedness of such Person for borrowed money, (b) any obligation owed
for the deferred purchase price of property or services which purchase price is
evidenced by a note or similar written instrument, (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (d) that portion of obligations of such Person
under capital leases which is properly classified as a liability on a balance
sheet in conformity with GAAP and (e) all liabilities of the type described in
the foregoing clauses (a) through (d) secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indemnified Person" shall have the meaning specified in
------------------
Section 10.19.
"Independent Public Accountants" shall mean, with respect to any
------------------------------
Person, any independent certified public accountants of nationally recognized
standing which
22
constitute one of the accounting firms commonly referred to as the "big six"
accounting firms (or any successor thereto); provided that such firm is
--------
independent with respect to such Person within the meaning of Rule 2-01(b) of
Regulation S-X under the Securities Act.
"Ineligibility Determination Date" shall have the meaning specified in
--------------------------------
subsection 2.05(a).
"Ineligible Receivable" shall have the meaning specified in
---------------------
subsection 2.05(a).
"Initial Closing Date" shall mean August 5, 1996.
--------------------
"Initial Invested Amount" shall have, with respect to any Series, the
-----------------------
meaning specified in the related Supplement for such Series.
"Insolvency Event" shall mean the occurrence of any one or more of the
----------------
Early Amortization Events specified in paragraph (a) of Section 7.01.
"Internal Operating Procedures Memorandum" shall mean the internal
----------------------------------------
operating procedures memorandum prepared by the Trustee as set forth in
Exhibit D hereto.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
---------------------
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Invested Amount" shall have, with respect to any Series, the meaning
---------------
specified in the related Supplement for such Series.
"Invested Percentage" shall have, with respect to any Series, the
-------------------
meaning specified in the related Supplement for such Series.
23
"Investment" shall mean the making by the Company or any Seller of any
----------
advance, loan, extension of credit or capital contribution to, the purchase of
any stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or the making by the Company or any Seller of
any other investment in, any Person.
"Investment Earnings" shall have the meaning specified in
-------------------
subsection 3.01(c).
"Investor Certificateholder" shall mean the holder of record of, or
--------------------------
the bearer of, an Investor Certificate.
"Investor Certificates" shall mean the Certificates executed by the
---------------------
Company and authenticated by or on behalf of the Trustee, substantially in the
form attached to the applicable Supplement, but shall not include the
Exchangeable Company Certificate, any Subordinated Company Certificate or any
other Certificate held by the Company.
"Issuance Date" shall mean, with respect to any Series, the date of
-------------
issuance of such Series, or the date of any increase to the Invested Amount of
such Series, as specified in the related Supplement.
"LHL Guarantee" shall mean the Guarantee dated as of August 5, 1996,
-------------
executed by Lifestyle Holdings Ltd. guaranteeing the performance of the
obligations of the Master Servicer under the Pooling and Servicing Agreements.
"LHL Demand Note" shall mean the demand note dated August 5, 1996,
---------------
issued by Lifestyle Holdings Ltd. to the Company in the amount of $5 million
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
----
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement
24
relating to such asset and (c) in the case of securities, any purchase option,
call or other similar right of a third party with respect to such securities;
provided, however, that if a lien is imposed under Section 412(n) of the
- -------- -------
Internal Revenue Code or Section 302(f) of ERISA for a failure to make a
required installment or other payment to a plan to which Section 412(n) of the
Internal Revenue Code or Section 302(f) of ERISA applies, then such lien shall
not be treated as a "Lien" from and after the time any Person who is obligated
to make such payment pays to such plan the amount of such lien determined under
Section 412(n)(3) of the Internal Revenue Code or Section 302(f)(3) of ERISA, as
the case may be, and provides to the Trustee and any Agent a written statement
of the amount of such lien together with written evidence of payment of such
amount, or such lien expires pursuant to Section 412(n)(4)(B) of the Internal
Revenue Code or Section 302(f)(4)(B) of ERISA.
"Lien Creation" shall mean the creation, incurrence, assumption or
-------------
suffering to exist by the Company or any Seller of any Lien upon the
Receivables, Related Property or the proceeds thereof.
"Lockbox" shall mean the post office boxes and accounts listed on
-------
Schedule 2 to the Receivables Sale Agreement to which the Obligors are
instructed to remit payments on the Receivables and/or such other post office
boxes as may be established pursuant to Section 2.03 of the Servicing Agreement.
"Lockbox Account" shall mean the intervening account or accounts used
---------------
by a Lockbox Processor for deposit of funds received in a Lockbox prior to their
transfer to the Collection Account; provided, however, that until a lockbox
-------- -------
account is put into use for Collections received in respect of the Receivables
sold by Robert Allen Fabrics, Inc., the term "Lockbox Account" shall include the
account specified in the BayBank Depository Agreement used in lieu of an actual
lockbox account until such time as an actual lockbox account can be put into use
for such Collections.
25
"Lockbox Agreement" shall mean a lockbox agreement substantially in
-----------------
the form set forth as Exhibit B-1, with such differences from such form as are
permitted upon satisfying the Rating Agency Condition and obtaining the consent
of each Agent as to such differences, or any of the lockbox agreements attached
as Exhibits B-2 through B-15.
"Lockbox Processor" shall mean the depositary institution or
-----------------
processing company (which may be the Trustee) that processes payments on the
Receivables sent by the Obligors thereon forwarded to a Lockbox; provided,
--------
however, in the case of the BayBank Depository Agreement, the term "Lockbox
- -------
Processor" shall include BayBank.
"Margin Stock" shall have the meaning given to such term in
------------
Regulation U of the Board.
"Master Servicer" shall mean LFI Servicing Corporation, a Delaware
---------------
corporation, and any successor Master Servicer under the Transaction Documents.
"Material Adverse Effect" shall mean a material impairment of the
-----------------------
collectibility of the Receivables or a material impairment of the interests,
rights or remedies of the Trustee or the Investor Certificateholders of any
Outstanding Series under or with respect to the Transaction Documents. Without
limiting the generality of the preceding sentence, any effect, result or
circumstance that adversely affects the collectibility of Receivables accounting
for 5% or more of the aggregate Principal Amount of all Receivables in the Trust
shall be deemed to be a Material Adverse Effect.
"Monthly Servicing Fee" shall have the meaning specified in
---------------------
subsection 2.05(a) of the Servicing Agreement.
"Monthly Settlement Statement" shall have the meaning specified in
----------------------------
Section 4.02 of the Servicing Agreement.
26
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
--------
"Obligor" shall mean, with respect to any Receivable, the party
-------
obligated to make payments with respect to such Receivable, including any
guarantor thereof.
"Officer's Certificate" shall mean, with respect to any Person, unless
---------------------
otherwise specified in this Agreement, a certificate signed by the Chairman of
the Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President (however denominated)
or the Treasurer of such Person (or an officer holding an office with equivalent
or more senior responsibilities).
"Opinion of Counsel" shall mean a written opinion or opinions of one
------------------
or more counsel (who may be internal counsel) to the Company, the Master
Servicer or any Servicer, designated by the Company, the Master Servicer or such
Servicer, as the case may be, that is reasonably acceptable to the Trustee.
"Optional Repurchase Percentage" shall have, with respect to any
------------------------------
Series, the meaning specified in the related supplement for such Series.
"Optional Termination Notice" shall have, with respect to any Series
---------------------------
the meaning specified in the related supplement for such Series.
"Outstanding Series" shall mean, at any time, a Series issued pursuant
------------------
to an effective Supplement for which the Series Termination Date for such Series
has not occurred.
"Overconcentration Amount" shall mean, at any date with respect to an
------------------------
Eligible Obligor, the Principal Amount of otherwise Eligible Receivables due
from such Obligor which, expressed as a percentage of the Principal Amount of
all
27
Eligible Receivables in the Trust at such date, exceeds the percentage set forth
below for the applicable ratings category of that Obligor (or such larger
percentage upon satisfaction of the Rating Agency Condition);
Minimum Rating
--------------
S&P D&P Percentage
--- --- ----------
A-1+ or AA- D-1 or AA- 15%
A-1 or A+ D-1 or A+ 15%
A-2 or BBB+ D-2 or BBB+ 7.5%
A-3 or BBB- D-3 or BBB- 5%
Less than A-3 or Less than D-3 or
BBB-/Not rated BBB-/Not rated 3%
; provided, however, (i) that all Eligible Obligors that are Affiliates of each
-------- -------
other shall be deemed to be a single Eligible Obligor to the extent the Master
Servicer or any Servicer has actual knowledge of the affiliation and in that
case, the applicable debt rating for such group of Obligors shall be the debt
rating of the ultimate parent of the group, (ii) with respect to all Eligible
Obligors that are Federal Government Obligors, such Obligors shall,
notwithstanding the foregoing, be deemed to be a single Eligible Obligor for
which the applicable percentage set forth under the column headed "Percentage"
above shall be 3% and (iii) with respect to all Eligible Obligors that are
State/Local Government Obligors shall, notwithstanding the foregoing, be deemed
to be a single Eligible Obligor for which the applicable percentage set forth
under the column headed "Percentage" above shall be 3%; provided further that
----------------
the debt ratings set forth under the column headed "D&P" above and references in
the immediately succeeding paragraph to D&P shall apply only if D&P is a Rating
Agency under any Supplement for an Outstanding Series.
28
If the ratings given by S&P and D&P to the debt of any Obligor (or the
ultimate parent of the affiliated group of which such Obligor is a member, as
the case may be) would result in different applicable percentages under the
table above, the applicable percentage shall be the percentage associated with
the lower rating, as between S&P's rating and D&P's rating, of such obligor's
(or such ultimate parent's, as the case may be) short-term senior debt; provided
--------
that: (i) if such short-term debt is rated only by S&P, the applicable
percentage will be the percentage associated with the rating issued by S&P and
(ii) if S&P issues no short-term rating with respect to such Obligor (or such
ultimate parent, as the case may be), then the percentage applicable to such
Obligor (or such ultimate parent, as the case may be) shall be the percentage
associated with the categories "Less than A-3 or BBB-/Not rated" and "Less than
D-3 or BBB-/Not rated." The ratings specified in the table are minimums for
each percentage category, so that a rating not shown in the table falls in the
category associated with the highest rating shown in the table that is lower
than that rating.
"Paying Agent" shall mean any paying agent and co-paying agent
------------
appointed pursuant to Section 5.06 and, unless otherwise specified in the
related Supplement of any Series and with respect to such Series, shall
initially be The Chase Manhattan Bank.
"Permitted Liens" shall mean, at any time, for any Person:
---------------
(i) Liens created pursuant to this Agreement or the Receivables Sale
Agreement and judgment Liens against any Seller that are in existence on
the Initial Closing Date in an aggregate amount for all Sellers not
exceeding $25,000; provided that such judgment Liens shall cease to be
--------
"Permitted Liens" on the 30th day following the Initial Closing Date;
29
(ii) Liens for taxes, assessments or other governmental charges or
levies not yet due and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person; and
(iii) Liens on a Receivable arising as a result of offsetting specific
reserves and rights of set-off, counterclaim or other defenses with respect
to such Receivable.
"Person" shall mean any individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Policies" shall mean, with respect to each Servicer, credit and
--------
collection policies of such Servicer, copies of which have been previously
delivered to the Trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Transaction Documents.
"Pooling and Servicing Agreements" shall have the meaning specified in
--------------------------------
subsection 10.01(a).
"Potential Early Amortization Event" shall mean an event which, with
----------------------------------
the giving of notice and/or the lapse of time, would constitute an Early
Amortization Event hereunder or under any Supplement.
"Potential Servicer Default" shall mean an event which, with the
--------------------------
giving of notice and/or the lapse of time, would constitute a Servicer Default
hereunder or under any Supplement.
"Prepayment Request" shall have, with respect to any Series, the
------------------
meaning specified in the related Supplement.
"Principal Amount" shall mean, with respect to any Receivable, the
----------------
amount due thereunder.
30
"Principal Terms" shall have the meaning, with respect to any Series
---------------
issued pursuant to an Exchange, specified in subsection 5.10(c).
"Publication Date" shall have the meaning specified in
----------------
subsection 7.02(a).
"Qualifying DIP Obligor" shall mean, as of any date of determination,
----------------------
each Receivable owing by an Obligor (i) that is a "debtor in possession", for
which no trustee or examiner has been appointed and no application is pending
for the appointment of a trustee or examiner, in a case under Chapter 11 of the
Bankruptcy Code in which no motion has been made for an order liquidating all or
any substantial portion of such debtor's assets and no motion has been made for
the conversion of such case to a case under Chapter 7 of the Bankruptcy Code,
(ii) in the case of any proposed Qualifying DIP Obligor whose Receivables would,
if included in the Trust Assets, account for 1% or more of the aggregate
Principal Amount of all Receivables included in the Trust, each Agent has been
given notice at least five Business Days prior to any transfer of Receivables
owing by such Obligor to the Trust of the proposed inclusion of such Obligor as
an Eligible Obligor on the basis of being a Qualifying DIP Obligor and (iii) as
to which no Agent has, in the exercise of its reasonable discretion, given
notice to the Company and the Master Servicer that such Obligor shall not be
included as an Eligible Obligor.
"Rating Agency" shall mean, with respect to each Outstanding Series,
-------------
any rating agency or agencies designated as such in the related Supplement;
provided that (i) in the event that no Outstanding Series has been rated, then
- --------
for purposes of the definitions of "Eligible Institution" and "Eligible
Investments", "Rating Agency" shall mean S&P; (ii) except as provided in (i), in
the event no Outstanding Series has been rated, any reference to "Rating Agency"
or the "Rating Agencies" shall be deemed to have been deleted herefrom, except
that references to the term "Rating Agency
31
Condition" shall not be deemed deleted, but shall be modified as set forth under
the definition of such term.
"Rating Agency Condition" shall mean, with respect to any action, that
-----------------------
each Rating Agency shall have notified the Company, the Master Servicer, any
Agent and the Trustee in writing that such action will not result in a reduction
or withdrawal of the rating of any Outstanding Series or any Class of any such
Outstanding Series with respect to which it is a Rating Agency; provided that in
--------
the event that no Outstanding Series has been rated, any reference to a "Rating
Agency Condition" shall be deemed to be a reference to the prior written consent
of the Agent with respect to such action.
"Receivable" shall mean the indebtedness and payment obligations of
----------
any Person to any Seller (including, without limitation, obligations evidenced
by an account, note, instrument, contract, security agreement, chattel paper,
general intangible or other evidence of indebtedness or security) arising from a
sale of merchandise or services by such Seller, including, without limitation,
any right to payment for goods sold or for services rendered, and including the
right to payment of any interest, sales taxes, finance charges, returned check
or late charges and other obligations of such Person with respect thereto, but
not including any Excluded Receivable.
"Receivables Purchase Date" shall mean, with respect to any
-------------------------
Receivable, the Business Day on which the Company purchases such Receivable from
a Seller and transfers such Receivable to the Trust.
"Receivables Sale Agreement" shall mean the Receivables Sale
--------------------------
Agreement, dated as of the date hereof, among the Sellers, the Servicers and the
Company, as buyer, as amended, supplemented or otherwise modified from time to
time in accordance with the Transaction Documents.
32
"Record Date", shall mean, with respect to any Series, the date
-----------
specified as such in the applicable Supplement.
"Recoveries" shall mean all amounts collected (net of out-of-pocket
----------
costs of collection) in respect of Charged-Off Receivables.
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Property" shall mean, with respect to each Receivable:
----------------
(a) all of a Seller's interest in the goods (including returned
goods), if any, relating to the sale which gave rise to such Receivable;
(b) all other security interests or Liens and property subject thereto
from time to time purporting to secure payment of such Receivable, whether
pursuant to the contract related to such Receivable or otherwise, together
with all financing statements signed by an Obligor describing any
collateral securing such Receivable; and
(c) all guarantees, insurance, letters of credit (including any
Eligible Letter of Credit) and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable whether pursuant to the contract related to such
33
Receivable or otherwise;
including in the case of clauses (b) and (c), without limitation, pursuant to
any obligations evidenced by an account, note, instrument, contract, security
agreement, chattel paper, general intangible or other evidence of indebtedness
or security.
"Reported Day" shall have the meaning specified in subsection 4.01(a)
------------
of the Servicing Agreement.
"Repurchase Terms" shall mean, with respect to any Series, the terms
----------------
and conditions under which the Company may repurchase such Series pursuant to
Section 9.02, as modified by the related Supplement.
"Requirement of Law" for any Person shall mean the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" shall mean (i) when used with respect to the
-------------------
Trustee, any officer within the Corporate Trust Office of the Trustee including
any Vice President, any Assistant Vice President, Trust Officer or Assistant
Trust Officer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
(ii) when used with respect to any other Person, the Chairman of the Board, any
Vice Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President or the Treasurer of such Person.
"Restricted Payments" shall have the meaning assigned in subsection
-------------------
2.08(o).
34
"Revolving Period" shall have, with respect to any Outstanding Series,
----------------
the definition assigned to such term in the related Supplement.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
---
McGraw-Hill Companies, Inc. or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933.
--------------
"Seller" shall mean each Seller listed as a party to, on Schedule 1
------
of, the Receivables Sale Agreement.
"Seller Material Adverse Effect" shall mean, with respect to any
------------------------------
Seller, (i) any material impairment of such Seller's ability to perform any of
its material obligations or to comply with or conduct its business in accordance
with any of its material representations, warranties, covenants or agreements
under any Transaction Document or (ii) any material impairment of the interests,
rights or remedies of the Trustee or the Investor Certificateholders against or
with respect to such Seller under any Transaction Document, including any
interests, rights or remedies of the Trustee or the Investor Certificateholders
as an assignee or assignees of the Company under, or a third-party beneficiary
or third-party beneficiaries of, the Receivables Sale Agreement.
"Seller Note" shall have the meaning specified in Section 8.01 of the
-----------
Receivables Sale Agreement.
"Series" shall mean any series of Investor Certificates and any
------
related Subordinated Company Certificate, the terms of which are set forth in a
Supplement.
"Series Account" shall mean any deposit, trust, escrow, reserve or
--------------
similar account maintained for the
35
benefit of the Investor Certificateholders of any Series or Class, as specified
in any Supplement.
"Series Collection Subaccount" shall have the meaning specified in
----------------------------
subsection 3.01(a).
"Series Collection Sub-subaccount" shall have the meaning specified in
--------------------------------
subsection 3.01(a).
"Series Non-Principal Collection Sub-subaccount" shall have the
----------------------------------------------
meaning specified in subsection 3.01(a).
"Series Principal Collection Sub-subaccount" shall have the meaning
------------------------------------------
specified in subsection 3.01(a).
"Series Termination Date" shall have, with respect to any Series, the
-----------------------
meaning specified in the related Supplement for such Series.
"Service Transfer" shall have the meaning specified in Section 6.01 of
----------------
the Servicing Agreement.
"Servicer" shall initially mean each Servicer identified in Schedule 1
--------
to the Receivables Sale Agreement and, after any Service Transfer, the Successor
Servicer.
"Servicer Default" shall have, with respect to any Series, the meaning
----------------
specified in Section 6.01 of the Servicing Agreement and, if applicable, as
supplemented by the related Supplement for such Series.
"Servicer Material Adverse Effect" shall mean, with respect to the
--------------------------------
Master Servicer or any Servicer, (i) any material impairment of such Person's
ability to perform any of its material obligations or to comply with or conduct
its business in accordance with any of its material representations, warranties,
covenants or agreements under any Transaction Document or (ii) any material
impairment of the interests, rights or remedies of the Trustee or the
36
Investor Certificateholders against or with respect to such Person under any
Transaction Document.
"Servicer Site Review" shall mean a review performed by the Trustee of
--------------------
the servicing operations of the Servicer's central site locations, as described
in Appendix A.
"Servicing Agreement" shall have the meaning specified in the recitals
-------------------
hereto.
"Servicing Fee" shall have the meaning specified in subsection 2.05(a)
-------------
of the Servicing Agreement.
"Servicing Fee Percentage" shall mean 1% per annum.
------------------------
"Settlement Period" shall mean, initially, the period commencing
-----------------
August 5, 1996, and ending at the end of the August 1996 fiscal month of the
Servicers and each fiscal month of the Servicers thereafter.
"Settlement Report Date" shall mean, except as otherwise set forth in
----------------------
the applicable Supplement, the 10th day of each calendar month or, if such 10th
day is not a Business Day, the next succeeding Business Day.
"Special Allocation Settlement Report Date" shall have the meaning
-----------------------------------------
specified in subsection 3.01(e).
"Specified Bankruptcy Opinion Provisions" shall mean the factual
---------------------------------------
assumptions (including those contained in the factual certificate referred to
therein) and the actions to be taken by the Sellers or the Company in each case
in the legal opinion of Morgan, Lewis & Bockius relating to certain bankruptcy
matters delivered on the Initial Closing Date.
"Standby Liquidation System" shall mean a system by which the Trustee
--------------------------
will receive and store electronic
37
information regarding Receivables from the Servicers which may be utilized in
the event of a liquidation of the Receivables to be carried out by the Trustee,
as described in Appendix B.
"State/Local Government Obligor" shall mean any state or local
------------------------------
government or any subdivision thereof or any agency, department, or
instrumentality thereof.
"Subordinated Certificate Amount" shall have, with respect to any
-------------------------------
Outstanding Series, the meaning specified in the related Supplement for such
Outstanding Series.
"Subordinated Company Certificate" shall mean any Certificate issued
--------------------------------
to the Company pursuant to the Supplement for any Series which represents an
interest in the Trust Assets which is subordinated to the Investor Certificates
of such Series.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
----------
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Successor Servicer" shall have the meaning specified in Section 6.02
------------------
of the Servicing Agreement.
"Supplement" shall mean, with respect to any Series, a supplement to
----------
this Agreement complying with the terms of Section 5.10(c), executed in
conjunction with the issuance of any Series.
38
"Target Receivables Amount" shall have, with respect to any
-------------------------
Outstanding Series, the meaning specified in the related Supplement for such
Outstanding Series.
"Tax Opinion" shall mean, unless otherwise specified in the Supplement
-----------
for any Series with respect to such Series or any Class within such Series, with
respect to any action, an opinion of counsel (a) to the effect that, for Federal
income tax purposes, (i) such action will not adversely affect the
characterization as debt of any Investor Certificates of any Outstanding Series
or Class not retained by the Company, (ii) in the case of Section 5.10, the
Investor Certificates of the new Series that are not retained by the Company
will be characterized as debt and (iii) following such action, the Trust will
not be an association (or publicly traded partnership) taxable as a corporation
and (b) with respect to state taxation issues regarding the taxation of the
Trust, in substantially the form delivered at the Initial Closing Date.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement, dated as
---------------------
of the date hereof, among Furnishings International Inc., Lifestyle Furnishings
International Ltd., the Company and Simmons Upholstered Furniture Corporation.
"Termination Notice" shall have the meaning specified in Section 6.01
------------------
of the Servicing Agreement.
"Transactions" shall have the meaning specified in subsection 2.03(b).
------------
"Transaction Documents" shall mean the collective reference to this
---------------------
Agreement, the Servicing Agreement, each Supplement with respect to any
outstanding Series, the Receivables Sale Agreement, the Lockbox Agreements, the
Certificates, the Tax Sharing Agreement and any other documents delivered
pursuant to or in connection therewith.
39
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 5.03 and shall initially be the Trustee.
"Transfer Deposit Amount" shall have the meaning specified in
-----------------------
subsection 2.05(b).
"Transferred Agreements" shall have the meaning assigned in
----------------------
subsection 2.01(a)(v).
"Trust" shall mean the LFI Receivables Master Trust created by this
-----
Agreement.
"Trust Assets" shall have the meaning specified in subsection 2.01(a).
------------
"Trust Termination Date" shall have the meaning specified in
----------------------
subsection 9.01(a).
"Trustee" shall mean the institution executing this Agreement as
-------
trustee, or its successor in interest, or any successor trustee appointed as
herein provided.
"Trustee Force Majeure Delay" shall mean any cause or event that is
---------------------------
beyond the control and not due to the gross negligence of the Trustee that
delays, prevents or prohibits the Trustee's performance of its duties under
Article III, including acts of God, floods, fire, explosions of any kind,
snowstorms and other irregular weather conditions, unanticipated employee
absenteeism, mass transportation disruptions, any of power failure, telephone
failure or computer failure in the office of the Trustee, including without
limitation, failure of the Chemlink system or failure of the Fed Wire system
operated by the Federal Reserve Bank of New York and all similar events. The
Trustee shall notify the Company as soon as reasonably possible after the
beginning of any such delay.
40
"UCC" shall mean the Uniform Commercial Code, as amended from time to
---
time, as in effect in any specified jurisdiction.
"UCP 500" shall mean "The Uniform Customs and Practices for
-------
Documentary Credits", 1993 Revision, International Chamber of Commerce
Publication No. 500.
SECTION 1.02. Other Definitional Provisions. (a) All terms defined
------------------------------
in this Agreement, the Servicing Agreement or in any Supplement shall have such
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.01, and accounting terms partly defined in Section 1.01 to the extent
not defined, shall have the respective meanings given to them under GAAP. To
the extent that the definitions of accounting terms herein are inconsistent with
the meanings of such terms under GAAP, the definitions contained herein shall
control.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, subsection,
Schedule, Exhibit and Appendix references contained in this Agreement are
references to Sections, subsections, Schedules, Exhibits and Appendices in or to
this Agreement unless otherwise specified.
(d) The definitions contained in Section 1.01 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.
41
(e) Where a definition contained in Section 1.01 specifies that such
term shall have the meaning set forth in the related Supplement, the definition
of such term set forth in the related Supplement may be preceded by a prefix
indicating the specific Series or Class to which such definition shall apply.
(f) Where reference is made in this Agreement or any related
Supplement to the principal amount of Receivables, such reference shall, unless
explicitly stated otherwise, be deemed a reference to the Principal Amount (as
such term is defined in Section 1.01) of such Receivables.
(g) Any reference herein or in any other Transaction Document to a
provision of the Bankruptcy Code, the Internal Revenue Code or ERISA shall be
deemed a reference to any successor provision thereto.
(h) Any reference herein to a Schedule, Exhibit or Appendix to this
Agreement shall be deemed to be a reference to such Schedule, Exhibit or
Appendix as it may be amended, modified or supplemented from time to time to the
extent that such Schedule, Exhibit or Appendix may be amended, modified or
supplemented (or any term or provision of any Transaction Document may be
amended that would have the effect of amending, modifying or supplementing
information contained in such Schedule, Exhibit or Appendix) in compliance with
the terms of the Transaction Documents.
(i) Any reference herein to any representation, warranty or covenant
"deemed" to have been made is intended to encompass only representations,
warranties or covenants that are expressly stated to be repeated on or as of
dates following the execution and delivery of this Agreement, and no such
reference shall be interpreted as a reference to any implicit, inferred, tacit
or otherwise unexpressed representation, warranty or covenant.
42
(j) The words "include", "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation".
ARTICLE II
Conveyance of Receivables;
--------------------------
Issuance of Certificates
------------------------
SECTION 2.01. Conveyance of Receivables. (a) By execution and
--------------------------
delivery of this Agreement, the Company does hereby assign, set over and
otherwise convey to the Trust for the benefit of the Certificateholders, without
recourse (except as specifically provided herein), all its present and future
right, title and interest in, to and under:
(i) all Receivables, including those existing at the close of business
on the Initial Closing Date and all Receivables thereafter arising from
time to time until but not including the Trust Termination Date;
(ii) the Related Property;
(iii) all Collections;
(iv) all rights (including rescission, replevin or reclamation)
relating to any Receivable or arising therefrom;
(v) each of the Receivables Sale Agreement and the Servicing
Agreement, including in respect of each agreement, (A) all rights of the
Company to receive monies due and to become due under or pursuant to such
agreement, whether payable as fees, expenses, costs or otherwise, (B) all
rights of the Company to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to such agreement, (C) claims of the
Company for damages arising out of or for breach of or default under such
agreement, (D) the right of the
43
Company to amend, waive or terminate such agreement, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder
and (E) all other rights, remedies, powers, privileges and claims of the
Company under or in connection with such agreement (whether arising
pursuant to such agreement or otherwise available to the Company at law or
in equity), including the rights of the Company to enforce such agreement
and to give or withhold any and all consents, requests, notices,
directions, approvals, extensions or waivers under or in connection
therewith (all of the foregoing set forth in subclauses (v)(A) through
-------
(E), inclusive, the "Transferred Agreements");
(vi) the Collection Account, each Lockbox and each Lockbox Account
(collectively, the "Accounts"), including (A) all funds and other evidences
of payment held therein and all certificates and instruments, if any, from
time to time representing or evidencing any of such Accounts or any funds
and other evidences of payment held therein, (B) all investments of such
funds held in such Accounts and all certificates and instruments from time
to time representing or evidencing such investments, (C) all notes,
certificates of deposit and other instruments from time to time hereafter
delivered or transferred to, or otherwise possessed by, the Trustee for and
on behalf of the Company in substitution for any of the then existing
Accounts and (D) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any and all of the then existing Accounts;
and
(vii) all proceeds of or payments in respect of any and all of the
foregoing clauses (i) through (vi) (including proceeds that constitute
property of the types described in clause (vi) above and including
Collections).
44
Such property described in the foregoing clauses (i) through (vii), together
with all investments and all monies on deposit in any other bank account or
accounts maintained for the benefit of any Certificateholders for payment to
Certificateholders shall constitute the assets of the Trust (the "Trust
Assets").
Subject to Section 5.09, although it is the intent of the parties to
this Agreement that the conveyance of the Company's right, title and interest
in, to and under the Receivables and the other Trust Assets pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Company hereby grants to the Trustee for the benefit of the
Certificateholders a perfected first priority security interest in all of the
Company's present and future right, title and interest in, to and under the
Receivables and the other Trust Assets, and that this Agreement shall constitute
a security agreement under applicable law in favor of the Trustee, for the
benefit of the Certificateholders.
(b) The assignment, setover and conveyance to the Trust pursuant to
Section 2.01(a) shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such assignment, setover and conveyance shall be
construed accordingly. In connection with the foregoing assignment, the Company
and the Master Servicer agree to deliver to the Trustee each Trust Asset
evidencing a Receivable to be included as an Eligible Receivable or any Related
Property with respect thereto (including any original document or instrument
necessary to effect or to perfect such assignment) in which the transfer of an
interest is being perfected under the UCC or otherwise by possession and not by
filing a financing statement or similar document (although a precautionary
filing of a financing statement or similar document is expected to be made in
respect of each such Trust Asset). Without limiting the generality of the
foregoing sentence, the Company and the Master Servicer agree to deliver or
cause to be
45
delivered to the Trustee an original of (i) any promissory note or other
instrument evidencing a Receivable sold to the Trust, (ii) any chattel paper
evidencing a Receivable sold to the Trust and (iii) each Eligible Letter of
Credit related to any Person that is to be considered an Eligible Obligor on the
basis of paragraph (a) of the definition of "Eligible Obligor".
Notwithstanding the assignment of the Transferred Agreements set forth
in Section 2.01(a), the Company does not hereby assign or delegate any of its
duties or obligations under the Receivables Sale Agreement to the Trust or the
Trustee and neither the Trust nor the Trustee accepts such duties or
obligations, and the Company shall continue to have the right and the obligation
to purchase Receivables from the Sellers thereunder from time to time and to
consummate the other transactions and take any actions contemplated thereby.
The foregoing assignment, set-over and conveyance does not constitute and is not
intended to result in a creation or an assumption by the Trust, the Trustee, any
Investor Certificateholder or the Company, in its capacity as a
Certificateholder, of any obligation of the Master Servicer, the Servicers, the
Company, the Sellers or any other Person in connection with the Receivables or
under any agreement or instrument relating thereto, including, without
limitation, any obligation to any Obligor.
In connection with such assignment, the Company agrees to record and
file, or cause to be recorded or filed, at its own expense, any financing
statements (and continuation statements with respect to such financing
statements when applicable) or, where applicable, registrations in the
appropriate records, (i) with respect to the Receivables now existing and
hereafter created and (ii) with respect to any other Trust Assets for which a
security interest may be perfected under the relevant UCC, legislation or
similar statute by such filing or registration, as the case may be, in each case
meeting the requirements of applicable law in such manner and in such
46
jurisdictions as are necessary to perfect and maintain perfection of the
assignment of the Receivables and such other Trust Assets (excluding returned
merchandise) to the Trust, and to deliver a file-stamped copy or certified
statement of such financing statement or registration or other evidence of such
filing or registration to the Trustee on or prior to the date of issuance of any
Certificates. The Trustee shall be under no obligation whatsoever to file such
financing statement, or a continuation statement to such financing statement, or
to make any other filing or other registration under the UCC, other relevant
legislation or similar statute in connection with such transfer. The Trustee
shall be entitled to conclusively rely on the filings or registrations made by
or on behalf of the Company without any independent investigation and the
Company's obligation to make such filings as evidence that such filings have
been made.
In connection with such assignment, the Company further agrees, at its
own expense, on or prior to the Initial Closing Date (a) to indicate, or to
cause to be indicated, in its computer files containing its master database of
Receivables and to cause each Seller to indicate in its records containing its
master database of Receivables that Receivables have been conveyed to the
Company or the Trust, as the case may be, pursuant to the Receivables Sale
Agreement or this Agreement, respectively, for the benefit of the
Certificateholders and (b) to deliver or transmit or cause to be delivered or
transmitted to the Trustee computer tapes, diskettes or data transmission
containing a true and complete list of all Receivables transferred to the Trust
specifying for each such Receivable, as of the Cut-Off Date, at least (i) the
name of the Obligor and (ii) the aggregate Principal Amount of the Receivables
owing by such Obligor. Such tapes, diskettes or data transmission shall
constitute Schedule 1 to this Agreement and are hereby incorporated into and
made a part of this Agreement whether they are delivered together with or
separate from this Agreement.
47
SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
----------------------
acknowledges its acceptance on behalf of the Trust of all right, title and
interest in, to and under the property, now existing and hereafter created,
assigned 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 simultaneous with the execution and delivery of this Agreement, the
Company delivered to the Trustee the computer tapes containing a list of the
Receivables described in the last paragraph of Section 2.01. The Trustee shall
maintain a copy of Schedule 1, as delivered from time to time, at the Corporate
Trust Office.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
SECTION 2.03. Representations and Warranties of the Company Relating
------------------------------------------------------
to the Company. The Company hereby represents and warrants to the Trustee and
- ---------------
the Trust, for the benefit of the holders of Certificates of each Outstanding
Series, as of the Issuance Date of such Series, that:
(a) Organization; Powers. The Company (i) is a corporation duly
---------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified to do business in, and is in good
standing in, every jurisdiction where the nature of its business so requires,
except where the failure so to qualify could not reasonably be expected to
result in a Company Material Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform its obligations under each of the
Transaction Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party.
48
(b) Authorization. The execution, delivery and performance by the
--------------
Company of each of the Transaction Documents and the other transactions contem-
plated hereby (collectively, the "Transactions") (i) have been duly authorized
by all requisite corporate and, if required, stockholder action and (ii) will
not (A) violate (1) any Requirement of Law or (2) any provision of any
Transaction Document or any other material Contractual Obligation to which the
Company is a party or by which it or any of its property is or may be bound
(B) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under, or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any Transaction Document or any other material Contractual
Obligation or (C) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by the Company
(other than any Lien created hereunder or contemplated or permitted hereby).
(c) Enforceability. This Agreement has been duly executed and
---------------
delivered by the Company and constitutes, and each other Transaction Document to
which the Company is a party when executed and delivered by the Company will
constitute, a legal, valid and binding obligation of the Company enforceable
against it in accordance with its respective terms, subject (a) as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally, from time to time in effect and (b) to general principles of equity
(whether enforcement is sought by a proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval of,
-----------------------
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (i) the
filing of appropriate Uniform Commercial Code financing statements and (ii) such
as have been made or obtained and are in full force and effect; provided,
--------
however, that with
- -------
49
respect to Receivables owing by Government Obligors, any failure by the Company
to comply with the United States Federal Nonassignment Act (Public Contracts),
41 U.S.C. Sec. 15, or Assignment of Claims Act, 31 U.S.C. Sec. 3727, or with any
similar legislation of any State shall not constitute a breach of this
subsection 2.03(d).
(e) Litigation; Compliance with Laws. (i) There are not any
---------------------------------
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any business, property or rights
of the Company, an adverse decision in which could reasonably be expected to
have a Company Material Adverse Effect.
(ii) The Company is not in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority.
(f) Agreements. (i) The Company has no Contractual Obligations
-----------
other than (A) the Transaction Documents to which it is a party (including the
Seller Note) and (B) any other agreements or instruments that the Company is not
prohibited from entering into by subsection 2.08(g) and that, in the aggregate,
neither contain payment obligations or other liabilities on the part of the
Company in excess of $50,000 nor would upon default result in a Company Material
Adverse Effect. The Company is not subject to any corporate restriction that
could reasonably be expected to have a Company Material Adverse Effect.
(ii) The Company is not in default in any material respect under any
provision of any Transaction Document or any other material Contractual
Obligation to which it is a party or by which it or any of its properties or
assets are or may be bound.
(g) Federal Reserve Regulations. (i) The Company is not engaged
----------------------------
principally, or as one of its
50
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(ii) No part of the proceeds from the issuance of any Investor
Certificates will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation G, U or X.
(h) Investment Company Act. Neither the Company nor the Trust is an
-----------------------
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940.
(i) No Early Amortization Event. No Early Amortization Event or
----------------------------
Potential Early Amortization Event has occurred and is continuing.
(j) Tax Returns. The Company has filed or caused to be filed all
------------
Federal, state or other material tax returns required to have been filed by it
and has paid or caused to be paid all taxes due and payable by it and all
assessments received by it to the extent that such failure to file or nonpayment
could reasonably be expected to have a Material Adverse Effect.
(k) Location of Records; Chief Executive Office. The offices at
--------------------------------------------
which the Company keeps its records concerning the Receivables either (x) are
located at the addresses set forth for the Sellers on Schedule 4 of the
Receivables Sale Agreement or (y) the Company has notified the Trustee of the
location thereof in accordance with the provisions of subsection 2.08(j) of this
Agreement. The chief executive office of the Company is located at the address
set forth on Schedule 3 and is the place where the Company is "located" for the
purposes of Section 9-103(3)(d) of the UCC as in effect in the State of New
York. As of the Initial Closing Date, the state and county where the chief
executive office of the Company is "located" for the purposes of
51
Section 9-103(3)(d) of the UCC as in effect in the State of New York has not
changed in the past four months.
(l) Solvency. No Insolvency Event with respect to the Company has
---------
occurred and the transfer of the Receivables by the Company to the Trust has not
been made in contemplation of the occurrence thereof. Both prior to and after
giving effect to the transactions occurring on each Issuance Date, (i) the fair
value of the assets of the Company at a fair valuation will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Company; (ii) the
present fair salable value of the property of the Company will be greater than
the amount that will be required to pay the probable liability of the Company on
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; (iii) the Company will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) the Company
will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted. For all purposes of clauses (i) through (iv) above, the amount of
contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
The Company does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it and the timing of and amounts
of cash to be payable in respect of its Indebtedness.
(m) Ownership; Subsidiaries. All of the issued and outstanding
------------------------
capital stock of the Company is owned, legally and beneficially, by Lifestyle
Holdings Ltd. The Company has no Subsidiaries.
52
(n) Names. The legal name of the Company is as set forth in this
------
Agreement. The Company has no trade names, fictitious names, assumed names or
"doing business as" names.
(o) Liabilities. Other than, (i) the liabilities, commitments or
------------
obligations (whether absolute, accrued, contingent or otherwise) arising under
or in respect of the Transaction Documents and (ii) immaterial amounts due and
payable in the ordinary course of business of a special-purpose company, the
Company does not have any liabilities, commitments or obligations (whether
absolute, accrued, contingent or otherwise), whether due or to become due.
(p) Collection Procedures. The Company and the Sellers have in place
----------------------
procedures pursuant to the Transaction Documents which are either necessary or
advisable to ensure the timely collection of Receivables.
(q) Lockbox Agreements; Lockbox Accounts. Except to the extent
-------------------------------------
otherwise permitted under the terms of this Agreement, (i) each Lockbox
Agreement to which the Company is party is in full force and effect and
(ii) each Lockbox Account set forth in Schedule 3 to the Receivables Sales
Agreement is free and clear of any Lien.
The representations and warranties as of the date made set forth in
this Section 2.03 shall survive the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company or a
Servicer or by a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties with respect to any Outstanding Series
as of the Issuance Date of such Series, the party discovering such breach shall
give prompt written notice to the other parties and to each Agent with respect
to all Outstanding Series. The Trustee's obligations in respect of any breach
are limited as provided in Section 8.02(g).
53
SECTION 2.04. Representations and Warranties of the Company Relating
------------------------------------------------------
to the Receivables. The Company hereby represents and warrants to the Trustee
- -------------------
and the Trust, for the benefit of the holders of Certificates of each Out-
standing Series, with respect to each Receivable transferred to the Trust as of
the related Receivables Purchase Date, unless, in either case, otherwise stated
in the applicable Supplement or unless such representation or warranty expressly
relates only to a prior date, that:
(a) Receivables Description. As of the Cut-Off Date, Schedule 1 to
------------------------
this Agreement sets forth a complete listing of all Receivables, aggregated
by Obligor, transferred to the Trust as of the Cut-Off Date and the
information contained therein specified in clauses (i) and (ii) of the last
paragraph of subsection 2.01(b) with respect to each such Receivable is
true and correct (except for any errors or omissions that do not result in
material impairment of the interests, rights or remedies of the Trustee or
the Investor Certificateholders with respect to any Receivable) as of the
Cut-Off Date. As of the Cut-Off Date, the aggregate amount of Receivables
owned by the Company is accurately set forth in Schedule 1 hereto.
(b) No Liens. Each Receivable existing on the Initial Closing Date
---------
or, in the case of Receivables transferred to the Trust after the Initial
Closing Date, on the date that each such Receivable shall have been
transferred to the Trust, has been conveyed to the Trust free and clear of
any Lien, except for Permitted Liens.
(c) Eligible Receivable. To the Company's knowledge, on the Initial
--------------------
Closing Date, each Receivable transferred to the Trust that is included in
the calculation of the initial Aggregate Receivables Amount is an Eligible
Receivable and, in the case of Receivables transferred to the Trust after
the Initial Closing Date, on the date such Receivable shall have
54
been transferred to the Trust, each such Receivable that is included in the
calculation of the Aggregate Receivables Amount on such date is an Eligible
Receivable.
(d) Filings. On or prior to the Initial Closing Date, all filings
--------
and other acts necessary (including but not limited to all filings and
other acts necessary or advisable under the UCC) shall have been made or
performed in order to grant the Trust on the Initial Closing Date a first
priority perfected ownership or security interest in respect of all
Receivables.
The representations and warranties as of the date made set forth in
this Section 2.04 shall survive the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company, the
Master Servicer or a Servicer or a Responsible Officer of the Trustee of a
breach of any of the representations and warranties (or of any Receivable
encompassed by the representation and warranty in subsection 2.04(c) not being
an Eligible Receivable as of the relevant Receivables Purchase Date) with
respect to each Outstanding Series as of the Issuance Date of such Series, the
party discovering such breach shall give prompt written notice to the other
parties and to each Agent with respect to all Outstanding Series. The Trustee's
obligations in respect of any breach are limited as provided in Section 8.02(g).
SECTION 2.05. Adjustment Payment for Ineligible Receivables. (a)
----------------------------------------------
Adjustment Payment Obligation. If (i) any representation or warranty under
- ------------------------------
subsections 2.04(a) or (b) is not true and correct as of the date specified
therein with respect to any Receivable transferred to the Trust or any
Receivable encompassed by the representation and warranty in subsection 2.04(c)
is determined not to be an Eligible Receivable as of the relevant Receivables
Purchase Date, (ii) there is a breach of any covenant under subsection 2.08(c)
with respect to any Receivable or (iii) the Trust's interest in any Receivable
is not a first
55
priority perfected ownership or security interest at any time as a result of any
action taken by, or the failure to take action by, the Company (any Receivable
as to which the conditions specified in any of clause (i), (ii) or (iii) of this
subsection 2.05(a) exists is referred to herein as an "Ineligible Receivable")
then, after the earlier (the date on which such earlier event occurs, the
"Ineligibility Determination Date"), to occur of the discovery by the Company of
any such event that continues unremedied or receipt by the Company of written
notice given by the Trustee or any Servicer of any such event that continues
unremedied, the Company shall make an adjustment payment with respect to such
Ineligible Receivable on the terms and conditions set forth in
subsection 2.05(b).
(b) Adjustment Payment Amount. Subject to the last sentence of this
--------------------------
subsection 2.05(b), the Company shall make an adjustment payment with respect to
each Ineligible Receivable as required pursuant to subsection 2.05(a) by
depositing in the Collection Account in immediately available funds on the
Business Day following the related Ineligibility Determination Date an amount
equal to the lesser of (x) the amount by which the Aggregate Target Receivables
Amount exceeds the Aggregate Receivables Amount (after giving effect to the
reduction thereof by the Principal Amount of such Ineligible Receivable) and
(y) the aggregate outstanding Principal Amount of all such Ineligible
Receivables (the "Transfer Deposit Amount"). Upon transfer or deposit of the
Transfer Deposit Amount, the Trust shall automatically and without further
action be deemed to have agreed to pay to the Company, without recourse, repre-
sentation or warranty, all Collections in respect of each such Ineligible
Receivable. Except as otherwise specified in any Supplement, the obligation of
the Company to pay such Transfer Deposit Amount with respect to any Ineligible
Receivables shall constitute the sole remedy respecting the event giving rise to
such obligation available to Investor Certificateholders (or the Trustee on
behalf of Investor Certificateholders).
56
SECTION 2.06. Purchase of Investor Certificateholders' Interest in
----------------------------------------------------
Trust Portfolio. (a) In the event of any breach of any of the representations
- ----------------
and warranties set forth in Section 2.03 as of the date made, which breach has a
Material Adverse Effect, then the Trustee, at the written direction of holders
evidencing more than 50% of the Invested Amount of each affected Outstanding
Series, shall notify the Company to purchase such Outstanding Series and the
Company shall be obligated to make such purchase on the next Distribution Date
occurring at least five Business Days after receipt of such notice on the terms
and conditions set forth below; provided however, that no such purchase shall be
----------------
required to be made if, by such Distribution Date, any Material Adverse Effect
caused thereby shall have been cured.
(b) The Company shall deposit into the Collection Account for credit
to the applicable subaccount of the Collection Account on the Business Day
preceding such Distribution Date an amount equal to the purchase price (as
described in the next succeeding sentence) for the Certificateholders' Interest
for such Outstanding Series on such day. The purchase price for any such
purchase will be equal to (i) the Adjusted Invested Amount of such Outstanding
Series on the date on which the purchase is made plus (ii) an amount equal to
all interest accrued but unpaid on such Series up to the Distribution Date on
which the distribution of such deposit is scheduled to be made pursuant to
Section 9.02 plus (iii) any other amount required to be paid in connection
therewith pursuant to any Supplement. Notwithstanding anything to the contrary
in this Agreement, the entire amount of the purchase price deposited in the
Collection Account shall be distributed to the related Investor
Certificateholders on such Distribution Date pursuant to Section 9.02. If the
Trustee gives notice directing the Company to purchase the Certificates of an
Outstanding Series as provided above, except as otherwise specified in any
Supplement, the obligation of the Company to purchase such Certificates pursuant
to this Section 2.6 shall constitute the sole remedy respecting an event of the
57
type specified in the first sentence of this Section 2.06 available to the
applicable Investor Certificateholders (or the Trustee on behalf of such
Investor Certificateholders).
SECTION 2.07. Affirmative Covenants of the Company. The Company
-------------------------------------
hereby covenants that, until the Trust Termination Date occurs, the Company
shall:
(a) Financial Statements, Reports, etc.
-----------------------------------
(i) Furnish to the Trustee, each Agent, and the Rating Agencies,
within 90 days after the end of each fiscal year, the balance sheet
and related statements of income, stockholders' equity and cash flows
showing the financial condition of the Company as of the close of such
fiscal year and the results of its operations during such year, all
audited by the Company's Independent Public Accountants and accom-
panied by an opinion of such accountants (which shall not be qualified
in any material respect) to the effect that such financial statements
fairly present the financial condition and results of operations of
the Company in accordance with GAAP consistently applied;
(ii) Furnish to the Trustee and each Agent, within 45 days after
the end of each of the first three fiscal quarters of each fiscal
year, the Company's balance sheet and related statements of income,
stockholders' equity and cash flows showing the financial condition of
the Company as of the close of such fiscal quarter and the results of
its operations during such fiscal quarter and the then elapsed portion
of the fiscal year (and, beginning with the second fiscal year,
showing, on a comparative basis, such information as of and for the
corresponding dates and periods of the preceding fiscal year), all
certified by a Responsible Officer of such Person as fairly repre-
senting the financial condition and results
58
of operations of the Company in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments; and
(iii) Furnish to the Trustee and each Agent, promptly, from time to
time, such other information regarding the operations, business
affairs and financial condition of the Company, or compliance with the
terms of any Transaction Document, in each case as any Agent or the
Trustee may reasonably request.
(b) Annual Opinion. Deliver to the Trustee an Opinion of Counsel
---------------
substantially in the form of Exhibit C, by January 31st of each fiscal year
of the Company commencing with the fiscal year ending December 31, 1996.
(c) Payment of Obligations; Compliance with Obligations. Pay,
--------------------------------------- ------------
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Company or
where the failure to pay, discharge or otherwise satisfy such obligation
would not have a Company Material Adverse Effect. The Company shall defend
the right, title and interest of the Certificateholders in, to and under
the Receivables and the other Trust Assets, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Company, the Sellers, the Master Servicer or the Servicers. The
Company will duly fulfill all material obligations on its part to be
fulfilled under or in connection with each Receivable and will do nothing
to impair the rights of the Certificateholders in such Receivable.
59
(d) Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------ ------------
proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of the Trustee upon reasonable advance notice to
visit and inspect any of its properties and examine and make abstracts from
any of its books and records during normal business hours on any Business
Day and as often as may reasonably be requested, subject to the Company's
security and confidentiality requirements, and to discuss the business,
operations, properties and financial and other condition of the Company
with officers and employees of the Company and with its Independent Public
Accountants.
(e) Compliance with Law and Policies.
---------------------------------
(i) Comply with all Requirements of Law, the provisions of the
Transaction Documents and all other material Contractual Obligations
applicable to the Company; and
(ii) Cause each of the Sellers to perform its respective
obligations in accordance and compliance with the Policies, as amended
from time to time in accordance with the Transaction Documents, in
regard to the Receivables and the Related Property.
(f) Purchase of Receivables. Purchase Receivables solely in
------------------------
accordance with the Receivables Sale Agreement or this Agreement.
(g) Delivery of Collections. In the event that the Company receives
------------------------
Collections directly from Obligors, deliver (which may be by regular mail)
or deposit such Collections into a Lockbox, a Lockbox
60
Account or the Collection Account within two Business Days after its
receipt thereof.
(h) Notices. Promptly (and, in any event, within two Business Days
--------
after a Responsible Officer of the Company becomes aware of such event)
give written notice to the Trustee, each Rating Agency and each Agent for
any Outstanding Series of:
(i) the occurrence of any Early Amortization Event or Potential
Early Amortization Event; and
(ii) any Lien not permitted by subsection 2.08(c) on Receivables
accounting for 5% or more of the aggregate Principal Amount of all
Receivables in the Trust.
(i) Lockboxes. (i) Maintain, and keep in full force and effect,
----------
each Lockbox Agreement to which the Company is a party, except to the
extent otherwise permitted under the terms of this Agreement and the other
Transaction Documents and (ii) take all reasonable actions necessary to
ensure that each related Lockbox Account shall be free and clear of, and
defend each such Lockbox Account against, any writ, order, stay, judgment,
warrant of attachment or execution or similar process; provided, however,
-------- -------
that, upon satisfaction of the Rating Agency Condition, the Company may
enter into any amendments or modifications of a Lockbox Agreement that the
Company reasonably deems necessary to conform such Lockbox Agreement to the
cash management system of the Company or the applicable Servicer or
Servicers.
(j) Separate Corporate Existence.
-----------------------------
(i) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions and
ensure that the funds of the Company will not be diverted
61
to any other Person or for other than corporate uses of the Company,
nor will such funds be commingled with the funds of any Seller or any
Subsidiary or Affiliate of any Seller;
(ii) To the extent that it shares the same officers or other
employees as any of its stockholders or Affiliates, the salaries of
and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and
each such entity shall bear its fair share of the salary and benefit
costs associated with all such common officers and employees;
(iii) To the extent that it jointly contracts with any of its
stockholders or Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such
entity shall bear its fair share of such costs. To the extent that
the Company contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
or services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between the Company
and any of its Affiliates, whether currently existing or hereafter
entered into, shall be only on an arm's length basis;
(iv) Maintain office space separate from the office space of
each Seller and its Affiliates (but which may be located at the same
address as one of the Sellers or one of the Sellers' Affiliates). To
the extent that the Company and
62
any of its stockholders or Affiliates have offices in the same
location, there shall be a fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair share of
such expenses;
(v) Issue separate financial statements prepared not less
frequently than quarterly and prepared in accordance with GAAP;
(vi) Conduct its affairs strictly in accordance with its
articles of incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts;
(vii) Not assume or guarantee any of the liabilities of any
Seller, any Servicer or any Affiliate thereof; and
(viii) Take, or refrain from taking, as the case may be, all
other actions that are necessary to be taken or not to be taken in
order to (x) ensure that the assumptions and factual recitations set
forth in the Specified Bankruptcy Opinion Provisions remain true and
correct with respect to the Company and (y) comply with those
procedures described in such provisions which are applicable to the
Company.
(k) Preservation of Corporate Existence. (i) Preserve and maintain
------------------------------------
its corporate existence,
63
rights, franchises and privileges in the jurisdiction of its incorporation
and (ii) qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where such qualification is required other
than any jurisdiction where the failure so to qualify would not have a
Company Material Adverse Effect.
(1) Assessments. Promptly pay and discharge all taxes, assessments,
------------
levies and other governmental charges imposed on it except such taxes,
assessments, levies and other governmental charges that (i) are being
contested in good faith by appropriate proceedings and for which the
Company shall have set aside on its books adequate reserves and (ii) the
failure to pay, satisfy or discharge would not, in any event, result in a
Company Material Adverse Effect.
(m) Net Worth. On the Initial Closing Date have a consolidated
----------
common stockholders' equity, and thereafter maintain at all times a net
worth, of at least $20,000,000.
SECTION 2.08. Negative Covenants of the Company. The Company hereby
----------------------------------
covenants that, until the Trust Termination Date occurs, it shall not directly
or indirectly:
(a) Limitation on Liabilities. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except Indebtedness evidenced by the Seller Note;
or incur any liability or obligation other than (i) liabilities or
obligations representing fees, expenses and indemnities payable pursuant to
and in accordance with the Transaction Documents and (ii) liabilities or
obligations for services supplied or furnished to the Company in an amount
not to exceed $50,000 at any time outstanding.
64
(b) Limitation on Transfers of Receivables, etc. At any time sell,
--------------------------------------------
transfer or otherwise dispose of any of the Receivables, Related Property
or the proceeds thereof pursuant to
(i) any Lien Creation except for Permitted Liens; or
(ii) any Investment except in respect of or in connection with
(A) the purchase of Receivables and Related Property from the Seller
or its Subsidiaries, (B) an advance or loan made to a Seller or
(C) investments of proceeds as contemplated in any Pooling and
Servicing Agreement.
(d) Limitation on Guarantee Obligations. Become or remain liable,
------------------------------------
directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or repurchase,
agreement to supply or advance funds, or otherwise other than under or in
connection with any Pooling and Servicing Agreement.
(e) Limitation on Fundamental Changes. Enter into any merger,
----------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in its
present method of conducting business, or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets other than the assignments and transfers contemplated
hereby.
(f) Business of the Company. Engage at any time in any business or
------------------------
business activity other than the acquisition of Receivables pursuant to the
Receivables
65
Sale Agreement, the assignments and transfers hereunder, the other
transactions contemplated by the Transaction Documents or any Pooling and
Servicing Agreement and the holding of the LHL Demand Note, and any
activity incidental to the foregoing and necessary or convenient to
accomplish the foregoing, or enter into or be a party to any agreement or
instrument other than in connection with the foregoing.
(g) Agreements. (i) Become a party to any indenture, mortgage,
-----------
instrument, contract, agreement, lease or other undertaking, except the
Transaction Documents, leases of office space, equipment or other
facilities for use by the Company in its ordinary course of business,
employment agreements, service agreements, agreements relating to shared
employees and the other Transaction Documents or any Pooling and Servicing
Agreement and agreements necessary to perform its obligations under the
Transaction Documents or any Pooling and Servicing Agreement, (ii) issue
any power of attorney (except to the Trustee, the Master Servicer or the
Servicers or except for the purpose of permitting any Person to perform any
ministerial functions on behalf of the Company that are not prohibited by
or inconsistent with the terms of the Transaction Documents or any Pooling
and Servicing Agreement), or (iii) amend, supplement, modify or waive any
of the provisions of the Receivables Sale Agreement or any Lockbox
Agreement or request, consent or agree to or suffer to exist or permit any
such amendment, supplement, modification or waiver or exercise any consent
rights granted to it thereunder unless such amendment, supplement,
modification or waiver or such exercise of consent rights would not have an
adverse effect on the interests, rights or remedies of the Trustee or the
Investor Certificateholders of any Outstanding Series under or with respect
to the Transaction Documents and the Rating Agency Condition shall have
been satisfied with respect to any such amendments, supplements,
modifications or waivers.
66
(h) Policies. Make any change or modification (or permit any change
---------
or modification to be made) in any material respect to the Policies, except
(i) if such changes or modifications are necessary under any Requirement of
Law or (ii) if the Rating Agency Condition is satisfied with respect
thereto; provided, however, that if any change or modification, other than
-------- --------
a change or modification permitted pursuant to clause (i) above, would be
reasonably likely to have a Material Adverse Effect on the interests of the
Investor Certificateholders of a Series which is not rated by a Rating
Agency, the consent of the applicable Agent (or if none, as specified in
the related Supplement) shall be required to effect such change or
modification.
(i) Receivables Not To Be Evidenced by Promissory Notes. Subject to
--------------------------------------------- ------
the delivery requirement set forth in subsection 2.01(b), take any action
to cause any Receivable not evidenced by an "instrument" (as defined in the
UCC as in effect in any state in which the Company's, or the related
Sellers' chief executive offices or books and records relating to such
Receivable are located) upon origination to become evidenced by an
instrument, except in connection with its enforcement or collection of a
Defaulted Receivable.
(j) Offices. Move the location of its chief executive office or of
--------
any of the offices where it keeps its records with respect to the
Receivables, or its legal head office to a new location within or outside
the state where such office is now located, without (i) 30 days prior
written notice to the Trustee and each Rating Agency and (ii) taking all
actions reasonably requested by the Trustee (including but not limited to
all filings and other acts necessary or advisable under the UCC or similar
statute of each relevant jurisdiction) in order to continue the Trust's
first priority perfected ownership or security interest
67
in all Receivables now owned or hereafter created; provided, however, that
-------- -------
the Company shall not change the location of its chief executive office to
a state which is within the Tenth Circuit unless it delivers an opinion of
counsel reasonably acceptable to the Rating Agencies to the effect that
Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993) is no
-----------------------------------
longer controlling precedent in the Tenth Circuit.
(k) Change in Name. Change its name, identity or corporate structure
---------------
in any manner that would or is likely (i) to make any financing statement
or continuation statement (or other similar instrument) relating to this
Agreement seriously misleading within the meaning of Section 9-402(7) of
the UCC, or (ii) to impair the perfection of the Trust's interest in any
Receivable under any other similar law, without 30 days prior written
notice to the Trustee and each Rating Agency.
(l) Charter. Amend or make any change or modification to its
--------
certificate of incorporation without first satisfying the Rating Agency
Condition (other than an amendment, change or modification made pursuant to
changes in law of the state of its incorporation or amendments to change
the Company's name (subject to compliance with clause (k) above),
registered agent or address of registered office).
(m) Addition of Sellers. Agree to the addition of any additional
--------------------
Seller pursuant to subsection 9.13 of the Receivables Sale Agreement unless
such additional Seller shall have been simultaneously added as a Servicer
party to the Servicing Agreement pursuant to Section 7.04 thereof or
another Servicer has simultaneously agreed to service the Receivables
originated by such additional Seller.
(n) Optional Termination of Seller. Designate any Seller as a Seller
-------------------------------
to be terminated as a Seller
68
pursuant to subsection 9.14(b) of the Receivables Sale Agreement unless, if
such Seller is a Servicer, such Seller shall have been terminated as a
Servicer pursuant to Section 6.04 of the Servicing Agreement.
(o) Limitation on Restricted Payments and Payments on Seller Note.
--------------------------------------------------------------
Declare or pay any dividend on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of
any class of capital stock of the Company, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of
the Company (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), or make, directly or indirectly,
payments in any form in respect of the Seller Note except, in either case,
in accordance with the terms of any Pooling and Servicing Agreement.
ARTICLE III
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
THE FOLLOWING PORTION OF THIS ARTICLE III
IS APPLICABLE TO ALL SERIES.
SECTION 3.01. Establishment of Collection Account; Certain
--------------------------------------------
Allocations. (a) The Trustee, for the benefit of the Certificateholders as
- ------------
their interests appear in this Agreement, shall cause to be established and
maintained in the name of the Trust with an Eligible Institution or with the
corporate trust department of the Trustee or an Eligible Institution or an
affiliate of the Trustee or an Eligible Institution, a segregated trust
69
account (the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders. Schedule 2, which is hereby incorporated into and made a
part of this Agreement, identifies the Collection Account by setting forth the
account number of such account, the account designation of such account and the
name of the institution with which such account has been established. The
Collection Account shall be divided into individual subaccounts for each
Outstanding Series (each, respectively, a "Series Collection Subaccount" and,
collectively, the "Series Collection Subaccounts") and for the Company (the
"Company Collection Subaccount"). For administrative purposes only, the Trustee
shall establish or cause to be established for each Series, so long as such
Series is an Outstanding Series, sub-subaccounts of the Series Collection
Subaccounts with respect to such Series (respectively, the "Series Principal
Collection Sub-subaccount" and "Series Non-Principal Collection Sub-subaccount"
and, collectively, the "Series Collection Sub-subaccounts").
(b) Authority of the Trustee in Respect of the Collection Account and
------------------------------------------ ----------------------
Certificateholders' Interests Therein. (i) 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
Investor Certificateholders and, to the extent set forth in any Supplement, any
holder of any Subordinated Company Certificate. If, at any time, the Master
Servicer or any Servicer has actual notice or knowledge that any institution
holding the Collection Account has ceased to be an Eligible Institution, any
such Servicer shall immediately notify the Master Servicer and the Master
Servicer shall direct the Trustee to establish within 30 days a substitute
account therefor with an Eligible Institution, transfer any cash and/or any
Eligible Investments to such new account and from the date any such substitute
accounts are established, such account shall be the Collection Account. Neither
the
70
Company, the Master Servicer nor any Servicer, nor any person or entity claiming
by, through or under the Company, the Master Servicer or any Servicer, shall
have any right, title or interest in, except to the extent expressly provided
under the Transaction Documents, or any right to withdraw any amount from, the
Collection Account. Pursuant to the authority granted to the Servicers in
subsection 2.02(a) of the Servicing Agreement, each Servicer shall have the
power to instruct the Trustee to make withdrawals from and payments to the
Collection Account for the purposes of carrying out the Master Servicers', the
Servicers' or Trustee's duties hereunder.
(ii) The Master Servicer agrees to give written direction (which may
be included within any Daily Report) in a timely manner to the Trustee to apply
all Collections with respect to the Receivables and to make all other
applications, allocations and distributions described in Article III and in the
Supplement with respect to each Outstanding Series.
(iii) Each Series of Investor Certificates shall represent Fractional
Undivided Interests as indicated in the Supplement relating to such Series and
the right to receive Collections and other amounts at the times and in the
amounts specified in this Article III (as supplemented by the Supplement related
to such Series) to be deposited in the Collection Account and any other accounts
maintained for the benefit of the Investor Certificateholders or paid to the
Investor Certificateholders (with respect to each outstanding Series, the
"Certificateholders' Interest"). The Exchangeable Company Certificate shall
represent the interest in the Trust not represented by any Series of Investor
Certificates or Subordinated Company Certificates then outstanding, including
the right to receive Collections and other amounts at the times and in the
amounts specified in this Article III to be paid to the Company (the "Company
Interest"), and each Subordinated Company Certificate, if any, shall represent
the interests granted to such Subordinated Company Certificate pursuant to the
related
71
Supplement; provided, however, that no such Subordinated Company Certificate
-------- -------
shall represent any interest in any Trust Account and any other accounts
maintained for the benefit of the Investor Certificateholders, except as
specifically provided in this Article III.
(c) Administration of the Collection Account. At the written
-----------------------------------------
direction of the Company, funds on deposit in the Collection Account available
for investment, shall be invested by the Trustee in Eligible Investments
selected by the Company. All such Eligible Investments shall be held by the
Trustee for the benefit of the Investor Certificateholders. Amounts on deposit
in each Series Non-Principal Collection Sub-subaccount shall, if applicable, be
invested in Eligible Investments that will mature, or that are payable or
redeemable upon demand of the holder thereof, so that such funds will be
available on or before the Business Day immediately preceding the next
Distribution Date. None of such Eligible Investments shall be disposed of prior
to the maturity date with respect thereto unless such disposition is reasonably
determined by the Company to be necessary to prevent a loss. All interest and
investment earnings (net of losses and investment expenses) on funds deposited
in a Series Non-Principal Collection Sub-subaccount shall be deposited in such
sub-subaccount. Amounts on deposit in the Series Principal Collection Sub-
subaccount and any other sub-subaccounts as specified in the related Supplement
shall be invested in Eligible Investments that mature, or that are payable or
redeemable upon demand of the holder thereof, so that such funds will be
available not later than the date which is specified in any Supplement. The
Trustee, or its nominee or custodian, shall maintain possession of the
negotiable instruments or securities, if any, evidencing any Eligible
Investments from the time of purchase thereof until the time of sale or
maturity. Any earnings (net of losses and investment expenses) (the "Investment
Earnings") on such invested funds in a Series Principal Collection
Sub-subaccount and any other sub-subaccounts as specified in the related
Supplement
72
will be deposited in the related Series Non-Principal Collection Sub-subaccount.
(d) Daily Collections. (i) Promptly following its receipt of
------------------
Collections in the form of available funds in a Lockbox Account, but in no event
later than 1:30 p.m., New York City time, on the Business Day following the
Business Day Received, the related Servicer shall transfer, or cause to be
transferred, all Collections on deposit (less the aggregate amount of set-offs
permitted to be retained pursuant to any applicable Lockbox Agreement) in the
form of available funds in the Lockbox Accounts directly to the Collection
Account.
(ii) If the Aggregate Daily Collections are deposited into the
Collection Account pursuant to the preceding subsection 3.01(d)(i) at or before
1:00 p.m., New York City time, and the Daily Report specified in
subsection 3.01(b)(ii) is received by the Trustee at or before 1:00 p.m., New
York City time, the Trustee shall transfer, within a reasonable time, on such
Business Day, from such Aggregate Daily Collections, to the respective Series
Collection Subaccount, an amount equal to the product of (x) the applicable
Invested Percentage for such Outstanding Series and (y) such Aggregate Daily
Collections in accordance with the Daily Report.
(iii) If the Aggregate Daily Collections are deposited into the
Collection Account at or before 1:00 p.m., New York City time, and the Daily
Report is received by the Trustee at or before 1:00 p.m., New York City time, as
set forth in the preceding subsection 3.01(d)(ii), the Trustee shall allocate,
within a reasonable time, on such Business Day, funds transferred to the Series
Collection Subaccount for each Outstanding Series pursuant to the preceding
subsection 3.01(d)(ii) to the Series Non-Principal Collection Sub-subaccount and
the Series Principal Collection Sub-subaccount of each such Series in accordance
with the Daily Report and the related Supplement for such Series.
73
(iv) Except as otherwise provided in a Supplement, if the Aggregate
Daily Collections are deposited into the Collection Account at or before
1:00 p.m., New York City time, and the Daily Report is received by the Trustee
at or before 1:00 p.m., New York City time, as set forth in
subsection 3.01(d)(ii), the Trustee shall, in accordance with the Daily Report,
transfer, within a reasonable time, on such Business Day, to the Company
Collection Subaccount the remaining funds, if any, on deposit in the Collection
Account on such day after giving effect to transfers to be made pursuant to
subsection 3.01(d)(ii).
(e) Certain Allocations Following an Amortization Period. (i) If, on any
-----------------------------------------------------
Settlement Report Date, an Amortization Period has occurred and is continuing
with respect to any Outstanding Series and at such Settlement Report Date, a
Revolving Period is still in effect with respect to any other Outstanding Series
(a "Special Allocation Settlement Report Date"), then the Master Servicer shall
-------------------------------------------
make the following calculations:
(A) the amount (the "Allocable Charged-Off Amount") equal to the
excess, if any, of (I) the aggregate Principal Amount of Charged-Off
Receivables for the related Settlement Period over (II) the aggregate
Principal Amount of Recoveries received during the related Settlement
Period;
(B) the amount (the "Allocable Recoveries Amount") equal to the
excess, if any, of (I) the aggregate Principal Amount of Recoveries
received during the related Settlement Period over (II) the aggregate
Principal Amount of Charged-Off Receivables for the related Settlement
Period; and
(ii) If, on any Special Allocation Settlement Report Date, either of
the Allocable Charged-off Amount or the Allocable Recoveries Amount is greater
than zero for the related Settlement Period, the Trustee shall (in accordance
with written directions received pursuant to
74
subsection (b)(ii) above) make (A) a pro rata allocation to each Outstanding
Series (based on the Invested Percentage for such Series) of a portion (as
determined in clause (iii) below) of each such positive amount and (B) an
allocation to the Exchangeable Company Certificate of the remaining portion of
each such positive amount.
(iii) With respect to each portion of the Allocable Charged-off Amount
and the Allocable Recoveries Amount which is allocated to an Outstanding Series
pursuant to subsection 3.01(e)(ii), the Trustee shall (in accordance with the
written direction of the Master Servicer) apply each such amount to such Series
in accordance with the related Supplement for such Series.
(f) Allocations for the Exchangeable Company Certificate. Until the
-----------------------------------------------------
occurrence and continuation of an Early Amortization Period, on each Business
Day and, after the occurrence and continuation of an Early Amortization Period
and until the Trust Termination Date, on each Distribution Date, after making
all allocations required pursuant to subsection 3.01(d), the Trustee shall (in
accordance with the written direction of the Master Servicer) transfer, using
its best efforts to transfer within two hours of receipt of the Aggregate Daily
Collections and the Daily Report and, if the Aggregate Daily Collections and the
Daily Report are received by the Trustee no later than 1:00 p.m., New York City
time, making such transfer no later than 3:00 p.m., New York City time, on such
Business Day, the amounts on deposit in the Company Collection Subaccount to the
holder of the Exchangeable Company Certificate or to such accounts or such
Persons as the holder of the Company Exchangeable Certificate may direct in
writing (which direction may consist of standing instructions provided by the
holder of the Company Exchangeable Certificate that shall remain in effect until
changed by the holder of the Company Exchangeable Certificate in writing);
provided, however, that a transfer for purposes of this subsection 3.01(f) shall
- -------- -------
be deemed to have occurred at such time as the Trustee instructs the
75
Federal Reserve Bank of New York of the outgoing amount; provided further that a
-------- -------
failure of the Trustee to transfer funds by 3:00 p.m., New York City time, shall
not be a breach of this subsection 3.01(f) if (i) Chemlink is not used by both
the Company and the Trustee to make such transfers or (ii) a Trustee Force
Majeure Delay occurs, and in either such event the Trustee shall use its best
efforts to transfer funds within a reasonable time.
(g) Set-Off. In addition to the provisions of Section 8.05, (i) if
--------
the Company shall fail to make a payment as provided in this Agreement or any
Supplement, the Master Servicer or the Trustee may set off and apply any amounts
otherwise payable to the Company under any Pooling and Servicing Agreement. The
Company hereby waives demand, notice or declaration of such set-off and
application; provided that notice will promptly be given to the Company of such
--------
set-off and application; provided further that failure to give such notice shall
----------------
not affect the validity of such set-off; and (ii) in the event any Servicer
shall fail to make a payment as provided in any Pooling and Servicing Agreement,
the Trustee may set off and apply any amounts otherwise payable to such Servicer
in its capacity as Servicer under the Transaction Documents on account of such
obligation. Each Servicer hereby waives demand, notice or declaration of such
set-off and application; provided that notice will promptly be given to such
--------
Servicer of such set-off; provided further that failure to give such notice
----------------
shall not affect the validity of such set-off.
(h) Allocation and Application of Funds. The Master Servicer shall
------------------------------------
direct the Trustee in writing (which may be given in the form of the Daily
Reports and the Monthly Settlement Statements) to apply all Collections with
respect to the Receivables as described in this Article III and in the
Supplement with respect to each Outstanding Series. The Master Servicer shall
direct the Trustee in writing to pay Collections to the holder of the
Exchangeable Company Certificate to the extent such Collections are allocated to
the Exchangeable Company Certificate under
76
subsection 3.01(f) and as otherwise provided in Article III. Unless otherwise
provided in one or more Supplements, if the Trustee receives any Daily Report at
or before 1:00 p.m., New York City time, on any Business Day, the Trustee shall
make any applications of funds required thereby on the same Business Day and
otherwise on the next succeeding Business Day.
THE REMAINDER OF ARTICLE III SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO EACH SERIES.
SUCH REMAINDER SHALL BE APPLICABLE ONLY TO THE
SERIES RELATING TO THE SUPPLEMENT IN WHICH
SUCH REMAINDER APPEARS.
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO.
ARTICLE V
The Certificates
----------------
SECTION 5.01. The Certificates. The Investor Certificates of each
-----------------
Series, any Class thereof and any Subordinated Company Certificates related
thereto shall be in fully registered form and shall be substantially in the form
of the exhibits with respect thereto attached to the applicable Supplement. The
Exchangeable Company Certificate shall be substantially in the form of
Exhibit A. The Certificates shall, upon issue, be executed and delivered by the
Company to the Trustee for authentication and redelivery as provided in
Section 5.02. Except as otherwise set forth as to any Series or Class in the
related Supplement, the Investor Certificates shall be issued in minimum
denominations of $500,000 and in integral multiples of
77
$100,000 in excess thereof. Unless otherwise specified in any Supplement for
any Series, the Investor Certificates shall be issued upon initial issuance as a
single global certificate in an original principal amount equal to the Initial
Invested Amount with respect to such Series. Each Subordinated Company
Certificate, if any, issued under any Supplement shall be a single certificate
and shall represent a subordinated interest in the Trust Assets allocated to
such Series, as designated in the related Supplement. The Exchangeable Company
Certificate shall also be a single certificate and shall represent the entire
Company Interest. The Company is hereby authorized to execute and deliver each
Certificate on behalf of the Trust. Each Certificate shall be executed by
manual or facsimile signature on behalf of the Company by a Responsible Officer.
Certificates bearing the manual or facsimile signature of the individual who
was, at the time when such signature was affixed, authorized to sign on behalf
of the Company or the Trustee shall not be rendered invalid, notwithstanding
that such individual has ceased to be so authorized prior to or on the date of
the authentication and delivery of such Certificates or does not hold such
office at the date of such Certificates. No Certificate shall be entitled to
any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Certificate a certificate of authentication substantially in the
form provided for herein executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate of authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication but failure to do
so shall not render them invalid.
SECTION 5.02. Authentication of Certificates. The Trustee shall
-------------------------------
authenticate and deliver the initial Series of Investor Certificates that is
issued upon the written order of the Company in a form reasonably satisfactory
to the Trustee, to the holders of the initial Series of Investor Certificates,
against payment to the Company of the Initial
78
Invested Amount and to the Company, the related Subordinated Company
Certificate, if any, as provided in the applicable Supplement. The Trustee
shall authenticate and deliver the Exchangeable Company Certificate to the
Company simultaneously with its delivery of the initial Series of Investor
Certificates. The Certificates shall be duly authenticated by or on behalf of
the Trustee, in the case of the Investor Certificates in authorized
denominations equal to (in the aggregate) the Initial Invested Amount, in the
case of any Subordinated Company Certificate, in a denomination equal to the
subordinated interest in the Trust Assets allocated to such Certificate in
accordance with the terms of the related Supplement and, in the case of the
Exchangeable Company Certificate, in a denomination equal to the remaining
Company Interest from time to time, and together evidencing the entire ownership
of the Trust. Upon an Exchange as provided in Section 5.10 and the satisfaction
of certain other conditions specified therein, the Trustee shall authenticate
and deliver the Certificates of additional Series (with the designation provided
in the applicable Supplement) (or, if provided in any Supplement, the additional
Investor Certificates of an existing Series), upon the written order of the
Company, to the Persons designated in such Supplement. Upon the order of the
Company, the Investor Certificates of any Series shall be duly authenticated by
or on behalf of the Trustee, in authorized denominations equal to (in the
aggregate) the initial Invested Amount of such Series of Investor Certificates.
SECTION 5.03. Registration of Transfer and Exchange of Certificates.
------------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to be maintained
by a transfer agent and registrar (which may be the Trustee) (the "Transfer
Agent and Registrar") in accordance with the provisions of Section 8.16 a
register (the "Certificate Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Transfer Agent and Registrar shall
provide for the registration of the Investor Certificates and of transfers and
exchanges of the Investor
79
Certificates as herein provided. The Company hereby appoints The Chase
Manhattan Bank as Transfer Agent and Registrar for the purpose of registering
the Investor Certificates and transfers and exchanges of the Investor
Certificates as herein provided. The Chase Manhattan Bank shall be permitted to
resign as Transfer Agent and Registrar upon 30 days prior written notice to the
Company, the Trustee and the Master Servicers; provided, however, that such
-------- -------
resignation shall not be effective and The Chase Manhattan Bank shall continue
to perform its duties as Transfer Agent and Registrar until the Trustee has
appointed a successor Transfer Agent and Registrar reasonably acceptable to the
Company and such successor Transfer Agent and Registrar has accepted such
appointment. The provisions of Sections 8.01, 8.02, 8.03, 8.05 and 10.19 shall
apply to The Chase Manhattan Bank (or the Trustee to the extent it is so acting)
also in its role as Transfer Agent or Registrar, as the case may be, for so long
as The Chase Manhattan Bank (or the Trustee to the extent it is so acting) shall
act as Transfer Agent or Registrar, as the case may be.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.05, for the payment of any reasonable compensation payable to the
Transfer Agent and Registrar for their services under this Section 5.03. The
Trustee hereby agrees that, upon the receipt of such funds from the Company, it
shall pay the Transfer Agent and Registrar such amounts.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Company shall execute, and the Trustee shall,
upon the written order of the Company, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Investor Certificates
in authorized denominations of the same Series representing like aggregate
Fractional Undivided Interests and which bear numbers that are not
contemporaneously outstanding.
80
At the option of an Investor Certificateholder, Investor Certificates
may be exchanged for other Investor Certificates of the same Series in
authorized denominations of like aggregate Fractional Undivided Interests,
bearing numbers that are not contemporaneously outstanding, upon surrender of
the Investor Certificates to be exchanged at any such office or agency of the
Transfer Agent and Registrar maintained for such purpose.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Company shall execute, and the Trustee shall, upon the written
order of the Company, authenticate and (unless the Transfer Agent and Registrar
is different from the Trustee, in which case the Transfer Agent and Registrar
shall) deliver, the Investor Certificates of such Series which the
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory
to the Trustee and the Transfer Agent and Registrar duly executed by the
Certificateholder thereof or his attorney-in-fact duly authorized in writing
delivered to the Trustee (unless the Transfer Agent and Registrar is different
from the Trustee, in which case to the Transfer Agent and Registrar) and
complying with any requirements set forth in the applicable Supplement.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require any Certificateholder that is transferring or exchanging one or more
Certificates to pay a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Investor Certificates surrendered for registration of transfer and
exchange shall be canceled and
81
disposed of in a customary manner satisfactory to the Trustee.
The Company shall execute and deliver Certificates to the Trustee or
the Transfer Agent and Registrar in such amounts and at such times as are
necessary to enable the Trustee and the Transfer Agent and Registrar to fulfill
their respective responsibilities under this Agreement and the Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, The City of New York and, subject to
subsection 5.03(a), if specified in the related Supplement for any Series, any
other city designated in such Supplement, an office or offices or agency or
agencies where Investor Certificates may be surrendered for registration or
transfer or exchange.
(c) Unless otherwise stated in any related Supplements, registration
of transfer of Certificates containing a legend relating to restrictions on
transfer of such Certificates (which legend shall be set forth in the Supplement
relating to such Investor Certificates) shall be effected only if the conditions
set forth in the related Supplement are complied with.
Certificates issued upon registration or transfer of, or in exchange
for, Certificates bearing the legend referred to above shall also bear such
legend unless the Company, the Master 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.
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
is delivered to the Transfer Agent
82
and Registrar and the Trustee such security or indemnity as may be required by
them to save the Trust, each of them and the Company harmless, then, in the
absence of actual notice to the Trustee or Transfer Agent and Registrar that
such Certificate has been acquired by a bona fide purchaser, the Company shall
execute and, upon the written request of the Company, the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate Fractional Undivided Interest and bearing a number that is not
contemporaneously outstanding. In connection with the issuance of any new
Certificate under this Section 5.04, the Trustee or the Transfer Agent and
Registrar may require the payment by the Certificateholder of a sum sufficient
to cover any tax or other governmental expenses (including the fees and expenses
of the Trustee and Transfer Agent and Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 5.04 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. The Company may not transfer, assign, exchange or otherwise pledge
or convey the Exchangeable Company Certificate, except pursuant to Section 5.10.
SECTION 5.05. Persons Deemed Owners. At all times prior to due
----------------------
presentation of a Certificate for registration of transfer, the Company, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, any Agent and any
agent of any of them may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Article IV of the related Supplement and for all other
purposes whatsoever, and neither the Trustee, the Paying Agent, the Transfer
Agent and Registrar nor any agent of any of them shall be affected by any notice
to the contrary. Notwithstanding the foregoing provisions of this Section 5.05,
in determining whether the holders of the requisite Fractional Undivided
Interests have given any request, demand, authorization, direction, notice,
consent
83
or waiver hereunder, Investor Certificates owned by the Company, the Master
Servicer or any Servicer or any Affiliate thereof, shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Investor Certificates which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Investor Certificates so owned by the Company, the Master Servicer
or any Servicer or any Affiliate thereof which have been pledged in good faith
shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Certificates and that the pledgee is not the
Company, the Master Servicer or any Servicer or any Affiliate thereof.
SECTION 5.06. Appointment of Paying Agent. The Paying Agent shall
----------------------------
make distributions to Investor Certificateholders from the Collection Account
(and/or any other account or accounts maintained for the benefit of
Certificateholders as specified in the related Supplement for any Series)
pursuant to Articles III and IV. The Trustee may revoke such power and remove
the Paying Agent if the Trustee determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. Unless otherwise specified in the related Supplement
for any Series and with respect to such Series, the Paying Agent shall initially
be The Chase Manhattan Bank and any co-paying agent chosen by The Chase
Manhattan Bank. Each Paying Agent shall have a combined capital and surplus of
at least $50,000,000. The Paying Agent shall be permitted to resign upon 30
days prior written notice to the Trustee. In the event that the Paying Agent
shall so resign, the Trustee shall appoint a successor to act as Paying Agent
(which shall be a depositary institution or trust company) reasonably acceptable
to the Company which appointment shall be effective on the date on which the
Person so appointed gives the Trustee written notice that it accepts the
84
appointment. Any resignation or removal of the Paying Agent and appointment of
successor Paying Agent pursuant to this Section 5.06 shall not become effective
until acceptance of appointment by the successor Paying Agent, as provided in
this Section 5.06. The Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Trustee to execute and deliver to the
Trustee an instrument in which such successor Paying Agent or additional Paying
Agent shall agree with the Trustee that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Investor Certificateholders in trust for the benefit of the
Investor Certificateholders entitled thereto until such sums shall be paid to
such Certificateholders. The Paying Agent shall return all unclaimed funds to
the Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Trustee. The provisions of
Sections 8.01, 8.02, 8.03, 8.05 and 10.19 shall apply to The Chase Manhattan
Bank (or the Trustee to the extent it is so acting) also in its role as Paying
Agent, for so long as The Chase Manhattan Bank (or the Trustee to the extent it
is so acting) 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.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.05, for the payment of any reasonable compensation payable to the
Paying Agent for its services under this Section 5.06. The Trustee hereby
agrees that, upon the receipt of such funds from the Company, it shall pay the
Paying Agent such amounts.
SECTION 5.07. Access to List of Certificate-holders' Names and
------------------------------------------------
Addresses. The Trustee will furnish or cause to be furnished by the Transfer
- ----------
Agent and Registrar to the Company, the Master Servicer or the Paying Agent,
within 10 Business Days after receipt by the Trustee of a request therefor from
the Company, the Master Servicer or the Paying
85
Agent, respectively, in writing, a list of the names and addresses of the
Investor Certificateholders as then recorded by or on behalf of the Trustee. If
three or more Investor Certificateholders of record or any Investor
Certificateholder of any Series or a group of Investor Certificateholders of
record representing Fractional Undivided Interests aggregating not less than 10%
of the Invested Amount of the related Outstanding Series (the "Applicants")
apply in writing to the Trustee, and such application states that the Applicants
desire to communicate with other Investor Certificateholders of any Series with
respect to their rights under this Agreement or under the Investor Certificates
and is accompanied by a copy of the communication which such Applicants propose
to transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall transmit or shall cause the
Transfer Agent and Registrar to transmit, such communication to the
Certificateholders reasonably promptly after the receipt of such application.
Every Certificateholder, by receiving and holding a Certificate,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, nor any of their respective agents, officers, directors or employees
shall be held accountable by reason of the disclosure or mailing of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the sources from which such information was derived.
As soon as practicable following each Record Date, the Trustee shall
provide to the Paying Agent or its designee, a list of Certificateholders in
such form as the Paying Agent may reasonably request.
SECTION 5.08. Authenticating Agent. (a) The Trustee may appoint one
---------------------
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates.
86
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent.
(b) Any institution succeeding to the corporate trust business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee. Upon the receipt by the Trustee of any
such notice of resignation and upon the giving of any such notice of termination
by the Trustee, the Trustee shall immediately give notice of such resignation or
termination to the Company. Any resignation of an authenticating agent shall
not become effective until acceptance of appointment by the successor
authenticating agent as provided in this Section 5.08. The Trustee may at any
time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time an authenticating
agent shall cease to be acceptable to the Trustee, the Trustee promptly may
appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
(other than an Affiliate of the Trustee) shall be appointed unless reasonably
acceptable to the Trustee and the Company.
(d) The Company hereby agrees to provide the Trustee from time to
time sufficient funds, on a timely
87
basis and in accordance with and subject to Section 8.05, for the payment of any
reasonable compensation payable to each authenticating agent for its services
under this Section 5.08. The Trustee hereby agrees that, upon the receipt of
such funds from the Company it shall pay each authenticating agent such amounts.
(e) The provisions of Sections 8.01, 8.02, 8.03 and 8.05 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 5.08, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
"This is one of the Certificates described in the Pooling Agreement
dated as of August 5, 1996, among LFI Receivables Corporation, LFI
Servicing Corporation, as Master Servicer and The Chase Manhattan Bank, as
Trustee.
THE CHASE MANHATTAN BANK
as Authenticating Agent
for the Trustee
By
-------------------------
Authorized Signatory
SECTION 5.09. Tax Treatment. It is the intent of the Master
--------------
Servicer, the Servicers, the Company, the Investor Certificateholders and the
Trustee that, under applicable U.S. Federal, state and local income and
franchise tax laws, the Investor Certificates will qualify as indebtedness
secured by the Trust Assets and the Trust will not be characterized as an
association taxable as a
88
corporation. The Company and the Trustee, by entering into this Agreement, and
each Investor Certificateholder, by its acceptance of its Investor Certificate,
agree to treat the Investor Certificates for applicable U.S. Federal, state and
local income and franchise tax purposes as indebtedness. The provisions of this
Agreement and all related Transaction Documents shall be construed to further
these intentions of the parties. This Section 5.09 shall survive the
termination of this Agreement and shall be binding on all transferees of any of
the foregoing persons.
SECTION 5.10. Tender of Exchangeable Company Certificate. (a) The
------------------------------ ------------
Company may tender the Exchangeable Company Certificate to the Trustee in
exchange for (i)(A) an increase in the Invested Amount of a Class of Investor
Certificates of an Outstanding Series and an increase in any related
Subordinated Company Certificate in connection with an issuance of additional
Investor Certificates of such Outstanding Series or (B) one or more newly issued
Series of Investor Certificates and any related newly issued Subordinated
Company Certificate, and (ii) a reissued Exchangeable Company Certificate (any
such tender a "Company Exchange"). (A Company Exchange shall not be necessary
in connection with an increase in the Invested Amount of any Investor
Certificates issued in a Series with an Invested Amount that may increase or
decrease from time to time. Such Investor Certificates are expected to be
designated as "Variable Funding Certificates" or "VFC Certificates".) The
Company may perform a Company Exchange by notifying the Trustee, in writing at
least three days in advance (an "Exchange Notice") of the date upon which the
Company Exchange is to occur (an "Exchange Date"). Any Exchange Notice shall
state the designation of any Series to be issued on the Exchange Date and, with
respect to each such Series: (a) its additional or Initial Invested Amount, as
the case may be, if any, which in the aggregate at any time may not be greater
than the current principal amount of the Exchangeable Company Certificate, if
any, at such time and (b) its Certificate Rate (or the method for allocating
interest payments or other cash flow to such Series), if
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any. On the Exchange Date, the Trustee shall only authenticate and deliver any
Certificates evidencing an increase in the Invested Amount of a Class of
Investor Certificates or a newly issued Series upon delivery by the Company to
the Trustee of the following (together with the delivery by the Company to the
Trustee of any additional agreements, instruments or other documents as are
specified in the related Supplement): (a) a Supplement executed by the Company
and specifying the Principal Terms of such Series (provided that no such
--------
Supplement shall be required for any increase in the Invested Amount of a Class
of Investor Certificates unless it is so required by the related Supplement),
(b) a Tax Opinion addressed to the Trustee and the Trust, (c) a General Opinion
addressed to the Trustee and the Trust, (d) an Officer's Certificate certifying
that all conditions precedent to the authentication and delivery of such
Certificates have been satisfied, (e) written confirmation from each Rating
Agency that the Exchange will not result in the Rating Agency's reducing or
withdrawing its rating on any then Outstanding Series rated by it and (f) the
existing Exchangeable Company Certificate, the applicable Investor Certificates
and Subordinated Company Certificates, as the case may be. Upon delivery of the
items listed in clauses (a) through (f) above, the Trustee shall cancel the
existing Exchangeable Company Certificate, the applicable Investor Certificates
and Subordinated Company Certificate, as the case may be, and issue, as provided
above, such Series of Investor Certificates, such Subordinated Company
Certificate, if applicable, and a new Exchangeable Company Certificate, dated
the Exchange Date. There is no limit to the number of Company Exchanges that
the Company may perform under this Agreement. If the Company shall, on any
Exchange Date, retain any Investor Certificates issued on such Exchange Date, it
shall, prior to transferring any such Certificates to another Person, obtain a
Tax Opinion. Additional restrictions relating to a Company Exchange may be set
forth in any Supplement.
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(b) Upon any Company Exchange, the Trustee, in accordance with the
written directions of the Company, shall issue to the Company under
Section 5.01, for execution and redelivery to the Trustee for authentication
under Section 5.02, (i) one or more Certificates representing an increase in the
Invested Amount of an Outstanding Series, and an increase in the related
Subordinated Company Certificate, or (ii) one or more new Series of Investor
Certificates and any related Subordinated Company Certificate(s). Any such
Certificates shall be substantially in the form specified in the applicable
Supplement and each shall bear, upon its face, the designation for such Series
to which each such certificate belongs so selected by the Company.
(c) In conjunction with a Company Exchange, the parties hereto shall,
except as otherwise provided in subsection (a) above, execute a supplement to
this Agreement, which shall define, with respect to any additional Investor
Certificates or newly issued Series, as the case may be: (i) its name or
designation, (ii) its additional or initial principal amount, as the case may
be, (or method for calculating such amount), (iii) its coupon rate (or formula
for the determination thereof), (iv) the interest payment date or dates and the
date or dates from which interest shall accrue, (v) the method for allocating
Collections to Certificateholders, (vi) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts,
(vii) the issue and terms of a letter of credit or other form of Enhancement, if
any, with respect thereto, (viii) the terms on which the certificates of such
Series may be repurchased by the Company or may be remarketed to other
investors, (viii) the Series Termination Date, (ix) any deposit account
maintained for the benefit of Certificateholders, (x) the number of classes of
such Series, and if more than one class, the rights and priorities of each such
class, (xi) the rights of the holder of the Exchangeable Company Certificate
that have been transferred to the holders of such Series, (xii) the designation
of any Series Accounts and the terms governing
91
the operation of any such Series Accounts, (xiii) provisions acceptable to the
Trustee concerning the payment of the Trustee's fees and expenses and
(xiv) other relevant terms (all such terms, the "Principal Terms" of such
Series). The Supplement executed in connection with the Company Exchange shall
contain administrative provisions which are reasonably acceptable to the
Trustee.
(d) The Company shall not transfer, assign, exchange or otherwise
dispose of any Subordinated Company Certificate or any interest represented
thereby without (i) the consent of Investor Certificateholders whose consent
would be necessary to amend the Agreement in accordance with the provisions of
Section 10.01 and the Trustee, (ii) the prior satisfaction of the Rating Agency
Condition and (iii) delivery of a Tax Opinion.
(e) Except as specified in any Supplement for a related Series, all
Investor Certificates of any Series shall be equally and ratably entitled as
provided herein to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Agreement and
the applicable Supplement.
SECTION 5.11. Book-Entry Certificates. If specified in any related
------------------------
Supplement, the Investor Certificates, or any portion thereof, upon original
issuance, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the depository
specified in such Supplement (the "Depository") which shall be the Clearing
Agency, specified by, or on behalf of, the Company for such Series. The
Investor Certificates shall initially be registered on the Certificate Register
in the name of the nominee of such Clearing Agency, and no Certificate
Book-Entry Holder will receive a definitive certificate representing such
Certificate Book-Entry Holder's interest in the Investor Certificates, except as
provided in
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Section 5.13. Unless and until definitive, fully registered Investor
Certificates ("Definitive Certificates") have been issued to Certificateholders
pursuant to Section 5.13 or the related Supplement:
(a) the provisions of this Section 5.11 shall be in full force and
effect;
(b) the Company, the Master Servicer, the Servicers and the Trustee
may deal with each Clearing Agency for all purposes (including the making
of distributions on the Investor Certificates) as the Certificateholder
without respect to whether there has been any actual authorization of such
actions by the Certificate Book-Entry Holders with respect to such actions;
(c) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Agreement, the provisions of this
Section 5.11 shall control; and
(d) the rights of Certificate Book-Entry Holders shall be exercised
only through the Clearing Agency and the related Clearing Agency
Participants and shall be limited to those established by law and
agreements between such related Certificate Book-Entry Holders and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Investor Certificates to
such Clearing Agency Participants.
Notwithstanding the foregoing, no Class or Series of Investor
Certificates may be issued as Book-Entry Certificates (but, instead, shall be
issued as Definitive Certificates) unless at the time of issuance of such Class
or Series, the Company and the Trustee receive an opinion of
93
independent counsel that the Certificates of such Class or Series will be
treated as indebtedness for Federal income tax purposes.
SECTION 5.12. Notices to Clearing Agency. Whenever notice or other
---------------------------
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Book-
Entry Holders pursuant to Section 5.13, the Trustee shall give all such notices
and communications specified herein to be given to the Investor
Certificateholders to the Clearing Agencies.
SECTION 5.13. Definitive Certificates. If (a) (i) the Company
------------------------
advises the Trustee in writing that any Clearing Agency is no longer willing or
able to properly discharge its responsibilities under the applicable Depository
Agreement, and (ii) the Company is unable to locate a qualified successor,
(b) the Company, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (c) after the
occurrence of a Servicer Default, Certificate Book-Entry Holders representing
Fractional Undivided Interests aggregating more than 50% of the Invested Amount
held by such Certificate Book-Entry Holders of each affected Series then issued
and outstanding advise the Clearing Agency through the Clearing Agency
Participants in writing, and the Clearing Agency shall so notify the Trustee,
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Book-Entry Holders, the Trustee
shall notify the Clearing Agency, which shall be responsible to notify the
Certificate Book-Entry Holders, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Book-Entry Holders
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Company nor the Trustee shall be
94
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.
ARTICLE VI
Other Matters Relating to the Company
-------------------------------------
SECTION 6.01. Liability of the Company. The Company shall be liable
-------------------------
for all obligations, covenants, representations and warranties of the Company
arising under or related to this Agreement or any Supplement. Except as
provided in the preceding sentence and otherwise herein, the Company shall be
liable only to the extent of the obligations specifically undertaken by it in
its capacity as Company hereunder.
SECTION 6.02. Limitation on Liability of the Company. Subject to
---------------------------------------
Sections 6.01, 6.03 and 10.19, neither the Company nor any of its directors or
officers or employees or agents shall be under any liability to the Trust, the
Trustee, the Certificateholders or any other Person for any action taken or for
refraining from the taking of any action pursuant to this Agreement whether or
not such action or inaction arises from express or implied duties under any
Transaction Document; provided, however, that this provision shall not protect
-------- -------
the Company against any liability which would otherwise be imposed by reason of
wilful misconduct, bad faith or negligence in the performance of any duties or
by reason of reckless disregard of any obligations and duties hereunder. The
Company and any director or officer or employee or agent of the Company may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person (other than, in the case of the Company, the Company or
the Servicer) respecting any matters arising hereunder.
SECTION 6.03. Liabilities. Notwithstanding Section 6.02 or any other
------------
provision of any Pooling and
95
Servicing Agreement, by entering into this Agreement, the Company agrees to be
liable, directly to the injured party, for the entire amount of any losses,
claims, damages or liabilities, arising out of or based on the arrangement
created by any Pooling and Servicing Agreement and the actions of any Servicer
taken pursuant hereto or thereto as though the Pooling and Servicing Agreements
created a partnership under the New York Uniform Limited Partnership Act with
the Company as a general partner thereof (except those losses, claims, damages
or liabilities incurred by an Investor Certificateholder in the capacity of an
investor in the Investor Certificates as a result of the performance of the
Receivables, market fluctuations or other similar market or investment risks).
In the event of a Service Transfer, the Successor Servicer (except for the
Trustee in its capacity as Successor Servicer) will indemnify and hold harmless
the Company for any losses, claims, damages and liabilities of the Company
arising under this Section 6.03 from the actions or omissions of such Successor
Servicer.
ARTICLE VII
Early Amortization Events
-------------------------
SECTION 7.01. Early Amortization Events. Unless modified with respect
--------------------------
to any Series of Investor Certificates by any related Supplement, if any one of
the following events (each, an "Early Amortization Event") shall occur:
(a) (i) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect (the Bankruptcy Code and all other
such applicable laws being collectively, "Applicable Insolvency Laws"),
which decree or order is not stayed or any other similar relief shall be
granted under any applicable federal or state law now or hereafter in
96
effect and shall not be stayed; (ii) (A) an involuntary case is commenced
against the Company under any Applicable Insolvency Law now or hereafter in
effect, a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company, or over
all or a substantial part of the property of the Company shall have been
entered, an interim receiver, trustee or other custodian of the Company for
all or a substantial part of the property of the Company is involuntarily
appointed, a warrant of attachment, execution or similar process is issued
against any substantial part of the property of the Company, and (B) any
event referred to in clause (ii)(A) above continues for 60 days unless
dismissed, bonded or discharged; (iii) the Company shall at its request
have a decree or an order for relief entered with respect to it or commence
a voluntary case under any Applicable Insolvency Law, consent to the entry
of a decree or an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any Applicable
Insolvency Law, consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; (iv) the making by the Company of any general assignment for the
benefit of creditors; (v) the inability or failure of the Company generally
to pay its debts as such debts become due; or (vi) the Board of Directors
of the Company adopts any resolution or otherwise authorizes action to
approve any of the foregoing; or
(b) the Trust or the Company shall become an "investment company"
within the meaning of the 1940 Act;
then, an "Early Amortization Period" with respect to all Outstanding Series
shall commence without any notice or other action on the part of the Trustee or
any Investor
97
Certificateholder immediately upon the occurrence of such event. The Master
Servicer shall notify each Rating Agency and the Trustee in writing of the
occurrence of any Early Amortization Period. Upon the commencement against the
Company of a case, proceeding or other action described in clause (a)(ii) above,
the Company shall cease to purchase Receivables from any Seller and cease to
transfer Receivables to the Trust, until such time, if any, as such case,
proceeding or other action is vacated, discharged, or stayed or bonded pending
appeal. If an Insolvency Event with respect to the Company occurs, the Company
shall immediately cease to transfer Receivables to the Trust (or, if the Company
has previously suspended the transfer of Receivables to the Trust to comply
with the preceding sentence, such suspension shall become a permanent cessation
of the transfer of Receivables to the Trust) and shall promptly give written
notice to the Trustee of such occurrence. Notwithstanding any cessation of the
transfer to the Trust of additional Receivables, Receivables transferred to the
Trust prior to the occurrence of such Insolvency Event and Collections in
respect of such Receivables and interest, whenever created, accrued in respect
of such Receivables, shall continue to be a part of the Trust.
Additional Early Amortization Events and the consequences thereof may
be set forth in each Supplement with respect to the Series relating thereto.
SECTION 7.02. Additional Rights upon the Occurrence of Certain
------------------------------------------------
Events. (a) If after the occurrence of an Insolvency Event, the Aggregate
- -------
Invested Amount and all accrued and unpaid interest thereon have not been paid
to the Investor Certificateholders, the Trustee in accordance with the written
direction of the Master Servicer shall (i) publish a notice in a newspaper with
a national circulation (an "Authorized Newspaper") that an Insolvency Event has
occurred and that the Trustee intends to sell, dispose of or otherwise liquidate
the Receivables in a commercially reasonable manner and (ii) send written notice
98
to the Certificateholders and request instructions from such holders, which
notice shall request each Certificateholder to advise the Trustee in writing
that it elects one of the following options: (A) the Certificateholder wishes
the Trustee not to sell, dispose of or otherwise liquidate the Receivables;
(B) the Certificateholder wishes the Trustee to sell, dispose of or otherwise
liquidate the Receivables; or (C) the Certificateholder refuses to advise the
Trustee as to the specific action the Trustee should take. If after 60 days
from the day notice pursuant to clause (i) above is first published (the
"Publication Date"), the Trustee shall not have received written instructions
selecting option (A) above from (x) Investor Certificateholders representing
more than 50% of the Invested Amount of each Series (or, in the case of a Series
having more than one Class of Investor Certificates, Investor Certificateholders
representing more than 50% of the Invested Amount of each Class of such Series)
and (y) if there are any holders of the Exchangeable Company Certificate other
than the Company, the holders of the Exchangeable Company Certificate
representing more than 50% of the Company Interest not held by the Company, the
Trustee shall proceed to 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 and the Trustee
shall proceed to consummate the sale, liquidation or disposition of the
Receivables as provided above with the highest bidder for the Receivables. The
Company or any of its Affiliates shall be permitted to bid for the Receivables.
In addition, the Company or any of its Affiliates shall have the right to match
any bid by a third person and be granted the right to purchase the Receivables
at such matched bid price. The provisions of Sections 7.01 and 7.02 shall be
cumulative. All reasonable costs and expenses incurred by the Trustee in such
sale shall be reimbursable to the Trustee as provided in Section 8.05.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) above shall be treated as Collections on
the Receivables and
99
such proceeds shall be released to the Trustee in an amount equal to the amount
of any expenses incurred by the Trustee acting in its capacity either as Trustee
or as liquidating agent under this Section 7.02 that have not otherwise been
reimbursed and the remainder, if any, will be distributed to holders of each
Series after immediately being deposited in the Collection Account, in
accordance with the provisions of Section 3.01(e) and the related Supplement for
such Series. After giving effect to all such distributions, the remainder, if
any, shall be allocated to the Company Interest and shall be released to the
holder of the Exchangeable Company Certificate upon surrender thereof.
SECTION 7.03. Expense Account. (a) Upon the occurrence and during
----------------
the continuation of an Early Amortization Event, the Trustee, for the benefit of
the Successor Servicer under the Servicing Agreement shall establish and
maintain in the name of the Trustee with an Eligible Institution or with the
trust department of the Trustee, a segregated trust account accessible only by
and under the sole control and dominion of, the Trustee (such account, the
"Expense Account").
(b) So long as the initial Servicers or any subsidiary, Affiliate or
joint venture thereof are acting as Servicers, upon the occurrence and during
the continuation of an Early Amortization Event with respect to any Outstanding
Series as specified in the related Supplement, the Trustee shall, in accordance
with the written direction of the Master Servicer, deposit into the Expense
Account the portion of the Servicing Fee identified in such written direction as
allocable to such Series and payable to the initial Servicers or Affiliates
thereof, subject to the limitations specified in such Supplements.
(c) Amounts in the Expense Account shall be withdrawn by the
Successor Servicer in the manner specified in Section 6.02 of the Servicing
Agreement and in accordance with Section 8.05 herein.
100
(d) The Trustee shall invest amounts on deposit in the Expense
Account in Eligible Investments and the income therefrom shall be deposited
therein. Any losses resulting from such investment shall be charged to amounts
on deposit in the Expense Account.
(e) Upon the earlier to occur of (i) the termination of the Trust
pursuant to Section 9.01, and (ii) 30 days after the termination of the duties
of the Successor Servicer under the Servicing Agreement, the Trustee shall
distribute all remaining funds in the Expense Account not otherwise owed to the
Trustee or any Successor Servicer to or at the written direction of the Company.
ARTICLE VIII
The Trustee
-----------
SECTION 8.01. Duties of Trustee. (a) The Trustee, prior to the
------------------
occurrence of a Servicer Default or Early Amortization Event of which a
Responsible Officer of the Trustee has actual knowledge and after the curing of
all Servicer Defaults and Early Amortization Events which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in the Pooling and Servicing Agreements or any Supplement and no implied
covenants or obligations shall be read into such Pooling and Servicing
Agreements against the Trustee. If a Servicer Default or Early Amortization
Event of which a Responsible Officer of the Trustee has actual knowledge
occurred (which has not been cured or waived), the Trustee shall exercise the
rights and powers vested in it by any Pooling and Servicing Agreement or any
Supplement and shall use the same degree of care and skill in their exercise as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions
101
expressed therein upon resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to the Trustee; provided, that
--------
(i) in the case of any of the above which are specifically required to be
furnished to the Trustee pursuant to any provision of the Pooling and Servicing
Agreements, the Trustee shall, subject to Section 8.02, examine them to
determine whether they appear on their face to conform to the requirements of
this Agreement and (ii) in the case of any of the above as to which the Trustee
is required to perform procedures pursuant to the Internal Operating Procedures
Memorandum, the Trustee shall perform said procedures in accordance with the
Internal Operating Procedures Memorandum.
(c) Subject to subsection 8.01(a), no provision of this Agreement or
any Supplement shall be construed to relieve the Trustee from liability for its
own grossly negligent action, its own grossly negligent failure to act or its
own wilful misconduct; provided, however, that:
-------- -------
(i) the Trustee shall not be liable for an error of judgment unless it
shall be proved that the Trustee was grossly negligent, or acted in bad
faith, in ascertaining the pertinent facts;
(ii) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith;
(iii) the Trustee shall not be charged with knowledge of any failure by
the Master Servicer or any Servicers to comply with any of their
obligations, unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure or the Trustee receives written notice of such
failure from the Master Servicer or any Servicer, any Agent or any Investor
Certificateholder;
(iv) the Trustee shall not be charged with knowledge of a Servicer
Default or Early Amortization
102
Event unless a Responsible Officer of the Trustee obtains actual knowledge
of such event or the Trustee receives written notice of such default or
event from the Master Servicer or any Servicer, any Agent or any holder of
Investor Certificates;
(v) the Trustee shall not be liable for any investment losses
resulting from any investments of funds on deposit in the Accounts or any
subaccounts thereof (provided that such investments are Eligible
--------
Investments); and
(vi) the Trustee shall have no duty to monitor the performance of the
Master Servicer or any Servicer, nor shall it have any liability in
connection with malfeasance or nonfeasance by the Master Servicer or any
Servicer; the Trustee shall have no liability in connection with compliance
of the Master Servicer or any Servicer or the Company with statutory or
regulatory requirements related to the Receivables; and the Trustee shall
have no duty to perform, except as otherwise required pursuant to the
Internal Operating Procedures Memorandum, any recalculation or verification
of any calculation with respect to data provided to the Trustee by the
Master Servicer or any Servicer.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties under any Pooling and Servicing Agreement or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, and none of the provisions contained in any
Pooling and Servicing Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any obligations of
the Master Servicer or any Servicer under such Agreement except during such
time, if any, as the Trustee shall be the successor to, and be
103
vested with the rights, duties, powers and privileges of, the Master Servicer or
any Servicer in accordance with the terms of such Agreement.
(e) Except as expressly provided in any Pooling and Servicing
Agreement, the Trustee shall have no power to vary the corpus of the Trust.
(f) Provided that the Master Servicer or any Servicer and the Company
shall have provided to the Trustee promptly upon request all books, records and
other information reasonably requested by the Trustee and shall have provided
the Trustee with all necessary access to the properties, books and records of
the Master Servicer or any Servicer and the Company which the Trustee may
reasonably require, then within 90 days following the Initial Closing Date, the
Trustee shall have (i) completed the Servicer Site Review and (ii) established
the Standby Liquidation System, and shall have notified the Master Servicer or
any Servicer, each Rating Agency and each Investor Certificateholder of such
events.
(g) The Trustee shall prepare, within 45 days of the Initial Closing
Date, the Internal Operating Procedures Memorandum. Once prepared, the Trustee
shall take such actions as are set forth in the Internal Operating Procedures
Memorandum unless prevented from doing so through no fault of the Trustee.
SECTION 8.02. Rights of the Trustee. Except as otherwise provided in
----------------------
Section 8.01 and in the Internal Operating Procedures Memorandum:
(a) The Trustee may conclusively rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officers Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper or document believed
by it to
104
be genuine and to have been signed or presented to it pursuant to any
Pooling and Servicing Agreement by the proper party or parties.
(b) The Trustee may consult with counsel and any Opinion of Counsel
and any advice of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel.
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by any Pooling and Servicing Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Certificate-
holders, pursuant to the provisions of any Pooling and Servicing Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby; provided, however, that nothing contained
-------- -------
herein shall relieve the Trustee of the obligations, upon the occurrence of
a Servicer Default or Early Amortization Event (which has not been cured),
to exercise such of the rights and powers vested in it by any Pooling and
Servicing Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs. The right of the Trustee to
perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other than
its gross negligence or wilful misconduct in the performance of any such
act.
(d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by any
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Pooling and Servicing Agreement; provided that the Trustee shall be liable
for its gross negligence or wilful misconduct.
(e) The Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, direction, order,
approval, bond, note or other paper or document, unless requested in
writing so to do by the holders of Investor Certificates evidencing
Fractional Undivided Interests aggregating more than 50% of the Invested
Amount of any Series which could be materially and adversely affected if
the Trustee does not perform such acts; provided, however, that such
-------- -------
holders of Investor Certificates shall indemnify and reimburse the Trustee
for any liability or expense resulting from any such investigation
requested by them; provided further that the Trustee shall be entitled to
----------------
make such further inquiry or investigation into such facts or matters as it
may reasonably see fit, and if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books
and records of the Company, personally or by agent or attorney, at the sole
cost and expense of the Company.
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through affiliates,
agents or attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such affiliate, agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(g) The Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or absence of
106
defects, the compliance by the Company with its representations and
warranties or for any other purpose.
(h) In the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded
to the Trustee pursuant to this Article VIII shall also be afforded to such
Paying Agent or Transfer Agent and Registrar.
SECTION 8.03. Trustee Not Liable for Recitals. The Trustee assumes
--------------------------------
no responsibility for the correctness of the recitals contained herein and in
the Certificates (other than the certificate of authentication on the
Certificates). Except as set forth in Section 8.15, the Trustee makes no
representations as to the validity or sufficiency of any Pooling and Servicing
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee
shall not be accountable for the use or application by the Company of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Company in respect of the Receivables or
deposited in or withdrawn from the Accounts or other accounts hereafter
established to effectuate the transactions contemplated herein and in accordance
with the terms of any Pooling and Servicing Agreement.
The Trustee shall not be accountable for the use or application by the
Master Servicer or any Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the Master
Servicer or any Servicer in respect of the Receivables or deposited in or
withdrawn from the Accounts or any Lockbox by or at the direction of the
Servicers or Lockbox Processors. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable.
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SECTION 8.04. Trustee May Own Certificates. The Trustee in its
-----------------------------
individual or any other capacity (a) may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee
and (b) may transact any banking and trust business with the Company, the Master
Servicer or any Servicer or the Sellers as it would were it not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses. The Master Servicer and
----------------------------
each Servicer covenant and agree to pay, but only from funds available to them
as the Servicing Fee paid under the Servicing Agreement, to the Trustee annually
in advance on the Initial Closing Date and on or about each one year anniversary
thereof, and the Trustee shall be entitled to receive, such reasonable
compensation as is agreed upon in writing between the Trustee and the Company
(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. The Trustee shall be
entitled to reimbursement upon its request for all reasonable expenses
(including, without limitation, expenses incurred in connection with notices,
requests for documentation or other communications to Certificate-holders),
disbursements, losses, liabilities, damages and advances incurred or made by the
Trustee in accordance with any of the provisions of any Pooling and Servicing
Agreement or by reason of its status as Trustee under any Pooling and Servicing
Agreement (including the reasonable fees and expenses of its agents, any co-
trustee and counsel) except any such expense, disbursement, loss, liability,
damage or advance as may arise from its gross negligence or bad faith. To the
extent the fees and expenses of the Trustee are not paid on a current basis, the
Trustee shall be entitled to be paid such items from amounts that would be
distributable to the Company under Article III of this Agreement and, to the
extent still unpaid in full, the Company will pay or reimburse the Trustee upon
its request for such items. If the Company fails so to reimburse the Trustee,
the Trustee
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shall be entitled to be paid from any amounts on deposit in the Expense Account.
Notwithstanding anything contained in this Agreement to the contrary, the
Trustee shall not be entitled to reimbursement for any costs or expenses
incurred in connection with the review, negotiation, preparation, execution and
delivery of any of the Transaction Documents or in connection with the issuance
of any Certificates on the Initial Closing Date except for such costs and
expenses as have been agreed to in writing between the Trustee and Company. If
the Trustee is appointed Successor Master Servicer or a Successor Servicer in
accordance with the Servicing Agreement, the provisions of this Section 8.05
shall not apply to expenses, disbursements, losses, liabilities, damages and
advances made or incurred by the Trustee in its capacity as Successor Master
Servicer or a Successor Servicer, which items shall be paid, first, out of the
Servicing Fee, second, to the extent not paid therefrom, by making an
appropriate withdrawal from the Expense Account, third, from amounts which would
be distributable to the Company under Article III of this Agreement, fourth,
from amounts distributable to the Company pursuant to Section 9.04 and to the
extent still unpaid in full, the Company will pay or reimburse the Trustee upon
its request for such items. The provisions of this Section 8.05 shall apply to
the reasonable expenses, disbursements and advances made or incurred by the
Trustee, or any other Person, in its capacity as liquidating agent, to the
extent not otherwise paid. The covenants to pay the expenses, disbursements,
losses, liabilities, damages and advances provided for in this Section shall
survive the termination of any Pooling and Servicing Agreement and shall be
binding on the Company, the Master Servicer, the Servicers and any Successor
Master Servicer or Successor Servicer. The Company's, the Master Servicer's and
the Servicers' covenants and agreements contained in this Section 8.05 shall
survive the termination of this Agreement.
SECTION 8.06. Eligibility Requirements for Trustee. The Trustee
-------------------------------------
hereunder shall at all times be a corporation organized and doing business under
the laws of
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the United States of America or any state thereof authorized under such laws to
exercise corporate trust powers, having (or having a holding company parent
with) a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for the
purpose of this Section 8.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07.
SECTION 8.07. Resignation or Removal of Trustee. (a) Subject to
----------------------------------
paragraph (c) below, the Trustee may at any time resign and be discharged from
the trust hereby created by giving written notice thereof to the Company, the
Master Servicer and the Rating Agencies. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted such appointment within
30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request therefor by the Master Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its
110
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Company may remove the Trustee and
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
(d) The obligations of the Company described in Sections 6.03 and
8.05 hereof and the obligations of the Master Servicer described in Section 8.05
hereof and Section 5.01 of the Servicing Agreement shall survive the removal or
resignation of the Trustee as provided in this Agreement.
(e) No Trustee under this Agreement shall be personally liable for
any action or omission of any successor trustee.
SECTION 8.08. Successor Trustee. (a) Any successor trustee
------------------
appointed as provided in Section 8.07 shall execute, acknowledge and deliver to
the Company and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor Trustee shall
deliver to the successor trustee all documents or copies thereof, at the expense
of the Master Servicer, and statements held by it hereunder; and the Company and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
111
confirming in the successor trustee all such rights, power, duties and
obligations. The Master Servicer shall immediately give notice, but in no event
less than 10 days prior to any such resignation or removal, to each Rating
Agency upon the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 8.08, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
SECTION 8.09. 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 8.06, 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. The Trustee shall promptly give notice (except to the
extent prohibited under any Requirement of Law or Contractual Obligation), but
in no event less than 10 days prior to any such merger or consolidation, to the
Company, the Master Servicer and the Rating Agencies upon any such merger or
consolidation of the Trustee. Information as to such merger or consolidation
that is made publicly available by the Trustee in at least two Authorized
Newspapers shall be deemed to satisfy the notice requirement of this
Section 8.09.
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SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
----------------------------------------------
(a) Notwithstanding any other provisions of any Pooling and Servicing
Agreement, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 8.08. The Trustee shall promptly notify each Rating Agency of the
appointment of any co-trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any statute of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Master 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
113
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of any Pooling and Servicing Agreement, specifically including every provision
of any Pooling and Servicing Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Master Servicer
and the Company.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to any
Pooling and Servicing Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted
114
by law, without the appointment of a new or successor trustee.
SECTION 8.11. Tax Returns. In the event the Trust shall be required
------------
to file U.S. Federal, state, local or foreign income tax returns, the Company
shall prepare and file or shall cause to be prepared and filed any such tax
returns required to be filed by the Trust and shall remit such tax returns to
the Trustee for signature at least five Business Days before such tax returns
are due to be filed (including extensions). The Company shall also prepare or
shall cause to be prepared all U.S. Federal tax information in connection with
this Agreement required by law to be distributed to Certificateholders and shall
deliver such information to the Trustee at least five Business Days prior to the
date it is required by law to be distributed to the Certificateholders. The
Trustee, upon request, will furnish the Company with all such information known
to the Trustee as may be reasonably determined by the Company to be required in
connection with the preparation of all U.S. Federal, state, local or foreign
income tax returns of the Trust, and shall, upon the Company's written request,
execute such tax returns. In no event shall the Trustee in its individual
capacity be liable for any liabilities, costs or expenses of the Trust, the
Certificateholders, the Company the Master Servicer, or the Servicers arising
under any U.S. Federal, state, local or foreign income tax law or regulation,
including, without limitation, excise taxes or any other tax imposed by a
Governmental Authority on or measured by income (or any interest or penalty with
respect thereto or arising from any failure to comply therewith). The Trustee
shall not be required to determine whether any filing of tax returns is
required.
SECTION 8.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under any Pooling and Servicing
- -------------
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and
115
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.
SECTION 8.13. Suits for Enforcement. If a Servicer Default shall
----------------------
occur and be continuing, the Trustee may, as provided in Section 6.01 of the
Servicing Agreement, proceed to protect and enforce its rights and the rights of
the Certificateholders under this Agreement or any other Transaction Document by
suit, action or proceeding (including any suit, action or proceeding on behalf
of the Certificateholders against any third party) in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Agreement or any other Transaction Document or in aid of the
execution of any power granted in this Agreement or any other Transaction
Document or for the enforcement of any other legal, equitable or other remedy as
the Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders. In
furtherance of and without limiting the generality of subsection 8.01(d), the
Trustee shall have the right to obtain, before initiating any such action, such
reasonable indemnity from the Investor Certificateholders as the Trustee may
require against the costs, expenses and liabilities that may be incurred therein
or thereby. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Certificateholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
116
SECTION 8.14. Rights of Investor Certificateholders To Direct
-----------------------------------------------
Trustee. Investor Certificateholders evidencing more than 50% of the Invested
- --------
Amount of any Series affected by the conduct of any proceeding or the exercise
of any right conferred on the Trustee shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
--------
however, that nothing in any Pooling and Servicing Agreement shall impair the
- -------
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction of the Investor Certificateholders;
provided further in furtherance and without limiting the generality of
- ----------------
subsection 8.01(d), the Trustee shall have the right to obtain, before acting in
accordance with any such direction of the Investor Certificateholders, such
reasonable indemnity from the Investor Certificateholders as the Trustee may
require against the costs, expenses and liabilities that may be incurred in so
acting.
SECTION 8.15. Representations and Warranties of Trustee. The Trustee
--------------------------------- --------
represents and warrants that:
(a) the Trustee is a banking corporation organized, existing and in
good standing under the laws of the State of New York and is duly
authorized to exercise trust powers under applicable law;
(b) the Trustee has the power and authority to enter into this
Agreement and any Supplement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement
and any Supplement; and
(c) each Pooling and Servicing Agreement and each of the Transaction
Documents executed by it have been duly executed and delivered by the
Trustee and, in the case of all such Transaction Documents, are legal,
valid and binding obligations of the Trustee,
117
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
SECTION 8.16. Maintenance of Office or Agency. The Trustee will
--------------------------------
maintain at its expense in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where notices and demands to or upon the
Trustee in respect of the Certificates and the Pooling and Servicing Agreements
may be served. The Trustee will give prompt written notice to the Company, the
Master Servicer and the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 8.17. Limitation of Liability. The Certificates are executed
------------------------
by the Trustee, not in its individual capacity but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred and vested in it by
the Trust Agreement. Each of the undertaking and agreements made on the part of
the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the purpose
of binding only the Trust.
ARTICLE IX
Termination
-----------
SECTION 9.01. Termination of Trust. (a) The Trust and the
---------------------
respective obligations and responsibilities of the Company, the Servicers and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereafter set forth) shall terminate, except
with respect to any such obligations or
118
responsibilities expressly stated to survive such termination, on the earliest
of (i) the last day of the July 2011 Settlement Period, (ii) at the option of
the Company, at any time when the Aggregate Invested Amount is zero,
(iii) following the occurrence of either of the Early Amortization Events
specified in Section 7.01 of this Agreement, at any time when the Aggregate
Invested Amount is zero and (iv) upon completion of distribution of the amounts
referred to in subsection 7.02(b) (the "Trust Termination Date").
(b) If on the Distribution Date in the month immediately preceding
the month in which the Trust Termination Date occurs (after giving effect to all
transfers, withdrawals, deposits and drawings to occur on such date and the
payment of principal on any Series of Certificates to be made on the related
Distribution Date pursuant to Article III) the Invested Amount of any Series
would be greater than zero (as certified in writing by the Master Servicer), the
Trustee, at the written direction of the Master Servicer, shall make reasonable
efforts to sell within 30 days of such Distribution Date all of the Receivables.
The proceeds of such sale shall be treated as Collections on the Receivables and
shall be allocated in accordance with Article III. During such 30-day period,
the Servicers shall continue to collect Collections on the Receivables and
allocate Collections in accordance with the provisions of Article III. The
reasonable costs and expenses incurred by the Trustee in such sale shall be
reimbursable to the Trustee as provided in Section 8.05.
SECTION 9.02. Optional Purchase and Final Termination Date of
-----------------------------------------------
Investor Certificates of Any Series. (a) On any Distribution Date during the
- ------------------------------------
Amortization Period with respect to any Series on which the Invested Amount (or
such other amount as may be set forth in the related Supplement) of such Series
is reduced to an amount equal to or less than the Optional Repurchase Percentage
of the Initial Invested Amount (or such other amount as may be set forth in the
related Supplement) for such Series as of the
119
day preceding the beginning of such Amortization Period, the Company shall have
the option to repurchase the entire Certificateholders' Interest of such Series,
at a purchase price equal to (i) the outstanding Invested Amount of the Investor
Certificates of such Series plus (ii) accrued and unpaid interest through such
----
Distribution Date (after giving effect to any payment of principal and monthly
interest on such date of purchase) plus (iii) all other amounts payable to all
----
Investor Certificateholders of such Series under the related Supplement (such
purchase price, the "Clean-Up Call Repurchase Price"). The amount of the Clean-
Up Call Repurchase Price will be deposited into the Collection Account for
credit to the Series Collection Subaccount for such Series on such Distribution
Date in immediately available funds and will be passed through in full to the
applicable Investor Certificateholders. Following any such repurchase, such
Certificateholders' Interest in the Receivables shall terminate and such
interest therein will be allocated to the Company Interest and such
Certificateholders will have no further rights with respect thereto. In the
event that the Company fails for any reason to deposit the Clean-Up Call
Repurchase Price for such Receivables, the Certificateholders' Interest in the
Receivables will continue and monthly payments will continue to be made to the
Certificateholders.
(b) The amount deposited pursuant to subsection 9.02(a) shall be paid
to the Investor Certificateholders of the related Series pursuant to Article III
on the Distribution Date following the date of such deposit. All Certificates
of a Series which are purchased by the Company pursuant to subsection 9.02(a)
shall be delivered by the Company upon such purchase to, and be canceled by (in
accordance with the written directions of the Company), the Transfer Agent and
Registrar and be disposed of in a manner satisfactory to the Trustee and the
Company.
(c) All principal or interest with respect to any Series of Investor
Certificates shall be due and payable no
120
later than the Series Termination Date with respect to such Series. Unless
otherwise provided in a Supplement, in the event that the Invested Amount of any
Series of Certificates is greater than zero on its Series Termination Date
(after giving effect to all transfers, withdrawals, deposits and drawings to
occur on such date and the payment of principal to be made on such Series on
such date), the Trustee will sell or cause to be sold, in accordance with the
directions of 50% of the Investor Certificateholders of such Series (upon which
the Trustee may conclusively rely) and pay the proceeds to all
Certificateholders of such Series pro rata (except that unless expressly
provided to the contrary in the related Supplement, no payment shall be made to
Certificateholders of any Class of any Series that is by its terms subordinated
to any other Class until such senior Class of Certificates have been paid in
full) in final payment of all principal of and accrued interest on such Series
of Certificates, an amount of Receivables or interests in Receivables up to the
Invested Amount of such Series at the close of business on such date; provided,
--------
however, in furtherance and without limiting the generality of subsection
- -------
8.01(d), the Trustee shall have the right to obtain, before acting in accordance
with any such direction of the Investor Certificateholders, such reasonable
indemnity from the Investor Certificateholders as the Trustee may require
against the costs, expenses and liabilities that may be incurred in so acting.
Absent such direction from Investor Certificateholders representing more than
50% of the Invested Amount of such Series or absent such reasonable indemnity as
the Trustee may require in connection with such direction, the Trustee shall
continue to hold the Trust Assets in respect of such Series in accordance with
the terms of the Pooling and Servicing Agreements until the Trust Termination
Date (or until a majority of the Certificateholders shall otherwise direct the
Trustee); provided that the terms of this Agreement, the related Supplement and
--------
the Servicing Agreement shall be deemed to remain in full force and effect,
except that no additional Receivables shall be allocated with respect to such
Series. The reasonable costs and expenses incurred by
121
the Trustee in such sale shall be reimbursable to the Trustee as provided in
Section 8.05. Any proceeds of such sale in excess of such principal and
interest paid shall be paid to the holder of the Exchangeable Company
Certificate, unless and to the extent otherwise specified in any applicable
Supplement. Upon such Series Termination Date with respect to the applicable
Series of Certificates, final payment of all amounts allocable to any Investor
Certificates of such Series shall be made in the manner provided in this
Section 9.02.
SECTION 9.03. Final Payment with Respect to Any Series. (a) Written
-----------------------------------------
notice of any termination, specifying the Distribution Date upon which the
Investor Certificateholders of any Series may surrender their Investor
Certificates for payment of the final distribution with respect to such series
and cancelation, shall be given (subject to at least 30 days prior written
notice from the Master Servicer to the Trustee containing all information
required for the Trustee's notice or such shorter period as is acceptable to the
Trustee) by the Trustee to Investor Certificateholders of such Series mailed not
later than the fifth day of the month of such final distribution specifying
(i) the Distribution Date upon which final payment of the Investor Certificates
will be made upon presentation and surrender of Investor Certificates at the
office or offices therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable, payments being made only upon presentation and surrender of the
Investor Certificates at the office or offices therein specified. The Master
Servicer's notice to the Trustee in accordance with the preceding sentence shall
be accompanied by an Officer's Certificate setting forth the information
specified in Section 4.04 of the Servicing Agreement covering the period during
the then current calendar year through the date of such notice. The Trustee
shall give such notice to the Transfer Agent and Registrar and the Paying Agent
at the time such notice is given to such Investor Certificateholders.
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(b) Notwithstanding the termination of the Trust pursuant to
subsection 9.01(a) or the occurrence of the Series Termination Date with respect
to any Series pursuant to Section 9.02, all funds then on deposit in the
Collection Account (but only to the extent necessary to pay all outstanding and
unpaid amounts to Certificateholders) shall continue to be held in trust for,
the benefit of the Certificateholders and the Paying Agent or the Trustee shall
pay such funds to the Certificateholders upon surrender of their Certificates in
accordance with the terms hereof. Any Certificate not surrendered on the date
specified in subsection 9.03(a)(i) shall cease to accrue any interest provided
for such Certificate from and after such date. In the event that all of the
Investor Certificateholders shall not surrender their Certificates for
cancelation within six months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice to the remaining
Investor Certificateholders of such Series to surrender their Certificates for
cancelation and receive the final distribution with respect thereto. If within
one year after the second notice all the Investor Certificates of such Series
shall not have been surrendered for cancelation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Investor Certificateholders of such Series concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds in the
Collection Account held for the benefit of such Investor Certificateholders.
The Trustee and the Paying Agent shall pay to the Company upon request any
monies held by them for the payment of principal or interest that remains
unclaimed for two years and neither the Trustee nor the Paying Agent shall be
liable to any Investor Certificateholder for such payment to the Company upon
its request. After payment to the Company, Certificateholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.
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(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancelation shall be canceled
by the Transfer Agent and Registrar and be disposed of in a customary manner
satisfactory to the Trustee.
SECTION 9.04. Company's Termination Rights. Upon the termination of
-----------------------------
the Trust pursuant to Section 9.01 and the surrender of the Exchangeable Company
Certificate and payment to the Trustee (in its capacity as such and/or in its
capacity as Successor Servicer) of all amounts owed to it under any Pooling and
Servicing Agreement, the Trustee shall assign and convey to the Company (without
recourse, representation or warranty) in exchange for the Exchangeable Company
Certificate all right, title and interest of the Trust in the Trust Assets,
whether then existing or thereafter created, and all proceeds thereof except for
amounts held by the Trustee pursuant to subsection 9.03(b). The Trustee shall
execute and deliver such instruments of transfer and assignment, in each case
without recourse, representation or warranty, as shall be reasonably requested
by the Company to vest in the Company all right, title and interest which the
Trust had in the Trust Assets.
ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.01. Amendment. (a) This Agreement, the Servicing
----------
Agreement and each Supplement in respect of an Outstanding Series (collectively,
the "Pooling and Servicing Agreements") may be amended in writing from time to
time by the Master Servicer, the Company and the Trustee, without the consent of
any holder of any outstanding Certificate, to cure any ambiguity, to correct or
supplement any provisions herein or therein which may be inconsistent with any
other provisions herein or therein or to add any other provisions hereof to
change in any manner or eliminate any of the provisions with respect to matters
or questions raised under
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any Pooling and Servicing Agreement which shall not be inconsistent with the
provisions of any Pooling and Servicing Agreement; provided, however, that such
-------- -------
action shall not, as evidenced by an Officer's Certificate delivered to the
Trustee, have a Material Adverse Effect or a Company Material Adverse Effect
(but, to the extent that the determination of whether such action would have a
Material Adverse Effect or a Company Material Adverse Effect requires a
conclusion as to a question of law, an Opinion of Counsel shall be delivered to
the Trustee in addition to such Officer's Certificate); provided further that
----------------
(i) any deletion or modification of the first sentence of Section 6.03 or the
language of Section 7.02 that the Company elects to make that conforms to a
change in the Internal Revenue Code related to partnerships occurring after the
execution and delivery of this Agreement or (ii) any amendment that is entered
into to provide additional Enhancement for any Outstanding Series shall, to the
extent that such deletion, modification or amendment is entered into for the
purposes set forth in the foregoing clause (i) or (ii), as applicable, be deemed
to have no Material Adverse Effect or Company Material Adverse Effect. The
Trustee may, but shall not be obligated to, enter into any such amendment
pursuant to this paragraph or paragraph (b) below which affects the Trustee's
rights, duties or immunities under any Pooling and Servicing Agreement or
otherwise.
(b) Any Pooling and Servicing Agreement and, to the extent provided
in any Pooling and Servicing Agreement, any other agreement relating to the
Receivables may also be amended (other than in the circumstances referred to in
the preceding paragraph (a)) in writing from time to time by the Master
Servicer, the Company and the Trustee with the consent of Investor
Certificateholders evidencing more than 50% of the Invested Amount of any Series
adversely affected in any material respect by the amendment (or, if any such
Series shall have more than one Class of Investor Certificates adversely
affected in any material respect by the amendment, 50% or more of the Invested
Amount of each such Class) for the purpose of adding any provisions to or
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changing in any manner or eliminating any of the provisions of such Pooling and
Servicing Agreement or such other agreement or of modifying in any manner the
rights of holders of any Series then issued and outstanding; provided, however,
-------- -------
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate of such Series without the consent of such Investor
Certificateholder of such Series; (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such Series
without the consent of such Investor Certificateholder; or (iii) reduce the
aforesaid percentage of the Invested Amount of any adversely affected Series or
Class the holders of which are required to consent to any such amendment without
the consent of all Certificateholders of each Series adversely affected in any
material respect.
(c) Notwithstanding anything in this Section 10.01 to the contrary,
the Supplement with respect to any Series may be amended on the terms and with
the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment to each Certificateholder of each Outstanding Series (or with respect
to an amendment of a Supplement, to each Certificateholder of the applicable
Series), and the Master Servicer shall furnish written notification of the
substance of such amendment to each Rating Agency. No such amendment (including
without limitation, the amendment of any Supplement notwithstanding anything to
the contrary contained in any Supplement) shall be effective until the Rating
Agency Condition has been satisfied.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 10.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the
126
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.
(f) In executing or accepting any amendment pursuant to this
Section 10.01, the Trustee shall, upon request, be entitled to receive and rely
upon (i) an Opinion of Counsel stating that such amendment is authorized
pursuant to a specific provision of a Pooling and Servicing Agreement and
complies with such provision, (ii) a certificate from a Responsible Officer of
the Company stating that such (A) amendment shall not adversely affect the
interests of the holders of any outstanding Certificates in any material respect
except for holders of the Series whose consent to such amendment has been
obtained in accordance with clause (b) of this Section 10.01 and (B) all
conditions precedent to the execution and delivery of such amendment shall have
been satisfied in full and (iii) a Tax Opinion.
SECTION 10.02. Protection of Right, Title and Interest to Trust. The
-------------------------------------------------
Company shall cause each Pooling and Servicing Agreement, all amendments thereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Certificateholders' and the Trustee's right,
title and interest to the Trust to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Trustee hereunder to all property comprising
the Trust. The Company 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.
In the event that the Company fails to file such financing or continuation
statements and the Trustee has received an opinion of counsel, at the expense of
the Company, that such filing is necessary to fully to preserve and to protect
the Trustee's
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right, title and interest in any Trust Asset then the Trustee shall have the
right to file the same on behalf of the Company and the Trustee shall be
reimbursed and indemnified by the Company for making such filing.
SECTION 10.03. Limitation on Rights of Certificateholders. (a) The
----------------------- -------------------
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholders' legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) Except with respect to the Investor Certificateholders as
expressly provided in any Pooling and Servicing Agreement, no Certificateholder
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto. Nor
shall any Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given to the Trustee, written request to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to initiate any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each
128
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Certificateholders shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of the Pooling and
Servicing Agreements to affect, disturb or prejudice the rights 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. For the
protection and enforcement of the provisions of this Section 10.03, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement
and the applicable Supplement, the Certificateholders agree to the provisions of
this Section 10.03.
SECTION 10.04. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ANY CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT ISSUES
OF PERFECTION ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 10.05. Notices. All notices, requests and demands to or upon
--------
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows (i) in the case of the Company, the
129
Master Servicer and the Trustee, or to such other address as may be hereafter
notified by the respective parties hereto:
The Company:
LFI Receivables Corporation
1300 National Highway
Thomasville, North Carolina 27360
Attention of Larry Milan and Richard Kennett
Telecopy: (910) 476-4551
with a copy to the Master Servicer
The Master Servicer:
LFI Servicing Corporation
1300 National Highway
Thomasville, North Carolina 27360
Attention of Larry Milan and Richard Kennett
Telecopy: (910) 476-4551
The Trustee:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10011
Attention of Advanced Structured Products Group
Telecopy: (212) 946-3240
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in any Pooling and Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
130
SECTION 10.06. Severability of Provisions. If any one or more of the
---------------------------
covenants, agreements, provisions or terms of any Pooling and Servicing
Agreement shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of such Pooling and Servicing
Agreement and shall in no way affect the validity or enforceability of the other
provisions of any Pooling and Servicing Agreement or of the Certificates or
rights of the Certificateholders.
SECTION 10.07. Assignment. Notwithstanding anything to the contrary
-----------
contained herein, except as provided in Section 5.03 of the Servicing Agreement,
no Pooling and Servicing Agreement may be assigned by the Company, the Master
Servicer or any Servicer without the prior written consent of the Trustee acting
on behalf of the holders of 66-2/3% of the Invested Amount of each Outstanding
Series and without the Rating Agency Condition having been satisfied with
respect to such assignment.
SECTION 10.08. Certificates Nonassessable and Fully Paid. It is the
------------------------------------------
intention of the parties to each Pooling and Servicing Agreement that the
Investor Certificateholders shall not be personally liable for obligations of
the Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever and that Investor Certificates upon authentication
thereof by the Trustee pursuant to Section 5.02 are and shall be deemed fully
paid.
SECTION 10.09. Further Assurances. The Company and the Master
-------------------
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of each Pooling and Servicing
Agreement, including, without limitation, the execution of any financing
statements or continuation
131
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.
SECTION 10.10. No Waiver; Cumulative Remedies. No failure to
-------------------------------
exercise and no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege, hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 10.11. Counterparts. This Agreement may be executed in two
-------------
or more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 10.12. Third-Party Beneficiaries. This Agreement will inure
--------------------------
to the benefit of and be binding upon the parties hereto, the Certificateholders
and their respective successors and permitted assigns. Except as otherwise
provided in this Section 10.12, no other Person will have any right or
obligation hereunder.
SECTION 10.13. Actions by Certificateholders. (a) Wherever in any
------------------------------
Pooling and Servicing Agreement a provision is made that an action may be taken
or a notice, demand or instruction given by Investor Certificateholders, such
action, notice or instruction may be taken or given by any Investor
Certificateholders of any Series, unless such provision requires a specific
percentage of Investor Certificateholders of a certain Series or all Series.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind such Certificateholder and
132
every subsequent holder of such Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Trustee, the Company, the Master
Servicer or any Servicer in reliance thereon, whether or not notation of such
action is made upon such Certificate.
SECTION 10.14. Merger and Integration. Except as specifically stated
-----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement and the Servicing Agreement.
This Agreement and the Servicing Agreement may not be modified, amended, waived,
or supplemented except as provided herein.
SECTION 10.15. Headings. The headings herein are for purposes of
---------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 10.16. Construction of Agreement. (a) The Company hereby
--------------------------
grants to the Trustee, for the benefit of the Certificateholders a security
interest in all of the Company's right, title and interest in, to and under the
Receivables and the other Trust Assets now existing and hereafter created, all
monies due or to become due and all amounts received with respect thereto and
all "proceeds" thereof (including Recoveries), to secure all of the Company's
and the Master Servicers' obligations hereunder, including, without limitation,
the Company's obligation to sell or transfer Receivables hereafter created to
the Trust.
(b) This Agreement shall constitute a security agreement under
applicable law.
SECTION 10.17. No Setoff. Except as expressly provided in this
----------
Agreement or any other Transaction Document, the Trustee agrees that it shall
have no right of setoff or banker's lien against, and no right to otherwise
133
deduct from, any funds held in the Collection Account for any amount owed to it
by the Company, the Master Servicer, any Servicers or any Certificateholder.
SECTION 10.18. No Bankruptcy Petition. Each of the Trustee and the
-----------------------
Master Servicer hereby covenant and agree that, prior to the date which is one
year and one day after the date of the end of the Amortization Period with
respect to all Outstanding Series, it will not institute against, or join any
other Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or state bankruptcy or similar law.
SECTION 10.19. Limitation of Liability. It is expressly understood
------------------------
and agreed by the parties hereto that (a) each Pooling and Servicing Agreement
is executed and delivered by the Trustee, not individually or personally but
solely as Trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it, (b) except with respect to Section 8.15 hereof the
representations, undertakings and agreements herein made on the part of the
Trust are made and intended not as personal representations, undertakings and
agreements by the Trustee, but are made and intended for the purpose of binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on the Trustee, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by any
Person claiming by, through or under such parties; provided, however, the
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Trustee shall be liable in its individual capacity for its own wilful misconduct
or gross negligence and for any tax assessed against the Trustee based on or
measured by any fees, commission or compensation received by it for acting as
Trustee and (d) under no circumstances shall the Trustee be personally liable
for the payment of any indebtedness or expenses of the Trust or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by
134
the Trust under any Pooling and Servicing Agreement; provided further that the
----------------
foregoing clauses (a) through (d) shall survive the resignation or removal of
the Trustee.
The Company hereby agrees to indemnify and hold harmless the Trustee
and the Trust for the benefit of the Certificateholders (each, an "Indemnified
Person") from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of, or relating to, activities of the Company pursuant to
any Pooling and Servicing Agreement to which it is a party, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and other
reasonable costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim, except to the extent such
loss, liability, expense, damage or injury resulted from the gross negligence,
bad faith or wilful misconduct of an Indemnified Person or resulted from the
performance of any Receivable, market fluctuations or other market or investment
risk not attributable to acts or omissions or alleged acts or omissions of the
Company; provided, however, that any payments to be made by the Company pursuant
-------- -------
to this subsection shall be Company Subordinated Obligations.
SECTION 10.20. Certain Information. The Master Servicer and the
--------------------
Company shall promptly provide to the Trustee such information in computer tape,
hard copy or other form regarding the Receivables as the Trustee may reasonably
determine to be necessary to perform its obligations hereunder.
135
IN WITNESS WHEREOF, the Company, the Master 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.
LFI RECEIVABLES CORPORATION,
by
---------------------------
Name:
Title:
LFI SERVICING CORPORATION, as
Master Servicer,
by
---------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee,
by
---------------------------
Name:
Title:
SCHEDULE 1 to the
POOLING AGREEMENT
-----------------
Receivables
-----------
Delivered or transmitted via computer tapes, diskettes or data
transmission pursuant to Section 2.01.
SCHEDULE 2 to the
Identification of Trust Accounts POOLING AGREEMENT
-------------------------------- -----------------
The following accounts have been established by and at The Chase
Manhattan Bank:
Name Number
---- ------
Collection Account 507-863623
Company Collection Subaccount 507-863763
SCHEDULE 3 to the
POOLING AGREEMENT
-----------------
Location of Chief Executive Office of the Company
-------------------------------------------------
LFI Receivables Corporation
1300 National Highway
Thomasville, North Carolina 27360
LFI RECEIVABLES MASTER TRUST EXHIBIT A to the
POOLING AGREEMENT
-----------------
FORM OF EXCHANGEABLE COMPANY CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF MAY BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED,
EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT AS EXPRESSLY PERMITTED BY THE
TERMS OF THE POOLING AGREEMENT REFERRED TO HEREIN.
This Certificate evidences a fractional undivided interest in assets
of the
LFI RECEIVABLES MASTER TRUST
the corpus of which consists of receivables representing amounts payable for
goods or services, which receivables have been purchased by LFI Receivables
Corporation, a Delaware corporation, which in turn transferred and assigned such
receivables to the LFI Receivables Master Trust.
(Not an interest in or obligation of
LFI Receivables Corporation, the Sellers listed on
Schedule 1 to the Receivables Sale Agreement
or any Affiliate thereof)
This certifies that LFI Receivables Corporation, a Delaware
corporation (the "Company"), is the registered owner of the undivided interest
-------
(the "Company Interest") in the LFI Receivables Master Trust (the "Trust") not
----------------
represented by the Investor Certificates or the Subordinated Company
Certificates pursuant to Article V of the Pooling Agreement, dated as of
August 5, 1996 (as amended, supplemented or otherwise modified from time to
time, the
2
"Agreement"), by and among the Company, LFI Servicing Corporation, a Delaware
---------
corporation (in its capacity as master servicer, the "Master Servicer"), and The
---------------
Chase Manhattan Bank, a New York banking corporation, not in its individual
capacity but solely as trustee (the "Trustee") for the Trust. The corpus of the
-------
Trust consists of receivables (the "Receivables") representing amounts payable
-----------
for goods or services and all other Trust Assets referred to in the Agreement.
Although a summary of certain provisions of the Agreement is set forth below,
this Certificate does not purport to summarize the Agreement, is qualified in
its entirety by the terms and provisions of the Agreement and reference is made
to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. A copy of the Agreement may be requested
by writing to the Trustee at The Chase Manhattan Bank, 450 W. 33rd Street, 15th
Floor, New York, New York 10011, Attn: Advanced Structured Products Group. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Company by
virtue of the acceptance hereof assents and is bound.
This Certificate is the Exchangeable Company Certificate, which
represents an interest in the Trust including the right to receive certain
Collections and other amounts at the times and in the amounts specified in the
Agreement to be paid to the holder of the Exchangeable Company Certificate. In
addition to this Certificate, Investor Certificates will be issued to investors
pursuant to the Agreement, which will represent the interests of Investor
Certificateholders in the Trust and, to the extent provided in the related
Supplement of any Series, Subordinated Company Certificates will be issued
pursuant to the Agreement and such Supplement. This Certificate shall not
represent any interest in the Collection Account or
3
other account except as expressly provided in the Agreement or in any
Supplement. This Certificate may be exchanged by the Company pursuant to the
Agreement for an increase in the Invested Amount of a Class of Investor
Certificates of an Outstanding Series and an increase in the related
Subordinated Company Certificate or one or more newly issued Series of Investor
Certificates representing an interest in any additional Receivables, and the
related newly issued Subordinated Company Certificate, and a reissued
Certificate upon the conditions set forth in the Agreement.
Subject to certain conditions in the Agreement and in each Supplement,
the obligations created by the Agreement (other than the obligation to make
payments to the Certificateholders as therein set forth) and the Trust created
thereby shall terminate, except with respect to any such obligations or
responsibilities expressly stated to survive such termination, upon the earlier
of (i) the last day of the July 2011 Settlement Period, (ii) at the option of
the Company, at any time when the Aggregate Invested Amount is zero,
(iii) following the occurrence of either of the Early Amortization Events
specified in Section 7.01 of the Agreement, at any time when the Aggregate
Invested Amount is zero and (iv) upon completion of distribution of the amounts
referred to in subsection 7.02(b) of the Agreement.
Upon termination of the Trust pursuant to Article IX of the Agreement,
subject to the provisions of the Agreement and the surrender of this
Certificate, the Trustee shall assign and convey to the Company (without
recourse, representation or warranty) all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, and all
proceeds thereof, except for amounts held by the Trustee pursuant to subsection
9.03(b) of the Agreement. The Trustee shall execute and deliver such
instruments of transfer and assignment, in each case without recourse,
representation or warranty as shall be reasonably requested by the Company to
4
vest in the Company all right, title and interest which the Trust has in the
Receivables.
It is expressly understood and agreed by the Company that (a) the
Agreement is executed and delivered by the Trustee, not individually or
personally but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it, (b) the representations, undertakings and
agreements made on the part of the Trust in the Agreement are made and intended
not as personal representations, undertakings and agreements by the Trustee, but
are made and intended for the purpose of binding only the Trust, (c) nothing
herein contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or implied
contained in the Agreement, all such liability, if any, being expressly waived
by the parties who are signatories to the Agreement and by any Person claiming
by, through or under such parties, provided, however, the Trustee shall be
-------- -------
liable in its individual capacity for its own willful misconduct or gross
negligence and for any tax assessed against the Trustee based on or measured by
any fees, commission or compensation received by it for acting as Trustee and
(d) under no circumstances shall the Trustee be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under the Agreement.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ANY CONFLICT OF LAW
PRINCIPLES.
5
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Exchangeable Company
Certificate to be duly executed.
Dated: August 5, 1996
LFI RECEIVABLES CORPORATION, as authorized
pursuant to Section 5.01 of the Agreement,
by
__________________________
Title:
6
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Company Certificate described in the within-
mentioned Agreement.
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee,
by
_______________________
Authorized Signatory
OR
by
_______________________
Authenticating Agent
by
_______________________
Authorized Signatory
EXHIBIT B-1 to the
[FORM OF LOCKBOX AGREEMENT]
POOLING AGREEMENT
-----------------
, 1996
[Name and address of Lockbox Bank]
Attention:
Ladies and Gentlemen:
LFI Receivables Corporation, a Delaware corporation (the "Company"), has
agreed to purchase certain receivables (the "Receivables") from a number of
Sellers (the "Sellers", and in their capacity as servicers pursuant to the
Transaction Documents, the "Servicers") pursuant to the Receivables Sale
Agreement, dated as of August 5, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Receivables Sale Agreement"), among the
Sellers, the Servicers and the Company. The Company has in turn assigned the
Receivables to a master trust (the "Master Trust") pursuant to a Pooling
Agreement, dated as of August 5, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Pooling Agreement"), among the Company, LFI
Servicing Corporation, as master servicer (in such capacity, the "Master
Servicer") and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "Trustee"). The Receivables are serviced pursuant to the terms of
a Servicing Agreement, dated as of August 5, 1996 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Servicing Agreement";
and, collectively with the Pooling Agreement, the "Pooling and Servicing
Agreements") among the Company, the Servicers, the Master Servicer and the
Trustee. Capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Pooling Agreement.
2
Pursuant to the terms of the Pooling and Servicing Agreements and except as
otherwise provided therein, (i) each of the Servicers has agreed to instruct all
Obligors under the Receivables originated by it as Seller to make all payments
in respect of such Receivables to a blocked deposit account (each, a "Lockbox
Account") designated by such Servicer to such Obligor and (ii) the Company has
agreed to grant a security interest in its right, title and interest in each
Lockbox Account and all funds and other evidences of payment held therein to the
Trustee. Furthermore, the Company, the Master Servicer, each of the Servicers
and the Trustee have agreed, pursuant to the Pooling and Servicing Agreements,
to enter into an agreement with each bank maintaining a Lockbox Account and
hereby request that [name of Lockbox Bank] (the "Lockbox Bank") act as, and the
Lockbox Bank hereby agrees to act as, a lockbox deposit bank for the Company
with respect to the Lockbox Account. This Letter Agreement defines certain
rights and obligations with respect to the appointment of the Lockbox Bank.
Accordingly, the Company, the Master Servicer, the Servicer party hereto, the
Trustee and the Lockbox Bank agree as follows:
Reference is made to the Lockbox Account (Account No. ), including
box number thereunder (collectively, the "Specified Account"),
maintained with you by the related Servicer. The related Servicer hereby
transfers the Specified Account to the Company and hereafter the Specified
Account shall be in the name of the Company and maintained by the Lockbox Bank
for the benefit of the Company and the Trustee, as set forth herein. All funds
and other evidences of payment received by the Lockbox Bank in its capacity as
Lockbox Bank shall be deposited in the Specified Account. Such payments shall
not be commingled with other funds. All funds and other evidences of payment at
any time on deposit in the Specified Account shall be held by the Lockbox Bank
for application strictly in accordance with the terms of this Letter Agreement.
The Lockbox Bank agrees to give the Trustee, the Company, the
3
Master Servicer and the related Servicer prompt notice if the Specified Account
shall become subject to any writ, judgment, warrant of attachment, execution or
similar process.
The Trustee shall have sole and exclusive dominion over and control of the
Specified Account and all Collections and other property from time to time
deposited therein, and shall have the sole right of withdrawal from the
Specified Account. Each of the Company, the Master Servicer and the related
Servicer acknowledges and agrees that it shall not have any dominion over or
control of the Specified Account or any Collections or other property from time
to time deposited therein including any right to withdraw or utilize any funds
or other evidences of payment on deposit in the Specified Account, other than
the right to authorize transfers to the Collection Account as set forth herein
and pursuant to the terms of the Pooling and Servicing Agreements. The Lockbox
Bank shall automatically, by 1:00 p.m., New York City time, at least as often as
once each day that is a business day for the Lockbox Bank and for the Trustee,
transfer, by means of the Automated Clearing House System, all available funds
on deposit in the Specified Account, including all funds transferred from
Obligors on or before the end of the preceeding day, along with, subject to the
next succeeding sentence, all remittance advisements and payment invoices on
deposit therein, to the Collection Account. The Lockbox Bank acknowledges that,
until it receives instructions from the Trustee to the contrary, the Lockbox
Bank shall return to the Company, upon the Company's reasonable request
therefor, any remittance advisements and payment invoices deposited into the
Specified Account.
Deposited checks with respect to the Specified Account returned to the
Lockbox Bank for any reason will be charged against the Specified Account.
Nothing contained in the previous sentence shall be construed to prejudice other
rights of the Lockbox Bank, which rights include the right
4
of recourse against the Company for any overdrafts in the Specified Account.
The Trustee is authorized to receive mail delivered to the Lockbox Bank with
respect to the Specified Account and the Company has filed a form of standing
delivery order with the United States Postal Service authorizing the Trustee to
receive mail delivered to the Lockbox Bank with respect to the Specified
Account.
The Lockbox Bank shall also furnish the Trustee with statements, in the form
and manner typical for the Lockbox Bank, of amounts of deposits in, and amounts
transferred to the Collection Account from, the Specified Account pursuant to
any reasonable request of the Trustee but in any event not less frequently than
monthly and such other information relating to the Specified Account at such
times as shall be reasonably requested by the Trustee.
For purposes of this Letter Agreement, any officer of the Trustee shall be
authorized to act, and to give instructions and notice, on behalf of the Trustee
hereunder.
The fees for the services of the Lockbox Bank shall be mutually agreed upon
between the Company and the Lockbox Bank and paid by the Company. Neither the
Trustee nor any investor in the Master Trust shall have any responsibility or
liability for the payment of any such fee.
The Lockbox Bank may perform any of its duties hereunder by or through its
officers, employees or agents and shall be entitled to rely upon the advice of
counsel as to its duties. The Lockbox Bank shall not be liable to the Trustee,
the Master Servicer, any Servicer or the Company for any action taken or omitted
to be taken by it in good faith, nor shall the Lockbox Bank be responsible to
the Trustee, the Master Servicer, any Servicer or the Company for the
consequences of any oversight or error of judgment or be answerable to the
Trustee for the same, unless such action, omission, oversight or error of
judgment shall
5
happen through the Lockbox Bank's negligence or willful misconduct.
The Lockbox Bank hereby represents and warrants that (a) it is a banking
corporation duly organized, validly existing and in good standing under the laws
of [ ] and has full corporate power and authority under such laws to
execute, deliver and perform its obligations under this Agreement and (b) the
execution, delivery and performance of this Agreement by the Lockbox Bank have
been duly and effectively authorized by all necessary coporate action and this
Agreement has been duly executed and delivered by the Lockbox Bank and
constitutes a valid and binding obligation of the Lockbox Bank enforceable in
accordance with its terms.
The Lockbox Bank may resign at any time as Lockbox Bank hereunder by delivery
to the Trustee and the Company of written notice of resignation not less than 30
days prior to the effective date of such resignation. The Company may, with the
written consent of the Trustee, and, if the Company shall refuse any demand by
the Trustee to do so in the event (i) an Early Amortization Event shall occur
and be continuing or (ii) there has been a failure by the Lockbox Bank to
perform any of its material obligations hereunder and such failure could
adversely affect the Trustee's interest in any Receivable or the Trustee's
rights, or ability to exercise any remedies, under this Letter Agreement or the
Pooling and Servicing Agreements, the Trustee may close the Specified Account at
any time by delivery of notice to the Lockbox Bank and the Company at the
addresses appearing below. This Letter Agreement shall terminate upon receipt
of such notice of closing, or delivery of such notice of resignation, except
that the Lockbox Bank shall immediately transfer to the Collection Account, or
any other account designated by the Trustee all available funds or, subject to
the Company's reasonable request to retain such items, any remittance
advisements or payment invoices, if any, then on deposit in, or otherwise to the
credit of, the Specified Account and deliver any
6
available funds or such remittance advisements or payment invoices relating to
the Receivables received by the Lockbox Bank after such notice directly to the
Collection Account or any other account designated by the Trustee.
All notices and communications hereunder shall be in writing (except where
telephonic instructions or notices are authorized herein) and shall be deemed to
have been received and shall be effective on the day on which delivered
(including delivery by telex):
(i) in the case of the Trustee, to it at:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10011
Attention: Advanced Structured Products Group
Telecopy No.: (212) 946-3240
(ii) in the case of the Lockbox Bank, to it at:
Attention:
Telecopy No.:
(iii) in the case of the Company, to it at:
LFI Receivables Corporation
1300 National Highway
Thomasville, NC 27360
Attention: Larry Milan and Richard Kennett
Telecopy No.: (910) 476-4551
7
(iv) in the case of the Master Servicer, to it at:
LFI Servicing Corporation
1300 National Highway
Thamasville, NC 27360
Attention: Larry Milan and Richard Kennett
Telecopy No.: (910) 476-4551
(v) in the case of the Servicer party hereto, to it at:
Attention:
Telecopy No.:
The Lockbox Bank shall not assign or transfer any of its rights or
obligations hereunder (other than to the Trustee) without the prior written
consent of the Trustee. Notwithstanding anything herein to the contrary, upon
the succession of the Master Servicer to the Servicer party hereto in accordance
with and under the [Servicing Agreement], the Master Servicer shall succeed to,
and be substituted for, and may exercise every right and power of, the Servicer
party hereto under this Letter Agreement with the same effect as if the Master
Servicer had been named as the Servicer party hereto. This Letter Agreement may
be amended only by a written instrument executed by the Company, the Master
Servicer, the Servicer party hereto, the Trustee and the Lockbox Bank, acting by
their representative officers thereunto duly authorized. Except with respect to
the amount of its fees payable hereunder, the Lockbox Bank hereby
unconditionally and irrevocably waives (so long as the Pooling and Servicing
Agreements are in effect) any rights of setoff or banker's lien against, or to
otherwise deduct from, any funds or other evidences of payment held in any
Specified Account for any indebtedness or other claim owed by the Company, the
Master Servicer or any Servicer to the Lockbox Bank.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW
8
YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST OR REMEDIES HEREUNDER IN RESPECT OF ANY RECEIVABLE MAY BE GOVERNED BY
THE LAW OF A JURISDICTION OTHER THAN NEW YORK.
This Letter Agreement (i) shall inure to the benefit of, and be binding upon,
the Company, the Servicers, the Master Servicer, the Trustee, the Lockbox Bank
and their respective successors and assigns and (ii) may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Letter Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Letter Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Letter Agreement to
be executed by their duly authorized officers as of the date first above
written.
Very truly yours,
LFI RECEIVABLES CORPORATION,
by
__________________________
Title:
[ ], as Servicer,
by
__________________________
Title:
9
LFI SERVICING CORPORATION, as
Master Servicer,
by
_________________________
Title:
Agreed to and accepted:
[NAME OF LOCKBOX BANK],
as Lockbox Bank
by
__________________________
Title:
THE CHASE MANHATTAN BANK, as Trustee
by
__________________________
Title:
EXHIBIT D to the
POOLING AGREEMENT
-----------------
Internal Operating Procedures Memorandum
----------------------------------------
Trustee to provide within 45 days of
the Initial Closing Date pursuant to
subsection 8.01(g).
APPENDIX A to the
POOLING AGREEMENT
Description of Servicer Site Review Procedures
----------------------------------------------
Trustee to provide within 90 days
of The Initial Closing Date pursuant
to subsection 8.01(f)(i).
APPENDIX B to the
POOLING AGREEMENT
-----------------
Description of Standby Liquidation System
-----------------------------------------
Trustee to establish within 90 days
of the Initial Closing Date pursuant to
subsection 8.01(f)(ii).
Exhibit C to the
Pooling Agreement
-----------------
FORM OF ANNUAL OPINION OF COUNSEL
PROVISIONS TO BE INCLUDED
IN ANNUAL OPINION OF COUNSEL DELIVERED PURSUANT TO
SECTION 2.07(b) OF THE POOLING AGREEMENT ON JANUARY ,
OF EACH YEAR COMMENCING WITH JANUARY , 1997
The opinion set forth below, which is to be
delivered pursuant to Section 2.07(b) of the Pooling Agreement, dated as of
August 5, 1996, among LFI Receivables Corporation, LFI Servicing Corporation, as
Master Servicer, and The Chase Manhattan Bank, as Trustee, may be subject to
certain qualifications, assumptions, limitations and exceptions taken or made in
the opinions of counsel delivered on the initial Issuance Date with respect to
similar matters. In addition, the opinion may contain the following
qualification as applicable:
With your permission, we have based our opinions set forth in
paragraphs 1, 2 and 3 below as they relate to the laws of [states in
which the opiner does not have an office] (each a "UCC State") solely
upon our review of the relevant provisions of Sections 9-102, 9-103,
9-105, 9-106, 9-302, 9-304, 9-306, 9-401, 9-402 and 9-403 [and such
additional Sections as the opiner may determine] of the Uniform
Commercial Code as enacted in each UCC State as set forth in [the CCH
Secured Transactions Guide or a similar compilation]. We have assumed
such provisions are presently in effect and have not been modified in
any respect by any other statute, regulation or court decision with
respect to the laws of each such UCC State or otherwise. We call to
your attention that we are not licensed to practice in any of the UCC
States nor do we profess any expertise with respect to the laws
thereof.
1. With respect to the transfer by each Seller to LFI
Receivables Corporation of all of such Seller's right, title and interest in, to
and under the Receivables, Related Property, Collections and all rights
(including
2
rescission, replevin or reclamation) relating to any Receivable originated by
such Seller or arising therefrom (collectively, the "Seller Property") pursuant
to the terms of the Receivables Sale Agreement, dated as of August 5, 1996 (as
amended, supplemented or otherwise modified, the "Receivables Sale Agreement"),
among LFI Receivables Corporation, the Sellers named therein and the Servicers
named therein, no filing or other action, other than such filing or action
described in the [opinions of counsel delivered on the initial Issuance Date]
[or the opinions delivered on [ ] of the prior year pursuant to
Section 2.07(b) of the Pooling Agreement] with respect to similar matters, is
necessary from the date of such opinions through 90 days into the following
calendar year to continue the perfected and priority status of the interest of
LFI Receivables Corporation in such Seller Property.
2. With respect to the transfer by LFI Receivables
Corporation to the Trust of all of LFI Receivables Corporation's right, title
and interest in, to and under the Receivables and the other Trust Assets (as
defined in the Pooling Agreement) (collectively, the "Trust Property") pursuant
to the terms of the Pooling Agreement, no filing or other action, other than
such filing or action described in the [opinions of counsel delivered on the
initial Issuance Date] [or the opinions delivered on [ ] of the prior year
pursuant to Section 2.07(b) of the Pooling Agreement] with respect to similar
matters is necessary from the date of such opinions through 90 days into the
following calendar year to continue the perfected and priority status of the
interest of the Trust in such Trust Property.
3. Set forth on Schedule __ to this opinion is a list of all
UCC Financing Statements which have been filed by each Seller relating to the
Seller Property and by LFI Receivables Corporation relating to the Trust
Property and the earliest and latest date under the applicable UCC on
3
which continuation statements may be filed for each such financing
statement. 1/
-
- --------------------
1/ In the event that the earliest date for filing any continuation
-
statement occurs prior to January 30 of the following year, such opinion shall
also be delivered to each Seller, LFI Receivables Corporation and the Servicers
with a notice stating that such continuation statements shall be filed on such
earliest date.
SCHEDULE 4 to the
POOLING AGREEMENT
-----------------
Contractual Obligations
-----------------------
NONE
----