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EXHIBIT 4.1
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CENTERIOR FUNDING CORPORATION, Transferor
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
and
THE TOLEDO EDISON COMPANY,
each as a Servicer
and
CITIBANK, N.A., as Trustee
CENTERIOR ENERGY RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of ___________, 1996
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. Transfer of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.03. Representations and Warranties of the Transferor Relating to the Transferor . . . . . . . . . . . . 27
SECTION 2.04. Representations and Warranties of the Transferor Relating to this Agreement and the Trust Assets. . 32
SECTION 2.05. Affirmative Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.06. Negative Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Acceptance of Appointment and Other Matters Relating to the Servicers . . . . . . . . . . . . . . . 42
SECTION 3.02. Servicing Compensation; Servicers' Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3.03. Representations and Warranties of the Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 3.04. Covenants of the Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.05. Reports and Records for the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.06. Annual Certificate of Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.07. Annual Servicing Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.08. Annual Investors' Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.09. Tax and Usury Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.10. Notice to Originators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.11. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.02. Establishment of Collection Accounts, Concentration Account and Other Trust Accounts . . . . . . . 56
SECTION 4.03. Daily Calculations and Allocation of Collections . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.02. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.03. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.06. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.07. Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.08. Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.09. New Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.10. Changes in Variable Funding Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.11. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.12. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 6.13. Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 6.14. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 6.15. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.16. Letter of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. Obligations not Assignable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.02. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.03. Indemnification of the Trustee, the Trust and the Investors . . . . . . . . . . . . . . . . . . . . 77
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ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICERS
SECTION 8.01. Liability of the Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicers . . . . . . . . . . 80
SECTION 8.03. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 8.04. Servicer Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 8.05. The Servicers Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 8.06. Examination of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE IX
EARLY AMORTIZATION EVENTS
SECTION 9.01. Early Amortization Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 9.02. Additional Rights Upon the Occurrence of any Early Amortization Event . . . . . . . . . . . . . . . 86
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.02. Trustee to Act; Appointment of Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 10.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 11.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 11.03. Trustee Not Liable for Recitals in Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.05. Compensation; Trustee's Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.07. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
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ARTICLE XI (CONTINUED)
THE TRUSTEE
SECTION 11.12. Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . . . . . . . . . . . 101
SECTION 11.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 11.14. Rights of Certificateholders to Direct Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.15. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.16. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ARTICLE XII
TERMINATION
SECTION 12.01. Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 12.02. Final Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 12.03. Transferor's Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 12.04. Optional Repurchase of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 13.02. Protection of Right, Title and Interest to Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.03. Limitation on Rights of Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 13.04. Governing Law; Jurisdiction; Consent to Service of Process . . . . . . . . . . . . . . . . . . . . 110
SECTION 13.05. Notices; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 13.06. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 13.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 13.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 13.09. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.10. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.11. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.12. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.14. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.15. Actions by Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 13.16. Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 13.17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 13.18. Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
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EXHIBITS
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Exhibit A Form of Transferor Revolving Certificate
Exhibit B Form of Daily Report
Exhibit C Form of Determination Date Certificate
Exhibit D Form of Annual Certificate of Servicer
Exhibit E Form of Collection Account Letter
SCHEDULES
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Schedule I List of Collection Accounts
Schedule II Credit and Collection Policy
Schedule III Locations of Receivables Records
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POOLING AND SERVICING AGREEMENT, dated as of ________, 1996
among CENTERIOR FUNDING CORPORATION ("CFC"), a Delaware corporation, as
Transferor (the "TRANSFEROR"), THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, an
Ohio corporation ("CEI") and THE TOLEDO EDISON COMPANY, an Ohio corporation
("TE"), each as Servicer (collectively, the "SERVICERS" and individually, a
"SERVICER"), and CITIBANK, N.A., a national banking association, as Trustee
(the "TRUSTEE").
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and the
Certificateholders to the extent provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"ADDITIONAL EARLY AMORTIZATION EVENT" shall mean, with respect
to any Series, any Additional Early Amortization Events specified in the
related Supplement.
"AFFILIATE" shall mean, with respect to any specified Person,
any other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall
be presumed to include (A) any Person which beneficially owns or holds 10% or
more of any class of voting securities of such designated Person or 10% or more
of the equity interest in such designated Person and (B) any Person of which
such designated Person beneficially owns or holds 10% or more of any class of
voting securities or in which such designated Person beneficially owns or holds
10% or more of the equity interest. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power
to direct the management and policies of such specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGREEMENT" shall mean this Pooling and Servicing Agreement,
as the same may from time to time be amended, modified
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or otherwise supplemented, including, with respect to any Series or Class, the
related Supplement.
"AGGREGATE INVESTED AMOUNT" shall mean the aggregate of the
Invested Amounts for all Series.
"AGGREGATE INVESTORS' INTEREST" shall mean the aggregate of
the Investors' Interests for each Series as defined in Section 4.01(a).
"ALLOCATED INELIGIBLE PERCENTAGE" shall mean, as calculated by
the Master Servicer in each Daily Report for the immediately preceding Business
Day, a fraction (expressed as a percentage) equal to the following:
AIP = PDU + AIR
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ATR ABR
where:
AIP = the Allocated Ineligible Percentage;
PDU = that portion of total revenues for the
immediately preceding 30-day period (the "PIP
Dollar Usage") which is allocated to PIP
Receivables, as such portion was calculated
in the most recent Daily Report (such
calculation to be made no less frequently
than twice per month at approximately equal
intervals);
ATR = the aggregate dollar amount of total revenues
for the immediately preceding 30-day
period, as calculated in the most recent
Daily Report (such calculation to be made
no less frequently than twice per month
at approximately equal intervals);
AIR = the aggregate Outstanding Balance of Billed
Receivables the Obligors of which are not
Eligible Obligors, as calculated in such
Daily Report; and
ABR = the aggregate Outstanding Balance of total
Billed Receivables, as calculated in such
Daily Report.
"AMORTIZATION DATE" shall mean, with respect to any Series the
earlier of (x) the Scheduled Amortization Date for such related Series and (y)
the date on which an Early Amortization Event is deemed to have occurred, in
each case unless otherwise specified in the applicable Supplement. The
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Amortization Date for any Series shall cause an Amortization Date for all
Series to occur.
"AMORTIZATION PERIOD" shall mean, with respect to all Series,
the period beginning on the Amortization Date for any Series, and ending upon
the payment in full to the Investors of all such Series of the Aggregate
Invested Amount with respect to such Series, all accrued and unpaid interest
thereon and all other amounts owed to the Investors hereunder and under the
applicable Supplement.
"BASE AMOUNT" shall mean the Net Receivables Balance MINUS the
sum of (i) the Carrying Cost Reserve and (ii) the aggregate of the Required
Reserves for all outstanding Series.
"BILLED RECEIVABLE" shall mean a Receivable which represents a
bona fide enforceable obligation for the provision of electricity to an Obligor
that is evidenced by an invoice of the applicable Originator.
"BOOK-ENTRY CERTIFICATES" shall mean any Certificates issued
in Book-Entry Form unless and until Definitive Certificates are issued to the
Holders thereof in accordance with SECTION 6.13 and the applicable Supplement.
"BOOK-ENTRY FORM" shall mean with respect to any Investor
Certificates or Series of Investor Certificates, that such Certificates or
Series are not certificated and the ownership and transfers thereof shall be
made through the book entries by a Clearing Agency as described in SECTION 6.11
and the applicable Supplement.
"BUDGET/BALANCED BILLING PAYMENT PLAN" shall mean the budget
or balanced billing payment plan provided by the Originators to certain
Obligors.
"BUSINESS DAY" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Cleveland, Ohio, Toledo, Ohio, or the city
in which the Corporate Trust Office is located are authorized or obligated by
law, executive order or governmental decree to be closed.
"CARRYING COST ACCOUNT" shall have the meaning specified in
SECTION 4.02(a).
"CARRYING COST AMOUNT" shall mean, as of any date of
determination, the sum of (i) all accrued but unpaid Carrying Costs due as of
such date, (ii) all fees, costs and expenses owed to the Trustee and/or the
Investors as of such date and (iii) all Carrying Costs that will, or are
estimated to, be due and owing
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on or before the next two Distribution Dates for any Collection Period;
PROVIDED, however, that if the Servicers subcontract or otherwise modify their
collection procedures so that Collections no longer pass through the initial
Servicers' processing departments prior to being deposited into the Trust
Accounts, then the amount described in this clause (iii) shall be limited to
the Carrying Costs that will, or are estimated to, be due and owing on or
before the next Distribution Date for any Collection Period.
"CARRYING COST RESERVE" shall mean the aggregate of the
"Carrying Cost Reserves" set forth in each Supplement.
"CARRYING COSTS" shall mean, for any Collection Period, (a)
all Yield payable on the Investor Certificates of any Series, (b) the Servicing
Fee for such period, (c) the Trustee's Fee for such Period and (d) any other
fees, costs and expenses which are entitled under SECTION 4.03 to priority of
payment over the Invested Amounts of any Series during the Amortization Period.
"CENTERIOR" shall mean Centerior Energy Corporation, an Ohio
corporation.
"CERTIFICATE" shall mean any one of the Investor Certificates
or the Transferor Revolving Certificate.
"CERTIFICATE RATE" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"CERTIFICATE REGISTER" shall have the meaning specified in
SECTION 6.03(a).
"CERTIFICATEHOLDERS" shall mean all Holders of all the
Certificates.
"CLAIM" shall mean a "claim" as defined in Section 101(5) of
the United States Bankruptcy Code.
"CLASS" shall mean, with respect to any Series divided into
classes, any one of the classes of Investor Certificates of that Series.
"CLASS ALLOCATION PERCENTAGE" shall mean, with respect to any
Class, the percentage equivalent of a fraction, the numerator of which is the
Ratable Principal Amount for such Class and the denominator of which is the sum
of such Ratable Principal Amount and the Ratable Principal Amounts for all
other Investor Certificates of equal priority with such Class at such time.
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"CLEARING AGENCY" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"CLOSING DATE" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.
"COLLECTION ACCOUNT" shall have the meaning specified in
SECTION 4.02(b).
"COLLECTION ACCOUNT BANK" shall have the meaning specified in
SECTION 4.02(b).
"COLLECTION ACCOUNT LETTER" shall have the meaning specified
in SECTION 4.02(b).
"COLLECTION PERIOD" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which any Closing Date occurs, the portion of such calendar month following the
Closing Date) immediately preceding the calendar month in which such
Distribution Date occurs.
"COLLECTIONS" shall mean (a) all payments by or on behalf of
the Obligors deposited to any Collection Account or Concentration Account, or
received by a Servicer, in respect of Transferor Receivables, in the form of
cash, checks, wire transfers, electronic transfers or any other form of cash
payment, and (b) all interest and other investment earnings (net of losses and
investment expenses) on Collections (including without limitation funds on
deposit in the Reserve Account) as a result of the investment thereof pursuant
to SECTION 4.02.
"CONCENTRATION ACCOUNT" shall have the meaning specified in
SECTION 4.02(a).
"CONCENTRATION ACCOUNT BANK" shall initially be the Trustee,
and shall have the meaning specified in SECTION 4.02(a).
"CONFIDENTIAL INFORMATION" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Centerior, any Affiliates or subsidiaries thereof (including the Originators)
or the Transferor to such Person in connection with or pursuant to this
Agreement or the transactions contemplated hereby which is proprietary in
nature,
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other than information (i) which was publicly known, or otherwise known to such
Person, at the time of disclosure (except pursuant to disclosure in connection
with this Agreement or otherwise previously provided by Centerior or an
Originator on a confidential basis), (ii) which subsequently becomes publicly
known through no act or omission by such Person, or (iii) which otherwise
becomes known to such Person other than through disclosure by Centerior, any
Originator or the Transferor.
"CONSOLIDATED AFFILIATE" shall mean, (i) as to any Obligor
included in the twenty-six Obligors with the largest Outstanding Balance of
Billed Receivables as of the end of the most recent Collection Period, any
other Person whose financial statements should, under generally accepted
accounting principles, be consolidated with the financial statements of such
Obligor; (ii) as to any Obligor, any other Person recognized in the Servicers'
accounting records as a Person whose financial statements should, under
generally accepted accounting principles, be consolidated with the financial
statements of such Obligor; and (iii) as to each of Centerior, the Originators
and the Transferor, any other Person whose financial statements should, under
generally accepted accounting principles, be consolidated with the financial
statements of Centerior, such Originator or the Transferor, as applicable.
"CONTRACT" shall mean an agreement between an Originator and
an Obligor, whether in the form of a written contract, tariff or invoice or an
unwritten agreement deemed to have arisen after such Obligor has accepted
electric service, in each case pursuant to or under which such Obligor shall be
obligated to pay from time to time for electric service and the other charges
related thereto.
"CORPORATE TRUST OFFICE" shall have the meaning specified in
SECTION 11.16.
"CREDIT AND COLLECTION POLICY" shall mean those credit and
collection policies and practices of the Originators described in their
respective credit policy manuals in effect on the date hereof relating to
Receivables, as the same may be amended or modified from time to time in
compliance with SECTION 3.04(j).
"CURE FUNDS" shall have the meaning specified in the
definition of the term "Set-Aside Period" contained in this SECTION 1.01.
"DAILY REPORT" shall have the meaning specified in SECTION
3.05(a).
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"DEFAULTED RECEIVABLE" shall mean a Receivable: (i) as to
which the Obligor thereof has taken any action, or suffered any event to occur,
of the type constituting an Insolvency Event, (ii) as to which any payment, or
part thereof, has remained unpaid by the Obligor thereof for 90 days or more
from the original invoice date for such payment, or (iii) which, consistent
with the applicable Credit and Collection Policy, would be written off as
uncollectible.
"DEFEASANCE ACCOUNT" shall have the meaning specified in
SECTION 4.02(a).
"DEFERRED ARRANGEMENT PAYMENT PLAN" shall mean the deferred
billing arrangement plan provided by the Originators to certain Obligors with
past-due balances on the Receivables.
"DEFERRED ARRANGEMENT PAYMENT PLAN RECEIVABLES" shall mean all
Receivables representing the restructured delinquent balance of any previously
Delinquent or Defaulted Receivable as provided for under the Deferred
Arrangement Payment Plan.
"DEFERRED PAYMENT RIGHT" shall have the meaning specified in
SECTION 4.01(c).
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
SECTION 6.11.
"DELINQUENT RECEIVABLE" shall mean a Receivable which is not a
Defaulted Receivable and the Outstanding Balance of which has remained unpaid
for 60 days or more after its original invoice date.
"DETERMINATION DATE" shall mean, with respect to any
Distribution Date, the second Business Day preceding such Distribution Date.
"DETERMINATION DATE CERTIFICATE" shall have the meaning
specified in SECTION 3.05(b).
"DILUTED RECEIVABLE" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by an Originator to deliver any electric power or provide any services
or otherwise to perform under the underlying Contract or invoice, (ii) any
change in the terms of, or cancellation of, a Contract or invoice or any other
adjustment by an Originator which reduces the amount payable by the Obligor on
the related Receivable or (iii) any setoff in respect of any claim by an
Obligor on the related Receivable or (b) subject to any specific dispute,
offset, counterclaim or defense whatsoever asserted (except the discharge in
bankruptcy of the Obligor thereof).
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"DISTRIBUTION DATE" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month immediately following the end
of such Collection Period, or, if such day is not a Business Day, the next
succeeding Business Day, or, with respect to any Series, such other day as may
be set forth in the applicable Supplement.
"EARLY AMORTIZATION EVENT" shall have the meaning specified in
SECTION 9.01 and with respect to any Series shall also mean any Additional
Early Amortization Event specified in the related Supplement.
"ELIGIBLE INSTITUTION" shall mean a depository institution
organized under the laws of the United States of America or any one of the
states thereof, including the District of Columbia (or any domestic branch of a
foreign bank), which at all times (i) is a member of the FDIC; (ii) has a
combined capital and surplus of at least $50,000,000; (iii) has a long-term
unsecured debt rating of at least A3 or better by Moody's; and (iv) has (A) a
long-term unsecured debt rating of at least A- or better by S&P or (B) a
certificate of deposit rating or short- term unsecured debt rating of A-2 by
S&P.
"ELIGIBLE INVESTMENTS" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee or negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of America or
any agency (having original maturities no later than the next Transfer
Date for any Series);
(b) demand deposits, time deposits or certificates of
deposit (having original maturities no later than the next Transfer
Date for any Series) of depository institutions or trust companies
incorporated under the laws of the United States of America or any
state thereof (or domestic branches of foreign banks), subject to
supervision and examination by Federal or state banking or depository
institution authorities, and having, at the time of the Trust's
investment or contractual commitment to invest therein, the highest
short-term unsecured debt rating from S&P and Moody's;
(c) commercial paper (having original maturities no later
than the next Transfer Date for any Series) having, at the time of the
Trust's investment or contractual commitment
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to invest therein, the highest short-term rating from S&P and Moody's;
(d) investments in money market funds (which may be 12b-1
funds, as contemplated under the rules promulgated by the Securities
and Exchange Commission under the Investment Company Act of 1940)
having a rating of AAA-m or AAAM-G from S&P and Aaa from Moody's
(including funds for which the Trustee or any of its Affiliates acts
as an investment adviser or manager);
(e) notes or bankers' acceptances (having original
maturities no later than the next Transfer Date for any Series) issued
by any depository institution or trust company referred to in clause
(b) above; or
(f) repurchase agreements entered into with a securities
firm which is a primary dealer on the Federal Reserve reporting dealer
list or a financial institution having the highest short-term debt or
certificate of deposit rating (as the case may be) available from S&P
or Moody's; PROVIDED that such repurchase agreements are secured by a
perfected first priority security interest in an obligation of the
type described in CLAUSE (A) above; and PROVIDED, FURTHER, that (y)
the market value of the obligation with respect to which such firm or
institution has a repurchase obligation, determined as of the date on
which such obligation is originally purchased, shall equal or exceed
102% of the repurchase price to be paid by such firm or institution
and (z) the Trustee or a custodian acting on its behalf shall have
possession of the instruments or documents evidencing such
obligations.
"ELIGIBLE OBLIGOR" shall mean an Obligor:
(i) which is not an Affiliate of Centerior or of either
Originator;
(ii) which is a United States resident;
(iii) which, as of the end of the most recent Collection
Period, was not the subject of any voluntary or involuntary bankruptcy
proceedings;
(iv) with respect to which, as of the end of the most
recent Collection Period, no more than 35% of all Receivables of such
Obligor and its Consolidated Affiliates were (for reasons other than
disputes) aged more than 89 days past their respective invoice dates;
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(v) with respect to which, as of the end of the most
recent Collection Period, none of the past due Receivables of such
Obligor had been evidenced by promissory notes; and
(vi) which is not a Governmental Authority.
"ELIGIBLE RECEIVABLE" shall mean each Transferor Receivable or
portion thereof:
(i) the Obligor of which is an Eligible Obligor;
(ii) as to which, at the time of the Transfer of such
Receivable to the Trust, the Transferor or the Trust will have good
and marketable title thereto free and clear from Liens except as
created hereunder, and which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all the
Transferor's right, title and interest therein (and in the proceeds
thereof), or the grant of a first priority perfected "security
interest" (within the meaning of the UCC of the jurisdiction the law
of which governs the perfection of the interest in such Receivable
created hereunder) therein (and in the proceeds thereof);
(iii) which is not a Defaulted Receivable or a Delinquent
Receivable;
(iv) which is (or, in the case of an Unbilled Receivable,
will be) required to be paid in full within 31 days from the original
billing date;
(v) which is (or, in the case of an Unbilled Receivable,
will be) denominated and payable only in United States dollars in the
United States;
(vi) which arose in the ordinary course of business of an
Originator from a sale of electricity or electric power by or on
behalf of such Originator;
(vii) which will at all times be the bona fide, legal and
assignable payment obligation of the Obligor of such Receivable,
enforceable against such Obligor in accordance with its terms except
as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
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);
(viii) which was created in compliance with, and which, at
the time of the Transfer of such Receivable to the Trust,
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does not contravene in any material respect any applicable
Requirements of Law;
(ix) which complies in all material respects with all
material requirements of the applicable Credit and Collection Policy
including, without limitation, payment terms that conform to the
provisions of such Credit and Collection Policy;
(x) which has not been extended, rewritten or otherwise
modified from the original terms thereof except in conformity with the
Credit and Collection Policy of the applicable Originator; and
(xi) with respect to which all material consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given in connection with the creation of such Receivable
have been duly obtained, effected or given and are in full force and
effect;
(xii) which is an account receivable representing all or
part of the sales price of merchandise or services within the meaning
of Section 3(c)(5) of the Investment Company Act, the Obligor of
which is primarily liable with respect thereto;
(xiii) which is an "account" (within the meaning of Section
9-106 of the UCC of the jurisdiction the law of which governs the
perfection of the interest in such Receivable created hereunder);
(xiv) which is not a Diluted Receivable, PROVIDED that any
otherwise Eligible Receivable which is a Diluted Receivable in part
will be an Eligible Receivable to the extent not subject to any
reduction, cancellation, rebate, refund, dispute, counterclaim,
offset, defense or other factor described in the definition of Diluted
Receivable;
(xv) which is not subject to any enforceable provision
prohibiting the transfer or assignment by the applicable Originator of
such payment obligation;
(xvi) which is not a PIP Receivable; and
(xvii) which is not a Deferred Arrangement Payment Plan
Receivable.
Notwithstanding the foregoing, for purposes of calculating the
Net Receivables Balance, the aggregate Outstanding Balance of Unbilled
Receivables which do not
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constitute Eligible Receivables shall be deemed to be the Allocated Ineligible
Percentage of the total Unbilled Receivables, as calculated in the applicable
Daily Report.
"ELIGIBLE SERVICER" shall mean each Originator, the Trustee or
an entity which, at the time of its appointment as Servicer, (a) is servicing a
portfolio of trade receivables, (b) is legally qualified and has the capacity
to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
with high standards of skill and care.
"ENHANCEMENT" shall mean the rights and benefits provided to
the Investors of any Series or Class pursuant to any letter of credit, surety
bond, cash collateral account, spread account, guaranteed rate agreement,
maturity liquidity facility, tax protection agreement, interest rate swap
agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Deferred Payment Right to any
Series or Class shall not be deemed to be an Enhancement.
"ENHANCEMENT AGREEMENT" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant to
which any Enhancement of any Series is issued or outstanding.
"ENHANCEMENT PROVIDER" shall mean the Person providing any
Enhancement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA AFFILIATE" shall mean, as to any Person, any
partnership, trade or business (whether or not incorporated) which, together
with such Person, is treated as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Internal Revenue Code.
"EXCESS CONCENTRATION BALANCES" shall mean, with respect to
any Obligor, the amount of otherwise Eligible Receivables due from such Obligor
and (without duplication) its Consolidated Affiliates which, expressed as a
percentage of the
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amount of all Eligible Receivables, exceeds the percentage set forth below for
the applicable category of Obligors:
Minimum Rating
--------------
S&P Moody's Percentage
--- ------- ----------
A-1+ or AA- P-1 or Aa3 7.0%
A-1 or A+ P-1 or A2 5.5%
A-2 or BBB+ P-2 or Baa1 4.0%
A-3 or BBB- P-3 or Baa3 3.0%
Not rated/other Not rated/other 1.5%
The percentage applicable to any Obligor will be the lowest percentage
associated with an Obligor's short-term or actual or implied long-term senior
debt rating that is in effect for such Obligor.
"EXPECTED FINAL PAYMENT DATE" with respect to any Series shall
have the meaning specified in the related Supplement.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"FINAL SCHEDULED PAYMENT DATE" shall mean that Distribution
Date which occurs twelve months after the Amortization Date.
"FLOATING ALLOCATION PERCENTAGE" with respect to all
outstanding Series, shall mean the percentage equivalent of a fraction, (a) the
numerator of which equals the sum of (i) the Net Invested Amount PLUS (ii) the
Carrying Cost Reserve and (b) the denominator of which equals the sum of (i)
the Net Receivables Balance MINUS (ii) the aggregate of the Required Reserves
for all Series computed without duplication as provided in the applicable
Supplements.
"GLOBAL CERTIFICATE" shall mean an Investor Certificate
evidencing all or any part of a Series to be issued in Book-Entry Form, which
Global Certificate shall be issued to the Clearing Agency for such Series or
its nominee in accordance with SECTION 6.11 and the applicable Supplement
pursuant to which such Certificate is issued.
"GOVERNMENTAL AUTHORITY" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive,
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legislative, judicial, regulatory or administrative functions of or pertaining
to government of any country or nation or political subdivision thereof.
"HOLDER" shall mean, with respect to any Certificate, the
Person in whose name such Certificate is registered in the Certificate
Register.
"INDEMNIFIED AMOUNTS" shall have the meaning specified in
SECTION 7.03.
"INDEMNIFIED PARTY" shall have the meaning specified in
SECTION 7.03.
"INDEPENDENT PUBLIC ACCOUNTANTS" shall mean any of (a) Arthur
Andersen LLP, (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst & Young,
(e) KPMG Peat Marwick and (f) Price Waterhouse LLP or any of their successors
so long as such successor is one of the six largest national accounting firms,
provided, that such firm is independent with respect to the Servicers within
the meaning of the Act.
"INITIAL INVESTED AMOUNT" shall mean, with respect to any
Series or Class and for any date, an amount equal to the initial invested
amount or amounts specified in the related Supplement.
"INSOLVENCY EVENT" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property,
or the ordering of the winding-up or liquidation of such Person's business,
and, other than in a case in which such proceeding was instituted by an
Affiliate of such Person, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors.
"INTEREST PERIOD" shall mean, unless otherwise specified in
the Supplement relating to any Series, with respect to any
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Distribution Date for such Series (i) in the case of the initial such
Distribution Date, the period from and including the Closing Date for such
Series to but excluding such initial Distribution Date and (ii) in the case of
any other Distribution Date, the period from and including the preceding
Distribution Date to but excluding such Distribution Date.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"INVESTED AMOUNT" shall mean, with respect to any Series or
Class and for any date, an amount equal to the invested amount or amounts
determined as provided in the related Supplement.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act
of 1940, as amended from time to time.
"INVESTOR CERTIFICATE" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Revolving Certificate.
"INVESTOR" shall mean the Person in whose name an Investor
Certificate is registered in the Certificate Register.
"INVESTORS' INTEREST" shall have the meaning specified in
SECTION 4.01(a).
"LETTER OF REPRESENTATIONS" shall mean any applicable
agreement among the Transferor, the Trustee and the applicable Clearing Agency
with respect to such Clearing Agency's rights and obligations with respect to
any Book-Entry Certificates, as the same may be amended, supplemented, restated
or otherwise modified from time to time.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other and including
a Lien created by the PBGC), preference, participation interest, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever resulting in an encumbrance against real or personal property of a
Person, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC or comparable law of any jurisdiction to evidence any of the foregoing.
"MAJORITY IN INTEREST" shall mean with respect to each Series
the Holders of Certificates evidencing 51% or more of the Invested Amount of
such outstanding Series.
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"MAJORITY INVESTORS" shall mean Investors holding Certificates
evidencing 51% or more of the Aggregate Investors' Interest; PROVIDED that if
at any time the aggregate Invested Amount for all Subordinated Classes is
greater than the aggregate Invested Amount for all Senior Classes, then
"Majority Investors" at such time shall mean Investors holding Certificates
evidencing both (i) 51% or more of the Aggregate Investors' Interest and (ii)
51% or more of the aggregate Invested Amount for all Senior Classes.
"MASTER SERVICER" shall mean the Servicer which is then
authorized to prepare and deliver the Daily Reports and Determination Date
Certificates, to instruct the Trustee with respect to the investment of funds
in the Trust Accounts and to perform any other functions herein which have been
delegated to the Master Servicer, and shall initially be CEI.
"MOODY'S" shall mean Moody's Investors Service, Inc. or its
successor.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which either Originator or an ERISA
Affiliate of either of them is making, is obligated to make or has within the
last six years made or been obligated to make contributions on behalf of
participants who are or were employed by any such entity.
"NET INVESTED AMOUNT" shall mean at any time the Aggregate
Invested Amount MINUS the amount of Cure Funds on deposit in the Reserve
Account as of such time MINUS the amount of funds on deposit in any Defeasance
Account to be distributed to Investors in reduction of the Invested Amount of
their Certificates.
"NET RECEIVABLES BALANCE" shall mean at any time the excess of
(a) the aggregate Outstanding Balances of Eligible Receivables over (b) the
Excess Concentration Balances at such time. For purposes of calculating the
Net Receivables Balance, the aggregate Outstanding Balances of Eligible
Receivables shall be calculated as if reduced by the aggregate amount of (i)
Collections received and security deposits held that have not been applied to
any corresponding Receivables on the records of the Servicers and (ii) all
credit balances in favor of Obligors which are outstanding under the
Originators' Budget/Balanced Billing Payment Plan; (iii) the cumulative dollar
portion of Receivables which portion, under applicable law, may be rescinded or
revoked by any Governmental Authority in connection with any contingent
approval for any rate increase; and (iv) unless the Servicers have
subcontracted or otherwise modified their collection procedures so that
Collections (including instruments representing Collections) no longer pass
through the initial Servicers' processing departments prior to
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being deposited into the Trust Accounts, a dollar amount equal to .25% of the
amount otherwise calculated above.
"NOTICES" shall have the meaning specified in SECTION
13.05(A).
"OBLIGOR" shall mean each Person who is obligated to pay for
goods or services provided by an Originator which gave rise to a Transferor
Receivable, including any guarantor of such Person's obligations.
"OFFICER'S CERTIFICATE" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller, the Assistant
Treasurer or the Secretary or Assistant Secretary of the Transferor, or of a
Servicer, or of any Successor Servicer, as the case may be, and delivered to
the Trustee.
"OPINION OF COUNSEL" shall mean a written opinion, in form and
substance reasonably satisfactory to the Trustee and from counsel reasonably
satisfactory to the Trustee, which counsel, except where this Agreement
otherwise provides, may be counsel for, or an employee of, either the Person
providing such opinion or an Affiliate of such Person.
"ORIGINATORS" shall mean each of CEI and TE, together with
their permitted successors and assigns under the Receivables Purchase
Agreement.
"OUTSTANDING BALANCE" of any Receivable at any time shall mean
the then outstanding principal balance thereof.
"PAYING AGENT" shall mean any paying agent appointed pursuant
to SECTION 6.06.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any other Governmental Authority succeeding to the functions thereof.
"PERMITTED LIENS" shall mean (i) Liens for taxes, assessments
or charges of any Governmental Authority or Liens of landlords, carriers,
warehousemen, mechanics and materialmen imposed by law and created in the
ordinary course of business, which, in either such case, are for amounts not
yet due or for amounts which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with generally accepted
accounting principles and (ii) any Liens of a collecting bank arising by
operation of law under Section 4-210 of the UCC.
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"PERSON" shall mean any individual, corporation, partnership,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, Governmental Authority or any other entity
of similar nature.
"PIP RECEIVABLE" shall mean any Receivable owed by an Obligor
which fulfills the conditions for inclusion in an Originator's "Percentage of
Income Payment" program for low income Obligors.
"PLAN" shall mean any plan, program, arrangement, agreement,
practice or contract that provides or is intended to provide benefits or
compensation to or on behalf of one or more employees or former employees of
either Originator or an ERISA Affiliate of either of them, whether formal or
informal, whether or not written, including, but not limited to, any employee
benefit plan as defined in Section 3(3) of ERISA, any employee pension benefit
plan and any retiree welfare plan.
"POOL RECEIVABLES" shall mean, with respect to Receivables
generated during, or outstanding during, any Collection Period, all such
Receivables except for Receivables which, as of the beginning of such
Collection Period, constituted PIP Receivables.
"PREPAYMENT PREMIUM" with respect to any Series, shall have
the meaning specified in the related Supplement, if applicable.
"PRINCIPAL TERMS" shall mean, with respect to any Series: (a)
the name or designation; (b) the Initial Invested Amount or maximum principal
amount (or method for calculating such amount); (c) the Certificate Rate (or
method for the determination thereof); (d) the payment date or dates and the
date or dates from which interest shall accrue; (e) the method for allocating
collections to Investors; (f) the designation of any Series Accounts and the
terms governing the operation of any such Series Accounts; (g) the issuer and
terms of any form of Enhancement with respect thereto; (h) the terms, if any,
on which the Investor Certificates of such Series may be exchanged for Investor
Certificates of another Series, repurchased or redeemed by the Transferor or
remarketed to other investors; (i) the number of Classes of Investor
Certificates of such Series and, if more than one Class, the rights and
priorities of each such Class; (j) the Scheduled Amortization Date and (k) if
such Series is designated as a Series of Variable Funding Certificates, the
Termination Date for such Series.
"PUCO" shall mean the Public Utilities Commission of Ohio.
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"PURCHASE PRICE" shall have the meaning specified in the
Receivables Purchase Agreement.
"QUALIFIED SALE AGENT" shall mean (i) a nationally recognized
investment bank, (ii) a nationally recognized commercial bank or (iii) any
other reputable institution whose regular business includes the sale of
receivables portfolios.
"RATABLE PRINCIPAL AMOUNT" shall mean, as to any Series of
Investor Certificates or the Transferor Revolving Certificate, the outstanding
Invested Amount thereof, except that: (a) if so provided in the Supplement
pursuant to which a Series of Investor Certificates is issued, the Ratable
Principal Amount of that Series may be greater or less than its outstanding
Invested Amount; and (b) if so provided in any Supplement, the Ratable
Principal Amount of the Transferor Revolving Certificate may be greater or less
than its outstanding Invested Amount.
"RATING AGENCY" shall mean each nationally recognized rating
agency which, at the request of the Transferor, has rated any Series or Class
of Certificates, as set forth in the related Supplement.
"RATING AGENCY CONDITION" shall mean, with respect to any
action, that each Rating Agency, upon the written request of the Transferor,
the Servicers or the Trustee, shall have notified such parties in writing that
such action in and of itself will not result in a reduction or withdrawal of
the rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"RECEIVABLE" shall mean an account receivable shown on the
records of either Originator as of the initial Series Cut-Off Date, and from
time to time thereafter, arising from the sale of electricity by an Originator
in the ordinary course of its business and shall include, without limitation,
all monies due or to become due and all Collections and other amounts received
from time to time with respect to such account receivable and all proceeds
(including, without limitation, "proceeds" as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest on the
Receivables transferred hereunder) thereof; PROVIDED, HOWEVER, that the term
"Receivable" shall not include any accounts receivable (i) that are due from
any Consolidated Affiliates of Centerior or of either Originator; (ii) arising
from wholesale electricity sales to other utilities or parties in the business
of providing electric power; or (iii) that are due from any Obligors located
outside the United States.
"RECEIVABLES PURCHASE AGREEMENT" shall mean the agreement
between the Originators and the Transferor, dated as of the date hereof,
governing the terms and conditions upon which the
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Transferor shall have acquired the Receivables transferred to the Trust on the
initial Closing Date and all Receivables to be transferred to the Trust from
time to time thereafter, as the same may from time to time be amended, modified
or otherwise supplemented.
"RECORD DATE" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"RELATED SECURITY" shall mean, with respect to any Receivable:
(i) all of the Transferor's rights under the related Contracts;
(ii) all guarantees, indemnities, warranties, chattel paper,
insurance policies and proceeds and security agreements 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 Receivable or
otherwise; and
(iii) all of the Transferor's right, title and interest to and
rights under the Receivables Purchase Agreement; and
(iv) all proceeds of the foregoing.
"REPORTABLE EVENT" shall mean any of the reportable events set
forth in Section 4043(b) of ERISA and the regulations issued from time to time
thereunder (other than a reportable event not subject to the provisions for
30-day notice to the PBGC under such regulations).
"REQUIRED RESERVES" shall mean, with respect to any Series,
the amount set forth in the related Supplement.
"REQUIREMENTS OF LAW" shall mean any law, treaty, rule or
regulation, final determination of an arbitrator or Governmental Authority, or
order of any judicial authority, and, when used with respect to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.
"RESERVE ACCOUNT" shall have the meaning specified in SECTION
4.02.
"RESPONSIBLE OFFICER" shall mean, (i) when used with respect
to the Trustee, any officer within the corporate trust department of the
Trustee including any vice president, assistant vice president, senior trust
officer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the persons who at the time
shall be such
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officers, respectively, or to whom any corporate trust matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and (ii) when used with respect to the Transferor or a Servicer, any of
the President, Chief Executive Officer, Vice President, Secretary, Assistant
Secretary, Treasurer, Assistant Treasurer or Chief Financial Officer of such
Person.
"REVOLVING PERIOD" shall mean the period from the initial
Closing Date until the Amortization Date.
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successor.
"SCHEDULED AMORTIZATION DATE" shall mean, with respect to any
Series, the date set forth in the related Supplement.
"SENIOR CLASS" shall mean any Class of Investor Certificates
which is designated as a "Senior Class" in the applicable Supplement.
"SERIES" shall mean any series of Investor Certificates.
"SERIES ACCOUNT" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investors of any
Series or Class, as specified in any Supplement and including, with respect to
any Series or Class, any Defeasance Accounts maintained for the benefit of the
applicable Investors.
"SERIES CUT-OFF DATE" shall mean, with respect to any Series,
the date specified as such in the related Supplement.
"SERVICE TRANSFER" shall have the meaning specified in
SECTION 10.01.
"SERVICER" shall mean, at any time, each Person which is
authorized to act as Servicer under SECTION 3.01 to administer, collect and
service the Receivables, including any Successor Servicer appointed pursuant to
SECTION 10.01 and, so long as more than one Servicer is so authorized,
"SERVICERS" shall mean all such Servicers. All references to any Servicer
shall mean and include the applicable Servicer when performing any servicing
functions delegated, for reasons of administrative convenience, to the Master
Servicer.
"SERVICER COLLECTION ACCOUNT" shall have the meaning
specified in SECTION 4.02(B).
"SERVICER DEFAULT" shall have the meaning specified in SECTION
10.01.
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"SERVICING FEE" shall have the meaning specified in SECTION
3.02(A).
"SERVICING OFFICER" shall mean any officer, employee or other
agent of a Servicer who in any case is involved in, or responsible for, the
administration and servicing of the Receivables and whose name appears on a
list of servicing officers furnished to the Trustee by such Servicer, as such
list may from time to time be amended.
"SET-ASIDE PERIOD" shall mean the period beginning on any
Business Day on which the Base Amount is less than the Net Invested Amount if
the Transferor shall begin depositing Collections or funds to the Reserve
Account on the day collected (all such funds so deposited from time to time by
the Transferor being "CURE FUNDS"), and continuing until the earlier of (a) the
date on which the Net Invested Amount is less than or equal to the Base Amount
and (b) the fifth consecutive Business Day on which the Base Amount is less
than the Net Invested Amount. Notwithstanding the foregoing, the Transferor
may not deposit any Cure Funds to the Reserve Account at any time if such
amount, together with the aggregate amount of Cure Funds previously deposited
by the Transferor and held in the Reserve Account at such time, would exceed
35% of the Aggregate Invested Amount at such time, unless the Transferor has
obtained the prior written consent of the Majority Investors.
"STATED AMOUNT" shall mean, with respect to any Variable
Funding Certificate, the maximum principal amount that may be required to be
funded by the Holder of such Variable Funding Certificate pursuant to the
applicable Supplement.
"SUBORDINATED CLASS" shall mean any Class of Investor
Certificates which is designated as a Subordinated Class in the applicable
Supplement.
"SUCCESSOR SERVICER" shall have the meaning specified in
SECTION 10.02(A).
"SUPPLEMENT" shall mean, with respect to any Series, a
supplement to this Agreement, executed and delivered in connection with the
original issuance of the Investor Certificates of such Series pursuant to
Article VI, and all amendments, modifications or supplements to this Agreement.
"TAX OPINION" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of Centerior or any Affiliate thereof
to the effect that, for federal and Ohio (and any other State where substantial
servicing activities in respect of Receivables are conducted by the Transferor
or the Servicers if there is a substantial change from present servicing
activities)
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state income and franchise tax purposes, (a) such action will not adversely
affect the characterization of the Investor Certificates of any outstanding
Series or Class as debt, (b) following such action the Trust should not be
subject to federal income tax, and (c) in the case of the original issuance of
Certificates and any New Issuance, the Investor Certificates being issued
thereby should properly be characterized as debt of the Transferor (or as a
partnership interest).
"TERMINATION DATE" shall mean, with respect to any Series of
Variable Funding Certificates, the termination date specified in the related
Supplement.
"TERMINATION NOTICE" shall have the meaning specified in
SECTION 10.01.
"TRANSFER" shall have the meanings specified in SECTION 2.01,
it being understood that the date of Transfer of any Receivable or other Trust
Asset shall be the date on which such Receivable or other Trust Asset shall be
created or otherwise arise and, in the case of such Receivable, be acquired by
the Transferor under the Receivables Purchase Agreement.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning
specified in SECTION 6.03.
"TRANSFER DATE" for any Series shall mean the Business Day
immediately preceding a Distribution Date for such Series, or, if the last day
of an Interest Period for such Series is other than a Distribution Date, the
Business Day immediately preceding such last day of such Interest Period.
"TRANSFEROR" shall mean Centerior Funding Corporation, a
Delaware special purpose corporation.
"TRANSFEROR COLLECTION ACCOUNT" shall have the meaning
specified in SECTION 4.02(b).
"TRANSFEROR COLLECTIONS" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account equal to
the product of (i) the Transferor Percentage on such date times (ii) the
aggregate amount of such Collections.
"TRANSFEROR INTEREST" shall have the meaning specified in
SECTION 4.01(a).
"TRANSFEROR PERCENTAGE" shall mean at any time 100% minus the
Floating Allocation Percentage at such time.
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"TRANSFEROR RECEIVABLE" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement.
"TRANSFEROR REVOLVING CERTIFICATE" shall mean the certificate
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of EXHIBIT A hereto.
"TRANSFEROR'S ACCOUNT" shall mean the special account under
the dominion and control of the Transferor, for deposits by the Servicers of
funds allocable to the Transferor, maintained at such bank as the Transferor
may designate for such purpose from time to time.
"TRUST" shall mean the Centerior Energy Receivables Master
Trust created by this Agreement.
"TRUST ACCOUNTS" shall mean the Concentration Account, the
Reserve Account, the Carrying Cost Account, each Defeasance Account and any
other Series Account established pursuant to the terms of any Supplement.
"TRUST ASSETS" shall have the meaning specified in SECTION
2.01.
"TRUSTEE" shall mean Citibank, N.A., a national banking
association, in its capacity as trustee on behalf of the Trust, or its
successor in interest, or any successor trustee appointed as herein provided.
"TRUSTEE'S FEE" shall have the meaning specified in SECTION
11.05.
"TURNOVER DAYS" shall mean, as of each Determination Date
until (but not including), the next Determination Date, the average number of
days outstanding for Receivables during the prior Collection Period as
calculated by the Master Servicer in each Determination Date Certificate in
accordance with the following formula:
TD = AOB to the X power + AOB to the Y power times ED
--------------------------------------- ----
2 BR
TD = Turnover Days;
AOB to the x power = The aggregate Outstanding Balance of all
Receivables as of the beginning of such
Collection Period;
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AOB to the y power = The aggregate Outstanding Balance of all
Receivables as of the end of such Collection
Period;
ED = The number of days elapsed in
the prior Collection Period; and
BR = The aggregate amount of new Billed Receivables generated
during such Collection Period.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.
"UNBILLED RECEIVABLE" shall mean a Receivable which represents
a bona fide enforceable obligation for the provision of electricity to an
Obligor but which has not yet been evidenced by an invoice and which is
accounted for on the applicable Originator's books and records as "unbilled
revenue" in accordance with its current financial accounting practices.
"UNDIVIDED FRACTIONAL INTEREST" with respect to each Series
shall have the meaning specified in the related Supplement.
"VARIABLE FUNDING CERTIFICATE" shall mean any Investor
Certificates of any Series the principal amount of which may be increased
and/or reduced from time to time and which is designated as a "Variable Funding
Certificate" in the Supplement pursuant to which such Series is issued.
"YIELD" shall mean, with respect to the Investor Certificates
of any Series or Class, the Yield payable on account of such Certificates as
specified in the related Supplement.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. (a) All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not completely defined, shall have the respective
meanings given to them under generally accepted accounting principles or
regulatory accounting principles, as applicable and in effect from time to
time. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted
accounting principles or regulatory accounting principles, the definitions
contained herein shall control.
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(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, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. TRANSFER OF RECEIVABLES. (a) By execution of
this Agreement, the Transferor does hereby transfer, assign, set-over and
otherwise convey without recourse, except as expressly provided herein (the
making of such transfer, assignment, set-over and conveyance being a
"TRANSFER", and so to transfer, assign, set-over and otherwise convey being to
"TRANSFER") to the Trust, for the benefit of the Certificateholders:
all of the Transferor's right, title and interest in, to and
under all Transferor Receivables existing at the close of business on the
initial Series Cut-Off Date and thereafter created from time to time, and
conveyed to the Transferor under the Receivables Purchase Agreement from time
to time, until the termination of the Revolving Period of the last outstanding
Series, all Related Security therefor and all monies due or to become due and
all Collections and other amounts received from time to time with respect to
such Transferor Receivables and all proceeds (including, without limitation,
"proceeds" as defined in the UCC of the jurisdiction the law of which governs
the perfection of the interest in the Transferor Receivables transferred
hereunder) thereof.
Such property described in the preceding sentence, together with all monies
from time to time on deposit in, and all Eligible Investments and other
securities, instruments and other investments purchased from funds on deposit
in, the Collection Accounts, the Concentration Account, the Reserve Account and
any Series Account, and any Enhancements shall constitute the assets of the
Trust (collectively the "TRUST ASSETS").
The foregoing Transfer does not constitute and is not intended
to result in an assumption by the Trust, the Trustee or any Certificateholder
of any obligation of any Servicer, any Originator, the Transferor or any other
Person in connection with the Receivables or under the Receivables Purchase
Agreement or under any agreement or instrument relating thereto, including,
without limitation, any obligation to any Obligor. The foregoing Transfer to
the Trust shall be made to the Trustee, on behalf of
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the Trust, and each reference in this Agreement to such Transfer shall be
construed accordingly.
The Transferor agrees to record and file from time to time, at
its own expense, financing statements and other documents (and amendments
thereto, assignments thereof and continuation statements, when applicable) with
respect to the Receivables and the other Trust Assets now existing and
hereafter created meeting the requirements of applicable law in such manner and
in such jurisdictions as are necessary to perfect, and maintain perfection of,
the Transfers of the Receivables and the other Trust Assets to the Trust, and
to deliver a file-stamped copy of such a financing statement or other document
or other evidence of such filing to the Trustee on or prior to the initial
Closing Date. The Trustee shall be under no obligation whatsoever to file such
financing statements, documents, amendments, assignments or continuation
statements, or to make any other filing under the UCC in connection with such
Transfer. In the event that any of the Receivables and other Trust Assets
become evidenced by an instrument, the Transferor agrees to (or to cause the
Originators or the Servicers to) deliver to the Trustee the original of such
instrument as required by SECTION 3.04(g) hereof.
Each of CEI, TE and the Transferor further agrees herein, at
its own expense, on or prior to the initial Closing Date to indicate in its
computer records that the Receivables have been sold, in the case of CEI and
TE, to the Transferor in accordance with the Receivables Purchase Agreement and
conveyed, in the case of CEI, TE and the Transferor, to the Trust in accordance
with this Agreement for the benefit of the Certificateholders.
(b) The Trustee hereby agrees not to disclose to any Person
any information delivered to the Trustee from time to time with respect to the
Receivables or any Obligor except (i) to a Successor Servicer or as required by
a Requirement of Law applicable to the Trustee, (ii) as required in the
performance of the Trustee's duties hereunder, (iii) as required in enforcing
the rights of the Certificateholders hereunder or (iv) as provided in any
Supplement. The Trustee agrees to protect and maintain the security and
confidentiality of such information in accordance with reasonable and customary
industry standards and, in connection therewith, will allow the Transferor to
inspect the Trustee's security and confidentiality arrangements from time to
time during normal business hours. The Trustee shall use its best efforts to
provide the Transferor written notice at least five Business Days prior to any
disclosure pursuant to this SECTION 2.01 and in any event will provide written
notice whenever disclosure is made.
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 and to the Trust Assets, now existing
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and hereafter created and transferred to the Trust pursuant to SECTION 2.01 and
the Trustee declares that it shall, subject to the terms set forth herein,
maintain such right, title and interest, upon the trust herein set forth, for
the benefit of all Certificateholders.
(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
TRANSFEROR RELATING TO THE TRANSFEROR. The Transferor hereby represents and
warrants to the Trust as of the date hereof and, by accepting on the date of
the initial Transfer of Receivables the proceeds of such Transfer, as of such
date and with respect to any Series, as of the date of any Supplement and the
related Closing Date, unless otherwise stated in such Supplement, that:
(a) ORGANIZATION AND GOOD STANDING. The Transferor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to own
its properties and conduct its business as presently owned or conducted, to
execute, deliver and perform its obligations under this Agreement and the
Receivables Purchase Agreement, and to execute and deliver to the Trustee
pursuant hereto the Certificates.
(b) DUE QUALIFICATION. The Transferor is duly qualified to
do business and is in good standing as a corporation or foreign corporation, as
applicable, and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the Transferor's ability to
perform its obligations hereunder, under the applicable Supplement or under the
Receivables Purchase Agreement.
(c) DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement and the applicable Supplement and the Receivables
Purchase Agreement by the Transferor, and the execution and delivery by the
Transferor to the Trustee of the Certificates and the consummation by the
Transferor of the transactions provided for in this Agreement and the
applicable Supplement and the Receivables Purchase Agreement, have been duly
authorized by all necessary corporate action on the part of the Transferor and
this Agreement and the other documents and agreements executed in connection
herewith have been duly executed and delivered on behalf of the Transferor.
(d) ENFORCEABILITY. Each of this Agreement, the applicable
Supplement and the Receivables Purchase Agreement constitutes a legal, valid
and binding obligation of the Transferor
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enforceable against the Transferor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at law or
in equity). The Receivables Purchase Agreement is in full force and effect,
and is not subject to any specific dispute, offset, counterclaim or defense.
(e) NO CONFLICT. The Transferor's execution and delivery of
this Agreement, the applicable Supplement, the Receivables Purchase Agreement
and the Certificates, performance of the transactions contemplated by this
Agreement and the applicable Supplement and the Receivables Purchase Agreement,
and fulfillment of the terms hereof and thereof applicable to the Transferor,
do not conflict with or violate in any material respect any Requirements of Law
applicable to the Transferor or conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which the Transferor is a party or by
which it or its properties are bound.
(f) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the best knowledge of the Transferor, threatened
against the Transferor before any Governmental Authority which asserts the
invalidity of this Agreement or the Receivables Purchase Agreement or which
otherwise is likely to have a material adverse effect on the Transferor's
financial condition or operations or on the Trust Assets or the transactions
contemplated herein, under each Supplement and under the Receivables Purchase
Agreement.
(g) CONSENTS. No authorization, consent, license, order or
approval of, registration or declaration with any Governmental Authority or
other Person is required to be obtained, effected or given by the Transferor in
connection with the execution and delivery of this Agreement, the applicable
Supplement, the Receivables Purchase Agreement and the Certificates by the
Transferor or its performance of its obligations under this Agreement, the
applicable Supplement and the Receivables Purchase Agreement or the
transactions contemplated hereby and thereby except for (i) regulatory
approvals by PUCO, all of which have been obtained and are in full force and
effect; (ii) the filings of the financing statements or other documents
required to have been filed on or prior to the initial Closing Date pursuant to
SECTION 2.01, all of which were so filed and are in full force and effect, and
(iii) the filing of any amendments, assignments or continuation statements
which may become applicable pursuant to SECTION 2.01; and (iv) other consents
and approvals the failure of which to
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obtain is not likely to have a material adverse effect on the Transferor's
financial condition or operations or the Trust Assets or the Transferor's
ability to perform its obligations under this Agreement.
(h) LIENS ON PROPERTIES. Except as created hereby, there are
no Liens (except for Permitted Liens) of any nature whatsoever on any
Transferor Receivable. The Transferor is not a party to any contract,
agreement, lease or instrument (other than this Agreement) the performance of
which, either unconditionally or upon the happening of an event, will result in
or require the creation of any Lien on any Transferor Receivable, or otherwise
result in a violation of this Agreement.
(i) CONTRACTUAL OBLIGATIONS. (i) The Transferor is not a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument, or subject to any Requirements of Law, that would have
a material adverse effect on the ability of the Transferor to carry out its
obligations under this Agreement, the applicable Supplement or the Receivables
Purchase Agreement, and (ii) neither the Transferor nor, to the best of the
knowledge of the Transferor, any other party is in default in any respect under
or with respect to the Receivables Purchase Agreement or any other material
contract, agreement, lease or other instrument to which the Transferor is a
party.
(j) INVESTMENT COMPANY. The Transferor is not an "investment
company" within the meaning of the Investment Company Act.
(k) LOCATIONS. The chief place of business and chief
executive office of the Transferor are located at the address of the Transferor
referred to in SECTION 13.05, and the locations of the offices where the
Transferor keeps the originals of its books, records and documents regarding
the Receivables and the other Trust Assets are listed on Schedule III hereto
(or at such other locations, notified to the Trustee in accordance with SECTION
2.05(d), in jurisdictions with respect to which all applicable action required
by the last two paragraphs of SECTION 2.01(A) has been taken and completed).
(l) TRADENAMES. The legal name of the Transferor is as set
forth on the signature page of this Agreement and the Transferor has no
tradenames, fictitious names, assumed names or "doing business as" names.
(m) SUBSIDIARIES. The Transferor has no subsidiaries.
(n) INFORMATION. (i) Each certificate, information,
exhibit, financial statement, document, book or record or report furnished by
the Transferor to the Trustee or the Servicers in
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connection with this Agreement and (ii) any information contained in any
written documents regarding the Transferor provided by the Transferor to
Investors is accurate in all material respects as of its date, when considered
as a whole with other such documents, and no such document contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
(o) SOLVENCY. As of the date hereof and after giving effect
to the transactions contemplated by this Agreement, the fair saleable value of
the Transferor's assets exceeds its liabilities and the Transferor is currently
repaying all of its indebtedness as such indebtedness becomes due; and, after
giving effect to the transactions contemplated by this Agreement, the
Transferor will have adequate capital to conduct its business as presently
conducted and as contemplated by this Agreement. The Transferor is not
entering into the transactions contemplated hereunder and under the Receivables
Purchase Agreement with the intent of hindering, delaying or defrauding
creditors and no Transfer hereunder constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or similar state
law.
(p) COMPLIANCE. The Transferor has complied in all material
respects with all Requirements of Law with respect to it, its business and
properties and all Receivables transferred to the Trust hereunder and the
Contracts related thereto.
(q) TAXES. The Transferor has filed all material tax returns
(federal, state and local) which it reasonably believes are required to be
filed by it and has paid or made adequate provision for the payment of all
taxes, assessments and other governmental charges due from the Transferor or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings. The Transferor knows of no basis for any
material additional tax assessment for any fiscal year for which adequate
reserves have not been established.
(r) USE OF PROCEEDS. No proceeds of the issuance of any
Certificate will be used by the Transferor to acquire any security in a
transaction that is subject to Sections 13 and 14 of the Securities Exchange
Act of 1934, as amended, or to purchase or carry any margin security in
violation of any applicable law or regulation.
(s) COLLECTION ACCOUNTS. The Collection Account Banks are
the only institutions holding Collection Accounts for the receipts of payments
in respect of Receivables (subject to such changes as may be made from time to
time in accordance with SECTION 4.02(b)).
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(t) EARLY AMORTIZATION EVENT. As of the Closing Date for any
Series, no Early Amortization Event, and no condition that with the giving of
notice and/or the passage of time would constitute an Early Amortization Event,
has occurred and is continuing.
(u) ERISA. No Plan maintained by the Transferor or any of
its ERISA Affiliates has any accumulated funding deficiency (within the meaning
of Section 302 of ERISA or Section 412 of the Internal Revenue Code), whether
or not waived. The Transferor and each ERISA Affiliate of the Transferor has
timely made all contributions required to be made by it to any Plan and
Multiemployer Plan to which contributions are or have been required to be made
since ________, 199_ by the Transferor or such ERISA Affiliate, and no
Reportable Event has occurred and is continuing or could reasonably be expected
to occur with respect to any such Plan, in any case, that could reasonably be
expected to result directly or indirectly, in any Lien being imposed on the
property of the Transferor or the payment of any material amount to avoid such
Lien.
The representations and warranties set forth in this SECTION
2.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the
Transferor, any Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties hereto and to any
Enhancement Providers. The Trustee's obligations in respect of any such breach
are limited as provided in SECTION 11.02(g).
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE
TRANSFEROR RELATING TO THIS AGREEMENT AND THE TRUST ASSETS. The Transferor
hereby represents and warrants to the Trust as of the date hereof and, by
accepting on the date of the initial Transfer of Receivables the proceeds of
such Transfer, as of such date and, in the case of the representations and
warranties contained in SECTIONS 2.04(a), (b), (c), (d), (e) and (f) below, by
accepting on each date during the Revolving Period for any Series the proceeds
of each Transfer of Receivables, as of such date, that:
(a) VALID TRANSFER. The Receivables Purchase Agreement
creates a valid sale, transfer and assignment to the Transferor of, and the
Transferor is the legal and beneficial owner of, all right, title and interest
of the Originators in and to the Receivables now existing and hereafter created
during the Revolving Period and the proceeds thereof. This Agreement
constitutes either (i) a valid transfer and assignment to the Trust of all
right, title and interest of the Transferor in and to the Receivables now
existing
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and hereafter created and purchased by the Transferor pursuant to the
Receivables Purchase Agreement, and in and to all other Trust Assets and the
proceeds thereof or (ii) a valid grant to the Trust of a first priority
perfected "security interest" (as defined in the UCC of the jurisdiction the
law of which governs the perfection of the interest in the Receivables and
other Trust Assets created hereunder) in all right, title and interest of the
Transferor in and to the Receivables now existing and hereafter created and
purchased by the Transferor pursuant to the Receivables Purchase Agreement, and
in and to all other Trust Assets and the proceeds thereof. Such transfer and
assignment and/or grant of security is enforceable against the Transferor
(except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, now or hereafter in effect, and except as such
enforceability may be limited by general principles of equity, whether
considered in a suit of law or in equity). Upon the filing of the financing
statements and, in the case of the Receivables hereafter created and the
proceeds thereof, upon the creation thereof and payment therefor, the Trust
shall have an ownership or first priority perfected security interest in those
Trust Assets in which a security interest may be perfected by filing and the
proceeds thereof. The Transferor has caused each Servicer to clearly and
unambiguously mark its computer records and its microfiche storage files, if
any, regarding such Receivables as the property of the Trust and shall cause
each such Servicer to maintain such records in a manner such that the Trust's
perfected interest of first priority in the Receivables shall not be adversely
affected in any material respect.
(b) NO CLAIM OR INTEREST. Except as otherwise provided in
this Agreement and the applicable Supplement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim to or interest in
the Concentration Account or any Series Account.
(c) OUTSTANDING BALANCE; BASE AMOUNT. As of each Closing
Date, the Net Invested Amount (after giving effect to the issuance of all
Certificates on such date) is less than or equal to the Base Amount.
(d) LIENS. Each Transferor Receivable and all other Trust
Assets have been Transferred to the Trust free and clear of any Lien except as
created hereby or by the Receivables Purchase Agreement and free and clear of
any adverse claim or interest of any other Person (other than disputes with
Obligors on account of factors described in the definition of Diluted
Receivable or discharge in bankruptcy of the related Obligor).
(e) ELIGIBILITY. Each Receivable classified as an "Eligible
Receivable" by the Transferor in any Daily Report or
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Determination Date Certificate delivered hereunder satisfies, as of the dates
referred to in such Daily Report orDetermination Date Certificate, as
applicable, the requirements of eligibility contained in the definition of
Eligible Receivable, and no such Receivable nor any related Contract has been
satisfied, subordinated or rescinded nor, except as otherwise permitted
hereunder, been compromised, adjusted, extended or otherwise modified.
(f) INVESTMENT COMPANY ACT. Each Transfer of Transferor
Receivables to the Trust hereunder constitutes a purchase or other acquisition
of notes, drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise or services within
the meaning of Section 3(c)(5) of the Investment Company Act.
The representations and warranties set forth in this SECTION
2.04 shall survive the Transfer of the Transferor Receivables to the Trust and
the issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the
Transferor, any Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties hereto and to any
Enhancement Provider. The Trustee's obligations in respect of any such breach
are limited as provided in SECTION 11.02(g).
SECTION 2.05. AFFIRMATIVE COVENANTS OF THE TRANSFEROR. The
Transferor hereby covenants that, until the termination of the Trust:
(a) COMPLIANCE WITH LAW. The Transferor will comply in all
material respects with all Requirements of Law applicable to the Transferor,
its business and properties and the Trust Assets, where failure to so comply
would have a material adverse effect on the Trust Assets or the ability of the
Transferor to perform in any material respects its obligations hereunder or
under the Receivable Purchase Agreement.
(b) PRESERVATION OF CORPORATE EXISTENCE. The Transferor will
preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to maintain such qualification would materially and adversely
affect (i) the interests of the Trustee or of the Investors hereunder or in the
Trust Assets, (ii) the collectibility of the Receivables or (iii) the ability
of the Transferor to perform its obligations hereunder
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or under the Receivables Purchase Agreement in any material respect.
(c) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Transferor
will (i) keep proper books of record and account, which shall be maintained or
caused to be maintained by the Transferor and shall be separate and apart from
those of any Affiliate of the Transferor, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Transferor in accordance with generally accepted accounting principles
consistently applied, and (ii) maintain and implement administrative and
operating procedures (including without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the
daily identification of each new Receivable and all Collections of and
adjustments to each existing Receivable).
The Transferor shall provide to the Trustee access to the
documentation regarding the Receivables in such cases where the Trustee is
required in connection with the enforcement of the rights of Certificateholders
or by applicable statutes or regulations to review such documentation, such
access being afforded without charge but only (i) upon reasonable written
request, (ii) during normal business hours, (iii) subject to the Transferor's
normal security and confidentiality procedures and (iv) at reasonably
accessible offices in the continental United States designated by the
Transferor.
(d) LOCATION OF RECORDS. The Transferor will keep its chief
place of business and chief executive office, and the office where it keeps the
books, records and documents regarding the Trust Assets, at the addresses of
the Transferor referred to in SECTION 13.05 and on Schedule III hereto or, upon
30 days' prior written notice to the Trustee, at any other location within the
United States with respect to which all applicable action required by the last
two paragraphs of SECTION 2.01(a) shall have been taken and completed.
(e) MAINTENANCE OF SEPARATE DIRECTORS. The Transferor will
maintain at least two independent directors each of whom is not an officer,
director or employee of (i) Centerior, (ii) any Originator or (iii) any
Affiliate, nor a parent, child, spouse or sibling of any such Person; provided,
however, that if any such independent director dies or resigns the Transferor
shall have 10 Business Days, to replace that Person with another independent
director.
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(f) PAYMENT OF TAXES, ETC. The Transferor will pay promptly
when due all taxes, assessments and governmental charges or levies imposed upon
it or any Trust Asset, or in respect of its income or profits therefrom, and
any and all claims of any kind, except that no such amount need be paid if (i)
such non-payment could not subject any Indemnified Party to civil or criminal
penalty or liability or involve any risk of the sale, forfeiture or loss of any
of the property, rights or interest covered hereunder or under the Receivables
Purchase Agreement, (ii) the charge or levy is being contested in good faith
and by proper proceedings and (iii) the obligation to pay such amount is
adequately reserved against in accordance with and to the extent required by
generally accepted accounting principles.
(g) REPORTING REQUIREMENTS. The Transferor will:
(i) within one Business Day after a Responsible Officer
becomes aware of the occurrence of any Early Amortization Event, any
Set-Aside Period and each event which, with the giving of notice or
lapse of time or both, would constitute an Early Amortization Event,
notify the Trustee and each Rating Agency of such occurrence;
(ii) as soon as possible and in any event (A) within
three Business Days after a Responsible Officer becomes aware of the
occurrence of each Early Amortization Event, any Set-Aside Period, and
each event which, with the giving of notice or lapse of time or both,
would constitute an Early Amortization Event, furnish to the Trustee
and each Rating Agency the statement of the chief administrative and
credit officer or other Responsible Officer of the Transferor setting
forth details of such Early Amortization Event, Set-Aside Period or
event and the action which the Transferor has taken and proposes to
take with respect thereto, and (B) within three Business Days after
the occurrence thereof, notify the Trustee of any other event,
development or information which is reasonably likely to materially
and adversely affect the ability of the Transferor to perform its
obligations under this Agreement or the Receivable Purchase Agreement;
(iii) as soon as practicable and in any event within 60
days after the end of each of the first three quarters of each fiscal
year of the Transferor, furnish to the Trustee a balance sheet of the
Transferor as of the end of such quarter, and the related revenue and
expense statements for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, all of
the foregoing to be certified by a Responsible Officer of the
Transferor and prepared in accordance with generally accepted
accounting principles;
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(iv) as soon as practicable and in any event within 120
days after the end of each fiscal year of the Transferor, furnish to
the Trustee and each Rating Agency a balance sheet of the Transferor
as of the end of such fiscal year, and the related revenue and expense
statements for such fiscal year, all of the foregoing to be certified
by a Responsible Officer of the Transferor and prepared in accordance
with generally accepted accounting principles;
(v) promptly, from time to time, furnish to the
Trustee such other information, documents, records or reports
respecting the Receivables, the other Trust Assets or the condition or
operations, financial or otherwise, of the Transferor as the Trustee
may from time to time reasonably request.
(h) RECEIVABLES PURCHASE AGREEMENT. The Transferor will at
its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce its rights under the Receivables Purchase
Agreement substantially in accordance with its terms and comply with its
obligations under Contracts and invoices giving rise to Receivables.
(i) UCC OPINION. On or before September 30 of each calendar
year, beginning with September 30, 1997, the Transferor shall deliver to the
Trustee and each Rating Agency an Opinion of Counsel to the effect that no
financing statements or continuation statements, other than those currently
filed, are necessary to be filed by the Transferor or the Servicers in order to
fully preserve and protect the perfected security or ownership interest of the
Trustee, Transferor or any of the Certificateholders hereunder in and to the
Receivables or describing such filings as may be necessary.
(j) RATING MAINTENANCE. For so long as the Investor
Certificates of any Series are outstanding, the Transferor shall use all
reasonable efforts to cause each Rating Agency to maintain its rating of the
Investor Certificates of each such Series; PROVIDED, HOWEVER, that such efforts
shall not require the Transferor to adversely affect its economic position.
(k) ERISA. The Transferor shall promptly give the Trustee
and each Rating Agency notice of the following events, as soon as possible and
in any event within 30 days after the Transferor or any of its ERISA Affiliates
knows or has reason to know thereof: (i) the occurrence or expected occurrence
of any Reportable Event with respect to any Plan to which the Transferor or any
of its ERISA Affiliates contributed, or any withdrawal from,
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or the termination, reorganization or insolvency of any Multiemployer Plan to
which the Transferor or any of its ERISA Affiliates contributes or to which
contributions have been required to be made by the Transferor or such ERISA
Affiliate or (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Transferor or any of its ERISA Affiliates or any such
Multiemployer Plan with respect to the withdrawal from, or the termination,
reorganization or insolvency of, any such Plan or Multiemployer Plan. The
Transferor shall give the Trustee and each Rating Agency notice, as soon as
possible and in any event within 10 days after the Transferor or any of its
ERISA Affiliates knows or has reason to know thereof, of any filing of any Lien
by the PBGC against the assets of either Originator, the Transferor or any of
their ERISA Affiliates.
(l) COLLECTIONS. On each Business Day that the Transferor or
any Affiliate thereof receives any Collections, the Transferor agrees to hold,
or cause such Affiliate to hold, all such Collections in trust and, in the case
of Collections remitted directly to the Transferor or any Affiliate by the
applicable Obligor, to deposit, or cause such Affiliate to deposit, such
Collections, in kind and in the form received, to the appropriate Collection
Account as soon as practicable, but in no event later than the next succeeding
Business Day.
SECTION 2.06. NEGATIVE COVENANTS OF THE TRANSFEROR. The
Transferor hereby further covenants that, until the termination of the Trust:
(a) NO SALES, LIENS, ETC.. Except for the Transfer hereunder
and the security interest granted pursuant to SECTION 2.01(b), the Transferor
will not sell, pledge, assign or transfer any Transferor Receivable or any
interest therein or any other Trust Asset to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on, any Trust Asset or any
other property or asset of the Transferor (other than the Transferor Revolving
Certificate and funds deposited to the Transferor's Account pursuant to the
applicable Supplement or the Transferor Revolving Certificate), whether now
existing or hereafter created, or any interest therein, and the Transferor
shall defend the right, title and interest of the Trust in and to the Trust
Assets, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Transferor. The Transferor shall not
pledge or transfer the Transferor Revolving Certificate unless it has delivered
to the Trustee and each Rating Agency a Tax Opinion with respect to such
transfer or pledge and except as permitted under SECTION 2.06(k) In connection
with any such pledge or transfer of the Transferor Revolving Certificate, the
Transferor shall, unless the transferee otherwise consents, deliver to such
transferee an opinion that the transferee's interest in the Transferor
Revolving Certificate will be properly characterized as debt of the Transferor.
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(b) ACTIVITIES OF THE TRANSFEROR. The Transferor will not
engage in, enter into or be a party to any business, activity or transaction of
any kind other than the businesses, activities and transactions contemplated
and authorized by this Agreement or the Receivables Purchase Agreement or any
document related hereto or thereto or incidental to its ability to carry out
its obligations under such agreements.
(c) INDEBTEDNESS. Except as provided herein or in the
Receivables Purchase Agreement, the Transferor will not create, incur or assume
any indebtedness (other than operating expenses incurred in the performance of
or incidental to its obligations under this Agreement) or sell or transfer any
receivables to a trust or other Person which issues securities in respect of
any such receivables.
(d) GUARANTEES. Except as provided for herein, the
Transferor will not 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.
(e) INVESTMENTS. The Transferor will not make or suffer to
exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the
business or assets, or otherwise) in, any Affiliate or any other Person except
for purchases of Receivables pursuant to the terms of the Receivables Purchase
Agreement, investments in Eligible Investments in accordance with the terms of
this Agreement, and the holding of the Transferor Revolving Certificate.
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
permitted in SECTION 3.01(c), the Transferor will not extend, amend or
otherwise modify (or consent or fail to object to any such extension, amendment
or modification by an Originator), the terms of any Receivable, or amend,
modify or waive (or consent or fail to object to any such amendment,
modification or waiver by an Originator) any payment term or condition of any
invoice related thereto (other than as provided in the Credit and Collection
Policy) if the effect of such amendment, modification or waiver would impair
the collectibility or delay the payment of any then existing Receivable beyond
60 days from the date of the invoice. The Transferor will not rescind or
cancel, or permit the rescission or cancellation of, any Receivable except as
ordered by a court of competent jurisdiction or other Governmental Authority.
Notwithstanding the foregoing provisions of this SECTION 2.06(f), each of the
Transferor and the Servicers may extend, amend, modify,
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cancel or rescind (and the Transferor need not object to any such action by the
Servicer) any Diluted Receivable in connection with a valid dispute; provided,
however, that such amendment, modification, cancellation or rescission shall
not have a material adverse effect on the interests of the Certificateholders.
(g) CHANGE IN CORPORATE NAME. The Transferor will not (i)
make any change to its corporate name or principal place of business or use any
tradenames, fictitious names, assumed names or "doing business as" names
unless, prior to the effective date of any such name change, change in
principal place of business, or use, the Transferor delivers an Opinion of
Counsel, together with such financing statements (Forms UCC-1 and UCC-3)
executed by the Transferor which reflect such name change or use, together with
such other documents and instruments that the Trustee may reasonably request in
connection therewith or (ii) change its jurisdiction of formation unless the
Trustee shall have received from the Transferor (A) written notice of such
change at least 30 days prior to the effective date thereof, and (B) prior to
the effective date thereof, an Opinion of Counsel, as to such formation and the
Transferor's valid existence and good standing and as to the matters referred
to in the first sentence of SECTION 2.04(a).
(h) RECEIVABLES PURCHASE AGREEMENT. The Transferor will not
(i) cancel or terminate the Receivables Purchase Agreement or consent to or
accept any cancellation or termination thereof, (ii) amend or otherwise modify
any term or condition of the Receivables Purchase Agreement or give any
consent, waiver or approval thereunder, (iii) waive any default under or breach
of the Receivables Purchase Agreement or (iv) take any other action under the
Receivables Purchase Agreement not required by the terms thereof, to the extent
that, in each of clauses (ii) through (iv) above, such amendment, modification,
consent, waiver, approval or other action would adversely affect in any
material respect the rights or interests of the Transferor thereunder or of the
Trustee or the Investors hereunder or thereunder, unless the Rating Agency
Condition shall have been satisfied with respect thereto, and the Transferor
will not undertake any actions described in clause (ii) or (iii) above without
giving prompt written notice thereof to the Rating Agencies.
(i) ORGANIZATION. The Transferor will not amend its
certificate of incorporation or bylaws in any manner which would modify the
limitations on the Transferor's business set forth therein, or modify the
requirements that the Transferor maintain at least two independent directors or
alter the duties, powers, rights and responsibilities of such directors or
otherwise alter the provisions contained therein requiring the Transferor to
maintain its existence as a corporation separate and apart from its Affiliates,
except for such changes not adverse to the Investors
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with respect to which the Transferor has provided an Opinion of Counsel, which
counsel is not an employee of Centerior or any of its Affiliates, relating to
the continued separated existence of the Transferor, and will not otherwise
amend its certificate of incorporation or bylaws in any manner which would be
materially adverse to the Investors.
(j) MAINTENANCE OF SEPARATE EXISTENCE. The Transferor will
not (i) fail to do all things necessary to maintain its existence as a
corporation separate and apart from Centerior, each Originator and any other
Affiliate of the Originators or of the Transferor including, without
limitation, conducting business correspondence in its own name, holding regular
meetings of, or obtaining regular written consents from, its shareholders and
Board of Directors and maintaining appropriate books and records; (ii) suffer
any limitation on the authority of its own directors and officers to conduct
its business and affairs in accordance with their independent business
judgment, or authorize or suffer any Person other than its own directors and
officers to act on its behalf with respect to matters (other than matters
customarily delegated to others under powers of attorney) for which a
corporation's own directors and officers would customarily be responsible;
(iii) fail to (A) maintain, or cause to be maintained by an agent of the
Transferor under the Transferor's control, physical possession of all its books
and records, (B) maintain capitalization adequate for the conduct of its
business, (C) account for and manage its liabilities separately from those of
any other Person, including, without limitation, payment of all payroll and
other administrative expenses and taxes from its own assets, (D) segregate and
identify separately all of its assets from those of any other Person, and (E)
maintain offices through which its business is conducted separate from those of
its Affiliates (provided that, to the extent that the Transferor and any of its
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs and expenses among them, and each such
entity shall bear its fair share of such expenses); or (iv) fail to take any
actions required on its part or fail to cause any Affiliates to take any action
required on their part to prevent the commingling of its funds with those of
any of its Affiliates, or use its funds for other than the Transferor's uses.
(k) OWNERSHIP; MERGER. The Transferor will not (i) sell any
shares of any class of its capital stock to any Person (other than the
Originators, Centerior or any wholly-owned Subsidiary of Centerior), or enter
into any transaction of merger or consolidation, or convey or otherwise dispose
of all or substantially all of its assets (except as contemplated herein)
PROVIDED, that the Transferor shall not be prohibited from transferring or
pledging the Transferor Revolving Certificate in connection with (x) any
issuance of any Series or (y) any other transaction
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involving the Transferor which is not otherwise prohibited under this Agreement
and with respect to which the Transferor has given prior written notice to the
Rating Agencies and has delivered both a Tax Opinion and an Opinion of Counsel,
which counsel is not an employee of Centerior or any of its Affiliates,
relating to the continued separate corporate existence of the Transferor, or
(ii) terminate, liquidate or dissolve itself (or suffer any termination,
liquidation or dissolution), or (iii) acquire or be acquired by any Person,
(except indirectly in connection with a consolidation, merger or transfer of
stock of either Originator to the extent such consolidation or merger is
permitted under the Receivables Purchase Agreement), in connection with which
the Trustee shall have received an Opinion of Counsel, which counsel is not an
employee of Centerior or any of its Affiliates, relating to the continued
separate corporate existence of the Transferor.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. ACCEPTANCE OF APPOINTMENT AND OTHER MATTERS
RELATING TO THE SERVICERS. (a) Each of CEI and TE agrees to act as a Servicer
and CEI as Servicer agrees to perform the duties of Master Servicer for the
benefit of the Certificateholders under this Agreement until appointment of a
Successor Servicer under ARTICLE X, and each Certificateholder by its
acceptance of its Certificates consents to each of CEI and TE so acting as
Servicers. Each Servicer hereby disclaims all right, title and interest in and
to the Transferor Receivables and the proceeds thereof, except for the payment
of its fees and expenses hereunder.
(b) Each Servicer shall (subject to ARTICLE X) enforce
the Transferor's respective rights and interests in, to and under the
Transferor Receivables and the Trust Assets on behalf of the Trust; PROVIDED
that, so long as CEI and TE remain separate corporate entities, and except as
otherwise provided herein with respect to CEI's duties as Master Servicer CEI's
duties as Servicer hereunder shall extend only to those Transferor Receivables
originated by it and any Trust Assets related thereto and TE's duties as
Servicer shall extend only to those Transferor Receivables originated by it and
any Trust Assets related thereto. Subject to the foregoing proviso, the
Servicers, on behalf of the Trustee, shall service, administer and collect the
Transferor Receivables and, in connection therewith, each Servicer shall take
or cause to be taken all such actions as may be necessary or advisable to
attempt to collect each Transferor Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy
applicable to such Transferor Receivable, except where such failure to conform
or comply would
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not be likely to materially adversely affect the rights of the Investors.
(c) Provided no Servicer Default shall have occurred and
be continuing, each Servicer may, in accordance with the applicable Credit and
Collection Policy, extend the maturity, adjust the Outstanding Balance, or
amend, modify or waive the terms of any Defaulted Receivable or amend, modify
or waive any payment term or condition of any invoice related thereto, or
otherwise modify any past-due Receivable in accordance with the Deferred
Arrangement Payment Plan, all as it may determine to be appropriate to maximize
Collections thereof.
(d) Each Servicer shall have full power and authority,
acting alone or through any party properly designated by it hereunder, to do
any and all things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the generality of the
foregoing and subject to SECTION 10.01, (i) the Master Servicer or its designee
is hereby authorized and empowered to instruct the Trustee to make withdrawals
and payments from the Trust Accounts, subject to the limitations set forth in
SECTION 4.02 and as otherwise set forth in this Agreement and to instruct the
Trustee to take any action required or permitted under any Enhancement
Agreement and (ii) each Servicer or its designee is hereby authorized and
empowered (x) to make any filings, reports, notices, applications and
registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or advisable to comply with any Federal or
state securities laws or reporting requirements, and (y) to subcontract with or
delegate to any other Person (at such Servicer's expense) for servicing,
administering or collecting the Receivables, PROVIDED that the Servicers shall
give each Rating Agency notice of any such subcontracting and such other Person
shall not become a Servicer hereunder and the subcontracting or delegating
Servicer shall remain liable for the performance of its duties and obligations
as a Servicer pursuant to the terms hereof. Each subservicing agreement will
be upon such terms and conditions as are not inconsistent with this Agreement
and the standard of care set forth herein. All compensation payable to a
subservicer under any subservicing agreement shall be payable by the applicable
Servicer from the Servicing Fee received by it or otherwise from its own funds,
and none of the Trust, the Trustee or the Certificateholders shall have any
obligations, duties or liabilities of any kind whatsoever under any such
subservicing agreements. Upon the written request of either Servicer and
receipt of an Officer's Certificate setting forth the facts underlying such
request, the Trustee shall execute any documents furnished by such Servicer
which are necessary or appropriate to enable such Servicer to carry out its
servicing and administrative duties hereunder and acceptable in form and
substance to the
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Trustee and shall furnish such Servicer with any documents then in the
Trustee's possession which are necessary or appropriate to enable such Servicer
to carry out its servicing and administrative duties hereunder.
(e) The relationship of each Servicer (including any
Successor Servicer) to the Trustee under this Agreement is intended by the
parties to be that of an independent contractor to or with the Trust and shall
not be construed to be that of a joint venturer, partner, or agent, such that
the acts of the Servicers are in any way vicariously attributable to the
Trustee in its individual capacity prior to such time as the Trustee may serve
as Servicer pursuant to the provisions of ARTICLE X.
SECTION 3.02. SERVICING COMPENSATION; SERVICERS' EXPENSES.
(a) COMPENSATION. As full compensation for its servicing
activities hereunder, each Servicer shall be entitled to receive a monthly
servicing fee (the "SERVICING FEE") for each Collection Period (or portion
thereof) from the initial Closing Date until the termination of the
Amortization Period, payable in arrears on the Distribution Date with respect
to such Collection Period (or portion), in an amount equal to a per annum fee
of 1% (calculated on the basis of a 360-day year of twelve 30-day months) TIMES
the aggregate outstanding Receivables being serviced by such Servicer as of the
beginning of such Collection Period; the Servicing Fee for any Servicer other
than the Originators or an Affiliate thereof may be a greater amount but not
exceeding the lesser of (x) a per annum fee of 2% times the beginning monthly
balance of Receivables as described above and (y) 110% of the aggregate
reasonable costs and expenses incurred by such Servicer during such calendar
month. The Servicing Fee shall be payable only from Collections. For any
periods during which there are separate Servicers acting with respect to the
Receivables originated by separate Originators, the Servicing Fee shall be
allocated between such Servicers based on the respective dollar amounts of
Receivables that each Originator has sold to the Transferor during the relevant
Collection Period.
(b) EXPENSES. The Servicers' expenses include: first,
the Trustee's Fee (to the extent not paid from the Carrying Cost Account,
Collections or other funds on deposit in the Trust Accounts or the Transferor's
Account) and second, all documented expenses and liabilities (other than any
liability of the Trustee with respect to any amount payable solely out of
Collections or any personal liability of the Trust to repay the Certificates)
of the Trust not expressly stated herein to be for the account of the
Certificateholders, including without limitation expenses related to
enforcement of the Receivables and the other amounts due to the Trustee
pursuant to SECTION 11.05, the reasonable fees and
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disbursements of independent accountants, counsel and other fees and documented
expenses including but not limited to the costs of filing UCC continuation
statements; provided that, in no event shall any Servicer be liable for any
federal, state or local income, franchise or other tax, or any interest or
penalties with respect thereto, assessed on the Trust, the Trustee or the
Certificateholders except as expressly provided herein. Such expenses shall be
payable, FIRST, from the Servicing Fee, and, SECOND, to the extent not paid
from the Servicing Fee, by the Transferor for its own account (subject to the
limitations set forth below). In addition, to the extent not paid from the
Servicing Fee, the Transferor shall pay for its own account, and, if the
Transferor fails to do so, the Servicers will pay, all fees and expenses
incurred by or on behalf of the Servicers in connection with their servicing
activities hereunder (including without limitation expenses related to
enforcement of the Receivables, the costs of a Service Transfer and expenses
otherwise relating to a Servicer Default), and the Servicers will not be
entitled to any fee or other payment from, or claim on, any of the Trust Assets
(other than the Servicing Fee and reimbursement from the Transferor). The
Transferor's and Servicers' covenant to pay the expenses and disbursements
provided for in this SECTION 3.02(b) shall survive the termination of this
Agreement. Any payments from the Transferor under this SECTION 3.02(b) shall
be made solely from funds available to make such payments after all other
allocations and/or payments to be made for the benefit of the Investors
pursuant to SECTION 4.03(b) or 4.03(C), as applicable, shall have been made,
and there shall be no other recourse to, and no Person shall have any Claim
against, the Transferor for the payment of all or any part of any such
obligations under this SECTION 3.02(b).
SECTION 3.03. REPRESENTATIONS AND WARRANTIES OF THE
SERVICERS. Each of CEI and TE, as an initial Servicer, hereby makes, and each
successor Servicer by acceptance of its appointment hereunder shall make, the
following representations and warranties, in the case of the initial Servicers,
as of the date hereof and as of the date of the initial Transfer of Receivables
and with respect to any Series as of the date of any Supplement and the related
Closing Date or, in the case of any Successor Servicer, the date of such
appointment and, with respect to any Series issued after such date, as of the
date of the related Supplement and the related Closing Date, in each case
unless otherwise stated in such Supplement:
(a) ORGANIZATION AND GOOD STANDING. Such Servicer is a
corporation or national banking association duly organized, validly existing
and in good standing under the applicable laws of its jurisdiction of
organization or incorporation and has, in all material respects, full corporate
power and authority to own its properties and conduct its business including
its receivables servicing business as such properties are presently owned and
as
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such business is presently conducted and as is proposed to be conducted under
this Agreement and the Receivables Purchase Agreement, and to execute, deliver
and perform its obligations under this Agreement and the applicable Supplement.
(b) DUE QUALIFICATION. Such Servicer is duly qualified
to do business and is in good standing as a foreign corporation (or is exempt
from such requirements), and has obtained all necessary licenses and approvals,
in each jurisdiction in which the servicing of the Receivables in accordance
with the terms of this Agreement and any Supplement requires such
qualification, except where failure to so qualify or to obtain such licenses or
approvals would not have a material adverse effect on its ability to perform
its obligations as Servicer under this Agreement and the applicable Supplement.
(c) DUE AUTHORIZATION. Such Servicer's execution,
delivery and performance of this Agreement and the applicable Supplement and
the other agreements and instruments executed or to be executed by such
Servicer as contemplated hereby have been duly authorized by all necessary
corporate action on the part of such Servicer.
(d) ENFORCEABILITY. Each of this Agreement and the
applicable Supplement constitutes a legal, valid and binding obligation of such
Servicer enforceable against it in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws now and hereafter in effect
affecting 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).
(e) NO CONFLICT. Such Servicer's execution and delivery
of this Agreement, performance of the transactions contemplated by this
Agreement and the applicable Supplement, and fulfillment of the terms hereof
and thereof applicable to such Servicer, do not conflict with or violate in any
material respects any material Requirements of Law applicable to such Servicer,
or conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both)
a default under, any material indenture, contract, agreement, mortgage, deed of
trust or other instrument to which such Servicer is a party or by which it or
its properties are bound in any manner which is likely to have a material
adverse effect on the Transferor's financial condition or operations or the
Trust Assets or such Servicer's ability to perform its obligations hereunder,
under the Receivables Purchase Agreement and each applicable Supplement.
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(f) NO PROCEEDINGS. There are no proceedings or, to the
best knowledge of such Servicer, investigations pending or threatened against
it before any Governmental Authority (i) asserting the illegality, invalidity
or unenforceability or seeking any determination or ruling that would affect
the legality, binding effect, validity or enforceability, of this Agreement and
the applicable Supplement, or (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement and the applicable
Supplement, or (iii) seeking any determination or ruling that is likely to have
a material and adverse effect on the performance by such Servicer of its
obligations under this Agreement and the applicable Supplement.
(g) CONSENTS. No authorization, consent, license, order or
approval of or registration or declaration with any Governmental Authority is
required to be obtained, effected or given by such Servicer in connection with
the execution and delivery of this Agreement and the applicable Supplement by
such Servicer or the performance of its obligations hereunder and thereunder
except where the failure to obtain such authorization, consent, license, order
or approval is not likely to have a material adverse effect on the performance
by such Servicer of its obligations under the Agreement and the applicable
supplement.
(h) COLLECTION ACCOUNTS. The names, addresses and ABA
numbers of all the Collection Account Banks, together with the account numbers
of the Collection Accounts and the name of a contact person at such Collection
Account Bank, are specified in Schedule I hereto as of the initial Closing
Date. Also specified in Schedule I hereto are the name, address and ABA
numbers of the Concentration Account Bank, together with the account number and
the name of a contact person for the Concentration Account as of the initial
Closing Date.
(i) PAYMENT INSTRUCTIONS. The Transferor has instructed (or
has caused the Servicers to instruct) all Obligors to make all payments (either
directly or indirectly through one or more banks, agents, or third-parties) on
the Receivables (i) to a Servicer Collection Account, (ii) to a Transferor
Collection Account or (iii) to the appropriate offices of the Servicers where
the receiving employees have been instructed not to deposit such payments into
any account except for a Transferor Collection Account.
(j) DAILY REPORTS AND DETERMINATION DATE CERTIFICATES. Each
Daily Report and Determination Date Certificate delivered by such Servicer
pursuant to this Agreement (and any information delivered by such Servicer to
the Master Servicer for purposes of preparing such documents) shall be true and
correct in all material respects as of the date such report or certificate is
delivered.
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(k) SERVICER DEFAULT. No Servicer Default with respect to
such Servicer has occurred or is continuing.
The representations and warranties set forth in this SECTION
3.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon a discovery by the
Transferor, any Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties. The Trustee's
obligations in respect of any such breach are limited as provided in SECTION
11.02(g).
SECTION 3.04. COVENANTS OF THE SERVICERS. Each Servicer
hereby covenants that, until the termination of the Amortization Period:
(a) CHANGE IN ACCOUNTS. Such Servicer will not (i) terminate
and substitute any Concentration Account (or make any change in its
instructions to Collection Account Banks regarding payments to be made to the
Concentration Account) except as required pursuant to SECTION 4.02 or any
Series Account except as required pursuant to the applicable Supplement or (ii)
add or terminate any institution as a Collection Account Bank from those listed
in SCHEDULE I hereto, except as otherwise permitted pursuant to SECTION 4.02 or
unless the Trustee shall have received written notice of such addition,
termination or change and executed copies of Collection Account Notices to each
new Collection Account Bank.
(b) COLLECTIONS. On each Business Day that such Servicer or
any Affiliate thereof receives any Collections, such Servicer agrees to hold,
or cause such Affiliate to hold, all such Collections in trust and, in the case
of Collections remitted directly to such Servicer or any Affiliate by the
applicable Obligor, to deposit, or cause such Affiliate to deposit, such
Collections, in kind and in the form received, to the appropriate Collection
Account as soon as practicable, but in no event later than the next succeeding
Business Day.
(c) COMPLIANCE WITH CONTRACTS AND REQUIREMENTS OF LAW. Such
Servicer will duly satisfy in all material respects all obligations on its part
to be fulfilled under or in connection with each Receivable and the related
Contracts, will maintain in effect all qualifications required under
Requirements of Law in order to service each Receivable and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable, in each case except where the failure to perform
such obligations or maintain such qualifications would not be substantially
likely to have a material adverse effect on any Investors.
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(d) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as
permitted by SECTION 3.01(c), such Servicer will not extend, amend or otherwise
modify (or consent or fail to object to any such extension, amendment or
modification by an Originator or the Transferor) the terms of any then existing
Receivable, or amend, modify or waive (or consent or fail to object to any such
amendment, modification or waiver by an Originator or the Transferor) any
payment term or condition of any invoice related thereto if the effect of any
such amendment, modification or waiver would impair the collectibility or delay
the payment of any Receivable beyond 60 days from date of invoice. Such
Servicer will not rescind or cancel, or permit the rescission or cancellation
of, any Receivable except as ordered by a court of competent jurisdiction or
other Governmental Authority. Notwithstanding the foregoing provisions of this
SECTION 3.04(d), each Servicer and each Originator may extend, amend, modify,
cancel or rescind (and no Servicer need object to any such action by an
Originator) any Diluted Receivable in connection with a valid dispute;
provided, however, that such amendment, modification, cancellation or
rescission shall not have a material adverse effect on the interests of the
Certificateholders.
(e) PROTECTION OF CERTIFICATEHOLDERS' RIGHTS. Except as
authorized by this Agreement and the applicable Supplement, such Servicer will
take no action which would impair the rights of Certificateholders in any
Receivable or Trust Asset.
(f) DEPOSITS TO CONCENTRATION ACCOUNT, ANY SERIES ACCOUNT OR
ANY COLLECTION ACCOUNT. Such Servicer will not deposit or otherwise credit, or
cause to be so deposited or credited, or consent or fail to object to any such
deposit or credit, to the Concentration Account, any Collection Account or any
Series Account cash or cash proceeds other than Collections, Cure Funds or
other funds constituting Trust Assets.
(g) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES.
Such Servicer will take no action to cause any Receivable to be evidenced by
any "instrument" (as defined in the UCC of the jurisdiction whose law governs
the perfection of the interest in such Receivable created hereunder), except in
connection with its enforcement, in which event the Transferor shall deliver
such instrument to the Trustee as soon as reasonably practicable but in no
event more than three Business Days after execution thereof.
(h) REPORTING REQUIREMENTS. Such Servicer will (or will
cause the other Servicer to) furnish to the Trustee and (in the case of clauses
(i), (ii)(A) and (iv) below) to each Rating Agency:
(i) within one Business Day after a Responsible
Officer becomes aware of the occurrence of a Servicer Default,
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any Early Amortization Event, the commencement of a Set-Aside Period
and each event which, with the giving of notice or lapse of time or
both, would constitute an Early Amortization Event, notification of
such occurrence;
(ii) as soon as possible and in any event (A)
within three Business Days after a Responsible Officer becomes aware
of the occurrence of a Servicer Default, any Early Amortization Event,
any Set-Aside Period, and each event which with the giving of notice
of lapse of time or both, would constitute a Servicer Default or an
Early Amortization Event, the statement of the chief financial officer
or chief accounting officer or other Responsible Officer setting forth
details of such Servicer Default or Early Amortization Event or
Set-Aside Period or other event and the action which such Servicer has
taken and proposes to take with respect thereto, and (B) within three
Business Days after the occurrence thereof, notice of any other event,
development or information which is likely to materially and adversely
affect the ability of such Servicer to perform its obligations under
this Agreement;
(iii) as soon as practicable and in any event within 60
days after the end of each of the first three quarters of each fiscal
year of such Servicer, copies of a balance sheet of the Servicer as of
the end of such quarter, and the related revenue and expense
statements and statements of cash flows each for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, all of the foregoing to be certified by a Responsible Officer
of the Servicer and prepared in accordance with generally accepted
accounting principles; PROVIDED, that, so long as such Servicer (or
its parent corporation) is subject to the information reporting
requirements of the Securities Exchange Act of 1934, delivery of such
Servicer's (or such parent corporation's) 10-Q as filed with the
Securities and Exchange Commission shall satisfy the requirements of
this clause (iii);
(iv) as soon as practicable and in any event within 120
days after the end of each fiscal year of each Servicer, a balance
sheet of the Servicer as of the end of such fiscal year, and the
related revenue and expense statements and statements of cash flows
for such fiscal year, all of the foregoing to be certified by a
Responsible Officer of the Servicer and prepared in accordance with
generally accepted accounting principles; PROVIDED, that, so long as
such Servicer (or its parent corporation) is subject to the
information reporting requirements of the Securities Exchange Act of
1934, delivery of such Servicer's (or such parent corporation's) 10-K
as filed with the Securities and Exchange
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Commission shall satisfy the requirements of this clause (iv);
(v) promptly, from time to time, such other
information, documents, records or reports within its possession
respecting the Receivables, the other Trust Assets or the condition or
operations, financial or otherwise, of the Servicers as the Trustee
may from time to time reasonably request.
Each Servicer shall provide to the Trustee access to the
documentation regarding the Receivables serviced by it in such cases where the
Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to such
Servicer's normal security and confidentiality procedures and (iv) at
reasonably accessible offices in the continental United States designated by
such Servicer.
(i) FILING OF CONTINUATION STATEMENTS. Each Servicer shall
prepare and file such continuation statements and any other documents
reasonably requested by the Trustee or the Transferor or which may otherwise be
required by law to fully preserve and protect the interest of the Trustee,
Transferor or any of the Certificateholders hereunder in and to the
Receivables. The Trustee shall be under no obligation whatsoever to file (or
to request the filing of) such continuation statements or other documents.
(j) COMPLIANCE WITH AND CHANGE IN CREDIT AND COLLECTION
POLICY. Each Servicer shall comply with and perform its servicing obligations
with respect to the Receivables in accordance with the applicable Credit and
Collection Policy, except insofar as any failure to so comply or perform would
not adversely affect the Certificateholders in any material respect. Subject
to compliance with all Requirements of Law, the Transferor or the Servicers, as
applicable, will not change the terms and provisions of the Credit and
Collection Policy in any manner which would both impair the collectibility of
any Receivable and have a material adverse effect on the Investors. The
Transferor and/or the Servicers on its behalf shall give each Rating Agency
prior written notice of any changes in the Credit and Collection Policy.
(k) CHANGE IN CORPORATE NAME. Such Servicer will not (i) (if
such Servicer is also an Originator) make any change to its corporate name or
principal place of business or use any tradenames, fictitious names, assumed
names or "doing business as" names for such company's business operations
unless, within 30 days after the effective date of any such name change, change
in principal place of business, or use, such Servicer delivers to the
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Trustee such financing statements (Forms UCC-1 and UCC-3) executed by it which
the Trustee may reasonably request to reflect such name change, change in place
of business or use, together with such other documents and instruments that the
Trustee may reasonably request in connection therewith or (ii) change its
jurisdiction of incorporation unless the Trustee shall have received from such
Servicer (A) written notice of such change within 30 days after the effective
date thereof, and (B) on or prior to such 30th day after the effective date, an
Opinion of Counsel, as to such incorporation and such Servicer's valid
existence and good standing and as to the matters referred to in the first
sentence of SECTION 2.04(a); PROVIDED that no such Opinion of Counsel need be
given in connection with a merger of TE with and into CEI or CEI with and into
TE so long as CEI or TE, as applicable, is the surviving corporation.
(l) RECEIVABLES PURCHASE AGREEMENT. Such Servicer will at
its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce its rights under the Receivables Purchase
Agreement in accordance with its terms, and make to any party to the
Receivables Purchase Agreement, upon the Trustee's request, such reasonable
demands and requests for information and reports or for action as such Servicer
is entitled to make thereunder.
(m) APPLICATION OF RECEIVABLES. With respect to each
Business Day, such Servicer shall either (i) apply all Collections received in
the Collection Accounts on such day to the related Receivables balances on the
records of such Servicer prior to the preparation of the Daily Report on the
immediately following Business Day or (ii) subtract such unapplied Collections
from the Net Receivables Balance (as contemplated by the definition thereof) to
be reported in such Daily Report.
SECTION 3.05. REPORTS AND RECORDS FOR THE TRUSTEE. (a)
DAILY RECORDS. On each Business Day, the Master Servicer shall provide by
telecopy to the Trustee, the Transferor and the Paying Agent, and upon request
to any Enhancement Provider, a report (the "DAILY REPORT") substantially in the
form of EXHIBIT B hereto (as the same may be supplemented in accordance with
the terms of any Supplement) or in such similar form as may be reasonably
acceptable to the Trustee, the Paying Agent, the Transferor and the Master
Servicer. Such Daily Report shall set forth, among other things, (i) the
Collections in respect of the Receivables processed by the Servicers on the
immediately preceding Business Day, (ii) the amount of Eligible Receivables as
of the close of business on the immediately preceding Business Day, (iii) the
Net Receivables Balance, Base Amount and Floating Allocation Percentage at the
close of business on the immediately preceding Business Day and
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(iv) if the Transferor or the Master Servicer has requested the Invested Amount
of any Variable Funding Certificate to be increased on the day of delivery of
such report, the Net Invested Amount and Floating Allocation Percentage after
giving effect to any such increases.
(b) DETERMINATION DATE CERTIFICATE. On or before each
Determination Date with respect to each outstanding Series, the Master Servicer
shall deliver by telecopy to the Trustee, the Transferor and the Paying Agent,
with a copy delivered by telecopy or mail to each Rating Agency and to each
Clearing Agency (or, in the case of the initial Clearing Agency, Cede & Co. as
its nominee), a certificate (the "DETERMINATION DATE CERTIFICATE")
substantially in the form of EXHIBIT C hereto (as the same may be supplemented
in accordance with the terms of any Supplement) or in such similar form as may
be reasonably acceptable to the Trustee, the Paying Agent, the Transferor and
the Master Servicer. Such Determination Date Certificate shall set forth,
among other things, any changes in the applicable Certificate Rate for the
upcoming Interest Period, any payments to be made to Investors on the related
Distribution Date, such other matters as may be required by any Supplement and
(at all times prior to the Amortization Date) calculations of the Required
Reserves for each Series.
SECTION 3.06. ANNUAL CERTIFICATE OF SERVICERS. On or before
April 30 of each calendar year, beginning with April 30, 1997, the Servicers
shall deliver to the Trustee, each Rating Agency and each Enhancement Provider
an Officer's Certificate, executed by a Responsible Officer of each Servicer,
substantially in the form of EXHIBIT D hereto. A copy of each such certificate
will be sent to each Investor by the Trustee.
SECTION 3.07 ANNUAL SERVICING REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS. (a) On or before April 30 of each calendar year, beginning with
April 30, 1997, the Servicers shall cause a firm of Independent Public
Accountants (who may also render other services to the Servicers or the
Transferor) to furnish a report (addressed to the Trustee) to the Trustee, the
Servicers, each Rating Agency and each Enhancement Provider substantially to
the effect that (i) such accountants have examined certain documents and
records relating to the servicing of Receivables under this Agreement, compared
the information contained in the Determination Date Certificates delivered
pursuant to SECTION 3.05(b) during the period covered by such report with such
documents and records and that, on the basis of such examination, and
describing what exceptions, if any, they detected between such documents and
records and such Determination Date Certificates and (ii) such accountants have
compared the mathematical calculations of certain amounts set forth in the
Determination Date Certificates delivered pursuant to SECTION 3.05(b) during
the period covered by such report with the Servicers' computer reports which
were the source
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of such amounts and describing what exceptions, if any, they detected between
the calculations set forth in such certificates and contained in the Servicers'
computer reports which were the source of such calculations.
(b) As soon as practicable and in any event within 120 days
after the close of each of its fiscal years commencing with the 1995 fiscal
year, the Transferor shall deliver to the Trustee and each Rating Agency the
annual audited consolidated financial statements of Centerior (including
balance sheets as of the end of such period, related revenue and expense
statements, and a statement of cash flows) certified by Independent Public
Accountants and prepared in accordance with generally accepted accounting
principles. Delivery of a copy of Centerior's 10-K as filed with the
Securities and Exchange Commission shall satisfy the requirements of this
SECTION 3.07(b).
SECTION 3.08. ANNUAL INVESTORS' STATEMENT. On or before
February 15 of each calendar year, beginning with February 15, 1997, the Master
Servicer (so long as it as an Affiliate of Centerior and, following any Service
Transfer, the Transferor) shall provide to the Paying Agent and the Paying
Agent shall forward or cause to be forwarded to any Person who at any time
during the preceding calendar year was an Investor, a statement prepared by the
Master Servicer containing any information which is required to be provided
under the Internal Revenue Code by an issuer of indebtedness to the holders
thereof and such other customary information in the possession of the
Transferor or the Master Servicer as is necessary to enable the Investors to
prepare their federal income tax returns. Such obligation of the Master
Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
SECTION 3.09. TAX AND USURY TREATMENT. The Transferor has
entered into this Agreement, and the Investor Certificates have been (or will
be) issued to and acquired by the Investors, and the Transferor Revolving
Certificate has been (or will be) issued to the Transferor, with the intention
that, for federal, state, foreign and local income and franchise tax and usury
law purposes, the Investor Certificates and the Transferor Revolving
Certificate will be indebtedness of the Transferor secured by the Receivables.
The Transferor, by entering into this Agreement, and each Certificateholder, by
the acceptance of its Certificate, agree to treat the Certificates for purposes
of federal, state and local income and franchise taxes and for any other tax
imposed on or measured by income and usury law purposes as indebtedness of the
Transferor. In accordance with the foregoing, the Transferor agrees that it
will report its income for such federal, state, foreign and local income or
franchise taxes, or for purposes of any
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other taxes on or measured by income, on the basis that it is the owner of the
Receivables. Furthermore the Trustee hereby agrees to treat the Trust as a
security device only, and shall not file tax returns or obtain an employer
identification number on behalf of the Trust (except as may be required as a
result of changes in law).
SECTION 3.10. NOTICE TO ORIGINATORS. In the event that an
Originator is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to such Originator and the Transferor each
certificate and report required to be delivered thereafter pursuant to SECTIONS
3.05(b), 3.06 and 3.07.
SECTION 3.11. ADJUSTMENTS. If either Servicer makes a
mistake with respect to the amount of any Collection and deposits or pays an
amount that is less than or more than the actual amount of such Collection,
such Servicer shall, promptly upon discovery thereof, appropriately adjust the
amount subsequently deposited into the Concentration Account or paid to reflect
such mistake and send written notice thereof to the Trustee. Any Receivable in
respect of which a dishonored check is received shall be deemed not to have
been paid.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. RIGHTS OF CERTIFICATEHOLDERS. (a) The
Investor Certificates shall represent fractional undivided beneficial interests
in the Trust (with respect to each Series, the "INVESTORS' INTEREST"), which
shall consist of the right to receive, to the extent necessary to make the
required payments with respect to the Investor Certificates of such Series at
the times and in the amounts specified in the related Supplement, the portion
of Collections allocable to Investors of such Series pursuant to this Agreement
and the related Supplement from funds on deposit in the Concentration Account
and the Reserve Account allocable to Investors of such Series and funds on
deposit in any related Series Account and funds available pursuant to any
related Enhancement (collectively with respect to all Series, the "AGGREGATE
INVESTORS' INTEREST"), it being understood that the Investor Certificates of
any Series or Class shall not represent any interest in any Series Account or
Enhancement for the benefit of any other Series or Class. The Transferor
Revolving Certificate shall represent the fractional undivided beneficial
interest (such interest, the "TRANSFEROR INTEREST") in the remainder of the
Trust Assets not allocated pursuant to this Agreement or any Supplement to the
Aggregate Investors' Interest and shall evidence the right of the Transferor to
receive the Transferor Percentage of Collections with
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respect to the Receivables and other amounts at the times and in the amounts
specified in this Agreement or in any Supplement until the amounts allocated to
the Transferor Revolving Certificate shall have been paid in full. The
Transferor Interest shall not include any interest in the Concentration
Account, the Reserve Account, any Series Account or any Enhancement, except as
specifically provided in this Agreement or any Supplement.
(b) The Floating Allocation Percentage, which is the
percentage that determines the portion of the Aggregate Investors' Interest
allocable to such Series, and the Transferor Percentage, which is the
percentage that determines the Transferor Interest, shall be initially computed
by the Master Servicer as of the opening of business of the Master Servicer on
the initial Closing Date. Thereafter until the commencement of the
Amortization Period, the Floating Allocation Percentage for each Series and the
Transferor Percentage, and through the recomputations thereof the Investors'
Interest for each Series and the Transferor Interest, shall be automatically
recomputed by the Master Servicer as of the close of business of the Master
Servicer on each Business Day. Each of the Investors' Interests, the Floating
Allocation Percentage, the Transferor Interest and the Transferor Percentage
(i) shall remain constant from the time as of which any such computation or
recomputation is made until the times as of which the next such recomputation,
if any, shall be made and (ii) as computed as of the close of business of the
Master Servicer on the Business Day immediately preceding the commencement of
the Amortization Period, shall remain constant at all times during the
Amortization Period.
(c) The purchase price (the "ASSET TRANSFER PRICE") to be
paid to the Transferor for the Aggregate Investors' Interest at any point in
time on or prior to the Amortization Date shall equal the Floating Allocation
Percentage TIMES the aggregate Outstanding Balance of the Receivables included
in the Trust Assets at such time; PROVIDED that the Investors shall have no
obligation to make any payments in excess of their initial Invested Amounts
except (i) to the extent specified in the related Supplement and (ii) to the
extent such excess payments are, pursuant to the Transferor's "Deferred Payment
Right" (as defined below), paid solely out of the Aggregate Investors' Interest
in the Receivables after the Aggregate Invested Amount has been reduced to zero
and all other required payments with respect to the Investor Certificates, as
provided in the applicable Supplements, shall have been paid. To the extent
that the Asset Transfer Price exceeds the Aggregate Invested Amount, the
Transferor shall be entitled to receive such excess as deferred payment (the
"DEFERRED PAYMENT RIGHT") from the Investors in consideration of their
acquisition of the Investors' Interest. It is expressly understood and agreed
that the Deferred Payment Right shall be payable solely from the Aggregate
Investors' Interest in the Trust Assets and that none of the Investors, the
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Trustee nor any Enhancement Provider shall have any personal liability
therefor. The Deferred Payment Right shall be initially computed by the Master
Servicer as of the opening of business of the Master Servicer on the initial
Closing Date and shall thereafter be automatically recomputed by the Master
Servicer on each Business Day concurrently with the recomputation of the
Investors' Interests under SECTION 4.01(b).
SECTION 4.02. ESTABLISHMENT OF COLLECTION ACCOUNTS,
CONCENTRATION ACCOUNT AND OTHER TRUST ACCOUNTS. (a) On or prior to the
initial Closing Date, the Master Servicer, for the benefit of the
Certificateholders, shall establish and maintain or cause to be established and
maintained with the Trustee, in the name of the Trustee on behalf of the Trust,
the Concentration Account, the Reserve Account and the Carrying Cost Account
described below in this SECTION 4.02 accessible by the Trustee and, subject to
the limitations set forth in this SECTION 4.02, the Master Servicer, each such
account bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. Any other Trust
Accounts established from time to time shall be similarly established and
maintained with the Trustee or any Eligible Institution and shall also bear a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Trustee shall possess all right,
title and interest in and to all funds from time to time on deposit in the
Concentration Account, the Reserve Account and all other Trust Accounts and in
all proceeds thereof. Each Trust Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders. Except as
expressly provided in this Agreement, each Servicer agrees that it shall have
no right of setoff or banker's lien against, and no right to otherwise deduct
from, any funds held in the Trust Accounts for any amount owed to it by the
Trustee, the Trust or any Certificateholder. Each Servicer shall (i) from time
to time, instruct each Collection Account Bank at which a Servicer Collection
Account is kept to transfer all Collections on deposit in such account to a
Transferor Collection Account and (ii) on each Business Day, deposit, or cause
to be deposited, all other Collections (including all available funds on
deposit in the Transferor Collection Accounts) into a segregated Trust Account
(such Trust Account, the "CONCENTRATION ACCOUNT" and the institution holding
such account being the "CONCENTRATION ACCOUNT BANK"). No Servicer shall make,
or cause to be made, any withdrawal of any funds on deposit in a Servicer
Collection Account except for a transfer of such funds to a Transferor
Collection Account. In no event shall any Servicer permit the aggregate amount
of Collections on deposit at any Collection Account Bank at which a Servicer
Collection Account is kept to exceed [$100,000] at any one time. In addition,
on or prior to the initial Closing Date, the Concentration Account Bank shall
set up (i) an administrative sub-account of the Concentration Account or a
separate Trust Account (such account, the "RESERVE ACCOUNT") into which funds
on deposit in the Concentration Account may be withdrawn from time to time as
described in this ARTICLE IV; (ii) an administrative sub-account of the
Concentration Account or a separate Trust Account (such account, the "CARRYING
COST ACCOUNT" into which funds shall be set aside for the payment of Carrying
Costs as described in SECTION 4.03 and (iii) to the extent required by any
Supplement for any Series, an administrative sub-account of the Concentration
Account or a separate Trust Account meeting the requirements described above
for the benefit of the Investors of
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such Series (each, a "DEFEASANCE ACCOUNT") into which funds from the other
Trust Accounts may be deposited as described in the related Supplement.
Notwithstanding the foregoing, if and to the extent that funds that are not
Collections or other Trust Assets are deposited into the Concentration Account,
the Master Servicer may direct the Trustee to withdraw such funds from the
Trust Accounts to be returned to the appropriate Person to whom such funds
belong.
If, at any time, the institution holding any of the Trust
Accounts ceases to be an Eligible Institution, the Servicers, upon actual
knowledge thereof, for the benefit of the Certificateholders, shall within 30
Business Days (i) establish new Trust Accounts meeting the conditions
specified above with an Eligible Institution, (ii) transfer any cash and/or any
investments held therein or with respect thereto to such new Trust Accounts and
(iii) in the case of any new Concentration Account, deliver to all Collection
Account Banks new Collection Account Notices (with copies thereof to the
Trustee) referring to such new Concentration Account, and from the date such
new Concentration Account is established, it shall be the "Concentration
Account." Pursuant to the authority granted to the Servicers in SECTION 3.01,
the Master Servicer shall have the power to instruct the Trustee to make
withdrawals and payments from the Concentration Account and the Reserve Account
for the purposes of carrying out the Servicers' or the Trustee's duties
specified in this Agreement.
Funds on deposit in any Trust Accounts on any date and which
are not released to the Transferor, including funds required pursuant to the
applicable Supplement to be deposited to the Transferor's Account on such date,
shall at the direction of the Master Servicer be invested by the Trustee or the
Eligible Institution maintaining such accounts in Eligible Investments as
instructed by the Master Servicer in writing (which may be a standing
instruction). All such Eligible Investments shall be held by the Trustee.
Such funds shall be invested in Eligible Investments that will mature so that
such funds will be available in amounts sufficient for the Master Servicer to
make each distribution required under the applicable Supplement on the
Distribution Date with respect to such Collection Period or the last day of an
Interest Period if such day is other than a Distribution Date. On each
Distribution Date, all interest and other investment earnings (net of losses
and investment expenses) received on funds on deposit in the Concentration
Account, to the extent such investment income is not needed to pay the
Investors on such Distribution Date, shall be paid to the Transferor, except as
otherwise specified in any Supplement. The Trustee is hereby authorized,
unless otherwise directed by the Master Servicer, to effect transactions in
Eligible Investments through a capital markets affiliate of the Trustee or its
own investment department.
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(b) On or prior to the initial Closing Date, the Servicers,
for the benefit of the Certificateholders, shall establish and maintain or
cause to be established and maintained in the name of the Trustee, on behalf of
the Trust, with a depositary institution organized under the laws of the United
States of America or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank (each, a "COLLECTION BANK")
segregated accounts accessible by the Trustee and the Servicers, subject to the
limitations set forth in this SECTION 4.02 (each such account, a "COLLECTION
ACCOUNT") to which Collections, subject to all Requirements of Law, are to be
remitted. Those Collection Accounts to which Collections are to be remitted
directly by Obligors by mail and into which Collections are deposited directly
by the Servicers are referred to as "TRANSFEROR COLLECTION ACCOUNTS"). Those
Collection Accounts into which Collections are deposited by third party
collection agents are referred to as "SERVICER COLLECTION ACCOUNTS." Each
Servicer Collection Account shall be maintained with a Collection Account Bank
which is a member of the FDIC and each Transferor or Collection Account shall be
maintained with an Eligible Institution. The Collection Accounts shall be
under the sole dominion and control of the Trustee for the benefit of the
Certificateholders; PROVIDED, HOWEVER, that each Collection Account shall be
accessible by the applicable Servicer for the purpose of transferring
Collections to the Concentration Account in the manner set forth in SECTION
4.02(a). The name, location and account number of each current Collection
Account is set forth on Schedule I attached hereto. Each Collection Account
shall be maintained with documentation and instructions in form and substance
satisfactory to the Trustee. Such documentation shall provide, among other
things, that available amounts shall be promptly transferred to the
Concentration Account or, in the case of a Servicer Collection Account, to a
Transferor Collection Account, when required by the terms of this Agreement.
Neither CEI nor TE nor the Transferor shall (i) change any Collection Account,
or establish any additional Collection Account without, in any such case,
causing any replacement Collection Account Bank to execute and deliver a
Collection Account Letter as contemplated by SECTION 4.02(c) below prior to the
establishment of such additional or alternative Collection Account or (ii)
without the prior written consent of the Trustee, change such instructions or
documentation at any time so long as the Trustee has any interest in the
Receivables. Each Originator will deposit any Collections received by it
directly from an Obligor into a Transferor Collection Account within one
Business Day following the Business Day on which such Originator has knowledge
of receipt thereof.
(c) Each of CEI, TE and the Transferor hereby agrees and
acknowledges that (i) such Person has executed and delivered to the Trustee a
letter and executed acknowledgment thereto substantially in the form of EXHIBIT
E hereto, addressed to each banking institution with which such Person
maintains a Collection Account (each, a "COLLECTION ACCOUNT LETTER") and (ii)
each such Person shall execute and deliver a substantially similar Collection
Account Letter prior to the establishment of any additional or alternative
Collection Account. Each of CEI, TE and the Transferor hereby agrees, and the
Trustee hereby accepts, that such letter transfers all right, title and
interest in all monies, securities and instruments in each Collection Account
to the Trustee. Each of CEI, TE and the Transferor agrees to execute such
further documents
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and take such other actions as may be reasonably requested by the Trustee in
order to effect such transfer.
SECTION 4.03. DAILY CALCULATIONS AND ALLOCATION OF
COLLECTIONS. (a) CALCULATION OF CARRYING COST AMOUNT AND BASE AMOUNT. On or
prior to _________ (New York City time) on each Business Day prior to the
Amortization Date, the Master Servicer shall deliver the Daily Report to the
Trustee and the Paying Agent as contemplated by SECTION 3.05(a). No increases
shall be made to the Invested Amount of any Variable Funding Certificate if, as
a result thereof (and after giving effect to the application of funds
therefrom), the resulting Net Invested Amount as reflected in such Daily Report
would be greater than the Base Amount.
(b) DAILY ALLOCATION OF FUNDS IN THE CONCENTRATION ACCOUNT,
CARRYING COST ACCOUNT AND RESERVE ACCOUNT PRIOR TO THE AMORTIZATION DATE. On
each Business Day prior to the Amortization Date, the Master Servicer shall
instruct the Trustee in the applicable Daily Report to, and the Trustee shall,
allocate all Collections and other funds then on deposit in the Trust Accounts
(other than funds which are required to be returned pursuant to SECTION 4.02(a)
or are required by the terms of any Supplement to be dealt with in some other
manner) to the following items, in the following order of priority:
FIRST, to the extent that the funds in the Carrying Cost
Account are less than the Carrying Cost Amount, funds shall be
transferred from the Concentration Account to the Carrying Cost
Account up to the amount of such deficiency. Funds which are on
deposit in the Carrying Cost Account shall be withdrawn solely for the
purpose of paying the applicable Carrying Costs and any other fees and
expenses included in the calculation of the Carrying Cost Amount. If,
on any day, the amount of Collections on deposit in the Carrying Cost
Account exceeds the Carrying Cost Amount, then funds on deposit in the
Carrying Cost Account up to the amount of such excess shall, if so
requested by the Master Servicer in the Daily Report, be transferred
to the Reserve Account and/or the Concentration Account for
distribution in accordance with the remaining provisions of this
SECTION 4.03(b).
SECOND, if a Set-Aside Period has occurred and is continuing,
funds on deposit in the Concentration Account shall be transferred
into the Reserve Account until the Net Invested Amount is less than or
equal to the Base Amount. If the Base Amount is greater than the Net
Invested Amount and funds are on deposit in the Reserve Account, then
funds on deposit in the Reserve Account up to the amount of such
excess shall, if so requested by the Master Servicer in the Daily
Report, be transferred to the Concentration Account for
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distribution in accordance with the remaining provisions of this
SECTION 4.03(b).
THIRD, if the Base Amount is greater than or equal to the Net
Invested Amount, funds on deposit in the Reserve Account shall, if
requested by the Master Servicer in the Daily Report and permitted by
the Supplement relating to any Investor Certificates, or if otherwise
required under any Supplement relating to any Investor Certificates,
be withdrawn to reduce the Invested Amount of any such Investor
Certificates in the order of priority described below and in
accordance with the terms of the applicable Supplements;
FOURTH, to the extent the Master Servicer has so requested in
the Daily Report if permitted by the Supplement relating to any
Investor Certificates or to the extent otherwise required under the
Supplement relating to any Investor Certificates, any funds on deposit
in the Concentration Account shall be withdrawn to reduce the Invested
Amount of any such Investor Certificates (or to deposit such amounts
in any Defeasance Account for the purpose of making such reduction) in
the order of priority described below and in accordance with the terms
of the applicable Supplements;
FIFTH, to the extent required by this Agreement or any
Supplement, funds on deposit in the Concentration Account shall be
deposited to the Trustee's own account, any Defeasance Account or any
other Series Account for the payment of any fees, costs, expenses or
other obligations (including prepayment premiums, if applicable) owed
to the Trustee and/or the Investors which are not payable from funds
in the Carrying Cost Account;
SIXTH, any remaining funds on deposit in the Concentration
Account shall be deposited into the Transferor's Account to be applied
towards the purchase of new Receivables, towards the payment of
ordinary costs and expenses of the Transferor and towards the payments
of any other amounts specified or permitted under the Receivables
Purchase Agreement or this Agreement; PROVIDED that, if the Transferor
so directs, amounts owed to the Originators under this clause SIXTH
may be paid directly to the Originators.
If, on any day prior to the Amortization Date, funds are to be
distributed under CLAUSES THIRD or FOURTH above to the Investors of more than
one Series, such funds shall be distributed among such Investors in the
following order of priority: first to all such Investors whose Certificates
constitute a Senior Class ratably in accordance with their Class Allocation
Percentages until the amount of the required or requested payments to be
distributed
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to such Investors has been paid in full, and second to all such Investors whose
Certificates constitute a Subordinated Class in accordance with their Class
Allocation Percentages until the amount of such required or requested payments
to be distributed to such Investors has been paid in full. If, on any day prior
to the Amortization Date, the funds to be distributed under CLAUSE FIFTH are
less than the fees, costs, expenses and other obligations to be paid pursuant to
such CLAUSE, such funds shall be allocated PRO RATA for distribution to the
Persons to whom such amounts are owed according to the respective amounts of
such obligations held by such Persons.
Funds on deposit in the Carrying Cost Account shall be
distributed in the following order of priority: FIRST, to the Trustee for
payment of the Trustee's Fee; SECOND, to the payment of the Servicing Fee to
the extent owed to a Successor Servicer which is not an Affiliate of the
Originators or of Centerior; THIRD, to the payment of accrued and unpaid Yield
on all Investor Certificates constituting a Senior Class; FOURTH, to the
payment of accrued and unpaid Yield on all Investor Certificates constituting a
Subordinated Class; FIFTH, to the payment of any other costs, fees, expenses or
other obligations included in the calculation of the Carrying Cost Amount and
SIXTH, to the payment of the Servicing Fee to the extent owed to CEI, TE or any
Affiliate of either of them. If, on any day prior to the Amortization Date,
the funds available for distribution from the Carrying Cost Account under any
of the immediately preceding CLAUSES FIRST through SIXTH above are less than
the amount of costs, fees, expenses or other obligations to be paid pursuant to
any such clause, then, in any such case, such available funds shall be
allocated by the Master Servicer PRO RATA for distribution to the Persons to
whom such amounts are owed according to the respective amounts of such
obligations held by such Persons and all obligations in lower priority
categories shall remain unsatisfied until the obligations in the preceding
category have been satisfied.
All Collections and other funds distributed for the benefit of
Investors of any Series pursuant to this SECTION 4.03(b) will be deposited and
distributed as specified in the related Supplement, and amounts so allocated to
any Series will not, except as specified in the related Supplement or as
provided in the first paragraph of SECTION 4.03(c)(i), be available to the
Investors of any other Series. Allocations among the Series or to any
Enhancement Agreement and among the Classes in any Series or to any Enhancement
Provider shall be set forth in the related Supplement or Supplements.
All obligations in lower priority categories shall remain
unsatisfied until the obligations in the preceding category have been
satisfied.
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(c) ALLOCATION OF FUNDS IN THE TRUST ACCOUNTS DURING THE
AMORTIZATION PERIOD. (i) On the Amortization Date, the outstanding principal
amount of the Variable Funding Certificate shall no longer be subject to
increase and the Floating Allocation Percentage shall, in accordance with the
terms of SECTION 4.01(b), become fixed as computed as of the close of business
on the Business Day immediately preceding the Amortization Date, and all funds
on deposit in the Carrying Cost Account, the Reserve Account and any Defeasance
Account shall be reallocated to the Concentration Account for distribution in
accordance with the remaining provisions of this SECTION 4.03(c).
(ii) On the Amortization Date and on each Business Day
thereafter during the Amortization Period, the Master Servicer shall direct the
Trustee in the Daily Report to, and the Trustee shall, allocate all Collections
and other funds received or held in the Concentration Account (other than any
such funds which are required to be returned pursuant to SECTION 4.02(a) or are
required by the terms of any Supplement to be dealt with in some other manner),
based on the Floating Allocation Percentage for the Amortization Period either
as funds allocable to the Investors' Interest or funds allocable to the
Transferor Interest. The Trustee shall:
(a) set aside and hold in trust in the Concentration Account,
for the benefit of the Investors, all Collections held in the Carrying
Cost Account, the Reserve Account and/or any Defeasance Account as of
the close of business on the Business Day immediately preceding the
Amortization Date, and all other Collections allocable to the
Investors' Interest;
(b) set aside and hold in trust in the Concentration Account,
for the benefit of the Investors and out of the Collections allocable
to the Transferor Interest, all fees, costs and expenses (other than
Yield, Servicing Fee or the Trustee's Fee) which have been identified
to the satisfaction of the Trustee as amounts due and owing to the
Trustee, the Investors, and/or any Successor Servicer; and
(c) deposit to the Transferor's Account all remaining
Collections allocable to the Transferor Interest.
(iii) Collections and other funds set aside and held for the
benefit of the Investors shall be allocated to the Investors in the following
order of priority:
FIRST, to be distributed for payment of accrued Carrying Costs
in the same order of priority described for the payment thereof in
SECTION 4.03(b);
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SECOND, to be distributed to Investors to reduce the Invested
Amount of all Investor Certificates in the following order of priority: FIRST,
to those Investors holding Certificates which constitute a Senior Class ratably
in accordance with their Class Allocation Percentages (as calculated on the
Amortization Date) until the Invested Amounts of such Certificates have been
reduced to zero, and SECOND to all such Investors whose Certificates constitute
a Subordinated Class in accordance with their Class Allocation Percentages (as
calculated on the Amortization Date) until the Invested Amounts of such
Certificates have been reduced to zero; and
THIRD, to be deposited to the Trustee's own account or any
Series Account or otherwise paid to any Successor Servicer for the
payment of any accrued and unpaid fees, costs, expenses or other
obligations (including prepayment premiums, if applicable) owed to
such Persons under this Agreement or any Supplement.
Notwithstanding the foregoing, to the extent set forth in any
Supplement, Collections which are identified as having been received in respect
of Receivables which are not Eligible Receivables or which are otherwise not
included in the calculation of the Net Receivables Balance may be distributed
first to the Investors of any Series which elected to give value to the
Transferor on account of such Receivables before being distributed to the
Investors of any other Series.
(iv) If, on any Business Day during the Amortization Period,
the amount of funds on deposit in the Concentration Account and available for
allocation under any of CLAUSES FIRST or THIRD above is less than the amount of
the obligations described in such CLAUSE, then the available Collections shall
be allocated by the Master Servicer PRO RATA for distribution to the Persons to
whom such amounts are owed according to the respective amounts of such
obligations held by such Persons; PROVIDED, however, that any such amounts to
be distributed to Investors shall be distributed (1) to the holders of such
obligations relating to any Senior Class until the same have been paid in full
and (2) thereafter to the holders of such obligations relating to any
Subordinated Class until the same have been paid in full. The allocation among
holders within each such Class shall be made PRO RATA according to the
respective amounts of such obligations held by them. All other obligations in
lower priority categories shall remain unsatisfied until the obligations in the
preceding category have been satisfied.
After the payment in full of all amounts described above in
priority categories FIRST through THIRD, all remaining funds received or held
in the Concentration Account and/or any of the other Trust Accounts and
allocable to the Investors' Interest shall
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be remitted to the Transferor in consideration of the Deferred Payment Right.
Collections and other funds distributed for the benefit of
Investors of any Series pursuant to this SECTION 4.03(c) will be deposited and
distributed as specified in the related Supplement, and amounts so allocated to
any Series will not, except as specified in the related Supplement, be
available to the Investors of any other Series. Allocations among the Series
or to any Enhancement Agreement and among the Classes in any Series or to any
Enhancement Provider shall be set forth in the related Supplement or
Supplements.
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTORS
Distributions shall be made to, and reports shall be provided
to, Investors as set forth in SECTION 3.08 hereof and in the applicable
Supplement.
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. THE CERTIFICATES. The Investor Certificates of
any Series or Class shall be issued in the form contemplated by the applicable
Supplement and shall upon issue be executed and delivered by the Transferor to
the Trustee for authentication and redelivery as provided in SECTION 6.02.
Except to the extent otherwise provided in an applicable Supplement, the
Investor Certificates shall be issued in minimum denominations of [$250,000]
and in integral multiples of [$1,000] in excess thereof (except that one
Certificate may be issued in a denomination that includes any residual amount);
provided, however, that if such Investor Certificates are issued in Book-Entry
Form, the Trustee shall have no liability to any Person for the issuance of
such Certificates in a denomination not permitted by this Section 6.01. The
Investor Certificates shall be issued upon initial issuance as one or more
Investor Certificates in an aggregate original principal amount equal to the
Initial Invested Amount or, in the case of any Variable Funding Certificate, in
its applicable Stated Amount. The Transferor Revolving Certificate shall be a
single certificate, substantially in the form of EXHIBIT A hereto, and shall
represent the Transferor Interest. Each Certificate shall be executed by
manual or facsimile signature on behalf of the Transferor by the President, any
Vice President, the Chief Financial Officer, the Chief Administrative and
Credit Officer, Treasurer or the Secretary of the Transferor, or by any other
officer or assistant officer duly authorized to execute such Certificate on
behalf of the Transferor. Certificates bearing the manual or facsimile
signature of the individual who was, at the
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time when such signature was affixed, authorized to sign on behalf of the
Transferor shall not be rendered invalid, notwithstanding that such individual
ceased to be so authorized prior to the authentication and delivery of such
Certificates or does not hold such office at the date of such Certificates. No
Certificates shall be entitled to any benefit under this Agreement or the
applicable Supplement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication in substantially the form provided
for herein executed by or on behalf of the Trustee by the manual signature of a
duly authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
SECTION 6.02. AUTHENTICATION OF CERTIFICATES. The Trustee
shall authenticate and deliver the Investor Certificates of each Series to, and
upon the written order of, the Transferor against payment to the Transferor of
the purchase price therefor. The Trustee shall authenticate and deliver the
Transferor Revolving Certificate to the Transferor simultaneously with its
delivery of the first Series of Investor Certificates to be issued hereunder.
The Certificates of any Series or Class shall be duly authenticated by or on
behalf of the Trustee, in authorized denominations equal to (in the aggregate)
in the case of the Investor Certificates, the Initial Invested Amount or Stated
Amount, as applicable, of such Series or Class, and, in the case of the
Transferor Revolving Certificate, in an indefinite denomination equal to the
Transferor Interest from time to time.
SECTION 6.03. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES. (a) The Trustee shall cause to be kept at its corporate trust
operations office in New York City, New York, such office or agency to be
maintained in accordance with the provisions of SECTION 11.16 a register (the
"CERTIFICATE REGISTER") in which, subject to such reasonable regulations as it
may prescribe, a transfer agent and registrar (which may be the Trustee) (the
"TRANSFER AGENT AND REGISTRAR") shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates as herein
provided. The Transfer Agent and Registrar shall initially be the Trustee,
together with any co-transfer agent and co-registrar chosen by the Trustee and
acceptable to the Servicers, and any reference in this Agreement to the
Transfer Agent and Registrar shall include any co-transfer agent and
co-registrar unless the context requires otherwise. The provisions of SECTIONS
11.01, 11.02, 11.03 and 11.05 shall apply to the Trustee also in its role as
Transfer Agent and Registrar, for so long as the Trustee shall act as Transfer
Agent and Registrar.
The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' (60 days' during an Amortization
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Period) written notice to the Transferor and the Servicer. Upon receiving such
notice of resignation, the Servicers shall appoint a successor Transfer Agent
and Registrar reasonably acceptable to the Transferor. If no successor
Transfer Agent and Registrar shall have been appointed and have accepted
appointment within 30 days (60 days during an Amortizaton Period) after the
giving of such notice of resgination, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor Transfer Agent and
Registrar; PROVIDED, HOWEVER, that such resignation shall not be effective and
the Trustee shall continue to perform its duties as Transfer Agent and
Registrar until a successor Transfer Agent and Registrar has been appointed in
accordance with this paragraph, and such successor has assumed its duties under
this Agreement.
It is intended that the registration of Certificates which is
described in this SECTION 6.03 comply with the registration requirements
contained in Section 163 of the Internal Revenue Code.
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 Transferor shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates (of the same Series and
Class) in authorized denominations of like aggregate Undivided Fractional
Interests in the Aggregate Investors' Interest.
Except as otherwise expressly provided in the Supplement
relating to any Series or Class of Investor Certificates and subject to SECTION
6.11, Investor Certificates may, at the option of an Investor, be exchanged for
other Investor Certificates (of the same Series and Class) of authorized
denominations of like aggregate Undivided Fractional Interests in the
Investors' Interest, upon surrender of the Investor Certificates to be
exchanged at any such office or agency. Whenever any Investor Certificates are
so surrendered for exchange, the Transferor shall execute, and the Trustee
shall authenticate and deliver, the Investor Certificates which the Investor
making the exchange is entitled to receive.
Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee or the Transfer
Agent and Registrar duly executed by the Holder thereof or his attorney-in-fact
duly authorized in writing. Each Holder must satisfy the transfer restrictions
set forth in the applicable Certificates.
Each Investor Certificate shall be registered at all times as
herein provided, and any transfer or exchange of such Investor Certificate will
be valid for purposes hereunder only upon registration of such transfer or
exchange by the Trustee or the Transfer Agent and Registrar as provided herein.
Payments on any Distribution Date shall be made to Holders of record on the
immediately preceding Record Date.
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No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer Agent and
Registrar or any co-transfer agent and co-registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Certificates.
All Investor Certificates surrendered for registration of
transfer or exchange, or for payment, shall be canceled and disposed of in a
manner reasonably satisfactory to the Trustee.
(b) The Transfer Agent and Registrar will maintain at its
expense, an office or offices or agency or agencies where Investor Certificates
may be surrendered for registration of transfer or exchange which office, so
long as the Trustee acts as Transfer Agent and Registrar, shall be the
Corporate Trust Office designated in Section 11.16.
SECTION 6.04. MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there is delivered to the Transfer Agent and Registrar, the Trustee and the
Transferor such indemnity (provided, that a letter of indemnity from an
insurance company or an institutional investor in either case of investment
grade credit rating shall satisfy such requirement) as may be required by them
to save each of them harmless, then, in the absence of notice to the Trustee
that such Certificate has been acquired by a bona fide purchaser, the
Transferor shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and (in the case of any new
Investor Certificate) Undivided Fractional Interest. In connection with the
issuance of any new Certificate under this SECTION 6.04, the Trustee or the
Transfer Agent and Registrar may require the payment by the Certificateholder
of a sum sufficient to pay any tax or other governmental charge that may be
imposed in relation thereto. Any duplicate Certificate issue pursuant to this
SECTION 6.04 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.
SECTION 6.05. PERSONS DEEMED OWNERS. At all times prior to
due presentation of a Certificate for registration of transfer, the Trustee,
the Paying Agent, the Transfer Agent and Registrar and any agent of any of them
shall treat the Person in whose name any Certificate is registered as the owner
of such Certificate as of the most recent Record Date for the purpose of
receiving distributions pursuant to the terms of the applicable Supplement and
for all other purposes whatsoever and neither the Trustee, the Paying
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Agent, the Transfer Agent and Registrar nor any agent of any of them shall be
affected by any notice to the contrary. Notwithstanding the foregoing, in
determining whether the Holders of the requisite Undivided Fractional Interests
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Certificates owned by the Transferor, the Servicers or any
Affiliate thereof shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Transferor, a Servicer or an
Affiliate thereof.
SECTION 6.06. APPOINTMENT OF PAYING AGENT. The Paying Agent
shall make distributions to Investors, the Servicers and the Trustee pursuant
to the applicable Supplement and shall report the amounts of such distributions
to the Trustee. The Trustee shall make available to the Paying Agent funds
from the applicable Trust Account on the day on which they are to be
distributed pursuant to the applicable Supplement. The Paying Agent shall
initially be the Trustee. The Trustee shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Servicers. In the event that the
Trustee shall no longer be the Paying Agent, the Servicers shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
Servicers shall cause such successor Paying Agent to execute and deliver to the
Trustee an instrument in which such successor Paying Agent shall agree with the
Trustee that, as Paying Agent, such successor Paying Agent will hold all sums,
if any, held by it for payment to the Certificateholders, the Servicers or the
Trustee in trust for the benefit of the Certificateholders entitled thereto,
the Servicers or the Trustee, respectively, until such sums shall be paid to
such Certificateholders, the Servicers or the Trustee, respectively. 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 11.01, 11.02, 11.03 and
11.05 shall apply to the Trustee also in its role as Paying Agent, for so long
as the Trustee shall act as Paying Agent.
SECTION 6.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee will, within five Business Days after receipt by the
Trustee of a written request therefor from the Servicers, the Transferor, or
the Paying Agent, respectively, furnish (or cause the Transfer Agent to
furnish) a list of the names and addresses of the Certificateholders. Upon
written
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request of any Investor or group of Investors holding Investor Certificates
evidencing not less than 10% of the Invested Amount of any Series, the Trustee
will (or will cause the Transfer Agent and Registrar to) afford such Investors
access during normal business hours to the current list of Investors of such
Series.
Every Certificateholder, by receiving and holding a
Certificate, agrees that neither the Trustee, the Transfer Agent and Registrar,
the Transferor, any Servicer, any Originator, nor any of their respective
agents, shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the sources from which such information was derived.
SECTION 6.08. AUTHENTICATING AGENT. (a) The Trustee may
appoint one or more authenticating agents with respect to the Certificates
which shall be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Whenever reference is
made in this Agreement to the authentication of Certificates by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and
a certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Transferor and the Servicers.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating
agent without the execution or filing of any power or any further act on the
part of the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by
giving written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an authenticating agent shall cease to be
acceptable to the Trustee or the Transferor, the Trustee may promptly appoint a
successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Transferor.
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(d) The Transferor agrees to pay to each authenticating
agent from time to time reasonable compensation for its services under this
SECTION 6.08.
(e) The provisions of SECTIONS 11.01, 11.02, 11.03 and
11.05 shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this SECTION
6.08, the Certificates may have endorsed thereon, in lieu of or in addition to
the Trustee's certification of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Certificates described in the Pooling and
Servicing Agreement.
________________________________
________________________________
as Authenticating Agent
for the Trustee
By:_____________________________
Authorized Officer
SECTION 6.09. NEW ISSUANCES. (a) The Transferor may from
time to time direct the Trustee, on behalf of the Trust, to issue one or more
new Series of Investor Certificates pursuant to a Supplement. The Investor
Certificates of all outstanding Series shall be equally and ratably entitled as
provided herein to the benefits of this Agreement without preference, priority
or distinction, all in accordance with the terms and provisions of this
Agreement and the applicable Supplement except, with respect to any Series or
Class, as provided in the related Supplement and except that any Enhancement
with respect to a particular Series or Class shall not be available for any
other Series or Class unless so provided in the applicable Supplement.
(b) On or before the Closing Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of
such new Series and to execute and deliver the related Supplement is subject to
the satisfaction of the following conditions:
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(i) on or before the fifth Business Day immediately
preceding the applicable Closing Date (or such later date preceding the
Closing Date as shall be acceptable to the Trustee, each Rating Agency
and any Enhancement Provider), the Transferor shall have given the
Trustee, the Servicers, each Rating Agency and any Enhancement Provider
written notice of such issuance and such Closing Date;
(ii) the Transferor shall have delivered to the Trustee
the related Supplement in a form satisfactory to the Trustee, executed
by each party hereto other than the Trustee;
(iii) the Transferor shall have delivered to the
Trustee any related Enhancement Agreement executed by each party
hereto other than the Trustee;
(iv) each Rating Agency shall have notified the
Transferor, the Servicers, the Trustee and any Enhancement Provider in
writing that the issuance of such new Series of Investor Certificates
will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class with respect to which it is a Rating
Agency;
(v) such issuance will not result in the occurrence of an
Early Amortization Event and the Transferor shall have delivered to
the Trustee and any Enhancement Provider an Officer's Certificate,
dated the applicable Closing Date (upon which the Trustee may
conclusively rely), to the effect that the Transferor reasonably
believes that such issuance will not in and of itself result in the
occurrence of an Early Amortization Event and is not reasonably in and
of itself expected to result in the occurrence of an Early
Amortization Event;
(vi) the Transferor shall have delivered to the Trustee
and any Enhancement Provider an Opinion of Counsel to the effect that
the issuance of the Investor Certificates of such Series (A) has been,
or need not be, registered under the Act and will not result in the
requirement that any other Series of Investor Certificates not
registered under the Act be so registered (unless the Transferor has
elected, in its sole discretion, to register such Certificates), (B)
will not result in the Trust becoming subject to registration as an
investment company under the Investment Company Act and (C) will not
require this Agreement or the related Supplement to be qualified under
the Trust Indenture Act of 1939, as amended;
(vii) the Transferor shall have delivered to the Trustee a
Tax Opinion, dated the applicable Closing Date, with respect to such
issuance;
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(viii) such issuance will not cause the Floating Allocation
Percentage (after giving effect to such new issuance and the deposit
of any proceeds into the Reserve Account) to exceed 100%;
(ix) if such issuance is in exchange for any outstanding
Investor Certificates, the Transferor shall have delivered to the
Trustee the Investor Certificates to be canceled in connection with
such exchange;
(x) if such Supplement allocates to any Investor
Certificate a Ratable Principal Amount in excess of its Invested
Amount, the Servicers shall have delivered to the Trustee an Officer's
Certificate stating that such allocation will not dilute the benefit of
the Required Reserves to which any pre-existing Series is entitled
prior to the effectiveness of such Supplement; and
(xi) the Transferor shall have delivered to the Trustee an
Officer's Certificate that the foregoing conditions have been
satisfied.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and the Transferor shall execute and deliver the Investor
Certificates of such Series for authentication and redelivery to or upon the
order of the Transferor. Notwithstanding the provisions of this SECTION
6.09(b), prior to the execution of any Supplement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such Supplement is authorized or permitted by this Agreement and
any Supplement related to any outstanding Series. The Trustee may, but shall
not be obligated to, enter into any such Supplement which adversely affects the
Trustee's own rights, duties or immunities under this Agreement.
(c) Except in the case of an exchange of Investor
Certificates, each new Issuance of Investor Certificates hereunder shall result
in a simultaneous reduction of the Transferor Interest.
SECTION 6.10. CHANGES IN VARIABLE FUNDING CERTIFICATES.
The Invested Amount of any Variable Funding Certificate shall at no time exceed
the Stated Amount then applicable to such Certificate. The Stated Amount and
the Invested Amount of any Variable Funding Certificates may be increased or
decreased from time to time, subject to any terms set forth in the applicable
Supplement and the allocation of Collections set forth in ARTICLE IV hereof,
PROVIDED that the Invested Amount of any Variable Funding Certificates may not
be increased in any manner which would cause the Net Invested Amount to exceed
the Base Amount as in effect prior to such increase.
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SECTION 6.11. BOOK-ENTRY CERTIFICATES. If the Transferor
shall establish pursuant to any Supplement that the Certificates to be issued
thereunder are to be issued in Book-Entry Form, then the Transferor shall, in
accordance with the other provisions of this Agreement, execute and the Trustee
shall authenticate and deliver one or more Global Certificates, evidencing the
Certificates of such Series which (i) shall be in an aggregate Invested Amount
equal to the Initial Invested Amount of such Series, (ii) shall be registered
in the name of the Clearing Agency therefor or its nominee, which shall
initially be Cede & Co., as nominee for The Depositary Trust Company, the
initial Clearing Agency, (iii) shall be delivered by the Trustee to such
Clearing Agency or such nominee pursuant to such Clearing Agency's or such
nominee's instructions, and (iv) shall bear a legend substantially to the
following effect: "Transfers of this Global Certificate shall be limited to
transfers in whole, but not in part, to the Clearing Agency or a nominee of the
Clearing Agency or to a successor thereof or such successor's nominee and
transfers of portions of this Global Certificate shall be limited to transfers
made in accordance with the restrictions set forth in the Pooling and Servicing
Agreement pursuant to which these Certificates were issued."
Each Clearing Agency designated pursuant to this SECTION 6.11
must, at the time of its designation and at all times while it serves as
Clearing Agency hereunder, be a "clearing agency" registered under the
Securities Exchange Act of 1934, as amended, and any other applicable statute
or regulation.
No Holder of any Investor Certificates issued in Book-Entry
Form shall receive a Definitive Certificate representing such Holder's
Undivided Fractional Interest except as provided in SECTION 6.13 or in the
applicable Supplement relating to such Certificates. Unless (and until)
certificated, fully registered Certificates of any Series (the "DEFINITIVE
CERTIFICATES") have been issued to the Investors of such Series pursuant to
SECTION 6.13 or pursuant to any applicable Supplement relating thereto:
(a) the provisions of this SECTION 6.11 shall be in full
force and effect;
(b) the Transferor, each Servicer, the Paying Agent, the
Transfer Agent and Registrar and the Trustee may deal with the
Clearing Agency for all purposes (including the making of
distributions on the Certificates of such Series) as the authorized
representatives of the Investors of such Series;
(c) to the extent that the provisions of this SECTION 6.11
conflict with any other provisions of this Agreement, the provisions
of this SECTION 6.11 shall control; and
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(d) the rights of Investors of such Series shall be exercised
only through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements
between such Investors and the Clearing Agency and/or the Clearing
Agency Participants. Unless and until Definitive Certificates are
issued pursuant to SECTION 6.13, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Book-Entry Certificates to such Clearing Agency Participants.
SECTION 6.12. NOTICES TO CLEARING AGENCY. Unless and until
Definitive Certificates shall have been issued to Investors of such Series
pursuant to SECTION 6.11 or the applicable Supplement relating to such Investor
Certificates, whenever notice, payment, or other communication to the holders
of Book-Entry Certificates of any Series is required under this Agreement, the
Trustee, the Servicers and the Paying Agent shall give all such notices and
communications specified herein to be given to Investors of such Series to the
Clearing Agency.
SECTION 6.13. DEFINITIVE CERTIFICATES. If (i)(A) the
Transferor advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities under any Letter of
Representations and (B) the Transferor is unable to locate a qualified
successor Clearing Agency, (ii) the Transferor, at its option, advises the
Trustee in writing that, with respect to any Series, it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
a Servicer Default, a Majority in Interest of the Investors of any Series of
Investor Certificates maintained as Book-Entry Certificates advise the Trustee
and the Clearing Agency (through the Clearing Agency Participants) in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Investors of such Series, the Trustee shall
notify the Clearing Agency and all such Investors of such Series of the
occurrence of any such event and of the availability of Definitive Certificates
of such Series to the Investors of such Series requesting the same. Upon
surrender to the Trustee of the Global Certificates of such Series by the
Clearing Agency accompanied by registration instructions from such Clearing
Agency for registration, the Trustee shall authenticate and deliver Definitive
Certificates of such Series. None of the Transferor, the Transfer Agent and
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates of any
Series, all references herein to obligations with respect to such Series
imposed upon or to be performed by the Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall
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recognize the holders of the Definitive Certificates as the Investors
hereunder.
SECTION 6.14. TEMPORARY CERTIFICATES. Pending the
preparation of Definitive Certificates of any Series to be issued in accordance
with SECTION 6.13, the Transferor may execute and, in accordance with the terms
of SECTION 6.02, the Trustee shall authenticate and deliver, temporary Investor
Certificates for such Series which are printed, lithographed, typewritten or
otherwise produced and are in any authorized denomination and substantially in
the forms of the Definitive Certificates of such Series, but with such
omissions, insertions and variations as may be appropriate for temporary
Investor Certificates, all as may be determined by the Transferor as evidenced
by the execution thereof by the authorized officers of the Transferor.
Temporary Investor Certificates may contain such references to any provisions
of this Agreement as may be appropriate. Every temporary Investor Certificate
of any Series shall be executed by the Transferor and authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the Definitive Certificates of such Series. If temporary
Investor Certificates are issued, the Transferor, without unreasonable delay,
shall cause Definitive Certificates to be executed and delivered to the Trustee
for authentication; and thereupon the temporary Certificates of such Series
shall be exchangeable for Definitive Certificates without charge at each office
or agency to be maintained for such purpose in accordance with SECTION 6.03.
The Trustee shall authenticate and deliver in exchange for temporary
Certificates of such Series so surrendered Definitive Certificates of equal
tenor and denomination. Until so exchanged, the temporary Certificates of any
Series shall be entitled to the same benefits under this Agreement as the
Definitive Certificates of such Series.
SECTION 6.15. CUSIP NUMBER. The Transferor in issuing any
Investor Certificates or Series of Certificates may use a "CUSIP" number and,
if so used, the Trustee shall use the CUSIP number in any notices to the
Investors thereof as a convenience to such Investors; PROVIDED, that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Investor
Certificates and that reliance may be placed only on the other identification
numbers printed on the Investor Certificates. The Transferor shall promptly
notify the Trustee of any change in the CUSIP number with respect to any
Investor Certificate.
SECTION 6.16. LETTER OF REPRESENTATIONS. Notwithstanding
anything to the contrary in this Agreement or any Supplement, the parties
hereto shall comply with the terms of each Letter of Representations.
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ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. OBLIGATIONS NOT ASSIGNABLE. The obligations of
the Transferor hereunder shall not be assignable nor shall any Person succeed
to the obligations of the Transferor hereunder.
SECTION 7.02. LIMITATIONS ON LIABILITY. None of the
directors, officers, shareholders, employees or agents of the Transferor, past,
present or future, shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in such capacities pursuant to this Agreement or
for any obligation or covenant under this Agreement; PROVIDED, HOWEVER, that
this provision shall not protect any such Person against any liability which
would otherwise be imposed by reason of willful misconduct or bad faith, in the
performance by such Person of such Person's duties or the reckless disregard by
such Person of any of his, her or its obligations and duties hereunder. The
Transferor and any director, officer, employee or agent of the Transferor may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person (other than the Transferor or any Affiliate
thereof) respecting any matters arising hereunder.
SECTION 7.03. INDEMNIFICATION OF THE TRUSTEE, THE TRUST AND
THE INVESTORS. Without limiting any other rights which the Trustee, the Trust
or any Investor (each, an "INDEMNIFIED PARTY") may have hereunder or under
applicable law, the Transferor hereby agrees to indemnify each Indemnified
Party from and against any and all claims, losses and liabilities (except to
the extent that such claims, losses and liabilities arise from any action by
such Indemnified Party) (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") arising out of or resulting from this Agreement, the
activities of the Trust or the Trustee in connection herewith, the Transferor's
use of proceeds of Transfers of Receivables or reinvestments of Collections,
the interest conveyed hereunder in Trust Assets, or in respect of any
Receivable or the Receivables Purchase Agreement, excluding, however, (a)
Indemnified Amounts to the extent resulting from willful misconduct, bad faith,
gross negligence, the reckless disregard by such Indemnified Party of any of
his, her or its obligations and duties, (b) recourse for uncollectible
Receivables, (c) indemnification for lost profits or for consequential, special
or punitive damages or (d) any income or franchise taxes (or any interest or
penalties with respect thereto) or other taxes on or measured by the gross or
net income or receipts of such Indemnified Party or (except as otherwise
provided in any Supplement) any withholding taxes, in each case to the extent
such Indemnified Amounts are incurred by such Indemnified Party arising out of
or as a result of this
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Agreement or the interest conveyed hereunder in Trust Assets or in respect of
any Receivable or any Contract or the Receivables Purchase Agreement. Without
limiting or being limited by the foregoing (other than clauses (a), (b), (c)
and (d)) the Transferor shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty or statement
made or deemed made by the Transferor under or in connection with this
Agreement or the Receivables Purchase Agreement which shall have been
incorrect in any material respect when made;
(ii) the failure by the Transferor to comply with this
Agreement or the Receivables Purchase Agreement, or the failure by the
Transferor to comply with any applicable Requirement of Law with
respect to any Receivable or the related Contract or invoice or the
Receivables Purchase Agreement, or the nonconformity of any Receivable
or the related Contract or invoice or the Receivables Purchases
Agreement with any Requirement of Law;
(iii) the failure to vest and maintain vested in the
Transferor a first priority perfected ownership interest in
the Receivables and the Related Security therefor as against
the Originators and the failure to vest and maintain vested in
the Trustee, for the benefit of the Investors, an undivided
fractional beneficial interest or perfected security interest
to the extent of the Investors' respective Undivided
Fractional Interests, in the Receivables and the other Trust
Assets, free and clear of any Lien;
(iv) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable or any other Trust Asset, whether at the
time of Transfer thereof or reinvestment of the proceeds thereof or at
any subsequent time;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor or other defense relating to
such Obligor's inability to pay) of any Obligor to the payment of any
Receivable;
(vi) any investigation, litigation or proceeding related to
this Agreement or the Receivables Purchase Agreement or the Trust or
the use of proceeds of Transfers of Receivables or reinvestments of
proceeds thereof or the ownership of Trust Assets or in respect of any
Receivable or invoice, other than any litigation or proceeding between
the Transferor or any
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Affiliate thereof, on the one hand, and the Trustee or any Investor or
any Affiliate thereof, on the other hand, in which the Transferor or
an Affiliate thereof prevails in a final non-appealable judgment by a
court of competent jurisdiction;
(vii) any products liability claim, personal injury or
property damage suit or other similar claim or action arising out of
or in connection with the services that are the subject of any
Receivable or any Related Security;
(viii) any failure by the Transferor or any Originator to be
duly qualified to do business or be in good standing in any
jurisdiction in which such qualification or good standing is necessary
for the enforcement of any Receivable;
(ix) the failure of the Transferor or any Originator to remit
Collections as required under this Agreement or the commingling of
Collections of Receivables at any time with other funds prior to
distribution under the applicable Supplement; or
(x) any tax (other than any taxes excluded by reason of
clause (d) in the first paragraph of this SECTION 7.03) imposed by
reason of ownership of the Receivables or other Trust Assets by the
Trustee.
In case any proceeding shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this SECTION
7.03 the Indemnified Party shall promptly notify the Transferor in writing and
the Transferor, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Transferor may designate in such proceeding and shall
pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Transferor and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Transferor and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual conflicts of interests between them. It is understood that the
Transferor shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm for all such Indemnified Parties. It is further
understood that the Transferor shall not be liable to any Indemnified Party
until or unless such Indemnified Party promptly notifies the Transferor in
writing of its request for indemnification.
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Indemnification pursuant to this SECTION 7.03 shall only be
payable from Collections and other funds in the Trust Accounts remaining after
all other obligations payable under CLAUSE FOURTH of SECTION 4.03(b) or CLAUSE
THIRD of SECTION 4.03(c)(iii) have been paid, as applicable, or from other
assets of the Transferor, and there shall be no recourse to, and no Person
shall have any Claim against, the Transferor for payment of all or any part of
any such indemnification to the extent that such Collections and other funds
are insufficient to pay the applicable Indemnified Amounts. In addition, any
indemnification payable under clause (vii), (viii), (ix) or (x) of this SECTION
7.03 shall be payable only to the extent that the Transferor has received
payment from the Originators under the equivalent indemnification provision of
the Receivables Purchase Agreement and there shall be no recourse to, and no
Person shall have any Claim against, the Transferor for payment of any all or
any part of any such indemnification to the extent that the amounts so received
are insufficient to pay the applicable Indemnified Amounts arising under such
clauses. The agreement contained in this SECTION 7.03 shall survive the
collection of all Receivables, the termination of this Agreement and the
payment of all amounts otherwise payable hereunder.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICERS
SECTION 8.01. LIABILITY OF THE SERVICERS. Each Servicer
shall be liable under this Agreement only to the extent of the obligations
specifically undertaken by such Servicer in its capacity as Servicer.
SECTION 8.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE OBLIGATIONS OF, THE SERVICERS. Except for a merger or consolidation of TE
with and into CEI or CEI with and into TE in which CEI or TE, as applicable, is
the surviving corporation, no Servicer shall consolidate with or merge into any
other Person or convey or transfer its properties and assets substantially as
an entirety to any Person unless:
(a) (i) the Person formed by such consolidation or into
which such Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of such Servicer substantially as an
entirety shall be, if such Servicer is not the surviving entity, a corporation
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and such successor corporation shall have
expressly assumed, by an agreement supplemental hereto, executed and delivered
to the Trustee, in form reasonably satisfactory to the Trustee, the performance
of every covenant and obligation of such Servicer hereunder; (ii) the
applicable Servicer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of
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Counsel stating that such consolidation, merger, conveyance or transfer
complies with this SECTION 8.02 and that all conditions precedent herein
provided for relating to such transaction have been complied with; and (iii)
the Rating Agency Condition shall have been satisfied with respect thereto; and
(b) if such Servicer is an Originator, all conditions for
such merger or consolidation or conveyance or transfer, as the case may be,
contained in the Receivables Purchase Agreement shall be satisfied; and
(c) the corporation formed by such consolidation or into which
such Servicer is merged or which acquires by conveyance or transfer the
properties and assets of the applicable Servicer substantially as an entirety
shall have all licenses and approvals of Governmental Authorities required to
service the Receivables, as evidenced by an officer's certificate of such
Servicer, except to the extent the failure to have any such license would not
have a material adverse effect on its ability to perform the obligations of a
Servicer hereunder.
SECTION 8.03. LIMITATIONS ON LIABILITY. None of the
directors, officers, shareholders, employees or agents of any Servicer, past,
present or future, shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in such capacities pursuant to this Agreement or
for any obligation or covenant under this Agreement, it being understood that,
with respect to the Servicers, this Agreement and the obligations created
hereunder are solely the corporate obligations of the Servicers; PROVIDED,
HOWEVER, that this provision shall not protect any Servicer or any such other
Person against any liability which would otherwise be imposed by reason of
willful misconduct, bad faith, gross negligence or the reckless disregard by
such Person of any of his, her or its obligations and duties. Each Servicer
and any director or officer or employee or agent of a Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person (other than such Servicer or any Affiliate thereof) respecting
any matters arising hereunder. No Servicer shall be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties as Servicer in accordance with this Agreement and which in its
reasonable judgment may involve it in any material expense or liability.
SECTION 8.04. SERVICER INDEMNIFICATION. Each Servicer shall
indemnify and hold harmless each Indemnified Party from and against Indemnified
Amounts suffered or sustained by reason of any breach by such Servicer of its
representations and warranties or obligations under this Agreement, excluding,
however, Indemnified Amounts to the extent resulting from (i) willful
misconduct, bad
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faith, gross negligence, the reckless disregard by such Indemnified Party of
any of his, her or its obligations and duties, (ii) recourse for uncollectible
Receivables, (iii) lost profits or for consequential, special or punitive
damages or (iv) any income or franchise taxes (or any interest or penalties
with respect thereto) or other taxes on or measured by the gross or net income
or receipts of such Indemnified Party or (except as otherwise provided in any
Supplement) any withholding taxes, in each case to the extent such Indemnified
Amounts are incurred by such Indemnified Party arising out of or as a result of
this Agreement or the interest conveyed hereunder in Trust Assets or in respect
of any Receivable or any Contract or the Receivables Purchase Agreement.
Indemnification pursuant to this SECTION 8.04 shall not be payable from the
Trust Assets. The agreement contained in this SECTION 8.04 shall survive the
collection of all Receivables, the termination of the Trust and the payment of
all amounts otherwise due hereunder.
In case any proceeding shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this SECTION
8.04, the Indemnified Party shall promptly notify the applicable Servicer in
writing and such Servicer, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others may designate in such proceeding and shall pay
the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of suchIndemnified Party unless (i) the applicable
Servicer and the Indemnified Party shall have mutually agreed to the retention
of such counselor (ii) the named parties to any such proceeding (including any
impleaded parties) include both such Servicer and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
no Servicer shall, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such Indemnified Parties. It is further
understood that no Servicer shall be liable to any Indemnified Party unless
such Indemnified Party promptly notifies such Servicer in writing of its
request for indemnification.
SECTION 8.05. THE SERVICERS NOT TO RESIGN. No Servicer shall
resign from the obligations and duties hereby imposed on it except upon
determination that (i) its performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
such Servicer could take to make its performance of its duties hereunder
permissible under applicable law. Any determination permitting the resignation
of
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such Servicer shall be evidenced by an Opinion of Counsel with respect to
clause (i) above, delivered to the Trustee. No resignation shall become
effective until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the resigning Servicer in accordance with
SECTION 10.02 hereof. If within 60 days of the date of the determination that
the resigning Servicer may no longer act as Servicer hereunder for any reason
and the Trustee has not appointed a Successor Servicer, the Trustee shall serve
as Successor Servicer hereunder. Notwithstanding the foregoing, the Trustee
shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution that is an Eligible
Servicer (other than the Trustee) as the Successor Servicer hereunder.
SECTION 8.06. EXAMINATION OF RECORDS. Each Servicer shall
indicate in its computer records that the Receivables and other Trust Assets
have been Transferred to the Trustee, on behalf of the Trust, pursuant to this
Agreement for the benefit of the Certificateholders. Each Servicer (and the
Transferor) shall, prior to the sale or transfer to a third party of any
receivable held in its custody, examine its records to determine that such
receivable is not a Transferor Receivable.
ARTICLE IX
EARLY AMORTIZATION EVENTS
SECTION 9.01. EARLY AMORTIZATION EVENTS. If any one of the
following events shall occur:
(a) any failure by the Transferor, either Originator or any
Servicer to make any payment, transfer or deposit required to be paid by it
under the terms of this Agreement, or the Receivables Purchase Agreement, on or
before the date occurring (i) in the case of any payment of Yield, five
Business Days after the date such payment is required to be made hereunder and
(ii) in the case of any other payment, transfer or deposit, within seven
Business Days after the date such payment, transfer or deposit is required to
be made hereunder or thereunder;
(b) any failure by the Transferor, either Originator or any
Servicer to observe or perform in any material respect any other covenant or
agreement to be performed by it under this Agreement, or the Receivables
Purchase Agreement, which failure has a material adverse effect on the
interests of the Investors of any Series and which continues unremedied for a
period of thirty days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor,
each Originator or Servicer, as applicable, by the Trustee or any Enhancement
Provider, or to the Transferor, each Originator or
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Servicer, as applicable, and the Trustee by the Majority Investors or by a
Majority in Interest of any Series; or
(c) (i) any representation, warranty or certification made by
the Transferor, an Originator or a Servicer under or in connection with this
Agreement, or the Receivables Purchase Agreement, or in any certificate or
information delivered pursuant hereto or thereto or in connection herewith or
therewith, shall prove to have been incorrect in any material respect when made
and which continues to be incorrect in any material respect for a period of 30
days (or, with respect to any representation, warranty or certification made by
the Transferor in SECTION 2.03(g) hereof, shall prove to have been incorrect in
any material respect when made and which continue to be incorrect in any
material respect for a period for 5 days, or, with respect to any
representations and warranties made under SECTION 2.04, such longer period as
may be agreed to by the Trustee and the Majority in Interest of any Series that
is materially and adversely affected by such incorrectness) after the date on
which notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Trustee or to the Transferor and the
Trustee by an Investor and (ii) as a result of such incorrectness the interests
of the Investors of any Series are materially and adversely affected; or
(d) any other default by the Transferor, an Originator or a
Servicer shall occur, and shall not be remedied within the applicable grace
period, if any, under the Receivables Purchase Agreement, or the Receivables
Purchase Agreement shall for any reason cease to be in full force and effect or
the Transferor shall otherwise cease to continue purchasing Receivables
thereunder;
(e) an Insolvency Event shall occur with respect to the
Transferor, an Originator or the Trust; or
(f) the Securities and Exchange Commission or other
regulatory body shall have reached a final determination that the Trust is an
"investment company" within the meaning of the Investment Company Act; or
(g) (i) any purchase of any Receivables by the Transferor
under the Receivables Purchase Agreement shall cease to create a valid sale,
transfer and assignment to the Transferor of all right, title and interest of
the Originators in and to such Receivables and the proceeds thereof; or (ii)
any Transfer of any Receivables on any date shall for any reason cease to
create either (A) a valid transfer and assignment to the Trust of all right,
title and interest of the Transferor in and to such Receivables and the
proceeds thereof or (B) if such Transfer does not constitute such a sale,
transfer and assignment, a valid and perfected first priority "security
interest" (as defined in the UCC of the jurisdiction the law of which governs
the perfection of the
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interest in such Receivables created hereunder) in such Receivables and the
proceeds thereof, or (iii) the Investor Certificates delivered hereunder shall
for any reason cease to evidence the transfer to the Investors of, or the
Investors shall otherwise cease to have, a beneficial interest in a trust
owning or having a perfected first priority security interest in the
Receivables and the other Trust Assets now existing and hereafter arising and
the proceeds thereof to the extent of their respective Undivided Fractional
Interests; or
(h) a Servicer Default shall have occurred and be continuing,
which Servicer Default shall have a material adverse effect on the interests of
the Investors; or
(i) the Trust at any time shall have received a final
determination that it will be treated as an association taxable as a
corporation or "publicly traded partnership" taxable as a corporation for
federal income tax purposes; or
(j) the Net Invested Amount shall be greater than the Base
Amount for a period of five consecutive Business Days; or
(k) the aggregate amount of Cure Funds deposited in the
Reserve Account at any time shall, without the prior consent of the Majority
Investors, exceed either (i) 30% of the Aggregate Invested Amount for five (5)
consecutive Business Days or (ii) 35% of the Aggregate Invested Amount at any
time; or
(l) the Servicers (if the Originators) shall have resigned
under SECTION 8.05 and the Person then acting as Successor Servicer, if not an
Affiliate of the Originators, shall not have been approved by the Majority
Investors within thirty (30) days of its agreement to act as Successor
Servicer; or
(m) the PBGC or the Internal Revenue Service shall have filed
notice of one or more Liens against either Originator or the Transferor unless
such Lien does not purport to cover the Receivables), and such notice shall
have remained in effect for more than fifteen (15) Business Days unless, prior
to the expiration of such period, such Liens shall have been adequately bonded
by the Originators in a transaction with respect to which the Rating Agency
Condition has been satisfied;
(n) any Originator shall admit in writing its inability to
pay its debts as they become due or shall fail generally to pay its debts as
they become due; or
(o) any Additional Early Amortization Event shall have
occurred with respect to any outstanding Series;
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then, in the case of any event either the Trustee (unless otherwise directed by
the Majority Investors), or the Majority Investors, by notice then given in
writing to the Transferor and the Servicers (and to the Trustee if given by
such Investors), may declare (provided such event shall not have been remedied)
that an early amortization event (an "EARLY AMORTIZATION EVENT") has occurred
as of the date of such notice; PROVIDED that, in the case of any event
described in subsection (e), (f), (j) or (m), or in the case of any event
described in subsection (g) which has occurred and is continuing for a period
of five (5) Business Days, subject to applicable law, an Early Amortization
Event shall occur without any notice or other action on the part of the Trustee
or the Investors, immediately upon the occurrence of such event and additional
Receivables will not be transferred to the Trust. Promptly and in any event
within one Business Day after a Servicer becomes aware of any Early
Amortization Event, such Servicer shall notify the Trustee and each Rating
Agency of the occurrence of such Early Amortization Event.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in SECTION 9.01(a) for a period of ten Business Days
after the applicable grace period, or under SECTION 9.01(b), (c) or (d) for a
period of thirty Business Days after the applicable grace period, shall not
constitute an Early Amortization Event if such delay or failure could not have
been prevented by the exercise of reasonable diligence by any of the
Transferor, the Originators or the Servicers and such delay or failure was
caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, computer system
failure, landslides, lightning, fire, hurricanes, earthquakes, floods, union
strikes, work stoppages or similar occurrences. The preceding sentence shall
not relieve the Transferor, any Servicer or any Originator from using its best
efforts to perform its obligations in a timely manner in accordance with the
terms of this Agreement and/or the Receivables Purchase Agreement, as
applicable, and the Transferor shall provide the Trustee and any Enhancement
Provider with an Officer's Certificate giving prompt notice of such failure or
delay by it, together with a description of its efforts so to perform its
obligations.
SECTION 9.02 ADDITIONAL RIGHTS UPON THE OCCURRENCE OF ANY
EARLY AMORTIZATION EVENT. (a) Upon the occurrence and during the continuance
of any Early Amortization Event, in addition to all other rights and remedies
under this Agreement or otherwise and all other rights and remedies provided
under the UCC of the applicable jurisdiction and other applicable laws (which
rights shall be cumulative), each of the Servicers, at the direction of the
Trustee, and the Trustee may exercise any and all rights and remedies of the
Transferor under or in connection with the Receivables Purchase Agreement,
including, without limitation, any and all rights of the Transferor to demand
or otherwise require
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payment of any amount under, or performance of, the Receivables Purchase
Agreement.
(b) If an Insolvency Event with respect to the Transferor
occurs, the Transferor shall immediately cease to transfer Receivables to the
Trust and shall promptly give written notice to the Trustee, who shall within
three Business Days forward such notice to the Investors and each Servicer of
such event. Notwithstanding the above, Receivables transferred to the Trust
prior to the occurrence of such Insolvency Event and collections relating to
such Receivables shall continue to be part of the Trust. Unless, within 90
days of the date of the notice provided by the Trustee in the preceding
sentence, the Trustee receives written instructions from the Majority Investors
instructing the Trustee not to sell, dispose of or liquidate the Receivables,
the Trustee shall, to the extent permitted by applicable law, promptly proceed
to sell, dispose of, or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms (which terms may include
the solicitation of bids by the Trustee or a Qualified Sale Agent and the
acceptance of the highest cash purchase offer from any bidder); PROVIDED,
HOWEVER, that if the amount available to the Trust for distribution after such
sale, disposition or liquidation would be less than the Aggregate Invested
Amount plus any unpaid Yield thereon through the Distribution Date next
succeeding the date of such sale, the Trustee shall not proceed with such sale,
disposition or liquidation unless the Majority in Interest of all outstanding
Series have consented in writing thereto. The proceeds from such sale,
disposition or liquidation of the Receivables shall be treated as Collections
on the Receivables and shall be immediately deposited in the Concentration
Account in accordance with the terms of this Agreement.
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. SERVICER DEFAULTS. If any one of the
following events (each being a "SERVICER DEFAULT") shall occur and be
continuing:
(a) any failure by a Servicer to make any payment,
transfer or deposit, or, if applicable, to give instructions or notice to the
Trustee to make such payment, transfer or deposit, which failure, (i) in the
case of any payment of Yield, continues for five Business Days after the date
such payment is required to be made hereunder and (ii) in the case of any other
payment, transfer or deposit, continues for seven Business Days after the date
such payment, transfer or deposit is required to be made hereunder or
thereunder;
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(b) any failure by a Servicer to give notice to the
Trustee as required in this Agreement, any Supplement or any Enhancement
Agreement, or any failure to provide the Determination Date Certificate to the
Trustee, on or before the date occurring five Business Days after the date such
notice or Determination Date Certificate is required to be made or given, as
the case may be, under the terms of this Agreement, such Supplement or
Enhancement Agreement;
(c) any failure by a Servicer duly to observe or perform
in any material respect any other covenant or agreement to be performed by it
as Servicer set forth in this Agreement, which failure has a material adverse
effect on the interest of the Investors and which continues unremedied for 30
days (or, with respect to any covenant contained in SECTIONS 3.04(a), 3.04(b),
3.04(h) and 3.04(i), continues unremedied for five Business Days) after the
earlier of (i) knowledge of such failure by a Responsible Officer of such
Servicer and (ii) the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to such Servicer by the Trustee,
or to such Servicer and the Trustee by the Majority in Interest of any Series
which is materially and adversely affected by such failure; or such Servicer
shall assign its duties under this Agreement, except as permitted by SECTION
8.02;
(d) any representation, warranty or certification made by
such Servicer under or in connection with this Agreement, or in any certificate
or information delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect in any material respect when made and which
has a material adverse effect on the interests of the Investors of any Series
and which material adverse effect continues for a period of 30 days after the
earlier of (i) knowledge of such failure by a Responsible Officer of either
Servicer and (ii) the date on which written notice thereof, requiring the same
to be remedied, shall have been given (A) to such Servicer by the Trustee or
(B) to such Servicer and the Trustee by the Majority in Interest of any Series
which is materially and adversely affected by such incorrect representation,
warranty or certification; or
(e) an Insolvency Event shall occur with respect to such
Servicer;
then, as long as such Servicer Default shall not have been remedied and is
continuing, then either the Trustee shall, by notice given in writing to the
Servicers at the direction of the Holders of Investor Certificates evidencing
not less than 66 2/3% of the Aggregate Invested Amount (the "REQUISITE
HOLDERS") or the Requisite Holders may, by notice given in writing to the
Servicers and to the Trustee (each such notice being a "TERMINATION NOTICE"),
terminate all but not less than all the rights and obligations of
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each Servicer as a Servicer under this Agreement. The Trustee shall not be
deemed to have knowledge of a Servicer Default unless it has actual knowledge
or if a Responsible Officer has received written notice thereof.
The Majority Investors may, on behalf of all Investors, waive
any default by the Transferor or a Servicer in the performance of their
obligations hereunder and its consequences, except the failure to make any
distributions required to be made to Investors or to make any required deposits
of any amounts to be so distributed. Upon any such waiver of a past default,
such default shall cease to exist, and any such default shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
After receipt by the Servicers of a Termination Notice, and on
the date that a Successor Servicer shall have been appointed pursuant to
SECTION 10.02, all authority and power of such Servicers under this Agreement
shall pass to and be vested in such Successor Servicer (a "SERVICE TRANSFER");
and, without limitation, the Trustee is hereby authorized, empowered and
instructed (upon the failure of either Servicer to cooperate) to execute and
deliver, on behalf of such Servicer, as attorney-in fact or otherwise, all
documents and other instruments upon the failure of such Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such Service
Transfer. Each Servicer agrees to cooperate, at its expense, with the Trustee
and such Successor Servicer in (i) effecting the termination of the
responsibilities and rights of the Servicers to conduct servicing hereunder,
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicers to service the Receivables as provided under this
Agreement, including all authority over all Collections which shall on the date
of such Service Transfer be held by the Servicers for deposit to any Collection
Account, the Concentration Account, the Reserve Account or the Transferor's
Account, or which have been deposited by the Servicers to any Collection
Account, the Concentration Account, or any other account, or which shall
thereafter be received with respect to the Receivables, and (ii) assisting the
Successor Servicer until all servicing activities have been transferred to such
Successor Servicer, such assistance to include, without limitation, (x)
assisting any accountants selected by the Successor Servicer to verify
collection records and reports made prior to the Service Transfer and (y)
assisting the Successor Servicer in making the computer systems of the
Servicers and the Successor Servicer compatible to the extent necessary to
effect the Service Transfer. Each Servicer shall, at its expense, within five
Business Days of such Service Transfer, (A) assemble such documents,
instruments and other records (including computer tapes and discs), which
evidence
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the Receivables and the other Trust Assets, and which are necessary or
desirable to collect the Receivables and shall make the same available to the
Successor Servicer or the Trustee or its designee at a place selected by the
Successor Servicer or the Trustee and in such form as the Successor Servicer or
the Trustee may reasonably request, and (B) segregate all cash, checks and
other instruments received by it from time to time constituting Collections of
Receivables in a manner acceptable to the Successor Servicer and the Trustee,
and, promptly upon receipt, remit all such cash, checks and instruments to the
Successor Servicer or the Trustee or its designee.
At any time following a Termination Notice:
(1) Each Servicer shall, at the Trustee's request
and at such Servicer's expense, give notice of the Trust's ownership
of the Receivables to the related Obligors and direct that payments be
made directly to the Trustee or its designee;
(2) If such Servicer fails to provide the notice
to Obligors required in paragraph (1) above, the Trustee may direct
the Obligors of Receivables, or any of them, that payment of all
amounts payable under any such Receivables be made directly to the
Trustee or its designee;
(3) Each of the Transferor and each Investor
hereby authorizes the Trustee to take any and all steps in the
Transferor's name and on behalf of the Transferor and the Investors
necessary or desirable, in the determination of the Trustee, to
collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Transferor's name on checks and
other instruments representing Collections in respect of such
Receivables and enforcing such Receivables.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in SECTION 10.01(a) for a period of ten Business Days
after the applicable grace period, or under SECTION 10.01(b) for a period of
thirty Business Days after the applicable grace period, shall not constitute a
Servicer Default if such delay or failure could not have been prevented by the
exercise of reasonable diligence by the applicable Servicer and such delay or
failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, computer
system failure, landslides, lightning, fire, hurricanes, earthquakes, floods,
union strikes, work stoppages or similar occurrences. The preceding sentence
shall not relieve the applicable Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement, and such Servicer shall provide the Trustee, the
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Transferor and any Enhancement Provider with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of
its efforts so to perform its obligations.
SECTION 10.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. (a) On and after the receipt by the Servicers of a Termination
Notice pursuant to SECTION 10.01 or upon a resignation by such Servicer
pursuant to SECTION 8.05, each Servicer shall continue to perform all servicing
functions under this Agreement until (i) in the case of any such receipt, the
date specified in such Termination Notice or otherwise specified by the Trustee
in writing or, if no such date is specified in such Termination Notice or
otherwise specified by the Trustee, until the earlier of a date agreed upon by
such Servicers and the Trustee or a date specified by the Trustee in a written
notice to the Servicers, and (ii) in the case of any such resignation, until
the Trustee or a Successor Servicer shall have assumed the responsibilities and
obligations of such Servicer pursuant to this SECTION 10.02. The Trustee shall
as promptly as possible after the giving of a Termination Notice or such a
resignation appoint an Eligible Servicer as a successor servicer (the
"SUCCESSOR SERVICER"), subject to the consent of any Enhancement Providers and
if specified in any Supplement, the consent of the Majority in Interest of the
Investors of the related Series, which consent shall not be unreasonably
withheld, and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Trustee. In the event that a Successor
Servicer has not been appointed or has not accepted its appointment by the
earlier of 60 days after the date of such Termination Notice or at the time
when the applicable Servicers cease to act, the Trustee without further action
shall automatically be appointed the Successor Servicer. The Trustee may
delegate any of its servicing obligations to an affiliate or agent in
accordance with the terms of this Agreement. Notwithstanding the foregoing,
the Trustee shall, if it is legally unable so to act as Successor Servicer,
petition a court of competent jurisdiction to appoint any established
institution that is an Eligible Servicer (other than the Trustee) as the
Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be
the successor in all respects to the Servicers being terminated with respect to
servicing functions under this Agreement performed by such Servicers and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on such Servicers by the terms and provisions hereof, and all references
in this Agreement to a Servicer or the Servicers shall be deemed to refer to
such Successor Servicer; PROVIDED, HOWEVER, that neither the Trustee (solely in
its capacity as such) nor any Successor Servicer shall be deemed in default
hereunder as a result of any predecessor Servicer's failure to deliver
necessary Trust Assets, documents, or records to the Trustee (solely in its
capacity as such) or to such
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Successor Servicer. Any Successor Servicer, by its acceptance of its
appointment, will automatically agree to be bound by the terms and provisions
of any Enhancement Agreement.
(c) In connection with any Termination Notice, the
Trustee will review any bids which it obtains from Eligible Servicers and shall
be permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation not in excess of the Servicing
Fee.
(d) All authority and power granted to the Successor
Servicer under this Agreement shall automatically terminate upon termination of
the Trust pursuant to SECTION 12.01, and shall pass to and be vested in the
Transferor and, without limitation, the Transferor is hereby authorized and
empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees
to cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing of
the Receivables. The Successor Servicer shall transfer its electronic records
relating to the Receivables to the Transferor in such electronic form as the
Transferor may reasonably request and shall transfer all other records,
correspondence and documents to the Transferor in the manner and at such times
and the Transferor shall reasonably request.
(e) Upon the effectiveness of the appointment of a
Successor Servicer, the Successor Servicer shall as soon as practicable upon
demand deliver to each Originator all documents, instruments and records in its
possession which evidence or relate to receivables owned by such Originator
which are not Trust Assets, and copies of documents, instruments and records in
its possession which evidence or relate to such receivables.
SECTION 10.03. NOTIFICATION TO CERTIFICATEHOLDERS. Promptly
and in any event within three Business Days after a Servicer becomes aware of
any Servicer Default, such Servicer shall give written notice thereof to a
Responsible Officer of the Trustee, and the Trustee shall promptly deliver a
copy of such notice to the Investors and each Rating Agency. Upon any
termination of the initial Servicers or appointment of a Successor Servicer
pursuant to this ARTICLE X, the Trustee shall give prompt written notice
thereof to the Transferor and the Investors.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. DUTIES OF TRUSTEE. (a) The Trustee, prior to
the occurrence of a Servicer Default of which it has actual knowledge and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement and no implied duties or covenants shall be read into this Agreement
against the Trustee. If a Servicer Default to the actual knowledge of the
Trustee has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vestedin it by this Agreement and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) The Trustee, upon receipt of any resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement or any Supplement, shall
examine them to determine whether they substantially conform to the
requirements of this Agreement or any Supplement. The Trustee shall give
prompt written notice to the Investors and each Rating Agency of any material
lack of conformity of any such instrument to the applicable requirements of
this Agreement or any Supplement discovered by the Trustee which would entitle
a specified percentage of the Investors to take any action pursuant to this
Agreement or any Supplement.
(c) Subject to SECTION 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; PROVIDED, HOWEVER, that:
(i) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the requisite amount of
Investors specified hereunder for each Series relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement; and
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(iii) the Trustee shall not be charged with knowledge for any
failure by a Servicer to comply with the obligations of the Servicers
referred to in SECTION 10.01 unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure or the Trustee
received written notice of such failure from such Servicer or from
Holders of Investor Certificates evidencing not less than 10% of the
Invested Amount of any Series.
(d) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder or under any Supplement or in the exercise of any of
its rights or powers. None of the provisions contained in this Agreement shall
in any event require the Trustee to perform, or be responsible for the manner
of performance of, any obligations of a Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, a Servicer in
accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
interests of the Trust in any Receivable now existing or hereafter created or
to impair the value of any Receivable now existing or hereafter created.
(f) Except as expressly provided in this Agreement, the
Trustee shall have no power to vary the corpus of the Trust including, without
limitation, by (i) accepting any substitute obligation for a Receivable
initially Transferred to the Trust under SECTION 2.01, (ii) adding any other
investment, obligation or security to the Trust, or (iii) withdrawing from the
Trust any Receivable.
(g) In the event that the Paying Agent or the Transfer
Agent and Registrar shall fail to perform any obligation, duty or agreement in
the manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement or under
any Supplement, the Trustee shall be obligated promptly upon its actual
knowledge thereof to perform such obligation, duty or agreement in the manner
so required.
(h) The Trustee shall have no responsibility or liability
for investment losses on Eligible Investments.
(i) Notwithstanding any other provision contained herein,
the Trustee is not acting as, and shall not be deemed to be, a fiduciary for
any Enhancement Provider and the Trustee's sole responsibility with respect to
any such Enhancement Provider shall
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be to perform those duties with respect to any such Enhancement Provider as are
specifically set forth herein or in any applicable Supplement and no implied
duties or obligations shall be read into this Agreement or such Supplement
against the Trustee with respect to any such Enhancement Provider.
SECTION 11.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except
as otherwise provided in SECTION 11.01:
(a) the Trustee may rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) the Trustee may consult with counsel and any advice
or Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel, and the cost of
obtaining any such Opinion of Counsel shall be an expense of the Trust
reimbursable under SECTION 3.02(b);
(c) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee security or indemnity reasonably satisfactory to the Trustee
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 (which
has not been cured or waived), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(d) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, approval, bond or other paper or document;
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(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
(g) the Trustee shall not be required to make any initial
or periodic examination of any documents or records related to the Receivables
for the purpose of establishing the presence or absence of defects, the
compliance by the Transferor with its representations and warranties or for any
other purposes; and
(h) nothing in this Agreement shall be construed to
require the Trustee to monitor the performance of the Servicers or act as a
guarantor of the Servicers' performance.
SECTION 11.03. TRUSTEE NOT LIABLE FOR RECITALS IN
CERTIFICATES. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates). Except as set forth in SECTION 11.15,
the Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivables or related document. The Trustee
shall not be accountable for the use or application by the Transferor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables
or deposited in or withdrawn from any Collection Account, the Concentration
Account, the Reserve Account, any other Trust Account, the Transferor's Account
or any other account hereafter established to effectuate the transactions
contemplated by and in accordance with the terms of this Agreement and any
Supplement.
SECTION 11.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Investor Certificates and may otherwise deal, and transact banking business,
with any Originator, any Servicer and/or the Transferor with the same rights as
it would have if it were not the Trustee.
SECTION 11.05. COMPENSATION; TRUSTEE'S EXPENSES. (a) The
Trustee shall be entitled to receive a monthly Trustee's fee (which shall not
be limited by any provision of law in regard to compensation of a trustee of an
express trust, such fee being the "TRUSTEE'S FEE") in respect to each
Collection Period (or portion thereof) from the initial Closing Date until the
termination of the Amortization Period, payable in arrears on each Distribution
Date in an amount agreed in writing by the Trustee and the Transferor which
amount shall not exceed $___ per month. The Trustee's Fee
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shall be payable, FIRST, from the Carrying Cost Account or (during the
Amortization Period, the Concentration Account) pursuant to, and subject to the
priority of payment set forth in, SECTION 4.03 of this Agreement and, SECOND,
to the extent not paid from the Trust Accounts, by the Transferor, and, THIRD,
to the extent not paid from the Trust Accounts or by the Transferor, by the
Servicers pursuant to SECTION 3.02(b).
(b) EXPENSES. The Transferor will pay or reimburse the
Trustee upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or any Supplement or in connection with any
amendment hereto (including the reasonable fees and expenses of its agents, any
co-trustee and counsel and fees incurred in connection with any Indemnified
Amounts, any Servicer Default or any Early Amortization Event) except any such
expenses, disbursement or advance as may arise from the Trustee's gross
negligence or bad faith and except as otherwise provided below in this SECTION
11.05(b). In addition to the foregoing, the Servicers will pay or reimburse
the Trustee upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee incurred in connection with any
Servicer Default or Indemnified Amounts with respect to which the Servicers
have provided indemnification under SECTION 8.04 except any such expenses,
disbursement or advance as may arise from the Trustee's gross negligence or bad
faith and except as otherwise provided below in this SECTION 11.05(b). All
such amounts shall be paid by the Transferor and/or, if applicable, by the
Servicers in accordance with the provisions of SECTION 3.02(b). If the Trustee
is appointed Successor Servicer pursuant to SECTION 10.02, the provision of
this SECTION 11.05 shall not apply to expenses, disbursement and advances made
or incurred by the Trustee in its capacity as Successor Servicer, which shall
be paid, FIRST, out of the Servicing Fee, and, SECOND, to the extent not paid
out of the Servicing Fee, by the Transferor pursuant to SECTION 3.02(b). The
Transferor's and Servicers' covenants and disbursements provided for in this
SECTION 11.05 are in addition to, and not in limitation of, any other rights
the Trustee may have under this Agreement (as an Indemnified Party or
otherwise) or under the Receivables Purchase Agreement as an assignee of the
Transferor and such covenants shall survive the termination of this Agreement.
SECTION 11.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The
Trustee hereunder shall at all times be an Eligible Institution. If the
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this SECTION 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in
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accordance with the provisions of this SECTION 11.06, the Trustee shall resign
immediately in the manner and with the effect specified in SECTION 11.07.
SECTION 11.07. RESIGNATION OR REMOVAL OF TRUSTEE. (a) The
Trustee may any time resign and be discharged from the trust hereby created by
giving written notice thereof to the Transferor and each Servicer. Upon
receiving such notice of resignation, the Transferor shall promptly appoint an
Eligible Institution as successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy of which shall be delivered to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of SECTION 11.06 hereof and shall fail to resign
after written request therefor by the Transferor, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent,
or if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, then
the Transferor may remove the Trustee and promptly appoint an Eligible
Institution as successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
of which shall be delivered to the successor trustee.
(c) If at any time the Trustee shall fail to perform its
obligations under this Agreement, the Majority Investors may remove the Trustee
and direct the Transferor to promptly appoint an Eligible Institution as
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy of which
shall be delivered to the successor Trustee.
(d) Notwithstanding anything herein to the contrary, any
resignation or removal of the Trustee and appointment of successor trustee
pursuant to any of the provisions of this SECTION 11.07 shall not become
effective until acceptance of appointment by the successor trustee as provided
in SECTION 11.08 hereof.
SECTION 11.08. SUCCESSOR TRUSTEE. (a) Any successor trustee
appointed as provided in SECTION 11.07 shall execute, acknowledge and deliver
to the Transferor, to the Servicers 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
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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 (with the expenses therefor payable out of
the Servicing Fee, andby the Transferor and the Servicers, pursuant to SECTIONS
3.02(b) and 11.05(b)) to the successor trustee all documents or copies thereof
and statements held by it hereunder; and the Transferor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided
in this SECTION 11.08 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of SECTION 11.06 hereof.
(c) Upon acceptance of appointment by a successor trustee as
provided in this SECTION 11.08, such successor trustee shall mail notice of
such succession hereunder to all Investors.
SECTION 11.09. MERGER OR CONSOLIDATION OF TRUSTEE. Any
Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation in which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of SECTION 11.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 11.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more persons to
act as a co-trustee, or co-trustees, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
SECTION 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under SECTION 11.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
SECTION 11.08 hereof.
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(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as Successor Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this ARTICLE XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Servicers.
(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 of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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SECTION 11.11. TAX RETURNS. No federal income tax return
shall be filed on behalf of the Trust unless either (i) the Trustee or the
Servicers shall receive an Opinion of Counsel based on a change in applicable
law occurring after the date hereof that the Internal Revenue Code requires
such a filing or (ii) the Internal Revenue Service shall determine that the
Trust is required to file such a return or (iii) the Trust is required to file
such a return by order of a court of competent jurisdiction. In the event the
Trust shall be required to file tax returns, the Master Servicer shall prepare
or to cause to be prepared any tax returns required to be filed by the Trust
and shall remit such returns to the Trustee for signature at least five days
before such returns are due to be filed; the Trustee shall promptly sign such
returns and deliver such returns after signature to the Master Servicer and
such returns shall be filed by the Master Servicer. The Trustee, the Paying
Agent and the Transfer Agent and Registrar, upon request, will each furnish the
Master Servicer with all such information known to such Person as may be
reasonably required in connection with the preparation of all tax returns of
the Trust, and the Trustee shall, upon request of the Master Servicer, execute
such returns. In no event shall the Trustee, any Servicer or the Transferor be
liable for any liabilities, costs or expenses of the Trust or the Investors
arising out of the application of any tax law, including federal, state,
foreign or local income or excise taxes or any other tax imposed on or measured
by income (or any interest penalty or addition with respect thereto or arising
from a failure to comply therewith).
SECTION 11.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 11.13. SUITS FOR ENFORCEMENT. (a) If a Servicer
Default shall occur and be continuing, the Trustee, in its discretion may,
subject to the provisions of SECTIONS 11.01 and 11.14, proceed to protect and
enforce its rights and the rights of the Certificateholders under this
Agreement by suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable or other remedy
as the Trustee, being advised by counsel, shall deem
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most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
(b) 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 Certificateholders or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
SECTION 11.14. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT
TRUSTEE. The Majority Investors shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; PROVIDED,
HOWEVER, that subject to SECTION 11.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee after being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Investor Certificateholders not parties to such direction; and,
PROVIDED, FURTHER, that nothing in this Agreement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of the Investors unless the Majority Investors
shall have directed the Trustee not to take such action.
SECTION 11.15. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee represents and warrants that:
(a) The Trustee is a national banking association;
(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery and performance by it of this Agreement;
and
(c) this Agreement has been duly executed and delivered by
the Trustee.
SECTION 11.16. MAINTENANCE OF OFFICE OR AGENCY. The Trustee
will maintain at its expense, an office or agency (the "CORPORATE TRUST
OFFICE") where Certificates may be presented for registration of transfer. The
Trustee initially designates its office or agency at 111 Wall Street, 5th
Floor, New York City, New York, 10043 as such office. The Trustee will give
prompt written notice to the Servicers and to Certificateholders of any change
in
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the location of the Certificate Register or any such office or agency.
ARTICLE XII
TERMINATION
SECTION 12.01. TERMINATION OF TRUST. (a) The Trust and the
respective obligations and responsibilities of the Transferor, the Servicers
and the Trustee created hereby (other than the obligation of the Trustee to
make payments to Certificateholders and to the Transferor as hereinafter set
forth) shall terminate, except with respect to the duties described in SECTIONS
3.02(b), 7.03, 8.04, 11.05 and 12.02(b), upon the earlier to occur of (i)
December 31, 2004 and (ii) the day following the Distribution Date on which (x)
the final distribution for each Series is made in accordance with this ARTICLE
XII and under the related Supplement and (y) the amount allocated to the
Transferor Revolving Certificate has been reduced to zero.
(b) Notwithstanding the foregoing, the last payment of the
principal of and Yield on the Investor Certificates of any Series shall be due
and payable no later than the Final Scheduled Payment Date. If, on or before
the Final Scheduled Payment Date, the Master Servicer determines that the
Aggregate Invested Amount will exceed zero as of the Final Scheduled Payment
Date (after giving effect to all distributions to be made on such date under
SECTION 4.03(c)), the Master Servicer shall, or shall engage a Qualified Sale
Agent to, solicit bids for the sale of interests in the Transferor Receivables
and Related Security which are included in the Trust Assets at an asking price
equal to 110% of the Aggregate Invested Amount on the Final Scheduled Payment
Date (after giving effect to all distributions required to be made on such date
under SECTION 4.03(c)). The proceeds of any such sale, disposition or
liquidation will be treated as Collections on the Receivables and shall be
immediately deposited in the Concentration Account for further distribution in
accordance with the terms of this Agreement. The Transferor shall be entitled
to participate in and to receive notice of each bid submitted in connection
with such bidding process. Upon the expiration of such period, the Master
Servicer shall determine (a) the highest cash purchase offer from any bidder
and (b) the amount of Collections on deposit in the Trust Accounts available
for distribution pursuant to the terms of this Agreement. The Master Servicer
shall sell such interests in the Trust Assets on the Final Scheduled Payment
Date to the bidder which has made the highest cash purchase offer and shall
deposit the proceeds of such sale in the Concentration Account for allocation
(together with the amounts described in clause (b) of the immediately preceding
sentence) for distribution to the Certificateholders.
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SECTION 12.02. FINAL DISTRIBUTION. (a) The Servicers shall
give the Trustee and the Transferor, and the Trustee shall give each Investor,
at least twenty days' prior written notice of the date on which (i) the Trust
is expected to terminate in accordance with SECTION 12.01 and (ii) the
Certificateholders shall surrender their Certificates for payment of the final
distribution on, and cancellation of, such Certificates. Such notice shall be
accompanied by an Officer's Certificate setting forth the information specified
in SECTION 3.06 covering the period during the then-current calendar year
through the date of such notice. Not later than five Business Days after the
Trustee shall receive such notice, the Trustee shall mail notice to the
Certificateholders specifying (i) the date upon which such final distribution
will be made upon presentation and surrender of such Certificates at the office
or offices therein designated, (ii) the amount of any such final distribution
and (iii) that the Distribution Date otherwise applicable to such final
distribution is not applicable, payments being made only upon presentation and
surrender of such Certificates at the office or offices therein specified.
Each such Certificateholder shall surrender its Certificate to the Trustee
following receipt of the final distribution thereon and any remaining amounts
shall be distributed to the Transferor in consideration of the Deferred Payment
Right. The Trustee shall give such notice to the Transfer Agent and Registrar
and the Paying Agent at the time such notice is given to the
Certificateholders.
(b) Notwithstanding the Servicers' delivery to the Trustee,
or the Trustee's delivery to the Certificateholders, of the notices required
under SECTION 12.02(a), all funds then on deposit in the Concentration Account,
the Reserve Account, any Series Account, any Defeasance Account, any other
Trust Account or the Transferor's Account shall continue to be held in trust
for the benefit of the Certificateholders (including, for purposes of this
SECTION 12.02, the Transferor as the holder of the Deferred Payment Right), and
the Paying Agent or the Trustee shall pay such funds to the Certificateholders
upon surrender of their Certificates pursuant to, and subject to the priorities
set forth in, the applicable Supplement, as if such surrender date were on a
Distribution Date (and any excess shall be paid in accordance with the terms of
any Enhancement Agreement). In the event that all Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice from the Trustee, the Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds
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in the Trust Accounts (if such Certificateholders are Investors) or the
Transferor's Account (if any such Certificateholder is the Holder of the
Transferor Revolving Certificate) held for the benefit of such
Certificateholders. The Trustee and the Paying Agent shall pay to the
Transferor any monies held by them for the payment of principal or interest
that remains unclaimed for two years. After payment to the Transferor,
Investors entitled to the money must look to the Transferor for payment as
general creditors unless an applicable abandoned property law designates
another person.
SECTION 12.03. TRANSFEROR'S TERMINATION RIGHTS. Upon the
termination of the Trust pursuant to SECTION 12.01, the payment in full of all
amounts due to the Investors, the payment of the Trustee's fees and expenses
and the surrender of the Transferor Revolving Certificate, the Trustee shall
assign and convey to the Transferor (as the holder of the Deferred Payment
Right) or its designee, without recourse, representation or warranty, all
right, title and interest of the Trust in and to the Receivables, whether then
existing or thereafter created, and all other Trust Assets, and all proceeds
thereof except for amounts held in any account by the Trustee or the Paying
Agent pursuant to SECTION 12.02(b). The Trustee at the expense of the
Transferor shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, representation or warranty, as shall
be prepared by the Transferor for execution by the Trustee which are reasonably
requested by the Transferor to vest in the Transferor all right, title and
interest which the Trust had in the Receivables and all other Trust Assets.
SECTION 12.04. OPTIONAL REPURCHASE OF TRUST ASSETS. On any
Distribution Date occurring on or after the Amortization Date when the
Aggregate Invested Amount is reduced to 10% or less of the Aggregate Invested
Amount as of the Amortization Date, the Transferor shall have the option, upon
giving twenty days' prior written notice to the Servicer, the Trustee and the
Rating Agencies, to repurchase the Aggregate Investors' Interest in the Trust
by depositing into the Concentration Account, on such Distribution Date, an
amount equal to the Aggregate Invested Amount as of such Distribution Date plus
accrued and unpaid Yield plus any other amounts, if any, which may be owed to
the Investors pursuant to the applicable Supplements or this Agreement;
PROVIDED, however, that if at such time the long-term unsecured debt
obligations of either of the Originators are not rated at least Baa-3 by
Moody's and BBB- by S&P, then such repurchase may not be funded through funds
other than Transferor Collections retained by the Transferor unless one of the
following conditions is satisfied: (i) the Transferor provides an Opinion of
Counsel (containing such assumptions and qualifications as are customary) to
the effect that such purchase would not constitute a fraudulent conveyance by
the Transferor or (ii) the Transferor provides a certificate from an
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independent accountant, investment banking firm or valuation research firm that
such purchase price represents a fair market value for the Investor
Certificates. Such notice shall be accompanied by a notice of a final
distribution in accordance with SECTION 12.02. The Trustee shall treat such
deposits as Collections on the Receivables allocable to the Aggregate
Investors' Interest and shall distribute such amounts to the Investors in
accordance with the terms hereof and the applicable Supplements upon
presentation and surrender of the Certificates as provided under SECTION 12.02.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT. (a) This Agreement or any
Supplement may be amended from time to time by the Servicers, the Transferor
and the Trustee without the consent of any of the Investors, (i) to cure any
ambiguity, (ii) to correct or supplement any provision herein or in any
Supplement which may be inconsistent with any other provision herein or
therein, (iii) to evidence the succession of another Person to any Originator,
the Transferor, any Servicer and/or the Trustee in each case to the extent that
such succession is otherwise permitted under the terms of this Agreement and,
if applicable, the Receivables Purchase Agreement, (iv) to add any other
provisions with respect to matters or questions arising under the Agreement or
any Supplement which are not inconsistent with the provisions of the Agreement
or such Supplement and (v) to change or eliminate any provisions of this
Agreement or any Supplement in order to maintain the outstanding rating of any
outstanding Series or Class of Investor Certificates; PROVIDED, that any
amendment pursuant to this paragraph (a) shall not, as evidenced by an
Officer's Certificate of the Servicers, adversely affect in any material
respect the interests of any Investors. No such Supplement or amendment to
this Agreement or any Supplement pursuant to this SECTION 13.01 shall become
effective unless a copy thereof shall have been sent to each Rating Agency and
the Rating Agency Condition shall have been satisfied with respect thereto.
The Trustee may request an Officer's Certificate and Opinion of Counsel with
respect to any such amendment concerning compliance with the requirements of
this Agreement.
(b) This Agreement or any Supplement may be amended from time
to time by the Servicers, the Transferor and the Trustee, with the consent of
the Majority in Interest of each adversely affected Series, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Investors; PROVIDED, HOWEVER, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, distributions to be
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made to any Investor or deposits of amounts to be so distributed or the amount
available under any Enhancement without the consent of such affected Investor,
(ii) change the definition of or the manner of calculating the Investors'
Interest or the Aggregate Investors' Interest without the consent of each
affected Investor, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor or (iv) cause any
adverse tax effect for an Investor without the consent of each affected
Investor. The Trustee may request an Officer's Certificate and Opinion of
Counsel with respect to an amendment entered into pursuant to this SECTION
13.01(b) concerning compliance with the requirements of this Agreement. Any
amendment to be effected pursuant to this paragraph shall be deemed to
adversely affect all outstanding Series. No such amendment to this Agreement
or any Supplement pursuant to this SECTION 13.01(b) shall become effective
unless a copy thereof shall have been sent to each Rating Agency and either (i)
the Rating Agency Condition shall have been satisfied with respect thereto or
(ii) if the Rating Agency Condition is not so satisfied, the Investors holding
Certificates evidencing not less than 66-2/3% of the Invested Amount of each
Series whose rating is or would be adversely affected thereby shall have
consented thereto in writing.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to SECTION 13.01(a)), the Trustee
shall furnish written notification of the substance of such amendment to each
affected Investor and each Enhancement Provider.
(d) It shall not be necessary for the consent of Investors
under this SECTION 13.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investors shall be subject to such
reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this SECTION 13.01 to the
contrary, no amendment may be made to this Agreement or any Supplement without
the consent of any Enhancement Provider unless such amendment would not (as
evidenced by an Officer's Certificate of the Servicers) adversely affect in any
material respect the interests of such Enhancement Provider.
(f) Any Supplement executed in accordance with the provisions
of SECTION 6.09 shall not be considered an amendment to this Agreement for the
purposes of this SECTION 13.01.
(g) Prior to the execution of any amendment to this Agreement
or any Supplement, the Trustee and any Enhancement Provider shall be entitled
to receive and rely upon an Opinion of
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Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement, any Supplement or otherwise.
SECTION 13.02. PROTECTION OF RIGHT, TITLE AND INTEREST TO
TRUST. (a) The Servicers shall cause this Agreement, all amendments hereto
and all financing statements and continuation statements and any other
necessary documents covering the Certificateholders' and the Trustee's right,
title and interest in and 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 to preserve and protect
fully the right, title and interest of the Certificateholders and the Trustee
hereunder in and to all property comprising the Trust. The Servicers shall
deliver to the Trustee file-stamped copies of, or filing receipts for, each
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferor shall
cooperate fully with the Servicers in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this SECTION 13.02(a).
(b) Within 30 days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with the terms of this
Agreement seriously misleading within the meaning of Section 9-402(7) (or any
comparable provision) of the UCC as in effect in the jurisdiction the law of
which governs the perfection of the interest in the Trust Assets created
hereunder, the Transferor shall give the Trustee notice of such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's interest in the Trust Assets and the
proceeds thereof contemplated by SECTION 2.01 hereof.
(c) The Transferor and the Servicers will give the Trustee
prompt written notice of any relocation of any office from which any of them
service Receivables or keep records concerning the Receivables or of their
principal executive offices and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new
financing statement and shall file such financing statements or amendments as
may be necessary to perfect or to continue the perfection of the Trust's
interest in the Receivables and the other Trust Assets and the proceeds thereof
contemplated by SECTION 2.01 hereof. The Transferor and the Servicers will at
all times main-
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tain each office from which they service Receivables and their principal
executive offices within the United States of America.
SECTION 13.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Investor shall not operate to terminate
this Agreement or the Trust, nor shall such death or incapacity entitle such
Investors' legal representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or winding up of
the Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Certificateholder shall have the right to vote (except
as expressly provided in this Agreement, including without limitation under
SECTION 11.14) or in any manner otherwise control the operation and management
of the Trust, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed
so as to constitute the Certificateholders from time to time as partners or
members of an association nor shall any Investor 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 Investor shall have any right by virtue of any
provisions of this Agreement to file or otherwise institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Investor previously shall have made, and unless the Majority
Investors shall have made, a written request to the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after such request and offer of indemnity, shall have
failed to file or otherwise refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted,
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Certificateholders shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the holders of any
of the Investor Certificates, or to obtain or seek to obtain priority over or
preference to any such Investor, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Investors. For the protection and enforcement of the provisions
of this SECTION 13.03, each and every Investor and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Agreement, the Certificates or any
Supplement, each Investor shall have the right to receive the payments of all
amounts due hereunder, under the Certificates held by such Holder
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and under the Supplement relating to the Series of Certificates held by such
Holder and the right to institute suit for the enforcement of any such payment
without the consent of the Trustee or any other Holder.
(d) By its acceptance of the Transferor Revolving
Certificate, the Holder thereof agrees that it will take no action with respect
to such Holder's rights under the Agreement that is inconsistent with, or
adverse to, the interests of the Investors.
SECTION 13.04. GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[(b) JURISDICTION. Each of the parties hereto hereby
irrevocably and unconditionally submits to the nonexclusive jurisdiction of any
federal court of the United States of America sitting in New York City or, if
jurisdiction is not available in such federal court, New York State court, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.]
(c) CONSENT TO SERVICE OF PROCESS. Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in SECTION 13.05. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
SECTION 13.05. NOTICES; PAYMENTS. (a) All demands, notices,
instructions, directions, requests, authorizations and communications
(collectively, "NOTICES") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Transferor, to Centerior Funding Corporation, Suite 350, 1013
Centre Road, Wilmington, Delaware 19805, Attention: ___________, (ii) in the
case of CEI, to The Cleveland Electric Illuminating Company, c/o Centerior
Energy Corporation, 6200 Oak Tree Boulevard, Independence, Ohio 44131,
Attention: _________, (iii) in the case
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of TE, to The Toledo Edison Company, 300 Madison Avenue, Toledo, Ohio 43652,
Attention: _________, (iv) in the case of the Trustee (including in its
capacity as Paying Agent), to 120 Wall Street, New York, New York 10043,
Attention: _________________, (v) in the case of the Trustee in its capacity as
Transfer Agent and Registrar, to 111 Wall Street, New York, New York
10043, Attention: ___________ or, as to each such party, at such other address
or facsimile number as shall be designated by such party in a written notice to
each other party. In the case of any Successor Servicer, successor Trustee or
any successor Paying Agent or successor Transfer Agent and Registrar, notices
shall be given to such Person at the address designated by it in a notice to
the other parties hereto at the addresses designated above as applicable.
(b) Any Notice required or permitted to be mailed to an
Investor shall be given by first-class mail, postage prepaid, at the address of
such Investor as shown in the Certificate Register. Notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Investor receives such notice.
(c) If the Transferor is not the Holder of the Transferor
Revolving Certificate, the Holder of the Transferor Revolving Certificate shall
be entitled to receive all notices which the Investors receive.
SECTION 13.06. RULE 144A INFORMATION. In the event that and
for so long as any of the Investor Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act, the
Transferor, the Servicers and any Enhancement Provider agree to cooperate with
each other to provide to each Investor of such Series or Class and to each
prospective purchaser of the applicable Investor Certificates designated by
such an Investor, upon the request of such Investor or prospective purchaser,
any information required to be provided to such holder or prospective purchaser
to satisfy the condition set forth in Rule 144A(d)(4) under the Act (or any
successor provision).
SECTION 13.07. SEVERABILITY OF PROVISIONS. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other covenants, agreements, provisions
or terms of this Agreement or of the Certificates or rights of the
Certificateholders.
SECTION 13.08. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, (i) this Agreement may not be assigned by the
Transferor, and (ii) except as provided in SECTION
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8.02, this Agreement may not be assigned by either Servicer without the prior
consent of the Majority in Interest of each Series.
SECTION 13.09. CERTIFICATES NONASSESSABLE AND FULLY PAID. It
is the intention of the parties to this Agreement that the Investors shall not
be personally liable for obligations of the Trust, that the Transferor shall
not be personally liable for obligations of the Trust except as otherwise
expressly provided herein, that the interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever and that Certificates upon authentication thereof by
the Trustee pursuant to SECTION 6.02 are and shall be deemed fully paid.
SECTION 13.10. FURTHER ASSURANCES. The Transferor and the
Servicers agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments and documents required or reasonably
requested by the Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
SECTION 13.11. NONPETITION COVENANT. Notwithstanding any
prior termination of this Agreement, the Servicers, the Trustee and the
Transferor shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Trust, acquiesce, petition or
otherwise invoke or cause the Trust to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against the Trust
under any Federal or state bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Trust.
SECTION 13.12. NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of any Person, 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
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
SECTION 13.13. COUNTERPARTS. This Agreement may be executed
in two or more counterparts and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
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SECTION 13.14. 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 Agreement, no other Person will have any
right or obligation hereunder.
SECTION 13.15. ACTIONS BY INVESTORS. (a) Wherever in this
Agreement a provision is made that an action may be taken or a Notice given by
Investors, such action or Notice may be taken or given by any Investor, unless
such provision requires a specific percentage of Investors.
(b) Any Notice, consent, waiver or other act by the Holder of
a Certificate shall bind such Holder and every subsequent Holder of such
Certificate and of any Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Servicers in reliance thereon,
whether or not notation of such action is made upon such Certificate.
SECTION 13.16. MERGER AND INTEGRATION. Except as
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 13.17. HEADINGS. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
SECTION 13.18. CONSTRUCTION OF AGREEMENT. The Transferor
hereby grants to the Trustee on behalf of the Trust a security interest in all
of the Transferor's right, title and interest in, to and under the Transferor
Receivables now existing and hereafter created, all monies due or to become due
and all amounts received with respect thereto, and all other Trust Assets, and
all "proceeds" thereof, to secure all the Transferor's and the Originators'
obligations hereunder, including, without limitation, the Transferor's
obligation to transfer and convey to the Trust all Receivables existing on the
date hereof or hereafter created and transferred to the Transferor from time to
time under the Receivables Purchase Agreement. This Agreement shall constitute
a security agreement under applicable law.
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IN WITNESS WHEREOF, the Transferor, the Servicers and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
CENTERIOR FUNDING CORPORATION
Transferor
By:___________________________
Name:
Title:
THE CLEVELAND ELECTRIC ILLUMINATING
COMPANY and THE TOLEDO EDISON
COMPANY,
as Servicers
By:___________________________
Name:
Title:
CITIBANK, N.A., as Trustee
By:___________________________
Name:
Title:
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EXHIBIT A
---------
FORM OF TRANSFEROR REVOLVING CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SUCH ACT.
CENTERIOR ENERGY RECEIVABLES MASTER TRUST
TRANSFEROR REVOLVING CERTIFICATE
THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST
IN CERTAIN ASSETS OF THE CENTERIOR ENERGY RECEIVABLES
MASTER TRUST
the corpus of which consists primarily of certain receivables generated from
time to time by The Cleveland Electric Company ("CEI") and The Toledo Edison
Company ("TE" and, together with CEI, collectively, the "Originators") and
purchased by Centerior Funding Corporation (the "Transferor"), which in turn
transfers and assigns such receivables to the Centerior Energy Receivables
Master Trust. This certificate does not represent any recourse obligation of,
and is not guaranteed by, the Transferor, any Originator or any Affiliate of
any of them.
This certifies that Centerior Funding Corporation is the
registered owner of the fractional undivided interest (the "Transferor
Interest") in the assets of the Centerior Energy Receivables Master Trust (the
"Trust") not represented by the Investor Certificates pursuant to that certain
Pooling and Servicing Agreement, dated ______________, 1996 (as supplemented or
modified, the "Agreement"), by and among the Transferor, CEI and TE, as
Servicers, and Citibank, N.A. as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement.
The corpus of the Trust consists of (i) a portfolio of
receivables (the "Receivables") transferred under the Agreement from time to
time, (ii) funds collected or to be collected from Obligors in respect of the
Receivables, (iii) all funds which are from time to time on deposit in the
Collection Accounts, the Concentration Account and any other account or
accounts held for the benefit of Certificateholders, and (iv) all other assets
and interests constituting the Trust Assets.
122
This Certificate is issued under and is subject to the terms,
provisions and conditions of 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, the Servicers and the other parties bound by the Agreement.
This Certificate is the Transferor Revolving Certificate,
which represents an interest in the Trust, including the right to receive
Collections and other amounts at the times and in the amounts specified in the
Agreement to be paid to the holder of the Transferor Revolving Certificate. In
addition to this Certificate, Investor Certificates are being issued pursuant
to the Agreement, which will represent the interests of Investors in the Trust.
The Transferor has the right to receive deferred compensation from the
Investors' Interests in the Trust, which deferred compensation right (i) is
payable from the interests of the Investors in the Trust and (ii) if so
received, will be applied towards the payment of this Certificate as provided
in the Agreement. This Certificate shall not represent any interest in the
Concentration Account or other account or Trust Asset except as provided in the
Agreement.
This Certificate does not represent an obligation of, or an
interest in, the Transferor, any Servicer, any Originator or any Affiliate of
any of them. This Certificate is limited in right of payment to certain
Collections of the Receivables (and certain other amounts), all as more
specifically set forth in the Agreement.
This Certificate may not be transferred or pledged except as
otherwise permitted under Sections 2.06(a) and 2.06(k) of the Agreement.
Subject to certain conditions in the Agreement, the
obligations created by the Agreement and the Trust created thereby shall
terminate upon the earliest of (i) December 31, 2004 and (ii) the day following
the Distribution Date on which the amount allocated to this Transferor
Revolving Certificate is zero.
By its acceptance of this Transferor Revolving Certificate,
the Holder hereof agrees that it will take no action with respect to such
Holder's rights under the Agreement that is inconsistent with, or adverse to,
the interests of the Investors as provided under the Agreement.
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123
Upon termination of the Trust pursuant to Article XII of the
Agreement, subject to the provisions of the Agreement, payment in full of the
Investors and the surrender of this Certificate, this Certificate shall be
repaid in full and the Trustee shall assign and convey to the Transferor, all
right, title and interest of the Trust in the Trust Assets, whether then
existing or thereafter created, including the Receivables and all proceeds
thereof, except for amounts held by the Trustee pursuant to subsection 12.02(b)
of the Agreement. The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Transferor to vest in the Transferor all right, title and
interest which the Trust has in the Trust Assets.
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 Transferor has caused this Certificate to be duly
executed.
Dated: ________________________
CENTERIOR FUNDING CORPORATION
By:__________________________
Name:
Title:
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124
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the
within-mentioned Pooling and Servicing Agreement.
Dated:___________________, 1996
CITIBANK, N.A.,
not in its individual capacity but
solely as Trustee
By:__________________________ OR
Authorized Officer
______________________________
Authenticating Agent for the
Trustee
By:__________________________
Authorized Officer
A-4
125
EXHIBIT B
---------
FORM OF DAILY REPORT
PART I
INSTRUCTIONS TO TRUSTEE
Series 1996-1
(A) ON EACH DEPOSIT DATE (NO SET-ASIDE PERIOD)
- ----------------------------------------------
(i) Transfer to Carrying Cost Account the
Required Carrying Cost Amount
(ii) Transfer Collections from Concentration Account
to Transferor Account (Compliance Date)
(iii) Transfer Cure Funds in the Reserve Account
to the Transferor's Account (Transaction
Must be in Compliance)
(B) ON EACH DEPOSIT DATE (SET ASIDE PERIOD)
- -------------------------------------------
(i) Retain Collections in Concentration Account
to cover Carrying Cost Amount N/A
(ii) Transfer Investor Collections to the Reserve
Account up to an amount until Net Invested Amount = Base Amount N/A
(iii) Transfer Collections to any Defeasance
Account if requested or required for any
other Series (transaction must be in compliance) N/A
(iv) Transfer Remaining Collections from
Concentration Account to Transferor Account N/A
(C) ON EACH DEPOSIT DATE (EARLY AMORTIZATION OR
- -----------------------------------------------
AMORTIZATION PERIOD)
- --------------------
(i) Retain Investor Collections in Concentration Account or
Defeasance Account for Distribution to Each Series N/A
(ii) Transfer Transferor Collections from Concentration
Account to the Transferor's Account (after payment of fees and
expenses) N/A
(D) ON THE FIRST BUSINESS DAY IMMEDIATELY AFTER
- -----------------------------------------------
EARLY AMORTIZATION OR AMORTIZATION PERIOD
- -----------------------------------------
(i) Transfer Cure Funds in the Reserve Account
to the Defeasance Accounts
126
FORM OF DAILY REPORT (continued)
PART II
REQUIRED BASE AMOUNT COMPLIANCE
Series 1996-1
O/S Invested Amount of all Series
LESS: (1) Cure Funds for all Series
(2) Concentration or Defeasance Account Funds allocated to
Principal of any Series
Net Invested Amount [O/S Invested Amount of all
Series reduced by (1) and (2)]
Net Receivables Balance
MINUS: Carrying Cost Reserve for all Series
Loss and Dilution Reserve for all Series
Base Amount
Net Invested Amount
Does Base Amount Exceed or Equal Net Invested Amount? (Y/N)
If "No", amount of Cure Funds required to put
the transaction in compliance
127
FORM OF DAILY REPORT (continued)
PART III
CASH ALLOCATION
Series 1996-1 Transferor Total
Allocation Percentage 100.00%
Collections Received since Date of Prior
Daily Report
Less: Collections Not Applicable to
Trust Receivables
Net Collections Available for Allocation
(i) Collections Allocated as Transferor
Collections N/A N/A
(ii) Collections Allocated as Investor
Collections (Note: If no Amortization
Period, (ii) = Net Collections
Available for Allocation)
Carrying Cost Amount Required
(Reflects Cumulative Required Balance)
Funds Held in the Carrying Cost Account
Additional Funds Required to be
Deposited as Carrying Cost Account
Investor Collections from (ii) above
Deposited to Carrying Cost Account
as additional Carrying Cost Amount
Cure Funds Required
Funds held in the Reserve Account to cover
the Required Net Invested Amount
Additional Funds Required to be Deposited
as Cure Funds to the Reserve Account
Collections Deposited to Reserve Account
Remaining Collections
128
FORM OF DAILY REPORT (continued)
PART IV
PORTFOLIO INFORMATION
1/ Portfolio Aging Data below reflect exclusion of PIP receivables, credit
balances of Budget Billing, Deposit balances, DFA Not Due
Aging Category 0-30 Days 31-59 Days 60-89 Days 90+ Days
Unbilled From Invoice From Invoice From Invoice From Invoice Total
Receivables Pool Balance 1/
Percentage to Total % % % % % 100.00%
Amount of delinquent Receivables with original due dates extended (other than
under the Deferred Payment Plan)
129
FORM OF DAILY REPORT (continued)
PART V
NET RECEIVABLES BALANCE
Gross Receivables Pool
Less: PIP, restructured into DPP, Deposits and
other Ineligibles
Defaulted Receivables (60+ Days From Invoice) Government Receivables
Unbilled Receivables allocated to
ineligible obligors 1/
Eligible Receivables Pool Balance
Less: Credit Adjustment under Budget Billing Plan
Deduction due to Cash Payments
Cum. Rate Increase subject to PUCO final approval Excess Concentration
Amount Unapplied Collections
Net Receivables Balance
1/ Calculated as the product of (A) the sum of (i) the % of PIP Usage to
Revenue, (ii) the % of Government Receivables Balance to Billed
Receivables, (iii) the % of other Ineligible Obligor Receivables
Balance to Billed Receivables and (B) the Unbilled Receivables
Balance.
$ to Billed
$ Amount A/R
PIP Dollar Usage 1/
Centerior Billed Revenue 1/
Government Receivables as of this
Report Date
Other Ineligible Obligor Receivables
Balance as of this Report Date
Billed Receivables as of this
Report Date
1/ Recalculated at the start and middle of each month and represent one
month's aggregate amount, i.e. (i) for the calculation done at the
start of the month, the data will be from the start of the previous
month to the end of the previous month and (ii) for the calculation
done during the middle of the month, the data will be from the middle
of the previous month to the middle of the current month.
130
FORM OF DAILY REPORT (continued)
PART VI
CARRYING COST AMOUNT
Series 1996-1
% of each Series to the Floating
Allocation Percentage
Series Certificate Rate
No. of Days until the Next Distribution
Date (See Note Below)
Note: Until the Series' First Distribution Date,
the No. of Days until the Next Distribution Date
will be 1.5 months rather than one calendar month.
No. of Days from Next Distribution Date to
Following Distribution Date
Servicing Fee Per Annum Rate
(For Carrying Cost Amount) 1.00%
Servicing Fee Per Annum Rate
(For Carrying Cost Reserve) 2.00%
Series 1996-1 Invested Amount at
end of Prior Collection Period
Yield/Servicing Fee to accrue until the
Next Distribution Date
Yield/Servicing Fee to accrue from Next
Dist. Date to Following Dist. Date
Total Yield Needed to be set aside
for this Period
Monthly Trust Expense Amount
Trustee Expenses (@ 2,500)
Trustee Fees (@ 3,000)
Servicing Fee
Total
Total Required Carrying Cost Amount
to be set aside for this Period
131
FORM OF DAILY REPORT (continued)
Cumulative Required Carrying Cost Amount
(Net of Any Payments Made)
a) Monthly Period 1 Carrying Cost Amount
(Net of Any Payments Made)
b) Monthly Period 2 Carrying Cost Amount
(Net of Any Payments Made)
c) Monthly Period 3 Carrying Cost Amount
(Net of Any Payments Made)
d) Monthly Period 4 Carrying Cost Amount
(Net of Any Payments Made)
e) Monthly Period 5 Carrying Cost Amount
(Net of Any Payments Made)
f) Monthly Period 6 Carrying Cost Amount
(Net of Any Payments Made)
Total Cumulative Carrying Cost Amount Required
in the Carrying Cost Account
(Net of Any Payments Made)
Total Carrying Cost Account Balance as of
Last Daily Report Date
Additional Carrying Cost Amount to be
Allocated in the Carrying Cost Account
132
FORM OF DAILY REPORT (continued)
PART VII
CARRYING COST RESERVE
Series 1996-1
Accrued and Unpaid Carrying Cost Amount
Less: Amount in the Carrying Cost Account
Net Amount to be added in Carrying Cost Reserve
Invested Amount
Weighted Average Certificate Rates
(Includes Successor Servicer Fee)
Turnover Days
Turnover Days Stress Factor
Total Carrying Cost Reserve
133
FORM OF DAILY REPORT (continued)
PART VIII
LOSS AND DILUTION RESERVE
Series 1996-1
(A) Invested Amount (at the end
of the Last Daily Report)
Less: (1) Cure Funds
(2) Partial Amortization Amount
(B) Invested Amount net of (1) and (2)
(C) Carrying Cost Reserve
(D) Net Invested Amount + Carrying Cost
Reserve (B+C)
(E) Loss and Dilution Reserve Percentage
(Most recent Distribution Date)
(F) Loss and Dilution Reserve
The sum of:
(i) (NRP) x ("B"LDRP)
(ii) MAX ("0", [(NRP) x (A"LDRP)]-
[("B"IA)+ ("NRPB) x ("B"LDRP)])
(G) Invested Amount + Carrying Cost Reserve +
Loss and Dilution Reserve
(H) Net Receivables Pool - Required Loss
and Dilution Reserve
FLOATING/SERIES ALLOCATION PERCENTAGE
(i) Floating Allocation Percentage [(D)/(H)]
Is Floating Allocation Percentage Greater than 100%? (Y/N)
134
FORM OF DAILY REPORT (continued)
PART IX
EXCESS CONCENTRATION AMOUNT
S&P Moody's Concentration Limit
Concentration Limits: A-1+ or AA P-1 or Aa3 7.00%
A-1 or A+ P-1 or A2 5.50%
A-2 or BBB+ P-2 or Baa1 4.00%
A-3 or BBB- P-3 or Baa3 3.00%
Non-Rated/Other Non-Rated/Other 1.50%
Unpaid Billed
+ Unbilled
Concentration Limit Concentration Receivables
Obligor Obligor Debt Rating Percentage Limit ($) Balance
1 Obligor 1
2 Obligor 2
3 Obligor 3
4 Obligor 4
5 Obligor 5
6 Obligor 6
7 Obligor 7
8 Obligor 8
9 Obligor 9
10 Obligor 10
11 Obligor 11
Total Excess Concentration Amount
Pro-forma Calculations of Major Obligor Outstandings (Billed and Unbilled)
Billed Amount Has Billed No. of Days
in Most Recent Amount Been Since Last Billed Days in Total Unpaid
Obligor Billing Cycle Paid (Y/N) Cut-Off Billing Cycle Billed + Unbilled
1 Obligor 1
2 Obligor 2
3 Obligor 3
4 Obligor 4
5 Obligor 5
6 Obligor 6
7 Obligor 7
8 Obligor 8
9 Obligor 9
10 Obligor 10
11 Obligor 11
12 Obligor 12
135
FORM OF DAILY REPORT (continued)
PART X
ADDITIONAL SERVICER INPUTS
Series 1996-1
Transaction Status:
(a) Is the Pool (NRP Balance) in Compliance? (Y/N)
(b) Extra Line
(c) Has the Transferor begun a Set Aside Period (Y/N)
(d) Is the Trust in an Early Amortization or
Amortization Period (Y/N)
Additional Cure Funds deposited by the
Transferor to the Reserve Account
Cure Funds to be transferred from the Reserve Account
to Transferor Account
Cure Funds Deposited in Reserve Account
Concentration Account Funds Allocated to
Each Series Defeasance Account
No. of Consecutive Days of Pool Non-Compliance
No. of Days in the Present Monthly Period
No. of Days in the Next Monthly Period
Outstanding Carrying Cost Amount balance in
the Concentration Account as of Last
Daily Report
Series Allocation Percentage in Last Daily Report
100.00% Series 1996-1 Invested Amount at the end
of the Prior Monthly Period
Series Certificate Rate
Turnover Days (as of Last Distribution Report)
Loss and Dilution Reserve Percentage
(as of Last Distribution Report)
Gross Receivables Pool (Before Adjustments on
PIP, Credit Balances, Deposits, DFA Not Due, etc.) Required Adjustments to
Gross Receivables Pool
(as described above) excluding Credit Adj.
under Budget Billing
Credit Adjustment under Budget Billing Plan
Adjusted Receivables Pool (Must match with the
Aging Analysis in Section IV)
Government Receivables
Collections since date of Last Daily Report
Unapplied Collections
Collections Not Applicable to Trust
Cum. Rate Increase subject to PUCO approval
Reduction due to cash payments
136
FORM OF DAILY REPORT (continued)
PART XI
SERIES INVESTED AMOUNT BALANCES
Series 1996-1
Invested Amount Outstanding as of end
of Previous Daily Report Date
Planned Increase/(Paydown) in Series
Invested Amount during Daily Report Date
New Invested Amount Outstanding as of end
of Current Daily Report Date
PART XII
OUTPUTS FOR NEXT DAILY REPORT
Series 1996-1
Cure Funds Allocated for Each Series
Carrying Cost Amount Deposited in the
Carrying Cost Account for each Series
137
EXHIBIT C
FORM OF DETERMINATION DATE CERTIFICATE
PART I
CERTIFICATE INFORMATION
Invested Certificate
Amount Rate
Series 1996-1
PART II
PORTFOLIO INFORMATION
1/ Portfolio Information Data below reflect exclusion of PIP Receivables,
credit balances of Budget/Balance Billing, Deposit balances, restructured
Deferred Payment Plan balances.
0-30 Days 31-59 Days 60-89 Days 90+ Days
Unbilled From Invoice From Invoice From Invoice From Invoice Total
Aging Category
Percentage to Total % % % % % 100.00%
Amount of delinquent Receivables with original due dates extended (other than
under the Deferred Payment Plan)
138
FORM OF DETERMINATION DATE CERTIFICATE (continued)
PART III
NET RECEIVABLES BALANCE (in $ 000)
Gross Receivables Pool
Less: PIP, restructured into DPP, Deposits,
Other Ineligible A/R
Defaulted Receivables (60+ Days from Invoice) Government Receivables
Unbilled Revenues allocated to
ineligible obligors 1/
Outstanding Balance of Eligible Pool Receivables
Less: Credit Adjustment under Budget Billing Plan
Cum. Rate Increase subject to final PUCO approval Deduction due to
Cash Payments Excess Concentrations (From Daily Report) Unapplied
Collections
Net Receivables Pool Balance
1/ Calculated as the product of (A) the sum of (i) the % of PIP Usage to
Revenue, (ii) the % of Government Receivables Balance to Billed
Receivables, (iii) the % of other Ineligible Obligor Receivables
Balance to Billed Receivables and (B) the Unbilled Receivables
Balance.
$ to Billed
$ Amount A/R
PIP Dollar Usage 1/
Centerior Billed Revenue 1/
Government Receivables as of this
Report Date
Other Ineligible Obligor Receivables
Balance as of this Report Date
Billed Receivables as of this
Report Date
1/ Recalculated at the start and middle of each month and represent one month's aggregate amount, i.e. (i) for the calculation done
at the start of the month, the data will be from the start of the previous month to the end of the previous month and (ii) for
the calculation done during the middle of the month, the data will be from the middle of the previous month to the middle of
the current month.
139
FORM OF DETERMINATION DATE CERTIFICATE (continued)
PART IV
TURNOVER DAYS CALCULATION
Total Receivables Balance at the end
of the Preceding Collection Period
Total Receivables Balance at the end
of the Current Collection Period
New Billed Receivables generated during
the Current Collection Period
No. of Days in the Current Collection Period
Turnover Days 1/
1/ [[(B34+G34)/2] x (Days in Collection Period)]/New Billed Receivables
Generated
PART V
CARRYING COST RESERVE
Daily Report Carrying Cost
Date Reserve
The Carrying Cost Reserve is calculated in the Daily
Report. The Carrying Cost Reserve for the Daily Report
date which has the same date as this Determination
Date Statement is:
140
FORM OF DETERMINATION DATE CERTIFICATE (continued)
PART VI
LOSS AND DILUTION RESERVE CALCULATION
(in $ 000)
Current Month (EOM) Eligible Pool Balance
Billed A/R
Unbilled A/R
Total
Less: 60+ Days From Invoice
Excess Concentrations
Government A/R
Deduction due to Cash
Unapplied Collections
Cum. rate inc. subject to PUCO final approval Total
Net Receivables Balance
DYNAMIC LOSS RESERVE
Change in
Restructured Restructured Gross 3-Month Highest in Dynamic
Revenues Deferred Monthly Deferred Loss Rolling Last 12 Loss Loss
(Billed A/R) Payment Plan Gross W/O's Payment Plan Ratio Average Months Horizon Reserve
Current Month
1 Month Prior % % % %
2 Months Prior % % % %
3 Months Prior % % % %
4 Months Prior % % % %
5 Months Prior % % % %
6 Months Prior % % % %
7 Months Prior % % % %
8 Months Prior % % % %
9 Months Prior % % % %
10 Months Prior % % % %
11 Months Prior % % % %
141
FORM OF DETERMINATION DATE CERTIFICATE (continued)
DYNAMIC DILUTION RESERVE
12-Month Highest Dilution Dynamic
Monthly Expected Rolling Dilution Last Volatility Dilution Dilution
Dilution Dilution Average 12 Months Factor Horizon Reserve
Current Month % % % % %
1 Month Prior % % % % %
2 Months Prior % % % % %
3 Months Prior % % % % %
4 Months Prior % % % % %
5 Months Prior % % % % %
6 Months Prior % % % % %
7 Months Prior % % % % %
8 Months Prior % % % % %
9 Months Prior % % % % %
10 Months Prior % % % % %
11 Months Prior % % % % %
Dynamic Floor Required
Loss and Loss and Loss and
Dilution Res Dilution Res Dilution Res
Series 1996-1 % % %
PART VII
DISTRIBUTION TO CERTIFICATEHOLDERS
(Based on Outstanding on the
date of this report)
Amount to be distributed on the 15th Day of the next calendar month which is:
Note: For Series 1996-1 Certificates, since payment of interest is
semi-annual, if the 15th Day of the next calendar month is not an interest
settlement date, then place "0".
Outstanding Series Interest Principal Total
Series 1996-1 Certificates
142
FORM OF DETERMINATION DATE CERTIFICATE (continued)
PART VIII
PURCHASE PRICE PERCENTAGE
A. LOSS DISCOUNT %
Greater of: % BUT Maximum: % 2/
(i) %
(ii) % 1/
1/ 1.5 times Loss-to-Liquidation Ratio.
2/ .5% plus Loss-to-Liquidation Ratio.
B. LOSS-TO-LIQUIDATION RATIO FOR THREE MOST RECENT INTEREST PERIODS %
Loss 3/ Liquidation
Current Interest Period
Prior Interest Period
2nd Prior Interest Period
Loss-to-Liquidation
3/ Net Write-offs.
C. PURCHASE DISCOUNT RESERVE RATIO 4/ %
Turnover Days
Discount Rate 5/ %
4/ Calculated as PDRR = (TD x DR)/360.
5/ Prime Rate of the Trustee.
D. PURCHASE PRICE PERCENT(PPP) = 100% (Loss Discount + Purchase
Discount Reserve Ratio)
= %
143
EXHIBIT D
---------
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before ___________ of each
calendar year beginning with April 30, 1997, pursuant to
Section 3.06 of the Pooling and Servicing Agreement)
[Name of Servicer]
_______________________________________
CENTERIOR ENERGY RECEIVABLES MASTER TRUST
The undersigned, chief financial officer of [Name of
Servicer], in its capacity as a "Servicer" pursuant to the Pooling and
Servicing Agreement, dated _________, 1996 (as amended and supplemented, the
"Agreement"), by and among Centerior Funding Corporation, as transferor, the
"Servicers" party thereto and Citibank, N.A., as trustee, do hereby certify
that:
1. [Name of Servicer] is, as of the date hereof, [a] [the]
Servicer under the Agreement.
2. The undersigned chief financial officer is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to
the Trustee, each Rating Agency and any Enhancement Providers.
3. A review of the activities of [name of Servicer] during
the calendar year ended December 31, ____, and of its performance
under the Agreement was conducted under my supervision.
4. Based on such review, such Servicer has, to the best of my
knowledge, performed in all material respects all of its obligations
under the Agreement throughout such year and no material default in
the performance of such obligations has occurred or is continuing
except as set forth in paragraph 5 below.
5. The following is a description of each material default in
the performance of such Servicer's obligations under the provisions of
the Agreement known to me to have been made by the named Servicer
during the calendar year ended December 31, _____, which sets forth in
detail the (a) nature of such material default, (b) the action taken
by such Servicer, if any, to remedy each such material default and (c)
144
the current status of each such default: [if applicable, insert
"None."]
Capitalized terms used but not defined herein are used as
defined in the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _________________, ____.
By:__________________________
Name:
Title:
D-2
145
EXHIBIT E
---------
FORM OF COLLECTION ACCOUNT LETTER
[Collection Account Bank]
Re: [Lock Box No.
Lock Box Account No.]*
Ladies and Gentlemen:
We hereby notify you that, effective as of the "Effective Date"
(as defined below), we have transferred exclusive ownership and control
of our [lock-box number (the "Lock-Box") and the corresponding lock-box account
no. (the "Account")] maintained with [Collection Account Bank] to
Centerior Funding Corporation, a Delaware corporation ("CFC") and CFC has
transferred exclusive ownership and control of the account to Citibank, N.A.,
as trustee for Centerior Energy Receivables Master Trust (the "Trust")
established pursuant to a Pooling and Servicing Agreement, dated _____________,
1996 by and among Centerior Funding Corporation, as transferor,
each of The Cleveland Electric Illuminating Company and The Toledo Edison
Company, Edison, as Servicers, and Citibank, N.A., as trustee (the "Trustee").
We hereby irrevocably instruct you to collect the monies,
checks, instruments and other items of payment [mailed to the Lock-Box and
deposit] [deposited] into the Account all monies, checks, instruments and other
items of payment (unless otherwise instructed by the Trustee), and to make all
payments to be made by you out of or in connection with the Account directly to
the [Centerior Energy Receivables Master Trust Concentration Account, account
no. ____________________, such account being in the name of the Trustee at
__________________, Attention _____________, for the account of the Trustee.]**
Anything in this letter agreement to the contrary notwithstanding, we and the
Trustee understand and agree that you will make the proceeds of items deposited
into the Account available for withdrawal in accordance with your applicable
availability schedule(s) in effect from time to time.
__________________________________
* If the Collection Account is a Transferor Collection Account, references
should be made here to the appropriate depositary account and not to any
lock-box.
** In the case of a Servicer Collection Account, transfers may be made to a
Transferor Collection Account rather than directly to the Concentration Account
at the option of the Servicers.
1
146
We also hereby notify you that the Trustee shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the [Lock-Box and the] Account, including without limitation,
the right to specify when payments are to be made out of or in connection with
the [Lock-Box and the] Account. The monies, checks, instruments and other
items of payment [mailed to the Lock-Box and the funds] deposited into the
Account will not be subject to deduction, set off, banker's lien, or any other
right in favor of any person other than the Trustee; PROVIDED, HOWEVER, that
you may deduct from or set-off against amounts from time to time in the Account
(i) your usual and customary costs and expenses in respect of interest on
overdrafts and any return items, and your usual and customary fees and expenses
associated with any such return item, overdraft and/or the maintenance of the
Account [or any related lock-box] and (ii) the face amount (or portion thereof)
of any check, instrument or other item which was deposited in the Account and
which has been returned unpaid for reasons of insufficient funds or has
otherwise not been collected. You hereby acknowledge and agree that all such
interest, costs, fees and expenses shall be for the account of the Transferor
and in the event the amounts in the Account are insufficient to reimburse you
for the same, the Transferor agrees to reimburse you for such interest, costs,
fees and/or expenses immediately upon your demand therefor in immediately
available funds.
You shall not be liable to either us or the Trustee, directly
or indirectly, for any damages arising out of your provision of services
pursuant to this letter agreement, other than damages arising as a result of
your negligence or willful misconduct, and in no event shall you be liable for
any consequential, indirect or special damages, even if you have been advised
of the possibility of such damages.
This letter agreement is binding upon us, you and the Trustee
and each of our respective successors and assigns and shall inure to the
benefit of each of us and our respective successors and assigns. It supersedes
all prior agreements, oral or written, with respect to the subject matter
hereof and may not be modified without the prior written consent of the
Trustee. This letter agreement may be terminated only as follows: (i) you may
terminate this letter agreement and the Account at any time which is thirty
(30) days or more after the date you shall have given written notice of such
termination to us, with a copy to the Trustee, and the (ii) the Trustee may
terminate this letter agreement and the Lock-Box Account at any time which is
thirty (30) days or more after the date the Trustee shall have given written
notice of such termination given to the Transferor and you. Notice hereunder
shall be delivered to each party hereto at the address and to the attention of
the person set forth below, or at such other address
2
147
or to the attention of such other party as the party to be addressed may
specify by written notice delivered to each other party hereto. No termination
shall affect or impair any of the agreements, rights or obligations hereunder
of any party with respect to any period of time prior to the date of such
termination.
Notwithstanding anything to the contrary in this letter
agreement, this agreement shall not become effective unless and until the date
(such date, the "Effective Date") specified to you in writing in the form
attached hereto as Exhibit A.
This letter agreement shall be governed by and construed in
accordance with the internal law of the State of New York and applicable
federal law. This letter agreement shall become effective immediately upon
being executed by all of the parties hereto.
Very truly yours,
[NAME OF ORIGINATOR]
By:_____________________
Name:
Title:
CENTERIOR FUNDING COPORATION
By:_____________________
Name:
Title:
Acknowledged and agreed to this
day of ____________, 1996
[NAME OF COLLECTION ACCOUNT BANK]
By: _____________________________
Name:
Title:
3
148
EXHIBIT A TO
COLLECTION ACCOUNT LETTER
FORM OF NOTICE OF EFFECTIVENESS
[VIA FACSIMILE TRANSMISSION]
To: [Name of Collecton Account Bank]
[Address]
Dated: ,199
Re: [Collection] Account No. .
Ladies and Gentlemen:
We hereby give you notice that the transfer of the above-referenced
Account, as described in our letter agreement to you dated as of , 199 ,
is effective as of 199 . You are hereby instructed to comply immediately with
the instructions set forth in that letter agreement.
Very truly yours,
[NAME OF ORGINATOR]
By:
Name:
Title:
CENTERIOR FUNDING CORPORATION
By:
Name:
Title:
ACKNOWLEDGED:
[NAME OF COLLECTION ACCOUNT BANK]
By:
Title:
4
149
ACKNOWLEDGMENT AND AUTHORIZATION
Citibank, N.A., as trustee (the "Trustee") for the Centerior
Energy Receivables Master Trust, referenced in the attached letter executed by
_______________ and acknowledged by [Collection Account Bank] and the Trustee
(the "Notice"), hereby acknowledges the transfer of exclusive ownership and
control of the ["Lock-Box" and] the "Account", in each case, as defined in and
pursuant to the Notice. Pursuant to the second paragraph of the Notice, the
Trustee hereby authorizes [Collection Account Bank] to continue to accept
instructions from ___________ for the payment of funds from said [Lock-Box and]
Account until the Trustee notifies [Collection Account Bank] in writing to the
contrary; PROVIDED that no such instructions shall provide for the withdrawal
of funds from said [Lock-Box and] Account to any account other than as
expressly permitted in the attached letter.
Very truly yours,
______________________________
as Trustee
By:___________________________
Name:
Title:
Agreed and Acknowledged:
[Collection Account Bank]
By: ____________________________
Name:
Title:
5
150
SCHEDULE I
----------
LIST OF COLLECTION ACCOUNTS
151
SCHEDULE II
-----------
CREDIT AND COLLECTION POLICY
152
SCHEDULE III
------------
LOCATIONS OF RECEIVABLES RECORDS
6200 OAK TREE BOULEVARD
INDEPENDENCE, OHIO 44131
300 MADISON AVENUE
TOLEDO, OHIO 43652
SUITE 350, 1013 CENTRE ROAD
WILMINGTON, DELAWARE 19805