EXHIBIT 10.23
SALE AND SERVICING AGREEMENT
Dated as of October 1, 2002
among
CBC INSURANCE REVENUE SECURITIZATION, LLC,
as Issuer,
LONG, XXXXXX & ASSOCIATES, L.L.C.,
in its individual capacity and as Seller,
XXXXX/XXXXXX CONSULTING, INC.,
in its individual capacity and as initial Servicer,
BNY MIDWEST TRUST COMPANY,
not in its individual capacity, but solely as Trustee
and
BNY ASSET SOLUTIONS LLC,
not in its individual capacity, but solely as Backup Servicer
ARTICLE I DEFINITIONS................................................................................1
Section 1.1 Definitions.......................................................................1
Section 1.2 Usage of Terms...................................................................16
Section 1.3 Calculations.....................................................................16
Section 1.4 Section References...............................................................16
Section 1.5 No Recourse......................................................................16
ARTICLE II CONVEYANCE OF RECEIVABLES.................................................................16
Section 2.1 Purchase and Sale of Receivables.................................................16
Section 2.2 Custody of Receivable Files......................................................17
Section 2.3 Conditions Precedent.............................................................18
Section 2.4 Representations, Warranties and Covenants of the Seller..........................20
Section 2.5 Repurchase of Receivables Upon Breach of Certain Representations and Warranties..22
Section 2.6 Issuer's Assignment of Administrative Receivables and Warranty Receivables.......23
Section 2.7 Protection of Right, Title and Interest..........................................23
Section 2.8 Restrictions on Liens............................................................24
Section 2.9 Sale.............................................................................24
Section 2.10 Indemnification By the Seller....................................................25
Section 2.11 Representations and Warranties of the Issuer.....................................25
Section 2.12 [Reserved].......................................................................27
Section 2.13 Covenants Regarding Termination or Exchange of Insurance Policies; No Merger,
Etc..............................................................................27
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES...............................................29
Section 3.1 Duties of the Servicer...........................................................29
Section 3.2 Collection of Receivable Payments................................................30
Section 3.3 Representations, Warranties and Covenants of Servicer............................30
Section 3.4 Purchase of Receivables Upon Breach of Covenant..................................35
Section 3.5 Servicing Fee; Payment of Certain Expenses by Servicer...........................35
Section 3.6 Servicer's Certificate...........................................................36
Section 3.7 Annual Statement as to Compliance; Notice of Servicer Termination Event; Financial
Statements.......................................................................36
Section 3.8 Annual Independent Accountants' Report...........................................37
Section 3.9 Access to Documentation and Information Regarding Receivables....................37
Section 3.10 Duties of the Servicer under the Indenture.......................................38
Section 3.11 Appointment and Powers of Backup Servicer........................................39
Section 3.12 Information to be Furnished to Rating Agency.....................................39
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS..................................................39
Section 4.1 Accounts.........................................................................39
Section 4.2 Collections......................................................................41
Section 4.3 Additional Deposits and Withdrawals..............................................42
Section 4.4 Distributions....................................................................42
Section 4.5 Trustee as Agent.................................................................44
Section 4.6 Statements to Noteholders........................................................44
ARTICLE V RESERVE ACCOUNT...........................................................................45
Section 5.1 Initial Deposit..................................................................45
Section 5.2 Withdrawals from Reserve Account.................................................45
ARTICLE VI SERVICER AS CUSTODIAN.....................................................................46
Section 6.1 Duties of Servicer as Custodian..................................................46
Section 6.2 Instructions; Authority to Act...................................................47
Section 6.3 Custodian's Indemnification......................................................47
Section 6.4 Effective Period and Termination.................................................47
ARTICLE VII SERVICER..................................................................................47
Section 7.1 Liability of Servicer; Indemnities...............................................47
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of the Servicer or
Backup Servicer..................................................................48
Section 7.3 Limitation on Liability of Servicer, Backup Servicer and Others..................49
Section 7.4 Delegation of Duties.............................................................50
Section 7.5 Servicer and Backup Servicer Not to Resign.......................................50
ARTICLE VIII SERVICER TERMINATION EVENTS...............................................................51
Section 8.1 Servicer Termination Event.......................................................51
Section 8.2 Consequences of a Servicer Termination Event.....................................52
Section 8.3 Appointment of Successor Servicer................................................53
Section 8.4 Notification to Noteholders......................................................54
Section 8.5 Waiver of Past Defaults..........................................................54
ARTICLE IX TERMINATION...............................................................................54
Section 9.1 Optional Purchase of All Receivables.............................................54
ARTICLE X MISCELLANEOUS PROVISIONS..................................................................55
Section 10.1 Amendment........................................................................55
Section 10.2 Protection of the Receivables....................................................56
Section 10.3 GOVERNING LAW....................................................................57
Section 10.4 Severability of Provisions.......................................................57
Section 10.5 Assignment.......................................................................57
Section 10.6 Third-Party Beneficiaries........................................................58
Section 10.7 Counterparts.....................................................................58
Section 10.8 Notices..........................................................................58
Section 10.9 WAIVER OF TRIAL BY JURY..........................................................58
Section 10.10 Nonpetition Covenant.............................................................59
Exhibit A Assignment
Exhibit B Servicer's Certificate
Exhibit C Accountants' Report
Exhibit D Form of Letter of Direction
Schedule A Schedule of Receivables
Schedule B Representations and Warranties of the Seller
Schedule C Servicing Policy and Procedures
Schedule D Maximum Outstanding Note Principal Balance
Schedule E Probability of Survival
THIS SALE AND SERVICING AGREEMENT, dated as of October 1, 2002, is made
among CBC INSURANCE REVENUE SECURITIZATION, LLC, a Delaware limited liability
company, as Issuer (the "Issuer"), LONG, XXXXXX & ASSOCIATES, L.L.C., a North
Carolina limited liability company, in its capacity as Seller (together with its
successors and permitted assigns, "Seller"), XXXXX/XXXXXX CONSULTING, INC., a
Delaware corporation in its individual capacity ("CBC") and in its capacity as
initial Servicer (the "Servicer"), BNY MIDWEST TRUST COMPANY, an Illinois
corporation, not in its individual capacity, but solely as Trustee (together
with its successors and permitted assigns in such capacity, the "Trustee") and
BNY ASSET SOLUTIONS LLC, a Delaware limited liability company, not in its
individual capacity, but solely as Backup Servicer (together with its successors
and permitted assigns in such capacity, the "Backup Servicer").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All terms defined in the Indenture (as defined
below) shall have the same meaning in this Agreement. Whenever capitalized and
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accountants' Report: The report of a firm of nationally recognized
independent accountants described in Section 3.8.
Additional Compensation: Any commission or compensation in excess of
the commission or compensation rates identified with respect to a Receivable in
the Schedule of Receivables, including, without limitation any commission
bonuses based upon the volume of insurance policies sold during any specified
period or any increase in such commission or compensation rates negotiated after
the Cutoff Date.
Administrative Receivable: With respect to any Quarterly Period, a
Receivable which the Servicer is required to purchase pursuant to Section 3.4 on
the Deposit Date following such Quarterly Period.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such 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: This Sale and Servicing Agreement, including all amendments
and supplements hereto and all exhibits and schedules to any of the foregoing.
Amount Available: With respect to any Payment Date, the sum of (i) the
Net Available Funds for the immediately preceding Determination Date, plus (ii)
the Reserve Account Draw Amount, if any, with respect to such Payment Date, plus
(iii) if the sum of such Net Available Funds and such Reserve Account Draw
Amount is less than the sum of the amounts payable on such Payment Date pursuant
to clauses first through eleventh of Section 4.4, an amount equal to the lesser
of (x) such deficiency and (y) the Retained Available Funds for such Payment
Date.
Assignment: An assignment from the Seller to the Issuer, dated the
Closing Date, in substantially the form of Exhibit A hereto.
Available Funds: With respect to any Determination Date, the sum of (i)
the Collected Funds for such Determination Date less the aggregate Split
Commissions Amount for the related Quarterly Period, if any, (ii) all amounts
deposited in the Collection Account in respect of Purchased Receivables as of
the related Deposit Date, and (iii) without duplication, all income from
investments of funds in the Trust Accounts during the related Quarterly Period;
it being expressly understood that "Available Funds" shall not include any
amounts that constitute "Additional Compensation".
Backup Servicer: As set forth in the introductory paragraph of this
Agreement, including any successor thereto pursuant to the terms of this
Agreement.
Business Day: Any day other than a Saturday, Sunday, legal holiday or
other day on which federal and commercial banking institutions in the State of
New York, Texas, Illinois or North Carolina or in the State of the principal
place of business of any successor Servicer, successor Issuer or successor
Trustee, are authorized or obligated by law, executive order or governmental
decree to be closed.
BNY: Means The Bank of New York, a New York banking corporation,
together with its successors and permitted assigns.
Case: At any time, with respect to any Receivable, the group of related
insurance policies issued to the same owner by the same Obligor on the same
date, taken as a whole.
CBI: Xxxxx/Xxxxxx, Inc., a Delaware corporation and direct parent of
CBC.
CBC: As set forth in the introductory paragraph of this Agreement.
CBFS: Xxxxx/Xxxxxx Financial Services, Inc., a California corporation.
Class A Notes: As defined in the Indenture.
Class A-1 Interest Carryover Shortfall: With respect to any Payment
Date, the excess of the sum of the Class A-1 Quarterly Interest Payment Amount
for the preceding Payment Date
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and any outstanding Class A-1 Interest Carryover Shortfall on such preceding
Payment Date, over the amount of the Class A-1 Interest Payment Amount that was
actually paid to the Holders of the Class A-1 Notes in respect of such preceding
Payment Date, plus, to the extent permitted by applicable law, 90 days' interest
computed on the basis of a 360-day year on the amount of interest due but not
paid to Holders of the Class A-1 Notes on the preceding Payment Date, at the
Class A-1 Interest Rate from such preceding Payment Date to but excluding the
current Payment Date.
Class A-1 Interest Payment Amount: With respect to any Payment Date,
the sum of the Class A-1 Quarterly Interest Payment Amount for such Payment Date
and the Class A-1 Interest Carryover Shortfall for such Payment Date.
Class A-1 Interest Rate: 3.52% per annum.
Class A-1 Notes: As defined in the Indenture.
Class A-1 Note Balance: Initially, the original principal amount of the
Class A-1 Notes issued by the Issuer on the Closing Date and, as of any date of
determination thereafter, the aggregate outstanding principal balance of the
Class A-1 Notes, unless otherwise specified, after giving effect to any
distribution in respect of principal on the Class A-1 Notes on or prior to such
date.
Class A-1 Principal Payment Amount: With respect to any Payment Date
(other than the Final Scheduled Payment Date or any Payment Date following the
occurrence and continuance of a Payout Trigger), the Quarterly Principal Payment
Amount for such Payment Date; provided, however, the Class A-1 Principal Payment
Amount shall not exceed the Class A-1 Note Balance prior to the distribution on
such Payment Date. The "Class A-1 Principal Payment Amount" on the Final
Scheduled Payment Date and following the occurrence and continuance of a Payout
Trigger will equal the Class A-1 Note Balance prior to the distribution on such
Payment Date.
Class A-1 Quarterly Interest Payment Amount: With respect to any
Payment Date, 90 days' interest computed on the basis of a 360-day year (or, in
the case of the first Payment Date, interest accrued from and including the
Closing Date to but excluding such Payment Date computed on the basis of a
360-day year) at the Class A-1 Interest Rate on the Class A-1 Note Balance on
the immediately preceding Payment Date, after giving effect to all payments of
principal to Holders of the Class A-1 Notes in respect of such preceding Payment
Date (or, in the case of the first Payment Date, on the Closing Date).
Class A-2 Interest Carryover Shortfall: With respect to any Payment
Date, the excess of the sum of the Class A-2 Quarterly Interest Payment Amount
for the preceding Payment Date and any outstanding Class A-2 Interest Carryover
Shortfall on such preceding Payment Date, over the amount of the Class A-2
Interest Payment Amount that was actually paid to the Holders of the Class A-2
Notes in respect of such preceding Payment Date, plus, to the extent permitted
by applicable law, 90 days' interest computed on the basis of a 360-day year on
the amount of interest due but not paid to Holders of the Class A-2 Notes on the
preceding Payment Date, at the
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Class A-2 Interest Rate from such preceding Payment Date to but excluding the
current Payment Date.
Class A-2 Interest Payment Amount: With respect to any Payment Date,
the sum of the Class A-2 Quarterly Interest Payment Amount for such Payment Date
and the Class A-2 Interest Carryover Shortfall for such Payment Date.
Class A-2 Interest Rate: 5.54% per annum.
Class A-2 Notes: As defined in the Indenture.
Class A-2 Note Balance: Initially, the original principal amount of the
Class A-2 Notes issued by the Issuer on the Closing Date and, as of any date of
determination thereafter, the aggregate outstanding principal balance of the
Class A-2 Notes, unless otherwise specified, after giving effect to any
distribution in respect of principal on the Class A-2 Notes on or prior to such
date.
Class A-2 Principal Payment Amount: With respect to any Payment Date
that occurs before the date on which the Class A-1 Notes are paid in full, an
amount equal to zero, and with respect to any other Payment Date (other than the
Final Scheduled Payment Date or any Payment Date following the occurrence and
continuance of a Payout Trigger) that occurs on or after the date on which the
Class A-1 Notes have been paid in full, the Quarterly Principal Payment Amount
for such Payment Date; provided, however, the Class A-2 Principal Payment Amount
shall not exceed the Class A-2 Note Balance prior to the distribution on such
Payment Date. The "Class A-2 Principal Payment Amount" on the Final Scheduled
Payment Date and following the occurrence and continuance of a Payout Trigger
will equal the Class A-2 Note Balance prior to the distribution on such Payment
Date.
Class A-2 Quarterly Interest Payment Amount: With respect to any
Payment Date, 90 days' interest computed on the basis of a 360-day year (or, in
the case of the first Payment Date, interest accrued from and including the
Closing Date to but excluding such Payment Date computed on the basis of a
360-day year) at the Class A-2 Interest Rate on the Class A-2 Note Balance on
the immediately preceding Payment Date, after giving effect to all payments of
principal to Holders of the Class A-2 Notes in respect of such preceding Payment
Date (or, in the case of the first Payment Date, on the Closing Date).
Class B Interest Carryover Shortfall: With respect to any Payment Date,
the excess of the sum of the Class B Quarterly Interest Payment Amount for the
preceding Payment Date and any outstanding Class B Interest Carryover Shortfall
on such preceding Payment Date, over the amount of the Class B Interest Payment
Amount that was actually paid to the Holders of the Class B Notes in respect of
such preceding Payment Date, plus, to the extent permitted by applicable law, 90
days' interest computed on the basis of a 360-day year on the amount of interest
due but not paid to Holders of the Class B Notes on the preceding Payment Date,
at the Class B Interest Rate from such preceding Payment Date to but excluding
the current Payment Date.
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Class B Interest Payment Amount: With respect to any Payment Date, the
sum of the Class B Quarterly Interest Payment Amount for such Payment Date and
the Class B Interest Carryover Shortfall for such Payment Date.
Class B Interest Rate: 7.65% per annum.
Class B Notes: As defined in the Indenture.
Class B Note Balance: Initially, the original principal amount of the
Class B Notes issued by the Issuer on the Closing Date and, as of any date of
determination thereafter, the aggregate outstanding principal balance of the
Class B Notes, unless otherwise specified, after giving effect to any
distribution in respect of principal on the Class B Notes on or prior to such
date.
Class B Principal Payment Amount: With respect to any Payment Date that
occurs before the date on which the Class A Notes have been paid in full, an
amount equal to zero, and with respect to any other Payment Date (other than the
Final Scheduled Payment Date or any Payment Date following the occurrence and
continuance of a Payout Trigger) that occurs on or after the date on which the
Class A Notes have been paid in full, the Quarterly Principal Payment Amount for
such Payment Date; provided, however, the Class B Principal Payment Amount shall
not exceed the Class B Note Balance prior to the distribution on such Payment
Date. The "Class B Principal Payment Amount" on the Final Scheduled Payment Date
and following the occurrence and continuance of a Payout Trigger will equal the
Class B Note Balance prior to the distribution on such Payment Date.
Class B Quarterly Interest Payment Amount: With respect to any Payment
Date, 90 days' interest computed on the basis of a 360-day year (or, in the case
of the first Payment Date, interest accrued from and including the Closing Date
to but excluding such Payment Date computed on the basis of a 360-day year) at
the Class B Interest Rate on the Class B Note Balance on the immediately
preceding Payment Date, after giving effect to all payments of principal to
Holders of the Class B Notes in respect of such preceding Payment Date (or, in
the case of the first Payment Date, on the Closing Date).
Class C Interest Carryover Shortfall: With respect to any Payment Date,
the excess of the sum of the Class C Quarterly Interest Payment Amount for the
preceding Payment Date and any outstanding Class C Interest Carryover Shortfall
on such preceding Payment Date, over the amount of the Class C Interest Payment
Amount that was actually paid to the Holders of the Class C Notes in respect of
such preceding Payment Date, plus, to the extent permitted by applicable law, 90
days' interest computed on the basis of a 360-day year on the amount of interest
due but not paid to Holders of the Class C Notes the preceding Payment Date at
the Class C Interest Rate from such preceding Payment Date to but excluding the
current Payment Date.
Class C Interest Payment Amount: With respect to any Payment Date, the
sum of the Class C Quarterly Interest Payment Amount for such Payment Date and
the Class C Interest Carryover Shortfall for such Payment Date.
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Class C Interest Rate: 8.88% per annum.
Class C Notes: As defined in the Indenture.
Class C Note Balance: Initially, the original principal amount of the
Class C Notes issued by the Issuer on the Closing Date and, as of any date of
determination thereafter, the aggregate outstanding principal balance of the
Class C Notes, unless otherwise specified, after giving effect to any
distribution in respect of principal on the Class C Notes on or prior to such
date.
Class C Principal Payment Amount: With respect to any Payment Date that
occurs before the date on which the Class A Notes and the Class B Notes have
been paid in full, an amount equal to zero, and with respect to any other
Payment Date (other than the Final Scheduled Payment Date or any Payment Date
following the occurrence and continuance of a Payout Trigger) that occurs on or
after the date on which the Class A Notes and the Class B Notes have been paid
in full, the Quarterly Principal Payment Amount for such Payment Date; provided,
however, the Class C Principal Payment Amount shall not exceed the Class C Note
Balance prior to the distribution on such Payment Date. The "Class C Principal
Payment Amount" on the Final Scheduled Payment Date and following the occurrence
and continuance of a Payout Trigger will equal the Class C Note Balance prior to
the distribution on such Payment Date.
Class C Quarterly Interest Payment Amount: With respect to any Payment
Date, 90 days' interest computed on the basis of a 360-day year (or, in the case
of the first Payment Date, interest accrued from and including the Closing Date
to but excluding such Payment Date computed on the basis of a 360-day year) at
the Class C Interest Rate on the Class C Note Balance on the immediately
preceding Payment Date, after giving effect to all payments of principal to
Holders of the Class C Notes on such preceding Payment Date (or, in the case of
the first Payment Date, on the Closing Date).
Closing Date: November 26, 2002.
Collected Funds: With respect to any Determination Date, the amount of
funds in the Collection Account representing collections or payments on or with
respect to the Receivables received during the related Quarterly Period.
Collection Account: The account designated as the Collection Account
in, and which is established and maintained pursuant to Section 4.1(a).
Collection Records: All manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the
Receivables.
Computer Tape: The computer tape, disks or electronic files generated
on behalf of the Issuer which provide information relating to the Receivables
and which were used by the Seller in selecting the Receivables conveyed to the
Issuer hereunder.
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Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at 0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxxxx; or at such other address as
the Trustee may designate from time to time by notice to the Noteholders, the
Rating Agency and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders, the Rating Agency and the Issuer).
Cumulative Loss of Premium Rate: With respect to any Determination
Date, the fraction, expressed as a percentage, (i) the numerator of which is
equal to the aggregate amount of premium paid with respect to all insurance
policies related to the Receivables that have been terminated, satisfied,
surrendered, exchanged or paid in full and (ii) the denominator of which is
equal to the aggregate of the premiums paid with respect to all insurance
policies related to the Receivables that were in-force as of the Cutoff Date;
provided, however, that for purposes of the calculation in clause (i) above, the
aggregate amount of premium required to be included in such calculation with
respect to any such insurance policies that have been surrendered or exchanged
and with respect to which the Seller shall have assigned to the Issuer new
Receivables arising in connection with a transaction involving such surrendered
or exchanged insurance policies that is permitted under Section 2.13, shall be
reduced (but not below zero) by an amount equal to the product of (y) such
aggregate premium and (z) the lesser of (i) a fraction (expressed as a
percentage), the numerator of which is the Purchase Amount with respect to such
new Receivables (calculated as of the date of such assignment) and the
denominator of which is the Purchase Amount for the Receivables related to such
insurance policies that have been so surrendered or exchanged (calculated
immediately prior to, and without giving effect to, such surrender or exchange)
and (ii) 1.00.
Cutoff Date: Shall mean the Closing Date.
Deposit Date: With respect to any Determination Date, the Business Day
immediately preceding such Determination Date.
Determination Date: With respect to any Payment Date, the fifth
Business Day preceding such Payment Date.
Eligible Investments: Any one or more of the following types of
investments, excluding any security with the "r" symbol attached to the rating
and all mortgage-backed securities:
(a) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States;
(b) demand or time deposits in, certificates of deposit of,
demand notes of, or bankers' acceptances issued by any depository
institution or trust company organized under the laws of the United
States or any State and subject to supervision and
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examination by federal and/or State banking authorities; provided,
however, that the short-term unsecured debt obligations of such
depository institution or trust company at the time of such investment,
or contractual commitment providing for such investment, are rated at
least "A-1+" by the Rating Agency;
(c) short-term repurchase obligations pursuant to a written
agreement (i) with respect to any obligation described in clause (a)
above, where the Trustee has taken actual or constructive delivery of
such obligation in accordance with Section 4.1, and (ii) entered into
with the corporate trust department of a depository institution or
trust company organized under the laws of the United States or any
State thereof, the deposits of which are insured by the Federal Deposit
Insurance Corporation and the short-term unsecured debt obligations of
which are rated at least "A-1+" by the Rating Agency (including, if
applicable, the Trustee, or any agent of the Trustee acting in its
commercial capacity);
(d) short-term securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United States or any State whose long-term unsecured debt obligations
are assigned a credit rating of "AAA" by the Rating Agency at the time
of such investment or contractual commitment providing for such
investment; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that an
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held in the Trust Accounts to
exceed 10% of the Eligible Investments held in the Trust Accounts (with
Eligible Investments held in the Trust Accounts valued at par);
(e) commercial paper that (i) is payable in United States
dollars and (ii) is rated "A-1+" by the Rating Agency; or
(f) money market mutual funds that are rated in the highest
available rating category of the Rating Agency at the time of such
investment which only invest in other Eligible Investments; any such
money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirement for Eligible
Investments set forth in the Indenture.
Eligible Investments may be purchased by or through the Trustee or any
of its Affiliates.
Eligible Servicer: CBC, the Backup Servicer or another Person which at
the time of its appointment as Servicer (i) is capable of performing obligations
with respect to servicing a portfolio of payment streams similar to the
Receivables, (ii) is legally qualified and licensed in all applicable
jurisdictions to the extent that the failure to do so would reasonably be
expected to have a material and adverse effect on the Noteholders and has the
capacity to service the Receivables, (iii) has demonstrated the ability to
professionally and competently service a portfolio of payment streams similar to
the Receivables with reasonable skill and care, (iv) is qualified and entitled
to use, pursuant to a license or other written agreement, the software which the
Servicer uses in connection with performing its duties and responsibilities
under this
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Agreement or otherwise has available software which is adequate to perform its
duties and responsibilities under this Agreement, (v) has a minimum net worth of
$25,000,000 and (vi) is acceptable in writing to the Trustee and the Rating
Agency (such acceptance not to be unreasonably withheld).
Executive Officer: With respect to the Seller, the Servicer or the
Issuer, the President, Chief Financial Officer or any Senior Vice President
thereof.
Final Scheduled Payment Date: February 15, 2023 (or, if such day is not
a Business Day, the next succeeding Business Day).
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
Indenture: The Indenture, dated as of October 1, 2002, between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
Independent: When used with respect to any specified Person, that the
Person (i) is in fact independent of the Servicer, the Backup Servicer, the
Seller, the Issuer, and any Affiliate of any of the foregoing Persons, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Servicer, the Backup Servicer, the Seller, the Issuer, or any
Affiliate of any of the foregoing Persons, and (iii) is not connected with the
Servicer, the Backup Servicer, the Seller, the Issuer, or any Affiliate of any
of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Independent Accountants: As defined in Section 3.8.
Initial Purchaser: Banc One Capital Markets, Inc.
Insolvency Event: With respect to a specified Person, (a) the entry 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 Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or ordering the winding-up or
liquidation of such Person's affairs, or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed or stayed within 60 days; or (b) the commencement by
such Person of a voluntary case under any applicable Federal or state
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, or the failure by or
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admission of the inability of such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
Lien: Any security interest, lien, charge, pledge, or encumbrance of
any kind, including tax liens, mechanics' liens and any liens that attach by
operation of law; provided, however, the term "Lien" shall not include (i) any
liens for taxes, assessments or similar governmental charges or levies incurred
in the ordinary course of business that are not yet due and payable or (ii) any
lien or perfected security interest, if any, created under the terms of any
Obligor Receivable Agreement to secure any right to setoff or similar right, if
any, under such Obligor Receivable Agreement.
Lock-Box Account: Means a deposit account maintained at BNY and subject
to a blocked account agreement, for the purpose of receiving collections in
respect of the Receivables. The Lock-Box Account shall be an Eligible Account
(as defined in the Indenture).
Losses: As defined in Section 8.2.
Maximum Outstanding Note Principal Balance: With respect to any Payment
Date, the amount set forth on Schedule D opposite such Payment Date.
Net Available Funds: With respect to any Payment Date, an amount equal
to the Available Funds for the related Determination Date divided by 1.05.
Note Balance: Initially, the original principal amount of the Notes
issued by the Issuer on the Closing Date and, as of any date of determination
thereafter, the aggregate principal balance of the Notes that are Outstanding,
unless otherwise specified, after giving effect to any distribution in respect
of principal on the Notes on or prior to such date.
Note Payment Account: The account designated as such, established and
maintained pursuant to Section 4.1(b).
Note Pool Factor: With respect to any Payment Date, an eight-digit
decimal figure equal to (i) with respect to the Class A-1 Notes, the Class A-1
Note Balance as of such Payment Date divided by the original Class A-1 Note
Balance as of the Closing Date, (ii) with respect to the Class A-2 Notes, the
Class A-2 Note Balance as of such Payment Date divided by the original Class A-2
Note Balance as of the Closing Date, (iii) with respect to the Class B Notes,
the Class B Note Balance as of such Payment Date divided by the original Class B
Note Balance as of the Closing Date and (ii) with respect to the Class C Notes,
the Class C Note Balance as of such Payment Date divided by the original Class C
Note Balance as of the Closing Date.
Note Principal Shortfall: With respect to any Payment Date, an amount
equal to the excess of the Maximum Outstanding Note Principal Balance for such
Payment Date over the Note Balance on such Payment Date (calculated after giving
effect to the application on such Payment Date of the remaining Amount Available
to the payment of principal on the Notes).
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Note Purchase Agreement: The Note Purchase Agreement, dated the Closing
Date, among CBC, the Issuer and the Initial Purchaser.
Note Voting Amount: As defined in the Indenture.
Obligor: Any insurance carrier obligated under a contract or other
agreement or arrangement with any insurance broker or insurance agent to make
payments on or with respect to any Receivable.
Obligor Receivable Agreement: Means, with respect to any Receivable,
any contract or agreement between the Seller and the related Obligor governing
payment in respect of such Receivable.
Opinion of Counsel: A written opinion of counsel (who shall not be
in-house counsel to or an employee of the Servicer or any of its Affiliates)
reasonably acceptable in form and substance and from counsel reasonably
acceptable to the Issuer and, if such opinion or a copy thereof is required to
be delivered to the Trustee, reasonably acceptable (as to form, substance and
identity of counsel) to the Trustee.
Payment Date: The 15th day of each February, May, August and November,
or if such day is not a Business Day, the next succeeding Business Day,
commencing February 18, 2003 and including the Final Scheduled Payment Date.
Payout Trigger: With respect to any Determination Date, means (i) the
Cumulative Loss of Premium Rate on such Determination Date or on any prior
Determination Date exceeded 20.0%, (ii) the arithmetic average of the Quarterly
Loss of Premium Rate on such Determination Date and the Quarterly Loss of
Premium Rate with respect to the immediately preceding Determination Date
exceeds 0.50%, (iii) the occurrence of an Insolvency Event with respect to any
Obligor or (iv) the Notes have been accelerated following the occurrence of an
Event of Default; provided, however, that the occurrence of a Payout Trigger
described in clause (ii) above with respect to such Determination Date shall not
be deemed to be continuing with respect to any subsequent Determination Date so
long as on such Determination Date the arithmetic average of the Quarterly Loss
of Premium Rate on such subsequent Determination Date and the Quarterly Loss of
Premium Rate with respect to the immediately preceding Determination Date does
not exceed 0.50%; it being understood that the Payout Triggers described in
clauses (i), (iii) and (iv) may not be cured following the initial occurrence
thereof.
Performance Guarantor Default: At any time, the occurrence and
continuation of any breach (including, without limitation, the breach of any
covenant of CBI or CBC set forth in Section 7 of the related Performance
Guaranty), default or failure by CBI or CBC, after giving effect to the
applicable grace period, if any, of any of its duties or other obligations under
the related Performance Guaranty.
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Performance Guaranty: Each Performance Guaranty, dated as of October 1,
2002, made by CBI or CBC in favor of the Trustee for the benefit of the
Noteholders, as the same may be amended, supplemented or modified from time to
time.
Person: Any legal person, including any individual, corporation,
partnership, limited liability company, joint venture, estate, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof, or any other entity.
Projected Cash Flows: With respect to the Receivables related to the
insurance policies in any Case as of any date, an amount equal to the sum of the
products (calculated for the insurance policies in such Case and for each type
of compensation payable with respect to such insurance policies and for each
calendar year, (including the current calendar year), the related insurance
carrier is obligated to pay such compensation) of (a) the commission rate
applicable for each type of compensation payable with respect to such insurance
policies, (b)(i) if such compensation is based on the premium paid with respect
to such insurance policies, the aggregate amount of such premiums, or (ii) if
such compensation is based on the cash surrender value of such insurance
policies, the Projected Cash Surrender Value and (c) the "Probability of
Survival" percentage for such calendar year, as set forth in Schedule E attached
hereto.
Projected Cash Surrender Value: As of any date, with respect to any in
force insurance policies in any Case, an amount determined by taking the actual
cash surrender values of such insurance policies as of such date and assuming
that such values will grow at a compounded annual rate of 5.0%.
Pro Rata Share: With respect to any Receivable at any time, the
fraction (expressed as a percentage) (i) the numerator of which is the premium
paid for the insurance policy related to such Receivable, and (ii) the
denominator of which is the aggregate of the premiums paid for all in-force
insurance policies in the related Case.
Purchase Amount: With respect to any Receivable in any Case at any
time, the amount equal to the product of (a) the Pro Rata Share of such
Receivable and (b) the present value of the Projected Cash Flows as of such time
with respect to all Receivables in such Case (determined by discounting on an
annual basis) at a rate equal to the weighted average coupons of the Notes.
Purchased Receivable: Any Receivable that became a Warranty Receivable
or Administrative Receivable on or before the related Deposit Date, and as to
which the Purchase Amount has been or will be deposited in the Collection
Account by the Seller or the Servicer, as applicable, on or before the related
Deposit Date.
Quarterly Loss of Premium Rate: With respect to any Determination Date,
the fraction, expressed as a percentage, (i) the numerator of which is equal to
the aggregate amount of premium paid with respect to all insurance policies
related to the Receivables that have been terminated, satisfied, surrendered or
exchanged (other than such insurance policies that have been terminated or
satisfied as a result of the benefits under such insurance policies being paid
in full due to the mortality of the insured under such insurance policy) during
the related Quarterly
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Period and (ii) the denominator of which is equal to the aggregate of the
premiums paid with respect to the insurance policies related to the Receivables
that were in-force as of the first day of such Quarterly Period; provided,
however, that for purposes of the calculation in clause (i) above, the aggregate
amount of premium required to be included in such calculation with respect to
any such insurance policies that have been surrendered or exchanged and with
respect to which the Seller shall have assigned to the Issuer new Receivables
arising in connection with a transaction involving such surrendered or exchanged
insurance policies that is permitted under Section 2.13, shall be reduced (but
not below zero) by an amount equal to the product of (y) such aggregate premium
and (z) the lesser of (i) a fraction (expressed as a percentage), the numerator
of which is the Purchase Amount with respect to such new Receivables (calculated
as of the date of such assignment) and the denominator of which is the Purchase
Amount for the Receivables related to such insurance policies that have been so
surrendered or exchanged (calculated immediately prior to, and without giving
effect to, such surrender or exchange) and (ii) 1.00.
Quarterly Period: With respect to a Payment Date or a Determination
Date, the three calendar months immediately preceding such Payment Date or
Determination Date.
Quarterly Principal Payment Amount: With respect to any Payment Date,
the excess of the Net Available Funds for the related Determination Date over
the sum of all amounts payable on such Payment Date pursuant to clauses first
through fifth of Section 4.4.
Quarterly Records: All manually or electronically prepared or computer
generated records or files relating to historical payments for each Case and
relating to each insurance policy related to any Receivable.
Rating Agency: S&P, so long as it maintains a rating on the Notes; and
if it no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization then maintaining a rating on the
Notes.
Receivable: The right to receive payment from an insurance carrier of
commissions and all other compensation (whether payable now or at any other time
in the future) arising from, or in connection with, (a) the sale of life
insurance policies or other insurance products or the servicing thereof, which
rights are identified on the Schedule of Receivables or (b) the sale or issuance
of any life insurance policies or other insurance products or the servicing
thereof in connection with the exchange, surrender or termination of any life
insurance policies listed on the Schedule of Receivables, all proceeds thereof
and all rights (but none of the obligations, if any) under the contracts giving
rise to such rights, but not including any Purchased Receivable or proceeds
thereof on or after the Payment Date immediately preceding the Deposit Date on
which payment of the Purchase Amount is made in connection therewith pursuant to
Sections 2.5 or 3.4; provided, however, that a "Receivable" shall not include
"Additional Compensation".
Receivables File: As defined in Section 2.2(a)(i).
Receivables Purchase Price: $368,316,577.
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Redemption Price: As defined in the Indenture.
Related Documents: The Indenture, this Agreement, the Notes, the Note
Purchase Agreement and the Performance Guaranty, as each may be amended,
modified or supplemented from time to time.
Reserve Account: The account designated as such established and
maintained pursuant to Section 4.1(c).
Reserve Account Draw Amount: As defined in Section 5.2.
Reserve Account Required Amount: With respect to the Closing Date and
each Payment Date, as applicable, an amount equal to the sum of (a) the greater
of (i) 1% of the Note Balance on the Closing Date, and (ii) the aggregate amount
of interest due on the Notes on the next occurring Payment Date plus (b) all
amounts owed on the Receivables (including interest accrued thereon, but not
including any Split Commissions Amount in respect of such Receivables) which are
more than 60 days past due on such date.
Responsible Officer: When used with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Secretary, Assistant Secretary or Authorized Signer,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject. When used with respect to any other Person that is not an individual,
the President, any Vice-President or Assistant Vice-President or the Controller
of such Person, or any other officer or employee having similar functions.
Retained Available Funds: With respect to any Payment Date, an amount
equal to the excess of Available Funds for the related Determination Date over
the Net Available Funds for such Determination Date.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. and its successors.
Schedule of Receivables: The schedule of the rights to payment sold and
transferred to the Issuer by the Seller pursuant to this Agreement which is
attached hereto as Schedule A, as the same may be amended or supplemented in
accordance with Section 2.13(b)(ii) and from time to time and provided to the
Servicer and the Trustee.
Schedule of Representations: The Schedule of Representations and
Warranties attached hereto as Schedule B.
Seller: As set forth in the introductory paragraph of this Agreement.
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Series: Any series of securities issued by the Issuer in connection
with its purchase of pools of receivables from the Seller.
Servicer: CBC, its successor in interest pursuant to Section 8.2 or 8.3
or, after any termination of the Servicer upon a Servicer Termination Event, the
Backup Servicer or any other successor Servicer.
Servicer Advance: As defined in Section 4.2(b)(ii).
Servicer Termination Event: An event described in Section 8.1.
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.6, substantially in the form attached hereto as Exhibit B.
Servicing Fee: With respect to any Quarterly Period, the fee payable to
the Servicer for services rendered during such Quarterly Period, which fee shall
be equal to the product of (i) one-fourth times (ii) $3,000 per policyholder
plus $15 per insurance policy in-force as of the first day of such Quarterly
Period.
Servicing Policy and Procedures: The servicing policy and procedures of
the Servicer set forth in Schedule C hereto as amended in accordance with
Section 3.1.
Split Commissions Amount: With respect to any calendar month in a
Quarterly Period, an amount equal to the aggregate of the portion, if any, of
each Receivable collected during such calendar month that the Seller is
obligated to split pursuant to a contract, agreement or other arrangement, with
any other Person.
Subservicer: CBFS or any successor under the Subservicing Agreement.
Subservicing Agreement: The Subservicing Agreement dated as of October
1, 2002 among CBC and CBFS.
Trust Accounts: As defined in Section 4.1(d). All Trust Accounts shall
be Eligible Accounts (as defined in the Indenture).
Trustee: The Person acting as Trustee under the Indenture, its
successors in interest and any successor Trustee under the Indenture.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
Variable Policies: As defined in the Subservicing Agreement.
Warranty Receivable: With respect to any Quarterly Period, a Receivable
which the Seller has become obligated to repurchase pursuant to Section 2.5 on
the Deposit Date following such Quarterly Period.
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Section 1.2 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular, words
importing any gender include the other gender, references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their successors and permitted assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
Section 1.3 Calculations. All calculations of the amount of interest
accrued on the Notes and all calculations of the amount of the Servicing Fee,
except as otherwise expressly provided, shall be made on the basis of a 360-day
year consisting of twelve 30-day months.
Section 1.4 Section References. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
Section 1.5 No Recourse. No recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, partner, member of
other equity holder, officer, or director, as such, of the Seller, the Servicer,
the Trustee, the Backup Servicer or the Issuer or of any predecessor or
successor of the Seller, the Servicer, the Trustee, the Backup Servicer or the
Issuer. By way of clarification, the foregoing sentence shall not limit recourse
to the Seller, the Servicer, the Trustee, the Backup Servicer or the Issuer for
their respective obligations under this Agreement and the other Related
Documents.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1 Purchase and Sale of Receivables.
(a) On the Closing Date, subject to the terms and conditions of this
Agreement, the Seller agrees to sell to the Issuer, and the Issuer agrees to
purchase from the Seller, all of the Seller's right, title and interest in and
to the Receivables and all proceeds thereof received after the Cutoff Date. The
conveyance to the Issuer of the Receivables and all proceeds thereof is intended
as a sale free and clear of all Liens (other than Liens in favor of the Issuer
or the Trustee created pursuant to this Agreement or the Related Documents) and
it is intended that the Receivables and such proceeds shall not be part of the
Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy or similar law. If, however,
notwithstanding the express intent of the parties hereto, such conveyance is
considered to be a secured financing or loan, the Seller hereby grants to the
Issuer a first priority security interest in all of the Seller's right, title
and interest in and to such Receivables and all proceeds thereof to secure all
of the Seller's obligations hereunder, and this Agreement constitutes a security
agreement.
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(b) Transfer of Receivables. On the Closing Date and simultaneously
with the transactions to be consummated pursuant to the Indenture, the Seller
shall, and does hereby automatically and without any further action, sell,
transfer, assign and otherwise convey to the Issuer, without recourse (subject
to the obligations herein), all of the Seller's right, title and interest in and
to: the Receivables, all monies and other proceeds with respect thereto after
the Cutoff Date and the proceeds of any and all of the foregoing.
(c) Receivables Purchase Price. In consideration for the Receivables
described in Section 2.1(b), the Issuer shall, on the Closing Date, (i) pay to
the Seller (or at the Seller's direction) an amount equal to $330,966,577 in
cash by federal wire transfer (same day) funds and (ii) assign and endorse over
to the Seller certain promissory notes, which in the aggregate, have a principal
face amount equal to $37,350,000.
(d) The Closing. The sale and purchase of the Receivables shall take
place at a closing at the offices of Vedder, Price, Xxxxxxx & Kammholz, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 on the Closing Date,
simultaneously with the closing under the Indenture pursuant to which the Issuer
shall (i) grant all of its right, title and interest in and to the Receivables
and the proceeds thereof to the Trustee for the benefit of the Noteholders and
(ii) issue the Notes.
Section 2.2 Custody of Receivable Files.
(a) In connection with the sale, transfer and assignment of the
Receivables to the Issuer pursuant to this Agreement and simultaneously with the
execution and delivery of this Agreement, the Issuer hereby directs the Trustee
to, and the Trustee hereby does, revocably appoint CBC (in its capacity as the
Servicer) to act as Custodian, and CBC hereby accepts such appointment, to act
as the agent of the Trustee as custodian of the following documents and/or
instruments in its possession which shall be delivered to the Custodian as agent
of the Trustee on or prior to the Closing Date (with respect to each
Receivable):
(i) The original contract governing payment in respect of such
Receivable, or a copy thereof, between each Obligor and the Seller or
any of its identified current or former officers, employees or members,
together with any written agreements amending, modifying or waiving the
terms of such contract prior to the Closing Date, the written consent
to the assignment by the Seller to the Issuer executed by the related
Obligor, copies of each insurance policy related to such Receivable and
an Assignment executed by the Seller (and consented to by the related
Obligor) conveying all of its right, title and interest in and to such
Receivable and the proceeds thereof (the "Receivables Files").
The Servicer shall, following the occurrence of a Servicer Termination
Event, automatically cease to act as Custodian with respect to the foregoing
documents and/or instruments, and shall within ten (10) Business Days deliver
the Receivables Files to the Trustee in accordance with Section 6.4, and the
Trustee shall assume the duties and obligations of Custodian upon its receipt of
the Receivables Files.
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(b) Upon payment in full of the Notes, the Servicer will notify the
Custodian and the Trustee pursuant to a certificate of an Executive Officer of
the Servicer (which certificate shall include a statement to the effect that all
amounts received which are required to be deposited in the Collection Account
have been so deposited) and shall request delivery of the Receivable Files to
the Servicer. From time to time as appropriate for servicing any Receivable or
enforcing the terms of the contract related to such Receivable, the Custodian
shall, upon written request of an Executive Officer of the Servicer, cause the
related Receivables File to be released to the Servicer. The Servicer's receipt
of a Receivables File shall obligate the Servicer to return such Receivables
File to the Custodian when its need by the Servicer has ceased unless the
Receivable is repurchased as described in Section 2.5 or 3.4, or has been
terminated due to surrender, exchange, or mortality of the insured or paid in
full.
Section 2.3 Conditions Precedent.
(a) Conditions to Purchase and Issuance by Issuer. The Issuer's
obligation to purchase the Receivables hereunder and to execute and deliver the
Notes on the Closing Date is subject to the satisfaction of the following
conditions on or before the Closing Date:
(i) Representations and Warranties True. The representations
and warranties of the Seller and the Servicer hereunder shall be true
and correct on the Closing Date with the same effect as if then made,
and the Seller and the Servicer shall have performed all obligations to
be performed by it hereunder on or prior to the Closing Date.
(ii) Computer Files Marked. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its computer
files that the Receivables have been sold to the Issuer pursuant to
this Agreement and are subject to the lien of the Indenture and the
Servicer shall deliver (by computer transmission or otherwise) to the
Issuer a complete Schedule of Receivables, certified by an Executive
Officer of the Servicer to be true, correct and complete.
(iii) Receivable Files. The Servicer shall, at the Seller's
expense, cause the Receivable Files to be delivered to the Custodian on
or prior to the Closing Date.
(iv) Documents to be delivered on or prior to the Closing
Date.
(A) The Assignment. On or prior to the Closing Date,
the Seller will execute and deliver an Assignment.
(B) Evidence of UCC-1 Filing. On or prior to the
Closing Date, the Servicer shall record and file, at its own
expense, a UCC-1 financing statement in each jurisdiction in
which required by applicable law, authorized by the Seller, as
seller or debtor, and naming the Issuer, as purchaser or
secured party, and the Trustee, as assignee of the Issuer,
naming the Receivables sold by the Seller as collateral,
meeting the requirements of the laws of each such jurisdiction
and in such manner as is necessary to perfect the sale,
transfer, assignment and
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conveyance of such Receivables to the Issuer and the Trustee,
as assignee of the Issuer. The Servicer shall deliver a
file-stamped copy, or other evidence of such filing, to the
Trustee on or prior to the Closing Date.
(C) Evidence of Release of Liens. On or prior to the
Closing Date, the Servicer shall have delivered to the Trustee
evidence satisfactory to the Trustee that UCC-3 termination
statements terminating the effectiveness of all financing
statements on file which perfect security interests in any
Receivable, including without limitation, the security
interests in the contracts giving rise to any Receivable and
any proceeds of such security interests in any Receivable,
have been authorized by each such Person. Upon closing, the
Servicer shall release and file such UCC-3 termination
statements.
(D) Resolutions. Copies of resolutions of the Board
of Directors of the Seller, CBI and the Servicer approving the
execution, delivery and performance of this Agreement and the
Related Documents to which it is a party and the transactions
contemplated hereby and thereby, certified by a Secretary or
an Assistant Secretary of such Person.
(E) Other Documents. On or prior to the Closing Date,
the Seller, CBI and the Servicer shall deliver to the Trustee
duly executed copies of (i) each Related Document to which it
is a party and (ii) such other documents, including
certificates and legal opinions as the Issuer, the Trustee or
the Initial Purchaser may reasonably request.
(v) Other Transactions. On or prior to the Closing Date, all
conditions precedent under the Related Documents shall have been
performed and the transactions contemplated thereby shall be
consummated.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to sell the Receivables to the Issuer is subject to the satisfaction of
the following conditions:
(i) Representations and Warranties True. The representations
and warranties of the Issuer hereunder shall be true and correct on the
Closing Date with the same effect as if then made, and the Issuer shall
have performed all obligations to be performed by it hereunder on or
prior to the Closing Date.
(ii) Receivables Purchase Price. On the Closing Date, the
Issuer will deliver the Receivables Purchase Price in the amounts and
as provided in Section 2.1(c). The Seller hereby directs the Issuer to
wire or otherwise deliver the Receivables Purchase Price pursuant to
wire instructions to be delivered to the Issuer on or prior to the
Closing Date.
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(iii) Completion of Acquisition of the Seller. All of the
conditions precedent to the acquisition of 100% of the equity interests
in the Seller by CBC shall have been satisfied.
Section 2.4 Representations, Warranties and Covenants of the Seller.
The Seller makes the following representations, warranties and covenants and the
Receivables, on which the Issuer relies in accepting the Receivables and in
executing and issuing the Notes and upon which the Trustee has relied in
authenticating the Notes. Unless otherwise specified, such representations,
warranties and covenants speak as of the Closing Date, but shall survive the
sale, transfer, and assignment of the Receivables to the Issuer and the pledge
thereof to the Trustee pursuant to the Indenture.
(a) Schedule of Representations. The representations and warranties
with respect to the Receivables and as set forth on the Schedule of
Representations attached hereto as Schedule B are true and correct.
(b) Organization and Good Standing. It has been duly organized and is
validly existing as a limited liability company, in good standing under the laws
of the State of North Carolina, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Receivables to the
Issuer, unless failure thereof would not materially and adversely affect (i) its
ability to transfer such Receivables to the Issuer pursuant to this Agreement,
(ii) the validity or enforceability of such Receivables or (iii) its ability to
perform its obligations hereunder and under the Related Documents to which it is
a party. It has not changed its limited liability structure or jurisdiction of
organization for the six years preceding the Closing Date. Its organizational
identification number is 0-0-000000.
(c) Due Qualification. It is duly qualified to do business as a foreign
corporation or limited liability company, as the case may be, in good standing,
has filed on a timely basis all required tax returns, and has obtained (x) all
necessary insurance licenses and approvals required by any insurance carrier
obligated to make payments in respect of any Receivable or required by any
applicable jurisdiction and (y) all other necessary licenses and approvals in
all jurisdictions where the failure to do so would materially and adversely
affect (i) its ability to transfer the Receivables to the Issuer pursuant to
this Agreement, (ii) the validity or enforceability of the Receivables or (iii)
its ability to perform its obligations hereunder and under the Related Documents
to which it is a party.
(d) Power and Authority. It has all necessary power and authority to
execute and deliver this Agreement and the Related Documents to which it is a
party, and to carry out its terms and their terms, respectively; and the
execution, delivery and performance by it of this Agreement and the Related
Documents to which it is a party have been duly authorized by it by all
necessary action and this Agreement and the Related Documents to which it is a
party have been duly executed and delivered by it.
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(e) Valid Sale, Binding Obligations. This Agreement effects a valid
sale, transfer and assignment of the Receivables, enforceable against it and its
creditors and purchasers; and this Agreement and the Related Documents to which
it is a party, when duly executed and delivered, shall constitute legal, valid
and binding obligations of it enforceable against it in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The execution, delivery and performance by the Seller
of this Agreement and the Related Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof do not and will not (i) conflict
with, result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under its (A)
organizational documents, or (B) any indenture, mortgage, deed of trust, or
other instrument or other agreement, which in the case of such other agreement
would reasonably be expected to have a material adverse effect upon its ability
to perform its obligations hereunder or under any of the other Related Documents
to which it is a party, or the enforceability or collectability of the
Receivables, or by which it or its properties are bound; or (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture (except for the Lien created pursuant to the
Indenture), agreement, mortgage, deed of trust or other instrument, other than
this Agreement and the Indenture, or (iii) violate any law, order, rule or
regulation applicable to it of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(g) No Proceedings. There are no proceedings or investigations pending
or, to its knowledge, threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent the issuance
of the Notes or the consummation of any of the transactions contemplated by this
Agreement or any of the Related Documents, (C) seeking any determination or
ruling that would be reasonably likely to adversely affect the performance by it
of its obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Notes.
(h) No Consents. No consent, approval, license, authorization or order
of or declaration, registration or filing with any governmental authority,
bureau or agency is required to be made by it in connection with the execution,
delivery or performance of this Agreement or the Related Documents to which it
is a party or the consummation of the transactions contemplated hereby or
thereby, except such as have been duly made, effected or obtained or are related
to federal or state securities laws in connection with the registration or the
sale of the Notes.
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(i) Location. The location (as such term is used in the UCC) of the
Seller is North Carolina, its place of business (or if it has more than one
place of business, its chief executive office) is 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 and it has not changed its location (as
such term is used in the UCC) for the four months preceding the Closing Date or
its place of business (or if it has more than one place of business, its chief
executive office) for the six years prior to the Closing Date.
(j) Legal Name. Its legal name is exactly as set forth in this
Agreement, it has not changed its name during the six years prior to the Closing
Date and it does not have any trade names, fictitious names, assumed names or
"doing business" names.
(k) Solvency. It is solvent and will not become insolvent after giving
effect to the transactions contemplated by the Related Documents. It is paying
its debts as they become due and after giving effect to the transactions
contemplated by the Related Documents will have adequate capital to conduct its
business.
(l) Pension Plans. All of its pension or profit sharing plans have been
fully funded in accordance with applicable obligations.
Section 2.5 Repurchase of Receivables Upon Breach of Certain
Representations and Warranties.
(a) Upon discovery by any of the Seller, the Servicer, the Trustee or
the Issuer of a breach of any of the representations and warranties of the
Seller contained in Section 2.4(a), the party discovering such breach or failure
shall give prompt written notice to the other parties hereto; provided, however,
that the failure to give any such notice shall not affect any obligation of the
Seller under this Section 2.5. As of the last day of the last calendar month of
each Quarterly Period in which a Responsible Officer of the Seller has actual
knowledge or notice of such breach or failure which materially and adversely
affects the interests of the Noteholders in any Receivable, the Seller shall,
unless such breach or failure shall have been cured in all material respects,
repurchase from the Issuer each Receivable materially and adversely affected by
such breach and, on or before the related Deposit Date, pay the Purchase Amount
to the Collection Account. Upon knowledge of the Trustee that the Seller has
failed to effect its repurchase obligation, the Trustee for the benefit of the
Noteholders shall enforce directly the obligation of the Seller to repurchase
such Receivables. The obligation of the Seller to repurchase any Receivable with
respect to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Seller for such
breach available to the Noteholders, the Issuer or the Trustee on behalf of
Noteholders; provided, however, that the Seller shall indemnify the Issuer, the
Backup Servicer, the Initial Purchaser, the Trustee and the Noteholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach except to the extent arising out of
or resulting from gross negligence or willful misconduct of the party seeking
indemnification.
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(b) In addition to the foregoing and notwithstanding whether the
related Receivable shall have been repurchased by the Seller, the Seller shall
indemnify the Issuer, the Trustee, the Initial Purchaser, the Backup Servicer,
and the Noteholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach except to the
extent arising out of the gross negligence or willful misconduct of the party
seeking indemnification; provided, however, that the Seller shall have the right
to participate in any litigation for which it must so indemnify a party.
Section 2.6 Issuer's Assignment of Administrative Receivables and
Warranty Receivables. With respect to all Administrative Receivables and all
Warranty Receivables purchased by the Servicer or repurchased by the Seller, the
Issuer shall take any and all actions reasonably requested by the Servicer or
the Seller, at the expense of the requesting party, to assign, without recourse,
representation or warranty, to the Servicer or the Seller, as applicable, all
the Issuer's right, title and interest in and to such Purchased Receivable being
an assignment outright and not for security; and the Servicer or the Seller, as
applicable, shall thereupon own such Receivable free of any further obligation
to the Issuer, the Trustee or the Noteholders with respect thereto.
Section 2.7 Protection of Right, Title and Interest.
(a) Filings. The Seller shall cause all financing statements and
continuation statements and any other necessary documents covering the right,
title and interest of the Issuer in and to the Receivables to be promptly filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Issuer hereunder to the Receivables. The Seller
shall deliver to the Issuer (with copies to the Trustee) file stamped copies of,
or filing receipts for, any financing statement or document recorded, registered
or filed as provided above, as soon as available following such recordation,
registration or filing. The Issuer shall cooperate fully with the Seller and the
Trustee in connection with the obligations set forth above, and file any
financing statements and all documents and obtain any Opinion of Counsel
reasonably requested to fulfill the intent of this Section 2.7(a). In the event
that the Seller fails to perform its obligations under this subsection, the
Issuer or the Trustee may do so at the expense of the Seller.
(b) Name and Other Changes. (I) At least 30 days prior to the date that
the Seller intends to make any change in its name, identity or legal structure
which could render any financing statement or continuation statement filed in
accordance with subsection (a) above seriously misleading within the applicable
provisions of the UCC or any title statute, the Seller shall give the Trustee,
the Rating Agency and the Issuer written notice of its intention to effectuate
such change (such notice to include, in reasonable detail, all information
surrounding such change) and (II) no later than two days after the effective
date of such change, the Seller shall file appropriate amendments to all
previously filed financing statements or continuation statements. At least 30
days prior to the date of any change in its location (as such term is used in
the applicable UCC), the Seller shall give the Trustee, the Rating Agency and
the Issuer written
23
notice of its intention to effectuate such change and the Seller shall within
two days after the effective date thereof, file any such amendment or new
financing statement requested by the Issuer or the Trustee. Prior to changing
its name, identity, legal structure or location, the Seller shall deliver to the
Issuer and the Trustee, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been authorized and filed (or will be filed) that are necessary fully to
preserve and protect the first priority perfected security interest of the
Issuer and the Trustee in the Receivables, and reciting the details of such
filings, or (b) stating that, in the opinion of such counsel, no such action is
necessary to preserve and protect such interest. The Seller shall at all times
maintain each office from which it shall service Receivables, and its principal
executive office, within the United States of America.
(c) List of Receivables. Upon request, the Seller shall furnish or
cause to be furnished to the Trustee, within five (5) Business Days, a list of
all Receivables then owned by the Issuer, together with a reconciliation of such
list to the Schedule of Receivables.
(d) Maintenance of Computer Systems. The Seller shall maintain its
computer systems so that, from and after the time of sale hereunder of the
Receivables to the Issuer, its master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of the
Issuer and the Trustee in such Receivable and that such Receivable is owned by
the Issuer.
Section 2.8 Restrictions on Liens. The Seller shall not (i) create,
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any Lien or restriction on
transferability of the Receivables, except for the ownership interest of the
Issuer and the Lien created hereby in favor of the Issuer or the Lien created by
the Indenture in favor of the Trustee for the benefit of the Noteholders, any
Lien permitted hereunder as may be in effect on the Closing Date, and the
restrictions on transferability imposed by this Agreement and the Indenture or
(ii) authorize any filing or cause to be filed under the UCC of any jurisdiction
any financing statement which names it or the Issuer as a debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement, with respect to the Receivables, except in each case any
such instrument solely evidencing the Issuer's ownership interest or securing
the rights and preserving the Lien in favor of the Trustee for the benefit of
the Noteholders and except for any such security agreement or authorization to
file a financing statement contained in or arising under the applicable UCC by
virtue of a security agreement contained in any Obligor Receivable Agreement as
in effect on the Closing Date. The Seller shall defend the right, title and
interest of the Issuer in, to and under the Receivables against all claims of
third parties claiming through or under the Seller.
Section 2.9 Sale. The Seller and the Issuer agree to treat this
conveyance for all purposes as an absolute sale on all relevant books, records
and other applicable documents; provided, however, that the foregoing shall not
prevent the Issuer from (i) treating the Receivables being sold by CBC as being
owned by CBC solely for financial accounting purposes
24
or (ii) being disregarded for income tax purposes. On and after the Closing
Date, the Issuer shall own the Receivables and the Seller shall not take any
action inconsistent with such ownership or claim any ownership interest in any
such Receivable.
Section 2.10 Indemnification By the Seller.
(a) The Seller shall defend, indemnify and hold harmless the Issuer,
the Trustee, the Servicer, the Backup Servicer, the Initial Purchaser and the
Noteholders for any liability as a result of any breach of any of its
representations, warranties or covenants contained herein (including those set
forth in Section 2.4(a)).
(b) The Seller shall defend, indemnify, and hold harmless the Issuer,
the Trustee, the Servicer, the Backup Servicer, the Initial Purchaser and the
Noteholders from and against any and all taxes with respect to the sale of the
Receivables to the Issuer, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes and costs and expenses in defending against the
same.
(c) The Seller shall defend, indemnify, and hold harmless the Issuer,
the Trustee, the Servicer, the Backup Servicer, the Initial Purchaser and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities to the extent that such cost, expense, loss, damage,
claim or liability arose out of, or was imposed upon the Issuer, the Trustee,
the Servicer, the Backup Servicer, the Initial Purchaser or the Noteholders
through, the gross negligence or willful misconduct of the Seller in the
performance (or failure to perform) its duties under this Agreement or the
Related Documents to the Seller is a party.
(d) Notwithstanding the indemnity provisions contained in Sections
2.10(a)-(d) above, the Seller shall not be required to indemnify the Issuer, the
Trustee, the Servicer, the Backup Servicer, the Initial Purchaser or the
Noteholders against any tax, costs, expenses, losses, damages, claims or
liabilities to the extent the same shall be due to (i) the willful misconduct or
gross negligence of such party, or (ii) recourse for uncollectible or
uncollected Receivables.
Indemnification under this Section shall survive the termination of
this Agreement and shall include fees and expenses of litigation. These
indemnity obligations shall be in addition to any obligation that the Seller may
otherwise have.
Section 2.11 Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Seller as of the date of its formation and
as of the Closing Date:
(a) Organization and Good Standing. The Issuer has been duly organized
and is validly existing as a limited liability company in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority and legal right to acquire and own the
Receivables and to pledge the Receivables to the Trustee pursuant to the
Indenture. It has not changed its limited liability
25
structure or jurisdiction of organization since the date of its formation. Its
organizational identification number is 3551825.
(b) Due Qualification. The Issuer is duly qualified to do business as a
foreign limited liability company in good standing, has filed on a timely basis
all required tax returns, and has obtained (x) all necessary insurance licenses
and approvals required by any insurance carrier obligated to make payments in
respect of any Receivable or required by any applicable jurisdiction and (y) all
other necessary licenses and approvals in all jurisdictions where the failure to
do so would materially and adversely affect (i) the Issuer's ability to pledge
the Receivables to the Trustee pursuant to the Indenture, (ii) the validity or
enforceability of the Receivables or (iii) the Issuer's ability to perform its
obligations hereunder and under the Related Documents to which it is a party.
(c) Power and Authority. The Issuer has all necessary power and
authority to execute and deliver this Agreement and the Related Documents to
which it is a party, and to carry out the terms hereof and thereof; and the
execution, delivery and performance of this Agreement and the Related Documents
to which it is a party have been duly authorized by the Issuer by all necessary
action.
(d) Binding Obligation. Each of this Agreement and, the Related
Documents to which the Issuer is a party shall constitute a legal, valid and
binding obligation of the Issuer enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance by the Issuer
of this Agreement and the Related Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof do not and will not (i) conflict
with, result in a breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, (A) the operating
agreement, as amended, of the Issuer, or (B) any indenture, mortgage, deed of
trust, or other instrument or other agreement, which in the case of such other
agreement would reasonably be expected to have a material adverse effect upon
its ability to perform its obligations hereunder or under any of the other
Related Documents to which it is a party, or the enforceability or
collectability of the Receivables, or by which it or its properties are bound;
or (ii) result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture (except for the Lien
created pursuant to the Indenture), agreement, mortgage, deed of trust, or other
instrument other than this Agreement or the Indenture; or (iii) violate any law,
order, rule or regulation applicable to the Issuer or its properties of any
court or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Issuer or its
properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the knowledge of the Issuer, threatened before any court, regulatory
body, administrative agency or
26
other governmental instrumentality having jurisdiction over the Issuer or its
properties: (i) asserting the invalidity of this Agreement or any of the Related
Documents; (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents; (iii) seeking
any determination or ruling that would be reasonably likely to adversely affect
the performance by the Issuer of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents; or (iv)
seeking to adversely affect the federal, state or local income, excise,
franchise or similar tax attributes of, or seeking to impose any excise,
franchise, transfer or similar tax upon, the transfer and acquisition of the
Receivables hereunder or the pledge of the Receivables to the Trustee under the
Indenture.
(g) No Consents. No consent, approval, license, authorization or order
of or declaration, registration or filing with any governmental authority,
bureau or agency is required in connection with the execution, delivery or
performance of this Agreement or the Related Documents to which it is a party or
the consummation of the transactions contemplated hereby or thereby, except such
as have been duly made, effected or obtained or are related to federal or state
securities laws in connection with the registration or the sale of the Notes.
(h) Location. The location (as such term is used in the UCC) of the
Issuer is Delaware, its place of business (or if it has more than one place of
business, its chief executive office) is 000 Xxxxx Xxxxxxxx Xxxx Xxxxx, Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000, and it has not changed its location or its place of
business (as such terms are used in the UCC) or if it has more than one place of
business, its chief executive office) since the date of its formation. The
Issuer has no other principal place of business.
(i) Legal Name. The legal name of the Issuer is exactly as set forth in
this Agreement, the Issuer has not changed its name since its formation and does
not have any trade names, fictitious names, assumed names or "doing business"
names.
(j) Solvency. The Issuer is solvent and will not become insolvent after
giving effect to the transactions contemplated by the Related Documents. The
Issuer is paying its debts as they become due and after giving effect to the
transactions contemplated by the Related Documents will have adequate capital to
conduct its business.
(k) Subsidiaries. Issuer does not own any stock or other equity
interest in any other Person.
Section 2.12 [Reserved].
Section 2.13 Covenants Regarding Termination or Exchange of Insurance
Policies; No Merger, Etc.
(a) Neither the Seller nor the Servicer shall, nor shall such Person
permit any of their respective Affiliates to, solicit, advise, induce or cause,
directly or indirectly, any owner or holder of any insurance policy related to
any Receivable to exchange or surrender such insurance policy; provided, that
the Seller may, so long as it shall not have engaged in any of the foregoing
27
activities, effect transactions with any owner or holder of an insurance policy
related to any Receivable involving an exchange or surrender of such insurance
policy if such transaction is effected solely to prevent a third party who is
not an Affiliate of, or associated with, the Seller from engaging in a similar
transaction that the Seller reasonably and in good faith believes is imminent
with such owner or holder and related to such insurance policy.
(b) On the date that the Seller effects a transaction involving an
exchange or surrender of any insurance policy related to any Receivable, as
permitted under Section 2.13(a) above, the Seller shall:
(i) deliver to the Trustee, a certificate executed by a
Responsible Officer of the Seller stating that, after giving effect to
such transaction each of the representations, warranties and covenants
made by it in this Agreement, including, but not limited to those
contained in the Schedule of Representations with respect to the new
Receivables arising in connection with such transaction, are true and
correct on such date;
(ii) deliver to the Trustee, an amended or supplemented
Schedule of Receivables (after giving effect to such transaction and
the addition of the new Receivable arising in connection therewith);
and
(iii) deliver to the Trustee, (A) a written consent executed
by the insurance carriers related to the new insurance policies related
to such transaction consenting to the assignment to the Issuer of the
commissions and other compensation payable with respect to such
insurance policies, (B) a copy of an irrevocable letter of direction
delivered to such insurance carrier to remit such commissions and other
compensation to the Trustee for deposit into the Lock-Box Account for
deposit into the Collection Account and distribution in accordance with
Section 4.4 and (C) an Assignment, executed by it (and consented to by
the related Obligor) in favor of the Issuer, in respect of all of its
right, title and interest in and to each new Receivable.
(c) On and after the Closing Date, the Seller shall not incur any
indebtness and shall not engage in any activity or business (including selling
any insurance policies or insurance products) with any Obligor (or any Affiliate
thereof) or enter into any contract, agreement or arrangement with any such
Person, that could give rise to or result in any such Person having the right to
set-off, offset or otherwise to charge against any Receivable any amount that is
due to or to become payable to any such Person by the Seller; provided, that the
Seller may engage in any activity or business with any such Person or enter into
a contract, agreement or arrangement with any such Person in accordance with
clause (a) above, so long as prior to such transaction the related Obligor shall
have irrevocably waived, in writing, any such right of set-off, offset or other
similar right with respect to the Receivables and the Seller shall have
delivered a copy of such waiver to the Trustee.
(d) The Seller shall at all times maintain its existence as a limited
liability company in good standing under the laws of North Carolina, and shall
not merge or consolidate with any
28
other Person, convey, transfer or lease all or substantially all its assets as
an entity to another Person, or permit any other Person to become the successor
to its business.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1 Duties of the Servicer. (a) The Servicer is hereby
authorized to act as agent for the Issuer and in such capacity shall manage,
service, administer and make collections on the Receivables, perform or arrange
for the performance of services, and administer or arrange for the
administration of programs, in accordance with the Servicing Policy and
Procedures and in a manner consistent with the terms of service contracts and
similar arrangements between the Seller, on the one hand, and holders of
insurance policies or Obligors related to the Receivables, on the other hand,
and perform the other actions required by the Servicer under this Agreement. The
Servicer agrees that its servicing of the Receivables shall be carried out in
accordance with customary and usual procedures of institutions which service
payment streams similar to the Receivables and, to the extent more exacting, the
degree of skill and attention that the Servicer exercises from time to time with
respect to all comparable payment streams similar to the Receivables that it
services for itself or any of its Affiliates. In performing such duties, so long
as CBC is the Servicer, it shall comply with its current Servicing Policy and
Procedures, as such Servicing Policy and Procedures may be amended from time to
time, (it being understood that the Servicer shall not amend its Servicing
Policy and Procedures in any way which would be reasonably expected to have an
adverse affect on the interests of the Noteholders). The Servicer's duties shall
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors on the Receivables, investigating delinquencies,
accounting for collections and furnishing quarterly and annual statements to the
Issuer and the Trustee with respect to distributions and performing the other
duties specified herein. To the extent consistent with the standards, policies
and procedures otherwise required hereby, the Servicer shall follow its
customary standards, policies, and procedures and shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable. The Servicer is hereby authorized to commence, in its own name or in
the name of the Issuer (provided the Servicer has obtained the Issuer's prior
written consent) a legal proceeding to enforce a Receivable or to commence or
participate in any other legal proceeding (including, without limitation, a
bankruptcy proceeding) relating to or involving a Receivable or an Obligor. If
the Servicer commences or participates in such a legal proceeding in its own
name, the Issuer shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer solely for purposes of commencing or participating in
any such proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Issuer to execute and deliver in the Servicer's name any
notices, demands, claims, complaints, responses, affidavits or other documents
or instruments in connection with any such proceeding. The Issuer shall furnish
the Servicer with any powers of attorney and other documents which the Servicer
may reasonably request and which the Servicer deems necessary or appropriate and
take any other steps which the Servicer may deem necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
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(b) Notwithstanding the foregoing, the Servicer shall not engage in any
of the following activities with respect to the Variable Policies:
(i) recommending any security;
(ii) giving any investment advice with respect to any
security;
(iii) discussing the merits of any security or any type of
security;
(iv) responding to any question that might require familiarity
with the securities industry;
(v) receiving any compensation based on transactions in
securities or the provision of investment advice; or
(vi) handling any customer funds or securities or becoming
involved in any securities transactions other than providing clerical
or ministerial assistance.
The Servicer shall refer all securities related questions to the Subservicer.
Section 3.2 Collection of Receivable Payments.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make all reasonable efforts to collect all
payments with respect to the Receivables as and when the same shall become due,
and shall follow such collection procedures as it follows with respect to all
comparable payment streams similar to the Receivables that it services for
itself or any of its Affiliates and otherwise act with respect to the
Receivables in such manner as will maximize the amount to be collected with
respect thereto.
(b) Notwithstanding any third-party processing arrangement, or any of
the provisions of this Agreement relating to any third-party processing
arrangement, the Servicer shall remain obligated and liable to the Issuer,
Trustee and Noteholders for servicing and administering the Receivables in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue thereof.
(c) The Servicer shall remit all payments by or on behalf of the
Obligors received directly by the Servicer to the Lock-Box Account within two
Business Days of receipt thereof.
Section 3.3 Representations, Warranties and Covenants of Servicer. The
Servicer makes the following representations, warranties and covenants on which
the Issuer relies in accepting the Receivables and issuing the Notes, on which
the Trustee relies in authenticating the Notes.
(a) The Servicer covenants as follows:
30
(i) Liens in Force. No Receivable shall be released in whole
or in part from the security interest granted by the Indenture, except
upon payment in full of such Receivable or as otherwise contemplated
herein;
(ii) No Impairment. The Servicer shall do nothing to impair
the rights of the Issuer or the Trustee for the benefit of the
Noteholders in the Receivables;
(iii) No Amendments. The Servicer shall not grant payment
extensions or amend or modify the terms of any Receivable or any
contract related to any Receivable; and
(iv) Restrictions on Liens. The Servicer shall not (i) create,
incur or suffer to exist, or agree to create, incur or suffer to exist,
or consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any
Lien or restriction on transferability of the Receivables except for
the Lien created hereby in favor of the Issuer or the Lien created by
the Indenture in favor of the Trustee for the benefit of the
Noteholders, any Lien as may be in effect on the Closing Date and the
restrictions on transferability imposed by this Agreement and the
Indenture; provided, however, that the Servicer shall only be liable
for any losses, costs or expenses resulting from any Lien (including
any Lien permitted hereunder) arising from any action or omission of
the Servicer, or (ii) authorize or file (or cause to be filed) under
the UCC of any jurisdiction any financing statement which names the
Seller, the Servicer or the Issuer as a debtor, or sign any security
agreement authorizing any secured party thereunder to file such
financing statement, with respect to the Receivables, except in each
case any such instrument solely securing the rights and preserving the
Lien of the Trustee for the benefit of the Noteholders and except for
any such security agreement or authorization to file a financing
statement contained in or arising under the applicable UCC by virtue of
a security agreement contained in any Obligor Receivable Agreement as
in effect on the Closing Date.
(b) CBC represents, warrants and covenants as to itself as of the
Closing Date and each successor Servicer represents, warrants and covenants as
to itself as of the date it becomes Servicer hereunder, with appropriate factual
changes, as necessary:
(i) Organization and Good Standing. It has been duly organized
and is validly existing and in good standing under the laws of the
State of Delaware, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to enter into and
perform its obligations under this Agreement unless failure thereof
would not adversely affect (i) its ability to service the Receivables
pursuant to this Agreement, (ii) the validity or enforceability of the
Receivables or (iii) its ability to perform its obligations hereunder
or under the Related Documents to which it is a party;
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(ii) Due Qualification. It is duly qualified to do business as
a foreign corporate entity in good standing and has obtained (x) all
necessary insurance licenses and approvals required by any insurance
carrier obligated to make payments in respect of any Receivables or
required by any applicable law and (y) all other licenses and
approvals, in all jurisdictions where the failure to do so would
materially and adversely affect (i) its ability to service the
Receivables pursuant to this Agreement, (ii) the validity or
enforceability of the Receivables or (iii) its ability to perform its
obligations hereunder or under the Related Documents to which it is a
party;
(iii) Power and Authority. It has all necessary power and
authority to execute and deliver this Agreement and the Related
Documents to which it is a party and to carry out its terms and their
terms, respectively, and the execution, delivery and performance of
this Agreement and the Related Documents to which it is a party have
been duly authorized by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Related
Documents to which it is a party shall constitute its legal, valid and
binding obligations enforceable against it in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law;
(v) No Violation. The execution, delivery and performance by
the Servicer of this Agreement and the Related Documents to which it is
a party, and the consummation of the transactions contemplated hereby
and thereby and the fulfillment of the terms hereof and thereof do not
and will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, (A) its organizational documents or bylaws,
or (B) any indenture, mortgage, deed of trust, or other instrument or
other agreement, which in the case of such other agreement would
reasonably be expected to have a material adverse effect upon its
ability to perform its obligations hereunder or under any of the other
Related Documents to which it is a party, or the enforceability or
collectability of the Receivables, or by which it or its properties are
bound, or (ii) result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture
(except for the Lien created pursuant to the Indenture), agreement,
mortgage, deed of trust or other instrument, other than this Agreement
and the Indenture, or (iii) violate any law, order, rule or regulation
applicable to it of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over it or any of its properties;
(vi) No Proceedings. There are no proceedings or
investigations pending or, to the best of its knowledge, threatened
against it, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having
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jurisdiction over it or its properties (A) asserting the invalidity of
this Agreement or any of the Related Documents, (B) seeking to prevent
the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (C) seeking any determination or ruling that would be
reasonably likely to adversely affect the performance of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of
the Notes;
(vii) No Consents. No consent, approval, license,
authorization or order of or declaration, registration or filing with
any governmental authority, bureau or agency is required to be made by
it in connection with the execution, delivery or performance of this
Agreement or the Related Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby, except
such as have been duly made, effected or obtained or are related to
federal or state securities laws in connection with the registration or
the sale of the Notes;
(viii) Information to Backup Servicer. The database and
information furnished to the Backup Servicer hereunder concerning the
Receivables is accurate and complete in all material respects;
(ix) Compensation. Its compensation as Servicer hereunder is
consistent with that which would be payable in an arm's-length
transaction;
(x) Nonconsolidation. CBC confirms that the statements
contained under "Assumptions of Fact" in the opinion of Vedder, Price,
Xxxxxxx & Kammholz regarding substantive consolidation matters
delivered to the Trustee on the Closing Date are true and correct with
respect to itself, and that CBC will comply with any covenants or
obligations assumed to be complied with by it therein as if such
covenants and obligations were set forth herein;
(xi) Members of the Issuer. CBC is the sole member of the
Issuer, and it is the registered owner of all of the membership
interests in the Issuer; and such membership interest has been fully
paid and is owned of record, free and clear of all mortgages,
assignments, pledges, security interests, warrants, options and rights
to purchase. CBC will not transfer its membership interests in the
Issuer without the prior written consent of the Trustee, the Backup
Servicer and the Rating Agency; provided, however, that CBC may
transfer all of such membership interests to a wholly-owned subsidiary
of CBC, so long as (a) such wholly-owned subsidiary covenants and
agrees in writing with the Trustee not to transfer such membership
interests without the prior written consent of the Trustee, the Backup
Servicer and the Rating Agency and (b) CBC provides 30 days' prior
written notice of such transfer to each of the Trustee, the Backup
Servicer and the Rating Agency and prior to such transfer, CBC shall
(I) upon request, fulfill the requirements of Section 2.7(b), and (II)
take all such actions, including, without limitation, executing and
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delivering all such documents, certificates, instruments and Opinions
of Counsel as are reasonably requested by the Trustee, the Backup
Servicer or the Rating Agency; and
(xii) Financial Statements. All audited and, to the extent
delivered or shown to any third party, unaudited financial statements
of CBC (or any Affiliate thereof) that are consolidated to include the
Issuer will contain detailed notes clearly stating that the (A) all of
the Issuer's assets (including the Receivables) are owned by the
Issuer, and (B) the Issuer is a separate entity.
(c) The Servicer covenants and agrees:
(i) Database File. The Servicer will provide the Backup
Servicer with a magnetic tape or disk in a format acceptable to the
Servicer and the Backup Servicer containing the database file for each
Receivable (including, a list of complete contact information for each
Obligor and each beneficiary under the related insurance policy) (A) as
of the Cutoff Date, (B) thereafter, as of the last day of (I) the
preceding Quarterly Period on each Determination Date prior to a
Servicer Termination Event and (II) each calendar week (within one
Business Day of such day) after the occurrence of a Servicer
Termination Event until the actual commencement of servicing functions
by the Backup Servicer and (C) on and as of the Business Day before the
actual commencement of servicing functions by the Backup Servicer
following the occurrence of a Servicer Termination Event.
(ii) Backup Servicer Indemnification. CBC shall defend,
indemnify and hold the Backup Servicer and any officers, directors,
employees or agents of the Backup Servicer harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the
Backup Servicer may sustain in connection with claims asserted at any
time by third parties against the Backup Servicer to the extent the
same arise out of the conduct of CBC in its capacity as the Servicer or
the Backup Servicer's performance of its obligations as Backup Servicer
or successor Servicer and which are not due to gross negligence or
willful misconduct of the Backup Servicer.
The Backup Servicer will not be responsible for delays attributable to
the Servicer's failure to deliver information, defects in the information
supplied by the Servicer or other circumstances beyond the control of the Backup
Servicer.
The Backup Servicer, upon replacement of the Servicer, will make
arrangements with the predecessor Servicer for the prompt and safe transfer of,
and the predecessor Servicer shall provide to the Backup Servicer, all necessary
servicing files and records, including (as deemed necessary by the Backup
Servicer at such time): (i) the Receivables Files, (ii) collections history,
(iii) copies of the reconciliation statements for the Collection Account for the
Quarterly Period (or portion thereof) immediately preceding the conversion to
the Backup Servicer and (iv) the trial balances, as of the close of business on
the day immediately preceding conversion to the Backup Servicer, reflecting all
applicable information.
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The Backup Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Backup Servicer acting in accordance with
information prepared or supplied by a Person other than the Backup Servicer who
the Backup Servicer reasonably and in good faith believes to be the appropriate
Person for preparing and supplying such information or the failure of any such
Person to prepare or provide such information. The Backup Servicer shall have no
responsibility, shall not be in default and shall incur no liability (i) for any
act or failure to act by any third party, including the Servicer, the Issuer or
the Trustee or for any inaccuracy or omission in a notice or communication
received by the Backup Servicer from any third party or (ii) which is due to or
results from the invalidity, unenforceability of any Receivable with applicable
law or the breach or the inaccuracy of any representation or warranty made with
respect to any Receivable.
Section 3.4 Purchase of Receivables Upon Breach of Covenant. Upon
discovery by the Seller, the Servicer, the Issuer or the Trustee of a breach of
any of the covenants set forth in Section 2.13 or 3.3(a), the party discovering
such breach shall give prompt written notice to the other parties hereto;
provided, however, that the failure to give any such notice shall not affect any
obligation of the Seller or CBC, as Servicer, under this Section 3.4. Subject to
the proviso in the second sentence of Section 8.2, as of the last day of the
Quarterly Period related to a Payment Date in which (a) a Responsible Officer of
the Servicer has actual knowledge or notice of any breach of any covenant set
forth in Section 3.3(a) which materially and adversely affects the interests of
the Noteholders in any Receivable or (b) a Responsible Officer of either the
Seller or the Servicer has actual knowledge or notice of any breach of any
covenant set forth in Section 2.13, the party in breach of any such covenant,
shall, unless such breach shall have been cured in all material respects,
purchase from the Issuer each Receivable materially and adversely affected by
such breach and, on or before the related Deposit Date, shall pay the Purchase
Amount to the Collection Account. Upon knowledge of the Trustee that such party
in breach has failed to effect its purchase obligation, the Trustee for the
benefit of the Noteholders shall enforce directly the obligation of such
breaching party to purchase such Receivables. The obligation of the Seller or
the Servicer to purchase any Receivable with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute
the sole remedy against the Seller or the Servicer, as applicable, for such
breach available to the Noteholders, the Issuer or the Trustee on behalf of
Noteholders; provided, however, that CBC, as the Servicer or the Seller, as
applicable, shall indemnify the Issuer, the Backup Servicer, the Initial
Purchaser, the Trustee and the Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third party claims arising out of the events or facts giving rise to such breach
except to the extent arising out of or resulting from gross negligence or
willful misconduct of the party seeking indemnification.
Section 3.5 Servicing Fee; Payment of Certain Expenses by Servicer. On
each Payment Date, the Servicer shall be entitled to receive out of the
Collection Account the Servicing Fee for the related Quarterly Period pursuant
to Section 4.4. The Servicer shall be required to pay all expenses incurred by
it in connection with its activities under this Agreement
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and the Related Documents to which it is a party (including taxes imposed on the
Servicer and expenses incurred in connection with distributions and reports made
by the Servicer to Noteholders).
Section 3.6 Servicer's Certificate. No later than 10:00 a.m. New York
City time on each Determination Date, the Servicer shall deliver to the Issuer,
the Initial Purchaser, the Trustee, the Backup Servicer and the Rating Agency a
Servicer's Certificate executed by a Responsible Officer of the Servicer
containing among other things, (i) all information necessary to enable the
Trustee to make any withdrawal required by Section 5.2, and the distributions
required by Section 4.4, (ii) all information necessary to enable the Trustee to
send the statements to Noteholders required by and containing the information
set forth in Section 4.6, (iii) a list of all Warranty Receivables and
Administrative Receivables, if any, purchased or repurchased, as the case may
be, during the related Quarterly Period, and identifying the Receivables so
purchased or repurchased, as the case may be and (iv) all information necessary
to enable the Trustee to reconcile all deposits to, and withdrawals from, the
Collection Account for the related Quarterly Period and Payment Date. Any
Receivables purchased by the Servicer or repurchased by the Seller during the
related Quarterly Period shall be identified by information similar to that as
set forth in the Schedule of Receivables.
Section 3.7 Annual Statement as to Compliance; Notice of Servicer
Termination Event; Financial Statements.
(a) The Servicer shall deliver to the Issuer, the Initial Purchaser,
the Trustee, the Backup Servicer and the Rating Agency, on or prior to the
Closing Date and on or before 120 days after the end of the Servicer's fiscal
year, of each year, beginning in 2003, an officer's certificate signed by any
Responsible Officer of the Servicer, dated as of the immediately preceding
December 31 (or other applicable date), as applicable, stating that (i) a review
of the activities of the Servicer during the preceding 12-month period (or such
other period as shall have elapsed from the Closing Date (or the date a
successor Servicer began to act as Servicer hereunder) to the date of the first
such certificate) and of its performance under this Agreement has been made
under such officer's supervision, and (ii) to such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature, extent and status thereof.
(b) The Servicer shall deliver to the Issuer, the Initial Purchaser,
the Trustee, the Backup Servicer and the Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than one Business Day
thereafter, an officer's certificate setting forth the details of any event
which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under Section 8.1.
(c) Each of the Servicer and the Seller shall deliver to the Issuer,
the Initial Purchaser, the Trustee, the Backup Servicer and the Rating Agency
(i) on the Closing Date and on or before 120 days after the end of its fiscal
year, of each year, beginning in 2003, the audited consolidated balance sheets
of CBI as of the end of the immediately preceding fiscal year and the audited
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consolidated statements of income, shareholders' equity and cash flows thereof
for such fiscal year, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior fiscal
year, prepared in accordance with generally accepted accounting principles,
consistently applied, and certified by the Independent Accountants therefor and
(ii) within 60 days after the close of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending September 30, 2002) of CBI the
unaudited consolidated balance sheets thereof as of the end of each such quarter
and the unaudited consolidated statements of income, shareholders' equity and
cash flows thereof for the portion of the fiscal year then ended, all in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the prior fiscal year, prepared in accordance
with generally accepted accounting principles, consistently applied (subject to
normal year-end adjustments), and certified by an Executive Officer thereof.
Section 3.8 Annual Independent Accountants' Report.
On or prior to the Closing Date, the Servicer shall deliver, or cause
Ernst & Young, who may also render other services to CBC, to deliver to the
Issuer, the Initial Purchaser, the Trustee, the Backup Servicer and the Rating
Agency, and, for so long as CBC (or one of its Affiliates) is acting as
Servicer, on or before April 30 of each year commencing in 2003, Deloitte &
Touche (or another nationally recognized "big 4" firm of independent certified
public accountants, the "Independent Accountants"), who may also render other
services to CBC to deliver to the Issuer, the Initial Purchaser, the Trustee,
the Backup Servicer and the Rating Agency, with respect to the twelve months
ended the immediately preceding December 31 (or other applicable date on which
CBC's fiscal year ends), a statement (the "Accountants' Report") addressed to
the Board of Directors of the Servicer, CBI, the Trustee, the Initial Purchaser
and the Backup Servicer, to the effect that such firm has audited the financial
statements of CBI and issued its report thereon, and that such audit was made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances. The Servicer shall also cause
such Independent Accountants to deliver an Accountants' Report (on any date in
December 2002 and each December thereafter) with respect to certain agreed upon
procedures and in substantially the form attached hereto as Exhibit C. In the
event such firm requires the Trustee to agree to the procedures performed by
such firm, the Servicer shall direct the Trustee in writing to so agree; it
being understood and agreed that the Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee shall not make any independent inquiry or investigation as to, and shall
have no obligation or liability in respect to, the sufficiency, validity or
correctness of such procedures. Delivery of such reports, information and
documents to the Trustee is for informational purposes only, and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Servicer's compliance with any of its covenants hereunder.
Section 3.9 Access to Documentation and Information Regarding
Receivables. On reasonable prior written notice, the Servicer shall provide to
representatives of the Issuer, the
37
Initial Purchaser, the Trustee, the Backup Servicer or the Rating Agency access
to the documentation regarding the Receivables at such party's own expense
(other than the Trustee), during the Servicer's normal business hours, to
examine all the books of account, records, reports, and other papers of the
Seller with respect to the Receivables, the Receivable Files or the Related
Documents (to the extent retained by the Servicer), to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Servicer's affairs, finances and accounts with
the Servicer's officers, employees, and independent certified public accounts,
all at such reasonable times and as often as may be reasonably requested. The
Trustee, the Backup Servicer and the Issuer shall and shall cause its
representatives to hold in confidence all such information. Notwithstanding
anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) the disclosure of any and all information that is or becomes
publicly known, or information obtained by the Trustee, any Noteholder, the
Backup Servicer, or the Issuer from sources other than the Seller, (ii)
disclosure of any and all information (A) if required to do so by any applicable
statute, law, rule or regulation, (B) to any government agency or regulatory
body having or claiming authority to regulate or oversee any respects of the
Trustee's, any Noteholder's, the Backup Servicer's, or the Issuer's business or
that of its Affiliates, (C) pursuant to any subpoena, civil investigative demand
or similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Trustee, any Noteholder, the Backup Servicer, or the
Issuer or an Affiliate or an officer, director, employer, member or shareholder
thereof is a party, (D) in any preliminary or final offering circular,
registration statement or contract or other document pertaining to the
transactions contemplated by this Agreement approved in advance by the Seller or
the Issuer or (E) to any Affiliate, independent or internal auditor, agent,
employee or attorney of the Trustee, any Noteholder, the Backup Servicer, or the
Issuer having a need to know the same; provided, that the Trustee, any
Noteholder, the Backup Servicer, or the Issuer advises such recipient of the
confidential nature of the information being disclosed, or (iii) any other
disclosure authorized by the Seller.
Section 3.10 Duties of the Servicer under the Indenture. The Issuer
hereby appoints the Servicer to, and the Servicer hereby agrees that it shall,
perform as agent on behalf of the Issuer the following duties of the Issuer
under the Indenture (the Section references in each parenthetical are references
to such Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit
moneys with the Trustee (Section 3.3);
(b) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance
and other instruments, in accordance with Section 3.5 of the Indenture,
necessary to protect the Trust Estate (Section 3.5);
(c) the annual delivery of the Officers' Certificate and
certain other statements, in accordance with Section 3.9 of the
Indenture, as to compliance with the Indenture (Sections 3.6 and 3.9);
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(d) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.11);
(e) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.1);
(f) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.8 and 6.10);
(g) the preparation and delivery of Officers' Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.1(b));
and
(h) the recording of the Indenture, if applicable (Section
11.14).
Section 3.11 Appointment and Powers of Backup Servicer. Subject to the
terms and conditions hereof, the parties hereto appoint BNY Asset Solutions LLC
as Backup Servicer, and BNY Asset Solutions LLC hereby accepts such appointment
and agrees to act as the Backup Servicer and to perform all of the duties of the
Backup Servicer in accordance with the provisions hereunder and under each of
the Related Documents. The parties hereto authorize the Backup Servicer to take
any such action as is authorized to be exercised by the Backup Servicer by the
terms hereof, and under each Related Document, together with such actions,
rights, remedies, powers and privileges as are reasonably incidental thereto.
Section 3.12 Information to be Furnished to Rating Agency. The Servicer
shall furnish to the Rating Agency such information with respect to the
Servicer, the Receivables, and such other matters related thereto and to the
transactions contemplated by the Related Documents as the Rating Agency may
request in order to maintain ratings on the Notes.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 4.1 Accounts.
(a) The Trustee shall establish the Collection Account in the name of
the Trustee for the benefit of the Secured Parties (as defined in the
Indenture). The Collection Account shall be a securities account established by
the Trustee, and maintained with BNY.
(b) The Trustee shall establish the Note Payment Account in the name of
the Trustee for the benefit of the Secured Parties (as defined in the
Indenture). The Note Payment Account shall be a securities account established
by the Trustee and maintained with BNY.
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(c) The Trustee shall establish the Reserve Account in the name of the
Trustee for the benefit of the Secured Parties (as defined in the Indenture).
The Reserve Account shall be a securities account established by the Trustee and
maintained with BNY.
(d) Each of the Collection Account, the Note Payment Account and
Reserve Account shall constitute a securities account (as such term is used in
the applicable UCC) for purposes of the applicable UCC. For purposes of the
applicable UCC, the BNY's jurisdiction shall be deemed to be Illinois.
(e) All amounts held in the Collection Account, the Note Payment
Account and the Reserve Account (collectively, the "Trust Accounts") shall, to
the extent permitted by applicable laws, rules and regulations, be invested by
the Trustee, as directed in writing by the Servicer, in Eligible Investments
that mature not later than one Business Day prior to the Payment Date for the
Quarterly Period to which such amounts relate. Any such written direction shall
certify that any such investment is authorized by this Section 4.1. With respect
to the Trust Accounts (i) BNY shall act as securities intermediary (as such term
is used in applicable UCC), (ii) the Trustee shall be the entitlement holder (as
such term is used in applicable UCC), (iii) all investments and other property
credited to, and all other rights of the entitlement holder in respect of, such
account shall be treated as financial assets (as such term is used in applicable
UCC), and shall be registered in the name of BNY or in blank, (iv) BNY shall
indicate by book entry that all such financial assets have been credited to the
applicable Trust Account, and send a confirmation thereof to the Trustee, (v)
BNY will only comply with entitlement orders originated by Trustee (without the
consent of Issuer or any other person). Subject to the other provisions hereof,
the Trustee shall have sole control over each such investment and the income
thereon. All interest, dividends, gains upon sale and other income from, or
earnings on, investments of funds in the Trust Accounts shall be deposited in
the Collection Account and distributed on the next Payment Date pursuant to
Section 4.4. The Issuer shall make a deposit to the applicable Trust Account in
an amount equal to any net loss on such investments from any amounts paid or
distributed to the Issuer hereunder on or within 5 days after the date such loss
was incurred. The parties hereto acknowledge and agree that Trustee has control
(as such term is used in the applicable UCC) of the Trust Accounts and the
Lock-Box Account.
(f) The Trustee shall, within ten (10) Business Days after the Closing
Date, (I) establish the Lock-Box Account in the name of the Trustee for the
benefit of the Secured Parties (as defined in the Indenture) and (II) subject
the Lock-Box Account to a blocked account agreement satisfactory in form and
substance to the Trustee and the Servicer and stating that BNY shall only take
directions and instructions with respect to such account from the Trustee. The
Lock-Box Account shall be a deposit account established by the Trustee and
maintained with BNY, and the Trustee shall be BNY's customer with respect to the
Lock-Box Account.
(g) On or prior to the Closing Date, the Servicer shall cause each bank
account owned by or maintained for the benefit of the Seller, or any of its
officers or employees, that any Obligor remits payments with respect to the
Receivables (the "Existing Bank Accounts"), to be changed to name "CBC Insurance
Revenue Securitization, LLC" as the owner of each such account and
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each such account to be subject to a blocked account agreement among the account
bank, the Servicer, the Issuer and the Trustee and consented to by the Seller,
which blocked account agreement shall state that (i) the account bank shall only
take directions and instructions with respect to such accounts from the Trustee,
(ii) neither the Servicer nor the Seller shall have any rights with respect to
such account or the amounts, if any, maintained therein, and (iii) any amounts
received in such accounts are to be removed and deposited into the Lock-Box
Account on a daily basis. The Servicer shall ensure that the banks holding the
Existing Bank Accounts transfer all funds deposited or otherwise credited to
the Existing Bank Accounts to the Lock-Box Account on each Business Day.
Section 4.2 Collections.
(a) The Servicer shall, within ten (10) Business Days after the Closing
Date, instruct each Obligor in an irrevocable written letter of direction,
substantially in the form of Exhibit D attached hereto (the "Letter of
Direction") to send payments in respect of Receivables to the Lock-Box Account.
The Servicer shall remit to the Lock-Box Account all payments in respect of the
Receivables by or on behalf of the Obligors received by the Servicer (and not
directly remitted by such Obligor to the Lock-Box Account, the Collection
Account or the Existing Bank Accounts) within two Business Days of receipt
thereof.
(b) Notwithstanding the provisions of subsection (a) hereof,
(i) the Servicer will be entitled to withdraw from amounts on
deposit in the Collection Account with respect to a Quarterly Period
amounts previously deposited in the Collection Account but later
determined by the Servicer to have resulted from mistaken deposits or
postings or checks returned for insufficient funds or that constituted
payment of amounts that are not Receivables. The amounts to be
withdrawn hereunder shall be paid by the Servicer to the Person
lawfully entitled to such amounts on the related Payment Date pursuant
to Section 4.4(ii) upon certification by the Servicer of such amounts
and the provision of such information to the Trustee as may be
necessary in the opinion of the Trustee to verify the accuracy of such
certification. In the event that the Trustee has not received such
certification or such information satisfactory to it of the Servicer's
right to withdraw such amounts pursuant to this Section 4.2(b), the
Trustee shall not make a distribution to the Servicer in respect of
such amounts pursuant to Section 4.4(ii), or if the Servicer prior
thereto has been reimbursed pursuant to Section 4.4(ii), the Trustee
shall withhold such amounts from amounts otherwise distributable to the
Servicer on the next succeeding Payment Date, and
(ii) on or prior to each Determination Date, the Servicer may,
but is under no obligation to, advance the amount required to be paid
with respect to a Receivable by the Obligor thereof on or prior to such
Determination Date, but not yet received from such Obligor (each, a
"Servicer Advance"). The Servicer shall only make a Servicer Advance
with respect to a Receivable, if, in good faith, it reasonably believes
that payment in an amount equal to such Servicer Advance on such
Receivable will be received from the Obligor thereof prior to the next
occurring Determination Date. Each Servicer Advance
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shall be repaid to the Servicer on the next occurring Payment Date
pursuant to Section 4.4(ii) to the extent that funds are available upon
certification by the Servicer of such amount advanced and the provision
of such information to the Trustee as may be necessary in the Trustee's
opinion to verify the accuracy of such certification. In the event that
the Trustee has not received such certification or such information
satisfactory to it of the Servicer's entitlement to reimbursement of
the amount of the Servicer Advance, the Trustee shall not make a
distribution to the Servicer in respect of such amount pursuant to
Section 4.4(ii).
Section 4.3 Additional Deposits and Withdrawals. (a) On or before each
Deposit Date, the Servicer or the Seller shall deposit in the Collection Account
the aggregate Purchase Amounts with respect to Administrative Receivables and
Warranty Receivables, respectively, which became such during the preceding
Quarterly Period. All such deposits of Purchase Amounts shall be made in
immediately available funds. On or before each Payment Date, the Trustee shall
deposit in the Collection Account any amounts withdrawn from the Reserve Account
pursuant to Section 5.2.
(b) No later than 10:00 a.m. New York City time on the third Business
Day of each calendar month of a Quarterly Period, the Servicer shall deliver to
the Issuer, the Trustee and the Backup Servicer, a certificate executed by a
Responsible Officer of the Servicer containing (i) all information necessary to
enable the Trustee to make any withdrawal from the Collection Account for
distribution of the Split Commissions Amount for the immediately preceding
calendar month and the aggregate amount, if any, of Additional Compensation
deposited into the Collection Account during the immediately preceding calendar
month, and (ii) all information necessary to enable the Trustee to confirm the
calculation of such Split Commissions Amount and the aggregate amount, if any,
of Additional Compensation. Not later than the second Business Day after
receiving such certificate, the Trustee shall, to the extent that funds are
available, withdraw from the Collection Account the Split Commissions Amount and
the amount of Additional Compensation, each as set forth in such certification
and distribute such amounts to the Persons entitled to receive any such amount
as set forth in such certification.
Section 4.4 Distributions. On each Payment Date, the Trustee shall
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date) distribute the following amounts and in the
following order of priority:
(i) first, from the Amount Available, to the Trustee, any
accrued and unpaid expenses (of up to $75,000 per year) and fees of the
Trustee in accordance with Section 6.7 of the Indenture; to any Backup
Servicer (including the Issuer or the Trustee if acting in any such
additional capacity), any accrued and unpaid fees and expenses
(including a one time, reasonable transition expense to the Backup
Servicer, not to exceed, in the aggregate, $75,000, but not including
any indemnities owed to such person);
(ii) second, from the remaining Amount Available, to the
Servicer, the Servicing Fee for the related Quarterly Period, each
Servicer Advance, if any, and any amounts specified in Section 4.2(b);
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(iii) third, from the remaining Amount Available, to the Note
Payment Account for pro rata (based on the interest payment amounts for
such subclass of Notes) distribution to the Holders of the Class A-1
Notes and the Holders of the Class A-2 Notes, an amount equal to the
Class A-1 Interest Payment Amount and the Class A-2 Interest Payment
Amount, respectively, for such Payment Date;
(iv) fourth, from the remaining Amount Available, to the Note
Payment Account for pro rata distribution to the Holders of the Class B
Notes, an amount equal to the Class B Interest Payment Amount for such
Payment Date;
(v) fifth, from the remaining Amount Available, to the Note
Payment Account for pro rata distribution to the Holders of the Class C
Notes, an amount equal to the Class C Interest Payment Amount for such
Payment Date;
(vi) sixth, to the Note Payment Account for pro rata
distribution to the Holders of the Class A-1 Notes, from the remaining
Amount Available, an amount equal to the Class A-1 Principal Payment
Amount for such Payment Date and the Note Principal Shortfall, if any
(calculated after giving effect to the application of such remaining
Amount Available);
(vii) seventh, to the Note Payment Account for pro rata
distribution to the Class A-2 Noteholders, from the remaining Amount
Available, an amount equal to the Class A-2 Principal Payment Amount
for such Payment Date, which Class A-2 Principal Payment Amount will
equal zero on any Payment Date that occurs before the date on which the
Class A-1 Notes have been paid in full and the Note Principal
Shortfall, if any (calculated after giving effect to the application of
such remaining Amount Available);
(viii) eighth, to the Note Payment Account for pro rata
distribution to the Class B Noteholders, from the remaining Amount
Available, an amount equal to the Class B Principal Payment Amount for
such Payment Date, which Class B Principal Payment Amount will equal
zero on any Payment Date that occurs before the date on which the Class
A Notes have been paid and the Note Principal Shortfall, if any
(calculated after giving effect to the application of such remaining
Amount Available);
(ix) ninth, to the Note Payment Account for pro rata
distribution to the Class C Noteholders, from the remaining Amount
Available, an amount equal to the Class C Principal Payment Amount for
such Payment Date, which Class C Principal Payment Amount will equal
zero on any Payment Date that occurs before the date on which the Class
A Notes and the Class B Notes have been paid in full and the Note
Principal Shortfall, if any (calculated after giving effect to the
application of such remaining Amount Available);
(x) tenth, from the remaining Amount Available to the Reserve
Account, an amount, if any, necessary to make the amount on deposit in
the Reserve Account (after
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giving effect to all withdrawals from the Reserve Account on such date)
equal to the Reserve Account Required Amount;
(xi) eleventh, from the remaining Amount Available to the
Trustee, the amounts owed to the Trustee in accordance with Section 6.7
of the Indenture and not paid pursuant to Section 4.4(i) and to the
Backup Servicer amounts owed to the Backup Servicer and not paid
pursuant to Section 4.4(i); and
(xii) twelfth, any remaining Amount Available, any remaining
Retained Available Funds and any amounts on deposit in the Reserve
Account in excess of the Reserve Account Required Amount, to the
Issuer.
Notwithstanding clauses first through twelfth above, if a Payout
Trigger has occurred and is continuing, principal payable pursuant to clauses
sixth and seventh above shall be distributed to the Class A-1 Noteholders and
the Class A-2 Noteholders, pro rata (based on the Class A-1 Note Balance and the
Class A-2 Note Balance) and at the same priority level.
Section 4.5 Trustee as Agent. The Trustee, in making distributions as
provided in this Agreement, shall act solely on behalf of and as agent for the
Noteholders.
Section 4.6 Statements to Noteholders. On each Payment Date, the
Trustee shall include with each distribution to each Noteholder, a statement
prepared by the Servicer (which statement shall also be provided by the Servicer
to the Rating Agency) and based on information in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.6, setting
forth for the Quarterly Period related to such Payment Date the following
information:
(i) the amount of such distribution allocable to interest with
respect to the Class A-1 Notes, the Class A-2 Notes, the Class B Notes
and the Class C Notes, as applicable;
(ii) the amount of such distribution allocable to principal
with respect to the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes and the Class C Notes, as applicable;
(iii) the amount in the Reserve Account (after giving effect
to distributions made on such Payment Date);
(iv) the Class A-1 Note Balance, the Class A-2 Note Balance,
the Class B Note Balance, the Class C Note Balance and the Maximum
Outstanding Note Principal Balance (after giving effect to
distributions made on such Payment Date);
(v) the Class A-1 Interest Carryover Shortfall, the Class A-2
Interest Carryover Shortfall, the Class B Interest Carryover Shortfall
and the Class C Interest Carryover Shortfall, and the change in such
amounts from the preceding statement;
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(vi) the amount of fees and expenses paid under clauses (i),
(ii) and (xi) of Section 4.4 by the Trustee with respect to such
Quarterly Period;
(vii) the Note Pool Factor for the Class A-1 Notes, the Class
A-2 Notes, the Class B Notes and the Class C Notes (after giving effect
to distributions made on such Payment Date);
(viii) the amount of collections on the Receivables during
such Quarterly Period;
(ix) the amounts paid for purchases or repurchases of
Receivables pursuant to Sections 2.5 and 3.4 during such Quarterly
Period, the aggregate Split Commissions Amount paid during such
Quarterly Period and any other amounts paid during such Quarterly
Period as a result of the benefits under any insurance policy related
to any Receivable being paid in full, including termination,
satisfaction, exchange or surrender thereof or the mortality of the
insured thereunder; and
(x) the details of any Event of Default or Payout Trigger
occurring during such Quarterly Period or continuing during such
Quarterly Period and the actions that the Servicer has taken and
proposes to take with respect thereto.
Each amount set forth pursuant to subclauses (i) through (iii) above may be
expressed as a dollar amount per $1,000 of original principal balance of a Note
of the related class or subclass. Each statement shall also contain a reminder
that (i) each Noteholder is required to be a Qualified Purchaser that purchased
the Notes for its own account (and not the account of others) or as a fiduciary
or agent for the account of another Qualified Purchaser (ii) any reoffer,
resale, pledge or other transfer of the Notes must be to such a Qualified
Purchaser and otherwise in accordance with the requirements of the Indenture and
(iii) the Issuer has the right to repurchase any Note not owned by a Qualified
Purchaser.
ARTICLE V
RESERVE ACCOUNT
Section 5.1 Initial Deposit. On the Closing Date, the Issuer shall
deposit the Reserve Account Required Amount for such date into the Reserve
Account.
Section 5.2 Withdrawals from Reserve Account. If the Servicer's
Certificate with respect to any Determination Date shall state that the amount
of the Net Available Funds with respect to such Determination Date is less than
the sum of the amounts payable on the related Payment Date pursuant to clauses
first through ninth of Section 4.4 (such deficiency being a "Reserve Account
Draw Amount"), then the Servicer's Certificate also shall specify the Reserve
Account Draw Amount, and the Trustee shall withdraw from the Reserve Account
funds in the amount of such Reserve Account Draw Amount (to the extent of the
funds available therein) on or prior to the related Payment Date in accordance
with the Servicer's Certificate. The amounts withdrawn by the Trustee from the
Reserve Account pursuant to this Section 5.2 shall be
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deposited by the Trustee into the Collection Account pursuant to Section 4.3.
Notwithstanding the foregoing, if a Payout Trigger has occurred, all amounts
remaining on deposit in the Reserve Account after giving effect to the
application of amounts on deposit in the Reserve Account to pay any such
deficiency of amounts payable pursuant to clauses first through fifth shall be
deposited in the Note Payment Account and distributed to the Class A-1
Noteholders and the Class A-2 Noteholders pro rata (based on the Class A-1 Note
Balance and the Class A-2 Note Balance) and at the same priority level.
ARTICLE VI
SERVICER AS CUSTODIAN
Section 6.1 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as Custodian, shall hold
(or have agents hold on behalf of the Servicer) the Receivable Files on behalf
of the Trustee. In performing its duties as Custodian hereunder, the Custodian
shall act with reasonable care, exercising the degree of skill and care that the
Custodian exercises with respect to similar documents and that is consistent
with industry standards. The Custodian shall implement such policies and
procedures in writing with respect to the handling and custody of the Receivable
Files, so that the integrity and physical possession of the Receivable Files
shall be maintained, and, in general, shall attend to all details in connection
with maintaining custody of the Receivable Files as agent of the Trustee. The
Custodian shall maintain the Receivable Files in such a manner as shall enable
the Trustee to verify, if the Trustee so elects, the accuracy of the
recordkeeping of the Custodian. The Custodian shall promptly report to the
Trustee any failure on its part to hold the Receivable Files and shall promptly
take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. CBC (if it is the Custodian)
shall maintain each Receivables File at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 or at such other office of CBC within the State
of North Carolina (or, in the case of any successor Servicer, within the State
in which its principal place of business is located) as shall be specified to
the Trustee by 30 days' prior written notice. The Custodian shall make available
to the Trustee (or, when requested in writing by the Trustee, to its attorneys
or auditors) the Receivables Files at such times during the normal operating
hours as the Trustee shall reasonably instruct.
(c) Release of Documents. Upon written instructions from the Servicer,
the Custodian shall release or cause to be released any Receivables File to the
Servicer, the Servicer's agent, or the Servicer's designee, as the case may be,
at such place or places as the Servicer may designate, as soon thereafter as is
practicable, but in all cases only for the purpose of permitting the Servicer to
service the Receivables in accordance with this Agreement and the Servicing
Policy and Procedures or if the benefit under the insurance policy related to
the Receivable has been terminated, satisfied, surrendered, exchanged, or paid
in full. Any Receivables File so released shall be handled by the Servicer with
due care and returned to the Custodian for safekeeping as soon as the Servicer
or its agent or designee, as the case may be,
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shall have no further need therefor. The Custodian shall not be responsible for
any loss occasioned by the failure of the Servicer, its agent or its designee to
return any documents or any delay in doing so.
(d) Title to Receivables Files. The Custodian agrees that, in respect
of any Receivables File held as custodian hereunder, the Custodian will not at
any time have or in any way attempt to assert any interest in such Receivables
File, other than solely for the purpose of collecting the related Receivable for
the benefit of the Issuer and the Trustee and that the entire equitable interest
in such Receivable and the related Receivables File shall at all times be vested
in the Issuer and the Secured Parties.
Section 6.2 Instructions; Authority to Act. The Custodian shall be
deemed to have received proper instructions with respect to the Receivables File
upon its receipt of written instructions signed by the Trustee. A certificate of
authority and incumbency executed by the Secretary or Assistant Secretary of the
Trustee shall constitute conclusive evidence of the authority of any signatory
to act and shall be considered in full force and effect until receipt by the
Custodian of written notice to the contrary given by the Trustee.
Section 6.3 Custodian's Indemnification. The Custodian (other than the
Trustee) shall indemnify and hold harmless the Trustee, its officers, directors,
employees and agents and the Noteholders from and against any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable legal fees if any) of any kind whatsoever that
may be imposed on, incurred, or asserted against the Trustee or the Noteholders
as the result of any gross negligence or willful misconduct by the Custodian
relating to the maintenance and custody of the Receivables File; provided,
however, that the Custodian shall not be liable hereunder to the extent, but
only to the extent, that such liabilities, obligations, losses, compensatory
damages, payments, costs or expenses result from the willful misconduct or gross
negligence of the Trustee.
Section 6.4 Effective Period and Termination. The Servicer's
appointment as Custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section 6.4
or until this Agreement shall be terminated. The Custodian may perform its
duties through one or more agents, which agents may maintain physical possession
of Receivables Files as agent for the Custodian acting as custodian but no such
arrangement shall relieve the Custodian of its obligations as custodian
hereunder. If CBC shall resign as Servicer, the appointment of the Custodian
hereunder may be terminated in the same manner as the rights and obligations of
the Servicer may be terminated under Section 8.2. Promptly (and in any event
within two Business Days) after any termination of such appointment, the
Custodian shall deliver, or cause to be delivered, the Receivables Files to the
Trustee, the Trustee's agent or the Trustee's designee at such place or places
as the Trustee (with the consent of the Note Voting Amount) may reasonably
designate.
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ARTICLE VII
SERVICER
Section 7.1 Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such and, in the case of CBC,
without limitation of its obligations hereunder in its individual capacity)
shall be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer and the representations,
warranties and covenants made by the Servicer.
(b) The Servicer (if CBC is the Servicer) shall indemnify, defend and
hold harmless the Issuer, the Trustee, the Backup Servicer, the Initial
Purchaser, their respective officers, directors, agents and employees and the
Noteholders from and against any taxes that may at any time be asserted against
any of such parties with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, tangible or
intangible personal property, privilege or license taxes and costs and expenses
in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Backup Servicer, the Initial Purchaser, their respective
officers, directors, agents and employees and the Noteholders from and against
any and all costs, expenses, losses, claims, damages, and liabilities to the
extent that such cost, expense, loss, claim, damage, or liability arose out of,
or was imposed upon the Issuer, the Trustee, the Backup Servicer, the Initial
Purchaser or the Noteholders by reason of the breach of this Agreement by the
Servicer (except as provided in Section 3.3), the gross negligence or willful
misconduct of the Servicer in the performance or failure to perform any of its
duties or obligations under this Agreement.
(d) Indemnification under this Article shall survive the termination of
this Agreement and shall include, without limitation, reasonable fees, costs and
expenses of counsel and expenses of litigation. If the Servicer has made any
indemnity payments pursuant to this Article and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts collected to the Servicer, without interest.
(e) Notwithstanding the indemnity provisions contained in Sections
7.1(b)-(d) above, the Servicer shall not be required to indemnify the Issuer,
the Trustee, the Backup Servicer, the Initial Purchaser, the Noteholders or
their respective officers, directors, agents or employees against any tax,
costs, expenses, losses, damages, claims or liabilities to the extent the same
shall be due to (i) the willful misconduct or gross negligence of such party, or
(ii) recourse for uncollectible or uncollected Receivables (unless such failure
to collect was a result of the Servicer's breach of its representations or
warranties or obligations hereunder).
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of the Servicer or Backup Servicer.
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(a) The Servicer shall not merge or consolidate with any other person,
convey, transfer or lease all or substantially all its assets as an entity to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be
capable of fulfilling the duties of the Servicer contained in this Agreement,
and shall be an Eligible Servicer (other than with respect to clauses (v) and
(vi) of the definition thereof). Any legal entity (i) into which the Servicer
may be merged or consolidated, (ii) resulting from any merger or consolidation
to which the Servicer shall be a party, (iii) which acquires by conveyance,
transfer, or lease all or substantially all of the assets of the Servicer, or
(iv) succeeding to the business of the Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Servicer under this Agreement and, whether or not such agreement of assumption
is executed, shall be the successor to the Servicer under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; provided, however, that (A) nothing contained herein shall be
deemed to release the Servicer from any obligation under the Related Documents
and (B) Servicer shall provide 30 days prior written notice of any merger,
consolidation or succession pursuant to this Section 7.2(a) to the Issuer, the
Trustee, the Noteholders and the Rating Agency. Notwithstanding the foregoing,
the Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business, unless (x)
immediately after giving effect to such transaction, no representation, warranty
or covenant made pursuant to Section 3.3 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and (y) the Servicer shall have delivered to
the Issuer and the Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 7.2(a) and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (z) the Servicer shall have delivered to the Issuer and the
Trustee an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been authorized and filed that are necessary to preserve and protect the
security interest of the Issuer and the Trustee in the Receivables and reciting
the details of the filings or (B) no such action shall be necessary to preserve
and protect such interest.
(b) Any legal entity (i) into which the Backup Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Backup Servicer under this Agreement and, whether or not such agreement of
assumption is executed, shall be the successor to the Backup Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Backup Servicer from any obligation hereunder.
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Section 7.3 Limitation on Liability of Servicer, Backup Servicer and
Others.
(a) None of the Servicer, the Backup Servicer or any of the directors
or officers or employees or agents of the Servicer or the Backup Servicer shall
be under any liability to the Issuer or the Noteholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision shall
not protect the Servicer, the Backup Servicer or any such person against any
liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misconduct or gross negligence in the performance of
duties; provided, further, that this provision shall not affect any liability to
indemnify the Issuer and the Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Issuer or the Trustee, each in its
individual capacity. The Servicer, the Backup Servicer and any director,
officer, employee or agent of the Servicer or the Backup Servicer may rely in
good faith on the written advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement, and the Issuer, the Trustee and the
Noteholders shall look only to the Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to BNY Asset
Solutions LLC acting in the capacity of Backup Servicer or successor Servicer.
BNY Midwest Trust Company, as Trustee, and BNY Asset Solutions LLC, as Backup
Servicer may, in their respective capacities, discharge their functions fully,
without hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from its respective performance of express duties set
forth in this Agreement in such respective capacities, all of which defenses,
claims or assertions are hereby expressly waived by the other parties hereto to
such extent, except in the case of gross negligence or willful misconduct by BNY
Midwest Trust Company or BNY Asset Solutions LLC, as applicable.
Section 7.4 Delegation of Duties. The Servicer may delegate all or any
portion of its servicing duties under this Agreement to an Affiliate of the
Servicer by providing prior written notification to the Rating Agency and
obtaining the prior written consent of the Note Voting Amount, the Issuer, and
the Backup Servicer; provided, however, that no such delegation or
sub-contracting duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties. If the Backup Servicer becomes the
Servicer hereunder, such Servicer may delegate its duties to one or more
subservicers; provided, however, that such delegation shall not relieve the
Servicer of its responsibility with respect to such duties. The Servicer may at
any time perform certain specific duties as Servicer through other
subcontractors, including through the Subservicer pursuant to the Subservicing
Agreement. The Subservicer shall be paid compensation on market terms by the
Servicer.
Section 7.5 Servicer and Backup Servicer Not to Resign. Subject to the
provisions of Section 7.2, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except upon a
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determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would have a material adverse effect on the
Servicer or the Backup Servicer, as the case may be, and the Note Voting Amount
does not elect to waive the obligations of the Servicer or the Backup Servicer,
as the case may be, to perform the duties which render it legally unable to act
or to delegate those duties to another Person. Any such determination permitting
the resignation of the Servicer or the Backup Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered and acceptable to the Issuer and the
Trustee. Notwithstanding the foregoing, if the Backup Servicer or the Servicer
is the Trustee and the Trustee resigns or is removed pursuant to Section 6.8 of
the Indenture, the Backup Servicer or the Servicer, as the case may be, may
resign hereunder or may be removed by the Issuer. No resignation of the Servicer
shall become effective until the Backup Servicer or a successor Servicer that is
an Eligible Servicer shall have assumed the responsibilities and obligations of
the Servicer. No resignation or removal of the Backup Servicer shall become
effective until the Issuer shall have appointed a Person that is an Eligible
Servicer to act as successor Backup Servicer and such Person shall have assumed
the responsibilities and obligations of the Backup Servicer; provided, however,
that in the event a successor Backup Servicer is not appointed within 60 days
after the Backup Servicer has given notice of its resignation and has provided
the Opinion of Counsel required by this Section 7.5, the Backup Servicer may
petition a court for its removal. The Backup Servicer may resign for any reason,
provided an entity acceptable to the Trustee and the Note Voting Amount, in
their sole discretion, shall have assumed the responsibilities and obligations
of the Backup Servicer prior to the effectiveness of any such resignation.
ARTICLE VIII
SERVICER TERMINATION EVENTS
Section 8.1 Servicer Termination Event. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to the Noteholders any proceeds or payment received and/or
required to be delivered by the Servicer under the terms of this
Agreement that continues unremedied for a period of two (2) Business
Days after such payment is due;
(b) Failure by the Servicer to deliver to the Trustee the
Servicer's Certificate on any Determination Date, or failure on the
part of the Seller or the Servicer to observe their respective
covenants and agreements set forth in Section 2.13, or failure on the
part of the Servicer to observe its covenants and agreements set forth
in Section 7.2(a);
(c) Failure or failures on the part of the Seller or the
Servicer duly to observe or perform any covenants or agreements of the
Seller or the Servicer set forth in this Agreement (other than the
breach of a covenant or agreement which constitutes a Servicer
Termination Event under another subsection of this Section 8.1), which
failure remains unremedied for a period of thirty (30) days after a
Responsible Officer of either the Seller or the Servicer has actual
knowledge or notice thereof;
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(d) The occurrence of an Insolvency Event with respect to the
Servicer;
(e) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect as of the time
when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on
the Issuer or the interests of the Noteholders and, within thirty (30)
days after a Responsible Officer of the Servicer has actual knowledge
or notice thereof, the circumstances or condition in respect of which
such representation, warranty or statement was incorrect (and the
resulting adverse effect) shall not have been eliminated or otherwise
cured, but not including any representation, warranty, covenant or
statement related to any Purchased Receivable on which payment of the
Purchase Amount is made in connection therewith pursuant to Section
3.4;
(f) Any Performance Guarantor Default shall occur; or
(g) (i) the Servicer is in default (as principal or as
guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any indebtedness that is
outstanding in an aggregate principal amount of at least $1,000,000
beyond any period of grace, if any, provided with respect thereto, or
(ii) the Servicer is in default in the performance of or compliance
with any term of any evidence of any indebtedness in an aggregate
outstanding principal amount of at least $1,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such
indebtedness has become, or has been declared, due and payable before
its stated maturity or before its regularly scheduled dates of payment.
Section 8.2 Consequences of a Servicer Termination Event. If a Servicer
Termination Event shall occur and be continuing, either the Trustee (to the
extent a Responsible Officer of the Trustee has actual knowledge thereof or at
the direction of the Note Voting Amount), the Issuer or the Note Voting Amount,
by notice given in writing to the Servicer and Backup Servicer (and to the
Trustee and the Issuer if given by the Noteholders) may terminate all of the
rights and obligations of the Servicer under this Agreement; provided, however,
that the terminated Servicer (if CBC is the terminated Servicer) shall remain
liable for any breach of its covenants described in Section 2.13 and Section
3.3(a) and for purchases of Receivables pursuant to Section 3.4. On or after the
receipt by the Servicer of such written notice or upon termination of the term
of the Servicer, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes, the
Receivables or otherwise (other than any repurchase obligation of the Servicer
for which CBC shall remain liable), automatically shall pass to, be vested in
and become obligations and responsibilities of the Backup Servicer; provided,
however, that the successor Servicer shall (i) have no liability for, and shall
be indemnified by the terminated Servicer or CBC, and from the Collection
Account in accordance with Section 4.2(b), from and against any and all costs,
expenses, losses, damages, claims and liabilities (collectively, "Losses"),
arising out of or resulting from any act, omission or breach of
52
this Agreement of the terminated Servicer or CBC and (ii) have no obligation to
perform any repurchase or advancing obligations of CBC hereunder. The successor
Servicer shall have no liability to the Noteholders, the Trustee or to any other
Person for any Losses arising out of or resulting from delays of the terminated
Servicer in transmitting Quarterly Records or Collection Records, to the
successor Servicer, or for any other Losses incurred in the servicing
transition. The successor Servicer is authorized and empowered by this Agreement
to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination. The terminated Servicer agrees to
cooperate with the successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in the Collection Account or thereafter received with respect to the
Receivables and the delivery to the successor Servicer of all Quarterly Records
and Collection Records and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the successor
Servicer to service the Receivables. The terminated Servicer shall grant the
Issuer, the Trustee and the successor Servicer reasonable access to the
terminated Servicer's premises at the terminated Servicer's expense. The
terminated Servicer shall be entitled, for so long as it was performing its
duties and obligations as Servicer in accordance with the terms of this
Agreement, to its pro rata share of the Servicing Fee for the Quarterly Period
during which the termination occurred.
Section 8.3 Appointment of Successor Servicer.
(a) On and after the time the Servicer and the Backup Servicer receives
a notice of termination pursuant to Section 8.2, or upon the resignation of the
Servicer pursuant to Section 7.5, the Backup Servicer shall be the successor in
all respects to the Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for in this Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Servicer by the terms
and provisions of this Agreement. The Issuer and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under Section 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
(b) Notwithstanding the above, if the Backup Servicer shall be legally
unable or unwilling to act as Servicer, the Backup Servicer, the Trustee, the
Note Voting Amount or the Issuer may petition a court of competent jurisdiction
to appoint any Eligible Servicer to act as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Backup Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 7.5, no
provision of this Agreement shall be construed as relieving the Backup Servicer
of its obligation to succeed as successor Servicer
53
upon the termination of the Servicer pursuant to Section 8.2 or the resignation
of the Servicer pursuant to Section 7.5.
(c) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder. In addition, any successor Servicer shall
be entitled to reasonable transition expenses incurred in acting as successor
Servicer.
(d) The Backup Servicer may, with the prior consent of the Note Voting
Amount and at its own expense, subservice any and all of its duties and
responsibilities hereunder, including its duties as successor Servicer hereunder
should the Backup Servicer become the successor Servicer pursuant to Section 8.2
or this Section 8.3; provided, however, that notwithstanding such subservicing,
the Backup Servicer shall remain primarily liable for the performance of the
duties and obligations so subserviced.
Section 8.4 Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Issuer shall give prompt written notice thereof to the Rating Agency, and the
Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register.
Section 8.5 Waiver of Past Defaults. The Note Voting Amount may, on
behalf of all Holders of Notes, waive any default by the Servicer in the
performance of its obligations hereunder or Servicer Termination Event and its
consequences; provided, however, that the Note Voting Amount may not waive any
default in the full and timely payment to BNY Midwest Trust Company, as Trustee
or BNY Asset Solutions LLC, as Backup Servicer of any of their respective fees,
expenses or other amounts due to either of them. Upon any such waiver of a past
default or Servicer Termination Event, such default or Servicer Termination
Event shall cease to exist, and any Servicer Termination Event arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon. The Trustee shall provide the Noteholders and the Rating
Agency with notice of any waiver of any such default or Servicer Termination
Event.
ARTICLE IX
TERMINATION
Section 9.1 Optional Purchase of All Receivables. On each Determination
Date as of which the Note Balance is equal to or less than 10% of the original
Note Balance, CBC shall have the option to purchase all, but not part, of the
Receivables. To exercise such option, CBC shall give the Issuer and the Trustee
written notice of such election at least 25 days prior to the Redemption Date
and pay the aggregate Purchase Amounts for the Receivables and following the
Redemption Date shall succeed to all interests in and to the Receivables;
provided, however, that the amount to be paid for such purchase (as set forth in
the following sentence) shall be sufficient to pay the full amount of the
Redemption Price of the Notes if applied in accordance
54
with Section 4.4. CBC shall deposit the aggregate Purchase Amounts for the
Receivables into the Collection Account on such Determination Date, and the
Trustee shall distribute the amounts so deposited in accordance with Section
4.4.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment.
(a) This Agreement may be amended by the Seller, the Servicer, the
Backup Servicer, the Trustee and the Issuer, without the consent of any of the
Noteholders, (i) to cure any ambiguity or (ii) to add provisions to this
Agreement or to correct or supplement any provisions in this Agreement;
provided, however, that any such action shall not, as evidenced by an Opinion of
Counsel delivered to the Issuer and the Trustee, adversely affect in any
material respect the interests of the Noteholders.
(b) This Agreement may be amended from time to time by the Seller, the
Servicer, the Backup Servicer, the Trustee and the Issuer and with the prior
written consent of the Note Voting Amount (which consent of any Holder of a Note
given pursuant to this Section 10.1 or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Note and of any Note issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Note) 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 Holders of Notes; provided, however,
that no such amendment, modification or change shall without the prior written
consent of the Holders of all Notes then Outstanding (i) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions required to be made on any Note, the
Class A-1 Interest Rate, the Class A-2 Interest Rate, the Class B Interest Rate
or the Class C Interest Rate, (ii) amend any provisions of Section 4.4 in such a
manner as to affect the priority of payment of interest or principal to
Noteholders, (iii) reduce the aforesaid percentage required to consent to any
such amendment or any waiver hereunder or (iv) amend, alter or modify the
definition of Net Available Funds.
(c) Prior to the execution of any such amendment or consent, the Issuer
shall furnish written notification of the substance of such amendment or consent
to the Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Issuer shall furnish an executed copy of such amendment or consent to the
Trustee, who shall promptly furnish copies thereof to the Noteholders.
(e) Prior to the execution of any amendment to this Agreement, the
Issuer and Trustee shall each be entitled to receive, upon request, and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized and permitted by this Agreement, in addition to the Opinion of
Counsel referred to in Section 10.2(i). The Issuer may, but shall not be
obligated to, enter into any such amendment which affects the Issuer's own
rights, duties or immunities
55
under this Agreement or otherwise. The Trustee may, but shall not be obligated
to, enter into any amendment to this Agreement that affects the Trustee's own
rights, duties, liabilities or immunities under this Agreement or otherwise.
Section 10.2 Protection of the Receivables.
(a) The Servicer shall authorize and file such financing statements and
cause to be authorized and filed such continuation, termination and other
financing statements, all in such manner and in such places as may be required
by law fully to preserve, maintain and protect the security interest of the
Issuer and the Trustee in the Receivables and in the proceeds thereof. The
Servicer shall deliver (or cause to be delivered) to the Issuer and the Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) None of the Seller, the Servicer or the Issuer shall change its
name, identity or legal structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Servicer in
accordance with paragraph (a) above seriously misleading within the meaning of
the UCC, unless and until it shall have fulfilled the requirements of Section
2.7(b).
(c) None of the Seller, the Servicer or the Issuer shall change its
location (as such term is used in the applicable UCC), unless and until it shall
have fulfilled the requirements of Section 2.7(b). The Servicer shall at all
times maintain each office from which it services Receivables and the Seller,
the Servicer and the Issuer shall at all times maintain its chief executive
office within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know the status of such Receivable (updated within one Business Day),
including payments made and payments owing (and the nature of each) and (ii)
reconciliation between payments on each Receivable and the amounts from time to
time deposited in the Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any backup archives) that
refer to any Receivable indicate clearly (with reference to the Issuer) that the
Receivable is owned by the Issuer and subject to the lien of the Indenture.
Indication of the Issuer's ownership of a Receivable and the lien of the
Indenture shall be deleted from or modified on the Servicer's computer systems
when, and only when, the insurance policy related to such Receivable has been
terminated, satisfied, surrendered, exchanged, paid in full or repurchased by
the Seller or the Servicer, as applicable.
(f) If at any time the Servicer proposes to sell, grant a security
interest in, or otherwise transfer any interest in receivables to any
prospective purchaser, lender or other transferee, the Servicer shall give to
such prospective purchaser, lender or other transferee computer tapes, records
or printouts (including any restored from backup archives) that, if they refer
in any
56
manner whatsoever to any Receivable, indicate clearly that such Receivable has
been sold and is owned by the Issuer unless the insurance policy related to such
Receivable has been terminated, satisfied, exchanged, paid in full or
repurchased by the Seller or the Servicer, as applicable.
(g) The Servicer shall deliver to the Issuer, the Trustee and the
Rating Agency, on or prior to the Closing Date and on or before April 30 of each
calendar year commencing in 2003 an Opinion of Counsel, either (a) stating that,
in the opinion of such counsel, all financing statements and continuation
statements have been authorized and filed that are necessary fully to preserve
and protect the security interest of the Issuer and the Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no action shall be necessary to preserve and protect
such security interest.
(h) The Servicer shall furnish to the Issuer, the Trustee and the
Backup Servicer at any time upon reasonable request a list of all Receivables
then held by Issuer, together with a reconciliation of such list to the Schedule
of Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Issuer. Upon request, the
Servicer shall furnish a copy of any list to the Seller.
(i) The Servicer shall deliver to the Issuer and the Trustee
simultaneously with the execution and delivery of this Agreement and of each
amendment hereto or to any of the other Related Documents and upon the
occurrence of the events giving rise to an obligation to give notice pursuant to
Section 10.2(b) or (c), an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been authorized and filed that are necessary fully to preserve and protect
the security interest of the Issuer and the Trustee in the Receivables, and
reciting, the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (b) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such security
interest.
Section 10.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER THAN WITH RESPECT TO
PERFECTION OF THE TRANSFER HEREUNDER) AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 10.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.
57
Section 10.5 Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer and the Backup Servicer), this Agreement may not be assigned by
the Seller or the Servicer without the prior written consent of the Issuer, the
Trustee, the Backup Servicer and the Note Voting Amount.
Section 10.6 Third-Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, including the Trustee on behalf of the
Noteholders pursuant to the Indenture. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and permitted assigns, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 10.7 Counterparts. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 10.8 Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, at the following address: Long, Xxxxxx &
Associates, L.L.C., c/x Xxxxx/Xxxxxx Consulting, Inc., 000 Xxxxx Xxxxxxxx Xxxx
Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000, Fax No.: (000) 000-0000, Attention:
Xxxx Xxx, (b) in the case of CBC, at the following address: 000 Xxxxx Xxxxxxxx
Xxxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000, Fax No.: (000) 000-0000,
Attention: Xxxxxx X. Xxxx, (c) in the case of the Issuer, at the following
address: CBC Insurance Revenue Securitization, LLC, c/x Xxxxx/Xxxxxx Consulting,
Inc., 000 Xxxxx Xxxxxxxx Xxxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000, Fax No.:
(000) 000-0000, Attention: Xxxxxx X. Xxxx, (d) in the case of the Trustee, at
the following address: 0 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Fax No.:
(000) 000-0000, Attention: Xxxxx Xxxxxx, (e) in the case of the Backup Servicer,
at the following address: 000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, Fax No.: (000) 000-0000, Attention: Risk Management and (f) in the
case of the Rating Agency, at the following address: Standard & Poor's Ratings
Services, at 00 Xxxxx Xxxxxx 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax No.:
(000) 000-0000, Attention: Structured Finance - Asset-Backed Surveillance; or at
such other address as shall be designated by any such Person in a written notice
to the parties hereto. Any notice required or permitted to be mailed to a
Noteholder shall be given by first class mail, postage prepaid, at the address
of such Noteholder as shown in the Note Register, and any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Noteholder receives such notice.
Notwithstanding any provision hereof to the contrary, a copy of each notice
required to be provided hereunder shall be provided to the Rating Agency.
58
Section 10.9 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH,
ANY RELATED DOCUMENT OR ANY MATTER ARISING THEREUNDER.
Section 10.10 Nonpetition Covenant. Until the date that is one year and
one day following the payment in full of all amounts due in respect of the
Notes, none of the Trustee, the Servicer, the Issuer, the Backup Servicer nor
the Seller shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining an involuntary
case against the Issuer 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 Issuer or any substantial part of
its respective property, or ordering the winding up or liquidation of the
affairs of the Issuer.
[SIGNATURE PAGES FOLLOW]
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CBC INSURANCE REVENUE SECURITIZATION, LLC,
as Issuer
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Secretary
LONG, XXXXXX & ASSOCIATES, L.L.C.
By: XXXXX/XXXXXX CONSULTING, INC.,
its sole member
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer and
Chief Operating Officer
XXXXX/XXXXXX CONSULTING, INC.,
in its individual capacity and as
initial Servicer
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer and
Chief Operating Officer
S-1
BNY MIDWEST TRUST COMPANY,
not in its individual capacity, but
solely as Trustee
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Assistant Treasurer
BNY ASSET SOLUTIONS LLC,
not in its individual capacity, but
solely as Backup Servicer
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Managing Director
S-2
Exhibit A
FORM OF ASSIGNMENT
------------------
November __, 2002
For value received, in accordance with the Sale and Servicing
Agreement, dated as of October 1, 2002 (the "Sale and Servicing Agreement"),
among CBC Insurance Revenue Securitization, LLC, as Issuer (the "Issuer"), the
undersigned, individually and as Seller ("LongMiller"), Xxxxx/Xxxxxx Consulting,
Inc., as Servicer (the "Servicer"), BNY Midwest Trust Company, as Trustee (the
"Trustee") and BNY Asset Solutions, LLC, as Backup Servicer (the "Backup
Servicer"), LongMiller does hereby irrevocably sell, transfer, assign and
otherwise convey unto the Issuer, without recourse (subject to the obligations
in the Sale and Servicing Agreement), all right, title and interest of
LongMiller in and to (A) the Receivables listed in the Schedule of Receivables
and all monies received thereunder after the Cutoff Date with respect to such
Receivables; (B) the Receivable File related to each Receivable; (C) all funds
on deposit in the Existing Bank Accounts and the Trust Accounts, and all
investments and proceeds thereof (including all income therein); and (D) the
proceeds of any and all of the foregoing. The foregoing sale does not constitute
and is not intended to result in any assumption by the Issuer of any obligation
of the undersigned to the Obligors or any other person in connection with the
Receivables, the Receivable Files, any insurance policies or any agreement or
instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Sale
and Servicing Agreement and is to be governed by the Sale and Servicing
Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Sale and Servicing Agreement.
This Assignment shall be governed by and construed in accordance with
the internal laws of the State of Illinois.
S-3
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of the date first above written.
LONG, XXXXXX & ASSOCIATES, L.L.C.
By: XXXXX/XXXXXX CONSULTING, INC.,
its sole member
By:
-------------------------------
Name:
Title:
Exhibit B
SERVICER'S CERTIFICATE
----------------------
Exhibit C
ACCOUNTANTS' REPORT
-------------------
Exhibit D
FORM OF LETTER OF DIRECTION
---------------------------
[Letterhead of Long, Xxxxxx & Associates, L.L.C.]
[Carrier]
[Address]
[Address]
Attention: [ ]
Dear _______________:
Reference is made to [our letter to you dated ___________, 2002, which
you acknowledged and returned to us (the "Letter")] [the Agreement and
Acknowledgement of Assignment dated ________, 2002 among you, Long, Xxxxxx &
Associates, L.L.C. and the other parties thereto (the "Agreement")]. Capitalized
terms used herein are used as used in the [Letter][Agreement]. We hereby advise
you that we have irrevocably sold, transferred and assigned all of our right,
title and interest in and to all of the Commissions referred to in the
[Letter][Agreement] to CBC Insurance Revenue Securitization, LLC, a Delaware
limited liability company ("CBC LLC"), and CBC LLC has pledged all of such
right, title and interest to BNY Midwest Trust Company, as trustee (the
"Trustee") for the benefit of the holders of certain indebtedness to be issued
by CBC LLC. We hereby irrevocably instruct you to direct all payments due and
payable on the Commissions on and after December 9, 2002, at the time such
payments are due, by means of (i) a wire transfer of immediately available
funds, to the following account (the "Lock-Box Account"):
Account Name:
-------------------------------------
Account No.:
--------------------------------------
Bank:
---------------------------------------------
ABA No.:
------------------------------------------
Attention:
----------------------------------------
Telephone:
----------------------------------------
Fax:
----------------------------------------------
or (ii) a check made payable to CBC Insurance Revenue Securitization, LLC mailed
to 0 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 for further deposit into the
Collection Account. We further authorize you to accept such further written
instructions from the Trustee, with respect to such payments.
Please feel free to contact Xx. Xxxxxx X. Xxx at (000) 000-0000 should
you have any questions concerning these instructions.
Very truly yours,
LONG, XXXXXX & ASSOCIATES, L.L.C.
By: _______________________
Name:
Title:
SCHEDULE A
SCHEDULE OF RECEIVABLES
-----------------------
On file at BNY MIDWEST TRUST COMPANY
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
In addition to the representations and warranties set forth in the
Agreement, the Seller makes the following representations and warranties as to
itself and the Receivables conveyed by the Seller, on which the Issuer relies in
accepting such Receivables and in executing and issuing the Notes and upon which
the Trustee has relied in authenticating the Notes.
1. Characteristics of Receivables. (A) Each Receivable (1) has been
originated in connection with the purchase of a policy of life insurance issued
by an Obligor and was originated by the Seller in the ordinary course of its
business and the Seller had (x) all necessary insurance licenses and approvals
required by any Obligor obligated to make payments in respect of any Receivable
or required by any applicable jurisdiction and (y) all other necessary licenses
and approvals in all jurisdictions where the failure to do so would adversely
affect (i) its ability to transfer the Receivables to the Issuer pursuant to
this Agreement, (ii) the validity or enforceability of the Receivables or any
contract or agreement related thereto (iii) its ability to perform its
obligations hereunder and under the Related Documents to which it is a party and
(2) is subject to the first priority security interest in favor of the Issuer
pursuant to the Sale and Servicing Agreement, which in turn will be pledged to
the Trustee for the benefit of the Noteholders pursuant to the Indenture; and
(B) as of the Cutoff Date no payment with respect to any Receivable is overdue.
2. Characteristics of Obligors. Each Obligor (other than Manufacturers
Life Insurance Company, Great-West Life & Annuity Insurance Company and Sun Life
Assurance Company of Canada) is incorporated or organized under the laws of a
State of the United States of America and, as of the Cutoff Date, no Obligor (A)
is the subject of any federal, state or other bankruptcy, insolvency or similar
proceeding or (B) is the subject of a judgment in its favor. Each payment with
respect to each Receivable will be made by the related Obligor free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
including those imposed by the state or foreign jurisdiction under the laws of
which such Person is organized or any political subdivision thereof.
3. Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been delivered to the Custodian on or prior to
the Closing Date.
4. Schedule of Receivables. The information with respect to the
Receivables set forth in its Schedule of Receivables is true and correct as of
the close of business on the Closing Date.
5. Adverse Selection. No selection procedures having an adverse effect
on the Noteholders have been utilized in selecting the Receivables from those
payment streams similar to the Receivables owned by it which met the selection
criteria contained in this Agreement.
6. Compliance with Law. None of the contracts related to any
Receivable, at the time such Receivable was originated, contravened and, at the
execution of this Agreement contravenes, any requirements of applicable federal,
state and local laws, and regulations.
7. No Government Obligor. None of the Receivables is due from the
United States of America or any state or from any agency, department, or
instrumentality of the United States of America or any state.
8. Receivables in Force. No Receivable has been satisfied, exchanged,
surrendered, terminated, subordinated or rescinded, nor has any such Receivable
been excluded from the Lien granted pursuant to the Indenture.
9. No Amendments. No payment extensions on any Receivable has been
granted, and no contract related to any Receivable has been amended or modified
(except as provided in the related Receivables File) and none of the provisions
of any contract related to any Receivable have been waived (except as provided
in the related Receivables File).
10. No Defenses. As of the Closing Date, no right of rescission,
set-off, counterclaim or defense exists (other than any unasserted setoff,
recoupment or similar right set forth in any Obligor Receivable Agreement or
existing under applicable law) or has been asserted or threatened with respect
to any Receivable or any contract related thereto. The operation of the terms of
any Receivable or any contract related thereto or the exercise of any right
thereunder will not render such Receivable or any contract related thereto
unenforceable in whole or in part or subject to any such right of rescission,
set-off, counterclaim, or defense (other than any unasserted setoff, recoupment
or similar right set forth in any Obligor Receivable Agreement or existing under
applicable law).
11. No Fraud or Misrepresentation. Each Receivable was originated by it
without fraud, deceit or misrepresentation on its part.
12. Receivables Not Assumable. No Receivable or any contract related
thereto is assumable by another Person in a manner which would release the
Obligor thereof from such Obligor's obligations to it with respect to payments
in respect of such Receivable.
13. No Impairment. The Seller has not done anything to convey any right
to any Person that would result in such Person having a right to payments in
respect of any Receivable or otherwise to impair the rights of the Issuer, the
Trustee, the Initial Purchaser or the Noteholders in any Receivable or the
proceeds thereof (other than contracts, agreements or other similar arrangements
entered into by the Seller or any of its identified current or former officers,
employees or members obligating the Seller (or such other person) to split
certain commissions in specified amounts with such Persons, which such Persons
and amounts have been identified to
the Trustee on or prior to the Closing Date). Prior to the sale by the Seller of
the Receivables to the Issuer, the Seller did not convey information (or know of
any such conveyance by another Person) to the Issuer that would result in
constructive or actual knowledge by the Issuer that the interest of the Seller
in such Receivables or the proceeds thereof were subject to the actual or
claimed interest of any Person.
14. No Default. No default, breach, violation or event which could
reasonably be expected to result in the termination of any contract related to
any Receivable has occurred; no continuing condition that with notice or the
lapse of time could reasonably be expected to result in a default, breach,
violation, or event which could reasonably be expected to result in the
termination under the terms of any insurance policy related to any contract
related to any Receivable has arisen as of the Closing Date; the Seller shall
not waive, and has not waived, any of the foregoing.
15. Title. It is the intention of the Seller that the sale, transfer
and assignment contemplated in this Agreement constitutes an absolute sale (or
contribution) of the Receivables and the proceeds thereof to the Issuer and that
the beneficial interest in and title to such Receivables not be part of its
estate in the event of the filing of a bankruptcy petition by or against it
under any bankruptcy law. No Receivable or the proceeds thereof has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Issuer. Immediately prior to the sale, transfer and assignment herein
contemplated, the Seller had good and marketable title to each Receivable, and
was the sole owner thereof, free and clear of all Liens and, immediately upon
the transfer thereof, the Issuer shall have good and marketable title to each
the Receivable, and will be the sole owner thereof, free and clear of all Liens
(other than the Lien in favor of the Trustee pursuant to the Related Documents).
16. Computer Tape. The Computer Tape made available by the Seller (or
the Servicer on its behalf) to the Issuer and the Backup Servicer on or prior to
the Closing Date was complete and accurate in all respects as of the Cutoff Date
and includes a description of the same Receivables that are described in the
Schedule of Receivables.
17. Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Receivable under this Agreement shall be unlawful, void, or
voidable. The Seller has not entered into any contract, agreement or arrangement
with any account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables (except in respect of which the required
consent to such assignment or waiver of such prohibition, restrictions or
conditions to such Assignment have been obtained).
18. All Filings Made. All filings or other action (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Issuer a
first priority perfected ownership interest, and the Trustee a first priority
perfected security interest, in the Receivables have been made.
19. Valid and Binding Obligation of Obligor. The related Obligor of
each Receivable is contractually obligated to make payments with respect to such
Receivable directly to the Seller (or to the Issuer (as assignee of such
Receivable)). Each Receivable and each contract related thereto is (a) in full
force and effect, (b) the legal, valid and binding obligation of the Obligor
thereunder and each other party thereto, (c) enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally, and
(d) all parties to such contract had full legal capacity to execute and deliver
such contract and all other documents related thereto. No event has occurred
under any contract related to a Receivable that would give the Obligor
thereunder the right to terminate such contract for cause or otherwise. All
necessary consents by each Obligor to the assignment of the Receivables have
been obtained and are in full force and effect.
20. The Seller hereby makes represents, warrants, and covenants to each
other party to the Agreement and the Initial Purchaser, as follows, that on the
Closing Date:
General
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1. The Indenture creates a valid and continuing security interest (as
defined in the applicable UCC) in the Receivables and the proceeds thereof in
favor of the Trustee for the benefit of the Noteholders, which security interest
is prior to all other Liens, and is enforceable as such as against its creditors
of and purchasers.
2. The Receivables constitute "accounts," "deposit accounts,"
"electronic chattel paper," "general intangibles," "goods," "instruments,"
"investment property," or "tangible chattel paper," within the meaning of the
applicable UCC.
3. The Lock-Box Account and the Trust Accounts constitute either a
deposit account or a securities account.
Creation
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4. It owns and has good and marketable title to the Receivables free
and clear of any Lien (other than the Lien in favor of the Issuer or the Trustee
pursuant to this Agreement or the Related Documents).
5. It has received all consents and approvals to the sale of the
Receivables hereunder to the Issuer required by the terms of each state's law
governing insurance policies.
Perfection
----------
6. It has caused or will have caused, within ten days after the
effective date of the Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the sale of the Receivables from it to the
Issuer, and the security interest in the Receivables granted to the Trustee for
the benefit of the Noteholders.
7. With respect to the Lock-Box Account that constitutes a deposit
account, either:
(i) the Issuer has delivered to the Trustee a fully executed agreement
pursuant to which the bank maintaining the deposit account has agreed
to comply with all instructions originated by the Trustee directing
disposition of the funds in the Lock-Box Account without further
consent by the Issuer; or
(ii) the Issuer has taken all steps necessary to cause the Trustee to
become the account holder of the Lock-Box Account.
8. With respect to the Trust Accounts that constitute securities
accounts or securities entitlements, either:
(i) the Issuer has caused or will have caused, within ten days after
the effective date of the Agreement, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security
interest granted in the Receivables to the Trustee; or
(ii) the Issuer has delivered to the Trustee a fully executed agreement
pursuant to which the securities intermediary has agreed to comply with
all instructions originated by the Trustee relating to the Trust
Accounts without further consent by the Issuer; or
(iii) the Issuer has taken all steps necessary to cause the securities
intermediary to identify in its records the Trustee as the person
having a security entitlement against the securities intermediary in
each of the Trust Accounts.
Priority
--------
9. Other than the transfer of the Receivables to the Issuer under the
Agreement and the security interest granted to the Trustee for the benefit of
the Noteholders pursuant to the Indenture, neither it nor the Issuer has
pledged, assigned, sold, granted a security interest in (except for any grant of
a security interest contained in any Obligor Receivable Agreement, as in effect
on the Closing Date), or otherwise conveyed any of the Receivables, the Lock-Box
Account or the Trust Accounts. Neither it nor the Issuer has authorized the
filing (except for any authorization to file a financing statement contained in
any Obligor Receivable Agreement, as in effect on the Closing Date, or resulting
from any Obligor Receivable Agreement being a security agreement under the
applicable UCC) of, or is aware of any financing statements against it or the
Issuer that include a description of collateral covering the Receivables, the
Lock-Box Account or any Trust Account other than any financing statement
relating to the security interest granted to the Issuer under the Agreement or
to the Trustee for the benefit of the Noteholders under the Indenture or that
has been terminated.
10. Neither it nor the Issuer is aware of any judgment, ERISA or tax
lien filings against either it or the Issuer.
11. None of the Trust Accounts are in the name of any person other than
the Issuer or the Trustee. The Issuer has not consented to the securities
intermediary of any Trust Account to comply with entitlement orders of any
person other than the Trustee.
12. The Lock-Box Account is not the name of any person other than the
Issuer or the Trustee. The Issuer has not consented to the bank maintaining the
Lock-Box Account to comply with instructions of any person other than the
Trustee.
13. Survival of Perfection Representations. Notwithstanding any other
provision of the Agreement or any other Related Document, the representations
and warranties contained in this Schedule B shall be continuing, and remain in
full force and effect (notwithstanding any termination or replacement of the
Servicer or termination of Servicer's rights to act as such) until such time as
all Secured Obligations under the Related Documents have been finally and fully
paid and performed.
14. No Waiver. The parties to the Agreement shall not, without
obtaining a confirmation of the then-current rating of the Notes, waive any of
the representations or warranties set forth in this Schedule B.
SCHEDULE C
SERVICING POLICY AND PROCEDURES
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SCHEDULE D
MAXIMUM OUTSTANDING NOTE PRINCIPAL BALANCE
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SCHEDULE E
PROBABILITY OF SURVIVAL
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