EXHIBIT 10.1
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FORM OF
TRANSFER AND SERVICING AGREEMENT
among
CONSECO BANK, INC.,
TRANSFEROR AND SERVICER
CONSECO FINANCE CREDIT CARD FUNDING CORP.,
TRANSFEROR
and
CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST,
TRUST
Dated as of May 1, 2001
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.........................................................1
Section 1.02. Other Definitional Provisions......................................12
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables..........................................14
Section 2.02. Acceptance by Trust................................................15
Section 2.03. Representations and Warranties of Each Transferor Relating
to Such Transferor.................................................16
Section 2.04. Representations and Warranties of each Transferor Relating
to the Agreement and Any Participation Interest Supplement
and the Receivables................................................17
Section 2.05. Reassignment of Ineligible Receivables.............................19
Section 2.06. Reassignment of Trust Portfolio....................................20
Section 2.07. Covenants of each Transferor.......................................20
Section 2.08. Covenants of each Transferor with Respect to Receivables
Purchase Agreement.................................................24
Section 2.09. Addition of Accounts...............................................25
Section 2.10. Removal of Accounts and Participation Interests....................29
Section 2.11. Account Allocations................................................30
Section 2.12. Discount Option....................................................31
ARTICLE III
ADMINISTRATION AND
SERVICING OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating to
the Servicer.......................................................32
Section 3.02. Servicing Compensation.............................................33
Section 3.03. Representations, Warranties and Covenants of the Servicer..........33
Section 3.04. Reports and Records for the Trust and the Indenture Trustee........35
Section 3.05. Annual Certificate of Servicer.....................................36
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TABLE OF CONTENTS (cont'd.)
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Section 3.06. Annual Servicing Report of Independent Public Accountants;
Copies of Reports Available........................................36
Section 3.07. Tax Treatment......................................................37
Section 3.08. Notices to Conseco Bank............................................37
Section 3.09. Adjustments........................................................37
Section 3.10. Reports to the Commission..........................................38
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 4.01. Liability of each Transferor.......................................39
Section 4.02. Merger or Consolidation of, or Assumption of the Obligations of,
a Transferor.......................................................39
Section 4.03. Limitations on Liability of Each Transferor........................40
Section 4.04. Assumption of the Transferor Obligations...........................40
ARTICLE V
OTHER MATTERS RELATING
TO THE SERVICER
Section 5.01. Liability of the Servicer..........................................42
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of,
the Servicer.......................................................42
Section 5.03. Limitation on Liability of the Servicer and Others.................42
Section 5.04. Servicer Indemnification of the Trust, the Owner Trustee and the
Indenture Trustee..................................................43
Section 5.05. Resignation of the Servicer........................................43
Section 5.06. Access to Certain Documentation and Information Regarding
the Receivables....................................................43
Section 5.07. Delegation of Duties...............................................44
Section 5.08. Examination of Records.............................................44
ARTICLE VI
INSOLVENCY EVENTS
Section 6.01. Rights upon the Occurrence of an Insolvency Event..................45
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TABLE OF CONTENTS (cont'd.)
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ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults..................................................46
Section 7.02. Indenture Trustee To Act; Appointment of Successor.................48
Section 7.03. Notification to Noteholders........................................49
ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement...........................................50
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.................................51
Section 9.02. Protection of Right, Title and Interest of Trust...................52
Section 9.03. Governing Law......................................................53
Section 9.04. Notices; Payments..................................................53
Section 9.05. Severability of Provisions.........................................54
Section 9.06. Further Assurances.................................................54
Section 9.07. No Waiver; Cumulative Remedies.....................................54
Section 9.08. Counterparts.......................................................54
Section 9.09. Third-Party Beneficiaries..........................................54
Section 9.10. Actions by Noteholders.............................................55
Section 9.11. Rule 144A Information..............................................55
Section 9.12. Merger and Integration.............................................55
Section 9.13. Headings...........................................................55
Section 9.14. Limitation of Liability............................................55
Section 9.15. Nonpetition Covenant...............................................55
Section 9.15. Nonpetition Covenant...............................................55
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TABLE OF CONTENTS
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EXHIBITS
EXHIBIT A Form of Assignment of Receivables in Additional Accounts........A-1
EXHIBIT B Form of Reassignment of Receivables in Removed Accounts........B-1
EXHIBIT C Form of Annual Servicer's Certificate...........................C-1
EXHIBIT D-1 Form of Opinion of Counsel with Respect to Amendments.........D-1-1
EXHIBIT D-2 Form of Opinion of Counsel with Respect to Accounts...........D-2-1
EXHIBIT D-3 Provisions to be Included in Annual Opinion of Counsel........D-3-1
SCHEDULES
SCHEDULE 1 List of Accounts................................................I-1
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TRANSFER AND SERVICING AGREEMENT dated as of May 1, 2001 among
CONSECO BANK, INC., a Utah industrial loan corporation, as a Transferor and as
Servicer, CONSECO FINANCE CREDIT CARD FUNDING CORP., a Minnesota corporation, as
a Transferor and CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST, a business
trust organized and existing under the laws of the State of Delaware, as Trust.
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties, the
Noteholders and any Series Enhancer (as defined below) to the extent provided
herein, in the Indenture and in any Indenture Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"Account" shall mean (a) each Initial Account, (b) each
Additional Account (but only from and after the Addition Date with respect
thereto), (c) each Related Account, and (d) each Transferred Account, but shall
exclude (i) any Account that has been closed and terminated in accordance with
the relevant Credit Card Guidelines and (ii) any Account all the Receivables in
which are (A) after the Removal Date, removed by the Transferor pursuant to
Section 2.10, (B) reassigned to the Transferor pursuant to Section 2.05 or (C)
assigned and transferred to the Servicer pursuant to Section 3.03.
"Account Owner" shall mean Retail Services Bank, Conseco Bank,
Conseco Finance Servicing Corp. and each other entity which is the issuer of the
credit or credit cards relating to an Account pursuant to a Credit Card
Agreement and/or a seller of Receivables directly or indirectly to a Transferor.
"Addition Date" shall mean (a) with respect to Additional
Accounts, the date from and after which such Additional Accounts are to be
included as Accounts pursuant to subsection 2.09(a), (b) or (d), and (b) with
respect to Participation Interests, the date from and after which such
Participation Interests are to be included as assets of the Trust pursuant to
subsection 2.09(a) or (b).
"Additional Account" shall mean each account, including any
Special Payment Account, designated to the Trust under the provisions of Section
2.09.
"Additional Cut-Off Date" shall mean (a) with respect to
Additional Accounts (other than Automatic Additional Accounts) or Participation
Interests, the date specified as such in the notice delivered with respect
thereto pursuant to subsection 2.09(c) and (b) with respect to Automatic
Additional Accounts, the date stated as the cut-off date in the related
Assignment.
"Additional Transferor" shall have the meaning specified in
subsection 2.09(g).
"Adverse Effect" shall mean, with respect to any action, that
such action will (a) result in the occurrence of an Amortization Event, a
Reinvestment Event or an Event of Default or (b) materially adversely affect the
amount or timing of distributions to be made to the Noteholders of any Series or
Class pursuant to this Agreement, the Indenture or the related Indenture
Supplement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Transfer and Servicing Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Amortization Event" shall have the meaning specified in the
Indenture.
"Appointment Date" shall have the meaning specified in Section
6.01.
"Assignment" shall have the meaning specified in subsection
2.09(h).
"Automatic Additional Accounts" shall mean Accounts designated
to the Trust under the provisions of subsections 2.09(d) and (e) which Accounts
are permitted to be added if the conditions set forth in subsection 2.09(e)
rather than 2.09(c) are satisfied.
"Authorized Newspaper" shall mean any newspaper or newspapers
of general circulation in the Borough of Manhattan, City of New York, printed in
the English language (and, with respect to any Series or Class, if and so long
as the Notes of such Series are listed on the Luxembourg Stock Exchange and such
Exchange shall so require, in Luxembourg, printed in any language satisfying the
requirements of such Exchange) and customarily published on each business day at
such place, whether or not published on Saturdays, Sundays or holidays.
"Bankruptcy Code" shall mean Title 11 of the United States
Code.
"Bearer Notes" shall have the meaning specified in the
Indenture.
"Business Day" shall mean any day other than (a) a Saturday or
Sunday or (b) any other day on which national banking associations or state
banking institutions in Minneapolis, Minnesota, New York City, New York, South
Dakota, Utah, Arizona, Delaware or any other State in which the principal
executive offices of the Transferors, the Servicer, the Owner Trustee, the
Indenture Trustee or other Account Owner, as the case may be, are located, are
authorized or obligated by law, executive order or governmental decree to be
closed or (c) for purposes of any particular Series, any other day specified in
the related Indenture Supplement.
"Cash Advance Fees" shall mean cash advance transaction fees
and cash advance late fees, if any, arising under the terms of a Credit Card
Agreement applicable to an Account.
"Class" shall have the meaning specified in the Indenture.
"Closing Date" shall mean, with respect to any Series, the
closing date specified in the related Indenture Supplement.
"Collections" shall mean all payments by or on behalf of
Obligors (including Insurance Proceeds) received in respect of the Receivables,
in the form of cash, checks, wire transfers, electronic transfers, ATM transfers
or any other form of payment in accordance with a Credit Card Agreement in
effect from time to time and all other amounts specified by this Agreement, the
Indenture or any Indenture Supplement as constituting Collections. As specified
in any Participation Interest Supplement
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or Indenture Supplement, Collections shall include amounts received with respect
to Participation Interests. All Recoveries with respect to Receivables
previously charged-off as uncollectible will be treated as Collections of
Finance Charge Receivables.
"Commission" shall mean the Securities and Exchange Commission
and its successors in interest.
"Conseco Bank" shall mean, Conseco Bank, Inc., a Utah
industrial loan corporation and its successors and assigns.
"Conseco Developed Program" shall mean a financing program
developed by Conseco Finance or an Affiliate under which Conseco Bank or an
Affiliate agrees with individual Dealers or groups of Dealers to provide credit
cards to customers of the Dealer or Dealers to finance the purchase of a
specified type or category of services, goods, vehicles and/or materials or
other products sold or provided by the Dealer or Dealers.
"Conseco Finance" shall mean Conseco Finance Corp., a Delaware
corporation, and its successors and assigns.
"Conseco Finance Servicing Corp." shall mean Conseco Finance
Servicing Corp., a Delaware corporation, and its successors and assigns.
"Corporate Trust Office" shall have the meaning (a) when used
in respect of the Owner Trustee, specified in the Trust Agreement and (b) when
used in respect of the Indenture Trustee, specified in the Indenture.
"Coupon" shall have the meaning specified in the Indenture.
"Credit Card Agreement" shall mean, with respect to a credit
card account or other credit account, the agreements between the Account Owner
and the Obligor governing the terms and conditions of such account, as such
agreements may be amended, modified or otherwise changed from time to time and
as distributed (including any amendments and revisions thereto) to holders of
such account.
"Credit Card Guidelines" shall mean the respective policies
and procedures of Conseco Bank, Retail Services Bank, Conseco Finance Servicing
Corp. and/or any other Account Owner as the case may be, as such policies and
procedures may be amended from time to time, (a) relating to the operation of
its private label credit card business including those programs for which no
credit cards are issued, which generally are applicable to its portfolio of
credit card accounts or, in the case of an Account Owner that has only a
specific portion of its portfolio designated to the Trust, applicable to such
portion of its portfolio, and, in each case, which are consistent with prudent
practice, including the policies and procedures for determining the
creditworthiness of Obligors and the extension of credit to Obligors, and (b)
relating to the maintenance of credit accounts and collection of receivables
created thereunder.
"Date of Processing" shall mean, with respect to any
transaction or receipt of Collections, the date on which such transaction is
first recorded on the Servicer's computer file of credit card accounts (without
regard to the effective date of such recordation).
"Defaulted Amount" shall mean, with respect to any Monthly
Period, an amount (which shall not be less than zero) equal to (a) the amount of
Principal Receivables which became Defaulted Receivables in such Monthly Period,
minus (b) the amount of any Defaulted Receivables of which the Transferor or the
Servicer became obligated to accept reassignment or assignment in accordance
with the terms of this Agreement during such Monthly Period; provided, however,
that, if an Insolvency Event occurs with respect to the Transferor, the amount
of such Defaulted Receivables which are subject to reassignment to the
Transferor in accordance with the terms of this Agreement shall not be added to
the sum so subtracted and, if any of the events described in subsection 7.01(d)
occur with respect to the
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Servicer, the amount of such Defaulted Receivables which are subject to
reassignment or assignment to the Servicer in accordance with the terms of this
Agreement shall not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any
Monthly Period and any Pool and related Group, all Principal Receivables which
are charged off as uncollectible in such Monthly Period in accordance with the
Credit Card Guidelines and the Servicer's customary and usual servicing
procedures for servicing credit card accounts. A Principal Receivable shall
become a Defaulted Receivable on the day on which such Principal Receivable is
recorded as charged-off on the Servicer's computer file of credit card accounts.
"Discount Option Date" shall mean each date on which a
Discount Percentage designated by the Transferors pursuant to Section 2.12 or
any change in the Discount Percentage takes effect. The first Discount Option
Date shall be the Initial Issuance Date.
"Discount Option Receivable Collections" shall mean on any
Date of Processing occurring after a Discount Option Date occurs, the product of
(a) a fraction the numerator of which is the Discount Option Receivables and the
denominator of which is the sum of the Principal Receivables and the Discount
Option Receivables in each case (for both the numerator and the denominator) at
the end of the preceding Monthly Period and (b) Collections of Principal
Receivables on such Date of Processing (without giving effect to the proviso in
the definition of Principal Receivables).
"Discount Option Receivables" shall have the meaning specified
in Section 2.12. The aggregate amount of Discount Option Receivables outstanding
on any Date of Processing occurring on or after the Discount Option Date shall
equal the sum of (a) the aggregate Discount Option Receivables at the end of the
prior Date of Processing plus (b) any new Discount Option Receivables created on
such Date of Processing minus (c) any Discount Option Receivables Collections
received on such Date of Processing. Discount Option Receivables on any Date of
Processing shall mean the product of the amount of any Principal Receivables
outstanding on such Date of Processing (without giving effect to the proviso in
the definition of Principal Receivables) and the Discount Percentage.
"Discount Percentage" shall mean the percentages, if any,
designated by the Transferor pursuant to Section 2.12.
"Document Delivery Date" shall have the meaning specified in
subsection 2.09(h).
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Eligible Account" shall mean a credit account owned by
Conseco Bank, Retail Services Bank or Conseco Finance Servicing Corp. in the
case of the Initial Accounts on the Initial Cut-Off Date, or Conseco Bank,
Retail Services Bank, Conseco Finance Servicing Corp. or another Account Owner,
in the case of Additional Accounts on the Addition Cut-Off Date which, as of the
Initial Cut-Off Date with respect to an Initial Account or as of the Additional
Cut-Off Date with respect to an Additional Account meets the following
requirements:
(a) is a credit account in existence and maintained by Conseco
Bank, Retail Services Bank, Conseco Finance Servicing Corp. or another
Account Owner, as the case may be;
(b) is payable in Dollars;
(c) has an Obligor who has provided, as his most recent
billing address, an address located in the United States or its
territories, possessions or military bases; provided,
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however, that as of any date of determination, up to ___% of the
Accounts (calculated by number of accounts) may have account obligors
who, as of the applicable cut-off date, have provided as their billing
addresses, addresses outside of the United States;
(d) except as provided below, has an Obligor who has not been
identified by the Servicer in its computer files as being currently
involved in a voluntary or involuntary bankruptcy proceeding;
(e) has not been identified as an account with respect to
which (i) the related card, if any, has been lost or stolen or (ii) the
related account number has been stolen;
(f) has not been sold or pledged to any other party except for
any sale to another Account Owner that has either entered into a
Receivables Purchase Agreement or is an Additional Transferor;
(g) does not have receivables which have been sold or pledged
by the Account Owner to any other party other than to the Trust or to
any Transferor pursuant to a Receivables Purchase Agreement;
(h) with respect to the Initial Accounts, is an account in
existence and maintained by Conseco Bank, Retail Services Bank or
Conseco Finance Servicing Corp. or another Account Owner as of the
Initial Cut-Off Date, or with respect to Additional Accounts, as of the
Additional Cut-Off Date;
(i) except as provided below, does not have any Receivables
that are Defaulted Receivables; and
(j) does not have any Receivables that have been identified by
the Servicer or the relevant Obligor as having been incurred as a
result of fraudulent use of any related credit card, if any, or related
account number.
Eligible Accounts may include Accounts the Receivables of
which have been charged off, or with respect to which the Servicer believes the
related Obligor is bankrupt, in each case as of the Initial Cut-Off Date, with
respect to the Initial Accounts, and as of the related Additional Cut-Off Date,
with respect to Additional Accounts; provided, that (a) the balance of all
Receivables included in such Accounts is reflected on the books and records of
the Servicer, the Transferor and the Account Owner (and is treated for purposes
of this Agreement) as "zero" and (b) borrowing and charging privileges with
respect to all such Accounts have been canceled in accordance with the relevant
Credit Card Guidelines.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all material respects
with all Requirements of Law applicable to the institution which owned
such Receivable at the time of its creation and pursuant to a Credit
Card Agreement which complies in all material respects with all
Requirements of Law applicable to the appropriate Account Owner;
(c) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations with, any Governmental
Authority required to be obtained, effected or given in connection with
the creation of such Receivable or the execution, delivery
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and performance by the Account Owner of the Credit Card Agreement
pursuant to which such Receivable was created, have been duly obtained,
effected or given and are in full force and effect;
(d) as to which at the time of the transfer of such Receivable
to the Trust, the Transferor or the Trust will have good and marketable
title thereto free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not then due and
payable or if the Transferor is then contesting the validity thereof in
good faith by appropriate proceedings and has set aside on its books
adequate reserves with respect thereto);
(e) which has been the subject of either a valid transfer and
assignment from a Transferor to the Trust of all the Transferor's
right, title and interest therein (including any proceeds thereof), or
the grant of a first priority perfected security interest therein (and
in the proceeds thereof), effective until the termination of the Trust;
(f) which at all times will be the legal, valid and binding
payment obligation of the Obligor thereon enforceable against such
Obligor in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(g) which, at the time of transfer to the Trust, has not been
waived or modified except as permitted in accordance with the Credit
Card Guidelines and which waiver or modification is reflected in the
Servicer's computer file of credit card accounts;
(h) which, at the time of transfer to the Trust, is not
subject to any right of rescission, setoff, counterclaim or any other
defense (including defenses arising out of violations of usury laws) of
the Obligor, other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights in general;
(i) as to which, at the time of transfer to the Trust, Conseco
Bank, Retail Services Bank, Conseco Finance Servicing Corp. or another
Account Owner, as the case may be, has satisfied all of its obligations
required to be satisfied by such time;
(j) as to which, at the time of transfer to the Trust, none of
the Transferor, Conseco Bank, Retail Services Bank, Conseco Finance
Servicing Corp. or any other Account Owner, as the case may be, has
taken any action which would impair, or omitted to take any action the
omission of which would impair, the rights of the Trust or the
Noteholders therein; and
(k) which constitutes either "chattel paper," an "account" or
a "general intangible" under and as defined in Article 9 of the UCC as
then in effect in the State of South Dakota, Utah and Delaware and any
other state where the filing of a financing statement is required to
perfect the Trust's interest in the Receivables and the proceeds
thereof.
"Eligible Servicer" shall mean the Indenture Trustee or, if
the Indenture Trustee is not acting as Servicer, an entity which, at the time of
its appointment as Servicer, (a) is servicing a portfolio of credit accounts
substantially similar to the Accounts, (b) is legally qualified and has the
capacity to service the Accounts, (c) in the sole determination of the Indenture
Trustee, which determination shall be conclusive and binding, has demonstrated
the ability to service professionally and competently a portfolio
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of similar accounts in accordance with high standards of skill and care, (d) is
qualified to use the software that is then being used to service the Accounts or
obtains the right to use or has its own software which is adequate to perform
its duties under this Agreement and (e) has a net worth of at least $50,000,000
as of the end of its most recent fiscal quarter.
"Event of Default" shall have the meaning specified in the
Indenture.
"FDIA" shall mean the Federal Deposit Insurance Act, as
amended by the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and as further amended from time to time.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Finance Charge Receivables" shall mean with respect to any
Pool, all amounts billed to the Obligors on any Account in respect of (a) all
periodic finance charges, (b) Cash Advance Fees, (c) annual membership fees and
annual service charges, if any, (d) Late Fees, (e) Overlimit Fees, (f) Discount
Option Receivables, (g) any other fees with respect to the Accounts designated
by the Transferors at any time and from time to time to be included as Finance
Charge Receivables and (h) any other amounts designated by Transferors to be
included as Finance Charge Receivables, including, but not limited to, interest
and investment earnings on the Collection Account and the Special Funding
Account to the extent provided in Section 8.03 of the Indenture. Finance Charge
Receivables shall also include the interest portion of Participation Interests
as shall be determined pursuant to, and only if so provided in, the applicable
Participation Interest Supplement or Indenture Supplement for any Series and
Recoveries with respect to Receivables previously charged off as uncollectible.
"Fitch" shall mean Fitch, Inc. or its successors.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall have the meaning set forth in the Indenture.
"Indenture" shall mean the Master Indenture, dated as of May
1, 2001 among the Trust, the Indenture Trustee and the Servicer, as the same may
be amended, supplemented or otherwise modified from time to time.
"Indenture Supplement" shall have the meaning specified in the
Indenture.
"Indenture Trustee" shall mean U.S. Bank Trust National
Association, a national banking association, in its capacity as trustee under
the Indenture, its successors in interest and any successor indenture trustee
under the Indenture.
"Ineligible Receivables" shall have the meaning specified in
subsection 2.05(a).
"Initial Account" shall mean each credit account, including
any Special Payment Account, established pursuant to a Credit Card Agreement
between Conseco Bank, Retail Services Bank or Conseco Finance Servicing Corp.
and any Person, which account is identified in the computer file or microfiche
list delivered to the Owner Trustee by the Transferor pursuant to Section 2.01
on the Initial Issuance Date.
"Initial Cut-Off Date" shall mean _____________ __, 2001.
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"Initial Issuance Date" shall mean May __, 2001, the date the
initial Series of Notes is issued by the Trust.
"Insolvency Event" shall have the meaning specified in Section
6.01.
"Insurance Proceeds" shall mean any amounts received pursuant
to the payment of benefits under any credit life insurance policies, credit
disability or unemployment insurance policies covering any Obligor with respect
to Receivables under such Obligor's Account.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount or adjusted invested
amount, as applicable, specified in the related Indenture Supplement.
"Issuer" shall mean the Trust.
"Late Fees" shall have the meaning specified in the Credit
Card Agreement applicable to an Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any grant
provided in the granting clauses of the Indenture, and the lien created by this
Agreement shall not be deemed to constitute a Lien.
"Merchant" shall mean a business entity organized under or
qualified to do business under the laws of one of the states of the United
States or the District of Columbia which sells, produces, distributes, installs,
services, provides or manufactures retail goods and/or services.
"Merchant Agreement" shall mean one or more agreements between
Conseco Finance Servicing Corp., Conseco Bank, Retail Services Bank or another
Account Owner and a Merchant pursuant to which Conseco Finance or an Account
Owner agrees to extend credit accounts to customers of the Merchant or customers
of dealers of such Merchants' goods and services and the Merchant agrees to
allow purchases of its goods and services under such accounts.
"Merchant Termination Payments" shall mean any payments made
by a Merchant under the terms of a Merchant Agreement for the purpose of
purchasing any Receivables existing in the Accounts created under that Merchant
Agreement.
"Monthly Period" shall have the meaning specified in the
Indenture.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.02.
"Moody's" shall mean Xxxxx'x Investors Service, Inc., or its
successor.
"Note Owner" shall have the meaning specified in the
Indenture.
"Note Register" shall have the meaning specified in the
Indenture.
8
"Noteholder" or "Holder" shall have the meaning specified in
the Indenture.
"Notices" shall have the meaning specified in subsection
9.04(a).
"Obligor" shall mean, with respect to any Account, the Person
or Persons obligated to make payments with respect to such Account, including
any guarantor thereof, but excluding any Merchant.
"Officer's Certificate" shall have the meaning specified in
the Indenture.
"Opinion of Counsel" shall have the meaning specified in the
Indenture.
"Overlimit Fees" shall have the meaning specified in the
Credit Card Agreement applicable to each Account for overlimit fees or similar
terms if such fees are provided for with respect to such Account.
"Owner Trustee" shall mean Wilmington Trust Company not in its
individual capacity but solely in its capacity as owner trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Participation Interest Supplement" shall mean a supplement to
this Agreement entered into pursuant to subsection 2.09(a)(ii) or (b) in
connection with the conveyance of Participation Interests to the Trust.
"Participation Interests" shall have the meaning specified in
subsection 2.09(a)(ii).
"Paying Agent" shall have the meaning specified in the
Indenture.
"Payment Date" shall mean, with respect to any Series, the
date specified in the applicable Indenture Supplement.
"Person" shall mean any legal person, including any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Pool" shall have the meaning specified in the Indenture.
"Principal Receivables" shall mean with respect to any Pool
all Receivables other than Finance Charge Receivables or Defaulted Receivables;
provided, however, that after a Discount Option Date, Principal Receivables on
any Date of Processing thereafter shall mean Principal Receivables as otherwise
determined pursuant to this definition minus the amount of any Discount Option
Receivables. Principal Receivables shall also include the principal portion of
Participation Interests as shall be determined pursuant to, and only if so
provided in, the applicable Participation Interest Supplement or Indenture
Supplement for any Series. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by
the aggregate amount of credit balances in the Accounts on such day. Any
Principal Receivables which the Transferor is unable to transfer as provided in
Section 2.11 shall not be included in calculating the amount of Principal
Receivables.
"Rating Agency" shall have the meaning specified in the
Indenture.
"Rating Agency Condition" shall have the meaning specified in
the Indenture.
9
"Reassignment" shall have the meaning specified in Section
2.10.
"Receivables" shall mean all amounts payable by Obligors on
any Account from time to time, including amounts payable for Principal
Receivables and Finance Charge Receivables. Receivables which become Defaulted
Receivables will cease to be included as Receivables as of the day on which they
become Defaulted Receivables. Receivables, where applicable, shall include also
the interest and principal portion of Participation Interests. Any reference in
this Agreement, the Indenture or any Indenture Supplement to the "underlying
receivable" with respect to a Receivable shall refer to the receivable in which
such Receivable represents an undivided interest.
"Receivables Purchase Agreements" shall mean (i) the
receivables purchase agreement dated as of August 29, 2000 between Retail
Services Bank and Conseco Bank, as amended, (ii) the receivables purchase
agreement dated as of August 1, 1999, between Conseco Bank and Conseco Finance
Servicing Corp., as amended, and (iii) the receivables purchase agreement dated
as of May 1, 2001 between Conseco Finance Servicing Corp. and Conseco Finance
Credit Card Funding Corp., each as amended from time to time, and any
receivables purchase agreement entered into between the Transferor and an
Account Owner or other Affiliated entity in the future.
"Recoveries" shall mean all amounts received (net of
out-of-pocket costs of collection) including Insurance Proceeds, which is
reasonably estimated by the Servicer to be attributable to Defaulted
Receivables, including the net proceeds of any sale of such Defaulted
Receivables and any amounts received upon foreclosure or other realization from
Related Security.
"Registered Notes" shall have the meaning specified in the
Indenture.
"Reinvestment Event" shall have the meaning specified in the
Indenture.
"Related Account" shall mean an Account with respect to which
a new account number has been issued by the applicable Account Owner or Servicer
or the applicable Transferor under circumstances resulting from a lost or stolen
credit card or account number, and not requiring standard application and credit
evaluation procedures under the Credit Card Guidelines.
"Related Security" shall mean all security interests and Liens
of whatever form granted by an Obligor to secure its obligation to make payment
of amounts advanced on an Account and any net amounts received as a result of a
foreclosure of such security interest or other Lien.
"Removal Date" shall have the meaning specified in Section
2.10.
"Removed Accounts" shall have the meaning specified in Section
2.10.
"Removed Participation Interests" shall have the meaning
specified in Section 2.10.
"Required Delivery Date" shall have the meaning specified in
subsection 2.01(d).
"Required Designation Date" shall have the meaning specified
in subsection 2.09(a).
"Required Minimum Principal Balance" shall mean, unless
otherwise provided in an Indenture Supplement relating to a Series having a
Paired Series, with respect to any date and any Pool (a) the sum of the Series
Adjusted Invested Amounts for each Series outstanding on such date in such Pool
plus the Required Transferor Amount on such date, minus (b) the Special Funding
Amount.
10
"Required Transferor Amount" shall have the meaning specified
in the Indenture.
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or Governmental Authority, whether
Federal, state or local (including usury laws, the Federal Truth in Lending Act
and Regulation B and Regulation Z of the Board of Governors of the Federal
Reserve System), and, when used with respect to any Person, the trust agreement,
articles of incorporation, certificate of incorporation and by-laws or other
organizational or governing documents of such Person.
"Retail Services Bank" shall mean Green Tree Retail Services
Bank, Inc., a South Dakota banking corporation and it successors and assigns.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Series" shall have the meaning specified in the Indenture.
"Series Account" shall have the meaning specified in the
Indenture.
"Series Adjusted Invested Amount" shall have the meaning
specified in the related Indenture Supplement.
"Series Enhancement" shall have the meaning specified in the
Indenture.
"Series Enhancer" shall have the meaning specified in the
Indenture.
"Series Portfolio Yield" shall have the meaning specified in
the related Indenture Supplement.
"Service Transfer" shall have the meaning specified in Section
7.01.
"Servicer" shall mean Conseco Bank, in its capacity as
Servicer pursuant to this Agreement, and, after any Service Transfer, the
Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
7.01.
"Servicing Fee" shall have the meaning specified in Section
3.02.
"Special Funding Account" shall have the meaning specified in
the Indenture.
"Special Funding Amount" shall have the meaning specified in
the Indenture.
"Special Payment Account" shall mean any credit account with a
fixed payment schedule.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Group, or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 7.02(a).
"Supplemental Certificate" shall have the meaning specified in
the Trust Agreement.
"Tax Opinion" shall have the meaning specified in the
Indenture.
11
"Termination Notice" shall have the meaning specified in
subsection 7.01(d).
"Transfer Agent and Registrar" shall have the meaning
specified in the Indenture.
"Transfer Restriction Event" shall have the meaning specified
in Section 2.11.
"Transferors" shall mean (a) Conseco Bank, Conseco Finance
Credit Card Funding Corp. and their successors and assigns, in each case for so
long as such entity is a transferor under this Agreement and (b) any Additional
Transferor or Additional Transferors. References to "each Transferor" shall
refer to each entity mentioned in the preceding sentence and references to "the
Transferors" shall refer to all of such entities.
"Transferor Amount" shall have the meaning specified in the
Indenture.
"Transferor Certificate" shall have the meaning specified in
the Trust Agreement.
"Transferor Certificates" shall mean, collectively, each
Transferor Certificate, if any, and any outstanding Supplemental Certificates.
"Transferred Account" shall mean each account into which an
Account shall be transferred provided that (i) such transfer was made in
accordance with the Credit Card Guidelines and (ii) such account can be traced
or identified as an account into which an Account has been transferred.
"Trust" shall mean the Conseco Private Label Credit Card
Master Note Trust, a Delaware business trust.
"Trust Agreement" shall mean the Trust Agreement relating to
the Trust, dated as of _____________, 2001, between Conseco Bank, Conseco
Finance Credit Card Funding Corp. and the Owner Trustee, as the same may be
amended, supplemented or otherwise modified from time to time.
"Trust Assets" shall have the meaning specified in Section
2.01.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified jurisdiction.
"Zero Balance Account" shall have the meaning established in
accordance with the Credit Card Guidelines.
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not
otherwise defined herein shall have meanings ascribed to them in the
Trust Agreement, the Indenture or the related Indenture Supplement, as
applicable.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other
document, and accounting terms partly defined in this Agreement or in
any such certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted
accounting principles or regulatory accounting principles, as
applicable and as
12
in effect on the date of this Agreement. To the extent that the
definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles or regulatory
accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall
control.
(d) The agreements, representations and warranties of Conseco
Bank in this Agreement in its respective capacities as Transferor and
Servicer shall be deemed to be the agreements, representations and
warranties of Conseco Bank solely in each such capacity for so long as
Conseco Bank act in each such capacity under this Agreement.
(e) The agreements, representations and warranties of Conseco
Finance Credit Card Funding Corp. in this Agreement in its capacity as
Transferor shall be deemed to be the agreements, representations and
warranties of Conseco Finance Credit Card Funding Corp. solely in such
capacity for so long as Conseco Finance Credit Card Funding Corp. acts
in such capacity under this Agreement.
(f) Any reference to each Rating Agency shall only apply to
any specific rating agency if such rating agency is then rating any
outstanding Series.
(g) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at
the close of business on such day.
(h) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement; references to any subsection, Section, Schedule or Exhibit
are references to subsections, Sections, Schedules and Exhibits in or
to this Agreement unless otherwise specified; and the term "including"
means "including without limitation."
[END OF ARTICLE I]
13
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables. (a) By execution of
this Agreement, each of Conseco Bank and Conseco Finance Credit Card Funding
Corp. and, in the case of Additional Accounts, Conseco Bank, Conseco Finance
Credit Card Funding Corp. or, if applicable, any Additional Transferor for good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, does hereby transfer, assign, set over, sell and otherwise convey
to the Trust, without recourse except as provided herein, all its right, title
and interest in, to and under (i) in the case of Receivables existing in or
arising in the Initial Accounts (including Transferred Accounts and Related
Accounts related to such Initial Accounts), the Receivables existing at the
close of business on the Initial Cut-Off Date, and thereafter created from time
to time in the Initial Accounts until the termination of the Trust; (ii) in the
case of Receivables existing in or arising in the Additional Accounts (including
Transferred Accounts and Related Accounts related to such Additional Accounts),
the Receivables existing at the close of business on the applicable Additional
Cut-Off Date, and thereafter created from time to time until the termination of
the Trust; (iii) all monies and other property credited to the Collection
Account, the Series Accounts and the Special Funding Account, including any
subaccounts of any such account; (iv) all Recoveries allocable to the Trust
including any amount realized as a result of the foreclosure or other
enforcement of any Related Security; (v) all rights to payment and amounts due
or to become due with respect to all of the foregoing; (vi) all rights,
remedies, powers, privileges and claims of any of the Transferors under or with
respect to the Receivables Purchase Agreements (whether arising pursuant to the
terms of the Receivables Purchase Agreements or otherwise available to a
Transferor at law or in equity), including, without limitation, the rights of
the Transferors to enforce the Receivables Purchase Agreements and to give or
withhold any and all consents, requests, notices, directions, approvals,
extensions or waivers under or with respect to the Receivables Purchase
Agreements to the same extent as such Transferor could but for the assignment
and security interest granted to the Trust; (vii) all amounts received or
receivable with respect to any of the foregoing and (viii) all proceeds
(including "proceeds" as defined in the UCC) thereof (such property plus the
property and interests described in the following sentence, is collectively, the
"Trust Assets"). The Trust Assets shall include, as applicable, the
Participation Interests and any property conveyed to the Trust pursuant to any
Participation Interest Supplement. The foregoing does not constitute and is not
intended to result in the creation or assumption by the Trust, the Owner Trustee
(as such or in its individual capacity), the Indenture Trustee, any Noteholder
or any Series Enhancer of any obligation of Conseco Bank, Retail Services Bank,
Conseco Finance, Conseco Finance Credit Card Funding Corp. or other Account
Owner or any Additional Transferor, the Servicer or any other Person in
connection with the Accounts, the Receivables or the Participation Interests or
under any agreement or instrument relating thereto, including any obligations to
Obligors, Merchants, merchant banks, merchants clearance systems or insurers.
The Obligors shall not be notified of the transfer, assignment, set-over and
conveyance of the Receivables to the Trust.
(b) In consideration for the conveyance and transfer of the
Trust Assets hereunder, the Trust hereby agrees to pay to the
Transferors the net proceeds received from the issuance of each Series
of Notes.
(c) Each Transferor agrees to record and file, at its own
expense, financing statements (and continuation statements when
applicable) with respect to the Receivables and other Trust Assets
conveyed by such Transferor meeting the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to
perfect, and maintain the perfection of, the transfer and assignment of
its interest in such Receivables and other Trust Assets to the Trust,
and to deliver a file stamped copy of each such financing statement or
other evidence of such filing to the Trust as soon as practicable on or
prior to the Initial Issuance Date, in the case of Receivables arising
in the Initial
14
Accounts, and (if any additional filing is so necessary) as soon as
practicable after the applicable Addition Date, in the case of
Receivables arising in Additional Accounts. The Owner Trustee shall be
under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with
such transfer and assignment.
(d) Each Transferor further agrees, at its own expense, on or
prior to (A) the Initial Issuance Date, in the case of the Initial
Accounts, (B) the applicable Addition Date, in the case of Additional
Accounts, and (C) the applicable Removal Date, in the case of Removed
Accounts, (i) to indicate in the appropriate computer files that
Receivables created (or reassigned, in the case of Removed Accounts) in
connection with the Accounts have been conveyed to the Trust pursuant
to this Agreement (or conveyed to the appropriate Transferor or its
designee in accordance with Section 2.10, in the case of Removed
Accounts) by including (or deleting in the case of Removed Accounts) in
such computer files the code that identifies each such Account and (ii)
on or prior to (A) the Initial Issuance Date, in the case of the
Initial Accounts, (B) the date that is five Business Days after the
applicable Addition Date, in the case of designation of Additional
Accounts, except Automatic Additional Accounts, (C) the Payment Date on
which the Opinion of Counsel is required to be delivered with respect
to the three consecutive Monthly Periods which includes the applicable
Additional Date, in the case of Automatic Additional Accounts, and (D)
the date that is five Business Days after the applicable Removal Date,
in the case of Removed Accounts (the "Required Delivery Date"), to
deliver to the Indenture Trustee a computer file or microfiche list
containing a true and complete list of all such Accounts specifying for
each such Account, as of the Initial Cut-Off Date, in the case of the
Initial Accounts, the applicable Additional Cut-Off Date in the case of
Additional Accounts, and the applicable Removal Date in the case of
Removed Accounts, (1) its account number, (2) the aggregate amount
outstanding in such Account, and (3) the aggregate amount of Principal
Receivables outstanding in such Account. Each such file or list, as
supplemented, from time to time, to reflect Additional Accounts and
Removed Accounts, shall be marked as Schedule 1 to this Agreement and
is hereby incorporated into and made a part of this Agreement. Each
Transferor further agrees not to alter the code referenced in this
paragraph with respect to any Account during the term of this Agreement
unless and until such Account becomes a Removed Account.
(e) [If the arrangements with respect to the Receivables
hereunder shall constitute a loan and not a purchase and sale of such
Receivables,] it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law,
and that each Transferor shall be deemed to have granted and does
hereby grant to the Trust a first priority perfected security interest
in all of such Transferor's right, title and interest, whether now
owned or hereafter acquired, in, to and under the Receivables and the
other Trust Assets conveyed by such Transferor and all money, accounts,
general intangibles, chattel paper, instruments, documents, goods,
investment property, deposit accounts, certificates of deposit, letters
of credit and advices of credit consisting of, arising from or related
to the Trust Assets, and all proceeds thereof, to secure its
obligations hereunder.
Section 2.02. Acceptance by Trust.
(a) The Trust hereby acknowledges its acceptance of all right,
title and interest to the property, now existing and hereafter created,
conveyed pursuant to Section 2.01. The Trust further acknowledges that,
prior to or simultaneously with the execution and delivery of this
Agreement, the Transferors delivered to the Owner Trustee the computer
file or microfiche list relating to the Initial Accounts described in
subsection 2.01(d). The Owner Trustee shall maintain a copy of Schedule
1, as delivered from time to time, at the Corporate Trust Office.
(b) The Trust hereby agrees not to disclose to any Person any
of the account numbers or other information contained in the computer
files or microfiche lists marked as Schedule 1 and delivered to the
Trust, from time to time, except (i) to a Successor Servicer or as
required by a
15
Requirement of Law applicable to the Trust, (ii) in connection with the
performance of the Trust's duties hereunder, (iii) to the Indenture
Trustee in connection with its duties in enforcing the rights of
Noteholders and Series Enhancers or (iv) to bona fide creditors or
potential creditors of any Account Owner or any Transferor for the
limited purpose of enabling any such creditor to identify Receivables
or Accounts subject to this Agreement or the Receivables Purchase
Agreements. The Trust agrees to take such measures as shall be
reasonably requested by any Transferor to protect and maintain the
security and confidentiality of such information and, in connection
therewith, shall allow each Transferor or its duly authorized
representatives to inspect the Owner Trustee's security and
confidentiality arrangements as they specifically relate to the
administration of the Trust from time to time during normal business
hours upon prior written notice. The Trust shall provide the applicable
Transferor with notice five Business Days prior to disclosure of any
information of the type described in this subsection 2.02(b).
(c) The Owner Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust other
than as contemplated in this Agreement, the Trust Agreement, the
Administration Agreement, the Indenture and the Indenture Supplements.
Section 2.03. Representations and Warranties of Each
Transferor Relating to Such Transferor. Each Transferor hereby severally
represents and warrants to the Trust (and agrees that the Owner Trustee and the
Indenture Trustee may conclusively rely on each such representation and warranty
in accepting the Receivables and the other Trust Assets and in accepting the
Trust Estate and authenticating the Notes, as the case may be), as of the
Initial Issuance Date and each subsequent Closing Date (but only if it was a
Transferor on such date) that:
(a) Organization and Good Standing. Such Transferor is a
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full
power and authority to own its properties and conduct its business as
presently owned or conducted, and to execute, deliver and perform its
obligations under this Agreement, any Receivables Purchase Agreement to
which it is a party and each applicable Participation Interest
Supplement.
(b) Due Qualification. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation and has
obtained all necessary licenses and approvals, in each jurisdiction in
which failure to so qualify or to obtain such licenses and approvals
would have an Adverse Effect.
(c) Due Authorization. The execution and delivery of this
Agreement, the Trust Agreement and, if it is a party to a Receivables
Purchase Agreement, such Receivables Purchase Agreement, and each
applicable Participation Interest Supplement by such Transferor and the
consummation by such Transferor of the transactions provided for in
this Agreement, the Trust Agreement if it is a party to a Receivables
Purchase Agreement, such Receivables Purchase Agreement and each
applicable Participation Interest Supplement have been duly authorized
by such Transferor by all necessary corporate action on the part of
such Transferor.
(d) No Conflict. The execution and delivery by such Transferor
of this Agreement, the Trust Agreement, each Receivables Purchase
Agreement, if applicable, and each applicable Participation Interest
Supplement, and the performance of the transactions contemplated by
this Agreement, the Trust Agreement, each Receivables Purchase
Agreement, if applicable, and each applicable Participation Interest
Supplement and the fulfillment of the terms hereof and thereof
applicable to such Transferor, will not conflict with or violate any
Requirements of Law applicable to such Transferor or conflict with,
result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture,
16
contract, agreement, mortgage, deed of trust or other instrument to
which such Transferor is a party or by which it or its properties are
bound.
(e) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of such Transferor,
threatened against such Transferor before any Governmental Authority
(i) asserting the invalidity of this Agreement, the Trust Agreement,
any Receivables Purchase Agreement or any applicable Participation
Interest Supplement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, the Trust Agreement,
any Receivables Purchase Agreement or any applicable Participation
Interest Supplement, (iii) seeking any determination or ruling that, in
the reasonable judgment of such Transferor, would materially and
adversely affect the performance by such Transferor of its obligations
under this Agreement, the Trust Agreement, any Receivables Purchase
Agreement or any applicable Participation Interest Supplement, (iv)
seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement, the Trust
Agreement, any Receivables Purchase Agreement or any applicable
Participation Interest Supplement or (v) seeking to affect adversely
the income or franchise tax attributes of the Trust under the United
States Federal or any State income or franchise tax systems.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by such Transferor
in connection with the execution and delivery by such Transferor of
this Agreement, the Trust Agreement, Receivables Purchase Agreement, if
applicable, and each applicable Participation Interest Supplement and
the performance of the transactions contemplated by this Agreement, the
Trust Agreement, the Receivables Purchase Agreement and each applicable
Participation Interest Supplement by such Transferor have been duly
obtained, effected or given and are in full force and effect.
Section 2.04. Representations and Warranties of each
Transferor Relating to the Agreement and Any Participation Interest Supplement
and the Receivables.
(a) Representations and Warranties. Each Transferor hereby
severally represents and warrants to the Trust as of the Initial
Issuance Date, each subsequent Closing Date and, with respect to
Additional Accounts, as of the related Addition Date (but only if, in
either case, it was a Transferor on such date and only with respect to
Accounts it has designated on such date and Receivables arising
therein) that:
(i) this Agreement, the Trust Agreement, any
Receivables Purchase Agreement to which it is a party, each
applicable Participation Interest Supplement and, in the case
of Additional Accounts, the related Assignment, each
constitutes a legal, valid and binding obligation of such
Transferor enforceable against such Transferor in accordance
with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or general principles of
equity;
(ii) as of the Initial Cut-Off Date with respect to
the Initial Accounts (and the Receivables thereunder) and as
of the related Additional Cut-Off Date with respect to
Additional Accounts (and the Receivables thereunder), the
portion of Schedule 1 to this Agreement under such
Transferor's name, as supplemented to such date, is, or will
be on the Required Delivery Date in the case of Additional
Accounts, an accurate and complete listing in all material
respects of all the Accounts the Receivables in which were
transferred by such Transferor on the Initial Issuance Date or
the Addition Date, as the case may be, and the information
contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is, or will
be on the Required Delivery Date in the case of Additional
Accounts, true and correct in all
17
material respects as of the Initial Cut-Off Date or such
Additional Cut-Off Date, as the case may be;
(iii) on the date each Receivable is conveyed to the
Trust by such Transferor, such Receivable has been conveyed to
the Trust free and clear of any Lien;
(iv) all authorizations, consents, orders or
approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected or
given by such Transferor in connection with the conveyance by
such Transferor of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
(v) either this Agreement or, in the case of
Additional Accounts, the related Assignment constitutes a
valid sale, transfer and assignment to the Trust of all right,
title and interest of such Transferor in the Receivables and
Participation Interests conveyed to the Trust by such
Transferor and the proceeds thereof and Recoveries identified
as relating to the Receivables conveyed to the Trust by such
Transferor which have become Defaulted Receivables or, if this
Agreement or, in the case of Additional Accounts, the related
Assignment does not constitute a sale of such property, it
constitutes a grant of a first priority perfected "security
interest" (as defined in the UCC) in such property to the
Trust, which, in the case of existing Receivables and
Participation Interests and the proceeds thereof and said
Recoveries, is enforceable upon execution and delivery of this
Agreement, or, with respect to then existing Receivables in
Additional Accounts, as of the applicable Addition Date, and
which will be enforceable with respect to such Receivables
hereafter and thereafter created and the proceeds thereof upon
such creation. Upon the filing of the financing statements
and, in the case of Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall
have a first priority perfected security or ownership interest
in such property and proceeds;
(vi) on the Initial Cut-Off Date, each Initial
Account specified in Schedule 1 with respect to such
Transferor is an Eligible Account and, on the applicable
Additional Cut-Off Date, each related Additional Account
specified in Schedule 1 with respect to such Transferor is an
Eligible Account;
(vii) on the Initial Cut-Off Date, each Receivable
then existing and conveyed to the Trust by such Transferor is
an Eligible Receivable, and, on the applicable Additional
Cut-Off Date, each Receivable contained in the related
Additional Accounts and conveyed to the Trust by such
Transferor is an Eligible Receivable;
(viii) as of the date of the creation of any new
Receivable transferred to the Trust by such Transferor, such
Receivable is an Eligible Receivable; and
(ix) no selection procedures believed by such
Transferor to be materially adverse to the interests of the
Noteholders have been used in selecting such Accounts.
(b) Notice of Breach. The representations and warranties set
forth in Section 2.03, this Section 2.04 and subsection 2.09(f) shall
survive the transfers and assignments of the Receivables to the Trust,
the pledge of the Receivables to the Indenture Trustee pursuant to the
Indenture, and the issuance of the Notes. Upon discovery by any
Transferor, the Servicer or the Owner Trustee of a breach of any of the
representations and warranties set forth in Section 2.03, this Section
2.04 or subsection 2.09(f), the party discovering such breach shall
give notice to the other parties and to the Indenture Trustee within
three Business Days following such discovery, provided that the failure
to give notice within three Business Days does not preclude subsequent
notice.
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Section 2.05. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any
representation or warranty contained in subsection 2.04(a)(ii), (iii),
(iv), (vi), (vii), (viii) or (ix) is not true and correct in any
material respect as of the date specified therein with respect to any
Receivable or the related Account and such breach has a material
adverse effect on any Receivable (which determination shall be made
without regard to whether funds are then available pursuant to any
Series Enhancement) unless cured within 60 days (or such longer period,
not in excess of 120 days, as may be agreed to by the Indenture Trustee
and the Servicer) after the earlier to occur of the discovery thereof
by the Transferor which conveyed such Receivables to the Trust or
receipt by the Transferor of written notice thereof given by the Owner
Trustee, the Indenture Trustee or the Servicer, or (ii) it is so
provided in subsection 2.07(a) with respect to any Receivables conveyed
to the Trust by such Transferor, then such Transferor shall accept
reassignment of all Receivables in the related Account ("Ineligible
Receivables") on the terms and conditions set forth in paragraph (b)
below.
(b) Price of Reassignment. The Servicer shall deduct the
portion of such Ineligible Receivables reassigned to each Transferor
which are Principal Receivables from the aggregate amount of the
Principal Receivables used to calculate the Transferor Amount. In the
event that, following the exclusion of such Principal Receivables from
the calculation of the Transferor Amount, the Transferor Amount would
be less than the Required Transferor Amount, not later than 1:00 P.M.,
New York City time, on the first Payment Date following the Monthly
Period in which such reassignment obligation arises, the applicable
Transferor shall make a deposit into the Special Funding Account in
immediately available funds in an amount equal to the amount by which
the Transferor Amount would be below the Required Transferor Amount (up
to the amount of such Principal Receivables).
Upon reassignment of any Ineligible Receivable, the Trust
shall automatically and without further action be deemed to transfer, assign,
set over and otherwise convey to the applicable Transferor or its designee,
without recourse, representation or warranty, all the right, title and interest
of the Trust in and to such Ineligible Receivable, all Recoveries related
thereto, all monies and amounts due or to become due and all proceeds thereof
and such reassigned Ineligible Receivable shall be treated by the Owner Trustee
and the Trust as collected in full as of the date on which it was transferred.
The obligation of each Transferor to accept reassignment of any Ineligible
Receivables conveyed to the Trust by such Transferor, and to make the deposits,
if any, required to be made to the Special Funding Account as provided in this
Section, shall constitute the sole remedy respecting the event giving rise to
such obligation available to the Trust, the Noteholders (or the Indenture
Trustee on behalf of the Noteholders) or any Series Enhancer. Notwithstanding
any other provision of this subsection 2.05(b), a reassignment of an Ineligible
Receivable in excess of the amount that would cause the Transferor Amount to be
less than the Required Transferor Amount shall not occur if the applicable
Transferor fails to make any deposit required by this subsection 2.05(b) with
respect to such Ineligible Receivable. The Trust shall execute such documents
and instruments of transfer or assignment and take such other actions as shall
reasonably be requested and provided by the applicable Transferor to effect the
conveyance of such Ineligible Receivables pursuant to this subsection 2.05(b),
but only upon receipt of an Officer's Certificate from such Transferor that
states that all conditions set forth in this Section 2.05 have been satisfied.
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Section 2.06. Reassignment of Trust Portfolio. In the event
any representation or warranty of a Transferor set forth in subsection 2.03(a)
or (c) or subsection 2.04(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on the Receivables or
Participation Interests conveyed to the Trust by such Transferor or the
availability of the proceeds thereof to the Trust (which determination shall be
made without regard to whether funds are then available pursuant to any Series
Enhancement), then either the Indenture Trustee or the Holders of Notes
evidencing not less than 50% of the aggregate unpaid principal amount of all
outstanding Notes, by notice then given to such Transferor and the Servicer (and
to the Indenture Trustee if given by the Noteholders), may direct such
Transferor to accept a reassignment of the Receivables and any Participation
Interests conveyed to the Trust by such Transferor if such breach and any
material adverse effect caused by such breach is not cured within 60 days of
such notice (or within such longer period, not in excess of 120 days, as may be
specified in such notice), and upon those conditions such Transferor shall be
obligated to accept such reassignment on the terms set forth below; provided,
however, that such Receivables and Participation Interests will not be
reassigned to such Transferor if, on any day prior to the end of such 60-day or
longer period (i) the relevant representation and warranty shall be true and
correct in all material respects as if made on such day and (ii) such Transferor
shall have delivered to the Owner Trustee and the Indenture Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which the relevant representation and warranty has become true and
correct.
The applicable Transferor shall deposit in the Collection
Account in immediately available funds not later than 1:00 P.M., New York City
time, on the first Payment Date following the Monthly Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Indenture Supplement. Notwithstanding anything
to the contrary in this Agreement, such amounts shall be distributed to the
Noteholders on such Payment Date in accordance with the terms of each Indenture
Supplement. If the Indenture Trustee or the Noteholders give notice directing
the applicable Transferor to accept a reassignment of the Receivables and
Participation Interests as provided above, the obligation of such Transferor to
accept such reassignment pursuant to this Section 2.06 and to make the deposit
required to be made to the Collection Account as provided in this paragraph
shall constitute the sole remedy respecting an event of the type specified in
the first sentence of this Section 2.06 available to the Noteholders (or the
Indenture Trustee on behalf of the Noteholders) or any Series Enhancer. Upon
reassignment of the Receivables and Participation Interests on such Payment
Date, the Trust shall automatically and without further action be deemed to
transfer, assign, set over and otherwise convey to the applicable Transferor,
without recourse, representation or warranty, all of the right, title and
interest of the Trust in and to the Receivables and Participation Interests, all
Recoveries allocable to the Trust, all monies and amounts due or to become due
with respect thereto and all proceeds thereof. The Trust shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the applicable Transferor to effect the
conveyance of such property pursuant to this subsection.
Section 2.07. Covenants of each Transferor. Each Transferor
hereby severally covenants with the Trust that:
(a) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of an Account,
such Transferor will take no action to cause any Receivable conveyed by
it to the Trust to be evidenced by any instrument (as defined in the
UCC) and if any such Receivable is so evidenced it shall be deemed to
be an Ineligible Receivable in accordance with Section 2.05(a) and
shall be reassigned to such Transferor in accordance with Section
2.05(b).
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(b) Security Interests. Except for the conveyances hereunder,
such Transferor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on,
any Receivable or Participation Interest conveyed by it to the Trust,
whether now existing or hereafter created, or any interest therein, and
such Transferor shall defend the right, title and interest of the Trust
and the Indenture Trustee in, to and under the Receivables and any
Participation Interest, whether now existing or hereafter created,
against all claims of third parties claiming through or under such
Transferor.
(c) Transferor Amount. Except for (i) the conveyances
hereunder, in connection with any transaction permitted by subsection
4.02(a)(i) and as provided in subsection 2.09(g) of this Agreement or
Section 2.12 of the Indenture or (ii) conveyances with respect to which
the Rating Agency Condition shall have been satisfied and a Tax Opinion
shall have been delivered, such Transferor agrees not to transfer,
sell, assign, exchange or otherwise convey or pledge, hypothecate or
otherwise grant a security interest in the Transferor Amount, the
Transferor Certificate or any Supplemental Certificate or in any
uncertificated interest in the Transferor's interest in the Trust and
any such attempted transfer, assignment, exchange, conveyance, pledge,
hypothecation, grant or sale shall be void.
(d) Delivery of Collections or Recoveries. In the event that
such Transferor receives Collections or Recoveries, such Transferor
agrees to pay the Servicer all such Collections and Recoveries as soon
as practicable after receipt thereof.
(e) Notice of Liens. Such Transferor shall notify the Owner
Trustee, the Indenture Trustee and each Series Enhancer promptly after
becoming aware of any Lien on any Receivable or Participation Interest
conveyed by it to the Trust other than the conveyances hereunder and
any Receivables Purchase Agreement to which it is a party and the
Indenture.
(f) Amendment of the Certificate of Incorporation. Such
Transferor will not amend in any material respect its certificate of
incorporation without providing the Rating Agency with notice no later
than the fifth Business Day prior to such amendment (unless the right
to such notice is waived by the Rating Agency) and satisfying the
Rating Agency Condition.
(g) Other Indebtedness. Such Transferor if it is an entity
subject to the Bankruptcy Code shall not incur any additional debt,
unless the Rating Agency is provided with notice no later than the
fifth Business Day prior to the incurrence of such additional debt
(unless the right to such notice is waived by the Rating Agency) and
the Rating Agency Condition is satisfied with respect to the incurrence
of such debt.
(h) Separate Corporate Existence. If the Transferor is an
entity which is eligible to be a debtor in a case under the Bankruptcy
Code, such Transferor shall:
(i) Maintain in full effect its existence, rights and
franchises as a corporation under the laws of the state of its
organization or incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Trust
Agreement and any Receivables Purchase Agreement to which it
is a party and each other instrument or agreement necessary or
appropriate to proper administration hereof and to permit and
effectuate the transactions contemplated hereby.
(ii) Except as provided herein, maintain its own
deposit account or accounts, separate from those of any
Affiliate of such Transferor, with commercial banking
institutions. The funds of such Transferor will not be
diverted to any other Person or used for other than the
corporate
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use of such Transferor, and, except as may be expressly
permitted by this Agreement or any Receivables Purchase
Agreement to which it is a party, the funds of such Transferor
shall not be commingled with those of any Affiliate of such
Transferor or any other Person.
(iii) Ensure that, to the extent that it shares the
same officers or other employees as any of its partners,
members, managers, stockholders or Affiliates, the salaries of
and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among
such entities, and each such entity shall bear its fair share
of the salary and benefit costs associated with all such
common officers and employees.
(iv) Ensure that, to the extent that it jointly
contracts with any of its partners, members, managers,
stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such
entities, and each such entity shall bear its fair share of
such costs. To the extent that such Transferor contracts or
does business with vendors or service providers where the
goods and services provided are partially for the benefit of
any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit
the goods and services are provided, and each such entity
shall bear its fair share of such costs. All material
transactions between such Transferor and any of its partners,
members, managers, stockholders or Affiliates shall be only on
an arm's-length basis and shall receive the approval of such
Transferor's board of directors, partners, members, managers
or other governing body including at least one Independent
Director (defined below).
(v) Maintain a principal executive and administrative
office through which its business is conducted and a telephone
number separate from those of its members, stockholders and
Affiliates. To the extent that such Transferor and any of its
members, stockholders or Affiliates have offices in contiguous
space, there shall be fair and appropriate allocation of
overhead costs (including rent) among them, and each such
entity shall bear its fair share of such expenses.
(vi) Conduct its affairs strictly in accordance with
its articles of incorporation or other certificate of
formation, as the case may be, and observe all necessary,
appropriate and customary corporate formalities (or such
formalities appropriate to the entity), including, but not
limited to, holding all regular and special stockholders' and
directors' or partners', members' or managers', as the case
may be, meetings appropriate to authorize all corporate or
entity action, keeping separate and accurate minutes of such
meetings, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including,
but not limited to, payroll and intercompany transaction
accounts. Regular stockholders' or other owners' and
directors', partners', members' or managers', as the case may
be, meetings shall be held at least annually.
(vii) Ensure that its board of directors or other
governing body shall at all times include at least one
Independent Director; and ensure that the articles of
incorporation or other organizational documents provide that
(x) the Transferor's board of directors shall not approve, or
take any other action to cause the filing of a voluntary
bankruptcy petition with respect to the Transferor unless the
Independent Director shall vote affirmatively to approve such
action, and (y) such provision cannot be amended without the
prior vote of the Independent Director in favor of such
amendment.
(viii) The Independent Director shall not at any time
serve as a trustee in bankruptcy for the Transferor or any
Affiliate thereof.
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(ix) Ensure that decisions with respect to its
business and daily operations shall be independently made by
such Transferor (although the officer making any particular
decision may also be an officer, partner, member, manager or
director of an Affiliate of such Transferor) and shall not be
dictated by an Affiliate of such Transferor.
(x) Act solely in its own corporate or entity name
and through its own authorized officers, partners, members,
managers and agents, and no Affiliate of such Transferor shall
be appointed to act as agent of such Transferor. Such
Transferor shall at all times use its own stationery and
business forms and describe itself as a separate legal entity.
(xi) Ensure that no Affiliate of such Transferor
shall advance funds to such Transferor, and no Affiliate of
such Transferor will otherwise guaranty debts of such
Transferor.
(xii) Other than organizational expenses and as
expressly provided herein, pay all expenses, indebtedness and
other obligations incurred by it with its own funds.
(xiii) Except as contemplated by the Transaction
Documents, not enter into any guaranty, or otherwise become
liable, with respect to or hold its assets or creditworthiness
out as being available for the payment of any obligation of
any Affiliate of such Transferor or of any other Person nor
shall such Transferor make any loans to, or incur any
indebtedness in respect of, any Person.
(xiv) Ensure that any financial reports required of
such Transferor shall comply with generally accepted
accounting principles and shall be issued separately from, but
may be consolidated with, any reports prepared for any of its
Affiliates; provided, that any such consolidated reports shall
indicate that the assets of the Transferor are not available
to the creditors of any Affiliate of the Transferor.
(xv) Ensure that at all times it is adequately
capitalized to engage in the transactions contemplated in its
articles of incorporation or other organizational documents.
(i) Independent Director. Each Transferor which is an entity
subject to the Bankruptcy Code agrees that each Independent Director
will be an individual who satisfies the following criteria: (i) is not
and has not been employed by Conseco Finance, or any of its Affiliates,
as a director, officer or employee within the five years immediately
prior to such individual's appointment as an Independent Director
(provided that such individual may also serve as a director of other
bankruptcy remote subsidiaries of Conseco Finance); (ii) is not (and is
not affiliated with a company or a firm that is) a significant advisor
or consultant to Conseco Finance or any of its Affiliates; (iii) is not
affiliated with a significant customer or supplier of Conseco Finance
or any of its Affiliates; (iv) is not affiliated with a company of
which Conseco Finance or any of its Affiliates is a significant
customer or supplier; (v) does not have significant personal services
contract(s) with Conseco Finance or any of its Affiliates; (vi) is not
affiliated with a tax-exempt entity that receives significant
contributions from Conseco Finance or any of its Affiliates; (vii) is
not the beneficial owner at the time of such individual's appointment
as an Independent Director, or at any time thereafter while serving as
an Independent Director, of such number of shares of any classes of
common stock of Conseco Finance the value of which constitutes more
than 0.1% of the outstanding common stock of Conseco Finance; and
(viii) is not a spouse, parent, sibling or child of any person
described by (i) through (vii). Various terms used in this subsection
2.07(i) have the following meanings:
23
(i) A person shall be deemed to be affiliated with a
company or firm that is a "significant advisor or consultant
to Conseco Finance or its Affiliates" if he, or she, or it, as
the case may be, received or would receive fees or similar
compensation from Conseco Finance or any of its Affiliates in
excess of the lesser of (A) 3% of the consolidated gross
revenues which Conseco Finance and its Affiliates received for
the sale of their products and services during the last fiscal
year of Conseco Finance; (B) 5% of the gross revenues of the
person during the last calendar year if such person is a
self-employed individual; and (C) 5% of the consolidated gross
revenues received by such company or firm for the sale of its
products and services during its last fiscal year, if the
person is a company or a firm; provided, however, that
director's fees and expense reimbursements shall not be
included in the gross revenues of an individual for purposes
of this determination.
(ii) A "significant customer of Conseco Finance or
any of its Affiliates" means a customer from which Conseco
Finance and any of its Affiliates collectively in the last
fiscal year of Conseco Finance received payments in
consideration for the products and services of Conseco Finance
and its Affiliates in excess of 3% of the consolidated gross
revenues of Conseco Finance and its subsidiaries during such
fiscal year.
(iii) A "significant supplier of Conseco Finance and
its Affiliates" means a supplier to which Conseco Finance and
any of its Affiliates collectively in the last fiscal year of
Conseco Finance made payments in consideration for the
supplier's products and services in excess of 3% of the
consolidated gross revenue of Conseco Finance and its
subsidiaries during such fiscal year.
(iv) Conseco Finance and any of its Affiliates shall
be deemed a "significant customer" of a company if Conseco
Finance and any of its Affiliates collectively were the direct
source during such company's last fiscal year of in excess of
5% of the gross revenues which such company received for the
sale of its products and services during such fiscal year.
(v) Conseco Finance and any of its Affiliates shall
be deemed a "significant supplier" of a company if Conseco
Finance and any of its Affiliates collectively received in
such company's last fiscal year payments from such company in
excess of 5% of the gross revenues which such company received
during such fiscal year for the sale of its products and
services.
(vi) A person shall be deemed to have "significant
personal services contract(s) with Conseco Finance or any its
Affiliates" if the fees and other compensation received by the
person pursuant to personal services contract(s) with Conseco
Finance and any of its Affiliates exceeded or would exceed 5%
of his or her gross revenues during the last calendar year.
(vii) A tax-exempt entity shall be deemed to receive
"significant contributions from Conseco Finance or any its
Affiliates" if such tax-exempt entity received during such
tax-exempt entity's last fiscal year contributions from
Conseco Finance or its Affiliates in excess of the lesser of
(A) 3% of the consolidated gross revenues of Conseco Finance
and its subsidiaries during such fiscal year and (B) 5% of the
contributions received by the tax-exempt entity during such
fiscal year.
Section 2.08. Covenants of each Transferor with Respect to
Receivables Purchase Agreement. Each Transferor which is a transferee of
Receivables under a Receivables Purchase Agreement, in such capacity hereby
covenants that such Transferor will at all times enforce the covenants and
agreements of the transferring party under such Receivables Purchase Agreement,
including covenants substantially to the effect set forth below:
24
(a) Periodic Rate Finance Charges. (i) Except (A) as otherwise
required by any Requirements of Law or (B) as is deemed by the
applicable Account Owner to be necessary in order for it to maintain
its credit card business or a program operated by such credit card
business on a competitive basis based on a good faith assessment by it
of the nature of the competition with respect to the credit business or
such program, it shall not at any time take any action which would have
the effect of reducing the Series Portfolio Yield to a level that could
be reasonably expected to result in an Adverse Effect with respect to
any Series based on the insufficiency of the Series Portfolio Yield or
any similar test.
(b) Credit Card Agreements and Guidelines. Subject to
compliance with all Requirements of Law and paragraph (a) above, the
Account Owner may change the terms and provisions of the applicable
Credit Card Agreements or the applicable Credit Card Guidelines in any
respect (including the calculation of the amount or the timing of
charge-offs and the finance charges to be assessed thereon).
Notwithstanding the above, unless required by Requirements of Law or as
permitted by paragraph (a) above, no Account Owner will take any action
unless (i) at the time of such action the Account Owner reasonably
believes that such action will not cause an Amortization Event,
Reinvestment Event or Event of Default to occur, and (ii) such change
is made applicable to the comparable segment of the credit card
accounts owned by such Account Owner which have characteristics the
same as, or substantially similar to, the Accounts that are the subject
of such change, except as otherwise restricted by an endorsement,
sponsorship, or other agreement between the Account Owner and an
unrelated third party or by the terms of the Credit Card Agreements.
Section 2.09. Addition of Accounts.
(a) Required Account Additions.
(i) Required Additional Accounts. If, on any
Determination Date, as of the close of business on the last
Business Day of the preceding Monthly Period, either (x) the
Transferors' Interest is less than the required Transferor
Interest or (y) the aggregate amount of the Principal
Receivables is less than the Required Minimum Principal
Balance (as adjusted for any Series having a Paired Series as
described in the Indenture Supplement for such Series) on such
date, the Transferors shall on or prior to the close of
business on the 10th Business Day following such Determination
Date (the "Required Designation Date"), unless the aggregate
amount of the Principal Receivables exceeds the Required
Minimum Principal Balance as of the close of business on any
day after the last Business Day of such calendar month and
prior to the Required Designation Date, effect the addition of
Eligible Accounts to be included as Accounts as of the
Required Designation Date or any earlier date in a sufficient
amount (or such lesser amount as shall represent all Eligible
Accounts constituting credit accounts then owned by one or
more Transferors or available to one or more Transferors under
a Receivables Purchase Agreement) such that, after giving
effect to such addition and the addition by each other
Transferor, the aggregate amount of the Principal Receivables
is at least equal to the Required Minimum Principal Balance on
such date.
(ii) Optional Participation Interests. In lieu of, or
in addition to, causing the designation of Additional Accounts
pursuant to clause (i) above, the Transferors may (but shall
not be required), subject to satisfaction of the conditions
specified in paragraph (c) below, convey to the Trust
participations (including 100% participations) representing
undivided interests in a pool of assets primarily consisting
of credit card receivables and any interests in any of the
foregoing, including securities representing or backed by such
receivables and collections, together with all earnings,
revenue, dividends, distributions, income, issues and profits
thereon ("Participation Interests"). The addition of
Participation Interests to the Trust pursuant to this
25
paragraph (a) or paragraph (b) below shall be effected by a
Participation Interest Supplement, dated the applicable
Addition Date and entered into pursuant to subsection 9.01(a).
(iii) Any Additional Accounts or Participation
Interests designated to be included as Trust Assets pursuant
to clauses (i) or (ii) above may only be so included if the
applicable conditions specified in paragraph (c) below have
been satisfied.
(b) Permitted Additions. Each Transferor may from time to
time, in its sole discretion, subject to the conditions specified in
paragraph (c) below, voluntarily cause the designation of additional
Eligible Accounts to be included as Accounts or Participation Interests
to be included as Trust Assets, in either case as of the applicable
Addition Date.
(c) Conditions to Additions. On the Addition Date with respect
to any Additional Accounts, except Automatic Additional Accounts
described in paragraph (d) below, the Trust shall acquire the
Receivables in such Additional Accounts (and such Additional Accounts
shall be deemed to be Accounts for purposes of this Agreement) or shall
acquire such Participation Interests existing as of the close of
business on the applicable Additional Cut-Off Date, subject to the
satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately
preceding the Addition Date, the applicable Transferor or
Transferors shall have given the Indenture Trustee, the
Servicer and each Rating Agency notice (unless such notice
requirement is otherwise waived) (and such notice provided to
the Rating Agencies shall include such portfolio information
as the Rating Agencies may reasonably request) that the
Additional Accounts or Participation Interests will be
included and specifying the applicable Addition Date and
Additional Cut-Off Date;
(ii) as of the applicable Additional Cut-Off Date,
such Additional Accounts shall be Eligible Accounts;
(iii) on or before the Required Delivery Date, the
applicable Transferor or Transferors shall have delivered to
the Indenture Trustee copies of UCC-1 financing statements
covering such Additional Accounts or Participation Interests,
if necessary to perfect the Trust's interest in the
Receivables arising therein and a schedule of such Additional
Accounts;
(iv) to the extent required by Section 8.04 of the
Indenture, such Transferor or Transferors shall have deposited
in the Collection Account all Collections with respect to such
Additional Accounts or Participation Interests since the
Additional Cut-Off Date;
(v) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to any Account
Owner of any of the Additional Accounts, or such Transferor
shall have occurred nor shall the transfer to the Trust of the
Receivables arising in the Additional Accounts or of the
Participation Interests have been made in contemplation of the
occurrence thereof;
(vi) solely with respect to Additional Accounts
designated pursuant to subsection 2.09(b) and Participation
Interests added under subsection 2.09(a) or subsection
2.09(b), the Rating Agency Condition shall have been
satisfied;
(vii) each Transferor transferring Receivables in the
Additional Accounts on such Addition Date shall have delivered
to the Indenture Trustee an Officer's Certificate, dated
26
the Addition Date, confirming, to the extent applicable, the
items set forth in clauses (ii) through (vi) above;
(viii) the addition to the Trust of the Receivables
arising in the Additional Accounts or of the Participation
Interests will not result in an Adverse Effect and, in the
case of Additions, each Transferor transferring Receivables in
the Additional Accounts on such Addition Date shall have
delivered to the Indenture Trustee an Officer's Certificate,
dated the Addition Date, stating that such Transferor
reasonably believes that the addition to the Trust will not
have an Adverse Effect;
(ix) solely with respect to Additional Accounts
designated pursuant to subsection 2.09(b) and Participation
Interests added under subsection 2.09(a) or subsection
2.09(b), the Transferors shall have delivered to the Indenture
Trustee and each Rating Agency an Opinion of Counsel, dated
the Addition Date, in accordance with subsection 9.02(d)(ii)
or (iv), as applicable; and
(x) solely with respect to the addition of accounts
that are Special Payment Accounts, immediately following the
addition of the Additional Accounts, the aggregate amount of
Principal Receivables existing in Special Payment Accounts
which have been designated to the Trust shall not exceed 30%
of the total amount of Principal Receivables then in the
Trust.
(d) Automatic Account Additions. (i) Each Transferor may from
time to time, at its sole discretion, subject to the conditions
specified in paragraph (e) below, voluntarily designate additional
Eligible Accounts to be included as Automatic Additional Accounts. For
purposes of this paragraph, Eligible Accounts shall be deemed to
include only credit card accounts originated under the same Merchant
Agreement or Conseco Developed Program as Accounts which were included
as Initial Accounts or were previously added as Additional Accounts
after satisfying the Rating Agency Condition.
(ii) The number of Automatic Additional Accounts
designated with respect to any of the three consecutive
Monthly Periods commencing in January, April, July and October
of each calendar year shall not exceed 15% of the number of
Accounts as of the first day of the calendar year during which
such Monthly Periods commence (or the Initial Cut-Off Date, in
the case of 2001) and the number of Automatic Additional
Accounts designated during any such calendar year shall not
exceed 20% of the number of Accounts as of the first day of
such calendar year (or the Initial Cut-Off Date, in the case
of 2001); provided, however, Automatic Additional Accounts may
be designated in excess of such 15% and 20% limitations if the
Rating Agency Condition is satisfied with respect to such
designation.
(e) Conditions to Addition of Automatic Additional Accounts.
The Transferors shall give the Rating Agencies prior notice of any
Addition of Automatic Additional Accounts, and on the Addition Date
with respect to any Automatic Additional Accounts, the Trust shall
acquire the Receivables in such Automatic Additional Accounts (and such
Automatic Additional Accounts shall be deemed to be Accounts for
purposes of this Agreement) as of the close of business on the
applicable Addition Date, subject to the satisfaction of the following
conditions:
(i) the Additional Accounts shall all be Eligible
Accounts;
(ii) on or before the Required Delivery Date, the
applicable Transferor shall have delivered to the Indenture
Trustee copies of UCC-1 financing statements covering such
Additional Accounts, if necessary to perfect the Trust's
interest and the Indenture Trustee's interest in the
Receivables arising therein and a schedule of such Additional
Accounts;
27
(iii) to the extent required by Section 8.04 of the
Indenture, the applicable Transferor shall have deposited in
the Collection Account all Collections with respect to such
Additional Accounts since the Additional Cut-Off Date;
(iv) as of each of the Additional Cut-Off Date and
the Addition Date, no Insolvency Event with respect to any
Account Owner of any of the Additional Accounts or any
Merchant under any Merchant Agreement related to any of the
Additional Accounts or such Transferor shall have occurred nor
shall the transfer to the Trust of the Receivables arising in
the Additional Accounts have been made in contemplation of the
occurrence thereof;
(v) such Transferor shall have delivered to the
Indenture Trustee an Officer's Certificate, dated the Addition
Date, confirming, to the extent applicable, the items set
forth in clauses (ii) through (iv) above;
(vi) the addition of the Receivables arising in the
Additional Accounts to the Trust will not result in an Adverse
Effect and each Transferor transferring Receivables in the
Additional Accounts on such Addition Date shall have delivered
to the Indenture Trustee an Officer's Certificate, dated the
Addition Date, stating that such Transferor reasonably
believes that the addition to the Trust will not have an
Adverse Effect;
(vii) with respect to each Payment Date following a
Monthly Period ending in March, June, September, and December,
the applicable Transferor shall deliver to the Indenture
Trustee and each Rating Agency, an Opinion of Counsel
substantially in the form of Exhibit D-2 with respect to the
Additional Accounts, if any, included as Accounts during the
three consecutive Monthly Periods ending prior to such Payment
Date. The opinion delivery requirement set forth in the
immediately preceding sentence may be modified provided that
the Rating Agency Condition is satisfied;
(viii) No accounts may be added to the Trust under
the Automatic Additional Account provisions unless such
accounts were originated under an Approved Program. For
purposes of this subsection, an Approved Program is a private
label credit card program under a Merchant Agreement or a
Conseco Developed Program and, with respect to such program,
accounts originated under such program were either included in
the Initial Accounts or accounts under such program have prior
to the Automatic Account Addition been added as Additional
Accounts under subsection 2.09(c) and subsection 2.09(d); and
(ix) solely with respect to the addition of accounts
that are Special Payment Accounts, immediately following the
addition of the Additional Accounts, the aggregate amount of
Principal Receivables existing in Special Payment Accounts
which have been designated to the Trust shall not exceed 30%
of the total amount of Principal Receivables then in the
Trust.
(f) Representations and Warranties. Each Transferor conveying
Additional Accounts or Participation Interests hereby represents and
warrants to the Owner Trustee and the Trust as of the related Addition
Date as to the matters set forth in clauses (v) and (viii) of
subsection 2.09(c) above or, if applicable, clauses (iv) and (vi) of
subsection 2.09(e) above and that, in the case of Additional Accounts,
the list delivered pursuant to subsection 2.09(h) is, as of the
applicable Additional Cut-Off Date, true and complete in all material
respects.
(g) Additional Transferors. Conseco Bank may designate another
entity or entities to be included as Transferors ("Additional
Transferors") under this Agreement in an amendment hereto pursuant to
subsection 9.01(a) and, in connection with such designation, the
Transferors shall (i) if the
28
Transferors' Interest is then in certificated form, surrender the
Transferor Certificates to the Owner Trustee in exchange for a newly
issued Transferor Certificate modified to reflect such Additional
Transferor's interest or (ii) if the Transferor's Interest is
uncertificated, direct the Owner Trustee to make the appropriate
entries in its books and records to reflect such Additional
Transferor's interest in the Transferor Interest.
(h) Delivery of Documents. In the case of the designation of
Additional Accounts, the Transferor designating such Accounts shall
deliver to the Indenture Trustee (i) the computer file or microfiche
list required to be delivered pursuant to Section 2.01 with respect to
such Additional Accounts on the date such file or list is required to
be delivered pursuant to Section 2.01 (the "Document Delivery Date")
and (ii) a duly executed, written Assignment (including an acceptance
by the Trust), substantially in the form of Exhibit A (the
"Assignment"), on the Document Delivery Date.
Section 2.10. Removal of Accounts and Participation Interests.
(a) On any day of any Monthly Period each Transferor shall have the right to
require the reassignment to it or its designee of all the Trust's right, title
and interest in, to and under the Receivables then existing and thereafter
created, all Recoveries related thereto received after the Removal Date, all
monies due or to become due and all amounts received or receivable with respect
thereto and all proceeds thereof in or with respect to such Accounts (the
"Removed Accounts") or Participation Interests conveyed to the Trust by such
Transferor (the "Removed Participation Interests") (unless otherwise set forth
in the applicable Participation Interest Supplement or Indenture Supplement) and
designated for removal by the Transferor, upon satisfaction of the conditions in
clauses (i) through (v) below; provided, however, that the conditions listed in
clauses (iv) and (v) below need not be satisfied if the Removed Accounts (x) are
Zero Balance Accounts or (y) relate to a terminated Merchant Agreement and the
related Merchant has elected to purchase the Receivables in such Removed
Accounts:
(i) on or before the fifth Business Day immediately
preceding the Removal Date, such Transferor shall have given
written notice to the Indenture Trustee, the Servicer, the
Rating Agency and each Series Enhancer (unless such notice
requirement is otherwise waived) of such removal and
specifying the date for removal of the Removed Accounts and
removed Participation Interests (the "Removal Date");
(ii) on or prior to the date that is five Business
Days on or before the Removal Date, such Transferor shall
amend Schedule 1 by delivering to the Indenture Trustee a
computer file or microfiche list containing a true and
complete list of the Removed Accounts specifying for each such
Account, as of the date notice of the Removal Date is given,
its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables
outstanding in such Account;
(iii) such Transferor shall have represented and
warranted as of the Removal Date that the list of Removed
Accounts delivered pursuant to paragraph (ii) above, as of the
Removal Date, is true and complete in all material respects;
(iv) the Rating Agency Condition shall have been
satisfied with respect to the removal of the Removed Accounts
and removed Participation Interests; and
(v) such Transferor shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate,
dated the Removal Date, to the effect that such Transferor
reasonably believes that (A) such removal will not have an
Adverse Effect and (B) no selection procedures believed by
such Transferor to be materially adverse to the interests of
the Noteholders have been used in selecting the Removed
Accounts.
29
Upon satisfaction of the above conditions, the Trust shall
execute and deliver to such Transferor a written reassignment in substantially
the form of Exhibit B (the "Reassignment") and shall, without further action, be
deemed to transfer, assign, set over and otherwise convey to such Transferor or
its designee, effective as of the Removal Date, without recourse, representation
or warranty, all the right, title and interest of the Trust in and to the
Receivables arising in the Removed Accounts and Removed Participation Interests,
all Recoveries related thereto, all monies due and to become due and all amounts
received or receivable with respect thereto after the Removal Date and all
proceeds thereof and any Insurance Proceeds relating thereto. The Owner Trustee
may conclusively rely on the Officer's Certificate delivered pursuant to this
Section 2.10 and shall have no duty to make inquiries with regard to the matters
set forth therein and shall incur no liability in so relying.
In addition to the foregoing, on the date when any Receivable
in an Account becomes a Defaulted Receivable, the Trust shall automatically and
without further action or consideration be deemed to transfer, set over and
otherwise convey to the Transferor with respect to such Account, without
recourse, representation or warranty, all right, title and interest of the Trust
in and to the Defaulted Receivables in such Account, all monies and amounts due
or to become due with respect thereto, all proceeds thereof and any Insurance
Proceeds relating thereto; provided, that Recoveries of such Account shall be
applied as provided herein.
(b) Anything to the contrary herein notwithstanding,
the Transferor shall be entitled to purchase all Receivables
in Accounts designated for purchase or re-purchase by a
Merchant pursuant to the termination of a Merchant Agreement
to which such Merchant is a party. Any repurchase of
Receivables pursuant to this subsection 2.10(b) shall be
effected [in the manner, and at a price determined in
accordance with subsection 2.05(b) as if the Receivables being
repurchased were Ineligible Receivables]; provided, however,
that the purchase price paid by the Merchant for the
Receivables shall be treated as Collections of Principal
Receivables and Finance Charge Receivables and be applied as
follows:
If, following the removal of the Receivables
from the Trust as a result of a repurchase by a
Merchant and the exclusion of the Principal
Receivables purchased from the calculation of the
Transferor Amount, the Transferor Amount will be less
than the Required Transferor Amount, then the
proceeds of the sale of the Receivables shall be
deposited into the Special Funding Account in an
amount equal to the amount by which the Transferor
Amount would be below the Required Transferor Amount
(up to the amount of the sale proceeds).
If, following the removal, the Transferor
Amount will not be less than the Required Transferor
Amount, then the proceeds of the sale of the
Receivables shall be deposited into the Collection
Account and treated as Principal Receivables and
Finance Charge Receivables as determined by the
Servicer. The Finance Charge Receivables and
Principal Receivables shall be treated as amounts
collected in the Monthly Period in which the amounts
are received by the Transferor. Amounts deposited in
the Collection Account in connection therewith shall
be applied in accordance with Article VIII of the
Indenture and the terms of each Indenture Supplement.
Section 2.11. Account Allocations. In the event that any
Transferor is unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement, including by reason of the
application of the provisions of Section 6.01 or any order of any Governmental
Authority (a "Transfer Restriction Event"), then, (a) such Transferor and the
Servicer agree (except as prohibited by any such order) to allocate and pay to
the Trust, after the date of such inability, all Collections, including
Collections of Receivables transferred to the Trust prior to the occurrence of
such event, and all amounts which would have constituted Collections but for
such Transferor's inability to transfer
30
Receivables (up to an aggregate amount equal to the amount of Receivables
transferred to the Trust by such Transferor in the Trust on such date), (b) such
Transferor and the Servicer agree that such amounts will be applied as
Collections in accordance with Article VIII of the Indenture and the terms of
each Indenture Supplement and (c) for so long as the allocation and application
of all Collections and all amounts that would have constituted Collections are
made in accordance with clauses (a) and (b) above, Principal Receivables and all
amounts which would have constituted Principal Receivables but for such
Transferor's inability to transfer Receivables to the Trust which are charged
off as uncollectible in accordance with this Agreement shall continue to be
allocated in accordance with Article VIII of the Indenture and the terms of each
Indenture Supplement. For the purpose of the immediately preceding sentence,
such Transferor and the Servicer shall treat the first received Collections with
respect to the Accounts as allocable to the Trust until the Trust shall have
been allocated and paid Collections in an amount equal to the aggregate amount
of Principal Receivables in the Trust as of the date of the occurrence of such
event. If such Transferor and the Servicer are unable pursuant to any
Requirements of Law to allocate Collections as described above, such Transferor
and the Servicer agree that, after the occurrence of such event, payments on
each Account with respect to the principal balance of such Account shall be
allocated first to the oldest principal balance of such Account and shall have
such payments applied as Collections in accordance with Article VIII of the
Indenture and the terms of each Indenture Supplement. The parties hereto agree
that Finance Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Trust shall continue to be
a part of the Trust notwithstanding any cessation of the transfer of additional
Principal Receivables to the Trust and Collections with respect thereto shall
continue to be allocated and paid in accordance with Article VIII of the
Indenture and the terms of each Indenture Supplement.
Section 2.12. Discount Option.
(a) The Transferors shall have the option to designate at any
time and from time to time a percentage or percentages, which may be a
fixed percentage or a variable percentage based on a formula (the
"Discount Percentage"), of all or any specified portion of Principal
Receivables existing on and after a Discount Option Date to be treated
as Finance Charge Receivables ("Discount Option Receivables").
(b) As of the Initial Issuance Date, the Transferors hereby
exercise such option and designate a Discount Percentage of ___% to be
effective as of the Initial Issuance Date and to be applied to all
Principal Receivables.
(c) The Transferors have the option of increasing, reducing or
withdrawing the Discount Percentage, at any time and from time to time
and if the Discount Percentage has been withdrawn to again designate a
Discount Percentage.
(d) Except with respect to the designation of the Discount
Percentage on the Initial Issuance Date, the Transferors shall provide
to the Servicer, the Indenture Trustee and each Rating Agency 30 days'
prior written notice of a Discount Option Date and such designation
shall become effective on a Discount Option Date only if, (i) the
Transferors deliver an Officer's Certificate to the effect that such
designation in the reasonable belief of the Transferors, would not
cause an Adverse Effect and (ii) the Rating Agency Condition shall have
been satisfied with respect to such designation.
(e) Discount Option Receivable Collections shall be treated as
Collections of Finance Charge Receivables.
[END OF ARTICLE II]
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ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer.
(a) Conseco Bank agrees to act as the Servicer under this
Agreement and the Noteholders by their acceptance of Notes consent to
Conseco Bank acting as Servicer.
(b) The Servicer shall service and administer the Receivables
and any Participation Interests, shall collect and deposit into the
Collection Account amounts received under the Receivables and any
Participation Interests and shall charge-off as uncollectible
Receivables, all in accordance with its customary and usual servicing
procedures for servicing credit card receivables comparable to the
Receivables and in accordance with the Credit Card Guidelines. As agent
for each Transferor and the Trust, the Servicer shall have full power
and authority, acting alone or through any party properly designated by
it hereunder, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing and subject to Section
7.01, the Servicer or its designee is hereby authorized and empowered,
unless such power is revoked by the Indenture Trustee on account of the
occurrence of a Servicer Default pursuant to Section 7.01, (i) to
instruct the Trust or the Indenture Trustee to make withdrawals and
payments from the Collection Account, the Special Funding Account and
any Series Account, as set forth in this Agreement, the Indenture or
any Indenture Supplement, (ii) to take any action required or permitted
under any Series Enhancement, as set forth in this Agreement, the
Indenture or any Indenture Supplement, (iii) to execute and deliver, on
behalf of the Trust, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivables and (iv) to make any
filings, reports, notices, applications and registrations with, and to
seek any consents or authorizations from, the Commission and any state
securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or state securities or reporting
requirements or other laws or regulations. Each of the Trust and the
Indenture Trustee shall furnish the Servicer with any documents in such
Person's possession reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties
hereunder.
(c) The Servicer shall not, and no Successor Servicer shall,
be obligated to use separate servicing procedures, offices, employees
or accounts for servicing the Receivables from the procedures, offices,
employees and accounts used by the Servicer or such Successor Servicer,
as the case may be, in connection with servicing other credit card
receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance
with the Credit Card Agreements relating to the Accounts and the Credit
Card Guidelines, except insofar as any failure to so comply or perform
would not have an Adverse Effect.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and
the servicing activities hereunder including expenses related to
enforcement of the Receivables, fees and disbursements of the Owner
Trustee and the Indenture Trustee (including the reasonable fees and
expenses of its outside counsel) and independent accountants and all
other fees and expenses, including the costs of filing UCC continuation
statements, and the costs and expenses relating to obtaining and
maintaining the listing of any Notes on any stock exchange. The
32
Transferors shall pay out of their own funds, without reimbursement,
the costs and expenses relating to any stamp, documentary, excise,
property (whether on real, personal or intangible property) or any
similar tax levied on the Trust or the Trust's assets that are not
expressly stated in this Agreement to be payable by the Trust or the
Transferors (other than federal, state, local and foreign income and
franchise taxes, if any, or any interest or penalties with respect
thereto, assessed on the Trust).
Section 3.02. Servicing Compensation. As full compensation for
its servicing activities hereunder and as reimbursement for any expense incurred
by it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") with respect to each Monthly Period, payable
monthly on the related Payment Date, in an amount equal to one-twelfth of the
product of (a) the weighted average of the Servicing Fee Rates with respect to
each outstanding Series (based upon the Servicing Fee Rate for each Series and
the Invested Amount (or such other amount as specified in the related Indenture
Supplement) of such Series, in each case as of the last day of the prior Monthly
Period prior to the termination of the Trust pursuant to 8.01 of the Trust
Agreement. The share of the Servicing Fee allocable to a particular Series with
respect to any Monthly Period (the "Monthly Servicing Fee") will each be
determined in accordance with the relevant Indenture Supplement. The portion of
the Servicing Fee with respect to any Monthly Period not so allocated to any
particular Series shall be paid by the Holders of the Transferors' Interest on
the related Payment Date and in no event shall the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders of any Series or any Series Enhancer be
liable for the share of the Servicing Fee with respect to any Monthly Period to
be paid by the Holders of the Transferors' Interest.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Conseco Bank, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, with respect to itself, on
each Closing Date (and on the date of any such appointment), the following
representations, warranties and covenants on which the Owner Trustee and the
Indenture Trustee shall be deemed to have relied in accepting the Receivables in
trust and in entering into the Indenture:
(a) Organization and Good Standing. The Servicer is a
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full
power and authority to own its properties and conduct its credit
servicing business as presently owned or conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation or other
foreign entity (or is exempt from such requirements) and has obtained
all necessary licenses and approvals in each jurisdiction in which the
servicing of the Receivables (including the underlying receivables) and
any Participation Interests as required by this Agreement requires such
qualification except where the failure to so qualify or obtain licenses
or approvals would not have a material adverse effect on its ability to
perform its obligations as Servicer under this Agreement.
(c) Due Authorization. The execution, delivery, and
performance of this Agreement and the other agreements and instruments
executed or to be executed by the Servicer as contemplated hereby, have
been duly authorized by the Servicer by all necessary action on the
part of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
33
or other similar laws affecting creditors' rights generally from time
to time in effect or by general principles of equity.
(e) No Conflict. The execution and delivery of this Agreement
by the Servicer, and the performance of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof and thereof
applicable to the Servicer, will not conflict with, violate or result
in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which
it or its properties are bound.
(f) No Violation. The execution and delivery of this Agreement
by the Servicer, the performance of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof and thereof
applicable to the Servicer will not conflict with or violate any
Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against
the Servicer before any Governmental Authority seeking to prevent the
consummation of any of the transactions contemplated by this Agreement
or seeking any determination or ruling that, in the reasonable judgment
of the Servicer, would materially and adversely affect the performance
by the Servicer of its obligations under this Agreement.
(h) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with each Receivable (and the underlying receivable) and the
related Account, if any, will maintain in effect all qualifications
required under Requirements of Law in order to service properly each
Receivable and the related Account, if any, and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable and the related Account the failure to comply
with which would have an Adverse Effect.
(i) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of any Receivable (or the
underlying receivable) except in accordance with the Credit Card
Guidelines or as ordered by a court of competent jurisdiction or other
Governmental Authority.
(j) Protection of Rights. The Servicer shall take no action
which, nor omit to take any action the omission of which, would impair
the rights of the Trust, the Owner Trustee, the Indenture Trustee or
the Noteholders in any Receivable (or the underlying receivable) or the
related Account or any Participation Interest, if any, nor shall it
reschedule, revise or defer payments due on any Receivable except in
accordance with the Credit Card Guidelines.
(k) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of an Account,
the Servicer will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the UCC) and if any
Receivable is so evidenced it shall be reassigned or assigned to the
Servicer as provided in this Section.
(l) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Servicer in
connection with the execution and delivery of this Agreement by the
34
Servicer and the performance of the transactions contemplated by this
Agreement by the Servicer, have been duly obtained, effected or given
and are in full force and effect.
(m) Changes in Credit Card Guidelines. Subject to compliance
with all Requirements of Law, the Servicer may change the terms and
provisions of the applicable Credit Card Guidelines of the Servicer in
any respect (including the calculation of the amount or the timing of
charge-offs and the finance charges to be assessed thereon).
Notwithstanding the above, unless required by Requirements of Law, the
Servicer will not take any action unless (i) at the time of such
action, the Servicer reasonably believes that such action will not
cause an Amortization Event, Reinvestment Event or Event of Default to
occur, and (ii) such change is made applicable to the comparable
segment of the credit accounts owned by the relevant Account Owner
which have characteristics the same as, or substantially similar to,
the Accounts that are the subject of such change, except as otherwise
restricted by an endorsement, sponsorship, or other agreement between
the Account Owner and an unrelated third party or by the terms of the
Credit Card Agreements.
In the event (x) any of the representations, warranties or
covenants of the Servicer contained in subsection 3.03(h), (i) or (j) with
respect to any Receivable or the related Account is breached, and such breach
has a material adverse effect on such Receivable (which determination shall be
made without regard to whether funds are then available to any Noteholders
pursuant to any Series Enhancement) and is not cured within 60 days (or such
longer period, not in excess of 120 days, as may be agreed to by the Indenture
Trustee and the Transferors) of the earlier to occur of the discovery of such
event by the Servicer, or receipt by the Servicer of notice of such event given
by the Indenture Trustee or a Transferor, or (y) as provided in subsection
3.03(k) with respect to any Receivable, all Receivables in the Account or
Accounts to which such event relates shall be assigned and transferred to the
Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by making a deposit
into the Collection Account in immediately available funds on the Payment Date
following the Monthly Period in which such assignment obligation arises in an
amount equal to the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the
Trust shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Servicer, without
recourse, representation or warranty, all right, title and interest of the Trust
in and to such Receivables, all Recoveries related thereto, all monies due or to
become due and all amounts received or receivable with respect thereto and all
proceeds thereof. The Trust shall execute such documents and instruments of
transfer or assignment and take such other actions as shall be reasonably
requested by the Servicer to effect the conveyance of any such Receivables
pursuant to this Section but only upon receipt of an Officer's Certificate of
the Servicer that states that all conditions set forth in this section have been
satisfied. The obligation of the Servicer to accept reassignment or assignment
of such Receivables, and to make the deposits, if any, required to be made to
the Collection Account as provided in the preceding paragraph, shall constitute
the sole remedy respecting the event giving rise to such obligation available to
Noteholders (or the Indenture Trustee on behalf of Noteholders) or any Series
Enhancer, except as provided in Section 5.04.
Section 3.04. Reports and Records for the Trust and the
Indenture Trustee.
(a) Daily Records. On each Business Day, the Servicer shall
make or cause to be made available at the office of the Servicer for
inspection by the Trust and the Indenture Trustee upon request a record
setting forth (i) the Collections in respect of Principal Receivables
and in respect of Finance Charge Receivables processed by the Servicer
on the second preceding Business Day in respect
35
of each Account and (ii) the amount of Receivables as of the close of
business on the second preceding Business Day in each Account. The
Servicer shall, at all times, maintain its computer files with respect
to the Accounts in such a manner so that the Accounts may be
specifically identified and shall make available to the Trust and the
Indenture Trustee at the office of the Servicer on any Business Day any
computer programs necessary to make such identification. The Trust and
the Indenture Trustee shall enter into such reasonable confidentiality
agreements as the Servicer shall deem necessary to protect its
interests and as are reasonably acceptable in form and substance to the
Trust and the Indenture Trustee.
(b) Monthly Servicer's Certificate. Not later than the second
Business Day preceding each Payment Date, the Servicer shall, with
respect to each outstanding Series, deliver to the Trust, the Indenture
Trustee and each Rating Agency a certificate of an Authorized Officer
in substantially the form set forth in the related Indenture
Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer
shall deliver to the Trust, the Indenture Trustee and each Rating Agency on or
before March 31 of each calendar year, beginning with March 31, 2002, an
Officer's Certificate substantially in the form of Exhibit C.
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
(a) On or before March 31 of each calendar year, beginning
with March 31, 2002, the Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other
services to the Servicer or a Transferor) to furnish a report addressed
to the Trust, the Owner Trustee, the Indenture Trustee, the Servicer
and each Rating Agency to the effect that they have applied certain
procedures agreed upon with the Servicer and examined certain documents
and records relating to the servicing of Accounts under this Agreement,
the Indenture and each Indenture Supplement and that, on the basis of
such agreed-upon procedures, nothing has come to the attention of such
accountants that caused them to believe that the servicing (including
the allocation of Collections) has not been conducted in compliance
with the terms and conditions as set forth in Article III and Section
5.08 of this Agreement and the applicable provisions of the Indenture
and each Indenture Supplement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set
forth in such statement. Such report shall set forth the agreed-upon
procedures performed. In the event such firm requires the Indenture
Trustee to agree to the procedures performed by such firm, the Servicer
shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such
letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Indenture Trustee shall not make any independent
inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of
such procedures.
(b) On or before March 31 of each calendar year, beginning
with March 31, 2002, the Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other
services to the Servicer or the Transferor) to furnish a report
(addressed to the Trust) to the Trust, the Indenture Trustee, the
Servicer and each Rating Agency to the effect that they have applied
certain procedures agreed upon with the Servicer to compare the
mathematical calculations of certain amounts set forth in the
Servicer's certificates delivered pursuant to subsection 3.04(b) during
the period covered by such report with the Servicer's computer reports
that were the source of such amounts and that on the basis of such
agreed-upon procedures and comparison, such accountants are of the
opinion that such amounts are in agreement, except for such exceptions
as they believe to be immaterial and such other exceptions as shall be
set forth in such statement. Such report shall set forth the
agreed-upon procedures performed. In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm,
the Servicer shall direct the Indenture Trustee in writing to so agree;
it being understood and agreed that the Indenture Trustee will deliver
such letter of agreement in conclusive
36
reliance upon the direction of the Servicer, and the Indenture Trustee
shall not make any independent inquiry or investigation as to, and
shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(c) A copy of each certificate and report provided pursuant to
subsection 3.04(b), or Section 3.05 or 3.06 may be obtained by any
Noteholder or beneficial owner of a Note by a request in writing to the
Trust at the address set forth in Section 9.04.
Section 3.07. Tax Treatment. Unless otherwise specified in the
Indenture or an Indenture Supplement with respect to a particular Series, the
Transferor has entered into this Agreement, and the Notes will be issued, with
the intention that, for federal, state and local income and franchise tax
purposes, (i) the Notes of each Series which are characterized as indebtedness
at the time of their issuance will qualify as indebtedness secured by the
Receivables and (ii) the Trust shall not be treated as an association or
publicly traded partnership taxable as a corporation. The Transferor, by
entering into this Agreement, and each Noteholder, by the acceptance of any such
Note (and each Note Owner, by its acceptance of an interest in the applicable
Note), agree to treat such Notes for federal, state and local income and
franchise tax purposes as indebtedness of the Transferor. Each Holder of such
Note agrees that it will cause any Note Owner acquiring an interest in a Note
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07. The parties hereto agree
that they shall not cause or permit the making, as applicable, of any election
under Treasury Regulation Section 301.7701-3 whereby the Trust or any portion
thereof would be treated as a corporation for federal income tax purposes and,
except as required by Section 6.13 of the Indenture, shall not file tax returns
or obtain any federal employer identification number for the Trust but shall
treat the Trust as a security device for such purposes. The provisions of this
Agreement shall be construed in furtherance of the foregoing intended tax
treatment.
Section 3.08. Notices to Conseco Bank. In the event that
Conseco Bank is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to Conseco Bank each certificate and report required
to be provided thereafter pursuant to subsection 3.04(b) and Sections 3.05 and
3.06.
Section 3.09. Adjustments.
(a) If the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing
error to an Obligor, because such Receivable was created in respect of
merchandise or services which was refused or returned by an Obligor, or
if the Servicer otherwise adjusts downward the amount of any Receivable
without receiving Collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Amount, and (unless
otherwise specified) any other amount required herein or in the
Indenture or any Indenture Supplement to be calculated by reference to
the amount of Principal Receivables, will be reduced by the amount of
the adjustment. Similarly, the amount of Principal Receivables used to
calculate the Transferor Amount and (unless otherwise specified) any
other amount required herein or in the Indenture or in any Indenture
Supplement to be calculated by reference to the amount of Principal
Receivables will be reduced by the principal amount of any Receivable
which was discovered as having been created through a fraudulent or
counterfeit charge or with respect to which the covenant contained in
subsection 2.07(b) was breached. Any adjustment required pursuant to
either of the two preceding sentences shall be made on or prior to the
end of the Monthly Period in which such adjustment obligation arises.
In the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Required Transferor Amount,
not later than 1:00 p.m., New York City time, on the Payment Date
following the Monthly Period in which such adjustment obligation
arises, one or more of the Transferors shall make a
37
deposit into the Special Funding Account in immediately available funds
and the total amount of such deposit shall be in an amount equal to the
amount by which the Transferor Amount would be less than the Required
Transferor Amount, due to adjustments with respect to Receivables
conveyed by the Transferors (up to the amount of such Principal
Receivables).
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection
was received by the Servicer in the form of a check which is not
honored for any reason or (ii) the Servicer makes a mistake with
respect to the amount of any Collection and deposits an amount that is
less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited
into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the
first two sentences of this paragraph, adjustments made pursuant to
this Section shall not require any change in any report previously
delivered pursuant to subsection 3.04(a).
Section 3.10. Reports to the Commission. The Servicer shall,
on behalf of the Trust, cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferor shall, at its own expense, cooperate in any reasonable request of
the Servicer in connection with such filings.
[END OF ARTICLE III]
38
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 4.01. Liability of each Transferor. Each Transferor
shall be severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement. Except as provided in the preceding sentence, each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.
Section 4.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor.
(a) No Transferor shall dissolve, liquidate, consolidate with
or merge into any other corporation or other entity or convey, transfer
or sell its properties and assets substantially as an entirety to any
Person unless:
(i) (x) the entity formed by such consolidation or
into which such Transferor is merged or the Person which
acquires by conveyance, transfer or sale the properties and
assets of the Transferor substantially as an entirety shall
be, if such Transferor is not the surviving entity, organized
and existing under the laws of the United States of America or
any State or the District of Columbia, and shall be a savings
association, a national banking association, a bank or other
entity which is not eligible to be a debtor in a case under
the Bankruptcy Code or is a special purpose corporation or
other special purpose entity whose powers and activities are
limited to substantially the same degree as provided in the
certificate of incorporation of such Transferor and, if such
Transferor is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and
delivered to the Trust and the Indenture Trustee, in form
reasonably satisfactory to the Trust and the Indenture
Trustee, the performance of every covenant and obligation of
such Transferor hereunder; and (y) such Transferor or the
surviving entity, as the case may be, has delivered to the
Trust and the Indenture Trustee (with a copy to each Rating
Agency) an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger, conveyance,
transfer or sale and such supplemental agreement comply with
this Section, that such supplemental agreement is a valid and
binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time
to time in effect or general principles of equity, and that
all conditions precedent herein provided for relating to such
transaction have been complied with; and
(ii) the Rating Agency Condition shall have been
satisfied with respect to such consolidation, merger,
conveyance or transfer.
(b) Except as permitted by subsection 2.07(c), the
obligations, rights or any part thereof of each Transferor hereunder
shall not be assignable nor shall any Person succeed to such
obligations or rights of any Transferor hereunder except (i) for
conveyances, mergers, consolidations, assumptions, sales or transfers
in accordance with the provisions of the foregoing paragraph and (ii)
for conveyances, mergers, consolidations, assumptions, sales or
transfers to other entities (1) which such Transferor and the Servicer
determine will not result in an Adverse Effect, (2) which meet the
requirements of clause (ii) of the preceding paragraph and (3) for
which such purchaser, transferee, pledgee or entity shall expressly
assume, in an agreement supplemental hereto, executed and delivered to
the Trust and the Indenture Trustee in writing in form satisfactory to
the Trust and the Indenture Trustee, the performance of every covenant
and obligation of such Transferor thereby conveyed.
39
Section 4.03. Limitations on Liability of Each Transferor.
Subject to Section 4.01, no Transferor nor any of the directors, officers,
employees, incorporators or agents of any Transferor acting in such capacities
shall be under any liability to the Trust, the Owner Trustee, the Indenture
Trustee, the Noteholders, any Series Enhancer, any other Transferor or any other
Person for any action taken or for refraining from the taking of any action in
good faith in such capacities pursuant to this Agreement, it being expressly
understood that such liability is expressly waived and released as a condition
of, and consideration for, the execution of this Agreement, the Indenture and
any Indenture Supplement and the issuance of the Notes; provided, however, that
this provision shall not protect any Transferor or any such person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Each Transferor and any director,
officer, employee or agent of such Transferor may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than such Transferor) respecting any matters arising hereunder.
Section 4.04. Assumption of the Transferor Obligations.
Notwithstanding the provisions of Section 4.02 or other provisions of this
Agreement, each Transferor may assign, convey and transfer its credit accounts
and the receivables arising thereunder, which may include all, but not less than
all, of the Accounts and such Transferor's remaining interest in the Receivables
arising thereunder and the Transferor Amount (collectively, the "Assigned
Assets"), together with all servicing functions and other obligations under this
Agreement or relating to the transactions contemplated hereby (collectively, the
"Assumed Obligations"), to other entities (such entity or entities, the
"Assuming Entity"), which may be entities that are not affiliated with such
Transferor, and such Transferor may assign, convey and transfer the Assigned
Assets and the Assumed Obligations to such Assuming Entity, without the consent
or approval of the Holders of the Notes, upon satisfaction of the following
conditions:
(a) such Assuming Entity, such Transferor and the Trust shall
have entered into an assumption agreement (the "Assumption Agreement")
providing for the Assuming Entity to assume the Assumed Obligations,
including the obligation under this Agreement to transfer the
Receivables arising under the Accounts to the Trust, and such
Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such transfer and assumption comply with this Section, that such
Assumption Agreement is a valid and binding obligation of such Assuming
Entity enforceable against such Assuming Entity in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws affecting creditors' rights
generally or creditors of national banking associations, from time to
time, in effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity), and that all conditions precedent herein provided for relating
to such transaction have been complied with;
(b) such Transferor or such Assuming Entity shall have
delivered to the Trust and the Indenture Trustee copies of UCC-1
financing statements covering such Accounts to perfect the Trust's
interest and the Indenture Trustee's interest in the Receivables
arising herein;
(c) if such Assuming Entity shall be eligible to be a debtor
in a case under the Bankruptcy Code, such Transferor shall have
delivered to the Rating Agency (with a copy to the Servicer and the
Indenture Trustee) notice of such transfer and assumption, and that
each Rating Agency that has rated an Outstanding Series of Notes
confirm in writing that such transfer will not result in a reduction or
withdrawal of its rating of any Class of any Outstanding Series of
Notes or, if such Assuming Entity shall not be eligible to be a debtor
under the Bankruptcy Code, such Transferor shall have delivered to the
Rating Agency notice of such transfer and assumption;
40
(d) the Trust and the Indenture Trustee shall have received an
Opinion of Counsel to the effect that (i) the transfer of such
Receivables by such Assuming Entity shall constitute either a sale of,
or the granting of a security interest in, such Receivables by such
Assuming Entity to the Trust, (ii) the condition specified in clause
(b) shall have been satisfied, and (iii) if such Assuming Entity shall
be subject to the FDIA, [the interest of the Trust in such Receivables
should not be subject to reclamation or recovery by the FDIC if the
FDIC were to become the receiver or conservator of such Assuming
Entity;]
(e) such Transferor shall have received written notice that
the Rating Agency Condition has been satisfied with respect to such
transfer and assumption and shall have delivered copies of each such
written notice to the Servicer, the Trust and the Indenture Trustee;
(f) the Indenture Trustee shall have received a Tax Opinion;
and
(g) the Rating Agency Condition shall be satisfied.
Upon any such transfer to and assumption by an Assuming
Entity, the Transferors shall if the Transferors' Interest is then in
certificated form, surrender the Transferors Certificate to the Transfer Agent
and Registrar or if the Transferors' Interest is not in certificated form
deliver transfer instructions to the Transfer Agent and Registrar for
registration of transfer and, if applicable, the Trustee shall issue a new
Transferor Certificate in the name of such Assuming Entity and any non-assigning
Transferor or shall record the interest of the Assuming Entity and the
non-assigning Transferor in its records. Notwithstanding such assumption, such
assigning Transferor shall continue to be liable for all representations and
warranties and covenants made by it and all obligations performed or to be
performed by it in its capacity as Transferor prior to such transfer.
Notwithstanding the provisions of this Section 4.04 to the
contrary, any Transferor may transfer, from time to time, Assigned Assets to any
other Transferor upon the satisfaction of subsections (a) and (b), above. Such
Transferor shall promptly provide notice to the Rating Agency indicating the
occurrence of any such transfer.
[END OF ARTICLE IV]
41
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER
Section 5.01. Liability of the Servicer. The Servicer shall be
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or other entity or convey, transfer or sell its
properties and assets substantially as an entirety to any Person, unless:
(a) (i) the entity formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance,
transfer or sale the properties and assets of the Servicer
substantially as an entirety shall be, if the Servicer is not the
surviving entity, a corporation or other entity organized and existing
under the laws of the United States of America or any State or the
District of Columbia, and, if the Servicer is not the surviving entity,
such corporation or other entity shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trust, the
Indenture Trustee and the Transferors, in form satisfactory to the
Trust, the Indenture Trustee and the Transferors, the performance of
every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Trust and the
Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger,
conveyance, transfer or sale comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with;
(iii) the Servicer shall have given the Rating
Agencies notice of such consolidation, merger or transfer or
assets and the Rating Agency Condition shall have been
satisfied; and
(b) the corporation or other entity formed by such
consolidation or into which the Servicer is merged or the Person which
acquires by conveyance or transfer the properties and assets of the
Servicer substantially as an entirety shall be an Eligible Servicer.
Section 5.03. Limitation on Liability of the Servicer and
Others. Except as provided in Section 5.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken or for refraining from the taking of any action in good faith
in its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties as Servicer in accordance with this
Agreement and which in its reasonable judgment may involve it in any expense or
liability. The Servicer may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the
Noteholders with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Noteholders hereunder.
42
Section 5.04. Servicer Indemnification of the Trust, the Owner
Trustee and the Indenture Trustee. The Servicer shall indemnify and hold
harmless the Trust, the Owner Trustee and the Indenture Trustee and any trustees
predecessor thereto (including the Indenture Trustee in its capacity as Transfer
Agent and Registrar or as Paying Agent) and their respective directors,
officers, employees and agents from and against any and all loss, liability,
claim, action, suit, cost, expense, damage or injury of any kind or nature
whatsoever suffered or sustained by reason of (a) any acts or omissions of the
Servicer with respect to the Trust pursuant to this Agreement or (b) the
administration by the Owner Trustee of the Trust (in the case of clause (a) or
(b), other than such as may arise from the negligence or willful misconduct of
the Owner Trustee or the Indenture Trustee, as applicable), including any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any action, proceeding or
claim. Indemnification pursuant to this Section shall not be payable from the
Trust Assets. The Servicer's obligations under this Section 5.04 shall survive
the termination of this Agreement or the Trust or the earlier removal or
resignation of the Owner Trustee or the Indenture Trustee, as applicable.
Section 5.05. Resignation of the Servicer. The Servicer shall
not resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Trust and the Indenture
Trustee, in form satisfactory to the Trust and the Indenture Trustee, of the
obligations and duties of the Servicer hereunder by any of its Affiliates that
is a direct or indirect wholly owned subsidiary of Conseco Finance Corp. or by
any other entity the appointment of which shall have satisfied the Rating Agency
Condition and, in either case, qualifies as an Eligible Servicer. Any
determination permitting the resignation of the Servicer shall be evidenced as
to clause (a) above by an Opinion of Counsel to such effect delivered to the
Trust and the Indenture Trustee. No resignation shall become effective until the
Indenture Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 7.02
hereof. If within 120 days of the date of the determination that the Servicer
may no longer act as Servicer under clause (a) above the Indenture Trustee is
unable to appoint a Successor Servicer, the Indenture Trustee shall serve as
Successor Servicer.
Notwithstanding the foregoing, the Indenture Trustee shall, if
it is legally unable so to act, petition a court of competent jurisdiction to
appoint any established institution qualifying as an Eligible Servicer as the
Successor Servicer hereunder. The Indenture Trustee shall give prompt notice to
each Rating Agency and each Series Enhancer upon the appointment of a Successor
Servicer. Notwithstanding anything in this Agreement to the contrary, Conseco
Bank may assign part or all of its obligations and duties as Servicer under this
Agreement to an Affiliate of Conseco Finance Corp. so long as Conseco Bank or
Conseco Finance Corp. shall have fully guaranteed the performance of such
obligations and duties under this Agreement and Conseco Bank may carry out some
or all of its duties and obligations as Servicer through subservicing
arrangements with its Affiliates.
Section 5.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trust or the
Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Trust or the Indenture
Trustee, as applicable, is required in connection with the enforcement of the
rights of Noteholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Trust, the Indenture Trustee and the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Servicer to provide
43
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
Section 5.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate its duties hereunder with
respect to the Accounts and the Receivables to any Person that agrees to conduct
such duties in accordance with the Credit Card Guidelines and this Agreement.
Such delegation shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of Section 5.05.
Section 5.08. Examination of Records. Each Transferor and the
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Trust pursuant
to this Agreement. Each Transferor and the Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its custody, examine its
computer records and other records to determine that such receivable is not, and
does not include, a Receivable.
[END OF ARTICLE V]
44
ARTICLE VI
INSOLVENCY EVENTS
Section 6.01. Rights upon the Occurrence of an Insolvency
Event. If any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver, liquidator or similar official in
any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to such
Transferor or of or relating to all or substantially all of such Transferor's
property, or the commencement of an action seeking a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of such entity's
affairs, or notwithstanding an objection by such Transferor any such action
shall have remained undischarged or unstayed for a period of 60 days or upon
entry of any order or decree providing for such relief; or such Transferor shall
admit in writing its inability to pay its debts generally as they become due,
file, or consent or fail to object (or object without dismissal of any such
filing within 30 days of such filing) to the filing of, a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship or similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations (any
such act or occurrence with respect to any Person being an "Insolvency Event"),
such Transferor shall on the day any such Insolvency Event occurs (the
"Appointment Date"), immediately cease to transfer Principal Receivables to the
Trust and shall promptly give notice to the Indenture Trustee and the Owner
Trustee thereof. Notwithstanding any cessation of the transfer to the Trust of
additional Principal Receivables, Principal Receivables transferred to the Trust
prior to the occurrence of such Insolvency Event, Collections in respect of such
Principal Receivables and Finance Charge Receivables (whenever created) accrued
in respect of such Principal Receivables shall continue to be a part of the
Trust Assets and shall be allocated and distributed to Noteholders in accordance
with the terms of the Indenture and each Indenture Supplement.
[END OF ARTICLE VI]
45
ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or to give notice to the Indenture
Trustee to make such payment, transfer or deposit on or before the date
occurring five Business Days after the date such payment, transfer or
deposit or such instruction or notice is required to be made or given,
as the case may be, under the terms of this Agreement, the Indenture or
any Indenture Supplement;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Indenture, any Indenture Supplement or
this Agreement which has an Adverse Effect and which continues
unremedied for a period of 60 days after the date on which notice of
such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Owner Trustee or the Indenture Trustee, or to
the Servicer, the Owner Trustee and the Indenture Trustee by Holders of
Notes evidencing not less than 10% of the aggregate unpaid principal
amount of all Notes (or, with respect to any such failure that does not
relate to all Series, 10% of the aggregate unpaid principal amount of
all Series to which such failure relates); or the Servicer shall assign
or delegate its duties under this Agreement, except as permitted by
Sections 5.02 and 5.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been incorrect when made, which has
an Adverse Effect and which Adverse Effect continues for a period of 60
days after the date on which notice thereof, requiring the same to be
remedied, shall have been given to the Servicer by the Owner Trustee or
the Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by the Holders of Notes evidencing not less than 10%
of the aggregate unpaid principal amount of all Notes (or, with respect
to any such representation, warranty or certification that does not
relate to all Series, 10% of the aggregate unpaid principal amount of
all Series to which such representation, warranty or certification
relates); or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee, conservator, receiver, liquidator or similar
official in any bankruptcy proceeding or other insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for
the appointment of a bankruptcy trustee, conservator, receiver,
liquidator or similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or the winding-up or liquidation of its affairs, shall
have been entered against the Servicer; or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Indenture Trustee or the Holders of
Notes evidencing more than 50% of the aggregate unpaid principal amount of all
Notes, by notice then given to the Servicer and the Owner Trustee (and to the
46
Indenture Trustee if given by the Noteholders) (a "Termination Notice"), may
terminate all but not less than all the rights and obligations of the Servicer
as Servicer under this Agreement, the Indenture and each Indenture Supplement;
provided, however, if within 60 days of receipt of a Termination Notice the
Indenture Trustee does not receive any bids from Eligible Servicers in
accordance with subsection 7.02(c) to act as a Successor Servicer and receives
an Officer's Certificate of the Servicer to the effect that the Servicer cannot
in good faith cure the Servicer Default which gave rise to the Termination
Notice, the Indenture Trustee shall grant a right of first refusal to the
Transferors which would permit the Transferors at their option to purchase the
Notes on the Payment Date in the next calendar month.
The price for the Notes shall be equal to the sum of the
amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. The Transferors shall notify the Indenture Trustee
prior to the Record Date for the Payment Date of the acquisition if it is
exercising such right of first refusal. If the Transferors exercise such right
of first refusal, the Transferors shall deposit the price into the Collection
Account not later than 1:00 p.m., New York City time, on such Payment Date in
immediately available funds. The price shall be allocated and distributed to
Noteholders in accordance with the terms of the Indenture and each Indenture
Supplement.
After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer is appointed by the Indenture Trustee
pursuant to Section 7.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Successor Servicer (a "Service
Transfer"); and, without limitation, the Indenture Trustee is hereby authorized
and empowered (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such Service
Transfer. The Servicer agrees to cooperate with the Indenture Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder, including the transfer to
such Successor Servicer of all authority of the Servicer to service the
Receivables provided for under this Agreement, including all authority over all
Collections which shall on the date of transfer be held by the Servicer for
deposit, or which have been deposited by the Servicer, in the Collection
Account, or which shall thereafter be received with respect to the Receivables,
and in assisting the Successor Servicer. The Servicer shall as soon as
practicable, but within not more than 20 Business Days, transfer its electronic
records relating to the Receivables to the Successor Servicer in such electronic
form as the Successor Servicer may reasonably request and shall promptly
transfer to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables in the manner
and at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section shall require the Servicer to disclose
to the Successor Servicer information of any kind which the Servicer deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
reasonably necessary to protect its interests. The Servicer shall pay to the
Indenture Trustee and any Successor Servicer the reasonable transition expenses
incurred by such person and the agents in connection with any transition of
Servicing.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in paragraph (a) above for a period of 10 Business Days
after the applicable grace period or under paragraph (b) or (c) above for a
period of 60 Business Days after the applicable grace period, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding sentence
shall not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Indenture Trustee, the
47
Trust, each Transferor and any Series Enhancer with an Officer's Certificate
giving prompt notice of such failure or delay by it, together with a description
of its efforts so to perform its obligations.
Section 7.02. Indenture Trustee To Act; Appointment of
Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 7.01, the Servicer shall continue to perform
all servicing functions under this Agreement until the date specified
in the Termination Notice or otherwise specified by the Indenture
Trustee or until a date mutually agreed upon by the Servicer and the
Indenture Trustee. The Indenture Trustee shall as promptly as possible
after the giving of a Termination Notice appoint an Eligible Servicer
as a successor servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee. In the event that a Successor
Servicer has not been appointed or has not accepted its appointment at
the time when the Servicer ceases to act as Servicer, the Indenture
Trustee without further action shall automatically be appointed the
Successor Servicer. The Indenture Trustee may delegate any of its
servicing obligations to an Affiliate or agent in accordance with
subsection 3.01(b) and Section 5.07. Notwithstanding the foregoing, the
Indenture Trustee shall, if it is legally unable so to act, petition at
the expense of the Servicer a court of competent jurisdiction to
appoint any established institution qualifying as an Eligible Servicer
as the Successor Servicer hereunder. The Indenture Trustee shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing
functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, and all references in this
Agreement to the Servicer shall be deemed to refer to the Successor
Servicer.
(c) In connection with any Termination Notice, the Indenture
Trustee will review any bids which it obtains from Eligible Servicers
and shall be permitted to appoint any Eligible Servicer submitting such
a bid as a Successor Servicer for servicing compensation not in excess
of the aggregate Monthly Servicing Fees for all Series plus the sum of
the amounts with respect to each Series and with respect to each
Payment Date equal to any Collections of Finance Charge Receivables
allocable to Noteholders of such Series which are payable to the
holders of the Transferors' Interest after payment of all amounts owing
to the Noteholders of such Series with respect to such Payment Date or
required to be deposited in the applicable Series Accounts with respect
to such Payment Date and any amounts required to be paid to any Series
Enhancer for such Series with respect to such Payment Date pursuant to
the terms of any Enhancement Agreement; provided, however, that the
Holders of the Transferors' Interest shall be responsible for payment
of the Transferors' portion of such aggregate Monthly Servicing Fees
and all other such amounts in excess of such aggregate Monthly
Servicing Fees. Each Holder of the Transferors' Interest agrees that,
if Conseco Bank (or any Successor Servicer) is terminated as Servicer
hereunder, the portion of the Collections in respect of Finance Charge
Receivables that the Transferors are entitled to receive pursuant to
this Agreement, the Indenture or any Indenture Supplement shall be
reduced by an amount sufficient to pay the Transferors' share of the
compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 8.01 of the Trust Agreement, and shall
pass to and be vested in the Transferors and, without limitation, the
Transferors are hereby authorized and empowered to execute and deliver,
on behalf of the Servicer, as attorneys-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other
acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Servicer agrees to cooperate with the
Transferors in effecting the termination of the responsibilities and
rights of the
48
Servicer to conduct servicing of the Receivables. The Servicer shall
transfer its electronic records relating to the Receivables to the
Transferors or their designees in such electronic form as they may
reasonably request and shall transfer all other records, correspondence
and documents to them in the manner and at such times as they shall
reasonably request. To the extent that compliance with this Section
shall require the Servicer to disclose to the Transferors information
of any kind which the Servicer deems to be confidential, the
Transferors shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to
protect its interests.
Section 7.03. Notification to Noteholders. Within five
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trust, the Indenture Trustee, each
Rating Agency and each Series Enhancer and the Indenture Trustee shall give
notice to the Noteholders. Upon any termination or appointment of a Successor
Servicer pursuant to this Article, the Indenture Trustee shall give prompt
notice thereof to the Noteholders and each Series Enhancer.
[END OF ARTICLE VII]
49
ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement. This Agreement and the
respective obligations and responsibilities of the Trust, the Transferors and
the Servicer under this Agreement shall terminate, except with respect to the
duties described in Section 5.04, on the date the Trust is dissolved as provided
in Section 8.01 of the Trust Agreement.
[END OF ARTICLE VIII]
50
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.
(a) This Agreement may be amended by the parties hereto from
time to time prior to, or in connection with, the issuance of the first
Series of Notes hereunder without the requirement of any consents or
the satisfaction of any conditions set forth below. This Agreement may
be amended from time to time by the Servicer, the Transferors and the
Trust, by a written instrument signed by each of them, without the
consent of the Indenture Trustee or any of the Noteholders, provided
that (i) the Transferors shall have delivered to the Indenture Trustee
and the Owner Trustee an Officer's Certificate, dated the date of any
such amendment, stating that the Transferors reasonably believe that
such amendment will not have an Adverse Effect and (ii) the Rating
Agency Condition shall have been satisfied with respect to any such
amendment; provided, however, the Servicer, the Transferors and the
Trust, may enter into one or more amendments, without the consent of
the Indenture Trustee or the Holders of any Notes but with prior notice
to the Rating Agencies (and provided that a final amendment to this
Agreement signed by the parties hereto shall be delivered to each
Rating Agency within 10 days of its execution) in order to (A) cure any
ambiguity, to correct or supplement any provision herein or in any
amendment hereto that may be inconsistent with any other provision
herein or in any amendment hereto, (B) to make any other provisions
with respect to matters or questions arising under this Agreement or in
any amendment hereto or (C) to assure that the transfer of assets under
the Transaction Documents does not qualify for sale treatment under
generally accepted accounting principles or, if so determined by the
Transferors to qualify for sale treatment under generally accepted
accounting principles; provided, that such amendment shall not have an
Adverse Effect and, in the case of clause (C), the Transferors shall
have delivered a Tax Opinion to the Indenture Trustee with respect to
such amendment. Additionally, notwithstanding the preceding sentence,
this Agreement will be amended by the Servicer and the Trust at the
direction of the Transferors without the consent of the Indenture
Trustee or any of the Noteholders or Series Enhancers to add, modify or
eliminate such provisions as may be necessary or advisable in order to
enable all or a portion of the Trust (i) to qualify as, and to permit
an election to be made to cause the Trust to be treated as, a
"financial asset securitization investment trust" as described in the
provisions of Section 860L of the Code, and (ii) to avoid the
imposition of state or local income or franchise taxes imposed on the
Trust's property or its income; provided, however, that (i) the
Transferors deliver to the Indenture Trustee and the Owner Trustee an
Officer's Certificate to the effect that the proposed amendments meet
the requirements set forth in this subsection, (ii) each Rating Agency
will have notified the Transferors, the Servicer, the Indenture Trustee
and the Owner Trustee in writing that the amendment will not result in
a reduction or withdrawal of the rating of any outstanding Series or
Class as to which it is a Rating Agency and (iii) such amendment does
not affect the rights, duties or obligations of the Indenture Trustee
or the Owner Trustee hereunder. The amendments which the Transferors
may make without the consent of Noteholders or Series Enhancers
pursuant to the preceding sentence may include, without limitation, the
addition of a sale of Receivables.
(b) This Agreement may also be amended from time to time by
the Servicer, the Transferors and the Trust, with the consent of the
Holders of Outstanding Notes evidencing not less than 66-2/3% of the
aggregate unpaid principal amount of the Outstanding Notes of all
affected Series for which the Transferors have not delivered an
Officer's Certificate stating that there is no Adverse Effect, 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 Noteholders; provided, however, that no
such amendment shall (i) reduce in any manner the amount of or delay
the timing of any distributions (changes in Amortization Events or
Reinvestment Events that decrease the likelihood of the occurrence
thereof shall not be considered delays in the timing of distributions
for purposes of this clause)
51
to be made to Noteholders or deposits of amounts to be so distributed
or the amount available under any Series Enhancement without the
consent of each affected Holder of Outstanding Notes, (ii) change the
definition of or the manner of calculating the interest of any
Noteholder without the consent of each affected Holder of Outstanding
Notes, (iii) reduce the aforesaid percentage required to consent to any
such amendment without the consent of each Holder of Outstanding Notes
or (iv) adversely affect the rating of any Series or Class by any
Rating Agency without the consent of the Holders of Outstanding Notes
of such Series or Class evidencing not less than 66-2/3% of the
aggregate unpaid principal amount of the Outstanding Notes of such
Series or Class.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the Trust
shall furnish notification of the substance of such amendment to the
Indenture Trustee and each Noteholder, and the Servicer shall furnish
notification of the substance of such amendment to each Rating Agency
and each Series Enhancer.
(d) It shall not be necessary for the consent of Noteholders
under this Section 9.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Noteholders
shall be subject to such reasonable requirements as the Indenture
Trustee may prescribe.
(e) Notwithstanding anything in this Section 9.01 to the
contrary, no amendment may be made to this Agreement or any
Participation Interest Supplement which would adversely affect in any
material respect the interests of any Series Enhancer without the
consent of such Series Enhancer.
(f) Any Indenture Supplement executed in accordance with the
provisions of Article X of the Indenture shall not be considered an
amendment of this Agreement for the purposes of this Section 9.01.
(g) The Holders of Outstanding Notes evidencing more than
66-2/3% of the aggregate unpaid principal amount of the Outstanding
Notes of each Series or, with respect to any Series with two or more
Classes, of each Class (or, with respect to any default that does not
relate to all Series, 66-2/3% of the aggregate unpaid principal amount
of the Outstanding Notes of each Series to which such default relates
or, with respect to any such Series with two or more Classes, of each
Class) may, on behalf of all Noteholders, waive any default by the
Transferors or the Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make any
distributions required to be made to Noteholders or to make any
required deposits of any amounts to be so distributed. Upon any such
waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived and provided that promptly
after any such waiver the Servicer shall give written notice of the
waiver including a description of the substance of the waiver to each
Rating Agency.
(h) The Owner Trustee may, but shall not be obligated to,
enter into any such amendment on behalf of the Trust which affects the
Owner Trustee's rights, duties or immunities under this Agreement or
otherwise. In connection with the execution of any amendment hereunder,
the Owner Trustee shall be entitled to receive the Opinion of Counsel
described in subsection 9.02(d).
Section 9.02. Protection of Right, Title and Interest of
Trust.
(a) The Transferors shall cause this Agreement, all amendments
and supplements hereto and all financing statements and continuation
statements and any other necessary documents
52
covering the Trust's right, title and interest to the Trust to be
promptly recorded, registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places
as may be required by law fully to preserve and protect the right,
title and interest of the Trust hereunder to all property comprising
the Trust. The Transferors shall deliver to the Trust and Indenture
Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferors shall
cooperate fully with the Servicer in connection with the obligations
set forth above and will execute any and all documents reasonably
required to fulfill the intent of this paragraph.
(b) Within 30 days after any Transferor makes any change in
its name, identity or corporate structure which would make any
financing statement or continuation statement filed in accordance with
paragraph (a) seriously misleading within the meaning of Section
9-402(7) (or any comparable provision) of the UCC, such Transferor
shall give the Trust and the Indenture Trustee notice of any such
change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest
or ownership interest in the Receivables and the other Trust Assets.
(c) Each Transferor shall give the Trust and the Indenture
Trustee prompt notice of any relocation of its chief executive office
or any change in the jurisdiction of its organization and whether, as a
result of such relocation or change, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement
and shall file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Trust's
security interest in the Receivables and the proceeds thereof. Each
Transferor shall at all times maintain its chief executive offices
within the United States and shall at all times be organized under the
laws of a jurisdiction located within the United States.
(d) The Transferors shall deliver to the Trust and the
Indenture Trustee (i) upon the execution and delivery of each amendment
of this Agreement, an Opinion of Counsel to the effect specified in
Exhibit D-1; (ii) on each date specified in subsection 2.09(c)(ix) with
respect to Additional Accounts (other than Automatic Additional
Accounts) to be designated as Accounts, an Opinion of Counsel
substantially in the form of Exhibit D-2, (iii) on each date specified
in subsection 2.09(e)(vii), with respect to any Automatic Additional
Accounts included as Accounts, an Opinion of Counsel substantially in
the form of Exhibit D-2, (iv) on each Addition Date on which any
Participation Interests are to be included in the Trust pursuant to
subsection 2.09(a) or (b), an Opinion of Counsel covering the same
substantive legal issues addressed by Exhibits D-1 and D-2 but
conformed to the extent appropriate to relate to Participation
Interests; and (v) on or before April 30 of each year, beginning with
April 30, 2002, an Opinion of Counsel substantially in the form of
Exhibit D-3.
Section 9.03. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.04. Notices; Payments.
(a) All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Agreement shall be
in writing and shall be deemed to have been duly given if personally
delivered at, mailed by registered mail, return receipt requested, or
sent by facsimile transmission (i) in the case of the Transferors,
addressed to Conseco Bank, Inc., 0000 X. Xxxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxx Xxxx Xxxx, Xxxx 00000 and Conseco Finance Credit Card Funding
Corp., 1100 Landmark Towers, 000 Xx. Xxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxx 00000, (ii) in the case of Conseco Bank, to
53
Conseco Bank, Inc., 0000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxx
Xxxx, Xxxx 00000, Attention: (facsimile no. (___) ___-____), (iii) in
the case of the Servicer, to Conseco Bank, at Conseco Bank, Inc., 0000
Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000,
Attention: (facsimile no. (___) ___-____), (iv) in the case of the
Trust, to Conseco Private Label Credit Card Master Note Trust, c/o
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: (facsimile no.
(___) ___-____), (v) in the case of the Rating Agency for a particular
Series, the address, if any, specified in the Indenture Supplement
relating to such Series, and (vi) to any other Person as specified in
the Indenture or any Indenture Supplement; or, as to each party, at
such other address or facsimile number as shall be designated by such
party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder
of Registered Notes shall be given by first-class mail, postage
prepaid, at the address of such Holder as shown in the Note Register.
No Notice shall be required to be mailed to a Holder of Bearer Notes or
Coupons but shall be given as provided below. Any Notice so mailed
within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Noteholder
receives such Notice. In addition, (a) if and so long as any Series or
Class is listed on the Luxembourg Stock Exchange and such Exchange
shall so require, any Notice to Noteholders shall be published in an
Authorized Newspaper of general circulation in Luxembourg within the
time period prescribed in this Agreement and (b) in the case of any
Series or Class with respect to which any Bearer Notes are outstanding,
any Notice required or permitted to be given to Noteholders of such
Series or Class shall be published in an Authorized Newspaper within
the time period prescribed in this Agreement.
Section 9.05. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.
Section 9.06. Further Assurances. The Transferors and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Owner Trustee and the Indenture Trustee more fully to effect the purposes of
this Agreement, including the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
Section 9.07. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trust, the Owner
Trustee, the Indenture Trustee or the Noteholders, any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided under this Agreement are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
Section 9.08. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
Section 9.09. Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the Indenture
Trustee, the Owner Trustee, the Noteholders, any Series Enhancer and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, no other Person will have any right or obligation
hereunder.
54
Section 9.10. Actions by Noteholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a Notice given by Noteholders, such action or
Notice may be taken or given by any Noteholder, unless such provision
requires a specific percentage of Noteholders.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Note shall bind such Holder and
every subsequent Holder of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trust,
the Transferors or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 9.11. Rule 144A Information. For so long as any of the
Notes of any Series or Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act, each of the Transferor, the Trust, the
Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate with
each other to provide to any Noteholders of such Series or Class and to any
prospective purchaser of Notes designated by such Noteholder, upon the request
of such Noteholder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.
Section 9.12. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 9.13. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 9.14. Limitation of Liability. Notwithstanding any
other provision herein or elsewhere, this Agreement has been executed and
delivered by Wilmington Trust Company, not in its individual capacity, but
solely in its capacity as Owner Trustee of the Trust, in no event shall
Wilmington Trust Company in its individual capacity have any liability in
respect of the representations, warranties, or obligations of the Trust
hereunder or under any other document, as to all of which recourse shall be had
solely to the assets of the Trust, and for all purposes of this Agreement and
each other document, the Owner Trustee (as such or in its individual capacity)
shall be subject to, and entitled to the benefits of, the terms and provisions
of the Trust Agreement.
Section 9.15. Nonpetition Covenant.
(a) Notwithstanding any prior termination of this Agreement,
none of the Servicer, the Indenture Trustee, the Owner Trustee nor any
Transferor shall, prior to the date which is one year and one day after
the termination of this Agreement, acquiesce, petition or otherwise
invoke or cause the Trust to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against
the Trust under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or any substantial
part of its property or ordering the winding-up or liquidation of the
affairs of the Trust.
(b) Notwithstanding any prior termination of this Agreement,
neither the Servicer, the Indenture Trustee, the Owner Trustee nor the
Trust shall, prior to the date which is one year and one day after the
termination of this Agreement, acquiesce, petition or otherwise invoke
or cause any Transferor to invoke the process of any Governmental
Authority for the purpose of commencing or
55
sustaining a case against such Transferor 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 Transferor or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the
Transferor.
[END OF ARTICLE IX]
56
IN WITNESS WHEREOF, the Transferors, the Servicer and the
Trust have caused this Transfer and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.
CONSECO BANK, INC.
Transferor
By:
--------------------------------
Name:
Title:
CONSECO FINANCE CREDIT CARD FUNDING
CORP.,
Transferor
By:
--------------------------------
Name:
Title:
CONSECO BANK INC.,
Servicer
By:
--------------------------------
Name:
Title:
CONSECO PRIVATE LABEL CREDIT CARD
MASTER NOTE TRUST,
Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
--------------------------------
Name:
Title:
Acknowledged and Accepted:
By: U.S. Bank Trust National Association
not in its individual capacity but
solely as Indenture Trustee
By:
--------------------------------
Name:
Title:
EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.09 of
the Transfer and Servicing Agreement)
ASSIGNMENT No. _________ OF RECEIVABLES IN ADDITIONAL ACCOUNTS
dated as of ____________,1 by and among ___________________________________ , a
__________________________________ as Transferor (the "Transferor"),
____________________________________ , a __________________________________ as
Servicer (the "Servicer"), and CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE
TRUST (the "Trust"), a Delaware business trust, pursuant to the Transfer and
Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Trust are parties
to the Transfer and Servicing Agreement dated as of May 1, 2001 (as amended and
supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Transferor wishes to
designate Additional Accounts to be included as Accounts and to convey the
Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Trust; and
WHEREAS the Trust is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor, the Servicer and the Trust
hereby agree as follows:
1. Defined Terms. All capitalized terms used herein shall have
the meanings ascribed to them in the Agreement unless otherwise defined
herein.
"Addition Date" shall mean, with respect to the Additional
Accounts designated hereby, __________,______.
"Additional Cut-Off Date" shall mean, with respect to the
Additional Accounts designated hereby, __________, ____.
2. Designation of Additional Accounts. On or before the
Document Delivery Date, the Transferor will deliver to the Owner
Trustee a computer file, microfiche list or printed list containing a
true and complete schedule identifying all Additional Accounts
designated hereby (the "Additional Accounts") specifying for each such
Account, as of the Additional Cut-Off Date, its account number, the
aggregate amount outstanding in such Account and the aggregate amount
of Principal Receivables outstanding in such Account, which computer
file, microfiche list or printed list shall be marked as Schedule 1 to
this Assignment and shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Transferor does hereby
sell, transfer, assign, set over and otherwise convey, without recourse
except as set forth in the Transfer and Servicing Agreement, to the
Trust, all its right, title and interest in, to and under the
Receivables of such Additional
------------------
1/ To be dated as of the applicable Addition Date.
A-1
Accounts existing on the Additional Cut-Off Date and thereafter created
from time to time until the termination of the Trust, all Recoveries
related thereto, including any amount realized as a result of the
foreclosure or other enforcement of any Related Security, all monies
due or to become due and all amounts received or receivable with
respect thereto and all proceeds (including "proceeds" as defined in
the UCC) thereof. The foregoing does not constitute and is not intended
to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer
of any obligation of the Servicer, the Transferor or any other Person
in connection with the Accounts, the Receivables or under any agreement
or instrument relating thereto, including any obligation to Obligors,
Merchants, Dealers, merchant banks, merchants clearance systems or
insurers.
(b) The Transferor agrees to record and file, at its
own expense, financing statements (and continuation statements
when applicable) with respect to the Receivables existing on
the Additional Cut-Off Date and thereafter created in
Additional Accounts, meeting the requirements of applicable
state law in such manner and in such jurisdictions as are
necessary to perfect, and maintain perfection of, the sale and
assignment of its interest in such Receivables to the Trust,
and to deliver a file-stamped copy of each such financing
statement or other evidence of such filing to the Trust on or
prior to the Addition Date. The Trust shall be under no
obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in
connection with such sale and assignment.
(c) In connection with such sale, the Transferor
further agrees, at its own expense, on or prior to the date of
this Assignment, to indicate in the appropriate computer files
that Receivables created in connection with the Additional
Accounts and designated hereby have been conveyed to the Trust
pursuant to the Agreement and this Assignment.
(d) The Transferor does hereby grant to the Trust a
security interest in all of its right, title and interest,
whether now owned or hereafter acquired, in and to the
Receivables of the Additional Accounts existing on the
Additional Cut-Off Date and thereafter created, all Recoveries
related thereto, all monies due or to become due and all
amounts received or receivable with respect thereto and all
"proceeds" (including "proceeds" as defined in the UCC)
thereof. This Assignment constitutes a security agreement
under the UCC.
4. Acceptance by the Trust. The Trust hereby acknowledges its
acceptance of all right, title and interest to the property, now
existing and hereafter created, conveyed to the Trust pursuant to
Section 3 of this Assignment. The Trust further acknowledges that,
prior to or simultaneously with the execution and delivery of this
Assignment, the Transferor delivered to the Owner Trustee the computer
file, microfiche list or printed list described in Section 2 of this
Assignment.
5. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust, as of the date
of this Assignment and as of the Addition Date that:
(a) Legal Valid and Binding Obligation. This
Assignment constitutes a legal, valid and binding obligation
of the Transferor enforceable against the Transferor in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in
a suit at law or in equity);
(b) Eligibility of Accounts. As of the Additional
Cut-Off Date, each Additional Account designated hereby is an
Eligible Account;
A-2
(c) Insolvency. As of each of the Additional Cut-Off
Date and the Addition Date, no Insolvency Event with respect
to the Transferor has occurred and the transfer by the
Transferor of Receivables arising in the Additional Accounts
to the Trust has not been made in contemplation of the
occurrence thereof;
(d) Amortization Event; Event of Default. The
Transferor reasonably believes that (A) the addition of the
Receivables arising in the Additional Accounts will not, based
on the facts known to the Transferor, then or thereafter cause
an Amortization Event or Event of Default to occur with
respect to any Series and (B) no selection procedure was
utilized by the Transferor which would result in the selection
of Additional Accounts (from among the available Eligible
Accounts available to the Transferor) that would be materially
adverse to the interests of the Noteholders of any Series as
of the Addition Date;
(e) Security Interest. This Assignment [constitutes a
valid sale, transfer and assignment to the Trust of all right,
title and interest, whether now owned or hereafter acquired,
of the Transferor in the Receivables existing on the
Additional Cut-Off Date and thereafter created in the
Additional Accounts, all Recoveries related thereto, all
monies due or to become due and all amounts received or
receivable with respect thereto and the "proceeds" (including
"proceeds" as defined in the UCC) thereof, or, if this
Assignment does not constitute a sale of such property, it]
constitutes a grant of a "security interest" (as defined in
the UCC) in such property to the Trust, which, in the case of
existing Receivables and the proceeds thereof, is enforceable
upon execution and delivery of this Assignment, and which will
be enforceable with respect to such Receivables hereafter
created and the proceeds thereof upon such creation. Upon the
filing of the financing statements described in Section 3 of
this Assignment and, in the case of the Receivables hereafter
created and the proceeds thereof, upon the creation thereof,
the Trust shall have a first priority perfected security or
ownership interest in such property;
(f) No Conflict. The execution and delivery by the
Transferor of this Assignment, the performance of the
transactions contemplated by this Assignment and the
fulfillment of the terms hereof applicable to the Transferor,
will not conflict with or violate any Requirements of Law
applicable to the Transferor or conflict with, result in any
breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the
Transferor is a party or by which it or its properties are
bound;
(g) No Proceedings. There are no proceedings or
investigations, pending or, to the best knowledge of the
Transferor, threatened against the Transferor before any
court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (i) asserting the
invalidity of this Assignment, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Assignment, (iii) seeking any determination or ruling that, in
the reasonable judgment of the Transferor, would materially
and adversely affect the performance by the Transferor of its
obligations under this Assignment or (iv) seeking any
determination or ruling that would materially and adversely
affect the validity or enforceability of this Assignment; and
(h) All Consents. All authorizations, consents,
orders or approvals of any court or other governmental
authority required to be obtained by the Transferor in
connection with the execution and delivery of this Assignment
by the Transferor and the performance of the transactions
contemplated by this Assignment by the Transferor, have been
obtained.
A-3
6. Ratification of Agreement. As supplemented by this
Assignment, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Assignment shall be read,
taken and construed as one and the same instrument.
7. Counterparts. This Assignment may be executed in two or
more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute
one and the same instrument.
8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
9. Limitation of Liability. Notwithstanding any other
provision herein or elsewhere, this Assignment has been executed and
delivered by Wilmington Trust Company, not in its individual capacity,
but solely in its capacity as Owner Trustee of the Trust, in no event
shall Wilmington Trust Company in its individual capacity have any
liability in respect of the representations, warranties, or obligations
of the Trust hereunder or under any other document, as to all of which
recourse shall be had solely to the assets of the Trust, and for all
purposes of this Assignment and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust
Agreement.
A-4
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust
have caused this Assignment to be duly executed by their respective officers as
of the day and year first above written.
__________________________________,
Transferor,
By:
--------------------------------
Name:
Title:
CONSECO BANK INC.,
Servicer,
By:
--------------------------------
Name:
Title:
CONSECO PRIVATE LABEL CREDIT CARD
MASTER NOTE TRUST,
Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
--------------------------------
Name:
Title:
A-5
EXHIBIT B
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Transfer and Servicing Agreement)
REASSIGNMENT No. ___________ OF RECEIVABLES dated as of
___________,1 by and among _________________________________________ , a
_________________________________ , as Transferor (the "Transferor"), CONSECO
BANK, INC., a Utah industrial loan corporation, as Servicer (the "Servicer") and
CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST, (the "Trust"), a Delaware
business trust, pursuant to the Transfer and Servicing Agreement referred to
below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Trust are parties
to the Transfer and Servicing Agreement dated as of May 1, 2001 (as amended and
supplemented, the "Agreement");
WHEREAS pursuant to the Agreement, the Bank wishes to remove
from the Trust all Receivables owned by the Trust in certain designated Accounts
and to cause the Trust to reconvey the Receivables of such Removed Accounts,
whether now existing or hereafter created to the Transferor; and
WHEREAS the Trust is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW, THEREFORE, the Transferor and the Trust hereby agree as
follows:
1. Defined Terms. All terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless
otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, __________, _______.
"Removal Notice Date" shall mean, with respect to the Removed
Accounts, __________, ______.
2. Designation of Removed Accounts. On or before the Document
Delivery Date, the Transferor will deliver to the Owner Trustee a
computer file, microfiche list or printed list containing a true and
complete schedule identifying all Accounts (the "Removed Accounts") the
Receivables of which are being removed from the Trust, specifying for
each such Account, as of the Removal Notice Date, its account number,
the aggregate amount outstanding in such Account and the aggregate
amount of Principal Receivables in such Account, which computer file,
microfiche list or printed list shall be marked as Schedule 1 of this
Reassignment and shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Trust does hereby
transfer, assign, set over and otherwise convey to the Transferor,
without recourse, on and after the Removal Date, all right, title and
interest of the Trust in, to and under the Receivables existing at the
close of business on the Removal Notice Date and thereafter created
from time to time in the Removed Accounts designated hereby, all
------------------
1/ To be dated as of the Removal Date.
B-1
Recoveries related thereto, all monies due or to become due and all
amounts received or receivable with respect thereto and all proceeds
thereof.
(b) In connection with such transfer, the Trust
agrees to execute and deliver to the Transferor on or prior to
the date this Reassignment is delivered, applicable
termination statements prepared by the Transferor with respect
to the Receivables existing at the close of business on the
Removal Notice Date and thereafter created from time to time
in the Removed Accounts reassigned hereby and the proceeds
thereof evidencing the release by the Trust of its interest in
the Receivables in the Removed Accounts, and meeting the
requirements of applicable state law, in such manner and such
jurisdictions as are necessary to terminate such interest.
4. Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust as of the
Removal Date:
(a) Legal Valid and Binding Obligation. This
Reassignment constitutes a legal, valid and binding obligation
of the Transferor enforceable against the Transferor, in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in
a suit at law or in equity); and
(b) Amortization Event; Event of Default. The
Transferor reasonably believes that (A) the removal of the
Receivables existing in the Removed Accounts will not, based
on the facts known to the Transferor, then or thereafter cause
an Amortization Event or Event of Default to occur with
respect to any Series and (B) no selection procedure was
utilized by the Transferor which would result in a selection
of Removed Accounts that would be materially adverse to the
interests of the Noteholders of any Series as of the Removal
Date.
(c) List of Removed Accounts. The list of Removed
Accounts delivered pursuant to subsection 2.10(a)(ii) of the
Agreement, as of the Removal Notice Date, is true and complete
in all material respects.
5. Ratification of Agreement. As supplemented by this
Reassignment, the Agreement is in all respects ratified and confirmed
and the Agreement as so supplemented by this Reassignment shall be
read, taken and construed as one and the same instrument.
6. Counterparts. This Reassignment may be executed in two or
more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute
one and the same instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
8. Limitation of Liability. Notwithstanding any other
provision herein or elsewhere, this Reassignment has been executed and
delivered by Wilmington Trust Company, not in its individual capacity,
but solely in its capacity as Owner Trustee of the Trust, in no event
shall Wilmington Trust Company in its individual capacity have any
liability in respect of the representations, warranties, or obligations
of the Trust hereunder or under any other document, as to all of which
recourse shall be had solely to the assets of the Trust, and for all
purposes of this Reassignment and each other document, the
B-2
Owner Trustee (as such or in its individual capacity) shall be subject
to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust
have caused this Reassignment to be duly executed by their respective officers
as of the day and year first above written.
___________________________________
Transferor,
By:
--------------------------------
Name:
Title:
CONSECO BANK, INC.,
Servicer,
By:
--------------------------------
Name:
Title:
CONSECO PRIVATE LABEL CREDIT CARD
MASTER NOTE TRUST,
Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
--------------------------------
Name:
Title:
B-3
EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before March 31 of
each calendar year beginning with March 31, 2002,
pursuant to Section 3.05 of the Transfer and
Servicing Agreement referred to below)
CONSECO PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST
The undersigned, a duly authorized representative of Conseco
Bank, Inc., as Servicer ("Conseco Bank"), pursuant to the Transfer and Servicing
Agreement dated as of May 1, 2001 (as amended and supplemented, the
"Agreement"), among Conseco Bank, Inc. and Conseco Finance Credit Card Funding
Corp., as transferors, Conseco Bank and Conseco Private Label Credit Card Master
Note Trust, does hereby certify that:
1. Conseco Bank is, as of the date hereof, the Servicer under
the Agreement. Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement.
2. The undersigned is an Authorized Officer who is duly
authorized pursuant to the Agreement to execute and deliver this
Certificate to the Trust.
3. A review of the activities of the Servicer during the year
ended December 31, ____, and of its performance under the Agreement was
conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of
such obligations has occurred or is continuing except as set forth in
paragraph 5 below.
5. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the
Agreement known to me to have been made by the Servicer during the year
ended December 31, _____ which sets forth in detail (i) the nature of
each such default, (ii) the action taken by the Servicer, if any, to
remedy each such default and (iii) the current status of each such
default: [If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _____________, 20___.
CONSECO BANK, INC.,
By:
--------------------------------
Name:
Title:
X-0
XXXXXXX X-0
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
to Section 9.02(d)(i)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions Of Counsel delivered on any applicable Closing Date.
(i) The amendment to the Transfer and Servicing Agreement,
attached hereto as Schedule 1 (the "Amendment" ), has been duly
authorized, executed and delivered by the Transferor and constitutes
the legal, valid and binding agreement of the Transferor, enforceable
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws from time to time in effect affecting
creditors' rights generally. The enforceability of the Transferor's
obligations is also subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
(ii) The Amendment has been entered into in accordance with
the terms and provisions of Section 9.01 of the Transfer and Servicing
Agreement.
X-0-0
XXXXXXX X-0
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
subsection 9.02(d)(ii) or (iii)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
1. To the extent that Article 9 of the New York UCC applies to
the transfer of the Additional Receivables and the proceeds thereof by
[the Account Owner] to the Transferor pursuant to the Supplemental
Conveyance, the Supplemental Conveyance creates in favor of the
transferor a security interest in the rights of [the Account Owner] in
such Additional Receivables and the proceeds thereof.
2. To the extent that the transfer of Additional Receivables
by the Transferor to the Trust pursuant to the Assignment does not
constitute an absolute assignment by the Transferor to the Trust of
such Additional Receivables or the proceeds thereof, the Assignment
creates in favor of the Trust a security interest in the rights of the
Transferor in such Additional Receivables and the proceeds thereof.
3. The security interests described in paragraphs 1 and 2
above are perfected and of first priority.
X-0-0
XXXXXXX X-0
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date. Unless otherwise
indicated, all capitalized terms used herein shall have the meanings ascribed to
them in the Transfer and Servicing Agreement and in the Assignment.
1. The Transfer and Servicing Agreement, together with the
Assignments, create in favor of the Trust a security interest in each
of the relevant Transferor's rights in the Receivables identified in
Schedule 1 to the Transfer and Servicing Agreement. Such security
interest is perfected and of first priority.
SCHEDULE I
List of Accounts
[Original list delivered to Owner Trustee]
