Common use of Note Receivables Clause in Contracts

Note Receivables. Each Eligible SBA 7 (a) Guaranteed Note Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable will (i) represent bona fide existing obligations created by the lending of money by Borrower to SBA 7 (a) Loan Obligors in the ordinary course of Borrower's business, and (ii) be unconditionally owed to Borrower without defenses, disputes, offsets or counterclaims, or rights of return or cancellation and is secured by SBA 7 (a) Note Receivable Collateral in accordance with the Required Procedures. Each Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable will be documented on Approved Forms in accordance with the Required Procedures. Unless otherwise clearly disclosed to Lender in writing prior to submission to Lender for evaluation for eligibility, Borrower will not have received notice of (a) actual or imminent bankruptcy, insolvency, or material impairment of the financial condition of any SBA 7(a) Loan Obligor regarding any Eligible SBA 7(a) Guaranteed Note Receivable or any Eligible SBA 7(a) Non-Guaranteed Note Receivable or (b) actual or threatened litigation regarding the validity or enforceability of any Eligible SBA 7(a) Guaranteed Note Receivable or any Eligible SBA 7(a) Non-Guaranteed Note Receivable or the validity, enforceability or priority of any SBA 7(a) Note Receivable Collateral. With respect to each Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable, Borrower will, no later than the respective funding date of the Financed SBA Loan, have taken the steps required to perfect Borrower's Liens in any SBA 7(a) Note Receivable Collateral for such Eligible SBA 7(a) Guaranteed Note Receivable or Eligible SBA 7(a) Non-Guaranteed Note Receivable, as applicable, against the applicable SBA 7 (a) Loan Obligor in all applicable jurisdictions. Unless otherwise clearly disclosed to Lender in writing prior to or simultaneously with submission to Lender for evaluation for eligibility, Borrower represents that it will be the sole legal and beneficial owner of each Eligible SBA 7 (a) Guaranteed Note Receivable, and that no participation interest or other ownership interest (legal, beneficial or otherwise) has been sold or is otherwise outstanding with respect thereto.

Note Receivables. Each a. All of the SBA 7(a) Note Receivables owned by Borrower which are reflected in the most recent Borrowing Base Certificate delivered by Borrower to Lender shall be “Eligible SBA (a) Note Receivables” for purposes of this Agreement, except any SBA 7(a) Note Receivable to which any of the exclusionary criteria set forth below applies. Lender shall have the right to establish, modify or eliminate Reserves against Eligible SBA 7(a) Note Receivables from time to time in its reasonable credit judgment. In addition, Lender reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below, to establish new criteria and to adjust advance rates with respect to Eligible SBA 7(a) Note Receivables, in its reasonable credit judgment; provided that Lender shall provide twenty-five (25) days prior written notice to Borrower with respect to any adjustment of existing criteria or establishment of new criteria that would have the effect of making less credit available. b. Eligible SBA 7(a) Note Receivables shall not include any SBA 7(a) Note Receivable of Borrower: i. as to which all conditions precedent to the effectiveness of the SBA guaranty with respect to the applicable SBA 7(a) Loan have not been met; ii. to the extent that the SBA 7(a) Loan has not been disbursed by Borrower to or for the account of the SBA 7(a) Loan Obligor; provided, that at the discretion of Lender, the disbursement requirements of this clause (b) may be deemed satisfied on the condition subsequent that the subject disbursements are actually made to the SBA 7(a) Loan Obligor on the same Business Day as the date of the Term Loan made hereunder; iii. with respect to which Borrower has not perfected its security interests and Liens in all underlying collateral for the applicable SBA 7 (a) Loan; provided, that at the discretion of Lender, the perfection requirements of this clause (c) may be deemed satisfied if escrow arrangements reasonably acceptable to Lender are in place to insure that all steps necessary for such perfection will be accomplished promptly, and in any event within seven (7) Business Days following the disbursement by Borrower of the proceeds of such SBA 7(a) Loan; iv. with respect to which the applicable SBA 7(a) Loan does not conform to all requirements of the SBA applicable to the initial approval and guaranty by the SBA thereof; v. with respect to which the applicable SBA 7(a) Loan, SBA 7 (a) Loan Notes or SBA 7 (a) Note Receivable Documents do not comply in all material respects with Applicable Laws; vi. with respect to which an event or condition has occurred that would release the SBA from its obligations to Borrower with respect to the applicable SBA 7(a) Loan, or the SBA has rejected the applicable SBA 7(a) Loan or the applicable SBA 7(a) Note Receivable Documents in any respect; vii. with respect to which the applicable SBA 7(a) Loan was not originated by the Borrower or Commercial Capital Corp.; viii. with respect to which the applicable SBA 7(a) Loan does not conform in all material respects to Borrower’s written credit and underwriting guidelines, including, without limitation, the Required Procedures as in effect on the date the applicable SBA 7(a) Loan was underwritten, copies of which have been previously delivered to Lender; ix. with respect to which the insurance coverage required by the applicable SBA Note Receivable Documents has been cancelled or lapsed or Borrower has not been named as loss payee or additional insured, as applicable, with respect thereto; x. to the extent that the outstanding principal amount of any SBA 7(a) Guaranteed Note Receivable exceeded the maximum amount permitted by the SBA Act at the time the applicable SBA 7(a) Loan was underwritten; xi. to the extent that the outstanding principal amount of any SBA 7(a) Non-Guaranteed Note Receivable exceeded the maximum amount permitted by the SBA Act at the time the applicable SBA 7 (a) Loan was underwritten, or if the aggregate outstanding principal amount of both the SBA 7 (a) Guaranteed Note Receivable portion and each Eligible the SBA 7(a) Non-Guaranteed Note Receivable will (i) represent bona fide existing obligations created by portion of the lending of money by Borrower to same SBA 7 (a) Loan Obligors in exceeded the ordinary course of Borrower's business, and (ii) be unconditionally owed to Borrower without defenses, disputes, offsets or counterclaims, or rights of return or cancellation and is secured maximum amount permitted by the SBA 7 (a) Note Receivable Collateral in accordance with Act at the Required Procedures. Each Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable will be documented on Approved Forms in accordance with the Required Procedures. Unless otherwise clearly disclosed to Lender in writing prior to submission to Lender for evaluation for eligibility, Borrower will not have received notice of (a) actual or imminent bankruptcy, insolvency, or material impairment of the financial condition of any SBA 7(a) Loan Obligor regarding any Eligible SBA 7(a) Guaranteed Note Receivable or any Eligible SBA 7(a) Non-Guaranteed Note Receivable or (b) actual or threatened litigation regarding the validity or enforceability of any Eligible SBA 7(a) Guaranteed Note Receivable or any Eligible SBA 7(a) Non-Guaranteed Note Receivable or the validity, enforceability or priority of any SBA 7(a) Note Receivable Collateral. With respect to each Eligible SBA 7(a) Guaranteed Note Receivable and each Eligible SBA 7(a) Non-Guaranteed Note Receivable, Borrower will, no later than the respective funding date of the Financed SBA Loan, have taken the steps required to perfect Borrower's Liens in any SBA 7(a) Note Receivable Collateral for such Eligible SBA 7(a) Guaranteed Note Receivable or Eligible SBA 7(a) Non-Guaranteed Note Receivable, as applicable, against time the applicable SBA 7 (a) Loan was underwritten, to the extent of such excess; xii. with respect to which the applicable SBA 7(a) Loan Obligor is the subject of an insolvency proceeding or a case commenced under the Bankruptcy Code; xiii. with respect to which any payment of interest, principal or any other amount due under the applicable SBA 7(a) Loan is more than 61 days past due; xiv. with respect to which the applicable SBA 7(a) Loan is not a valid, legally enforceable obligation of the SBA 7(a) Loan Obligor or is subject to any offset or other defense on the part of such SBA 7(a) Loan Obligor or to any claim on the part of the SBA 7(a) Loan Obligor denying liability; xv. with respect to which the subject SBA 7(a) Note Receivable is subject to any Lien, except for the Lien of Lender and the interest of the SBA pursuant to the applicable Loan Guaranty Agreement; xvi. to the extent that the subject SBA 7(a) Note Receivable has been sold pursuant to a Note Participation; xvii. with respect to which the applicable SBA 7(a) Loan is not evidenced by legal documentation in form and substance satisfactory to Lender; provided, that legal documentation that conforms in all material respects to forms provided by the SBA, standard forms of mortgages or deeds of trust provided by Borrower’s local counsel for use in specific jurisdictions, or other forms of documents previously approved by Lender shall be presumed to be satisfactory to Lender; xviii. with respect to which the applicable jurisdictions. Unless otherwise clearly disclosed to Lender in writing prior to or simultaneously with submission to Lender for evaluation for eligibility, Borrower represents that it will be the sole legal and beneficial owner of each Eligible SBA 7 (a) Guaranteed Note ReceivableLoan is made to an employee, and that no participation interest officer, agent, director, stockholder, or other ownership interest (legal, beneficial Affiliate of Borrower or otherwiseany Affiliate of any thereof; xix. with respect to which the applicable SBA 7(a) Loan has been sold turned over to the SBA or is otherwise outstanding with respect thereto.any other Person for servicing or collection;