AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
BY AND BETWEEN
▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED PARTNERSHIP,
as Borrower
THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO AS LENDERS,
ING (U.S.) CAPITAL CORPORATION,
as Agent
AND
PNC BANK, NATIONAL ASSOCIATION,
as Servicing Agent
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Dated as of February 11, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1. CERTAIN DEFINITIONS......................................................................2
SECTION 1.1 Certain Definitions..........................................................2
SECTION 1.2 Construction................................................................23
SECTION 1.3 Accounting Principles.......................................................23
SECTION 1.4 Reference to and Effect of the Existing Credit Agreement....................23
ARTICLE 2. AMOUNTS AND TERMS OF THE ADVANCES.......................................................24
SECTION 2.1 The Advances................................................................24
SECTION 2.2 The Settlement Advances and Settlement Differential Advances; Use of
Proceeds....................................................................24
SECTION 2.3 [INTENTIONALLY OMITTED].....................................................25
SECTION 2.4 [INTENTIONALLY OMITTED].....................................................25
SECTION 2.5 Overhead Expenses...........................................................25
SECTION 2.6 Making the Advances.........................................................25
SECTION 2.7 Fees........................................................................30
SECTION 2.8 Reduction of the Commitment.................................................30
SECTION 2.9 Revolving Loan Notes; Repayment of the Advances.............................31
SECTION 2.10 Optional Prepayments........................................................34
SECTION 2.11 Mandatory Prepayments.......................................................35
SECTION 2.12 Interest....................................................................35
SECTION 2.13 (a) Funding Indemnification.................................................37
SECTION 2.14 Payments and Computations...................................................37
SECTION 2.15 Payment on Non-Business Days................................................39
SECTION 2.16 Pro Rata Treatment of Lenders...............................................39
ARTICLE 3. CONDITIONS OF LENDING...................................................................39
SECTION 3.1 Condition Precedent to Initial Advance......................................39
SECTION 3.2 Conditions Precedent to All Advances........................................41
ARTICLE 4. REPRESENTATIONS AND WARRANTIES..........................................................42
SECTION 4.1 Representations and Warranties of the Borrower..............................42
SECTION 4.2 Additional Representations and Warranties of the Borrower with Respect to
Settlements.................................................................45
ARTICLE 5. COVENANTS OF THE BORROWER...............................................................47
SECTION 5.1 Affirmative Covenants.......................................................47
SECTION 5.2 Negative Covenants..........................................................52
ARTICLE 6. EVENTS OF DEFAULT.......................................................................55
SECTION 6.1 Events of Default...........................................................55
SECTION 6.2 Remedies....................................................................57
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Page
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ARTICLE 7. MISCELLANEOUS...........................................................................58
SECTION 7.1 Amendments, Etc.............................................................58
SECTION 7.2 Notices, Etc................................................................59
SECTION 7.3 No Waiver; Remedies.........................................................59
SECTION 7.4 Accounting Terms............................................................60
SECTION 7.5 Costs, Expenses and Taxes; Indemnification..................................60
SECTION 7.6 Right of Set-off; Ratable Payments; Relations Among Lenders.................61
SECTION 7.7 Binding Effect..............................................................61
SECTION 7.8 Effect on Limited Partners..................................................62
SECTION 7.9 GOVERNING LAW...............................................................62
SECTION 7.10 Section Headings............................................................62
SECTION 7.11 Tax Characterization........................................................62
SECTION 7.12 Execution...................................................................62
ARTICLE 8. THE AGENT...............................................................................63
SECTION 8.1 Appointment; Nature of Relationship.........................................63
SECTION 8.2 Powers......................................................................63
SECTION 8.3 General Immunity............................................................63
SECTION 8.4 No Responsibility for Advances, Creditworthiness, Collateral, Recitals, Etc.63
SECTION 8.5 Action on Instructions of Lenders...........................................64
SECTION 8.6 Employment of Agents and Counsel............................................64
SECTION 8.7 Reliance on Documents; Counsel..............................................64
SECTION 8.8 The Agent's Reimbursement and Indemnification...............................64
SECTION 8.9 Rights as a Lender..........................................................65
SECTION 8.10 Lender Credit Decision......................................................65
SECTION 8.11 Successor Agent.............................................................65
SECTION 8.12 Collateral Documents........................................................66
ARTICLE 9. THE SERVICING AGENT.....................................................................66
SECTION 9.1 Appointment; Nature of Relationship.........................................66
SECTION 9.2 Powers......................................................................66
SECTION 9.3 General Immunity............................................................66
SECTION 9.4 No Responsibility for Advances, Creditworthiness, Collateral, Recitals, Etc.66
SECTION 9.5 Action on Instructions of Lenders...........................................67
SECTION 9.6 Employment of Agents and Counsel............................................67
SECTION 9.7 Reliance on Documents; Counsel..............................................67
SECTION 9.8 The Servicing Agent's Reimbursement and Indemnification.....................67
SECTION 9.9 Rights as a Lender..........................................................68
SECTION 9.10 Successor Servicing Agent...................................................68
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SCHEDULES
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Schedule I -- Lock Boxes, Lock-Box Banks, and Collection Accounts
Schedule II -- Material Contracts and Other Commitments of the Borrower
Schedule III -- Closing Costs
Schedule IV -- Closing Date Advances
Schedule V -- Designated Annuity Funding Companies
Schedule VI -- Benefit Plans
EXHIBITS
--------
EXHIBIT A -- Form of Notice of Purchase
EXHIBIT B -- Form of Notice of Direction of Payment
EXHIBIT C -- Form of Notice of Borrowing
EXHIBIT D -- Form of Notice of Continuation/Conversion
EXHIBIT E -- Eligible Settlement Purchase Procedures
EXHIBIT F -- Form of Borrowing Base Certificate
EXHIBIT G -- Form of Lock-Box Agreement
EXHIBIT H -- Form of Amended and Restated Revolving Loan Note
EXHIBIT I -- Form of Amended and Restated Security Agreement
EXHIBIT J -- Form of Purchase Agreement
EXHIBIT K -- Commitments
EXHIBIT L -- Form of Servicing Agent Note
EXHIBIT M -- Form of Monthly Report
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AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the, "Agreement") is
made as of February 11, 1997 by and between ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Borrower"), the institutions
from time to time party hereto as Lenders, ING (U.S.) CAPITAL CORPORATION ("ING
Capital"), in its capacity as contractual representative for itself and the
other Lenders (the "Agent"), and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as
servicing agent (the "Servicing Agent").
RECITALS
WHEREAS, the Borrower and ING Baring (U.S.) Capital Markets, Inc. (formerly
known as Internationale Nederlanden (U.S.) Capital Markets, Inc., the "Original
Lender") entered into that certain Revolving Credit Agreement dated as of August
25, 1995 (as amended, restated, supplemented or otherwise modified from time to
time prior to the date hereof, the "Existing Credit Agreement"), pursuant to
which the Original Lender agreed to make loans and other financial
accommodations to the Borrower to facilitate the Borrower's purchases of
Settlements (as hereinafter defined);
WHEREAS, the Original Lender has assigned all of its rights and obligations
with respect to the Existing Credit Agreement to the Agent, and the Agent has
agreed to assume all such rights and obligations with respect to the Existing
Credit Agreement, pursuant to the Assignment Agreement;
WHEREAS, the Borrower, the Agent, the Servicing Agent and the Lenders have
agreed to enter into this Agreement in order, among other things, (i) to amend,
restate and consolidate the Existing Credit Agreement in its entirety and (ii)
to set forth the terms and conditions under which the Lenders will hereafter
extend loans and make other financial accommodations to or for the benefit of
the Borrower;
WHEREAS, it is the intent of the Borrower, the Agent, the Servicing Agent
and the Lenders that this Agreement set forth new terms for the repayment and
performance of the Borrower's obligations under the Existing Credit Agreement
and this Agreement, it being the intent of the parties hereto that, from and
after the satisfaction of the conditions precedent set forth in Section 3.1
hereof, such obligations shall be governed by this Agreement; and
WHEREAS, it is the intent of the Borrower, the Agent, the Servicing Agent
and the Lenders that this Agreement be merely an amendment, restatement and
consolidation of the Existing Credit Agreement and not constitute a novation of
the indebtedness thereunder;
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
SECTION 1.1 Certain Definitions. In addition to terms defined elsewhere in
this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Adjusted Base Rate" shall mean on any date, the Base Rate plus the Base
Rate Spread.
"Advance" shall mean any advance by any Lender, or by the Servicing Agent
on behalf of any Lender to the Borrower, whether a Settlement Advance or a
Settlement Differential Advance, made pursuant to Article 2 of this Agreement or
Article II of the Existing Credit Agreement (including without limitation, a
Settlement Advance and a Settlement Differential Advance), consisting of a
Fixed-Rate Advance and/or a Floating-Rate Advance (each of which shall be a
"Type" of Advance).
"Advance Documents" shall mean this Agreement, the Revolving Loan Notes,
the Security Agreement, the Lock-Box Agreements, the Fee Letter and any other
instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the same may
be supplemented or amended from time to time hereafter in accordance herewith or
therewith, and "Advance Document" shall mean any of the Advance Documents.
"Affiliate" as to any Person shall mean any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with, such
Person, (ii) which beneficially owns or holds 10% or more of any class of the
voting stock (or, in the case of a Person that is not a corporation, 10% or more
of the equity interest) of such Person, or (iii) 10% or more of the voting stock
(or, in the case of a Person that is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held, directly or indirectly,
by such Person. Control, as used herein, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities,
partnership interests, membership, voting rights, governing boards, committees,
divisions or other bodies, including the power to elect a majority of the
directors or trustees of a corporation or trust, as the case may be.
"Agent" shall mean ING Capital in its capacity as contractual
representative for itself, the Servicing Agent and the Lenders pursuant to
Article 8 hereof and any successor Agent appointed pursuant to Article 8 hereof.
"Agent's Account" shall mean the Agent's bank account at The Chase
Manhattan Bank, ABA No. ▇▇▇-▇▇▇-▇▇▇, Account No. 9301035763, for the account of
ING (U.S.) Capital Corporation, or such other account as may be designated by
the Agent from time to time by notice to the Borrower and the Servicing Agent.
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"Agreement" shall mean this Amended and Restated Credit Agreement, as the
same may be amended, restated, supplemented or otherwise modified from time to
time hereafter, including all schedules and exhibits hereto.
"Agreement of Limited Partnership" shall mean the Agreement of Limited
Partnership of ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. Limited Partnership among ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ING Capital (as successor by assignment to
Internationale Nederlanden (U.S.) Capital Markets, Inc.), Stone International,
LLC, and the General Partner, as the same may be amended, restated, supplemented
or otherwise modified from time to time hereafter.
"A.M. Best" shall mean the A.M. Best Company or its successor.
"Approved Working Capital Budget" has the meaning assigned to such term in
Section 2.5.
"Approved Asset Securitization Transaction" shall mean any Asset
Securitization Transaction arranged, agented, sponsored or approved by ING
Capital.
"Asset Securitization Transaction" shall mean any financing arrangement
entered into by the Borrower or any of its Affiliates (other than under this
Agreement) pursuant to which the Borrower is required to sell or pledge any
interests in a material portion of the Collateral hereunder to secure or provide
for the payment of amounts owing by the Borrower or such Affiliate to the
provider of such credit or in respect of securities issued by the Borrower, such
Affiliate or any other third-party credit provider and backed by such
Collateral.
"Assignment Agreement" shall mean that certain Assignment and Acceptance,
dated as of February 11, 1997, between ING Baring (U.S.) Capital Markets, Inc.
(formerly known as Internationale Nederlanden (U.S.) Capital Markets, Inc.) and
ING (U.S.) Capital Corporation and acknowledged by the General Partner, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇ International, LLC.
"Authorized Officer" shall mean any of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Base Rate" shall mean, on any date, a fluctuating rate of interest per
annum equal to the higher of (i) the Chemical Bank Prime Rate and (ii) the
Citibank Prime Rate.
"Base Rate Spread" shall mean the rate of interest per annum referred to in
the definition of "Adjusted Base Rate" and set forth in the Fee Letter.
"Borrower's Account" shall mean the Borrower's bank account at PNC Bank,
National Association, ABA No. ▇▇▇▇▇▇▇▇▇▇, Account No. ▇▇▇▇▇▇▇▇▇ for the account
of the Borrower or such other account as may be designated by the Borrower from
time to time by notice to the Servicing Agent, the Agent and the Lenders.
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"Borrowing Base" shall mean, on any date of determination, (a) the
aggregate for all Purchased Settlements which are Eligible Settlements of (i)
the Value of each Purchased Settlement which is an Eligible Settlement on such
date minus (ii) the Settlement Concentration Amount with respect to such
Purchased Settlement, minus (b) the aggregate of the Designated Annuity Funding
Company Concentration Amounts on such date, minus (c) the Post-Asset
Securitization Annuity Provider Concentration Amount on such date.
"Borrowing Base Certificate" shall mean the certificate in the form of
Exhibit F hereto delivered with each Notice of Borrowing and at the times
specified in Sections 3.1, 3.2 and 5.1(c).
"Borrowing/Conversion Date" shall mean, with respect to any Advance, the
date of the making of such Advance or the Continuation or Conversion of the
same, which date shall in any case be a Business Day.
"Breakage Costs" shall mean, with respect to (a) any voluntary or mandatory
prepayment of any Fixed-Rate Advance pursuant to Section 2.10 or Section 2.11 or
(b) a failure by the Borrower, for any reason, to borrow any proposed Fixed-Rate
Advance on the date specified in the applicable Notice of Borrowing (including
without limitation, as a result of the Borrower's failure to satisfy any
conditions precedent to such borrowing), the resulting loss, cost or expense
incurred by any Lender, the Agent or the Servicing Agent, including, but not
limited to, any loss, cost or expense incurred in liquidating or employing
deposits from third parties; provided, however, that any such Lender, the Agent
or the Servicing Agent shall use its best efforts to minimize such loss or
expense and shall have delivered to the Borrower a certificate as to the amount
of such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
"Business Day" shall mean any day other than a Saturday or Sunday or other
day upon which banks are authorized or required to close in New York City;
provided, however, that when used with respect to the ING CoF, the term
"Business Day" shall be deemed to mean a day of the year on which dealings are
carried on in the London interbank market and banks are open in London and not
authorized or required to be closed in New York City.
"Capitalization Rate" shall mean, with respect to any Settlement, at the
time of purchase of such Settlement by the Borrower, the Purchase Yield for such
Settlement minus the Rate Differential.
"Chemical Bank Base Rate" shall mean the rate designated by Chemical Bank
from time to time as its prime rate in the United States, such rate to change as
when such designated rate changes. The Chemical Bank Base Rate is not
necessarily the lowest rate of interest charged by Chemical Bank in connection
with extensions of credit to its customers.
"Citibank Base Rate" shall mean the rate designated by Citibank, N.A. from
time to time as its prime rate in the United States, such rate to change as when
such designated rate
4
changes. The Citibank Base Rate is not necessarily the lowest rate of interest
charged by Citibank, N.A. in connection with extensions of credit to its
customers.
"Claim Group" shall mean either the Base Rate Claim Group, the Matched
Claim Group or the Unmatched Claim Group.
"Closing Costs" shall mean, with respect to a Settlement, the estimate of
closing costs and expenses in respect thereof set forth in Schedule III hereto,
including, but not limited to, broker commissions, overnight mail charges,
courier fees, legal fees, expenses related to credit reports, and UCC filing
fees.
"Closing Date" shall mean February 11, 1997.
"Collateral" shall mean the property of the Borrower in which security
interests are granted to the Agent pursuant to the Security Agreement.
"Collection Account" shall mean a bank account described in Schedule I
hereto and/or any other bank account from time to time hereafter designated by
the Borrower as a Collection Account in accordance with the terms hereof and of
the Security Agreement and in respect of which a Lock-Box Agreement executed by
all of the parties thereto shall have been delivered to the Agent in accordance
with the terms hereof and thereof.
"Collection Period" shall mean the calendar month immediately preceding a
Monthly Payment Date.
"Collections" shall mean, with respect to any Purchased Settlement, all
cash collections and other cash proceeds thereof, including, but not limited to,
any interest earned on such amounts while on deposit in the Collection Account.
"Collections" shall be deemed to include any amounts payable to the Borrower
under any interest rate swap agreement, cap, collar, or floor agreement or other
interest rate management device entered into in connection with this Agreement.
"Commitment" shall mean, for each Lender, the obligation of such Lender to
fund Advances pursuant to Article 2 not exceeding the amount set forth on
Exhibit K to this Agreement opposite its name thereon, as such amount may be
modified from time to time pursuant to the terms of this Agreement. As of the
Closing Date, the aggregate amount of the Commitments of the Lenders shall be
equal to $105,000,000.
"Commitment Termination Date" shall mean the earliest to occur of (i) the
date of the reduction of the Commitments of all of the Lenders to zero or the
termination of all of the Lenders' Commitment, in either case, pursuant to
Section 2.8, (ii) the declaration or automatic occurrence of the Commitment
Termination Date or the Facility Termination Date pursuant to Section 6.2(a), or
(iii) August 25, 1998.
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"Continue," "Continuation," and "Continued" each refers to the continuation
of an Advance of one Type as an Advance of that same Type pursuant to Section
2.6(b).
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414(b) or 414(c) of the Internal Revenue Code
of 1986, as amended from time to time.
"Convert", "Conversion" and "Converted" each refers to a conversion of an
Advance of one Type into an Advance of another Type pursuant to Section 2.6(b).
"Credit Report" shall mean a consumer credit report in respect of a Person
based upon such Person's social security number, from such firms or institutions
as the Agent may from time to time select and notify to the Borrower.
"Daily Settlement Option" shall have the meaning assigned to such term in
Section 2.6(d) hereof.
"Default Rate" shall mean, as of any date of determination, a rate of
interest per annum equal to (a) with respect to any outstanding Advance, the
Interest Rate otherwise then applicable to such Advance plus two percent (2.0%),
and (b) with respect to any other outstanding Obligations hereunder, the
Adjusted Base Rate then in effect plus two percent (2.0%).
"Delaware ULPA" shall mean the Delaware Uniform Limited Partnership Act (6
Del. C. (section) 17-101, et seq.), as the same may be amended or supplemented
from time to time, and any successor statute.
"Delinquency Ratio" shall mean with respect to Settlements, the ratio
(expressed as a percentage) computed as of the last day of each calendar month
by dividing (i) the aggregate of the Values of all Purchased Settlements that
were Delinquent Settlements on such date, by (ii) the aggregate of the Values on
such date of all Purchased Settlements.
"Delinquent Settlement" shall mean any Settlement as to which any payment
of a Periodic Payment thereunder remains unpaid sixty (60) days after the day
such Periodic Payment is due.
"Designated Annuity Funding Company" shall mean an Insurer issuing an
annuity contract related to a Purchased Settlement described under the caption
"Background" in the Purchase Agreement.
"Designated Annuity Funding Company Concentration Amount" shall mean, for
any Designated Annuity Funding Company, the excess, if any, of the Values of all
of the Purchased Settlement that are Eligible Settlements related to such
Designated Annuity Funding Company over the Designated Annuity Funding Company
Concentration Limit for such Designated Annuity Funding Company.
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"Designated Annuity Funding Company Concentration Limit" shall mean, for
any Designated Annuity Funding Company, (a) in the case of a Designated Annuity
Funding Company listed on Schedule V hereto, the lesser of (x) $15,000,000 and
(y) twenty percent (20%) of the aggregate Value of all Purchased Settlements
which are Eligible Settlements, and (b) in the case of any other Designated
Annuity Funding Company, $5,000,000. The Agent (with the consent of the
Supermajority Lenders, which consent shall not unreasonably be withheld) is
hereby irrevocably authorized to amend Schedule V from time to time in its
commercially reasonable discretion; provided, however, that in the event that
the Agent elects to remove any Designated Annuity Funding Company listed
thereon, the Designated Annuity Funding Company Concentration Limit with respect
to such Designated Annuity Funding Company shall be equal to the lesser of (i)
$15,000,000 and (ii) the aggregate Values of all Purchased Settlements that are
Eligible Settlements related to such Designated Annuity Funding Company at such
time.
"Discretionary Non-Ratable Advance" has the meaning assigned to such term
in Section 2.6(c)(iii) (it being understood and agreed that the Servicing Agent
shall not make any Discretionary Non-Ratable Advance except in the event one or
more Lenders have notified the Servicing Agent of its intent to fund the
aggregate amount of any such requested Discretionary Non- Ratable Advance, such
determination to fund any requested Discretionary Non-Ratable Advance to be made
in the sole discretion of each such Lender).
"Discretionary Non-Ratable Advance Borrowing Base" shall mean at any time,
the aggregate Values of all Purchased Settlements purchased with the proceeds of
any Discretionary Non-Ratable Advance.
"Dollar", "Dollars", "U.S. Dollars" and the symbol "$" shall mean the
lawful currency of the United States of America.
"Duration" shall mean as of the date of determination for any Settlement,
an amount equal to (x) the sum of the products for each future payment of such
Settlement of (i) the present value of such payment discounted at the applicable
Capitalization Rate to such date of determination, multiplied by (ii) the number
of years (or portions thereof calculated on a basis of a 360 day year) preceding
such payment, divided by (y) the aggregate present value of all payments
scheduled under such Settlement discounted by the applicable Capitalization
Rates to such date of determination.
"Eligible Settlement" shall mean a Settlement:
(i) which is not a Delinquent Settlement;
(ii) the Purchase Price of which does not exceed its Value at the time
of purchase;
(iii) which is based on an actual and bona fide personal injury or
physical sickness claim;
7
(iv) which is denominated and payable only in U.S. Dollars;
(v) which is a "general intangible" within the meaning of the UCC of
the state in which the Seller has its principal place of business, or is a
right to payment under a policy of insurance or proceeds thereof, and is
not evidenced by any instrument or chattel paper;
(vi) which is payable by an Obligor, whether or not funded with a
Qualified Annuity and (A) if funded with a Qualified Annuity, the
Designated Annuity Funding Company, or (B) if not funded with a Qualified
Annuity, the Obligor, shall not, in either case, be the subject of any
Insolvency Event;
(vii) in the event the Insurer or other Person obligated to make
Periodic Payments thereunder has purchased an annuity contract to fund the
payment obligations of such Insurer or other Person, as the case may be,
such annuity contract was issued by a Designated Annuity Funding Company;
(viii) which is not subject to court approval, does not arise from a
court judgment and is not subject to appeal;
(ix) in the event the Seller was married at the time the Settlement
Agreement was executed, the Purchased Settlement, the Purchase Agreement
and any related documents are signed by such Seller's spouse;
(x) with respect to which there is no payor that is primarily liable
on such Purchased Settlement other than the Obligors identified as such by
the Seller;
(xi) which is not the subject of any action, suit, investigation,
proceeding or dispute (pending or threatened), rescission, recoupment,
set-off, counterclaim, defense, abatement, suspension, deferment,
deductible, reduction or termination by any Obligor, any Settlement
Counterparty, the Seller, or any Designated Annuity Funding Company related
to such Settlement or any other person;
(xii) which is not governed by the law of a state which restricts per
se the assignability of proceeds of settlements or insurance policies
obtained in connection with settlements;
(xiii) which neither the Borrower nor the Servicer has compromised,
adjusted or modified (including by extension of time of payment or the
granting of any discounts, allowances or credits, other than in the
ordinary course of Borrower's business consistent with past practices or as
otherwise approved by the Agent and the Supermajority Lenders in writing in
each of the foregoing's respective commercially reasonable discretion);
8
(xiv) neither the terms of which or the assignment of which
contravenes in any material respect any laws, rules or regulations
applicable thereto and as to which no party thereto is in violation of any
such law, rule or regulation in any material respect;
(xv) which complies with such other criteria and requirements as the
Agent may from time to time in its commercially reasonable credit judgment
specify (with the prior consent of the Supermajority Lenders) to the
Borrower following thirty (30) days' notice, which other criteria and
requirements shall be based on the existence or occurrence of any factors
to be specified by the Agent (with the prior consent of the Supermajority
Lenders), in such notice, which, in the commercially reasonably credit
judgment of the Agent materially impair the composition, quality or the
prospects of collection of such Settlement;
(xvi) as to which at the time of acquisition by the Borrower the Agent
has not notified the Borrower that the Agent has determined, in its sole
commercially reasonable discretion, that such Settlement is unacceptable
for purchase by the Borrower;
(xvii) with respect to which, all of the conditions precedent set
forth in the Purchase Agreement have been satisfied;
(xviii) with respect to which, all of the Eligible Settlement Purchase
Procedures have been completed;
(xix) any Obligor of which, or, if funded by a Qualified Annuity, the
Designated Annuity Funding Company, at the time of the purchase of such
Settlement by the Borrower, is rated at least "Baa3" by Moody's, "BBB-" by
S&P or "A-" by A.M. Best, or the Borrower's purchase of which has been
pre-approved by the Agent, and the Supermajority Lenders on written notice
from the Borrower given by telephone, confirmed in writing (whether by
telecopy, telex or otherwise) in substantially the form of a Notice of
Purchase;
(xx) as to which (a) the Borrower has obtained a good and indefeasible
ownership interest in the rights of the Seller to receive Periodic Payments
with respect thereto, subject to no other Liens (other than in favor of the
Agent or the Lenders pursuant hereto and the Security Agreement) and (b)
the Agent has obtained a first priority perfected security interest in the
Borrower's rights therein;
(xxi) with respect to which all documents required to be contained in
the related Settlement Package have been received by the Servicer (such
receipt to be confirmed by the Servicer by notice thereof to the Agent), in
satisfactory form and in compliance with the requirements of this
Agreement;
(xxii) in the event such Settlement is a Non-Guaranteed Settlement,
the Borrower shall have complied with the requirements of Section 4.2(o);
provided, however, that with respect to any Non-Guaranteed Settlement that
does not comply with the
9
requirement of Section 4.2(o)(ii), the non-guaranteed Periodic Payments
portion of such Non-Guaranteed Settlement shall be deemed ineligible
pursuant to this clause (xxii); and
(xxiii) with respect to which Collections have been directed to (x) a
Lock-Box or Lock-Box Account in respect of which a Lock-Box Agreement shall
have been obtained or (y) the Collection Account, in each case, pursuant to
the terms hereof and of the Security Agreement.
"Eligible Settlement Purchase Procedures" shall mean the procedures set
forth in Exhibit E hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any successor
statute, and the rules and regulations thereunder, as from time to time in
effect.
"ERISA Affiliate" shall mean any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Borrower, or (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as the Borrower, any corporation described
in clause (i) above or any partnership, trade or business described in clause
(ii) above.
"Event of Default" shall mean any of the Events of Default described in
Section 6.1.
"Existing Credit Agreement" shall have the meaning assigned to such term in
the Recitals to this Agreement.
"Facility Termination Date" shall mean the earlier to occur of (i) the
declaration or automatic occurrence of the Facility Termination Date pursuant to
Section 6.2(a) and (ii) the Projected Collection Date.
"Fee Letter" shall mean that certain amended and restated letter agreement,
dated as of February 11, 1997, between the Borrower and the Agent, as the same
may be amended, restated, supplemented or otherwise modified from time to time
hereafter.
"Fixed Rate" shall mean, for any Fixed-Rate Advance, with respect to the
related Fixed-Rate Interest Period, a fixed rate of interest per annum equal to
the ING CoF for such period, plus the Fixed-Rate Spread. The Fixed Rate for any
Fixed-Rate Interest Period for a Fixed-Rate Advance shall be determined by the
Agent two (2) Business Days prior to the first day of such period.
"Fixed-Rate Advance" shall mean an Advance which bears interest as provided
in 2.12(a)(ii).
10
"Fixed-Rate Interest Period" shall mean, with respect to any Settlement
Advance, the period commencing on the date on which such Advance is made or is
Converted or Continued as a Fixed-Rate Advance and ending on such date as shall
be selected by the Borrower and agreeable to the Agent, in each case, subject to
the following provisions:
(i) If the Interest Rate at which such Advance is to accrue interest
is determined by reference to the LIBOR, such Fixed-Rate Interest Period
shall be any number of months not exceeding 12;
(ii) If a Fixed-Rate Interest Period would otherwise expire on a day
other than a Business Day, the last day of such Fixed-Rate Interest Period
shall be extended to occur on the immediately succeeding Business Day;
provided, however, that if the next succeeding Business Day occurs in the
following calendar month, then the last day of such Fixed-Rate Interest
Period shall be deemed to occur on the immediately preceding Business Day;
(iii) If the Interest Rate at which such Advance is to accrue interest
is determined by reference to LIBOR and such Fixed-Rate Interest Period
commences on the last Business Day in a calendar month or on a day for
which there is no numerically corresponding day in the calendar month in
which such Fixed-Rate Interest Period is to expire, the last day of such
Fixed-Rate Interest Period shall be deemed to occur on the last Business
Day of the calendar month in which such Fixed-Rate Interest Period is to
expire; and
(iv) No Fixed-Rate Interest Period may be scheduled to expire later
than the Projected Collection Date.
"Fixed-Rate Spread" shall mean the rate of interest per annum which is
referred to in the definition of "Fixed Rate" as set forth in the Fee Letter.
"Floating-Rate Advance" shall mean an Advance which bears interest as
provided in Section 2.12(a)(i).
"GAAP" shall mean generally accepted accounting principles as are in effect
from time to time and applied on a consistent basis (except for changes in
application in which the Borrower's independent certified public accountants and
the Agent concur) both as to classification of items and amounts.
"General Partner" shall mean the Person or Persons then acting as the
general partner or general partners of the Borrower. As of the Closing Date, the
"General Partner" is ▇.▇. ▇▇▇▇▇▇▇▇▇ Structured Settlement Funding Corporation.
"Governmental Authority" shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission,
11
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Indebtedness" shall mean as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money; (ii)
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (iii) amounts raised under or liabilities in respect of any
note purchase or acceptance credit facility; (iv) reimbursement obligations
under any letter of credit, currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate management device (other than
in connection with this Agreement); (v) obligations of such Person to pay the
deferred purchase price of property or services; (vi) obligations of such Person
as lessee under leases which have been or should be in accordance with GAAP
recorded as capital leases; (vii) any other transaction (including without
limitation forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements, and whether structured as a borrowing, sale and leaseback or a
sale of assets for accounting purposes; (viii) any guaranty or endorsement of,
or responsibility for, any Indebtedness of the types described in this
definition; (ix) liabilities secured by any Lien on property owned or acquired,
whether or not such a liability shall have been assumed; or (x) unvested pension
obligations.
"ING Capital" shall mean ING (U.S.) Capital Corporation, and its successors
and assigns.
"ING CoF" shall mean, with respect to a Fixed-Rate Advance, (a) the
Fixed-Rate Interest Period of which is greater than one year, the applicable
Swap Rate, and (b) in all other cases, LIBOR, as applicable.
"Insolvency Event" shall mean, with respect to any Person, (i) such Person
generally shall not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against such Person seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law related to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property; or (ii)
such Person shall take any action to authorize any of the actions set forth in
clause (i) herein.
"Insurer" shall mean, with respect to any Settlement, any insurance company
or other Person which is qualified to underwrite insurance and is under an
obligation to make Periodic Payments with respect to such Settlement and any
assignee of such obligations pursuant to a Qualified Assignment.
"Interest Rate" shall mean, unless the context otherwise requires, the
Adjusted Base Rate or a Fixed Rate.
12
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
the same may be amended or supplemented from time to time, or any successor
statute, and the rules and regulations thereunder, as the same are from time to
time in effect.
"Issuing Vehicle" has the meaning assigned to such term in Section
5.2(a)(4).
"Issuing Vehicle Securities" has the meaning assigned to such term in
Section 5.2(a)(4).
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Governmental Authority.
"Lenders" shall mean the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"LIBOR" shall mean, with respect to a Fixed-Rate Advance with a Fixed-Rate
Interest Period no greater than one year, the rate of interest per annum
determined by the Derivatives and Treasury Department of the Agent's New York
office and communicated to the Servicing Agent to be equal to the rate for
deposits in Dollars in a principal amount approximating the principal amount of
such Advance for a period approximating the related Fixed-Rate Interest Period
as quoted on the Reuters Screen LIBO Page as of 11:00 A.M. (London time) and
adjusted to reflect subsequent changes in prevailing interest rates; provided,
if the related Fixed-Rate Interest Period is in excess of three months, such
rate shall be adjusted by the Agent to account for the quarterly payment of
interest on the unpaid principal amount of the Advance by the Borrower as
required by Section 2.12(b).
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including, but not
limited to, any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and any filed financing statement or other notice of any of the
foregoing (whether or not a lien or other encumbrance is created or exists at
the time of the filing).
"Life Insurance Carrier" shall mean any insurance carrier providing the
required life insurance policy pursuant to the requirements of Section 4.2(o)
hereof.
"List of Closing Documents" shall mean a list of agreements, documents, and
instruments related to the initial Advance under this Agreement which has been
agreed upon by the Borrower and Lender.
"Lock-Box" shall mean a Lock-Box described in Schedule I hereto and/or any
other lock-box from time to time hereafter designated by the Borrower as a
Lock-Box in accordance with the terms hereof and of the Security Agreement and
in respect of which a Lock-Box Agreement
13
executed by all of the parties thereto shall have been delivered to the Agent in
accordance with the terms hereof and thereof.
"Lock-Box Agreement" shall mean an agreement substantially in the form of
Exhibit G hereto by and among the Borrower, the Agent, and a depositary
institution acceptable to the Agent.
"Lock-Box Bank" shall mean the bank(s) described in Schedule I hereto at
which any Lock-Box or the Collection Account is maintained or any other bank
from time to time hereafter designated by the Borrower as a Lock-Box Bank in
accordance with the terms hereof and of the Security Agreement and which has
executed and delivered a Lock-Box Agreement to the Agent with respect to all
such Lock-Boxes and/or the Collection Account maintained with it as required
pursuant hereto and/or to the Security Agreement.
"Match Funded" shall mean, with respect to any Fixed-Rate Advance, that the
last day of the Fixed Rate Interest Period to which such Advance is allocated
shall be scheduled to occur no more than two weeks prior to the date the final
Periodic Payment in respect of the Purchased Settlement relating to such Advance
is scheduled to be made.
"Matched Claim Group" shall mean, at any time, those Purchased Settlements
with respect to which the cash flows have been allocated to Fixed-Rate Interest
Periods ending within five (5) days of the final scheduled Periodic Payment of
such Purchased Settlements.
"Material Adverse Change" shall mean any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of, or the Borrower's
ability to perform its obligations under, this Agreement or any other Advance
Document, (b) is or could reasonably be expected to be material and adverse to
the businesses, properties, assets, financial condition, results of operations
or prospects of the Borrower, (c) impairs materially or could reasonably be
expected to impair materially the ability of the Borrower to duly and punctually
pay or perform its Obligations hereunder and under the other Advance Documents,
(d) impairs materially or could reasonably be expected to impair materially the
ability of the Agent, to the extent permitted, to enforce its legal remedies
pursuant to this Agreement or any other Advance Document or (e) impairs or could
reasonably be expected to impair materially the collectibility of any
Settlement.
"Material Adverse Effect" shall mean any circumstance or event that could
result in a Material Adverse Change.
"Monthly Payment Date" shall mean the tenth (10th) day of each month, or if
such day is not a Business Day, the next succeeding Business Day.
"Monthly Payment Period" shall mean any period commencing on a Monthly
Payment Date and ending on the day immediately preceding the following Monthly
Payment Date.
"Monthly Report" shall have the meaning assigned such term in Section
5.1(c)(i).
14
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. or its successor.
"Multiemployer Plan" shall mean a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Pool Weighted Average Yield" shall mean as of the date of
determination, with respect to Settlements which are Eligible Settlements, a
rate of interest per annum equal to the weighted average on such date of the
Capitalization Rates based on the Values of such Settlements minus one-tenth of
one percent (0.10%).
"Non-Guaranteed Settlement" shall mean any Settlement in respect of which
any portion of the Periodic Payments purchased under any Purchase Agreement are
scheduled to be made after any guaranteed payment period pursuant to the
applicable Settlement Agreement.
"Notice of Borrowing" has the meaning assigned to such term in Section
2.6(a).
"Notice of Continuation/Conversion" has the meaning assigned to such term
in Section 2.6(b).
"Notice of Direction of Payment" shall mean a notice of direction of
payment executed by the Seller with respect to a Settlement in substantially the
form of Exhibit B hereto, pursuant to which the Seller notifies its related
Obligors, or, if funded with a Qualified Annuity, the related Designated Annuity
Funding Company, as applicable, by certified mail or reputable overnight courier
of the redirection of payments to be made in accordance with the Settlement.
"Notice of Purchase" shall mean a notice substantially in the form of
Exhibit A hereto.
"Obligations" shall mean and include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to the Agent, the Servicing
Agent, or any Lender by the Borrower of any kind or nature, present or future,
arising under this Agreement, the Existing Credit Agreement, the Revolving Loan
Notes, the Security Agreement, the Fee Letter, any of the other Advance
Documents, or other instruments, documents or agreements executed and/or
delivered in connection with any of the foregoing and to which the Borrower is a
party, whether or not for the payment of money, whether arising by reason of an
extension of credit, the issuance of a letter of credit, a loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising. The term includes, without limitation, the
principal amount of all Advances, together with interest, charges, expenses,
fees, attorneys' and paralegals' fees and expenses, any other sums chargeable to
the Borrower under this Agreement or any other Advance Document pursuant to
which it arose.
"Obligor" shall mean any party obligated to make Periodic Payments under
any Settlement Agreement (including any Qualified Assignment or any other
assignment thereof),
15
including, without limitation, any Settlement Counterparty, any Qualified
Assignee, and any Life Insurance Carrier obligated in respect of a
Non-Guaranteed Settlement.
"Original Lender" shall have the meaning assigned to such term in the
Recitals hereto.
"Overhead Expenses" has the meaning assigned to such term in Section 2.5.
"Partner" has the meaning assigned to such term in the Delaware ULPA.
"Payment Contracts" has the meaning assigned to such term in Section
5.2(a)(1).
"Payment Contracts Buyer" has the meaning assigned to such term in Section
5.2(a)(3).
"Payment Contracts Seller" has the meaning assigned to such term in Section
5.2(a)(2).
"Periodic Payments" shall mean, with respect to a Settlement, all payments
from time to time due to be paid by an Obligor or a Designated Annuity Funding
Company on behalf of each Obligor pursuant to the terms of such Settlement.
"Permitted Indebtedness" shall mean:
(a) Indebtedness under the Advance Documents; and
(b) Other Indebtedness incurred in the ordinary course of the
Borrower's business but not to exceed $1,000,000 at any time outstanding
and otherwise permitted to be incurred pursuant to Section 5.2.
"Permitted Liens" shall mean:
(a) Liens for taxes, assessments or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;
(b) pledges or deposits made in the ordinary course of business and to
the extent required by Law to secure payment of worker's compensation, or
to participate in any fund in connection with worker's compensation,
unemployment insurance, old-age pensions or other social security programs;
(c) Liens in favor of the Agent; and
(d) purchase money security interests on the equipment of the Borrower
securing no more than 100% of the purchase price of the equipment purchased
with the proceeds of
16
any purchase money Indebtedness, to the extent such Indebtedness is
Permitted Indebtedness hereunder.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint-stock company, trust, unincorporated organization or
association, joint venture, government or political subdivision or agency
thereof, or any other entity.
"Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Internal Revenue Code as to which the Borrower or any Subsidiary may have
any liability.
"Pool Weighted Average Duration" shall mean as of the date of
determination, an amount equal to the sum of the following amounts calculated
for each Eligible Settlement as follows: for each Eligible Settlement, the
Duration of such Settlement, multiplied by (x) the sum of all future payments
scheduled under such Settlement, divided by (y) the sum of all future payments
scheduled under each Eligible Settlement.
"Post-Asset Securitization Annuity Provider Concentration Amount" shall
mean, at any time, the amount by which (i) the aggregate Values of all Eligible
Settlements the Designated Annuity Funding Company related to which is neither a
Tier One Designated Annuity Funding Company nor a Tier Two Designated Annuity
Funding Company exceeds (ii) the Post-Asset Securitization Annuity Provider
Concentration Limit, in each case, at such time.
"Post-Asset Securitization Annuity Provider Concentration Limit" shall
mean, at any time from and after the date upon which the Borrower shall enter
into any Asset Securitization Transaction, an amount equal to the lesser of (i)
ten percent (10%) of the aggregate Value of all Purchased Settlements that are
Eligible Settlements at such time and (ii) the Tangible Net Worth of the
Borrower at such time.
"Potential Default" shall mean any event or condition which with notice,
passage of time or both would constitute an Event of Default.
"Present Value Differential" shall mean as of the date of determination, in
respect of each Purchased Settlement that is an Eligible Settlement, an amount
equal to (a) the Value of such Settlement on such date minus (b) the Purchase
Price of such Settlement.
"Projected Collection Date" shall mean as of any date of determination, the
scheduled date of the last scheduled Periodic Payment in which the Borrower has
acquired an interest in respect of all Purchased Settlements.
"Purchase Agreement" shall mean, with respect to a Settlement, each
agreement in the form of Exhibit J hereto entered into between a Seller and the
Borrower pursuant to which the Seller sells, assigns and conveys all of its
right, title and interest in the Settlement to which it is a party, and all
amounts due with respect thereto, to the Borrower.
17
"Purchased Settlement" shall mean any Settlement (together with the Notice
of Direction of Payment executed by the Seller with respect thereto) that has
been or will be acquired by the Borrower with the proceeds of an Advance
pursuant to the procedure described in Section 2.6.
"Purchase Price" shall mean, with respect to any Purchased Settlement, the
aggregate amount paid by the Borrower for the Settlement to the Seller from whom
such Settlement was purchased plus the amount of the Closing Costs.
"Purchase Yield" shall mean, with respect to any Purchased Settlement, as
calculated as of the date of purchase of such Settlement on a per annum basis,
the discount rate at which the Borrower has determined the present value of all
Periodic Payments under such Settlement to be paid (until the final date
specified in the related Purchase Agreement) equals the Purchase Price for such
Settlement.
"Qualified Annuity" shall mean an annuity contract which qualifies as a
"qualified funding asset" under Section 130(d) of the Internal Revenue Code.
"Qualified Assignee" shall mean the Person to which the obligation to make
payments under a Settlement has been assigned pursuant to a Qualified
Assignment.
"Qualified Assignment" shall mean an assignment of the obligation to make
Periodic Payments pursuant to a Settlement which satisfies Section 130(c) of the
Internal Revenue Code.
"Ratable Share" shall mean, for any Lender, (a) with respect to any Advance
(other than a Discretionary Non-Ratable Advance), a fraction (x) the numerator
of which shall be equal to such Lender's Commitment minus the aggregate amount
of such Lender's Advances with respect to Discretionary Non-Ratable Advances,
and (y) the denominator of which shall be equal to the aggregate amount of all
of the Lenders' Commitments minus the aggregate amount of all Discretionary Non-
Ratable Advances; (b) with respect to the making of any Discretionary
Non-Ratable Advance, the proportion such Lender's Commitment bears to the
aggregate of the Commitments of those Lenders electing to make such
Discretionary Non-Ratable Advance, and (c) with respect to payments in respect
of any Discretionary Non-Ratable Advance, a fraction (x) the numerator of which
shall be equal to the amount of such Lender's funded portion of such
Discretionary Non-Ratable Advance, and (y) the denominator of which shall be
equal to the aggregate amount of such Discretionary Non-Ratable Advance.
"Rate Differential" shall be equal to 4.0%.
"Related Security" has the meaning assigned to such term in Section
5.2(a)(2).
"Reportable Event" shall mean a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the Pension Benefit Guaranty
Corporation by regulation or by public notice
18
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days of the occurrence of such event, provided that a failure to
meet the minimum funding standard of Section 412 of the Internal Revenue Code
and of Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waivers in accordance with either Section 4043(a) of ERISA
or Section 412(d) of the Internal Revenue Code.
"Required Lenders" shall mean those Lenders whose Commitments aggregate at
least 51% of the Commitments of all of the Lenders.
"Revolving Loan Note" shall mean each of the Amended and Restated Revolving
Loan Notes of the Borrower in the form of Exhibit H hereto, payable to the order
of each Lender in the aggregate face amount of such Lender's Commitment
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from Advances made by such Lender.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc. (or its predecessor or successors in interest).
"Scheduled Maturity Date" shall mean with respect to any Settlement, the
original date scheduled for the payment by the Obligor thereof of the last
scheduled Periodic Payment with respect thereto.
"Security Agreement" shall mean the Amended and Restated Security Agreement
in the form of Exhibit I hereto, of even date herewith executed and delivered by
the Borrower in favor of the Agent, for the benefit of itself, the Servicing
Agent and the Lenders.
"Seller" shall mean, with respect to any Settlement, a claimant under a
Settlement who agrees to sell his/her interest in such Settlement to the
Borrower pursuant to a Purchase Agreement.
"Seller's Questionnaire" shall mean, with respect to any Settlement, the
questionnaire completed by the related Seller at the request of the Borrower.
"Servicer" shall mean Electronic Data Systems Corporation, a Texas
corporation, in its capacity as the provider of services under the Servicing
Agreement and/or any other Person or entity performing similar services for the
Borrower which has been approved by the Agent and the Servicing Agent in
accordance with the terms of this Agreement.
"Servicer Default" shall mean any breach by the Servicer of any of the
terms or provisions of the Servicing Agreement.
"Servicing Agent" shall mean PNC Bank, National Association in its capacity
as contractual representative as servicing agent for itself, the Agent and the
Lenders pursuant to Article 9 hereof and any successor Agent appointed pursuant
to Article 9 hereof.
19
"Servicing Agent Account" shall mean the bank account at PNC Bank, National
Association, Account No. ▇▇▇▇▇▇▇▇▇▇, or such other account as may be designated
by the Servicing Agent from time to time by notice to the Borrower, the Agent
and the Lenders.
"Servicing Agent Advances" shall have the meaning assigned to such term in
Section 2.6(c)(ii)(A) hereof.
"Servicing Agent Fee" shall have the meaning set forth in Section 2.7(c).
"Servicing Agent Note" shall mean that certain revolving loan note of the
Borrower in the form of Exhibit L hereto payable to the order of the Servicing
Agent in the aggregate principal amount of all of the Lenders' Commitments
evidencing the aggregate indebtedness of the Borrower to the Servicing Agent
resulting from Servicing Agent Advances made by the Servicing Agent.
"Servicing Agreement" shall mean the Servicing Agreement between the
Borrower, the Servicer and the Agent (as successor to the Original Lender and
ING Capital) dated as of August 25, 1995, as the same has been amended pursuant
to that certain Acknowledgment of Assignment and Amendment No. 1 to the
Agreement for Settlements Servicing dated as of the date hereof and as the same
may be further amended, restated, supplemented and modified from time to time
hereafter.
"Servicing Fee" has the meaning assigned to such term in Section 2.7(b).
"Settlement" shall mean the right to Periodic Payments due or to become due
in connection with, and all other rights (but not obligations or liabilities)
under a Settlement Agreement, including, without limitation all rights to
receive such Periodic Payments from any assignee Insurer pursuant to a Qualified
Assignment and all rights to receive any payments under any Qualified Annuity
purchased by any Obligor (or its assignee) to fund its payment obligations under
such Settlement Agreement.
"Settlement Agreement" shall mean a settlement agreement entered into by a
Seller and a Settlement Counterparty evidencing, among other things, the
indebtedness of the Settlement Counterparty to such Seller and the right of the
Seller to receive future payments thereunder as compensation.
"Settlement Advance" has the meaning assigned to such term in Section
2.2(b).
"Settlement Amount" shall mean, with respect to any Settlement, the total
consideration agreed to be paid by the Settlement Counterparty to the Seller for
the settlement of the claim of the Seller; provided, however, that such amount
shall only include the amount of the consideration scheduled to be paid through
and including the final payment date specified in the related Purchase
Agreement.
20
"Settlement Concentration Amount" shall mean, for any Purchased Settlement
that is an Eligible Settlement, the excess, if any, of the Value of such
Purchased Settlement over the Settlement Concentration Limit for such Purchased
Settlement.
"Settlement Concentration Limit" shall mean, for any Purchased Settlement
that is an Eligible Settlement (a) if the Designated Annuity Funding Company in
respect of such Purchased Settlement is a Tier One Designated Annuity Funding
Company, $350,000, (b) if the Designated Annuity Funding Company in respect of
such Purchased Settlement is a Tier Two Designated Annuity Funding Company,
$230,000, or (c) if the Designated Annuity Funding Company in respect of such
Purchased Settlement is neither a Tier One Designated Annuity Funding Company or
a Tier Two Designated Annuity Funding Company, the lesser of (i) $120,000 or
(ii) the maximum amount available under the insurance guaranty funds maintained
by the state where such Designated Annuity Funding Company is located if such
Designated Annuity Funding Company is an Insurer.
"Settlement Counterparty" shall mean the Person that entered into a
Settlement with a Seller and is obligated to make payments to the Seller
thereunder.
"Settlement Differential Advance" has the meaning assigned to such term in
Section 2.2(b).
"Settlement Package" shall mean, as it relates to any Purchased Settlement,
fully executed copies of all documentation related to the purchase of any and
all Settlements by the Borrower, and shall include, without limitation, (i) the
original Purchase Agreement related to a Settlement and all documents required
to be delivered to the Borrower pursuant thereto, (ii) the original Settlement,
(iii) the original Notice of Direction of Payment, and (iv) any notifications or
acknowledgments received by the Borrower related to a Purchased Settlement,
including acknowledgments of releases and payment obligations.
"Single Employer Plan" shall mean a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group, but excluding any Multiemployer Plan.
"Subsidiary" shall mean, with respect to any Person at any time, (a) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's subsidiaries, or any partnership of which such Person is a
general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
subsidiaries, and (b) any corporation, trust, partnership or other entity which
is controlled or capable of being controlled by such Person or one or more of
such Person's subsidiaries.
21
"Supermajority Lenders" shall mean those Lenders whose Commitments
aggregate at least 75% of the Commitments of all of the Lenders.
"Swap Rate" shall mean, with respect to a Fixed-Rate Advance with a
Fixed-Rate Interest Period originally greater than one year, the rate of
interest per annum determined by the Agent to be applicable to the related
Fixed-Rate Interest Period by interpolation (on a straight-line basis) between
the average zero-coupon bond swap rates offered to major financial institutions
(as quoted by the Derivatives and Treasury Department of the Agent's New York
office or, in the event that the Borrower selects any other provider of
derivatives that issues similar securities and has a long-term unsecured senior
debt rating of at least "A" from S&P, such provider of derivatives, which rate
quote is then communicated to the Servicing Agent) for notional amounts of not
less than $500,000 for the two periods most closely approximating such period;
provided, such rate shall be adjusted by the Agent to account for the quarterly
payment of interest on the unpaid principal amount of the Advance by the
Borrower as required by Section 2.12(b).
"Swap Rate Advance" shall mean any Settlement Advance that is a Fixed-Rate
Advance and for which the applicable Fixed Rate is based on a Swap Rate.
"Tangible Net Worth" shall mean at any time, the greater of (i) tangible
net worth of the Borrower calculated in accordance with generally accepted
accounting principles applied on a consistent basis and (ii) the discounted
present value of the Borrower's tangible assets calculated on the basis of a
discount rate equal to LIBOR plus 7.5% minus the sum of total liabilities of the
Borrower.
"Tier One Designated Annuity Funding Company" shall mean a Designated
Annuity Funding Company which is rated at ▇▇▇▇▇ "▇▇" or better by ▇▇▇▇▇'▇, or at
least "A-" or better by S&P, or at least "A+" or better by A.M. Best.
"Tier Two Designated Annuity Funding Company" shall mean an Designated
Annuity Funding Company (other than a Tier One Designated Annuity Funding
Company) which is rated at least "Baa3" or better by ▇▇▇▇▇'▇, or at least "BBB-"
or better by S&P, or at least "A-" or better by A.M. Best.
"UCC" shall mean the Uniform Commercial Code (or any successor statute) as
in effect from time to time in the State of New York or any other jurisdiction
the laws of which are required by Section 9-103 thereof to be applied in
connection with the issue of the perfection of security interests.
"Unfunded Liabilities" of a Plan shall mean the amount (if any) by which
the present value of all vested pension benefit obligations under such Plan
exceeds the fair market value of all Plan assets allocable to such benefits, all
determined in accordance with GAAP, including, without limitation, Financial
Accounting Standards Board Statement No. 87, "Employers' Accounting for
Pensions".
"United States" shall mean the United States of America.
22
"Unmatched Claim Group" shall mean, at any time, the Purchased Settlements
which are not included in the Matched Claim Group.
"Unused Commitment Fee" has the meaning assigned to such term in Section
2.7(a).
"Value" shall mean, on any date of determination, with respect to any
Settlement, the present value of the remaining Periodic Payments in respect of
the Settlement Amount thereof, discounted at the applicable Capitalization Rate.
"Weekly Settlement Date" shall mean, with respect to any week ending prior
to the election of the Daily Settlement Option, Wednesday of the immediately
succeeding week, or, if such Wednesday is not a Business Day, the next Business
Day thereafter.
"Weighted Average Forward Rate" shall mean for any day, as reported in the
most recent Monthly Report (or, until the first such report shall have been
delivered, on the Closing Date) and confirmed by the Agent, a per annum rate
equal to the forward Fixed Rate which (as of the date of calculation,
interpolated on a straight line basis for the applicable number of days thereof)
would be applicable to a Fixed-Rate Interest Period having a duration equal to
the Weighted Average Maturity of the Purchased Settlements allocated to the
Unmatched Claim Group (as such Weighted Average Maturity is calculated as of the
last day of the month covered by such Monthly Report). The Weighted Average
Forward Rate as set forth in any Monthly Report shall remain in effect until the
delivery of a succeeding Monthly Report.
"Weighted Average Maturity" shall mean on any date as reported in the most
recent Monthly Report with respect to any specified group of Purchased
Settlements, the weighted average of the maturities (determined by reference to
the Scheduled Maturity Dates) of all of such outstanding Purchased Settlements
in such group as of the last day of the month covered by such Monthly Report.
SECTION 1.2 Construction. Unless the context of this Agreement otherwise
clearly requires, references to the plural shall include the singular,
references to the singular shall include the plural, references to the part
shall include the whole and references to any masculine, feminine or neuter
pronoun shall include all other genders. References in this Agreement to
"determination" of or by the Agent or the Servicing Agent shall be deemed to
include good faith estimates by the Agent or the Servicing Agent, as applicable,
(in the case of quantitative determinations) and good faith beliefs by the Agent
or the Servicing Agent, as applicable, (in the case of qualitative
determinations). The words "hereof," "herein," "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Any references herein to Articles, Sections,
Exhibits or Schedules are references to Articles, Sections, Exhibits and
Schedules of or to this Agreement unless otherwise expressly specified. All
other undefined terms used herein shall, unless the context otherwise requires,
have the meanings provided for by the UCC to the extent the same are used or
defined therein. The Section and other headings contained in this Agreement and
the Table of Contents preceding this
23
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation thereof in any respect.
SECTION 1.3 Accounting Principles. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP.
SECTION 1.4 Reference to and Effect of the Existing Credit Agreement. The
Borrower, the Agent, the Servicing Agent and each of the Lenders agree that,
upon the execution and delivery of this Agreement by each of the parties hereto,
the terms and provisions of the Existing Credit Agreement shall be and hereby
are amended, superseded and restated in their entirety by the terms and
provisions of this Agreement. This Agreement is not intended to and does not
constitute a novation of the indebtedness under the Existing Credit Agreement.
All outstanding Advances made under the Existing Credit Agreement which are
outstanding on the Closing Date and which are set forth on Schedule IV hereto
shall continue as Advances under and shall be governed by the terms of this
Agreement. Upon and after the Closing Date, all interest, fees, charges and
other amounts accruing and payable by the Borrower to Original Lender under the
terms of the Existing Credit Agreement shall be payable by the Borrower in
accordance with the terms of this Agreement; provided, however, that the amount
of all such interest, fees, charges and other amounts accruing prior to the
Closing Date shall be payable in the full amount thereof (and shall not be
reduced or increased by operation of the incorporation of the Existing Credit
Agreement hereby) at the times set forth herein for the payment of such amounts.
All Settlements acquired by the Borrower under the Existing Credit Agreement
which are owned by the Borrower on the Closing Date and which are set forth on
Schedule IV hereto shall continue to constitute Purchased Settlements under and
shall be governed by the terms of this Agreement.
ARTICLE 2. AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1 The Advances. (a) Upon the terms and subject to the conditions
hereinafter set forth, each Lender, severally and not jointly with any other
Lender, agrees to make to the Borrower, from time to time during the period from
the date hereof to, but not including, the Commitment Termination Date, Advances
in an aggregate principal amount up to such Lender's Commitment (except for a
Lender in its capacity as the Servicing Agent with respect to any Servicing
Agent Advance, which advance may, in the absolute discretion of the Servicing
Agent, exceed such Commitment); provided, however, that the aggregate
outstanding principal balance of all Advances (including any outstanding
Servicing Agent Advances) shall at no time exceed the aggregate of the Lenders'
Commitments; provided, further, that the aggregate outstanding principal balance
of all Advances (other than Advances with respect to Discretionary Non-Ratable
Advances, but including any outstanding Servicing Agent Advances) shall at no
time exceed the lesser of (i) the aggregate of all of the Lenders' Commitments,
as such amount may be reduced pursuant to Section 2.8, minus the aggregate
amount of all outstanding Discretionary Non-Ratable Advances or (ii) the
Borrowing Base at such time. Within such limits of time and amount and
24
subject to the other provisions of this Agreement, the Borrower may borrow,
repay without premium or penalty, except as provided in Sections 2.6, 2.10 and
2.11, and reborrow pursuant to this Section 2.1.
SECTION 2.2 The Settlement Advances and Settlement Differential Advances;
Use of Proceeds. (a) Each Settlement Advance shall be a Fixed-Rate Advance or a
Floating-Rate Advance, subject to Conversion as described in Section 2.6(e) and
subject to Section 2.9(c). No Settlement Advance shall exceed the sum of the
Purchase Prices of such Eligible Settlements as set forth in the applicable
Notice of Borrowing to be acquired with the proceeds of such Settlement Advance,
nor shall any Settlement Advance that is a Discretionary Non-Ratable Advance
exceed the sum of the Purchase Price of all Settlements as set forth in the
applicable Notice of Borrowing to be acquired with the proceeds of such
Discretionary Non-Ratable Advance. Proceeds of Settlement Advances (other than
Settlement Advances that are Discretionary Non-Ratable Advances) shall only be
used by the Borrower to purchase Eligible Settlements. Proceeds of Settlement
Advances that are Discretionary Non-Ratable Advances shall only be used by the
Borrower to purchase Settlements that do not meet the requirements of Section
4.2.
(b) The Agent, the Servicing Agent and each Lender agrees, subject to the
limitations set forth below and to the satisfaction of all other conditions to
the making of Advances under this Agreement, that on any Business Day, the
Borrower may request in writing, subject to the procedures set forth in Section
2.6, an advance (a "Settlement Differential Advance"; any other Advance made
pursuant to the terms of this Agreement being a "Settlement Advance") for the
payment of then due and payable Overhead Expenses, Obligations of the Borrower,
Servicing Fees, and certain expenses of the Borrower approved by the Agent. Each
Settlement Differential Advance shall be a Floating-Rate Advance. The amount of
each such Settlement Differential Advance may not exceed the aggregate of the
Present Value Differentials minus the aggregate principal amount of Settlement
Differential Advances then outstanding. The proceeds of Settlement Differential
Advances may only be used by the Borrower to pay (i) Obligations of the
Borrower, (ii) Servicing Fees and (iii) due and payable Overhead Expenses and
certain other expenses of the Borrower approved by the Agent in an aggregate
amount not to exceed during any month (when aggregated with all other such
amounts previously paid by the Borrower during such month) 125% of the Approved
Working Capital Budget for such month.
SECTION 2.3 [INTENTIONALLY OMITTED]
SECTION 2.4 [INTENTIONALLY OMITTED]
SECTION 2.5 Overhead Expenses. Not later than thirty (30) days prior to the
beginning of each six-month period following the initial six-month period after
the effectiveness of this Agreement, the Borrower will present to the Agent, for
its approval, an estimate of the monthly marketing, interest, overhead, and
other operating expenses ("Overhead Expenses") to be incurred by the Borrower in
connection with the purchase of Eligible Settlements by the Borrower during each
subsequent six-month period. Overhead expenses may include the Borrower's pro
rata share
25
of the salaries of employees of Affiliates of the Borrower who are providing
services to the Borrower. The amount of each approved monthly estimate
(excluding interest) (an "Approved Working Capital Budget") is subject to
periodic adjustment at the commercially reasonable discretion of the Agent. This
amount includes a minimum monthly base salary of $12,500 (or such higher amount
as shall be based on the reports prepared by an executive compensation
consulting firm to be retained by the Borrower, subject to the commercially
reasonable approval of the Agent, and the Supermajority Lenders (it being
understood that Towers, ▇▇▇▇▇▇ or Haye Associates is acceptable) for each of
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Such salary amounts shall only
be paid on each Monthly Payment Date, and amounts in excess of $12,500 shall
only be paid if the Borrower shall have paid all other Overhead Expenses due and
payable in such month. When any of Messrs. ▇▇▇▇▇▇▇, Veloric or ▇▇▇▇▇▇▇ shall
cease to be an officer of the Borrower's general partner, such person shall no
longer be entitled to any salary pursuant to this Section 2.5, with the
exception of any amounts already payable or otherwise accrued.
SECTION 2.6 Making the Advances. (a) Except as otherwise provided herein,
the Borrower may from time to time prior to the Commitment Termination Date
request the Lenders to make Advances to the Borrower by the delivery to the
Servicing Agent, the Agent and the Lenders, not later than 10:00 A.M. (New York
City time) (i) three (3) Business Days prior to the proposed borrowing date of a
Fixed-Rate Advance or Discretionary Non-Ratable Advance and (ii) on the proposed
borrowing date of a Floating-Rate Advance, in either case, of a duly completed
notice of borrowing (a "Notice of Borrowing") therefor, or a request by
telephone immediately confirmed in writing (including by any tele-transmission)
signed by an Authorized Officer in such notice, in substantially the form of
Exhibit C hereto. The Servicing Agent shall have no duty to verify the
authenticity of the signature appearing on any Notice of Borrowing and, with
respect to any telephonic request for an Advance, the Servicing Agent shall have
no duty to verify the identity of any individual representing himself as an
Authorized Officer. Any Notice of Borrowing received by the Servicing Agent
after the time specified in the immediately preceding sentence shall be deemed
to have been received by the Servicing Agent on the next Business Day, and the
date specified in any such Notice of Borrowing as the proposed Borrowing Date of
an Advance shall be deemed to be the Business Day immediately succeeding the
proposed Borrowing Date of such Advance specified in such Notice of Borrowing.
(b) Each Notice of Borrowing shall be (x) irrevocable, (y) shall specify
(i) the date and the aggregate amount of the proposed Advance which, in the case
of a Fixed-Rate Advance shall be in a minimum amount of $500,000, (ii) the Type
of Advance, (iii) the sum of the Purchase Price(s), the sum of the Settlement
Amount(s), and the individual Purchase Yields of the Eligible Settlement(s) to
be acquired therewith, (iv) the sum of the Purchase Price(s), the sum of the
Settlement Amount(s), and the individual Purchase Yields of any other Settlement
that does not meet the requirements of Section 4.2 and that the Borrower
proposes to be acquired therewith, (v) the aggregate amount and type of Overhead
Expenses and the aggregate amount of Servicing Fees to be paid with the proceeds
of any Settlement Differential Advance, and (vi) the date of such purchase or
payment of such fees or expenses, as applicable, and (z) shall be accompanied by
a fully completed Borrowing Base Certificate. In the case of any proposed
Advance which the related Notice of Borrowing specifies is to be a Fixed-Rate
Advance, the Borrower shall reimburse the Servicing Agent and each Lender on
demand for any Breakage Costs incurred by the Servicing
26
Agent or such Lender as a result of such proposed Advance not being made on the
date specified in such Notice of Borrowing for any reason whatsoever.
(c) (i) Upon the receipt by the Servicing Agent of a Notice of Borrowing
from the Borrower, the Servicing Agent shall, in its absolute discretion (except
as provided below with respect to a requested Fixed-Rate Advance), elect (1) to
have the terms of Section 2.6(c)(iii) hereof apply to such requested Advance, or
(2) to the extent the Agent shall not have previously exercised its Daily
Settlement Option, to make a Servicing Agent Advance with respect to such
requested Advance under the terms of Section 2.6(c)(ii) hereof, except that no
Servicing Agent Advance shall be made (A) in respect of any requested Fixed-Rate
Advance or (B) in respect of any Discretionary Non-Ratable Advance, and the
terms of Section 2.6(c)(iii) hereof shall apply to such requested Fixed-Rate
Advance or Discretionary Non-Ratable Advance, as applicable.
(ii) (A) If the Servicing Agent shall have elected under Section
2.6(c)(i) hereof to make a Servicing Agent Advance with respect to a
requested Floating-Rate Advance, then, subject to the satisfaction of the
conditions precedent set forth in Sections 3.1 and 3.2 hereof, the
Servicing Agent shall fund such requested Advance (any such advance solely
by the Servicing Agent to the Borrower being hereinafter referred to as a
"Servicing Agent Advance" and all such outstanding advances to the Borrower
being hereinafter referred to collectively as "Servicing Agent Advances")
by transferring the amount requested in the Notice of Borrowing (subject to
the maximum amounts specified in Section 2.1(a) hereof), in U.S. Dollars
and immediately available funds, to the Borrower's Account prior to 2:00
P.M.( New York City time) on the date specified or deemed specified in such
Notice of Borrowing. Each Servicing Agent Advance is an Advance hereunder
and shall be evidenced by the Servicing Agent Note in favor of the
Servicing Agent and subject to all of the terms and conditions and entitled
to all of the benefits applicable to all Advances hereunder except that all
payments thereon shall be payable to the Servicing Agent solely for its own
account until such time as such Servicing Agent Advance is repaid in
accordance with Sections 2.6(c)(ii)(B)(1) or 2.6(c)(ii)(B)(2).
(B) (1) The Servicing Agent shall request settlement with respect to
the previous week's Servicing Agent Advances by notifying the Agent and the
Lenders by telecopy, telephone or other similar form of transmission no
later than 11:00 a.m. (New York City time) on the Weekly Settlement Date
applicable to such Servicing Agent Advances of the amount due from such
Lender. Each Lender (except the Lender which made the Servicing Agent
Advances with respect to which settlement is requested in its capacity as
Servicing Agent) shall make such Lender's Ratable Share (calculated on the
basis of all Lenders, including the Lender that made the Servicing Agent
Advance) of the outstanding principal amount of the previous week's
Servicing Agent Advances, minus any amounts received by the Servicing Agent
as payment or prepayment of the Advances prior to such Weekly Settlement
Date, to the Servicing Agent, in same day funds, to the Servicing Agent
Account not later than 2:00 p.m. (New York City time) on such Weekly
Settlement Date. Such amounts made available to the Servicing Agent shall
be applied against the amount of the applicable Servicing Agent Advances
and shall constitute the Advances of such Lenders making such payments.
27
(2) If any Lender fails under Section 2.6(c)(ii)(B)(1) hereof to make
available to the Servicing Agent its Ratable Share of such applicable
Servicing Agent Advance on the applicable Weekly Settlement Date, such
defaulting Lender shall be liable to pay the Servicing Agent the
amount thereof immediately upon the Servicing Agent's demand therefor,
together with interest thereon from the date such amount is advanced
until paid in full at a rate equal to the Base Rate. Until such amount
is paid to the Servicing Agent by such Lender or by the Borrower (the
interest rate applicable thereto if paid by the Borrower being that
selected by the Borrower in the applicable Notice of Borrowing, and
not the Base Rate), such advance shall be deemed for all purposes to
be an Advance made by the Servicing Agent to the Borrower, and the
Servicing Agent shall for all purposes hereunder be deemed a "Lender"
and shall be entitled to all rights, remedies and benefits as such
hereunder and under the other Advance Documents. Upon the payment of
the principal and interest of any such Servicing Agent Advance by such
Lender to the Servicing Agent, such payment shall be treated (to the
extent of the principal amount thereof) as the payment of the
Servicing Agent Advance under Section 2.6(c)(ii)(B)(1) hereof. No such
payment by the Borrower shall prejudice its rights in respect of any
default by such Lender hereunder. The failure of any Lender to fulfill
its Commitment to fund any Advance or to pay the related Servicing
Agent Advance on any Weekly Settlement Date shall not relieve any
other Lender of its Commitment to fund any such Advance or to pay its
Ratable Share of the Servicing Agent Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to
fulfill such Commitment of any other Lender.
(iii) If either (w) the Borrower shall have requested a Fixed-Rate Advance,
or (x) the Servicing Agent shall have elected under Section 2.6(c)(i) to have
the terms of this Section 2.6(c)(iii) apply to a requested Floating Rate
Advance, or (y) the Agent shall have exercised its Daily Settlement Option, or
(z) in the event that the Borrower has requested a Settlement Advance to
purchase a Settlement that does not meet all of the requirements of purchase
under this Agreement (each such Settlement Advance, a "Discretionary Non-Ratable
Advance"), the Servicing Agent shall promptly (but in any event by 11:00 A.M.
(New York City time) on the date of its deemed receipt of a Notice of Borrowing
for an Advance) notify the Agent and the Lenders of its receipt of such Notice
of Borrowing and shall specify: (A) the proposed date and the time and method of
disbursement of such Advance as set forth in such Notice of Borrowing; (B) the
amount of such Advance and the allocation of all tranches thereof among the
applicable Fixed-Rate Interest Periods and/or interest periods as provided in
Section 2.12(a)(i) as requested by the Borrower in such Notice of Borrowing; and
(C) whether such Advance shall be a Discretionary Non-Ratable Advance and the
amount of such requested Discretionary Non-Ratable Advance and (D) with respect
to any Advance other than a Discretionary Non-Ratable Advance, each Lender's
Ratable Share of such Advance. With respect to any Discretionary Non-Ratable
Advance, on or before 11:00 A.M. (New York City time) on the Business Day after
each Lender's receipt of notice of the Borrower's request for such Discretionary
Non-Ratable Advance from the Servicing Agent, each Lender shall deliver written
notice to the Servicing Agent as to whether such Lender elects to fund such
Advance, at which time the Servicing Agent shall promptly notify all applicable
Lenders electing to make such Advance of each Lender's respective Ratable Share
of such Advance. Each Lender shall, subject to the satisfaction of the
conditions precedent set forth in Sections 3.1 and 3.2 hereof, remit its Ratable
Share of the principal amount of each Advance to the Servicing Agent
28
Account by no later than 1:00 P.M. (New York City time) on the
Borrowing/Conversion date specified or deemed specified in such Notice of
Borrowing, and the Servicing Agent shall upon fulfillment of the applicable
conditions set forth in Article 3 notify the Borrower of the Fixed-Rate Interest
Period, and to the extent the Lenders have made funds available to it for such
purpose, fund such Advance to the Borrower in U.S. Dollars and immediately
available funds to the Borrower's Account prior to 2:00 P.M. (New York City
time) on the Borrowing/Conversion Date specified or deemed specified in such
Notice of Borrowing; provided, that if any Lender fails to remit such funds to
the Servicing Agent in a timely manner, the Servicing Agent may, but shall not
be required to, advance on behalf of any such Lender, such Lender's Ratable
Share of the Advances (other than Discretionary Non-Ratable Advances) on the
applicable Borrowing/Conversion Date unless such Lender shall have notified the
Servicing Agent and the Agent prior to such Borrowing/Conversion Date that it
does not intend to make available its Ratable Share of such Advance on such
date. If the Servicing Agent makes such Advance, each of the Borrower and such
defaulting Lender severally, but not jointly, shall be liable to repay the
Servicing Agent the amount thereof immediately upon the Servicing Agent's demand
therefor, together with interest thereon from the date such amount is advanced
until repaid in full at a rate equal to, in the case of such Lender, the Base
Rate and, in the case of the Borrower, the interest rate applicable to such Type
of Advance. Until such amount is repaid to the Servicing Agent by such Lender or
the Borrower, such Advance shall be deemed for all purposes to be an Advance
made by the Servicing Agent to the Borrower, and the Servicing Agent shall for
all purposes hereunder be deemed a "Lender" and shall be entitled to all rights,
remedies and benefits as such hereunder and under the other Advance Documents.
Upon the repayment of the principal and interest of any such Advance by such
Lender to the Servicing Agent, such repayment shall be treated (to the extent of
the principal amount thereof) as the funding of such Lender's Ratable Share of
the Advances to which such amounts relate. No such repayment or payment by the
Borrower shall prejudice its rights in respect of any default by such Lender
hereunder. The failure of any Lender to fulfill its Commitment to fund any
Advance on any Borrowing/Conversion Date shall not relieve any other Lender of
its Commitment to fund any such Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to fulfill such Commitment of
any other Lender.
(d) At any time upon notice by the Agent (either on its own or at the
direction of the Required Lenders) to the Servicing Agent, the Agent may, at its
option (the "Daily Settlement Option") declare that the Servicing Agent shall
cease to make Servicing Agent Advances and that the provisions of Section
2.6(c)(ii) shall cease to be applicable, whereupon all settlements and fundings
as among the Lenders, the Agent, and the Servicing Agent, and any requested
Borrowing hereunder shall be governed by the terms of Section 2.6(c)(iii).
(e) Prior to the Facility Termination Date, the Borrower shall have the
option with respect to each Advance, and with the Servicing Agent's prior
written consent, (i) to Continue all or a portion of a Settlement Advance which
is a Fixed-Rate Advance or (ii) to Convert all or a portion of a Settlement
Advance which is a Fixed-Rate Advance to a Floating-Rate Advance or which is a
Floating- Rate Advance to a Fixed-Rate Advance; provided, however, that (x) any
such Conversion or Continuation of any Advance as a Fixed-Rate Advance shall be
in an aggregate amount not less than the lesser of $100,000 or the aggregate
outstanding principal balance of all Settlement Advances and (y) any such
Continuation of a Fixed-Rate Advance may only be effected on the last
29
scheduled day of the applicable preceding Fixed-Rate Interest Period and on such
date any accrued interest to such date shall be paid.
(i) The Borrower's right to Convert or Continue Advances pursuant to this
Section 2.6(e) shall be understood to include the right (i) to divide
any Advance into two or more Advances having aggregate principal equal
to the aggregate principal of such original Advance or (ii) to combine
any two or more Advances into a single Advance having aggregate
principal equal to the aggregate principal of such original Advances;
provided, that with respect to any Advance accruing interest at the
Fixed-Rate, such divisions or combinations may only be made upon the
expiration of the Fixed-Rate Interest Period to which such Advance is
allocated; provided further, that no Conversion shall occur except on
a Weekly Settlement Date; provided, further, that the Borrower shall
not have the right to combine any Discretionary Non-Ratable Advance
with any other Advance.
(ii) To Convert or Continue any Advance under this Section 2.6(e), the
Borrower shall deliver a written notice ("Notice of
Continuation/Conversion"), substantially in the form of Exhibit D
hereto, signed by an Authorized Officer or telephonic notice
(confirmed immediately thereafter in writing (including by any
tele-transmission) signed by an Authorized Officer in such form) to
the Servicing Agent and the Agent, and each Lender not later than
10:00 A.M. (New York City time) (i) on the third Business Day prior to
the proposed Borrowing/Conversion Date with respect to the proposed
Conversion or Continuation if the Advance is to be Converted into or
Continued as a Fixed-Rate Advance and (ii) on the proposed
Borrowing/Conversion Date with respect to a proposed Conversion from a
Fixed-Rate Advance to a Floating-Rate Advance and, in either case,
such Borrowing/Conversion Date must also be a Weekly Settlement Date.
The Servicing Agent shall then give the Agent and each Lender prompt
(and in any event not later than 11:00 A.M. on such day) notice
thereof by telephone, facsimile or telex. Each such notice by the
Borrower shall specify (i) the Advances to be Continued or Converted,
(ii) the portion of the principal balance of the Advance to be
Continued or Converted, (iii) the date of the proposed Conversion or
Continuation (which date shall be a Weekly Settlement Date) and (iv)
the proposed Fixed-Rate Interest Period with respect to the proposed
Conversion or Continuation. Any Notice of Continuation/Conversion (or
telephonic notice thereof) shall be irrevocable, and the Borrower
shall be bound to Convert or to Continue the Advances in accordance
therewith. The Servicing Agent shall have no duty to verify the
authenticity of the signature appearing on any Notice of
Continuation/Conversion and, with respect to any telephonic request
for a Conversion/Continuation, the Servicing Agent shall have no duty
to verify the identity of any individual representing himself as an
Authorized Officer. Any Notice of Continuation/Conversion received by
the Servicing Agent after the time specified in the immediately
preceding sentence shall be deemed to have been received by the
Servicing Agent on the next Business Day. An Advance may be Continued
any number of times, subject to the terms and limitations of this
Agreement. With respect to any Advance Continued or
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Converted as a Fixed-Rate Advance, the Agent will promptly notify the
Borrower of the Fixed-Rate Interest Period applicable to such Advance.
If the Borrower shall fail to deliver a Notice of
Conversion/Continuation with respect to any Settlement Advance which
is a Fixed- Rate Advance or the Borrower and the Agent shall fail to
agree on a Fixed-Rate Interest Period, in either case, prior to the
time specified above, such Advance shall become a Floating-Rate
Advance until such time, if any, as such Advance is Converted to a
Fixed-Rate Advance pursuant to the terms of this Section 2.6(e).
(f) Upon the occurrence of the Commitment Termination Date, the Servicing
Agent shall cease to make any further Servicing Agent Advances to the Borrower.
SECTION 2.7 Fees. (a) The Borrower agrees to pay to the Agent, for the
account of the Lenders, in such proportion as the Agent and each such Lender
shall agree, a fee (the "Unused Commitment Fee"), payable on each Monthly
Payment Date during the term of the Agreement and on the Commitment Termination
Date, on the average daily unused portion of the aggregate of all of the
Lenders' Commitments during the immediately preceding Monthly Payment Period at
the related rate per annum set forth in the Fee Letter.
(b) The Borrower shall pay to the Servicer a servicing fee (the "Servicing
Fee") at the times and in the amounts set forth in the Servicing Agreement.
(c) The Borrower shall pay the Servicing Agent a fee (the "Servicing Agent
Fee") equal to $5000 per calendar quarter during which any Obligations are
outstanding hereunder (such amount to be payable in arrears and to be pro rated
for any shorter period for which such amount is payable), payable on the first
Business Day of each January, April, July and October and on the date occurring
after the Commitment Termination Date upon which all the Obligations shall have
been paid in full.
SECTION 2.8 Reduction of the Commitment. The Borrower may, on any Business
Day, upon written notice given to the Agent, the Servicing Agent and each of the
Lenders not later than thirty (30) Business Days prior to the date of the
proposed action, terminate in whole or reduce in part the "Unused Portion of the
Commitments" (as hereinafter defined); provided, however, that any partial
reduction shall be in the amount of $500,000 or an integral multiple thereof;
provided, further, that any such notice given by the Borrower to the Agent, the
Servicing Agent and the Lenders shall be irrevocable when given. As used in this
Section 2.8, the "Unused Portion of the Commitments" shall mean the excess of
(i) the aggregate of all of the Lenders' Commitments at such time, over (ii) the
sum of the outstanding principal balance of the Advances at such time. Any such
reduction in the Unused Portion of the Commitments pursuant to this Section 2.8
shall reduce the Commitment of each Lender in accordance with its respective
Ratable Share.
SECTION 2.9 Revolving Loan Notes; Repayment of the Advances. (a) The
Advances shall be evidenced by the Revolving Loan Notes executed by the Borrower
payable to the order of each Lender in a maximum principal face amount equal to
the Commitment of such
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Lender and delivered to each Lender pursuant to Article 3. A Fixed-Rate Advance
shall be due and payable, or Converted or Continued, on the last day of the
related Fixed-Rate Interest Period. Notwithstanding any other provision to the
contrary, the Advances and the other Obligations owing under this Agreement
shall be due and payable, if not due and payable earlier, on the Facility
Termination Date.
(b) On or prior to the occurrence of the Commitment Termination Date, the
Agent and the Servicing Agent, in consultation with the Borrower, shall agree on
an amortization schedule (the "Amortization Schedule", delineated separately for
Discretionary Non-Ratable Advances and all other Advances), which shall be
effective following the occurrence of the Commitment Termination Date, to be
based upon projected monthly Periodic Payments and mutually agreeable overhead
expenses other than in connection with the purchase of any new Settlements, and
which shall be revised monthly to the extent necessary based on monthly review
and revision of such Periodic Payments and such overhead expenses. Pursuant to
such Amortization Schedule, portions of the aggregate unpaid principal amount of
the Advances shall be due and payable from time to time and the aggregate unpaid
principal amount of the Advances shall be reduced to zero no later than the date
set forth in such Amortization Schedule.
(c) The Borrower shall cause all Collections in respect of Purchased
Settlements to be deposited directly into the Collection Account. The Borrower
agrees that all Collections in respect of Purchased Settlements shall be
received by the Borrower in trust for the benefit of the Agent, the Servicing
Agent and Lenders and shall be remitted by the Borrower (on the Business Day
received, if practicable, otherwise on the immediately succeeding Business Day)
to the Collection Account. Any proceeds or other Collateral received by the
Agent shall be remitted to the Servicing Agent on the next immediate Business
Day after the Agent's receipt thereof.
(i) On each Business Day the Servicing Agent shall apply all
Collections (other than Collections in respect of Purchased Settlements
purchased with the proceeds of to Discretionary Non-Ratable Advances) on
deposit in the Collection Account in respect of Purchased Settlements to
the Obligations in the following order of priority (such allocations to be
made by the Servicing Agent based on information and directions provided to
it by the Servicer and the Borrower, provided that if the Agent gives any
conflicting directions with respect to any such allocation (prior to the
Servicing Agent's making of the same), the Servicing Agent shall act in
accordance with the Agent's directions; it being understood and agreed that
the Servicing Agent shall be entitled to rely, and shall have no liability
for relying, on any such directions in accordance with this parenthetical):
(A) first, to the payment of any accrued and unpaid Servicing
Fees which are due and payable at such time, if any,
(B) second, to the payment of interest (calculated in accordance
with Section 2.12), if any, which is due and payable with respect to
the Servicing Agent Advances, allocated among such Advances pro rata
based on the unpaid principal amount thereof;
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(C) third, to the extent that the aggregate outstanding principal
amount of all Advances (other than Discretionary Non-Ratable Advances)
shall exceed the Borrowing Base, to the prepayment and reduction of
the outstanding principal amount of any Servicing Agent Advances,
allocated among such Advances pro rata based on the unpaid amounts of
such Advances;
(D) fourth, to the payment of interest (calculated in accordance
with Section 2.12), if any, which is due and payable with respect to
the Settlements Advances (other than Discretionary Non-Ratable
Advances) and Settlement Differential Advances, allocated among such
Advances pro rata based on the unpaid principal amounts thereof;
(E) fifth, to the repayment of the aggregate unpaid principal
amount of the Settlement Advances (other than Discretionary
Non-Ratable Advances) and Settlement Differential Advances which are
then due and payable in accordance with the Amortization Schedule,
allocated among such Advances pro rata based on the unpaid amounts of
such Advances;
(F) sixth, to the extent that the aggregate outstanding principal
amount of all Advances (other than Discretionary Non-Ratable Advances)
exceeds the Borrowing Base, to the prepayment of the aggregate unpaid
principal amount of the Settlement Advances (other than Discretionary
Non-Ratable Advances) and Settlement Differential Advances that are
Floating-Rate Advances, allocated among such Advances pro rata based
on the unpaid amounts of such Advances;
(G) seventh, to the extent that the aggregate outstanding
principal amount of all Advances (other than Discretionary Non-Ratable
Advances) exceeds the Borrowing Base, to the extent the aggregate
amount of all outstanding Advances exceeds the Borrowing Base, to the
repayment of the aggregate unpaid principal amount of the Settlement
Advances (other than Discretionary Non-Ratable Advances) and
Settlement Differential Advances that are Fixed-Rate Advances in the
amount of such excess, allocated among such Advances pro rata based on
the unpaid principal amounts thereof;
(H) eighth, to any Breakage Cost which is then due and owing
(including any amounts which would become due and payable after giving
effect to any prepayment of principal in accordance with clause
seventh above and clause tenth below);
(I) ninth, to the payment of all other fees, expenses and
indemnities due and payable hereunder, including, without limitation,
the Unused Commitment Fee and the Servicing Agent Fee.
(J) tenth, to the ratable payment of all other Obligations due
and payable hereunder; and
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(K) eleventh, to the Borrower's Account for the use of the
Borrower, upon the approval of the Agent, as provided herein and in
the Agreement of Limited Partnership.
(ii) On each Business Day the Servicing Agent shall apply all
Collections in respect of Purchased Settlements purchased with the proceeds
of Discretionary Non-Ratable Advances on deposit in the Collection Account
to the Obligations in the following order of priority (such allocations to
be made by the Servicing Agent based on information and directions provided
to it by the Servicer and the Borrower, provided that if the Agent gives
any conflicting directions with respect to any such allocation (prior to
the Servicing Agent's making of the same), the Servicing Agent shall act in
accordance with the Agent's directions; it being understood and agreed that
the Servicing Agent shall be entitled to rely, and shall have no liability
for relying, on any such directions in accordance with this parenthetical):
(A) first, to the payment of any accrued and unpaid Servicing
Fees which are due and payable at such time, if any,
(B) second, to the payment of interest (calculated in accordance
with Section 2.12), if any, which is due and payable with respect to
the Discretionary Non-Ratable Advances, allocated among such
Discretionary Non-Ratable Advances pro rata based on the unpaid
principal amounts thereof;
(C) third, to the repayment of the aggregate unpaid principal
amount of the Discretionary Non-Ratable Advances that are then due and
payable in accordance with the Amortization Schedule, allocated among
such Advances pro rata based on the unpaid amounts of such
Discretionary Non-Ratable Advances;
(D) fourth, to the extent that the aggregate outstanding
principal amount of all Discretionary Non-Ratable Advances exceeds the
Discretionary Non-Ratable Advance Borrowing Base, to the prepayment of
the aggregate unpaid principal amount of the Discretionary Non-Ratable
Advances that are Floating-Rate Advances, allocated among such
Advances pro rata based on the unpaid amounts of such Advances;
(E) fifth, to the extent that the aggregate outstanding principal
amount of all Discretionary Non-Ratable Advances exceeds the
Discretionary Non-Ratable Advance Borrowing Base, to the prepayment of
the aggregate unpaid principal amount of the Discretionary Non-Ratable
Advances that are Fixed-Rate Advances, allocated among such Advances
pro rata based on the unpaid amounts of such Advances;
(F) sixth, to any Breakage Cost which is then due and owing
(including any amounts which would become due and payable after giving
effect to any prepayment of principal in accordance with clause fifth
above and clause eighth below);
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(G) seventh, to the payment of all other fees, expenses and
indemnities due and payable hereunder, including, without limitation,
the Unused Commitment Fee and the Servicing Agent Fee.
(H) eighth, to the ratable payment of all other Obligations due
and payable hereunder; and
(I) ninth, to the Borrower's Account for the use of the Borrower,
upon the approval of the Agent, as provided herein and in the
Agreement of Limited Partnership.
At the direction of the Agent, the Servicing Agent may, and is hereby authorized
to, make or cause to be made an advance on behalf of the Borrower for payment of
all fees, principal, interest, or other Obligations owing by the Borrower under
this Agreement or any of the other Advance Documents if and to the extent that
the Borrower fails to promptly pay any such amounts as and when due. At the
option of the Lenders and to the extent permitted by applicable law, advances so
made may be deemed Advances hereunder.
(d) On each Monthly Payment Date, if the excess of the Net Pool Weighted
Average Yield on those Purchased Settlements that are Eligible Settlements that
are allocated to the Unmatched Group on such date over the Weighted Average
Forward Rate of all outstanding Advances which are not Matched Funded is less
than five percent (5.00%), then the Borrower shall prepay the aggregate unpaid
principal balance of any such Advances with the proceeds of one or more Match
Funded Fixed-Rate Advances to be requested by the Borrower from the Servicing
Agent on such date to effect an excess of such Net Pool Weighted Average Yield
(all of which shall then be Match Funded) over the weighted average of the
Interest Rates applicable to all such Advances equal to a percentage greater
than two percent (2%) which is acceptable to the Agent; provided, however, such
Matched Funded Fixed-Rate Advances shall be requested by the Borrower in
accordance with the provisions of this Agreement and the terms of each such
Advance shall be at the sole discretion of the Agent.
SECTION 2.10 Optional Prepayments. (a) Subject to the limitations set forth
in this Section 2.10(a), the Borrower may at any time upon written notice to the
Agent, the Servicing Agent and each of the Lenders prepay all or any portion of
the balance of the principal amount of any Floating-Rate Advance or Fixed-Rate
Advance, which notice shall be given at least (2) Business Days prior to the
proposed date of such prepayment, in the case of the prepayment of any
Floating-Rate Advance, and at least five (5) Business Days prior to the proposed
date of such prepayment of any Fixed-Rate Advance; provided, however, that in
the event that any Advances (other than Discretionary Non-Ratable Advances) are
outstanding, the Borrower may make prepayments in respect of Discretionary
Non-Ratable Advances only out of Collections received into the Collection
Account in respect of Purchased Settlements purchased with the proceeds of
Discretionary Non-Ratable Advances or the proceeds of any life insurance policy
relating to any Non-Guaranteed Settlement. Each such prepayment shall (i) be
accompanied by (x) the payment of all accrued but unpaid interest on the amounts
to be so prepaid and (y) in the case of the
35
prepayment of any Fixed-Rate Advance, any Breakage Costs required to be paid in
connection therewith as set forth in Section 2.10(b), and (ii) in the case of
any prepayment of less than the aggregate balance of all Advances then
outstanding, be in a minimum amount of $500,000. Floating-Rate Advances may be
prepaid without premium or penalty.
(b) If any portion of any Fixed-Rate Advance is repaid prior to the last
date of the Fixed-Rate Interest Period applicable thereto for any reason
whatsoever (including, without limitation, the acceleration of the Obligations
in accordance with Section 6.2(a) or the required prepayment thereof pursuant to
Section 2.11(b)), or the Borrower shall fail, for any reason, to borrow any
proposed Fixed-Rate Advance on the date specified in the applicable Notice of
Borrowing (including without limitation, as a result of the Borrower's failure
to satisfy any conditions precedent to such borrowing), the Borrower shall
reimburse each Lender on demand for any Breakage Costs incurred.
(c) If the Borrower desires to terminate any Fixed-Rate Advance prior to
the agreed-upon termination date, the Borrower may request that each Lender
provide an indicative quotation of the amount that such Lender would charge or
pay the Borrower to agree to terminate such Fixed-Rate Advance. If the Borrower
elects to terminate such Fixed-Rate Advance, the Borrower shall pay a Lender the
applicable amount determined in a commercially reasonable manner by such Lender
in such Lender's sole discretion, notwithstanding that any such amount may be
different than the amount quoted by such Lender in accordance with the first
sentence of this Section 2.10(c).
SECTION 2.11 Mandatory Prepayments. (a) Notwithstanding anything contained
herein to the contrary, all Obligations shall become immediately due and payable
upon the occurrence of the Facility Termination Date for any reason whatsoever.
(b) On each date on which the aggregate outstanding principal amount of all
Advances exceeds the aggregate of the Lenders' Commitments, and/or the aggregate
outstanding principal amount of all Advances (other than Discretionary
Non-Ratable Advances) exceeds the lesser of (i) the aggregate of the Lenders'
Commitments minus the aggregate outstanding principal amount of all
Discretionary Non-Ratable Advances, or (ii) the Borrowing Base on such date, the
Borrower shall pay to the Servicing Agent for the account of each Lender the
amount of any such excess (to be applied as set forth in the following
sentence), together with accrued but unpaid interest on the amount required to
be so prepaid to the date of such prepayment and, in the case of the prepayment
of any Fixed-Rate Advance, the Breakage Costs required to be paid pursuant to
Section 2.10(b). Any such mandatory prepayment shall be applied (i) first, to
the prepayment of all Floating-Rate Advances, if any, and (ii) second, to any
Fixed-Rate Advances then outstanding. The Borrower's obligation to prepay such
excess shall be a demand Obligation which bears interest at the Default Rate
from the date such excess occurs until repayment in full of said excess.
SECTION 2.12 Interest. (a) The Borrower shall pay to the Servicing Agent
for the account of each Lender interest on the unpaid principal amount of each
Advance made by the Servicing Agent from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:
36
(i) During such periods as such Advance is a Floating-Rate Advance,
the Borrower shall pay interest on such Advance at a rate per annum equal
to the Adjusted Base Rate in effect from time to time; provided that any
amount of principal which is not paid when due (whether at stated maturity,
by acceleration or otherwise) shall bear interest, from the date on which
such amount is due until such amount is paid in full, at the Default Rate
in effect from time to time.
(ii) During such periods as such Advance is a Fixed-Rate Advance, the
Borrower shall pay interest on such Advance at a rate per annum at all
times during the Fixed-Rate Interest Period for such Advance equal to the
Fixed Rate in effect for such period; provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest, from the date on which such amount is due
until such amount is paid in full, at the Default Rate in effect from time
to time.
(b) Except as otherwise provided herein, accrued but unpaid interest on
each Floating-Rate Advance, to the extent applicable, shall be payable on each
Monthly Payment Date. Accrued interest on each Fixed-Rate Advance shall be due
and payable on the last day of the Fixed-Rate Interest Period for such Advance;
provided, however, that with respect to any Fixed-Rate Advance which has a
Fixed-Rate Interest Period which is more than three (3) months long, the accrued
interest on the related Advance shall also be due and payable on the last day of
each three-month period during which such Fixed-Rate Advance is outstanding.
Notwithstanding the foregoing, interest payable at the Default Rate shall be
payable from time to time on demand of the Agent.
(c) In no event shall any interest rate exceed the maximum rate permissible
for business borrowers such as the Borrower under applicable Law (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations under
this Agreement, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would have been
paid or accrued if the interest rates set forth in this Agreement had at all
times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Servicing Agent, for the benefit of the affected
Lenders, an amount equal to the difference between (a) the lesser of (i) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have accrued
had the interest rates set forth in this Agreement, at all times, been in effect
and (b) the amount of interest actually paid or accrued under this Agreement. In
the event that a court determines that any Lender has received interest and
other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce,
the Obligations other than interest, in the inverse order of maturity, and if
there are no Obligations outstanding, such Lender shall refund such excess to
the Borrower.
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SECTION 2.13 (a) Funding Indemnification. If any payment of a Fixed-Rate
Advance occurs on a date which is not the last day of the applicable Fixed-Rate
Interest Period, whether because of acceleration, prepayment, or otherwise, or a
Fixed-Rate Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower indemnifies each Lender
for any loss or cost incurred by it resulting therefrom, including, without
limitation, any Breakage Cost or any other loss or cost in liquidating or
employing deposits acquired to fund or maintain the Fixed-Rate Advance. The
Borrower shall not be responsible for any Breakage Costs or any other loss,
cost, or expenses arising as the time of, and arising solely as a result of, any
assignment made pursuant to Section 7.7 and the reallocation of any portion of
the Fixed-Rate Advances of the Lender making such assignment unless, in each
case, such assignment is requested by the Borrower.
(b) Increased Capital. If, due to either (i) the introduction of, or any
change in the interpretation of any law or regulation, or (ii) the compliance by
any Lender with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), which affects
or would affect the amount of capital required or expected to be maintained by
such Lender or any corporation controlling such Lender and the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender, the Borrower shall immediately pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation, in light of such circumstances, to the extent that
such Lender reasonably determines such increase in capital to be allocable to
the existence of such Lender's commitment to lend hereunder. A certificate as to
such amounts submitted to the Borrower by such Lender shall, in the absence of
manifest error, be conclusive and binding for all purposes.
SECTION 2.14 Payments and Computations. (a) The Borrower shall make each
payment and prepayment hereunder and under the Revolving Loan Notes and the
Servicing Agent Note with respect of principal, interest, expenses, indemnities,
fees or other Obligations (except Unused Commitment Fees and other fees due the
Agent) due from the Borrower not later than 1:00 P.M. (New York City time) on
the day when due in U.S. Dollars to the Servicing Agent at its address referred
to in Section 7.2 or to the Servicing Agent's Account in same-day funds. The
Borrower hereby authorizes the Servicing Agent, if and to the extent payment is
not made when due hereunder or under the Revolving Loan Notes, to charge from
time to time against the Servicing Agent Account any amount so due, or upon
notice to the Borrower, to make Advances in the amount of and in payment of such
amounts. The Borrower agrees that, to the extent there are insufficient funds in
the Servicing Agent Account or such other accounts to make any payment when due,
the Borrower shall immediately pay to the Servicing Agent all amounts due that
remain unpaid. Payments on Obligations may also be made by (i) application of
funds in the Collection Account as provided in Section 2.9(c) or (ii) by the
making of additional Advances as provided in Section 2.6(e). All computations of
interest (other than interest on a Floating-Rate Advance) and Unused Commitment
Fees shall be made by the Agent on the basis of a year of 360 days in each case
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or commitment fees are
payable. Interest on a Floating-Rate
38
Advance shall be computed by the Agent on the basis of a year of 365 or 366
days, as applicable, and the actual number of days elapsed. Each determination
by the Agent of an interest rate hereunder shall be conclusive and binding for
all purposes, absent error; provided, however, that in any event each such
determination shall be conclusive and binding unless the Agent shall have
received written notice from the Borrower of such error within a commercially
reasonable period.
(b) All payments to be made in respect of Unused Commitment Fees or other
fees due to the Agent from the Borrower hereunder shall be made to the Agent's
Account prior to 11:00 A.M. (New York City time) on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. The
Borrower hereby authorizes and directs each of the Agent and the Servicing Agent
to charge either or both of the Agent's Account and the Servicing Agent Account,
respectively, for all such fees due from the Borrower hereunder when due and the
Servicing Agent agrees to charge such account for such amounts at the direction
of the Agent and to remit such amounts to the Agent. The Borrower agrees that,
to the extent there are insufficient funds in the Agent's Account, the Servicing
Agent Account or such other accounts to make any payment when due, the Borrower
shall immediately pay to the Agent all amounts due that remain unpaid. The Agent
shall allocate and distribute Unused Commitment Fees to each Lender (as a
Lender, and to the extent applicable, as Servicing Agent) in accordance with
such Lender's daily average unused Commitment.
(c) (i) If the Agent shall not have exercised the Daily Settlement Option,
on each Weekly Settlement Date, the Servicing Agent shall distribute to the
Agent and the Lenders in immediately available funds all payments and
prepayments received during the previous week by the Servicing Agent in respect
of principal, interest and other amounts received and available for distribution
as of the opening of business on such date, net of any principal amount that the
Agent or such Lender would be required to remit to the Servicing Agent under
Sections 2.6(c)(ii) or 2.6(c)(iii), as applicable, of this Agreement. The
Servicing Agent's, the Agent's and each Lender's statement of account, ledger or
other relevant record shall be conclusive, in the absence of error, provided,
however, that in any event each such statement, ledger or other relevant record
shall be conclusive and binding unless the Agent shall have received written
notice from the Borrower of such error within a commercially reasonable period
and unless notice is received shall be deemed an "account stated." The Borrower
shall have no liability to the Servicing Agent, the Agent or any Lender for any
loss or expense incurred as a result of the failure by the Servicing Agent to
comply with the provisions of this Section 2.14(c)(i).
(ii) If the Agent has exercised its Daily Settlement Option, on each
Business Day thereafter, the Servicing Agent shall distribute to the Agent and
the Lenders in immediately available funds all payments and prepayments received
by the Servicing Agent in respect of principal, interest and other amounts
received and available for distribution as of the opening of business on such
date, net of any principal amount that the Agent or such Lender would be
required to remit to the Servicing Agent under Sections 2.6(c)(ii) or
2.6(c)(iii), as applicable, of this Agreement. The Servicing Agent's, the
Agent's and each Lender's statement of account, ledger or other relevant record
shall be conclusive, in the absence of error, provided, however, that in any
event each such statement, ledger or other relevant record shall be conclusive
and binding unless
39
the Agent shall have received written notice from the Borrower of such error
within a commercially reasonable period and unless such notice is received
timely shall be deemed an "account stated." The Borrower shall have no liability
to the Servicing Agent, the Agent or any Lender for any loss or expense incurred
as a result of the failure by the Servicing Agent to comply with the provisions
of this Section 2.14(c)(ii).
(d) The Borrower hereby transfers and conveys to the Agent, for its and the
Lenders' benefit, exclusive ownership and control of each of the Lock-Boxes and
the Lock-Box Accounts. If, notwithstanding the requirements of Section 5.2(m),
the Borrower receives any Collections of any Purchased Settlements or any other
proceeds of Collateral which are required to be paid to the Servicing Agent or
the Agent, each for the benefit of the Lenders, it shall receive such payments
as the Agent's trustee, and shall promptly (and, in any event, within one (1)
Business Day after its receipt thereof) deliver such payments to a Lock-Box
Account, or to the Servicing Agent, in each case, in their original form duly
endorsed in blank. All Collections received in the Lock-Boxes or the Lock-Box
Accounts and all amounts on deposit in the Agent's Account shall be the sole
property of the Agent, for the benefit of itself and the Lenders, and subject to
the Agent's sole control. All amounts on deposit in the Servicing Agent Account
shall be the sole property of the Servicing Agent, for the benefit of itself,
the Agent, and the Lenders, and subject to the Servicing Agent's sole control.
At the Agent's request, the Borrower shall execute and deliver to the Agent such
documents as the Agent shall require to grant the Agent access to, and exclusive
dominion and control over, any lock-boxes and/or bank accounts (including,
without limitation, the Lock-Boxes and Lock-Box Accounts) to which Collections
are remitted.
SECTION 2.15 Payment on Non-Business Days. Whenever any payment hereunder
or under the Revolving Loan Notes shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or commitment fees, as the case may be.
SECTION 2.16 Pro Rata Treatment of Lenders. Subject to the weekly
settlement procedures contained in Section 2.1(d)(ii) and Section 2.14(c)(i) to
this Agreement prior to the exercise by the Agent of the Daily Settlement
Option, each Borrowing, and each selection of, Conversion to or Continuation of
any Interest Rate and each payment or prepayment by the Borrower with respect to
principal and other amounts (except interest) due from the Borrower hereunder to
the Lenders (other than any such amounts of the type described in Section 2.6,
Section 2.13, Section 8.8 or Section 9.8) shall be made and distributed in
proportion to the Ratable Shares of each Lender.
ARTICLE 3. CONDITIONS OF LENDING
SECTION 3.1 Condition Precedent to Initial Advance. The obligation of the
Lenders and the Servicing Agent to make the initial Advance is subject to the
condition precedent that the Agent shall have received, with sufficient copies
for the Servicing Agent and each of the
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Lenders, on or before the day of such Advance the following, each dated such
day, in form and substance (and in such quantities as shall be) satisfactory to
the Agent:
(a) Each of this Agreement, the Security Agreement, the Assignment
Agreement and the Servicing Agreement, fully executed, with all Exhibits and
Schedules thereto completed in form and substance satisfactory to the Agent.
(b) The Revolving Loan Notes.
(c) Certificate of the Secretary of the General Partner, certifying (i)
resolutions adopted by the Board of Directors authorizing, among other things,
the execution and delivery by the General Partner of the this Agreement, the
Revolving Loan Notes, the Security Agreement, the Servicing Agreement, the
Assignment Agreement and any other documents and instruments required to be
executed by the Partnership or the General Partner pursuant to the terms of the
Advance Documents, (ii) names and signatures of officers of the General Partner
authorized to execute the documents and instruments referred to in clause (i)
above, (iii) the accuracy and currency of the By-Laws of the General Partner,
and (iv) the accuracy and currency of the Agreement of Limited Partnership.
(d) Certificate of Incorporation of the General Partner certified by the
Secretary of State of Delaware.
(e) Good Standing or Subsistence Certificate for the General Partner from
the Secretaries of State of Delaware and Pennsylvania.
(f) Certificate of Limited Partnership of the Borrower certified by the
Secretary of State of Delaware.
(g) Good Standing or Subsistence Certificate for the Borrower from the
Secretaries of State of Delaware and Pennsylvania.
(h) Officer's Certificate executed on behalf of the General Partner by the
chairman, the president or the chief financial officer of the General Partner
that (i) the representations and warranties of the Borrower contained in this
Agreement or otherwise made in writing in connection therewith are true and
correct on or as of the Closing Date and (ii) no event shall have occurred and
be continuing on the Closing Date which would constitute a Default or an Event
of Default under this Agreement.
(i) Favorable opinions of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇, counsel for
the Borrower, in form and substance satisfactory to the Agent.
(j) Executed financing statements, amendments and assignments required to
be filed by the Borrower pursuant to the Security Agreement.
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(k) Certified copies of UCC and tax lien and judgment search reports with
respect to the Borrower and the General Partner from such jurisdictions as are
deemed necessary or desirable by the Agent, in each case, dated a date
reasonably prior to the Closing Date.
(l) Executed releases with respect to any Liens (other than Permitted
Liens) filed against the Borrower or any of its properties.
(m) Borrowing Base Certificate dated as of the Closing Date.
(n) Certification evidencing coverage under the fidelity insurance policy
referred to in Section 5.1(p);
(o) All of the items listed on the List of Closing Documents which are not
included in items (a) through (n) above, in form and substance satisfactory to
the Agent.
SECTION 3.2 Conditions Precedent to All Advances. The obligation of
Servicing Agent to make each Advance (including the initial Advance) and each of
the Lenders to make Advances shall be subject to the further conditions
precedent that on the date of such Advance and after giving effect thereto (a)
the following statements shall be true (and each of the giving of the applicable
notice requesting such Advance and the acceptance by the Borrower of the
proceeds of such Advance shall constitute a representation and warranty by the
Borrower that on the date of such Advance such statements are true):
(i) The Agent shall have received (a) a fully completed Notice of
Borrowing and Borrowing Base Certificate, and (b) in the case of any
proposed Settlement Advance (other than a Discretionary Non-Ratable
Advance) or Settlement Differential Advance, a Borrowing Base Certificate
reflecting a Borrowing Base that equals or exceeds the sum of the
outstanding Settlement Advances (other than Discretionary Non-Ratable
Advances) and Settlement Differential Advances after giving effect to such
proposed Advances;
(ii) The representations and warranties contained in Section 4.1 and
in Section 4.2, as applicable, of this Agreement are correct on and as of
the date of such Advance, before and after giving effect to such Advance
and to the application of the proceeds of such Advance, as though made on
and as of such date;
(iii) No event has occurred and is continuing, or would result from
such Advance or from the application of the proceeds of such Advance, which
constitutes an Event of Default or would constitute an Event of Default or
Potential Default unless waived; and
(iv) Since the Closing Date, no event or events shall have occurred
and be continuing which would have, or would reasonably be expected to
result in, a Material Adverse Change;
(b) the Servicing Agent shall have:
42
(i) Received confirmation from the Servicer that all documents
required to be contained in the Settlement Package with respect to
each Settlement to be acquired with the proceeds of such Advance have
been received and appear to be in satisfactory form and in compliance
with the requirements of this Agreement;
(ii) Received such other approvals, opinions or documents as the
Agent or the Servicing Agent may reasonably request, including, but
not limited to, an opinion from counsel acceptable to the Agent that
each Settlement against which such Advance is to be made is an
Eligible Settlement in accordance with this Agreement (such opinion
may rely, with respect to factual matters, on written representations
made by the Seller, the Broker, if any, and the Borrower)( it being
understood that each of the Agent and the Servicing Agent hereby agree
to give prompt notice of such reasonable request to the other);
(iii) Completed a reasonable investigation, to the extent the
Agent has determined such investigation to be necessary, with respect
to each Settlement against which such Advance is to be made;
(iv) Received, in the event the Settlement against which such
Advance is to be made is being purchased in a state where no
Settlement has previously been purchased by the Borrower, satisfactory
advice from counsel to the Agent that the purchase of such Settlement
does not violate or contravene the Law of such state (such opinion may
rely on one or more opinions provided by local counsel, who shall be
acceptable to the Agent, counsel to the Agent, and the Borrower, and
whose legal fees shall be solely the expense of the Borrower); and
(v) Certification evidencing coverage under the fidelity
insurance policy referred to in Section 5.1(p).
(c) The acceptance by the Borrower of each Advance shall be deemed to
constitute, as of the date of such Advance, (i) a representation and warranty by
the Borrower that the conditions in this Section 3.2 have been satisfied and
(ii) a confirmation and reaffirmation by the Borrower of the granting and
continuance of the Agent's Liens on the Collateral on behalf of the Lenders
pursuant to the Security Agreement.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) The Borrower is a limited partnership duly formed and validly existing
under the laws of the State of Delaware, is qualified to do business and is in
good standing in all other states in which such qualification and good standing
are necessary in order for the Borrower to conduct its business and own its
property as conducted and owned in such states, except in such states where
failure to qualify to do business would not have a materially adverse effect on
the business operations or financial condition of the Borrower, has all
requisite power and authority to conduct its business, to own its property and
to execute, deliver and perform all of its obligations under this Agreement and
the other Advance Documents, has the requisite corporate power and authority and
the legal right to own, pledge, mortgage or otherwise encumber the Collateral,
and to conduct its business as now and proposed to be conducted, and has all
licenses, permits, consents or approvals from or by, and has made all filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent they are material to such ownership, operation and
conduct.
(b) The General Partner is a corporation duly organized and existing in
good standing under the laws of the State of Delaware, is qualified to do
business and is in good standing in all other states in which such qualification
and good standing are necessary in order for the General Partner to conduct its
business and own property as conducted and owned in such states, except in such
states where failure to qualify to do business would not have a materially
adverse effect on the business operations or financial condition of the
Borrower, and has all requisite power and authority to conduct its business, to
own its property and to execute and deliver this Agreement and the other Advance
Documents as general partner and agent of the Borrower, and to execute, deliver
and perform all of its obligations under the other Advance Documents to which it
is a party.
(c) The execution, delivery and performance by the Borrower and the General
Partner of this Agreement, the Revolving Loan Notes, the Security Agreement, the
Assignment Agreement, the Servicing Agreement, and each Lock-Box Agreement are
within the Borrower's powers, have been duly authorized by all necessary action,
and do not contravene (i) the Borrower's partnership agreement or (ii) any law
or contractual restriction binding on, or affecting, the Borrower.
(d) No authorization or approval or other action by, and no notice to or
registration of or filing with, any Governmental Authority or regulatory body or
holder of any Indebtedness is required for the due execution, delivery and
performance by the Borrower, or to insure the legality, validity, binding effect
or enforceability of, this Agreement, the Revolving Loan Notes, the Security
Agreement and the Servicing Agreement.
(e) This Agreement, the Security Agreement, the Assignment Agreement and
the Servicing Agreement are, and the Revolving Loan Notes when delivered
hereunder will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.
44
(f) There are no judgments or other judicial or administrative orders
outstanding against the Borrower nor is there any pending or, to the best
knowledge of the Borrower, threatened action or proceeding affecting the
Borrower before any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition or operations of the
Borrower or which purports to affect the legality, validity or enforceability of
this Agreement, the Revolving Loan Notes, the Security Agreement, the Assignment
Agreement, the Servicing Agreement or any Lock-Box Agreement.
(g) The Borrower is not in violation of any law, rule, regulation, order,
writ, judgment, decree, determination or award applicable to it or any
indenture, lease, loan or other agreement to which it is a party or by which it
or its assets may be bound or affected, the violation of which may reasonably be
expected to have a material adverse effect upon the ability of the Borrower to
perform any of its obligations under this Agreement or a material adverse effect
upon the ability of the Borrower to perform any of their respective obligations
the other documents related thereto to which it is party.
(h) No proceeds of any Advance will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934.
(i) The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
G issued by the Board of Governors of the Federal Reserve System), and no
proceeds of any Advance will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
(j) The principal place of business and chief executive office of the
Borrower and the office where the Borrower keeps all of its records are located
at the address of the Borrower referred to in Section 7.2 (or at such other
locations as to which the notice and other requirements specified in Section
5.1(d) shall have been satisfied).
(k) The names and addresses of all the lock-box banks, together with the
account number of the Collection Account, of the Borrower at such lock-box
banks, are specified in Schedule I hereto (which shall be deemed to include any
other lock-box banks or Collection Account as to which the notice and other
requirements specified in the Servicing Agreement have been satisfied).
(l) Except as set forth on Schedule VI, neither the Borrower nor any of its
ERISA Affiliates has maintained or participated in any Plan during the past six
(6) years. With respect to any such Plan, (i) such Plan complied and complies in
all material respects with all applicable requirements of law and regulations,
(ii) no Reportable Event has occurred with respect to any such Plan, (iii) no
such Plan has been terminated, and (iv) no funding deficiency has occurred in
respect of any such Plan, except, in each case, where the occurrence of any of
the foregoing could not be reasonably expected to result in liability to the
Borrower in excess of $50,000.
45
(m) The balance sheets and statements of income and cash flows of the
Borrower as of December 31, 1996 (i) have been prepared in accordance with GAAP,
and (ii) are true and complete and present fairly the respective financial
condition and results of operations of the Borrower, and said balance sheets
accurately reflect the all of the respective liabilities, including contingent
liabilities of the Borrower.
(n) The Borrower has filed all federal, state and local tax returns which
it is required by Law to file and has paid all taxes, assessments and other
governmental charges due in respect of its respective returns, except to the
extent that any such taxes, assessments or other governmental charges are being
contested in good faith and as to which the Borrower has set aside on its books
adequate reserves and in respect of which no Liens have attached to or been
filed against the Collateral. There are no agreements or waivers extending the
statutory period of limitations applicable to any federal income tax return of
the Borrower for any period.
(o) Except as described in Schedule II hereto, the Borrower is not a party
to any material lease, contract, agreement, understanding or commitment of any
kind (including without limitation all agreements which, if breached, could
directly or indirectly have a Material Adverse Effect), and to the best of the
Borrower's knowledge, (a) all parties (including the Borrower) to all such
material leases, contracts, agreements, understandings and commitments, have
complied with the provisions thereof, (b) no such party (including the Borrower)
is in default under any provision thereof, and (c) no event has occurred which,
but for the giving of notice or the passage of time, or both, would constitute a
default thereunder.
(p) Neither this Agreement nor any other Advance Document to which the
Borrower is a party, or any certificate or statement furnished to the Agent, the
Servicing Agent or any Lender in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading. There
is no fact known to the Borrower which has or may have a Material Adverse Effect
which has not been set forth in this Agreement or in the other Advance
Documents, certificates and statements furnished to the Agent, the Servicing
Agent or any Lender in connection with the transactions contemplated hereby.
(q) There has occurred no event which constitutes a Potential Default or an
Event of Default.
(r) The Borrower is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended, and the making of the Advances and the use of the proceeds
thereof by the Borrower will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
46
(s) The Borrower has good, indefeasible, and merchantable title to and
ownership of the Collateral, free and clear of all liens, claims, security
interests, and encumbrances except those held by the Agent, and other Permitted
Liens.
SECTION 4.2 Additional Representations and Warranties of the Borrower with
Respect to Settlements. With respect to each Settlement against which an Advance
shall be made, the Borrower represents and warrants, as of the time of its
purchase of such Settlement, as follows:
(a) The Settlement is an Eligible Settlement;
(b) To the best knowledge of the Borrower, the Settlement is the legal,
valid and binding obligation of each Obligor related thereto, enforceable
against each such Obligor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity;
(c) The assignment of the Seller's right to receive payments under such
Settlement does not contravene or conflict with any applicable laws, rules or
regulations or any contractual or other restriction, limitation or encumbrance;
(d) To the best knowledge of the Borrower, the Settlement has not, nor has
any document in the related Settlement Package, been satisfied, subordinated or
rescinded;
(e) The Settlement is unrelated to an Obligor (if such Settlement is not
funded by a Qualified Annuity), Designated Annuity Funding Company (if such
Settlement is funded by a Qualified Annuity), or Seller either of which is (i)
the subject of a bankruptcy, insolvency or receivership proceeding or unable to
make payments on its obligations when due, unless, with respect to a Seller, the
bankruptcy court having jurisdiction over such Seller has approved the sale of
the Settlement to the Borrower, (ii) not located in the United States, or (iii)
an Insurer or other entity which the Agent or the Servicing Agent has previously
notified the Borrower is unacceptable to the Agent or the Servicing Agent, as
applicable, in its commercially reasonable judgment;
(f) The Settlement has no related guaranty, letter of credit providing
support therefor, or collateral security therefor, other than any guaranty,
letter of credit or collateral security that has been assigned by the Borrower
to the Agent;
(g) The Seller has represented and warranted to the Borrower in writing
that:
(i) the Settlement is not the primary source of income of the Seller,
and the Seller does not have any disability or other incapacity that would
prevent the Seller from being gainfully employed;
(ii) the proceeds of the sale of the Settlement to the Borrower will
be used for the valid personal, business or commercial purposes of the
Seller;
47
(iii) the Seller has been advised of, and understands, the advantages
and disadvantages of a sale of the Settlement pursuant to the related
Purchase Agreement through consultation with such legal, tax and accounting
advisors as the Seller deems necessary, and the Seller has been represented
by counsel in the negotiation and execution of the related Purchase
Agreement;
(iv) the Seller is competent to enter into the related Purchase
Agreement, has executed such agreement voluntarily, and has legitimate
reasons for selling the Settlement thereby; and
(v) the sale of the Settlement under the Purchase Agreement is being
made by the Seller in good faith and without actual intent to hinder, delay
or defraud the Seller's present or future creditors;
(h) Counsel for the Seller has issued a letter to the effect that Counsel
has explained to the Seller the terms of the transaction contemplated in the
Purchase Agreement, and is satisfied that the Seller understands the nature and
terms of such transaction;
(i) To the best knowledge of the Borrower, the insurance policy, annuity
contract or other instrument, if any, obligating an Obligor or Designated
Annuity Funding Company to make one or more payments with respect to the
Settlement:
(A) has been duly authorized and, together with the Settlement,
constitutes the legal, valid and binding obligation of such Obligor or
Designated Annuity Funding Company, as applicable, in accordance with its
terms; and
(B) together with the Settlement, does not contravene in any respect
any requirement of law applicable thereto;
(j) The Seller's Questionnaire related to the Settlement has been reviewed
and approved by the Borrower;
(k) The Settlement has a Purchase Yield no less than the ING CoF plus seven
and one-half percent (7.50%);
(l) The Borrower has taken and completed all actions reasonably required
under the UCC to protect and perfect its interest in the Settlement;
(m) Any one or more payments by the Borrower to the Seller or the Seller's
designated payee(s) of all or a part of the Purchase Price agreed upon by the
Seller and Borrower in the Purchase Agreement have been, or will be, duly
authorized by an Authorized Officer of the Borrower; and
(n) All of the applicable Eligible Settlement Purchase Procedures have been
completed;
48
(o) the Borrower has (i) obtained and maintains a life insurance policy on
the life of the Seller related to such Settlement Agreement in an amount
sufficient to fund the aggregate amount of all non-guaranteed Periodic Payments,
if any, due or to become due in respect of such Settlement Agreement and (ii)
caused the collateral assignment of the beneficial interest in respect of such
life insurance policy in favor of the Agent, for the benefit of itself, the
Servicing Agent and the Lenders; and
(p) in the event that any Obligor of, or the Designated Annuity Funding
Company in respect of, such Settlement may, at its option, upon the death of the
Seller related to such Settlement, prepay any Periodic Payments to become due
thereunder, the discount rate applicable to such prepayment shall not exceed the
Purchase Yield in respect of such Settlement.
ARTICLE 5. COVENANTS OF THE BORROWER
SECTION 5.1 Affirmative Covenants. So long as any Obligations shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will,
unless the Required Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property except
to the extent contested in good faith.
(b) Reporting Requirements. Furnish to the Agent (with sufficient copies
for each Lender):
(i) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, containing financial
statements for such year certified in a manner acceptable to the Agent by
Coopers & ▇▇▇▇▇▇▇ or other independent public accountants acceptable to the
Agent;
(ii) as soon as available and in any event within twenty (20) Business
Days after the end of each month, financial statements of the Borrower,
including, but not limited to, a balance sheet and income statement, as of
the end of such month, certified by the chief financial officer of the
Borrower;
(iii) as soon as possible and in any event within five (5) days after
the occurrence of each Potential Default or Event of Default, a statement
of the chief financial officer of the Borrower setting forth the nature and
period of existence of such Potential Default or Event of Default and the
action which the Borrower has taken and proposes to take with respect
thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its Partners, and copies of all
reports and registration statements which the Borrower files with the
Securities and Exchange Commission or any national securities exchange;
49
(v) promptly after the filing or receiving thereof, copies of all
reports and notices which the Borrower files under ERISA, with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Borrower receives from such entity;
(vi) promptly after the Borrower knows that any Reportable Event has
occurred with respect to any Plan, the occurrence of which could reasonably
be expected to have a material adverse effect on the financial condition of
the Borrower and its Subsidiaries taken as a whole, and, in any event,
within thirty (30) days after the Borrower knows that any Reportable Event
has occurred with respect to any Plan, a statement, signed by an Authorized
Officer of the Borrower, describing said Reportable Event and the action
which the Borrower proposes to take with respect thereto; and
(vii) such other information respecting the condition or operations,
financial or otherwise, of the Borrower as the Agent or any Lender may from
time to time reasonably request.
(c) Settlement Reporting. Furnish to the Agent:
(i) as soon as available and in any event within seven (7) Business
Days after the end of each month, a report (the "Monthly Report") in the
form of Exhibit M attached hereto or such other form satisfactory to the
Agent in its commercially reasonable discretion related to all Purchased
Settlements as of the last Business Day of the immediately preceding month
setting forth (i) each Delinquent Settlement (with an explanation for such
status) as of the end of such month, (ii) each Settlement which has been
returned to the Servicer pursuant to Section 3.3 of the Servicing Agreement
as of the end of such month, (iii) the Weighted Average Maturity for each
Claim Group, (iv) the present value of the Purchased Settlements, (v) the
Delinquency Ratio, (vi) the excess of the Net Pool Weighted Average Yield
over the Weighted Average Forward Rate of all outstanding Settlement
Advances and Settlement Differential Advances which are not Match Funded,
as of the next succeeding Monthly Payment Date, and (vii) the aggregate
value of all of the Purchased Settlements, together, in each case, with the
calculations thereof in a form satisfactory to the Agent in its
commercially reasonable discretion;
(ii) on the Commitment Termination Date, a report identifying each
Purchased Settlement on the day immediately preceding the Commitment
Termination Date;
(iii) upon the Agent's request, on any day, a report identifying each
Purchased Settlement on such day; and
(iv) with each Notice of Borrowing, and no less than weekly, on the
first Wednesday following the end of each calendar week (to the extent not
delivered earlier in any such week in accordance with this clause), a fully
completed Borrowing Base Certificate;
50
(d) UCC Matters; Protection and Perfection of Security Interests. Keep its
principal place of business and chief executive office, and the office where it
keeps its records, at the address of the Borrower referred to in Section 4.1(j),
or, upon thirty (30) days' prior written notice to the Agent, the Servicing
Agent and the Lenders, at such other locations within the United States where
all actions necessary reasonably requested by the Agent to protect and perfect
the interest of the Agent in the Collateral have been taken and completed. The
Borrower will not make any change to its name or use any tradenames, fictitious
names, assumed names or "doing business as" names, unless prior to the effective
date of any such name change or use, the Borrower delivers to the Agent such
executed financing statements as the Agent may request to reflect such name
change or use, together with such other documents and instruments as the Agent
may request in connection therewith. The Borrower agrees that from time to time,
at its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action necessary and/or reasonably required by
the Agent to perfect, protect or more fully evidence the interest in the
Purchased Settlements acquired by the Borrower under the applicable Purchase
Agreements, or to enable the Agent to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, upon the request of
the Agent, the Borrower will execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate or as the Agent may
require. The Borrower hereby authorizes the Agent to file one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Collateral and the Collections now existing or
hereafter arising without the signature of the Borrower where permitted by law.
A carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement.
(e) Access to Certain Documentation and Information Regarding the
Settlements.
(i) Provide the Agent, the Lenders and/or any of their respective duly
authorized representatives, attorneys or accountants access to any and all
documentation that the Borrower may possess regarding the Settlements, such
access being afforded without charge, but only upon reasonable request and
during normal business hours, so as not to interfere unreasonably with the
Borrower's normal operations, at the office of the Borrower.
(ii) Maintain with respect to Purchased Settlements, accounts and
records as to each Purchased Settlement that are accurate and sufficiently
detailed so as to permit (x) the reader thereof to know as of the most
recently ended calendar month the status of each Purchased Settlement
including payments made and payments owing (and whether or not such
payments are past due), and (y) reconciliation of payments on each
Purchased Settlement and the amounts from time to time deposited in the
Collection Account in respect thereof.
51
(f) Accounting System. Maintain a financial accounting system determined by
Coopers & ▇▇▇▇▇▇▇ or such other independent certified public accountants
acceptable to the Agent on an ongoing basis to be adequate (to the extent that
the procedures contained in such system are complied with) to generate timely,
accurate and complete financial records of the Borrower.
(g) Existence and Rights; Compliance with Laws. Preserve and keep in full
force and effect its limited partnership existence, rights, permits, patents,
franchises, licenses, trademarks and trade names and obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and comply in all material respects with any
and all Laws which may at any time be applicable to it.
(h) Books and Records. Maintain proper and complete financial and
accounting books and records.
(i) Taxes. Pay when due all taxes, assessments, charges and levies imposed
upon it or any of its respective properties or which it is required to withhold
and pay over, and provide evidence of such payment to the Agent if requested,
except where such taxes, assessments or charges shall be contested in good faith
by appropriate proceedings and where adequate reserves therefor have been set
aside on its books, provided that Borrower shall pay or cause to be paid all
such taxes, assessments, charges, and levies in excess, individually or in the
aggregate, in excess of $50,000 or if any Lien is or is reasonably likely to be
filed with respect thereto against the assets of the Borrower. Within ten (10)
days of the Agent's request therefor, Borrower will furnish the Agent with
copies of federal income tax returns filed by the Borrower.
(j) Maintenance of Properties. Maintain all of its tangible property
(except for obsolete property not yet disposed of) in good repair, working order
and condition and, from time to time, make all appropriate and proper repairs,
renewals, replacements, additions and improvements thereto.
(k) Performance and Compliance with Material Agreements. Perform and comply
with each of the provisions of all material agreements of the kind described in
Section 4.1(g) to which it is a party.
(l) Litigation. Give prompt notice to the Agent, the Servicing Agent and
each Lender, of all litigation or proceedings affecting it which, (a) if
adversely determined, could have a Material Adverse Effect, or (b) in any event,
in which damages exceeding $200,000 (if such damages would be covered by
insurance) or $100,000 (if such damages would not be covered by insurance) are
claimed (whether or not the claim is considered to be covered by insurance) in
respect of any litigation or proceeding, or any series of related litigation or
proceedings, or, in the aggregate in respect of all litigation and proceedings
occurring during any twelve (12) month period.
(m) Notice of Defaults. Within one Business Day after becoming aware
thereof, notify the Agent, the Servicing Agent and each Lender promptly of the
occurrence of any Event of Default or Potential Default hereunder, which notice
shall describe such event and the actions which the Borrower intends to take
with respect thereto.
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(n) Change of Business Location; Change of Lock-Boxes, Collection Accounts,
or Lock-Box Banks. (i) Notify the Agent at least thirty (30) days in advance of
(x) any change in the location of the principal place of business of the
Borrower, (y) the establishment of any new, or the discontinuance of any
existing, place of business, or (z) any change to its name or of the use of any
tradenames, fictitious names, assumed names or "doing business as" names, and,
in each case, execute, deliver, and file (and, if necessary, pay related filing
fees and taxes) all such documents as may be necessary or advisable in the
opinion of the Agent and the Agent's legal counsel to continue to perfect and
protect the Liens of the Agent in the Collateral (including, without limitation,
UCC financing statements). Notwithstanding anything contained herein to the
contrary, the Borrower may not move its principal place of business to a
location outside of the United States.
(ii) Notify the Agent at least thirty (30) days in advance of
terminating any Lock-Box, Collection Account or Lock-Box Bank, and provide
for such termination and handling procedures for Collections previously
directed to be sent thereto as shall be acceptable to the Agent in its
commercially reasonable judgment. Notify the Agent at least ten (10) days
in advance of adding any new lock-box, bank account or bank as a new
Lock-Box, Collection Account or Lock-Box Bank and, prior to directing any
Obligors or Designated Annuity Funding Company to remit Collections
thereto, deliver a fully executed Lock-Box Agreement with respect to any
such new Lock-Box, Collection Account or Lock-Box Bank, as applicable, to
the Agent.
(iii) Agree that, from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all
further action that the Agent may reasonably request in order to perfect,
protect or more fully evidence the Agent's interest in the Purchased
Settlements, or to enable the Agent to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the
Borrower will, upon the request of the Agent, execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the Agent may reasonably request. The Borrower hereby
authorizes the Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all
or any of the Purchased Settlements and the other collateral now existing
or hereafter arising without the signature of the Borrower where permitted
by law.
(o) Payment of Obligations. Pay all Permitted Indebtedness when due in
accordance with the terms thereof; provided, however, that unless an Event of
Default or Potential Default is then continuing or would result therefrom, the
Borrower shall be permitted to prepay any such obligations owing to any Person
other than an Affiliate.
(p) Fidelity Insurance. Maintain, at its own expense, a fidelity insurance
policy, with broad coverage with responsible companies on all officers,
employees or other persons acting on behalf of the Borrower in any capacity with
regard to the Purchased Settlements to handle
53
documents and papers related thereto. Any such fidelity insurance shall protect
and insure the Borrower against losses, including forgery, theft, embezzlement,
and fraud, and shall be maintained in an amount of at least $5,000,000, and in a
form acceptable to the Agent in its commercially reasonable judgement. No
provision of this Section 5.1(p) requiring such fidelity insurance shall
diminish or relieve the Borrower from its duties and obligations as set forth in
this Agreement. The Borrower shall be deemed to have complied with this
provision if one of its respective Affiliates has such fidelity policy coverage
and, by the terms of such fidelity policy, the coverage afforded thereunder
extends to the Borrower. Upon the request of the Agent at any time subsequent to
the Closing Date, the Borrower shall cause to be delivered to the Agent a
certification evidencing coverage under such fidelity policy. Any such insurance
policy shall not be cancelled or modified in a materially adverse manner without
ten (10) days' prior written notice to the Agent, the Servicing Agent and each
Lender.
(q) Opinion Updates. The Borrower shall provide the Agent with updated
opinions on each five-year anniversary of the Closing Date, with respect to the
opinion described in Section 3.1(i).
SECTION 5.2 Negative Covenants. So long as any Obligations shall remain
unpaid or any of the Lenders shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Required Lenders:
(a) Business Activities. Conduct any business other than
(1) the acquisition from time to time of any or all right, title and
interest in and to any right to receive one or more pre-scheduled deferred
payments including (i) any right to the underlying payments of Eligible
Settlements including payments arising out of claims on insurance policies
related thereto, (ii) any rights to payments of awards from lotteries operated
or sanctioned by federal, state or local governmental authorities and (iii) any
other asset consisting of the right held by any Person to receive one or more of
such pre-scheduled deferred payments whether arising under contract, a claim at
law, judicial award, gift, bequest or otherwise (collectively, the "Payment
Contracts");
(2) the execution and delivery by the Borrower from time to time of
agreements, each between the Borrower, as transferee, and one or more other
parties, including Affiliates, as transferors (collectively, the "Payment
Contracts Seller"), to effect the transfer from the Payment Contracts Seller to
the Borrower of various Payment Contracts and any related insurance policies and
any proceeds or further associated rights (the "Related Security") agreed upon
by the Borrower and the Payment Contracts Seller, in each case pursuant to the
terms of one or more agreements providing therefor;
(3) the execution and delivery by the Borrower from time to time of
agreements, each between the Borrower, as transferor, and one or more other
parties, including Affiliates, as transferees (collectively, the "Payment
Contracts Buyer"), to effect the transfer from the Borrower to the Payment
Contracts Buyer of various Payment Contracts and any Related Security agreed
upon by the Borrower and the Payment Contracts Buyer, in each case pursuant to
the terms of one or more agreements providing therefor;
54
(4) the conveyance by the Borrower from time to time of Payment Contracts
and/or any Related Security into one or more trusts or other issuing vehicles
(each, an "Issuing Vehicle") that will issue interests in or debt secured by
Payment Contracts and any Related Security (such interests and/or debt,
collectively, the "Issuing Vehicle Securities"), in each case pursuant to the
terms of one or more agreements providing therefor;
(5) the establishment by the Borrower from time to time of Issuing Vehicles
for the issuance and sale of Issuing Vehicle Securities, in each case pursuant
to the terms of the agreement providing therefor;
(6) the execution and delivery by the Borrower from time to time of
underwriting agreements and purchase agreements related to the sale of Issuing
Vehicle Securities by the Borrower;
(7) the performance by the Borrower of all of its obligations under the
aforementioned agreements;
(8) the preparation, execution and delivery of any and all other documents
and agreements as may be required in connection with the performance of the
activities of the Borrower approved above; and
(9) to engage in any lawful act or activity and to exercise any powers
permitted under the Delaware ULPA that are related or incidental to the
foregoing and necessary, convenient or advisable to accomplish the foregoing.
(b) Sales, Liens, Etc. Except as permitted under the Security Agreement or
pursuant to an Approved Asset Securitization, (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien
upon or with respect to, any Settlement or the related Settlement Amount or
Collections, or upon or with respect to the Collection Account or any other
account to which any Collections are sent, or assign any right to receive income
in respect thereof or (ii) create or suffer to exist any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired, or
assign any right to receive income, to secure or provide for the payment of any
Indebtedness of any Person.
(c) Indebtedness. Create or suffer to exist any Indebtedness, except for
Permitted Indebtedness.
(d) Loans and Advances. Make any loans or advances to any Person.
(e) Dividends, Etc. Declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any interest in the Borrower, or purchase, redeem or otherwise
acquire for value any interest in the Borrower or any rights or options to
acquire any such interest; provided, however that so long as the Borrower is not
an organization taxable as a corporation, for each fiscal year of the Borrower,
the Borrower may make distributions to its Partners in an aggregate amount equal
to the federal, state, and local income tax liability of such Partners with
respect to income of the Borrower attributable to such Partners.
55
(f) Mergers, Etc. Merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, or acquire all or substantially all of the assets of,
any Person.
(g) Dissolution and Merger. Wind-up, liquidate or dissolve its affairs,
convey, sell, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its properties or assets
(whether now owned or hereafter acquired).
(h) Investments. Except pursuant to any Approved Asset Securitization, make
any investment of capital in any Person either by purchase of stock or
securities, contributions to capital, property transfer or otherwise or acquire
or agree to acquire by any manner any business or Person.
(i) Extraordinary Transactions. Except pursuant to any Approved Asset
Securitization, enter into or agree to enter into any transaction that is not in
the ordinary course of business.
(j) Change of Business or Capital Structure. (i) Change the nature of its
business or enter into a new business or (ii) change the legal form of its
business or (iii) make any change in the capital structure thereof which could
reasonably be expected to be detrimental to the interests of the Agent, the
Servicing Agent and/or any of the Lenders.
(k) Change in Agreement of Limited Partnership. Amend or modify or the
Agreement of Limited Partnership which could reasonably be expected to be
detrimental to the interests of the Agent, the Servicing Agent and/or any of the
Lenders.
(l) Bankruptcy Proceedings. (1) Commence any case, proceeding or other
action under any existing or future bankruptcy, insolvency or similar law
seeking to have an order for relief entered with respect to itself, or seeking
reorganization, arrangement, adjustment, wind-up, liquidation, dissolution,
composition or other relief with respect to itself or its debts, (2) seek
appointment of a receiver, trustee, custodian or other similar official for
itself or any part of its assets, (3) make a general assignment for the benefit
of creditors, (4) take any action in furtherance of, or consenting to or
acquiescing in, any of the foregoing, (5) initiate or support the filing of a
motion in any bankruptcy or other insolvency proceedings involving any of its
Affiliates to substantively consolidate itself with any such Person.
(m) Deposits in Lock-Box or the Collection Accounts. (i) Deposit at any
time any proceeds of any Collateral in any of the Borrower's bank accounts other
than the Collection Account, (ii) direct any Obligor or Designated Annuity
Funding Company to make any payments of any Settlements to any other destination
other than a Lock-Box or the Collection Account or (iii) permit the assets of
any Person (other than the Borrower) to be deposited into any of the Lock-Boxes
or the Collection Accounts.
56
(n) Limitation of Overhead Expenses. Incur in any month Overhead Expenses
in excess of 125% of the Approved Working Capital Budget for such month.
ARTICLE 6. EVENTS OF DEFAULT
SECTION 6.1 Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:
(a) (i) The Borrower shall fail to make any required payment of principal
or interest when due hereunder and such failure shall continue unremedied for
three (3) Business Days thereafter or (ii) the Borrower shall fail to make any
required payment on any other Obligation when due hereunder and such failure
shall continue unremedied for twenty (20) days after notice to the Borrower from
the Agent, the Servicing Agent or any Lender.
(b) The Borrower or the General Partner shall be the subject of an
Insolvency Event and, in the case of any involuntary Insolvency Event instituted
against the Borrower or the General Partner either such Insolvency Event remains
undismissed for thirty (30) days or any of the remedies sought in any such
proceeding are granted;
(c) Any representation or warranty made or deemed to be made by the
Borrower (or any of its officers or managers) under or in connection with this
Agreement or a Monthly Report or other information or report delivered pursuant
hereto shall prove to have been false or incorrect in any material respect when
made; or
(d) The Borrower shall fail to perform or observe any other material term,
covenant or agreement, except as described in Sections 6.1(a) or 6.1(c),
contained in this Agreement, the Security Agreement, the Servicing Agreement or
any other agreement or document executed in connection herewith or therewith on
its part to be performed or observed and any such failure shall remain
unremedied for twenty (20) days after written notice thereof shall have been
given by the Agent to the Borrower; or
(e) The Borrower shall fail to perform any reporting requirements contained
in this Agreement, and in the case of audited financial statements, monthly
financial reports, and all other reports, agreements or documents, such failure
to perform shall remain unremedied for twenty (20), ten (10), and five (5)
Business Days, respectively; or
(f) The Delinquency Ratio with respect to Settlements for any three
consecutive Collection Periods shall equal or exceed ten percent (10.00%); or
57
(g) There shall have been any Material Adverse Change in the financial
condition or operations of the Borrower or the General Partner or there shall
have occurred any event which has a Material Adverse Effect on the
collectibility of all or a portion of the Purchased Settlements or the
enforceability of the Purchased Settlements, Purchase Agreements, or the Notices
of Direction of Payments, or there shall have occurred any other event which has
a Material Adverse Effect on the ability of the Borrower to perform hereunder;
or
(h) The Borrower shall become, or become controlled by, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
or
(i) The Borrower or the General Partner shall fail to pay any principal of
or interest on any Indebtedness (excluding the Indebtedness evidenced by the
Revolving Loan Notes), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such default is to accelerate,
or permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(j) the aggregate of the Values of all Eligible Settlements owing by (i) to
the extent such Eligible Settlements are not funded by Qualified Annuities, any
Obligor thereof or (ii) to the extent such Eligible Settlements are funded by
Qualified Annuities, any applicable Designated Annuity Funding Company, which,
in either case, is the subject of an Insolvency Event, shall be equal to or
greater than ten percent (10.00%) of the aggregate of the Values of all of the
Eligible Settlements; or
(k) Any of the following events shall occur:
(i) any two of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall for any
reason terminate their active participation in the conduct of the Borrower's
business or are removed as directors of the General Partner; or
(ii) the General Partner shall cease to be directly or indirectly
controlled by Messrs. ▇▇▇▇▇▇▇, Veloric and/or ▇▇▇▇▇▇▇.
(l) Any Class A Partner (as defined in the Agreement of Limited
Partnership) fails to make the additional capital contributions to the Borrower
required by Section 3.3(a) of the Agreement of Limited Partnership; or
(m) The Agent shall cease to have a first priority perfected security
interest in all of the Collateral;
(n) A Servicer Default shall occur and shall either (i) remain unremedied
or (ii) the defaulting Servicer shall not have been replaced, in either case,
within sixty (60) days after notice thereof is given by the Agent or any Lender
to the Servicer and the Borrower;
58
(o) (i) the aggregate outstanding principal amount of Advances (other than
Discretionary Non-Ratable Advances) shall exceed the Borrowing Base for one (1)
Business Day or (ii) the aggregate outstanding principal amount of all
Discretionary Non-Ratable Advances shall exceed the Discretionary Non-Ratable
Advances Borrowing Base for (1) Business Day;
(p) The aggregate of (i) the Unfunded Liabilities of all Single Employer
Plans; (ii) in the event that any member of the Controlled Group shall withdraw
from any Multiemployer Plan, or any Multiemployer Plan shall be in
"Reorganization" or shall be "Insolvent", as defined in ERISA, in each case, if
the Reorganization or Insolvent status continues unremedied for thirty (30)
days, in any such case, the aggregate amount of any liability of the Borrower
and its Subsidiaries resulting from such withdrawal, Reorganization or Insolvent
status; and (iii) in the event that (A) any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended from time to time) involving any
Plan, (B) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, for which an excise tax is due or would be due in
the absence of a waiver, shall exist with respect to any Plan, (C) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for ten (10) days after notice of such
Reportable Event pursuant to Section 4043(a), (d) or (e) of ERISA is given and,
in the case of the commencement of proceedings, the continuance of such
proceedings for ten (10) days after commencement thereof, (D) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, or (E) any
other event or condition shall occur or exist with respect to any Plan; and in
each case in clauses (A) through (E) of this Section 6.1(p), such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to subject the Borrower or any of the Subsidiaries to any
tax, penalty or other liabilities, such aggregate amount of tax, penalty, or
other liabilities; shall in the aggregate, exceed $50,000;
(q) A breach of Section 8.8(c) of the Agreement of Limited Partnership
shall occur; or
(r) the Net Pool Weighted Average Yield on those Purchased Settlements that
are Eligible Settlements that are allocated to a Matched Group shall be less
than a per annum rate equal to (i) the weighted average of the Fixed Rates on
all Match Funded Advances plus (ii) two percent (2%).
SECTION 6.2 Remedies.
(a) Termination. Immediately upon the occurrence of an Event of Default as
described in Section 6.1(b), the Commitment Termination Date and the Facility
Termination Date shall be deemed to have occurred automatically and all of the
Advances then outstanding, all interest thereon and all other amounts payable by
the Borrower hereunder shall automatically
59
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything herein to the contrary notwithstanding. Upon the occurrence of any
other Event of Default or at any time thereafter during the continuation of such
Event of Default, the Agent may (and, at the direction of the required
constituency of Lenders which would be required to waive any such Event of
Default, shall), if the Commitment Termination Date hereunder has not
theretofore occurred, declare the Commitment Termination Date to have occurred
and declare the Commitments of all of the Lenders and their respective
obligations to make Advances, and the Servicing Agent's obligations to make
Advances, to be terminated, whereupon the same shall forthwith terminate and all
of the Advances then outstanding, all interest thereon and all other amounts
payable by the Borrower hereunder shall immediately thereupon become and be due
and payable, without presentment, demand, protest or any notice of any kind, all
of which are hereby expressly waived by the Borrower, anything herein to the
contrary notwithstanding.
(b) Additional Remedies. Upon the occurrence and during the continuation of
an Event of Default, the Agent shall have, in addition to all other rights and
remedies under this Agreement and the other Advance Documents, all other rights
and remedies provided under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE 7. MISCELLANEOUS
SECTION 7.1 Amendments, Etc. Subject to the provisions of this Article 7,
the Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Advance Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder (in each case, except as provided below);
provided, however, that no such supplemental agreement shall, without the
consent of each Lender affected thereby:
(i) Postpone or extend the Commitment Termination Date, the Facility
Termination Date, the Scheduled Commitment Termination Date or any other
date fixed for any payment of principal of, or interest on, the Advances or
any fees or other amounts payable to such Lender;
(ii) Reduce the principal amount of any outstanding Advances, or
reduce the rate or extend the time of payment of interest or fees thereon;
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters;
(iv) Change the amount of the Commitment of any Lender hereunder;
(v) Permit the Borrower to assign its rights under this Agreement;
60
(vi) Amend Section 2.9 or this Section 7.1;
(vii) Release any guarantor of the Obligations or all or substantially
all of the Collateral;
and, provided, further, that no such supplemental agreement shall, without the
consent of the Supermajority Lenders:
(i) Amend the definition of "Borrowing Base", "Designated Annuity
Funding Company Concentration Amount", "Designated Annuity Funding Company
Concentration Limit", "Eligible Settlement", "Post-Asset Securitization
Annuity Provider Concentration Amount", "Post-Asset Securitization Annuity
Provider Concentration Limit", "Settlement Concentration Amount",
"Settlement Concentration Limit", and "Value"; or
(ii) Waive compliance with or any default arising under or otherwise
amend any of Sections 5.1(d), 5.1(e)(i), 5.2(e), 5.2(j), 5.2(k), 5.2(l),
5.2(m)(ii), 6.1(a), 6.1(b), 6.1(d) (to the extent related to the
noncompliance with any other section referred to in this clause (ii)),
6.1(f), 6.1(g) (to the extent the Supermajority Lenders have agreed that a
Material Adverse Change has occurred pursuant to Section 6.1(g)), 6.1(h),
6.1(j) 6.1(k), 6.1(m), 6.1(o), 6.1(q) or 6.1(r).
No amendment of any provision of this Agreement or the Servicer Agreement
relating to the Agent shall be effective without the written consent of the
Agent. No amendment of any provision of this Agreement or the Servicer Agreement
relating to the Servicing Agent shall be effective without the written consent
of the Agent and the Servicing Agent.
SECTION 7.2 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex or cable
communication) and mailed, telegraphed, telexed, cabled or delivered, if to the
Borrower, at its address at The ▇▇▇▇▇▇ Building, 15th and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇; if to the Agent, at
its address at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Structured Finance - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇;
and if to the Servicing Agent, at its address at PNC Bank Center, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and communications shall be effective, upon receipt, or
in the case of (i) notice by mail, upon return of the completed delivery receipt
when sent via United States certified mail, or (ii) notice by overnight courier,
one Business Day after being deposited with a national overnight courier
service, except that notices and communications to the Agent or the Servicing
Agent, as applicable, pursuant to Article 2 shall not be effective until
received by the Agent or the Servicing Agent, as applicable,.
SECTION 7.3 No Waiver; Remedies. No failure on the part of the Agent, the
Servicing Agent or any Lender to exercise, and no delay in exercising, any right
hereunder or under the Revolving Loan Notes shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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SECTION 7.4 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with those applied
in the preparation of the financial statements referred to in Section 5.1(b).
SECTION 7.5 Costs, Expenses and Taxes; Indemnification. The Borrower agrees
to pay all costs and expenses in connection with the preparation, execution,
delivery, filing, recording, administration, modification and amendment of this
Agreement, the Revolving Loan Notes and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent and the Servicing Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
under this Agreement pursuant to the terms of the Fee Letter. The Borrower
further agrees to pay on demand all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Revolving Loan Notes and the other documents to be delivered
hereunder, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 7.5. In
addition, the Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement, the Revolving Loan Notes and the other documents to be delivered
hereunder, and agrees to save the Agent, the Servicing Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.
The Borrower further agrees to (i) reimburse the Agent, the Servicing Agent
and each Lender for any reasonable costs and expenses (including, without
limitation, attorneys' and paralegals' fees and expenses) incurred by the Agent
in defending any suit brought against it by the Borrower or any other Person in
connection with the transactions contemplated by this Agreement, and (ii)
indemnify and hold the Agent, the Servicing Agent and each Lender, and their
respective officers, directors, employees, attorneys and agents (collectively,
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever incurred by such
Indemnitees, whether direct, indirect or consequential, as a result of or
arising from or relating to any proceeding by any Person, whether threatened or
initiated, asserting any claim for legal or equitable remedy against any Person
under any statute or regulation, including, without limitation, any federal or
state usury laws or under any common law or equitable cause or otherwise arising
from or in connection with the negotiation, preparation, execution, delivery,
enforcement, performance and administration of this Agreement or any other
document executed in connection herewith, provided that the Borrower shall have
no obligation hereunder with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of such Indemnitee seeking such
indemnification. Each Indemnitee will promptly notify the Borrower of the
commencement of any legal proceeding which may give rise to any indemnified
liability under the foregoing indemnity and shall permit the Borrower to
participate in the defense of any Indemnitee in any such proceeding and shall
consult with the Borrower prior to agreeing to any settlement related thereto
(provided that the Indemnitees retain the sole right to agree to any such
settlement). The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement. All of the foregoing fees,
costs and expenses shall be part of the Obligations, payable upon demand, and
secured by the Collateral.
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SECTION 7.6 Right of Set-off; Ratable Payments; Relations Among Lenders.
(a) Upon the occurrence and during the continuance of any Event of Default, each
of the Agent, the Servicing Agent and the Lenders are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the
Agent, the Servicing Agent or such Lender to or for the credit or the account of
the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement and the Revolving Loan Notes, whether or
not the Agent, the Servicing Agent or such Lenders shall have made any demand
under this Agreement or the Revolving Loan Notes and although such obligations
may be unmatured. The Agent, the Servicing Agent and each Lender agrees promptly
to notify the Borrower after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Agent, the Servicing Agent and the Lenders under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agent, the Servicing Agent and
the Lenders may have.
(b) If any Lender, other than the Servicing Agent in its capacity as the
Servicing Agent at any time prior to the election of the Daily Settlement
Option, whether by setoff or otherwise, has payment made to it upon its Advances
in a greater proportion than that received by any other Lender (other than with
respect to Discretionary Non-Ratable Advances), such Lender agrees, promptly
upon demand, to purchase a portion of the Advances held by the other Lenders so
that after such purchase each Lender will hold its ratable proportion of
Advances. If any Lender, whether in connection with setoff or amounts which
might be subject to setoff or otherwise, receives collateral or other protection
for its Obligation or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in proportion to the
obligations owing to them. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.
(c) (i) Except with respect to the exercise of set-off rights of any Lender
in accordance with Section 7.6(a), the proceeds of which are applied in
accordance with this Agreement, and except as set forth in the following
sentence, each Lender agrees that it will not take any action, nor institute any
actions or proceedings, against the Borrower or any other obligor hereunder or
with respect to any Collateral or Advance Document, without the prior written
consent of the Required Lenders or, as may be provided in this Agreement or the
other Advance Documents, at the direction of the Agent.
(ii) The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth
herein in case of the Agent and the Servicing Agent) authorized to act for,
any other Lender.
SECTION 7.7 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Agent, the Servicing Agent and each
Lender, and their
63
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Agent, the Servicing Agent and the Required Lenders. Each
Lender may assign to one or more banks or other entities all or any part or
portion of, or may grant participations to one or more banks or other entities
in all or any part or portion of its rights and obligations hereunder
(including, without limitation, its Commitment, its Revolving Loan Notes or its
Advances); provided, however, that each such assignment (i) shall be in form and
substance acceptable to the Agent and (ii) shall be to a bank or other financial
institution which is acceptable to the Agent in its sole discretion; provided,
further, however, that no such assignment shall be permitted without the
Borrower's prior written consent (which consent shall not be unreasonably
withheld) unless a Default or Potential Default shall have occurred and be
continuing at the time thereof. The Agent shall provide information regarding
such assignments to the Servicing Agent as is necessary to allow the Servicing
Agent to properly fulfill its obligations hereunder, and the Servicing Agent
shall be entitled to rely on such information provided by the Agent without any
independent investigation or analysis. Upon, and to the extent of, any
assignment (unless otherwise stated therein) made by any Lender hereunder, the
assignee or purchaser of such assignment shall be a Lender hereunder for all
purposes of this Agreement. Without limiting the foregoing, each assignee and
each purchaser of an assignment or participation shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder with respect to
the rights and benefits so assigned or participated as it would have if it were
a Lender hereunder.
SECTION 7.8 Effect on Limited Partners. This Agreement and the Revolving
Loan Notes do not represent a debt, liability, or obligation of any limited
partner of the Borrower or any shareholder of the General Partner, and none of
such shareholders of the General Partner or any other Persons shall have any
liability for the Borrower's debts, liabilities or other Obligations under this
Agreement, the Revolving Loan Notes and the Servicing Agent Notes.
SECTION 7.9 GOVERNING LAW. THIS AGREEMENT AND THE REVOLVING LOAN NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 7.10 Section Headings. All section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Agreement.
SECTION 7.11 Tax Characterization. The parties hereto intend for the
transactions effected hereunder to constitute a financing transaction for
federal taxation purposes.
SECTION 7.12 Execution. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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ARTICLE 8. THE AGENT
SECTION 8.1 Appointment; Nature of Relationship. ING Capital is appointed
by the Servicing Agent and the Lenders as the Agent hereunder and under each
other Advance Document, and each of the Servicing Agent and the Lenders
irrevocably authorizes the Agent to act as the contractual representative of the
Servicing Agent and such Lender with the rights and duties expressly set forth
herein and in the other Advance Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
8. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to the Servicing Agent or any Lender by reason of this
Agreement and that the Agent is merely acting as the representative of the
Servicing Agent and the Lenders with only those duties as are expressly set
forth in this Agreement and the other Advance Documents. In its capacity as the
Servicing Agent's and the Lenders' contractual representative, the Agent (i)
does not assume any fiduciary duties to any of the Servicing Agent or the
Lenders, (ii) is a "representative" of the Servicing Agent and the Lenders
within the meaning of Section 9-105 of the Uniform Commercial Code as in effect
in the State of New York and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Advance Documents. Each of the Servicing Agent and the
Lenders agrees to assert no claim against the Agent on any agency theory or any
other theory of liability for breach of fiduciary duty, all of which claims the
Servicing Agent and each Lender waives.
SECTION 8.2 Powers. The Agent shall have and may exercise such powers under
the Advance Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Servicing
Agent or the Lenders, or any obligation to the Servicing Agent or the Lenders to
take any action hereunder or under any of the other Advance Documents except any
action specifically provided by the Advance Documents required to be taken by
the Agent.
SECTION 8.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Servicing
Agent, the Lenders or any Lender for any action taken or omitted to be taken by
it or them hereunder or under any other Advance Document or in connection
herewith or therewith except to the extent such action or inaction is found in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen solely from (i) the gross negligence or willful misconduct of such Person
or (ii) breach of contract by such Person with respect to the Advance Documents.
SECTION 8.4 No Responsibility for Advances, Creditworthiness, Collateral,
Recitals, Etc. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into,
or verify (i) any statement, warranty or representation made in connection with
any Advance Document or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under any
Advance Document; (iii) the satisfaction of any condition specified in Article
3, except receipt of items required to be delivered solely to the Agent; (iv)
the existence or possible existence of any Default or (v) the validity,
effectiveness or genuineness of any Advance Document or any other instrument or
writing
65
furnished in connection therewith. The Agent shall not be responsible to the
Servicing Agent or any Lender for any recitals, statements, representations or
warranties herein or in any of the other Advance Documents, for the perfection
or priority of any of the Liens on any of the Collateral, or for the execution,
effectiveness, genuineness, validity, legality, enforceability, collectibility,
or sufficiency of this Agreement or any of the other Advance Documents or the
transactions contemplated thereby, or for the financial condition of any
guarantor of any or all of the Obligations, the Borrower or any of their
respective Subsidiaries.
SECTION 8.5 Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Advance Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders, the Servicing Agent and
on all holders of Revolving Loan Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Advance
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
SECTION 8.6 Employment of Agents and Counsel. The Agent may execute any of
its duties as the Agent hereunder and under any other Advance Document by or
through employees, agents, and attorney-in-fact and shall not be answerable to
the Servicing Agent or the Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between the
Agent, the Servicing Agent and the Lenders and all matters pertaining to the
Agent's duties hereunder and under any other Advance Document.
SECTION 8.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Revolving Loan Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by the Agent,
which counsel may be employees of the Agent.
SECTION 8.8 The Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to their
respective Ratable Shares of any Advances (i) for any amounts not reimbursed by
the Borrower for which the Agent is entitled to reimbursement by the Borrower
under the Advance Documents, (ii) for any other expenses incurred by the Agent
on behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Advance Documents and (iii) for
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in any way relating
to or arising out of the Advance Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the gross negligence or willful
misconduct of the Agent.
66
SECTION 8.9 Rights as a Lender. With respect to its Commitment, Advances
made by it and the Revolving Loan Note issued to it, the Agent shall have the
same rights and powers hereunder and under any other Advance Document as any
Lender and may exercise the same as through it were not the Agent, and the term
"Lender" or "Lenders", as applicable, shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Advance Document, with the Borrower or any of its Subsidiaries in
which such Person is not prohibited hereby from engaging with any other Person.
SECTION 8.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Servicing Agent or any
other Lender and based on the financial statements prepared by the Borrower and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Advance
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Servicing Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Advance Documents.
SECTION 8.11 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Servicing Agent, the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by written notice
received by the Agent from the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on behalf of the
Borrower, the Servicing Agent and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving notice of resignation, then the retiring Agent may appoint, on
behalf of the Borrower, the Servicing Agent and the Lenders, a successor Agent.
Notwithstanding anything herein to the contrary, so long as no Default has
occurred and is continuing, each such successor Agent shall be subject to
approval by the Borrower, which approval shall not be unreasonably withheld.
Such successor Agent shall be a commercial bank having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder and under the other Advance Documents. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Article 8 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent hereunder
and under the other Advance Documents.
SECTION 8.12 Collateral Documents. The Servicing Agent and each Lender
authorizes the Agent to enter into each of the Collateral Documents to which it
is a party and to take all action
67
contemplated by such documents. The Servicing Agent and each Lender agrees that
neither the Servicing Agent nor any Lender shall have the right individually to
seek to realize upon the security granted by any Advance Document, it being
understood and agreed that such rights and remedies may be exercised solely by
the Agent for the benefit of the Servicing Agent and the Lenders upon the terms
of the Advance Documents.
ARTICLE 9. THE SERVICING AGENT
SECTION 9.1 Appointment; Nature of Relationship. PNC Bank, National
Association is appointed by the Agent and the Lenders as the Servicing Agent
hereunder and under each other Advance Document, and each of the Agent and the
Lenders irrevocably authorizes the Servicing Agent to act as the contractual
representative of the Agent and such Lender with the rights and duties expressly
set forth herein and in the other Advance Documents. The Servicing Agent agrees
to act as such contractual representative upon the express conditions contained
in this Article 9. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Servicing Agent shall not have any
fiduciary responsibilities to the Agent or any Lender by reason of this
Agreement and that the Servicing Agent is merely acting as the representative of
the Agent and the Lenders with only those duties as are expressly set forth in
this Agreement and the other Advance Documents. In its capacity as the Agent's
and the Lenders' contractual representative, the Servicing Agent (i) does not
assume any fiduciary duties to any of the Agent or the Lenders and (ii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Advance Documents.
Each of the Agent and the Lenders agrees to assert no claim against the
Servicing Agent on any agency theory or any other theory of liability for breach
of fiduciary duty, all of which claims the Agent and each Lender waives.
SECTION 9.2 Powers. The Servicing Agent shall have and may exercise such
powers under the Advance Documents as are specifically delegated to the
Servicing Agent by the terms of each thereof, together with such powers as are
reasonably incidental thereto. The Servicing Agent shall have no implied duties
or fiduciary duties to the Agent or the Lenders, or any obligation to the Agent
or the Lenders to take any action hereunder or under any of the other Advance
Documents except any action specifically provided by the Advance Documents
required to be taken by the Servicing Agent.
SECTION 9.3 General Immunity. Neither the Servicing Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, the
Agent, the Lenders or any Lender for any action taken or omitted to be taken by
it or them hereunder or under any other Advance Document or in connection
herewith or therewith except to the extent such action or inaction is found in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen solely from (i) the gross negligence or willful misconduct of such Person
or (ii) breach of contract by such Person with respect to the Advance Documents.
SECTION 9.4 No Responsibility for Advances, Creditworthiness, Collateral,
Recitals, Etc. Neither the Servicing Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any statement, warranty or
68
representation made in connection with any Advance Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Advance Document; (iii) the satisfaction of
any condition specified in Article 3, except receipt of items required to be
delivered solely to the Servicing Agent; (iv) the existence or possible
existence of any Default or (v) the validity, effectiveness or genuineness of
any Advance Document or any other instrument or writing furnished in connection
therewith. The Servicing Agent shall not be responsible to the Agent or any
Lender for any recitals, statements, representations or warranties herein or in
any of the other Advance Documents, for the perfection or priority of any of the
Liens on any of the Collateral, or for the execution, effectiveness,
genuineness, validity, legality, enforceability, collectibility, or sufficiency
of this Agreement or any of the other Advance Documents or the transactions
contemplated thereby, or for the financial condition of any guarantor of any or
all of the Obligations, the Borrower or any of their respective Subsidiaries.
SECTION 9.5 Action on Instructions of Lenders. The Servicing Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Advance Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders, the
Agent and on all holders of Revolving Loan Notes. The Servicing Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Advance Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
SECTION 9.6 Employment of Agents and Counsel. The Servicing Agent may
execute any of its duties as the Servicing Agent hereunder and under any other
Advance Document by or through employees, agents, and attorney-in-fact and shall
not be answerable to the Servicing Agent or the Lenders, except as to money or
securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. The Servicing Agent shall be entitled to advice of counsel
concerning the contractual arrangement between the Servicing Agent, the Agent
and the Lenders and all matters pertaining to the Servicing Agent's duties
hereunder and under any other Advance Document.
SECTION 9.7 Reliance on Documents; Counsel. The Servicing Agent shall be
entitled to rely upon any Revolving Loan Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel selected
by the Servicing Agent, which counsel may be employees of the Servicing Agent.
SECTION 9.8 The Servicing Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Servicing Agent ratably in
proportion to their respective Ratable Shares of any Advances (i) for any
amounts not reimbursed by the Borrower for which the Servicing Agent is entitled
to reimbursement by the Borrower under the Advance Documents, (ii) for any other
expenses incurred by the Servicing Agent on behalf of the Lenders, in connection
with the interpretation, performance and administration of the Advance Documents
and (iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
69
against the Servicing Agent in any way relating to or arising out of the Advance
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have arisen
solely from the gross negligence or willful misconduct of the Servicing Agent.
SECTION 9.9 Rights as a Lender. With respect to its Commitment, Advances
and Servicing Agent Advances made by it and the Revolving Loan Note and
Servicing Agent Note issued to it, the Servicing Agent shall have the same
rights and powers hereunder and under any other Advance Document as any Lender
and may exercise the same as through it were not the Servicing Agent, and the
term "Lender" or "Lenders", as applicable, shall, unless the context otherwise
indicates, include the Servicing Agent in its individual capacity. The Servicing
Agent may accept deposits from, lend money to, and generally engage in any kind
of trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Advance Document, with the Borrower or any of its
Subsidiaries in which such Person is not prohibited hereby from engaging with
any other Person.
SECTION 9.10 Successor Servicing Agent. The Servicing Agent may resign at
any time by giving written notice thereof to the Agent, the Lenders and the
Borrower, and the Servicing Agent may be removed at any time with or without
cause by written notice received by the Servicing Agent from the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint, on behalf of the Borrower, the Agent and the Lenders, a
successor Servicing Agent. If no successor Servicing Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Servicing Agent's giving notice of
resignation, then the retiring Servicing Agent may appoint, on behalf of the
Borrower, the Agent and the Lenders, a successor Servicing Agent.
Notwithstanding anything herein to the contrary, so long as no Default has
occurred and is continuing, each such successor Servicing Agent shall be subject
to approval by the Borrower, which approval shall not be unreasonably withheld.
Such successor Servicing Agent shall be a commercial bank having capital and
retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as the Servicing Agent hereunder by a successor Servicing Agent,
such successor Servicing Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Servicing Agent,
and the retiring Servicing Agent shall be discharged from its duties and
obligations hereunder and under the other Advance Documents. After any retiring
Servicing Agent's resignation hereunder as Servicing Agent, the provisions of
this Article 9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Servicing
Agent hereunder and under the other Advance Documents.
70
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Revolving Credit Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED
PARTNERSHIP, a Delaware limited partnership
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ STRUCTURED
SETTLEMENT FUNDING CORPORATION, as
general partner
By:
---------------------------------------
Name:
Title:
ING (U.S.) CAPITAL CORPORATION, as Agent
and as a Lender
By:
---------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Servicing Agent and as a Lender
By:
---------------------------------------
Name:
Title:
71
ASSUMPTION AGREEMENT AND AMENDMENT NO. 2 TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS ASSUMPTION AGREEMENT AND AMENDMENT NO. 2 ("Assumption Agreement and
Amendment") is made as of September 30, 1997, by ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. Limited
Partnership, a Delaware limited partnership (the "Company"), ▇.▇. ▇▇▇▇▇▇▇▇▇
Receivables II, LLC, a Delaware limited liability company ("JGW II LLC"), ING
(U.S.) Capital Corporation ("ING Capital") and PNC Bank, National Association
("PNC Bank").
Reference is hereby made to (i) that certain Amended and Restated Revolving
Credit Agreement dated as of February 11, 1997 (as amended to the date hereof,
the "Credit Agreement") among the Company, the financial institutions from time
to time parties thereto (the "Lenders"), ING Capital, in its capacity as a
Lender and as contractual representative (the "Agent") on behalf of itself and
the other Lenders, and PNC Bank, in its capacity as a Lender and as servicing
agent (the "Servicing Agent"), (ii) that certain Amended and Restated Security
Agreement dated as of February 11, 1997 (the "Security Agreement") executed by
the Company in favor of the Agent, (iii) each of the Amended and Restated
Revolving Loan Notes, dated as of February 11, 1997, of the Company to the order
of ING Capital and PNC Bank, in the original principal amount of $75,000,000 and
$30,000,000, respectively (the "Revolving Loan Notes"), (iv) that certain
Revolving Loan Note, dated as of February 11, 1997, of the Company to the order
of the Servicing Agent (the "Servicing Agent Note", and, together with the
Revolving Loan Notes, the "Notes"), (v) that certain Agreement for Settlements
Servicing dated as of August 24, 1995 (as amended, the "Servicing Agreement")
among the Company, ING Capital and Electronic Data Systems Corporation, and (vi)
all other "Advance Documents" (as defined in the Credit Agreement; the Credit
Agreement, the Security Agreement, the Notes, the Servicing Agreement and the
Advance Documents hereinafter referred to collectively as the "Wentworth S.S.C.
Documents"). Capitalized terms not otherwise defined herein shall have the
meanings assigned thereto in the Credit Agreement as amended hereby.
WHEREAS, the Company is the owner of 100% of the issued and outstanding
member interests of JGW II LLC;
WHEREAS, the Company and JGW II LLC are entering into that certain Purchase
and Contribution Agreement pursuant to which the Company will, concurrently with
the effectiveness of this Assignment and Assumption Agreement and from time to
time hereafter, sell, transfer and otherwise assign to JGW II LLC all of its
right, title and interest in and to the Settlements, whether now owned or
hereafter existing, and certain other property related thereto; and
WHEREAS, in connection with the foregoing, the Company wishes to assign to
JGW II LLC all of its rights under the Wentworth S.S.C. Documents, and JGW II
LLC desires to assume the obligations and liabilities of the Company under the
Wentworth S.S.C. Documents; and
WHEREAS, JGW II LLC has requested the Lenders, the Agent and the Servicing
Agent to amend the Credit Agreement, and the Lenders, the Agent and the
Servicing Agent are
willing to amend the Credit Agreement on the terms and conditions set forth
herein, it being expressly understood that, except as expressly provided herein,
this Assumption Agreement and Amendment shall in no event constitute a waiver by
the Lenders, the Servicing Agent or the Agent of any breach of the Credit
Agreement or any of the Lenders', the Servicing Agent's or the Agent's rights or
remedies with respect thereto;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties hereto, the
Company and JGW II LLC hereby agree as follows:
1. Assignment and Assumption. Effective as of September 30, 1997 and
subject to the satisfaction of the conditions precedent set forth in Section 3
below:
1.1. Assignment of Rights. The Company hereby assigns, without recourse,
all of its rights under the Credit Agreement to JGW II LLC, including, without
limitation, the right to obtain Advances, all on the terms and subject to the
conditions set forth in the Credit Agreement. From and after the date hereof,
the Company acknowledges and agrees that it shall cease to have any rights under
the Credit Agreement, including, without limitation, any right to obtain
Advances thereunder.
1.2 Assumption of Obligations JGW II LLC hereby assumes, as its direct and
primary obligation, the payment and performance of all of the liabilities and
obligations of the Company under the Wentworth S.S.C. Documents, including,
without limitation, the obligation to pay interest and fees with respect to all
such liabilities and obligations, and indemnification obligations related
thereto (collectively the "Assumed Obligations") and hereby agrees to make all
payments required under the Wentworth S.S.C. Documents in effect and to
discharge the Assumed Obligations as they become due or are declared due. JGW II
LLC acknowledges that the Company has assigned to JGW II LLC all of the rights
of the Company under the Credit Agreement, including, without limitation, the
right to obtain Advances, all on the terms and subject to the conditions set
forth in the Credit Agreement. From and after the date hereof, JGW II LLC agrees
to perform and discharge all of the Assumed Obligations, including, without
limitation, performance and observance of all of the covenants and conditions of
the Wentworth S.S.C. Documents to be performed or observed by the Company
thereunder or in connection therewith, and to be bound in all respects by the
terms of the Wentworth S.S.C. Documents as they relate to the Company as if JGW
II LLC were an original signatory thereto. From and after the Effective Date (as
defined below) hereof (i) all references in any of the Wentworth S.S.C.
Documents to the Company as the "Borrower" as defined in the Credit Agreement
(or any equivalent term in any other Wentworth S.S.C. Document) shall be deemed
to be a reference to JGW II LLC as the Borrower, (ii) all references to the
"Security Agreement" in the Wentworth S.S.C. Documents shall mean and be a
reference to the "Security Agreement" executed by JGW II LLC in connection with
this amendment (as such agreement may be amended, restated and/or otherwise
modified from time to time) and (iii) the Company shall cease to be a party to
the Credit Agreement and the Notes and shall have no continuing obligations
thereunder or under any of the other Wentworth S.S.C. Documents except as
otherwise expressly provided herein.
2
1.3 Consent. Each of the Agent, Servicing Agent and Lenders hereby consent
to the assignment of rights from the Company to JGW II LLC and the assumption by
JGW II LLC of the obligations and liabilities of the Company and agree that from
and after the effectiveness of this Assumption Agreement and Amendment, (i) JGW
II LLC shall have all of the rights, benefits and obligations of the Company
under the Credit Agreement and the other Wentworth S.S.C. Documents and (ii) the
Company shall be relieved of any further obligations under the Credit Agreement,
the Notes, the Security Agreement, and the other Wentworth S.S.C. Documents,
subject to the terms and conditions set forth herein and therein, provided,
however, that (x) the Company shall (except as otherwise provided herein) remain
obligated under the Servicing Agreement with respect to all of the Settlements
and Related Security in existence as of or prior to the effective date of this
Assumption Agreement and Amendment; (y) nothing in this Agreement shall be
deemed to constitute a release by the Agent, the Servicing Agent or any Lender
of any Lien on any Settlements, Related Security or other Collateral in
existence as of the date hereof and transferred (or purported to be transferred)
to JGW II LLC under the Seller Purchase Agreement (it being understood that all
Collateral sold to JGW II LLC under such agreement is being sold subject to the
Lien of the Agent except as provided in the Intercreditor Agreement) and (z) the
Company shall remain liable for damages caused by any breach of any
representation, warranty or covenant made by it contained in any of the
Wentworth S.S.C. Documents insofar as such representation, warranty or covenant
relates to matters in existence as of or prior to, or actions taken by it prior
to, the effective date of this Assumption Agreement and Amendment. Except as
otherwise provided in clause (y) of the immediately preceding sentence with
respect to that portion of the Collateral transferred or purported to be
transferred to JGW II LLC, the Agent, the Servicing Agent and the Lenders hereby
agree that as of the Effective Date, any Liens heretofore created under the
Security Agreement or any other Wentworth S.S.C. Documents on any other
Collateral which remains property of the Company shall be released and of no
further force and effect.
1.4. JGW II LLC Representations and Warranties. To induce the Lenders, the
Servicing Agent and Agent to consent to JGW II LLC's assumption of the Assumed
Obligations and to hereafter make and extend Advances and other financial
accommodations to or for the account of JGW II LLC under the Credit Agreement,
JGW II LLC hereby represents and warrants to the Lenders, the Servicing Agent
and the Agent that, as of the date hereof:
(a) JGW II LLC (i) is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization; (ii) is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which failure to be so
qualified and in good standing will have or is reasonably likely to have a
Material Adverse Effect, and (iii) has all requisite power and authority to
own, operate and encumber its Property and to conduct its business as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the transactions contemplated by this
Assumption Agreement and Amendment.
(b) JGW II LLC has the requisite power and authority to execute,
deliver and perform its obligations under this Assumption Agreement and
Amendment, and thereby to perform its obligations under the Wentworth
S.S.C. Documents, and all other agreements, instruments and documents
executed and delivered or to be executed and delivered by it pursuant
hereto or in connection herewith.
3
(c) JGW II LLC has taken all necessary company action to authorize the
execution and delivery of, and the performance of its obligations under,
this Assumption Agreement and Amendment and all other agreements,
instruments and documents executed and delivered by JGW II LLC pursuant
hereto or in connection herewith.
(d) This Assumption Agreement and Amendment and all other agreements,
instruments or documents executed and delivered by JGW II LLC pursuant
hereto or in connection herewith have been duly executed and delivered and,
together with all S.S.C. Wentworth Documents assumed hereby, constitute the
legal, valid and binding obligations of JGW II LLC enforceable against JGW
II LLC in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally or general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(e) The execution, delivery and performance by JGW II LLC of this
Assumption Agreement and Amendment and all other agreements, instruments or
documents executed and delivered by JGW II LLC pursuant hereto or in
connection herewith and the performance by JGW II LLC of the S.S.C.
Wentworth Documents do not and will not (i) cause a violation by JGW II LLC
of any requirement of law or contractual obligation binding upon JGW II
LLC, the consequences of which violation, singly or in the aggregate, would
be likely to have an adverse effect on the ability of JGW II LLC to perform
its obligations under this Assumption Agreement and Amendment, the
Wentworth S.S.C. Documents or any other agreements, instruments or
documents executed and delivered by JGW II LLC pursuant to or in connection
therewith or would be likely to have a Material Adverse Effect, or would be
likely to subject the Agent, the Servicing Agent or any Lender to any
liability (whether criminal or civil), (ii) constitute a tortious
interference with any such contractual obligation or conflict with, result
in a breach of or constitute (with or without notice or lapse of time or
both) a default under any such requirement of law or contractual
obligation, the consequences of which tortious interference, default or
violation, singly or in the aggregate, would be likely to have a Material
Adverse Effect or would be likely to subject the Agent, the Servicing Agent
or any Lender to any liability (whether criminal or civil), or require the
termination of any such contractual obligation, (iii) result in or require
the creation or imposition of any Lien whatsoever upon any of the
properties or assets of JGW II LLC (other than the Lien granted pursuant to
the Security Agreement in favor of the Agent, for the ratable benefit of
itself, the Servicing Agent and the Lenders), and the Lien granted in the
Intercreditor Agreement or (iv) require any approval of any Person holding
directly or indirectly an ownership interest in JGW II LLC or consent of
any Person under any contractual obligation of JGW II LLC, except such as
have been duly obtained or will be duly obtained in accordance with
applicable law.
4
(f) The execution, delivery, and performance by JGW II LLC of this
Assumption Agreement and Amendment and any other documents, instruments or
agreements executed and delivered by JGW II LLC pursuant hereto or in
connection herewith do not require any registration with, consent or
approval of, or notice to, or other action by any governmental authority,
except filings, consents or notices which have been made, obtained or given
(unless the failure to obtain any such filing, consent or notice will not
have a Material Adverse Effect).
(g) The correct limited liability company name, the principal place of
business and the chief executive office of JGW II LLC and the places where
JGW II LLC's books and records are kept are as follows:
▇.▇. ▇▇▇▇▇▇▇▇▇ Receivables II LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Amendments to the Credit Agreement. Effective as of September 30, 1997,
and immediately subsequent to the effectiveness of Section 2 hereof, and subject
to the conditions precedent set forth in Section 3 below, the Credit Agreement
is hereby amended as follows:
2.1. Section 1.1 of the Credit Agreement is hereby amended as follows:
(i) to delete the period (".") at the conclusion of the definition of
"Approved Asset Securitization Transaction", to substitute therefor a
semi-colon (";") and to insert immediately thereafter the following:
"provided, however, that, from and after the date on which the Company has
fulfilled its obligations under Section G(l) of that certain letter
agreement dated May 23, 1997 among ▇.▇. ▇▇▇▇▇▇▇▇▇ & Co., Inc., the Company
and ING Baring (U.S.) Securities, Inc.), the term "Approved Asset
Securitization Transaction" shall also include any Asset Securitization
Transaction the consummation of which (after giving effect to the
application of proceeds thereof) would not cause an Event of Default or
Potential Default."
(ii) to insert immediately after the word "owing" in the definition of
"Asset Securitization Transaction" the phrase "(or to be owing as a result
of such financing arrangement)."
(iii) to insert immediately after the phrase "which neither the
Borrower" now appearing in clause (xiii) of the definition of "Eligible
Settlement", the following: ", the Company";
(iv) to delete the phrase "the Borrower" now occurring in the
definition of "General Partner" and to substitute the following therefor:
"the Company";
(v) to insert immediately after the phrase "the Borrower" now
appearing in clause (b) of the definition of "Material Adverse Change", the
following: "and/or the Company";
5
(vi) to delete clause (b) now appearing in the definition of
"Permitted Indebtedness" and to substitute therefor the following clauses
(b) and (c): "(b) Other Indebtedness incurred in the ordinary course of the
Borrower's business but not to exceed $1,000,000 at any time outstanding
and otherwise permitted to be incurred pursuant to Section 5.2; and (c)
Indebtedness incurred in connection with any Approved Asset Securitization
Transaction."
(vii) to delete the definition of "Permitted Liens" in its entirety
and to substitute the following therefor: "Permitted Liens" shall mean (i)
Liens for taxes, assessments, or similar charges, incurred in the ordinary
course of business and which are not yet due and payable, (ii) Liens in
favor of the Agent and/or (iii) Liens in favor of the Issuer in connection
with the sale or transfer of Settlements and Related Property to evidence
the sale of Settlements to the Issuer in connection with an Approved Asset
Securitization Transaction."
(viii) to delete the phrase "Borrower" each time it now appears in the
definition of "Purchase Agreement" and to substitute therefor the phrase
"Company";
(ix) to delete the phrase "Borrower" now appearing in the definition
of "Purchase Price" and "Purchase Yield" and to substitute therefor the
phrase "Company";
(x) to insert immediately after the phrase "for the Borrower" now
appearing in the definition of "Servicer", the following: "and/or any
Affiliate of the Borrower";
(xi) to delete the definition of "Settlement Package" in its entirety
and to substitute the following therefor: "Settlement Package" shall mean,
as it relates to any Purchased Settlement, fully executed copies of all
documentation related to the purchase of any and all Settlements by the
Company, and shall include, without limitation, (i) the original Purchase
Agreement related to a Settlement and all documents required to be
delivered to the Company pursuant thereto, (ii) the original Settlement,
(iii) the original Notice of Direction of Payment, (iv) any notifications
or acknowledgments received by the Company and/or the Borrower related to a
Purchased Settlement, including acknowledgments of releases and payment
obligations, and (v) a Seller Daily Report (as defined in the Seller
Purchase Agreement)";
(xii) to add the following definitions alphabetically therein:
"Affiliated Entity" shall mean any of ▇.▇. ▇▇▇▇▇▇▇▇▇ & Company,
Inc., a Pennsylvania corporation, any of its direct or indirect
Subsidiaries and/or Affiliates of any of the foregoing.
"Company" shall mean ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. Limited Partnership, a
Delaware limited partnership.
6
"Delaware Act" shall mean the Delaware Limited Liability Company
Act (6 Del. C. (section) 18-101, et seq.), as the same may be amended
or supplemented from time to time, and any successor statute.
"Intercreditor Agreement" shall mean that Amended and Restated
Collateral Trust and Intercreditor Agreement dated as of September 30,
1997 by and among ING Capital, (as Lender and as Agent), PNC (as
Servicing Agent, as a Lender, as Collateral Trustee and in certain
other capacities), the Company, the Borrower, the Issuer, ▇.▇.
▇▇▇▇▇▇▇▇▇ Receivables I LLC, and the other institutions from time to
time parties thereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Issuer" shall mean ▇.▇. ▇▇▇▇▇▇▇▇▇ Receivables III LLC, a
Delaware limited liability company.
"Issuer Purchase Agreement" shall mean that certain Purchase and
Contribution Agreement, dated as of September 30, 1997, between the
Borrower as seller and the Issuer as purchaser, as the same may be
amended, restated, supplemented or otherwise modified from time to
time
"Seller Purchase Agreement" shall mean that certain Purchase and
Contribution Agreement, dated as of September 30, 1997, between the
Company as seller and the Borrower as purchaser, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.
2.2 Section 2.2(b) of the Credit Agreement is hereby amended to delete the
last sentence thereof in its entirety and to substitute therefor the following:
"The proceeds of Settlement Differential Advances may only be used by the
Borrower to pay (i) Obligations of the Borrower, (ii) Servicing Fees and (iii)
due and payable Overhead Expenses or distributions and/or reimbursements to the
Company to enable the Company to pay due and payable Overhead Expenses and
certain other expenses in an aggregate amount not to exceed during any month
(when aggregated with all other such amounts previously paid by the Borrower
during such month) 125% of the Approved Working Capital Budget for such month."
2.3. Section 2.5 of the Credit Agreement is hereby amended (i) to insert
immediately after each occurrence of the phrase "the Borrower" now appearing
therein, the following: "and/or the Company"; (ii) to delete the phrase
"Borrower's pro rata share" and to substitute therefor the phrase "Borrower's
and/or the Company's pro rata share"; and (iii) to delete the phrase "the
Borrower's general partner" now appearing in the fifth sentence thereof and to
substitute therefor the following: "the General Partner".
2.4. Section 2.9 of the Credit Agreement is hereby amended to delete the
phrase "the Agreement of Limited Partnership" now appearing in each of clause
(c)(i)(K) and clause (c)(ii)(I) thereof, and to substitute the following
therefor: "the constituent documents of the Borrower".
7
2.5 Section 2.14(d) of the Credit Agreement is hereby amended to reflect
that, as of June 13, 1997, the Agent re-assigned to the Company all right, title
and interest of the Company in and to the Lock-Boxes and the Lock-Box Accounts
for purposes of the Company consummating the assignments contemplated by the
Intercreditor Agreement, the terms and provisions of which Intercreditor
Agreement, as in effect from and after June 13, 1997, have superseded the
provisions of such Section 2.14(d) and any other provisions of the Credit
Agreement, the Lock-Box Agreement and the Security Agreement relating to such
Lock-Boxes and/or Lock-Box Accounts.
2.6. Section 3.2 of the Credit Agreement is hereby amended (i) to insert
immediately after the occurrence of the phrase "the Borrower" now appearing in
clause (b)(ii) thereof, the following: "and/or the Company"; (ii) to insert
immediately after the first occurrence of the phrase "the Borrower" now
appearing in clause (b)(iv) thereof, the following: "and/or the Company"; and
(iii) to insert immediately after the second occurrence of the phrase "the
Borrower" now appearing in clause (b)(iv) thereof, the following: "and the
Company".
2.7. Section 4.1(a) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(a) The Borrower is a limited liability company duly formed and
validly existing under the laws of the State of Delaware, is qualified to
do business and is in good standing in all other states in which such
qualification and good standing are necessary in order for the Borrower to
conduct its business and own its property as conducted and owned in such
states, except in such states where failure to qualify to do business would
not have a materially adverse effect on the business operations or
financial condition of the Borrower, has all requisite power and authority
to conduct its business, to own its property and to execute, deliver and
perform all of its obligations under this Agreement and the other Advance
Documents, has the requisite power and authority and the legal right to
own, pledge, mortgage or otherwise encumber the Collateral, and to conduct
its business as now and proposed to be conducted, and has all licenses,
permits, consents or approvals from or by, and has made all filings with,
and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent they are material to such ownership, operation
and conduct."
2.8. Section 4.1 of the Credit Agreement is hereby further amended to
insert the following at the end thereof:
"(t) Tradenames. The Borrower has no tradenames, fictitious names,
assumed names or "doing business as" names and since its incorporation, the
Borrower (i) has not been the subject of any merger or other corporate
reorganization that resulted in a change of name, identity or corporate
structure or (ii) had any other name.
(u) Subsidiaries; Business Activities. The Borrower has no
Subsidiaries other than the Issuer and does not otherwise own or hold,
directly or indirectly, any capital stock or equity security of, or any
equity interest in, any other Person and has conducted no other business
except for the execution and delivery of the Seller Purchase Agreement,
this Agreement, the Issuer Purchase Agreement, the acquisition and sales of
Settlements and related property therein contemplated, and such other
activities as are incidental to the foregoing.
8
(v) Valid Transfer. The Seller Purchase Agreement creates a valid
sale, transfer and/or assignment to the Borrower of all right, title and
interest of the Company in and to all Settlements and related property
conveyed to the Borrower thereunder.
(w) Company Receivables. The Borrower has given reasonably equivalent
value to the Company (which may include additional equity interests in the
Borrower) in consideration for the transfer to the Borrower by the Company
of the Settlements pursuant to the Seller Purchase Agreement, and no such
transfer has been made for or on account of an antecedent debt owed by the
Company to the Borrower."
2.9. Section 4.1(b) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(b) The Company is a limited partnership and the General Partner is a
corporation and each of the Company and the General Partner is duly formed
and validly existing under the laws of the State of Delaware, is qualified
to do business and is in good standing in all other states in which such
qualification and good standing are necessary in order for the Company
and/or the General Partner to conduct its business and own its property as
conducted and owned in such states, except in such states where failure to
qualify to do business would not have a materially adverse effect on the
business operations or financial condition of the Borrower, the Company
and/or the General Partner, and each of the Company and the General Partner
has all requisite power and authority to conduct its business, to own its
property and to execute, deliver and perform all of its obligations under
the Seller Purchase Agreement and to execute and deliver this Agreement and
the other Advance Documents on behalf of the Borrower."
2.10 Section 4.1(c) of the Credit Agreement is hereby amended (i) to delete
the phrase "and the General Partner" now appearing in the first line thereof and
(ii) to delete the phrase "the Borrower's partnership agreement" now appearing
in clause (i) thereof and to substitute the following therefor: "the Borrower's
limited liability company agreement".
2.11. Section 4.1(m) of the Credit Agreement is hereby amended to delete
the text thereof in its entirety.
2.12. Section 4.1(o) of the Credit Agreement is hereby amended to delete
the phrase "Except as described in Schedule II hereto," and to substitute the
following therefor: "Except for the Seller Purchase Agreement, the Issuer
Purchase Agreement, or any similar agreement entered into in connection with an
Approved Asset Securitization Transaction,"
9
2.13. Section 4.2(g)(ii) of the Credit Agreement is hereby amended to
delete the phrase "the Borrower" now appearing therein and to substitute the
following therefor: "the Company".
2.14. Section 4.2(m) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(m) Any one or more payments by the Company to the Seller or the
Seller's designated payee(s) of all or a part of the Purchase Price agreed
upon by the Seller and Company in the Purchase Agreement have been, or will
be, duly authorized by an Authorized Officer of the Company;"
2.15. Section 5.1(g) of the Credit Agreement is hereby amended to delete
the phrase "its limited partnership existence" now appearing therein and to
substitute therefor the following: "its limited liability company existence".
2.16. Section 5.1(p) of the Credit Agreement is hereby amended to delete
from the first sentence thereof the phrase "at its own expense" and to
substitute therefor "at its or the Company's own expense".
2.17. Section 5.1 of the Credit Agreement is hereby amended to insert the
following at the end thereof:
"(r) Maintenance of Separate Member. The Borrower will (i) maintain at
least two independent members, each of whom is not otherwise (and has not
at any time during the last five years otherwise been) an officer,
director, employee, shareholder, partner, holder of any limited liability
company interest, creditor, trustee, liquidator, member, manager,
conservator or receiver of or for the Company or any other Affiliated
Entity (unless so acting in a similar independent role), or any relative of
any of the foregoing, and is otherwise acceptable to the Agent and (ii)
ensure that such independent members receive reasonable and customary fees
and/or other compensation in an amount not exceeding $7,500 per calendar
year per member.
(s) Seller Purchase Agreement. The Borrower will at its expense timely
perform and comply in all material respects with all provisions, covenants
and other promises required to be observed by it under the Seller Purchase
Agreement, maintain the Seller Purchase Agreement in full force and effect,
enforce the Seller Purchase Agreement in accordance with its respective
terms, and, at the request of the Agent, make to the Company such
reasonable demands and requests for information and reports or for action
as the Agent may request to the extent that the Borrower is entitled to do
the same thereunder.
(t) Acquisition of Settlements from the Company. With respect to each
Settlement acquired by the Borrower from the Company, the Borrower shall
(i) acquire such Settlement pursuant to and in accordance with the terms of
the Seller Purchase Agreement, (ii) take all action necessary to perfect,
protect and more fully evidence the Borrower's
10
ownership of such Settlement, including, without limitation, (A) filing and
maintaining effective financing statements (Form UCC-1) against the Company
in all necessary or appropriate filing offices, and filing continuation
statements, amendments or assignments with respect thereto in such filing
offices and (B) executing or causing to be executed such other instruments
or notices (other than to the Seller, the Qualified Assignee or the
Designated Annuity Funding Company related to such Settlement) as may be
necessary or appropriate and (iii) take all additional action that the
Agent or the Required Lenders may reasonably request to perfect, protect
and more fully evidence the respective interests of the parties to this
Agreement.
(u) Confidentiality of Settlement Agreements. The Borrower, and its
officers, directors and employees shall keep, and shall cause to be kept,
strictly confidential all terms of all Settlement Agreements, including,
without limitation, the name of the Settlement Counterparties related
thereto and the nature of the injury to the Seller, and shall not copy or
disclose such terms in any manner whatsoever, in whole or in part, except
(i) to the Servicer in accordance with the Servicing Agreement, (ii) as
required pursuant to the terms of any Approved Asset Securitization
Transaction, and (iii) as required by law; provided that the Borrower may
in any event disclose in its sole discretion the terms of any Settlement
Agreement so long as (i) all references therein to the Settlement
Counterparties related thereto and the nature of the Seller's injury shall
be stricken from such disclosure, and (ii) such recipient shall agree to
the terms of confidentiality contained in this Section 5.1(u).
(v) Maintenance of Separate Existence. The Borrower shall take all
reasonable steps to continue its identity as a separate legal entity and to
make it apparent to third Persons that it is an entity with assets and
liabilities distinct from those of ▇.▇. ▇▇▇▇▇▇▇▇▇ & Company, Inc., the
Company, the other Affiliated Entities or any other Person, and that it is
not a division of any of the Affiliated Entities or any other Person. In
that regard, and without limiting the foregoing in any manner, the Borrower
shall:
(1) maintain its limited liability company existence and make
independent decisions with respect to its daily operations and
business affairs and, other than pursuant to the terms of the limited
liability company agreement of the Borrower, not be controlled in
making such decisions by any other Affiliated Entity or any other
Person;
(2) maintain at least two members neither of which otherwise is
(or at any time during the last five years has been) a direct,
indirect or beneficial officer, general partner, member, director,
employee, affiliate, associate, customer or supplier of any of the
Affiliated Entities (unless acting as such in an independent
capacity), nor a direct, indirect or beneficial owner of the
outstanding equity interest (including, limited partnership interests
or limited liability company interest) of any of the Affiliated
Entities (any such Person also being a "Affiliated Entity"), nor a
relative of any of the foregoing, nor a trustee in bankruptcy for any
of the foregoing;
11
(3) maintain separate and clearly delineated office space owned
by it or evidenced by a written lease or sublease (even if located in
an office owned or leased by, or shared with, another Affiliated
Entity);
(4) maintain its assets in a manner which facilitates their
identification and segregation from those of any of the other
Affiliated Entities;
(5) maintain a separate telephone number which will be answered
only in its own name and separate stationery and other business forms;
(6) conduct all intercompany transactions with the other
Affiliated Entities on terms which the Borrower reasonably believes to
be on an arm's-length basis;
(7) not guarantee any obligation of any of the other Affiliated
Entities, nor have any of its obligations guaranteed by any other
Affiliated Entity or hold itself out as responsible for the debts of
any other Affiliated Entity or for the decisions or actions with
respect to the business and affairs of any other Affiliated Entity,
nor seek or obtain credit or incur any obligation to any third-party
based upon the creditworthiness or assets of any other Affiliated
Entity or any other Person;
(8) except as expressly otherwise permitted hereunder or under
any of the other Advance Documents, not permit the commingling or
pooling of its funds or other assets with the assets of any other
Affiliated Entity;
(9) maintain separate deposit and other bank accounts to which no
other Affiliated Entity (other than as a master servicer in connection
with an Approved Asset Securitization Transaction) has any access;
(10) maintain financial records which are separate from those of
the other Affiliated Entities;
(11) compensate (either directly or through reimbursement of its
allocable share of any shared expenses) all employees, consultants and
agents, and Affiliated Entities, to the extent applicable, for
services provided to the Borrower by such employees, consultants and
agents or Affiliated Entities, in each case, from the Borrower's own
funds;
(12) have agreed with each of the other relevant Affiliated
Entities to allocate among themselves shared overhead and corporate
operating services and expenses which are not reflected in
documentation in connection with an Approved Asset Securitization
Transaction (including without limitation the services of shared
employees, consultants and agents and reasonable legal and auditing
expenses) on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to actual use or
the value of services rendered;
12
(13) pay for its own account for accounting and payroll services,
rent, lease and other expenses (or its allocable share of any such
amounts provided by one or more other Affiliated Entity) and not have
such operating expenses (or the Borrower's allocable share thereof)
paid by any of the Affiliated Entities, provided, that ▇.▇. ▇▇▇▇▇▇▇▇▇
& Company, Inc. and/or the Company shall be permitted to pay the
initial organizational expenses of the Borrower;
(14) maintain adequate capitalization in light of its business
and purpose;
(15) conduct all of its business (whether in writing or orally)
solely in its own name through its duly authorized officers, employees
and agents;
(16) not make or declare any dividends or other distributions of
cash or property to the holders of its equity securities or make
redemptions or repurchases of its equity securities, in either case,
on a periodic basis any more frequently than monthly or otherwise, in
certain other irregular cases, in accordance with appropriate
corporate formalities and consistent with sound business judgment; and
all such distributions, redemptions or repurchases shall only be
permitted hereunder to the extent that it is not violative of any
applicable law and that no Event of Default or Potential Default then
exists or would result therefrom;
(17) maintain at least one employee (which employee may be shared
with an Affiliate pursuant to a written agreement allocating the
compensation and other remuneration and benefits for such employee as
among such parties) in charge of day-to-day operations of the
Borrower;
(18) otherwise practice and adhere to corporate formalities such
as complying with its constitutive documents and member and manager
resolutions, the holding of regularly scheduled meetings of members
and managers, and maintaining complete and correct books and records
and minutes of meetings and other proceedings of its members and
managers; and
(19) not fail to maintain all policies and procedures or take or
continue to take all actions necessary or appropriate to ensure that
all factual assumptions set forth in those certain opinions of counsel
of the Borrower delivered in connection with any Approved Asset
Securitization Transaction concluding that sales of Settlements by the
Company to the Borrower made pursuant to the Seller Purchase Agreement
would constitute true sales and that the Borrower would not be
substantively consolidated with the Company or ▇.▇. ▇▇▇▇▇▇▇▇▇ &
Company, Inc. following the occurrence of an Insolvency Event with
respect to either such Person
13
2.18 Section 5.2(a) of the Credit Agreement is hereby amended (i) to delete
from clause (9) thereof the phrase "Delaware ULPA" and to substitute therefor
the phrase "Delaware Act"; (ii) to delete the period (".") at the conclusion of
such clause (9) and to substitute therefor a semi-colon followed by the word and
("; and") and to insert immediately thereafter the following:
"(10) to engage in such activities as a member or managing member of
any Issuing Vehicle as are necessary or appropriate in connection with the
activities of such Issuing Vehicle pursuant to the terms of any Approved
Asset Securitization Transaction or otherwise.
Notwithstanding the foregoing, the Borrower shall not, without the
prior written consent of the Required Lenders, (i) purchase or otherwise
acquire any Payment Contracts from any Payment Contracts Seller except for
acquisitions from the Company pursuant to the Seller Purchase Agreement,
(ii) convey or otherwise dispose of any Payment Contracts or Related
Security to any Payments Contracts Buyer other than to the Issuer under the
Issuer Purchase Agreement or directly to any Issuing Vehicle in connection
with an Approved Asset Securitization Transaction, and (iii) shall not
establish any Issuing Vehicles or Subsidiaries except for the Issuer and
such Issuing Vehicles to which the Issuer may assign or otherwise convey
its rights under, or a security interest in, the Payment Contracts and
Related Security so acquired from the Borrower."
2.19 Section 5.2(d) of the Credit Agreement is hereby amended to insert at
the conclusion thereof of the following: "except for loans or advances made to
the Issuer expressly contemplated under the terms of the Issuer Purchase
Agreement."
2.20 Section 5.2(e) of the Credit Agreement is hereby deleted in its
entirety, and the following is substituted therefor:
"Dividends, Etc. Declare or make any dividend payment or other distribution
of assets, properties, cash, rights, obligations or securities on account of any
interest in the Borrower, or purchase, redeem or otherwise acquire for value any
interest in the Borrower or any rights or options to acquire any such interest;
provided, however that (i) so long as the Borrower is not an organization
taxable as a corporation, for each fiscal year of the Borrower, the Borrower may
make distributions to the Company in an aggregate amount equal to the federal,
state, and local income tax liability of the Company's Partners with respect to
income of the Borrower or of the Company attributable to such Partners; (ii) the
Borrower may make distributions to the Company to enable the Company to pay
Overhead Expenses and certain other expenses to the extent permitted by Section
5.2(n); and (iii) so long as no Event of Default or Potential Default has
occurred and is continuing, the Borrower may make other distributions to the
Company so long as, immediately after giving effect thereto, the Borrower's
Tangible Net Worth would not be reduced below $4,000,000."
2.21 Section 5.2(f) of the Credit Agreement is hereby amended to delete the
period at the end thereof and to substitute the following therefor: ", except
for sales of Settlements and Related Security and similar property pursuant to
the Issuer Purchase Agreement, the Seller Purchase Agreement, or any similar
agreement entered into in connection with any Approved Asset Securitization
Transaction."
14
2.22 Section 5.2(k) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(k) Change in Organizational Documents. Amend, modify or otherwise
change any of the terms or provisions in its organizational documents as in
effect on the date hereof in any manner which could reasonably be expected
to be detrimental to the interests of the Agent, the Servicing Agent and/or
any of the Lenders."
2.23 Section 5.2(n) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"(n) Limitation of Overhead Expenses. Incur in any month Overhead
Expenses, or reimburse the Company in such month (whether directly or
indirectly) for Overhead Expenses, to the extent such Overhead Expenses
exceed 125% of the Approved Working Capital Budget for such month."
2.24 Section 5.2 of the Credit Agreement is hereby further amended to
insert the following at the end thereof:
"(o) Transactions with Affiliates. The Borrower will not enter into,
or be a party to, any transaction with any of its Affiliates, except (i)
the transactions contemplated by the Seller Purchase Agreement and the
Issuer Purchase Agreement or any or any similar agreement entered into in
connection with any Approved Asset Securitization Transaction and (ii) any
other transactions (including, without limitation, the lease of office
space or computer equipment or software by the Borrower from an Affiliate
and the sharing of employees and employee resources and benefits) (A) in
the ordinary course of business or as otherwise permitted hereunder, (B)
pursuant to the reasonable requirements and purposes of the Borrower's
business, (C) upon fair and reasonable terms (and, to the extent material,
pursuant to written agreements) that are consistent with market terms for
any such transaction, and (D) not inconsistent with the factual assumptions
set forth in the opinion letters referred to in clause (19) of Section
5.1(v)."
2.25 Section 6.1(b) of the Credit Agreement is hereby amended to insert
immediately after each occurrence of the phrase "the Borrower" now appearing
therein, the following: ", the Company".
2.26 Section 6.1(g) of the Credit Agreement is hereby amended to delete
therefrom the phrase "or the General Partner."
2.27 Section 6.1(i) of the Credit Agreement is hereby amended to delete
therefrom the phrase "or the General Partner."
15
2.28 Section 6.1(k) of the Credit Agreement is hereby amended to insert the
following at the conclusion thereof: "Notwithstanding the foregoing, it shall
not constitute an Event of Default under this Section 6.1(k) if the events
described in clauses (i) or (ii) above have occurred in connection with or
otherwise following an initial public offering of the stock of either ▇.▇.
▇▇▇▇▇▇▇▇▇ & Co., Inc. or an Affiliate thereof created to facilitate such public
offering).
2.29 Section 6.1(l) of the Credit Agreement is hereby amended to delete the
phrase "the Borrower" now appearing therein and to substitute therefor the
following: "the Company".
2.30 Section 6.1(p) of the Credit Agreement is hereby amended to delete the
phrase "the Borrower" each time it now appears therein and to substitute
therefor the following: "the Company:".
2.31 Section 6.1 of the Credit Agreement is hereby amended to delete the
period (".") at the conclusion of clause (r) thereof, to substitute therefor a
semi-colon (";") and to insert immediately thereafter the following:
"(s) Any representation or warranty made or deemed to be made by the
Company (or any of its officers or managers) under or in connection with
the Seller Purchase Agreement or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any material
respect when made;
(t) The Company shall fail to perform or observe any other material
term, covenant or agreement contained in the Seller Purchase Agreement or
any other agreement or document executed in connection therewith on its
part to be performed or observed and any such failure shall remain
unremedied for twenty (20) days after written notice thereof shall have
been given by the Agent to the Borrower and the Company;
(u) The Company shall permit any amendment or modification to the
Agreement of Limited Partnership which could reasonably be expected to be
detrimental to the interests of the Agent, the Servicing Agent and/or any
of the Lenders; or
(v) The Borrower shall cease to be an Affiliate of the Company, or the
Company shall cease to own at least 95% of the limited liability company
interest in the Borrower."
2.32 Section 7.8 of the Credit Agreement is hereby deleted in its entirety
and the following is substituted therefor:
SECTION 7.8 Effect on Owners of Interests in the Borrower, Limited
Partners of the Company and Shareholders of the General Partner. This
Agreement and the Revolving Loan Notes do not represent a debt, liability,
or obligation of any owner of a limited liability company interest in the
Borrower, any limited partner of the Company or any shareholder of the
General Partner, and none of such owners, partners, shareholders of the
General Partner or any other Persons shall have any liability for the
Borrower's debts, liabilities or other Obligations under this Agreement,
the Revolving Loan Notes and the Servicing Agent Notes.
16
2.33 Article 7 of the Credit Agreement is hereby amended to add the
following at the end thereof:
SECTION 7.13. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the Agent, the Servicing Agent and
the Lenders hereby agrees that it shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to
the Borrower, acquiesce, petition or otherwise invoke or cause the
Borrower, the Company or the General Partner to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Borrower or the Company 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 Borrower
or the Company or any substantial part of its property or ordering the
winding-up or liquidation of the affairs of the Borrower or the Company.
SECTION 7.14. Limitations on Liability. None of the members, managers,
partners, officers, employees, agents, shareholders, directors or holders
of limited liability company interests of or in (x) the Borrower or (y) the
general or limited partners of the Company, past, present or future, shall
be under any liability to the Agent, the Servicing Agent or the Lenders,
respectively, any of their successors or assigns, or any other Person for
any action taken or for refraining from the taking of any action in such
capacities or otherwise pursuant to this Agreement or for any obligation or
covenant under this Agreement, it being understood that this Agreement and
the obligations created hereunder shall be, to the fullest extent permitted
under applicable law, with respect to the Borrower, solely the limited
liability company obligation of the Borrower. The Borrower and any member,
manager, partner, officer, employee, agent, shareholder, director, or
holder of a limited liability company interest of or in the Borrower may
rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person (other than the Borrower or any
Affiliate thereof) respecting any matters arising hereunder.
SECTION 7.15. Intercreditor Agreement. Each of the parties hereto
agrees that, as amongst themselves, to the extent the terms and provisions
of this Assumption Agreement and Amendment or any of the Wentworth S.S.C.
Documents are inconsistent with the terms and provisions of the
Intercreditor Agreement, the terms and provisions of the Intercreditor
Agreement shall control.
3. Conditions of Effectiveness of this Assumption Agreement and Amendment.
This Assumption Agreement and Amendment shall become effective and be deemed
effective as of the date hereof (the "Effective Date"), if, and only if the
Agent shall have received each of the following:
17
(a) Duly executed originals of this Assumption Agreement and Amendment
from each of the Company, JGW II LLC, the Servicing Agent and the Lenders.
(b) Duly executed originals of the Seller Purchase Agreement from each
of the Company and JGW II LLC.
(c) Certificate of the Secretary of the General Partner on behalf of
the Company as the Managing Member of JGW II LLC, certifying (i)
resolutions adopted by the Board of Directors authorizing, among other
things, the execution and delivery by the Company and JGW II LLC of this
Assumption Agreement and Amendment and the Seller Purchase Agreement and
any other documents and instruments required to be executed by either of
them pursuant to the terms hereof or thereof, (ii) names and signatures of
officers of the General Partner authorized to execute the documents and
instruments referred to in clause (i) above, (iii) the accuracy and
currency of the By-Laws of the General Partner, (iv) the accuracy and
currency of the Agreement of Limited Partnership of the Company, and (v)
the accuracy and currency of JGW II LLC's Limited Liability Company
agreement.
(d) Certificate of Formation of JGW II LLC, Certificate of Limited
Partnership of the Company and Certificate of Incorporation of the General
Partner, each certified by the Secretary of State of Delaware.
(e) Good Standing or Subsistence Certificate for each of JGW II LLC,
the Company and the General Partner from the Secretaries of State of
Delaware and Pennsylvania.
(f) Officer's Certificate executed on behalf of the General Partner on
behalf of the Company as managing member of JGW II LLC by the chairman, the
president or the chief financial officer of the General Partner that (i)
the representations and warranties of JGW II LLC contained in this
Agreement or the Credit Agreement or otherwise made or deemed to be made as
of the Effective Date and (ii) no event shall have occurred and be
continuing on the Effective Date which would constitute a Default or an
Event of Default under this Agreement.
(g) Favorable opinions of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇, counsel
for the Company and JGW II LLC, in form and substance satisfactory to the
Agent.
(h) Executed financing statements required to be filed by the Company
in favor of JGW II LLC pursuant to the Seller Purchase Agreement and to be
filed by JGW II LLC pursuant to the Security Agreement, in each case with
the Secretary of the Commonwealth of Pennsylvania, the Prothonotaries of
Philadelphia, ▇▇▇▇▇▇▇▇▇▇ and Delaware Counties, Pennsylvania and the
Secretaries of State of New Jersey and Delaware.
(i) Certified copies of UCC and tax lien and judgment search reports
with respect to JGW II LLC, the Company and the General Partner from such
jurisdictions as are deemed necessary or desirable by the Agent, in each
case, dated a date reasonably prior to the Effective Date.
18
(j) Evidence satisfactory to it that the Company has contributed to
the capital of JGW II LLC the Company's member interest in JGW Receivables
I LLC.
(k) Such other documents, instruments and agreements as the Agent may
reasonably request.
4. Representations and Warranties of JGW II LLC.
4.1. Upon the effectiveness of this Assumption Agreement and Amendment, JGW
II LLC hereby reaffirms in all material respects all covenants, representations
and warranties heretofore made by the Company in the Credit Agreement to the
extent the same are not amended hereby and except to the extent the same
expressly relates solely to an earlier date and agrees that all such cove nants,
representations and warranties shall be deemed to have been re-made as of the
effective date of this Assumption Agreement and Amendment and that, as of the
Effective Date and after giving effect hereto, no Event of Default or Potential
Default has occurred and is continuing.
4.2. JGW II LLC hereby represents and warrants that this Assumption
Agreement and Amendment and the Credit Agreement, as previously executed and as
amended hereby, constitute legal, valid and binding obligations of JGW II LLC
and are enforceable against JGW II LLC in accordance with their terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally or general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
5. Reference to and Effect on the Agreement.
5.1. Upon the effectiveness of this Assumption Agreement and Amendment
pursuant to Section 3 hereof, on and after the date hereof, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Credit Agreement as
amended hereby.
5.2. Except as specifically set forth above, the Credit Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
5.3. The execution, delivery and effectiveness of this Assumption Agreement
and Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender, the Agent or the Servicing
Agent nor constitute a waiver of any provision of the Credit Agreement, or any
other documents, instruments and agreements executed and/or delivered in
connection therewith.
19
5.4 Without limiting the immediately preceding Section, the parties hereto
acknowledge and agree that, by their execution hereof, neither the Agent nor any
Lender is waiving any rights such party may have in the future to seek to
exclude any Settlements from the Borrowing Base or otherwise enforce any rights
in respect of any Settlements due to any failure of the Borrower to satisfy
certain of the representations, warranties and covenants contained in the Credit
Agreement and the other Wentworth S.S.C. Documents with respect to any
Settlements.
6. Section Headings. The Section headings contained in this Assumption
Agreement and Amendment are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Assumption Agreement and
Amendment.
7. Counterparts. This Assumption Agreement and Amendment may be executed by
one or more of the parties to this Assumption Agreement and Amendment on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
8. Entire Agreement. This Assumption Agreement and Amendment, taken
together with the Credit Agreement and all of the other Advance Documents,
embodies the entire agreement and understanding of the parties hereto and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
9. Governing Law. This Assumption Agreement and Amendment shall be governed
by and construed in accordance with the internal laws (as distinguished from the
choice of law provisions) of the State of New York.
10. Fees and Expenses. JGW II LLC hereby confirms its agreement to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution and delivery of this Assumption Agreement and Amendment and any of the
other instruments, documents and agreements to be executed and/or delivered in
connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel to the Agent, the Servicing Agent and the
Lenders with respect thereto.
20
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement and Amendment to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED PARTNERSHIP
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ Structured Settlement Funding
Corporation, its sole general partner
By:
--------------------------------------------
Name:
Title:
▇.▇. ▇▇▇▇▇▇▇▇▇ RECEIVABLES II LLC
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. Limited Partnership,
its member
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ Structured Settlement Funding
Corporation, its sole general partner
By:
--------------------------------------------
Name:
Title:
ING (U.S.) CAPITAL CORPORATION, as
Agent and as a Lender
By:
--------------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as
Servicing Agent and as a Lender
By:
--------------------------------------------
Name:
Title:
21
AMENDMENT NO. 1
TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment No. 1") is entered into as of May 26, 1997
by and among ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Borrower"), ING (U.S.) CAPITAL CORPORATION ("ING Capital"),
and PNC BANK, NATIONAL ASSOCIATION ("PNC Bank", and, together with ING Capital,
the "Lenders"), ING Capital, in its capacity as the contractual representative
for itself and the Lenders (the "Agent") and PNC Bank, as servicing agent (the
"Servicing Agent"). Capitalized terms used in this Amendment which are not
otherwise defined herein, shall have the meanings given such terms in the Credit
Agreement (as defined below).
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Agent and the Servicing Agent are
parties to that certain Amended and Restated Revolving Credit Agreement, dated
as of February 11, 1997 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders, the Servicing Agent
and the Agent temporarily increase the aggregate amount of the Commitments to
$115,000,000 and amend the Credit Agreement in certain respects; and
WHEREAS, the Lenders, the Agent and the Servicing Agent are willing to
amend the Credit Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders, the Servicing Agent and the Agent hereby agree as follows.
1. Amendments to the Credit Agreement. Effective as of May 26, 1997 and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement is hereby amended as follows:
1.1. Section 1.1 of the Credit Agreement is hereby amended to add the
following definition alphabetically thereto:
"Reduction Date" shall mean the earlier of (x) August 22, 1997 and (y) the
sale of the Series 1997-1 Structured Settlement Pass-Through Trust
Certificates issued pursuant to that certain Pooling and Servicing
Agreement (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Pooling and Servicing Agreement") to be
entered into by and among ▇.▇. ▇▇▇▇▇▇▇▇▇ Receivables I LLC, as seller (the
"Company"), ▇.▇. ▇▇▇▇▇▇▇▇▇ & Company, Inc., as the initial master servicer
(the "Master Servicer"), and PNC Bank, National Association, as trustee
(the "Trustee"), and that certain Series 1997-1 Supplement (as the same may
be amended, restated, supplemented or otherwise modified from time to time,
the "Supplement") to be entered into by and among the Company, the Master
Servicer and the Trustee.
1.2. Exhibit K of the Credit Agreement is hereby amended and restated in
its entirety to read as set forth in Attachment A hereto.
2. Conditions of Effectiveness of this Amendment. This Amendment shall
become effective and be deemed effective as of the date hereof (the "Effective
Date"), if, and only if the Agent shall have received each of the following (in
each case, in form and substance, and in such quantities, satisfactory to it):
(a) duly executed originals of this Amendment from the Borrower, the
Lenders, the Agent and the Servicing Agent;
(b) duly executed original Amended and Restated Revolving Loan Note
payable to the order of ING Capital, as a Lender;
(c) a Certificate of the Secretary of the General Partner certifying
the resolutions adopted by the Board of Directors of the General Partner
approving and authorizing the execution and delivery of the Amendment; and
(d) such other documents, instruments and agreements as the Agent may
reasonably request.
Notwithstanding anything herein to the contrary, in the event the conditions to
effectiveness set forth in this Section 2 are not either satisfied or waived in
writing by all of the Lenders on or prior to May 31, 1997 then this Amendment
shall be of no force and effect.
3. Representations and Warranties of the Borrower.
3.1 Upon the effectiveness of this Amendment, the Borrower hereby reaffirms
in all material respects all covenants, representations and warranties made in
the Credit Agreement to the extent the same are not amended hereby and except to
the extent the same expressly relates solely to an earlier date and agrees that
all such covenants, representations and warranties shall be deemed to have been
re-made as of the effective date of this Amendment and that, as of the effective
date of this Amendment and after giving effect hereto, no Event of Default or
Potential Default has occurred and is continuing.
-2-
3.2 The Borrower hereby represents and warrants that this Amendment and the
Credit Agreement, as previously executed and as amended hereby, constitute
legal, valid and binding obligations of the Borrower and are enforceable against
the Borrower in accordance with their terms.
4. Reference to the Effect on the Agreement.
4.1 Upon the effectiveness of this Amendment pursuant to Section 2 hereof,
on and after the date hereof, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import shall mean
and be a reference to the Credit Agreement as amended hereby.
4.2 Except as specifically set forth above, the Credit Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender, the Agent or the Servicing Agent nor constitute a waiver
of any provision of the Credit Agreement, or any other documents, instruments
and agreements executed and/or delivered in connection therewith.
5. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
6. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
7. Entire Agreement. This Amendment, taken together with the Credit
Agreement and all of the other Advance Documents, embodies the entire agreement
and understanding of the parties hereto and supersedes all prior agreements and
understandings, written and oral, relating to the subject matter hereof.
8. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as distinguished from the choice of law
provisions) of the State of New York.
9. Fees and Expenses. The Borrower hereby confirms its agreement to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution and delivery of this Amendment and any of the other instruments,
documents and agreements to be executed and/or delivered in connection herewith,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel to the Agent, the Servicing Agent and the Lenders with respect thereto.
-3-
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed as of the
day and year first above written.
▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ Structured Settlement
Funding Corporation, as general partner
By:
---------------------------------------
Name:
Title:
ING CAPITAL CORPORATION,
as Agent and as a Lender
By:
---------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as
Servicing Agent and as a Lender
By:
---------------------------------------
Name:
Title:
-4-
ATTACHMENT A TO AMENDMENT NO. 1
TO THE AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
[See Attached]
EXHIBIT K
Commitments
Lender Amount of Commitment
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ING (U.S.) CAPITAL CORPORATION $85,000,000; provided, that at all times
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on and after the Reduction Date, the
Commitment of ING (U.S.) Capital
Corporation shall be $75,000,000
PNC BANK, NATIONAL ASSOCIATION $30,000,000
TOTAL $115,000,000, and from and after
the Reduction Date, $105,000,000
ATTACHMENT B TO AMENDMENT NO. 1
TO THE AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
[See Attached]
AMENDED AND RESTATED
REVOLVING LOAN NOTE
$85,000,000 May 26, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, ▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED PARTNERSHIP, a Delaware
limited partnership (the "Borrower"), hereby promises to pay to the order of ING
(U.S.) CAPITAL CORPORATION (the "Lender"), at its office located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or to such other location as the Lender
shall specify to the Borrower from time to time, in immediately available funds
in lawful money of the United States the principal amount of EIGHTY-FIVE MILLION
DOLLARS ($85,000,000) or, if less, the aggregate unpaid principal amount of all
Advances made by the Lender to the Borrower pursuant to Section 2.6 of the
Amended and Restated Revolving Credit Agreement, dated as of February 11, 1997,
by and among the Borrower, the financial institutions from time to time parties
thereto as lenders (including, without limitation, the Lender), ING (U.S.)
Capital Corporation, as agent (the "Agent"), and PNC Bank, National Association,
as servicing agent (as the same has been or may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the "Amended and Restated
Revolving Credit Agreement"), on the Facility Termination Date. Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in the Amended and Restated Revolving Credit Agreement.
The Borrower also agrees to pay interest in like money at such office on
the unpaid principal of each such Advance from time to time from the date of
each such Advance until payment in full thereof at the rate or rates and on the
dates set forth in the Amended and Restated Revolving Credit Agreement. The
Borrower further agrees to pay all fees, expenses, indemnities, and monetary
Obligations set forth in the Amended and Restated Revolving Credit Agreement,
including, without limitation, the Unused Commitment Fee, in accordance with the
terms of such Agreement.
This Amended and Restated Revolving Loan Note is one of the Revolving Loan
Notes referred to in, and is entitled to the benefits of, the Amended and
Restated Revolving Credit Agreement, which, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of the principal hereof prior
to the maturity hereof upon the terms and conditions specified therein and is
secured by the Purchased Settlements covered thereby.
This Amended and Restated Revolving Loan Note and the Amended and Restated
Revolving Credit Agreement do not represent a debt, liability, or obligation of
any limited partner of the Borrower or any shareholder of the Borrower's general
partner and none of such
shareholders of the General Partner or any other Persons shall have any
liability for the Borrower's debts, liabilities or other Obligations under this
Amended and Restated Revolving Credit Note, the Servicing Agent Note or the
Amended and Restated Revolving Credit Agreement.
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to them in the Amended and Restated Revolving Credit
Agreement.
THIS AMENDED AND RESTATED REVOLVING LOAN NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS DISTINGUISHED FROM THE
CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW YORK.
This Amended and Restated Revolving Note (i) re-evidences, in part, the
Borrower's indebtedness to the Lender under that certain Amended and Restated
Revolving Loan Note dated as of February 11, 1997 made by the Borrower in favor
of the Lender in the original principal amount of $75,000,000 (the "Original
Note"), (ii) is given in substitution for, and not as payment of, the Original
Note, and (iii) is in no way intended to constitute a novation of the Borrower's
indebtedness which was evidenced by the Original Note.
This Amended and Restated Revolving Note shall be binding upon the Borrower
and shall inure to the benefit of the holder hereof and its successors and
assigns. The obligations and liabilities of the Borrower hereunder may not be
assigned to any person or entity without the prior written consent of the holder
hereof. Any such assignment in violation of this paragraph shall be void and of
no force or effect.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
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IN WITNESS WHEREOF, this Amended and Restated Revolving Loan Note has been
duly executed and delivered on behalf of the Borrower by its duly authorized
officer on the date and year first written above.
▇.▇. ▇▇▇▇▇▇▇▇▇ S.S.C. LIMITED
PARTNERSHIP
By: ▇.▇. ▇▇▇▇▇▇▇▇▇ STRUCTURED
SETTLEMENT FUNDING CORPORATION,
as General Partner
By:
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Name:
Title:
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