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U.S. $150,000,000.
RECEIVABLES CREDIT AGREEMENT
Dated as of February 4, 1999
Among
FIDELITY LEASING SPE III, LLC
as the Borrower
FIDELITY LEASING, INC.
as the Servicer
the INVESTORS
named herein
VARIABLE FUNDING CAPITAL CORPORATION
as a Lender
FIRST UNION CAPITAL MARKETS CORP.
as the Deal Agent
FIRST UNION NATIONAL BANK
as the Liquidity Agent
and
XXXXXX TRUST AND SAVINGS BANK
as the Collateral Custodian and the Backup Servicer
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms.................................................................................1
Section 1.2 Other Terms..........................................................................................24
Section 1.3 Computation of Time Periods..........................................................................24
ARTICLE II THE LOAN
Section 2.1 The Loan; Grant of Security..........................................................................24
Section 2.2 Procedures for the Loan..............................................................................25
Section 2.3 Determination of Interest............................................................................26
Section 2.4 Settlement Procedures Prior to Termination Date......................................................26
Section 2.5 Settlement Procedures Following a Termination Date...................................................27
Section 2.6 Collections and Allocations..........................................................................28
Section 2.7 Payments, Computations, Etc..........................................................................28
Section 2.8 Optional Prepayment..................................................................................29
Section 2.9 Fees.................................................................................................29
Section 2.10 Increased Costs; Capital Adequacy; Illegality.......................................................30
Section 2.11 Taxes...............................................................................................31
Section 2.12 Assignment of the Purchase Agreement................................................................33
Section 2.13 Substitution of Contracts...........................................................................34
ARTICLE III CONDITIONS OF THE ADVANCE
Section 3.1 Conditions Precedent to the Loan.....................................................................35
Section 3.2 Delivery of Contract Files...........................................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Borrower.......................................................37
Section 4.2 Representations and Warranties of Borrower Relating to the Agreement and the Contracts...............46
ARTICLE V GENERAL COVENANTS OF THE BORROWER
Section 5.1 General Covenants....................................................................................47
Section 5.2 Covenants of Borrower................................................................................47
Section 5.3 Release of Lien on Equipment and Vehicles............................................................49
Section 5.4 Hedging of Contracts.................................................................................49
Section 5.5 Release of Ineligible Contracts......................................................................51
Section 5.6 Retransfer of Assets.................................................................................51
ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties...................................................................52
Section 6.2 Collection of Payments...............................................................................55
Section 6.3 Servicer Advances....................................................................................56
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Section 6.4 Realization Upon Defaulted Contract..................................................................57
Section 6.5 Maintenance of Insurance Policies....................................................................57
Section 6.6 Representations and Warranties of Servicer...........................................................59
Section 6.7 Representations and Warranties of Backup Servicer and Collateral Custodian...........................60
Section 6.8 Covenants of Servicer................................................................................62
Section 6.9 Covenants of Backup Servicer and Collateral Custodian................................................62
Section 6.10 Servicing Compensation..............................................................................63
Section 6.11 Custodial Compensation..............................................................................63
Section 6.13 Reports.............................................................................................64
Section 6.14 Annual Statement as to Compliance...................................................................64
Section 6.15 Annual Independent Public Accountant's Servicing Reports............................................65
Section 6.16 Adjustments.........................................................................................65
Section 6.17 Merger or Consolidation of the Servicer.............................................................65
Section 6.18 Limitation on Liability of the Servicer and Others..................................................66
Section 6.19 Indemnification of the Borrower, the Backup Servicer, the Collateral Custodian, the Deal Agent and
the Secured Parties..............................................................................................66
Section 6.20 The Servicer Not to Resign..........................................................................67
Section 6.21 Access to Certain Documentation and Information Regarding the Contracts.............................67
Section 6.22 Backup Servicer.....................................................................................68
Section 6.23 Identification of Records...........................................................................70
Section 6.24 Servicer Defaults...................................................................................70
Section 6.25 Appointment of Successor Servicer...................................................................72
Section 6.26 Notification........................................................................................73
Section 6.27 Protection of Right, Title and Interest to Assets...................................................73
Section 6.28 Subservicers........................................................................................74
Section 6.29 Release of Contract Files...........................................................................74
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default....................................................................................75
Section 7.2 Remedies.............................................................................................76
ARTICLE VIII INDEMNIFICATION
Section 8.1 Indemnities by the Borrower..........................................................................78
ARTICLE IX THE DEAL AGENT AND THE LIQUIDITY AGENT
Section 9.1 Authorization and Action.............................................................................80
Section 9.2 Delegation of Duties.................................................................................81
Section 9.3 Exculpatory Provisions...............................................................................81
Section 9.4 Reliance.............................................................................................82
Section 9.5 Non-Reliance on Deal Agent, Liquidity Agent and Other Lenders........................................83
Section 9.6 Reimbursement and Indemnification....................................................................83
Section 9.7 Deal Agent and Liquidity Agent in their Individual Capacities........................................83
Section 9.8 Successor Deal Agent or Liquidity Agent..............................................................84
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ARTICLE X ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Assignments and Participations......................................................................84
ARTICLE XI MISCELLANEOUS
Section 11.1 Amendments and Waivers..............................................................................88
Section 11.2 Notices, Etc........................................................................................88
Section 11.3 Ratable Payments....................................................................................89
Section 11.4 No Waiver, Rights and Remedies......................................................................89
Section 11.5 Binding Effect; Benefit of Agreement................................................................89
Section 11.6 Term of this Agreement..............................................................................89
Section 11.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue................................90
Section 11.8 Waiver of Jury Trial................................................................................90
Section 11.9 Costs, Expenses and Taxes...........................................................................90
Section 11.10 No Proceedings.....................................................................................91
Section 11.11 Recourse Against Certain Parties...................................................................91
Section 11.12 Protection of Ownership Interests of the Lenders; Intent of Parties; Security Interest.............92
Section 11.13 Confidentiality....................................................................................93
Section 11.14 Execution in Counterparts; Severability; Integration...............................................94
Section 11.15 Year 2000 Compliance...............................................................................94
EXHIBITS
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EXHIBIT A Form of Lock-Box Notices
EXHIBIT B Form of Assignment and Acceptance
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Servicer's Certificate
EXHIBIT E Form of Borrowing Certificate and Assignment
EXHIBIT F Form of Notice of Borrowing
EXHIBIT G Form of Release of Documents and Receipt
SCHEDULES
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SCHEDULE I Condition Precedent Documents
SCHEDULE II Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IV Location of Contract Files
SCHEDULE V List of Contracts
SCHEDULE VI Commitment Amount of Each Investor
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THIS RECEIVABLES CREDIT AGREEMENT (the "Agreement") is made as
of February 4, 1999, among:
(1) FIDELITY LEASING SPE III, LLC, a Delaware limited
liability company, as borrower (the "Borrower");
(2) FIDELITY LEASING, INC., a Pennsylvania corporation
("Fidelity"), as servicer (the "Servicer");
(3) the financial institutions listed on the signature pages
of this Agreement under the heading "Investors" and their respective successors
and assigns (the "Investors");
(4) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware
corporation ("VFCC");
(5) FIRST UNION CAPITAL MARKETS CORP., a North Carolina
corporation ("FCMC"), as deal agent (the "Deal Agent");
(6) FIRST UNION NATIONAL BANK, a national banking association
("First Union"), as liquidity agent (the "Liquidity Agent"); and
(7) Xxxxxx Trust and Savings Bank, an Illinois banking
corporation ("Xxxxxx"), as collateral custodian (the "Collateral Custodian") and
backup servicer (the "Backup Servicer").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.
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(a) Certain capitalized terms used throughout this Agreement
are defined above or in this Section 1.1.
(b) As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
ADCB: On any date of determination, the sum of the Discounted
Contract Balance of each Eligible Contract (excluding all Defaulted Contracts,
Casualty Loss Contracts, Early Termination Contracts and Contracts subject to a
Warranty Event) included in the Borrowing Base as of the date of such
determination.
Adjusted Eurodollar Rate: On any day, an interest rate per
annum equal to the quotient, expressed as a percentage and rounded upwards (if
necessary), to the nearest 1/100 of 1%, obtained by dividing (i) the LIBOR Rate
on such day by (ii) the decimal equivalent of 100% minus the Eurodollar Reserve
Percentage on such day.
Adjusted Eurodollar Rate Advance: The Principal of the Loan
during any period when Interest accrues at a rate based upon the Adjusted
Eurodollar Rate.
Administration Agreement: That certain Administration
Agreement executed between VFCC and FCMC, as the same may be amended,
supplemented, or otherwise modified from time to time.
Advance Rate: A rate equal to the lesser of (i) .89 and (ii)
one minus an amount equal to five times the Default Ratio.
Adverse Claim: A lien, security interest, charge, encumbrance
or other right or claim of any Person.
Affected Party: As defined in Section 2.10(a).
Affiliate: With respect to a Person means any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
Agent's Account: A special account (account number 01 41 96
47) in the name of the Deal Agent or, so long as VFCC is the sole Lender
hereunder, in the name of VFCC maintained at Bankers Trust Company.
Aggregate Unpaids: At any time, an amount, equal to the sum of
all Interest (accrued and to accrue), Principal, and all other amounts owed
hereunder, under any Hedging Agreement (including, without limitation, payments
in respect of the termination of any such Hedging Agreement) or under any fee
letter delivered by the Originator to the Deal Agent and the Lenders at such
time (whether due or accrued).
Agreement: This Receivables Credit Agreement, dated as of
February 4, 1999, as amended, modified, supplemented or restated from time to
time.
Alternative Rate: On any day, an interest rate per annum equal
to the Adjusted Eurodollar Rate or the Base Rate; provided, however, that the
Alternative Rate shall be the Base Rate only in the event that, (i) on or before
the first day of such Interest Period, the relevant Lender shall have notified
the Deal Agent that a Eurodollar Disruption Event has occurred, or (ii) such
Interest Period is a period of less than one month.
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Asset: All right, title and interest of the transferring party
in, to and under any and all of the following:
(i) the Contracts, together with all Collections and all
monies due or to become due in payment of such Contracts on and after
the Cut Off Date, including but not limited to any Prepayment Amounts,
any payments in respect of a Casualty Loss or early termination, and
any Recoveries received with respect thereto, but excluding any
Scheduled Payments due prior to the Cut Off Date and any Excluded
Amounts;
(ii) the Equipment related to such Contracts including all
proceeds from any sale or other disposition of such Equipment;
(iii) the Contract Files,
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder and under any
guarantee or similar credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income and proceeds of the foregoing.
Assignment and Acceptance: An assignment and acceptance
entered into by an Investor and an Eligible Assignee, and accepted by the Deal
Agent, in substantially the form of Exhibit B hereto.
Backup Servicer: Xxxxxx Trust and Savings Bank, and its
permitted successors and assigns.
Backup Servicer and Collateral Custodian Fee Letter: The
letter dated as of the Closing Date, among Fidelity, the Deal Agent, the Backup
Servicer and Collateral Custodian, setting forth among other things the Backup
Servicer Fee and the Collateral Custodial Fee.
Backup Servicer Fee Rate: The rate per annum set forth in the
Backup Servicer and Collateral Custodian Fee Letter, dated as of the Closing
Date.
Backup Servicing Fee: As defined in Section 6.22.
Bankruptcy Code: The Federal Bankruptcy Code, as amended from
time to time (Title 11 of the United States Code).
Base Rate: On any date, a fluctuating rate of interest per
annum equal to the higher of (i) the Prime Rate or (ii) the Federal Funds Rate
plus the Federal Funds Margin.
Base Rate Advance: The Principal of the Loan during any period
when Interest accrues at a rate based upon the Base Rate.
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Benefit Plan: Any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate of the
Borrower is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
Borrower: Fidelity Leasing SPE III, LLC, or any permitted
successor thereto.
Borrowing Base: At any time, an amount equal to the product of
the ADCB and the Advance Rate.
Breakage Costs: Any amount or amounts as shall compensate a
Lender for any loss, cost or expense incurred by such Lender (as reasonably
determined by such Lender) as a result of a prepayment by the Borrower of
Principal or Interest pursuant to the terms hereof.
Business Day: Any day of the year other than a Saturday or a
Sunday on which (i) banks are not required or authorized to be closed in New
York City, Philadelphia, Pennsylvania, Charlotte, North Carolina, and Chicago,
Illinois, and (ii) if the term "Business Day" is used in connection with the
Adjusted Eurodollar Rate, dealings in United States dollar deposits are carried
on in the London interbank market.
Casualty Loss: With respect to any item of Equipment or
Vehicle, the loss, theft, damage beyond repair or governmental condemnation or
seizure of such item of Equipment or Vehicle.
Casualty Loss Contract: Any Contract that is subject to a
Casualty Loss.
Closing Date: February 4, 1999.
Code: The Internal Revenue Code of 1986, as amended.
Collateral: At any time, all of the outstanding Assets Granted
to the Lenders hereunder.
Collateral Custodian: Xxxxxx Trust and Savings Bank, and its
permitted successors and assigns.
Collection Account: As defined in Section 6.2(f).
Collection Date: The date following the Termination Date on
which the aggregate outstanding Principal has been reduced to zero, the Lender
has received all Interest and other amounts due to the Lender in connection with
this Agreement, each Hedge Transaction has been terminated and each Hedge
Counterparty has received all amounts owing to it under its respective Hedging
Agreement, and the Deal Agent has received all amounts due to it in connection
with this Agreement.
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Collections: (i) All cash collections and other cash proceeds
of any Asset, including, without limitation, Scheduled Payments, Prepayments,
Insurance Proceeds, Recoveries, and Residual Proceeds, all as related to amounts
attributable to the Contracts in the Borrowing Base or the related Equipment or
Vehicles, but excluding any Excluded Amounts, (ii) any other funds received by
the Borrower or the Servicer with respect to any Contract or related Equipment
or Vehicle, and (iii) all payments received pursuant to any Hedging Agreement or
Hedge Transaction.
Commercial Paper Notes: On any day, any short-term promissory
notes issued by VFCC with respect to its making the Loan.
Commitment: For each Investor, the commitment of such Investor
to fund the Loan in an amount not to exceed the amount set forth opposite such
Investor's name on Schedule VI, as such amount may be modified in accordance
with the terms hereof.
Contract: Each lease of Equipment or Vehicles by the
Originator to an Obligor, as set forth on the Contract List.
Contract Files: With respect to each Contract, the fully
executed original counterpart (for UCC purposes) of the Contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Collateral Custodian holds, evidencing ownership of such Equipment (if
applicable) and all other documents originally delivered to the Borrower or held
by the Collateral Custodian with respect to any Contract.
Contract List: The contract list provided by the Borrower to
the Deal Agent and the Collateral Custodian, in the form of Schedule V hereto.
CP Rate: For any Interest Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by
VFCC from time to time as interest on or otherwise (by means of interest rate
xxxxxx or otherwise, including incremental carrying costs associated with notes
maturing on dates other than those dates on which VFCC is to receive funds) in
respect of the promissory notes issued by VFCC that are allocated, in whole or
in part, by the Deal Agent (on behalf of VFCC) to fund or maintain the Loan
during such period, as determined by the Deal Agent (on behalf of VFCC) and
reported to the Borrower and the Servicer, which rates shall reflect and give
effect to the commissions of placement agents and dealers in respect of such
promissory notes, to the extent such commissions are allocated, in whole or in
part, to such promissory notes by the Deal Agent (on behalf of VFCC); provided,
however, that if any component of such rate is a discount rate, in calculating
the "CP Rate", the Deal Agent shall for such component use the rate resulting
from converting such discount rate to an interest bearing equivalent rate per
annum.
CP Rate Advance: The Principal of the Loan during any period
when Interest accrues at a rate based upon the CP Rate.
Credit and Collection Policy: The written credit and
collection policies of the Originator and Servicer in effect on the date hereof,
as amended or supplemented from time to time in accordance with Section 4.1(j).
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Credit Limit: As of the Closing Date, $150,000,000, and on the
Termination Date, the "Credit Limit" shall mean the aggregate outstanding
Principal.
Custodial Fee: As defined in Section 6.11.
Cut Off Date: January 31, 1999.
Default Ratio: As of any Determination Date, the percentage
equivalent of a fraction, the numerator of which is equal to four times the sum
of the Discounted Contract Balance of Contracts that became Defaulted Contracts
(net of Recoveries related thereto) during the immediately preceding three
calendar months (regardless of whether a Substitute Contract was provided
therefor) and the denominator of which is the average of the ADCB as of each of
the current Determination Date and each of the immediately preceding two
Determination Dates.
Defaulted Contract: (i) A Contract included in the Collateral
as to which the Servicer has determined or should have determined in accordance
with its Credit and Collection Policy that such Contract is not collectible or
is subject to repossession, or (ii) a Contract in the Borrowing Base as to which
all or a portion of any one or more Scheduled Payments is more than 120 days
past due in an aggregate amount equal to the higher of (A) ten dollars or more
or (B) ten percent or more of any Scheduled Payment.
Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction, the numerator of which is the average of
the Discounted Contract Balance of Delinquent Contracts as of such Determination
Date and each of the immediately preceding two Determination Dates and the
denominator of which is the average of the ADCB as of such Determination Date
and each of the immediately preceding two Determination Dates.
Delinquent Contract: A Contract in the Borrowing Base as to
which all or a portion of any one or more Scheduled Payments is 30 days or more
past due.
Derivatives: Any exchange-traded or over-the-counter (i)
forward, future, option, swap, cap, collar, floor, foreign exchange contract,
any combination thereof, whether for physical delivery or cash settlement,
relating to any interest rate, interest rate index, currency, currency exchange
rate, currency exchange rate index, debt instrument, debt price, debt index,
depositary instrument, depositary price, depositary index, equity instrument,
equity price, equity index, commodity, commodity price or commodity index, (ii)
any similar transaction, contract, instrument, undertaking or security, or (iii)
any transaction, contract, instrument, undertaking or security containing any of
the foregoing.
Determination Date: The last Business Day of each calendar
month.
Discount Rate: For any Contract, a rate per annum, equal to
the sum of (i) the Hedge Rate for that Contract, (ii) the Maximum Program Fee
Rate, (iii) .05%, (iv) the Servicing Fee Rate, and (v) the Backup Servicer Fee
Rate.
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Discounted Contract Balance: With respect to any Contract at
any time, the present value of all remaining Scheduled Payments becoming due
under such Contract after the Cut Off Date discounted monthly at the Discount
Rate. The Discounted Contract Balance for each Contract shall be calculated
assuming:
(i) all payments due in any Monthly Period as due on the last
day of the Monthly Period;
(ii) payments are discounted on a monthly basis using a 30 day
month and a 360 day year; and
(iii) all security deposits and drawings under letters of
credit, if any, issued in support of a Contract are applied to reduce
Scheduled Payments in inverse order of the due date thereof.
Early Termination Contracts: Any Contract that the Servicer
has allowed the related Obligor to terminate prior to the date on which the
final Scheduled Payment is due thereunder.
Eligible Assignee: (i) A Person whose short-term rating is at
least "A-1" from S&P and "P-1" from Xxxxx'x, or whose obligations under this
Agreement are guaranteed by a Person whose short-term rating is at least "A-1"
from S&P and "P-1" from Xxxxx'x, or (ii) such other Person satisfactory to VFCC,
the Deal Agent and each of the rating agencies rating the Commercial Paper Notes
and approved, in writing, by the Borrower; provided, however, that no such
approval shall be required in the event any Investor is required by any rating
agency rating VFCC's commercial paper notes or by any regulatory agency to make
an assignment.
Eligible Contract: On any Determination Date, each Contract
with respect to which each of the following is true:
(i) the information furnished to the Deal Agent or the Lender
with respect to the Contract and the Equipment or Vehicle subject to the
Contract is true and correct in all material respects;
(ii) immediately prior to the Grant hereunder of the Contract
and any related Equipment (or security interest therein), the Contract was owned
by the Borrower free and clear of any Adverse Claim;
(iii) no Scheduled Payment related to the Contract is (A) more
than 60 days delinquent, (B) a payment as to which the Servicer has failed to
make a Servicer Advance, (C) a payment as to which the related Equipment or
Vehicle has been or is in the process of being repossessed, (D) a payment as to
which the related Equipment or Vehicle has been charged-off in accordance with
the credit and collection policies of the Servicer, or (E) a payment due on
other than a monthly basis; provided however, up to 3% (by ADCB) may have
payments due less frequently than on a monthly basis;
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(iv) the Contract is not a Defaulted Contract;
(v) no provision of the Contract has been waived, altered,
modified or extended in any respect except as allowed under the Credit and
Collection Policy of the Servicer and no payment terms of the Contract have been
rewritten or extended;
(vi) the Contract is a valid and binding payment obligation of
the Obligor and is enforceable in accordance with its terms (except as may be
limited by applicable Insolvency Laws and the availability of equitable
remedies);
(vii) the Contract is not and will not be subject to rights of
rescission, setoff, counterclaim or defense and no such rights have been
asserted or threatened with respect to the Contract;
(viii) the Contract, at the time it is Granted to VFCC does
not violate the laws of the United States or any state in any manner which would
create liability for any Lender or which would materially and adversely affect
the enforceability or collectibility of such Contract;
(ix) the Contract and any related Equipment or Vehicle have
not been sold, transferred, assigned or pledged by the Borrower to any other
Person and, (A) with respect to a Contract that is a "true lease," any Equipment
related to such true lease is owned by the Borrower free and clear of any Liens
of any third parties (except for any Permitted Liens), (B) with respect to any
Contract that is a Vehicle lease, the related Vehicle is owned by the Originator
free and clear of any Liens of any third parties (except for Permitted Liens),
and (C) with respect to any other Contract that is not a "true lease," such
Contract is secured by a fully perfected Lien of the first priority on the
related Equipment;
(x) the Contract constitutes chattel paper, an account, an
instrument or a general intangible as defined under the UCC and if the Contract
constitutes "chattel paper" for purposes of the UCC, there is not more than one
"secured party's original" counterpart of the Contract;
(xi) all filings necessary to evidence the conveyance or
transfer to the Deal Agent of the Contract and all right, title and interest in
the related Equipment have been made in all appropriate Jurisdictions;
(xii) the Obligor is not the subject of bankruptcy or other
insolvency proceedings;
(xiii) the Obligor's billing address is in the United States,
the Contract is a U.S. dollar-denominated obligation, and the Contract is
secured by Collateral physically located within the United States, provided,
however, that up to 1% (by ADCB) may have related Equipment physically located
outside the United States;
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(xiv) the Contract does not require the prior written consent
of an Obligor or contain any other restriction on the transfer or assignment of
the Contract (other than a consent or waiver of such restriction that has been
obtained prior to the Closing Date);
(xv) the obligations of the related Obligor under the Contract
are irrevocable, unconditional, non-cancelable, and due and payable on a fixed,
monthly basis (without the right to set off for any reason and net of any
maintenance or cost per copy charges);
(xvi) the Contract has a remaining term to maturity of not
greater than 60 months, provided, however, that up to 10% (by ADCB) may have a
remaining term to maturity of not greater than 96 months;
(xvii) no adverse selection procedure was used in selecting
the Contract for the Collateral;
(xviii) the Obligor under the Contract is required to maintain
casualty insurance with respect to the related Equipment in accordance with the
Servicer's normal requirements and, in the case of Vehicle leases, fire, theft,
liability, collision, and other insurance in an amount equal to the higher of
(A) that required by law, (B) that required in accordance with the Servicer's
Credit and Collection Policy, and (C) that maintained in accordance with
industry standards;
(xix) the Contract is not a "consumer lease" as defined In
Section 2A-103(1)(e) of the UCC;
(xx) the Contract is not subject to any guarantee by the
Servicer nor has the Borrower or the Originator established any specific credit
reserve with respect to the related Obligor;
(xxi) the Contract provides that (A) the Originator, the
Borrower or the Servicer may accelerate all remaining Scheduled Payments if the
Obligor is in default under any of its obligations under such Contract and (B)
the Obligor thereof may not elect to utilize its security deposit to offset any
remaining Scheduled Payment;
(xxii) the Obligor under the Contract is required to maintain
the Equipment or Vehicle in good working order and bear all costs of operating
the Equipment or Vehicle (including the payment of Taxes);
(xxiii) no provision of such Contract provides for a
Prepayment Amount less than the amount calculated in accordance with the
definition of Prepayment Amount;
(xxiv) the Contract has not been terminated as a result of a
Casualty Loss to the related Equipment or Vehicle or for any other reason;
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(xxv) the Discounted Contract Balance of such Contract, when
aggregated with the Discounted Contract Balance of each other Contract having
the same Obligor, does not exceed the Portfolio Concentration Criteria;
(xxvi) the Discounted Contract Balance of such Contract does
not include the amount of any security deposit held by the Servicer or the
Borrower;
(xxvii) such Contract provides that in the event of a Casualty
Loss, the Obligor is required to pay an amount not less than the present value
of all remaining Scheduled Payments discounted at the applicable Discount Rate
plus any past due amounts as of the date of determination;
(xxviii) the Obligor thereunder has represented to the
Originator that such Obligor has accepted the related Equipment or Vehicle and
has had a reasonable opportunity to inspect and test such Equipment or Vehicle
and the Originator has not been notified of any defects therein;
(xxix) all payments in respect of a Contract will be made free
and clear of, and without deduction or withholding for or on account of, any
Taxes, unless such withholding or deduction is required by law;
(xxx) the Obligor under the Contract is not a municipality or
government-related organization; and
(xxxi) the Obligor is acceptable to the Lender in its
reasonable discretion.
Equipment: The tangible assets financed or leased by an
Obligor pursuant to a Contract and/or, unless the context otherwise requires, a
security interest in such assets, such tangible assets to consist of small
ticket equipment, including without limitation small manufacturing, automotive
repair, printing, information and document processing and storage,
telecommunications and office equipment; provided, however, such Equipment shall
not include Vehicles.
ERISA: The U.S. Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
ERISA Affiliate: (i) Any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Borrower, (ii) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with the Borrower, or (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as the Borrower, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above.
Eurocurrency Liabilities: As defined in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
10
Eurodollar Disruption Event: The occurrence of any of the
following: (i) a determination by a Lender that it would be contrary to law or
to the directive of any central bank or other governmental authority (whether or
not having the force of law) to obtain United States dollars in the London
interbank market to make, fund or maintain the Loan, (ii) the failure of one or
more of the Reference Banks to furnish timely information for purposes of
determining the Adjusted Eurodollar Rate, (iii) a determination by a Lender that
the rate at which deposits of United States dollars are being offered to such
Lender in the London interbank market does not accurately reflect the cost to
such Lender of making, funding or maintaining the Loan, or (iv) the inability of
a Lender to obtain United States dollars in the London interbank market to make,
fund or maintain the Loan.
Eurodollar Reserve Percentage: For any day in any Interest
Period, the reserve percentage applicable on such day under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for First Union National Bank with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (as defined in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from time
to time) and having a term equal to such Interest Period).
Event of Default: As defined in Section 7.1.
Excluded Amounts: (i) Any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect to
the Collateral or related Equipment or Vehicles, which collections are
attributable to any Taxes, fees or other charges imposed by any Governmental
Authority, (ii) any collections representing reimbursements of insurance
premiums or payments for services that were not financed by the Originator,
(iii) any collections with respect to Contracts retransferred or substituted for
with respect to a Warranty Event, or otherwise replaced by a Substitute
Contract, and (iv) any late fees, insufficient funds charges, inspection
charges, collection fees, delinquency fees, repossession fees or UCC fees,
extension fees, documentation fees, maintenance fees and insurance fees.
Facility Financing Statement: As defined in Schedule I.
Federal Funds Margin: As defined in the Fee Letter.
Federal Funds Rate: For any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the federal funds rates as quoted by First Union and confirmed in Federal
Reserve Board Statistical Release H.15(519) or any successor or substitute
publication selected by First Union (or, if such day is not a Business Day, for
the next preceding Business Day), or, if, for any reason, such rate is not
available on any day, the rate determined, in the sole opinion of First Union,
to be the rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 a.m. (New York City time).
11
Fee Letter: The letter agreement, dated as of the Closing
Date, among the Borrower, the Servicer and the Deal Agent, setting forth, among
other things, the Commitment Fee, the Program Fee and the Structuring Fee.
First Union: First Union National Bank, in its individual
capacity, and its successors or assigns.
GAAP: Generally accepted accounting principles as in effect
from time to time the United States.
Governmental Authority: With respect to any Person, any nation
or government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.
Grant: To grant, bargain, sell, warrant, alienate, remise,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of the
Contracts or of any other instrument shall include all rights, powers and
options (but none of the obligations) of the granting party thereunder,
including without limitation the immediate and continuing right to claim,
collect, receive and receipt for payments in respect of the Contracts, or any
other payment due thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring proceedings in the name of the granting party or otherwise,
and generally to do and receive anything which the granting party is or may be
entitled to do or receive thereunder or with respect thereto.
H.15: Federal Reserve Statistical Release H.15.
Hedge Breakage Costs: For any Hedge Transaction, any amount
payable by the Borrower for the early termination of that Hedge Transaction or
any portion thereof.
Hedge Counterparty: Any entity which (i) on the date of
entering into any Hedge Transaction (A) is an interest rate swap dealer that is
either a Lender or an Affiliate of a Lender, or has been approved in writing by
the Deal Agent (which approval shall not be unreasonably withheld), and (B) has
a long-term unsecured debt rating of not less than "A" by S&P and not less than
"A-2" by Moody's ("Long-term Rating Requirement") and a short-term unsecured
debt rating of not less than "A-1" by S&P and not less than "P-1" by Moody's
("Short-term Rating Requirement"), and (ii) in a Hedging Agreement (A) consents
to the assignment of the Borrower's rights under the Hedging Agreement to the
Deal Agent pursuant to Section 5.4(b) and (B) agrees that in the event that
Moody's or S&P reduces its long-term unsecured debt rating below the Long-term
Rating Requirement, or reduces its short-term unsecured debt rating below the
Short-term Rating Requirement, it shall transfer its rights and obligations
under each Hedging Transaction to another entity that meets the requirements of
clauses (i) and (ii) hereof and has entered into a Hedging Agreement with the
Borrower on or prior to the date of such transfer.
12
Hedge Notional Amount: For any Purchase, the aggregate
notional amount in effect on any day under all Hedge Transactions entered into
pursuant to Section 5.4(a) for that Purchase.
Hedge Rate: For any Contract, the "Fixed Rate" of the Hedge
Transaction to be used in computing the Discount Rate of that Contract.
Hedge Transaction: Each interest rate swap transaction between
the Borrower and a Hedge Counterparty which is entered into pursuant to Section
5.4(a) and is governed by a Hedging Agreement.
Hedging Agreement: Each agreement between the Borrower and a
Hedge Counterparty which governs one or more Hedge Transactions entered into
pursuant to Section 5.4(a), which agreement shall consist of a "Master
Agreement" in a form published by the International Swaps and Derivatives
Association, Inc., together with a "Schedule" thereto in a form acceptable to
the Deal Agent, and each "Confirmation" thereunder confirming the specific terms
of each such Hedge Transaction.
Increased Costs: Any amounts required to be paid by the
Borrower to an Affected Party pursuant to Section 2.10.
Indebtedness: With respect to any Person at any date, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (ii) all obligations of such Person under capital leases, (iii) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (iv) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, and (v) all indebtedness, obligations or
liabilities of that Person in respect of Derivatives.
Indemnified Amounts: As defined in Section 8.1.
Indemnified Persons: As defined in Section 6.19.
Independent Director: A Person serving on the board of
directors of the Independent Manager who is not at the time of appointment and
has not been at any time during the preceding five (5) years: (i) a stockholder,
director, officer, employee or partner of the Borrower, any member of the
Borrower, the Servicer, or any Affiliate of any of them; (ii) a Person having
any direct financial interest in the Borrower, or in any Affiliate of the
Borrower; (iii) a customer, supplier or other Person who derives more than 10%
of its purchases or revenues from its activities with the Borrower, any member
of the Borrower, the Servicer, or any Affiliate of any of them; (iv) a Person
controlling or under common control (as such "control" is defined in the
definition of "Affiliate" set forth herein) with any such stockholder, director,
officer, employee, partner, customer, supplier or other Person; or (v) a member
of the immediate family of any such stockholder, director, officer, employee,
partner, customer, supplier or other Person. Notwithstanding the foregoing, an
Independent Director may serve in similar capacities for other special purpose
entities formed by the Servicer or any Affiliate thereof.
13
Independent Manager: A manager of the Borrower who (i) is a
corporation having a board of directors comprised of at least two (2)
Independent Directors and (ii) is not at the time of appointment and has not
been at any time during the preceding five (5) years: (A) a stockholder,
director, officer, employee or partner of the Borrower, any member of the
Borrower, the Servicer, or any Affiliate of any of them; (B) a person having any
direct financial interest in the Borrower, or in any Affiliate of the Borrower;
(C) a customer, supplier or other Person who derives more than 10% of its
purchases or revenues from its activities with the Borrower, any member of the
Borrower, the Servicer, or any Affiliate of any of them; (D) a Person
controlling or under common control (as such "control" is defined in the
definition of "Affiliate" set forth herein) with any such stockholder, director,
officer, employee, partner, customer, supplier or other Person; or (v) a member
of the immediate family of any such stockholder, director, officer, employee,
partner, customer, supplier or other Person. Notwithstanding the foregoing, an
Independent Manager may serve in similar capacities for other special purpose
entities formed by the Servicer or any affiliate thereof.
Ineligible Contract: As defined in Section 5.5.
Insolvency Event: With respect to a specified Person, (i) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (ii) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
Insolvency Laws: The Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
Instrument: Any "instrument" (as defined in Article 9 of the
UCC), other than an instrument which constitutes part of chattel paper.
14
Insurance Policy: With respect to any Contract, an insurance
policy covering physical damage to or loss of the related Equipment or Vehicle.
Insurance Proceeds: Depending on the context, any amounts
payable or any payments made, to the Servicer under any Insurance Policy.
Interest: For any Interest Period, the sum of the product (for
each such day during such Interest Period) of:
IR x P x 1
---
360
where:
IR = the Interest Rate applicable on such day
P = the Principal outstanding on such day
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Interest in excess of the maximum permitted
by applicable law, and (ii) Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
Interest Period: For any Payment Date, the period beginning
on, and including the 13th day of the immediately preceding calendar month (or,
with respect to the first Interest Period, the Closing Date) and ending on and
including the 12th day of the calendar month in which such Payment Date occurs.
Interest Rate: For any day,
(i) to the extent the relevant Lender funded the Loan through
the issuance of commercial paper, a rate equal to the CP Rate for such day, and
(ii) to the extent the relevant Lender did not fund the Loan
through the issuance of commercial paper, a rate equal to the Alternative Rate.
Investment: With respect to any Person, any direct or indirect
loan, advance or investment by such Person in any other Person, whether by means
of share purchase, capital contribution, loan or otherwise, excluding the
acquisition of Assets pursuant to the Purchase Agreement and excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.
Investor: First Union and each other liquidity bank that is a
party to a liquidity agreement entered into at any time with the Lender.
15
Issuer: VFCC and any other Lender whose principal business
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
JLC: Japan Leasing (U.S.A.), Inc., a Delaware corporation.
Lender: Collectively, VFCC and the Investors and any other
Person that agrees, pursuant to the pertinent Assignment and Acceptance, to fund
the Loan.
LIBOR Rate: For any Interest Period, an interest rate per
annum equal to the average (rounded upward to the nearest one-sixteenth (1/16th)
of one percent) per annum rate of interest determined by First Union National
Bank on the basis of the offered rates for deposits in dollars for a term equal
to the Interest Period; and commencing on the first day of such Interest Period
appearing on Telerate Page 3750 (or, if, for any reason, Telerate Page 3750 is
not available, the Reuters Screen LIBO Page) as of 11:00 a.m. (London time) on
the Business Day which is the second Business Day immediately preceding the
first day of the applicable Interest Period. If neither Telerate Page 3750 nor
the Reuters Screen LIBO Page is available, then the LIBOR Rate shall be the rate
determined by First Union National Bank at its principal office in Charlotte,
North Carolina as its LIBOR Rate (each such determination, absent manifest
error, to be conclusive and binding on all parties hereto and their assignees)
as of the two Business Days prior to the applicable Interest Period as the rate
at which deposits in immediately available funds in U.S. dollars are being,
having been, or would be offered or quoted by First Union National Bank or major
banks in the applicable interbank market for Eurodollar deposits at or about
11:00 a.m. (Charlotte, North Carolina time) on the Business Day which is the
second Business Day immediately preceding the first day of the applicable
Interest Period for delivery on the first day of such Interest Period for a term
equal to such Interest Period.
Lien: With respect to any Asset, (i) any mortgage, lien,
pledge, charge security interest or encumbrance of any kind in respect of such
Asset or (ii) the interest of a vendor or lessor under any conditional sale
agreement, financing lease or other title retention agreement relating to such
Asset.
Liquidation Expenses: With respect to any Contract, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to any subservicer) and any reasonably
allocated costs of internal counsel, in each case in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any related Equipment or Vehicle upon or after
the expiration or earlier termination of such Contract and other out-of-pocket
costs related to the liquidation of any such Equipment or Vehicle, including the
attempted collection of any amount owing pursuant to such Contract if it is a
Defaulted Contract.
Loan: The loan by the Lender to the Borrower made pursuant to
the provisions of Article II hereof.
16
Lock-Box: A post office box to which Collections are remitted
for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a
Lock-Box Account.
Lock-Box Account: An account maintained for the purpose of
receiving Collections at a bank or other financial institution which has
executed a Lock-Box Notice for the purpose of receiving Collections.
Lock-Box Bank: Any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
Lock-Box Notice: A notice, in substantially the form of
Exhibit A, between the Originator and a Lock-Box Bank.
Maturity Date: February 2, 2000, or such later date to which
the Maturity Date may be extended (if extended) in the sole discretion of VFCC
and each Investor in accordance with the terms of Section 2.1(c).
Maximum Program Fee Rate: The highest Program Fee Rate.
Minimum Overcollateralization: On any date,
Overcollateralization equal to 100% minus the Advance Rate.
Monthly Period: As to any Determination Date, the calendar
month ended on such Determination Date.
Monthly Report: As defined in Section 6.13(a).
Moody's: Xxxxx'x Investors Service, Inc., and any successor
thereto.
Multiemployer Plan: A "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding five years contributed to by the Borrower or any
ERISA Affiliate on behalf of its employees.
Notice of Borrowing: A notice, substantially in the form of
Exhibit F hereto, delivered pursuant to Section 2.2.
Obligor: A Person obligated to make payments pursuant to a
Contract including any guarantor thereof.
Officer's Certificate: A certificate signed by any manager of
the Borrower or any officer the Servicer, as the case may be, and delivered to
the Collateral Custodian.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for Borrower or the Servicer and who shall be reasonably acceptable to
the Deal Agent.
Originator: JLA Credit Corporation, a Delaware corporation.
17
Outstanding Balance: Of any Asset at any time, the then
outstanding principal balance thereof.
Overcollateralization: On any day, the difference determined
by subtracting the Principal on such day from the ADCB on such day.
Payment Date: The 20th day of each calendar month or, if such
day is not a Business Day, the next succeeding Business Day.
Permitted Investments: Any one or more of the following types
of investments:
(i) marketable obligations of the United States of America,
the full and timely payment of which are backed by the full faith and credit of
the United States of America and which have a maturity of not more than 270 days
from the date of acquisition;
(ii) marketable obligations, the full and timely payment of
which are directly and fully guaranteed by the full faith and credit of the
United States of America and which have a maturity of not more than 270 days
from the date of acquisition;
(iii) bankers' acceptances and certificates of deposit and
other interest-bearing obligations (in each case having a maturity of not more
than 270 days from the date of acquisition) denominated in dollars and issued by
any bank with capital, surplus and undivided profits aggregating at least
$100,000,000, the short-term obligations of which are rated "A-1" by S&P and
"P-1" by Moody's;
(iv) repurchase obligations with a term of not more than ten
days for underlying securities of the types described in clauses (i), (ii) and
(iii) above entered into with any bank of the type described in clause (iii)
above;
(v) commercial paper rated at least "A-1" by S&P and "P-1" by
Moody's; and,
(vi) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository institutions
or trust companies incorporated under the laws of the United States of America
or any state thereof (or domestic branches of any foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however that at the time such investment, or
the commitment to make such investment, is entered into, the short-term debt
rating of such depository institution or trust company shall be at least "A-1"
by S&P and "P-1" by Moody's.
Permitted Liens: (i) With respect to Contracts in the
Collateral:
(A) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable, (B) Liens in favor of
the Borrower created pursuant to a Purchase Agreement and transferred
to the Borrowing Base hereunder, and (C) Liens in favor of the Deal
Agent as agent for the Lender created pursuant to this Agreement; and
18
(ii) with respect to the related Equipment or Vehicles:
(A) materialmen's, warehousemen's and mechanics' liens and
other Liens arising by operation of law in the ordinary course of
business for sums not due, (B) Liens for state, municipal or other
local taxes if such taxes shall not at the time be due and payable, (C)
Liens in favor of the Borrower created pursuant to the Purchase
Agreement and transferred to the Borrowing Base hereunder, and (D)
Liens in favor of the Deal Agent as agent for the Lender created
pursuant to this Agreement.
Person: An individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, sole proprietorship, joint venture, government (or
any agency or political subdivision thereof) or other entity.
Portfolio Concentration Criteria: The following concentration
limitations at all times measured on the basis of percentage of ADCB:
(i) the sum of the Discounted Contract Balances of Contracts
relating to any one Obligor is no more than of 1.5% of the ADCB;
(ii) the sum of the Discounted Contract Balance of Contracts
relating to the five (5) Obligors with the largest aggregate Discounted Contract
Balances is limited to 10% of the ADCB;
(iii) the sum of the Discounted Contract Balances of Contracts
relating to Obligors located in California is limited to 50% of the ADCB;
(iv) the sum of the Discounted Contract Balances of Contracts
relating to Obligors located in any state (other than California) is limited to
10% of the ADCB;
(v) the sum of the Discounted Contract Balances of Contracts
secured by, or representing leases of, software is limited to 1% of the ADCB;
(vi) the sum of the Discounted Contract Balances of Contracts
relating to Obligors having the same standard industry code is limited to 5% of
the ADCB;
(vii) the sum of the Discounted Contract Balances of Contracts
having terms up to 96 months is limited to 10% of the ADCB;
(viii) the sum of the Discounted Contract Balances of
Contracts constituting leases of Vehicles is limited to 4% of the ADCB; and
(ix) the sum of the Discounted Contract Balances of Contracts
constituting leases of Equipment physically located outside the United States is
limited to 1% of the ADCB.
19
Prepaid Contract: Any Contract that has terminated or been
prepaid in full prior to its scheduled expiration date (including because of a
Casualty Loss), other than a Defaulted Contract.
Prepayment Amount: As specified in Section 6.2(b).
Prepayments: Any and all (i) partial and full prepayments on a
Contract (including, with respect to any Contract and any Monthly Period, any
Scheduled Payment or portion thereof which is due in a subsequent Monthly Period
which the Servicer has received, and expressly permitted the related Obligor to
make, in advance of its scheduled due date, and which will be applied to such
Scheduled Payment on such due date), (ii) cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of Equipment or Vehicles under a
Prepaid Contract, net of Liquidation Expenses, and (iii) Recoveries.
Prime Rate: The rate announced by First Union from time to
time as its prime rate in the United States, such rate to change as and when
such designated rate changes. The Prime Rate is not intended to be the lowest
rate of interest charged by First Union in connection with extensions of credit
to debtors.
Principal: The original amount of the Loan, reduced from time
to time by Collections distributed on account of such Principal pursuant to
Sections 2.4 and 2.5; provided, however, that the Principal shall not be reduced
by any distribution or any portion of Collections if at any time such
distribution is rescinded or must be returned for any reason.
Program Fee: As defined in Section 2.9(a).
Program Fee Rate: The rate per annum set forth in the Program
Fee Agreement.
Purchase Agreement: The Purchase and Sale Agreement dated as
of the date hereof, between the Originator and the Borrower, as amended,
modified, supplemented or restated from time to time with the prior written
consent of the Lender.
Qualified Institution: As defined in Section 6.2(f).
RAI: Resource America, Inc., a Delaware corporation.
Rating Agency: Each of S&P, Xxxxx'x, and any other rating
agency that has been requested to issue a rating with respect to the commercial
paper notes issued by the Issuer.
Records: All Contracts and other documents, books, records and
other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained with respect to Assets and the related Obligors which the Borrower
has itself generated, in which the Borrower has acquired an interest pursuant to
the Purchase Agreement or in which the Borrower has otherwise obtained all
interest.
20
Recoveries: With respect to a Defaulted Contract, proceeds
from the sale, lease, re-lease or refinancing of the Equipment or Vehicle,
proceeds of any related Insurance Policy and any other recoveries with respect
to such Defaulted Contract and the related Equipment or Vehicle and related
property, and other amounts representing late fees and penalties net of
Liquidation Expenses and amounts, if any, so received that are required to be
refunded to the Obligor on such Contract.
Reference Bank: Any bank which furnishes information for
purposes of determining the Adjusted Eurodollar Rate.
Register: As defined in Section 10.1(c).
Release Date: As defined in Section 5.6.
Replaced Contract: As defined in Section 2.13(a).
Reporting Date: The 16th day of the month or the first
Business Day thereafter.
Required Investors: At a particular time, all (or 100%) of the
Investors.
Required Reports: Collectively, the Monthly Report, the
Servicer's Certificate and the quarterly financial statement of the Servicer
required to be delivered to the Deal Agent pursuant to Section 6.13(c) hereof.
Requirements of Law: For any Person shall mean the certificate
of incorporation or articles of association and by-laws or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation,
or order or determination of an arbitrator or Governmental Authority, in each
case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act, and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
Residual Proceeds: With respect to any Contract or any item of
Equipment, the net proceeds from the sale, re-lease or other disposition of the
equipment upon the expiration, or early termination, of the term of such
Contract.
Responsible Officer: As to any Person (other than the
Collateral Custodian and Backup Servicer), any officer of such Person with
direct responsibility for the administration of this Agreement and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject, and with respect to the Collateral Custodian and Backup
Servicer it shall mean any officer within the office at the address set forth
under its name on the signature pages hereof including any Vice President,
Managing Director, Assistant Vice President, Secretary, Assistant Secretary or
Assistant Treasurer or any other officer of the Collateral Custodian and Backup
Servicer customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge and familiarity with the particular subject.
21
S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. and any successor thereto.
Scheduled Payments: On any Determination Date with respect to
any Contract, (i) each monthly, quarterly, annual or seasonal rent or financing
(whether principal or principal and interest) payment scheduled to be made by
the Obligor thereof after such Determination Date under the terms of such
Contract, reduced by a number of such scheduled payments equal to a number
(rounding upwards to the next highest integer if such number is not an integer)
obtained by dividing (A) the dollar amount of any security deposit related to
such Contract by (B) the amount of a single scheduled payment under such
Contract, (ii) any payment due from the Obligor of such Contract at the
expiration or other termination of such Contract, and (iii) any payments in
connection with a Warranty Event.
Secured Party: (i) Each Lender and (ii) each Hedge
Counterparty that is either a Lender or an Affiliate of a Lender if such
Affiliate executes a counterpart of this Agreement agreeing to be bound by the
terms of this Agreement applicable to a Secured Party.
Servicer: Fidelity Leasing, Inc., and its permitted successors
and assigns.
Servicer Advance: An advance of Scheduled Payments made by the
Servicer pursuant to Section 6.3.
Servicer Default: As specified in Section 6.24.
Servicer's Certificate: As defined in Section 6.13(b).
Servicing Fee: As specified in Section 2.9(b).
Servicing Fee Letter: The letter, dated as of the Closing
Date, among the Borrower, the Servicer, and the Deal Agent setting forth, among
other things, the Servicer Fee.
Servicing Fee Rate: The rate per annum set forth in the
Servicing Fee Letter.
Solvent: As to any Person at any time, having a state of
affairs such that all of the following conditions are met: (i) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code, (ii) the present fair salable value of the
property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its property and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in
the normal course of business, (iv) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (v) such Person is not engaged in
a business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
22
Stock Purchase Agreement: That certain agreement by and
between Fidelity and JLC, dated as of December 15, 1998, as amended by Amendment
No. 1, dated as of December 31, 1998, and as further amended by Amendment No. 2,
dated as of January 12, 1999.
Structuring Fee: The arrangement fee agreed to between the
Borrower and the Deal Agent in the Program Fee Agreement.
Subordinated Promissory Note: That certain Subordinated
Promissory Note, dated as of February 4, 1999, made by Fidelity and payable to
the order of Resource Leasing, Inc., a Delaware corporation.
Subservicer: JLA Credit Corporation, a Delaware corporation.
Substitute Contract: On any day, an Eligible Contract which
meets each of the conditions for substitution set forth in Section 2.13.
Successor Servicer: As defined in Section 6.25(a).
Taxes: Any present or future taxes, levies, imposts, duties,
charges, assessments or fees of any nature (including interest, penalties, and
additions thereto) that are imposed by any government or other taxing authority.
Termination Date: The earliest of (i) the date of repayment in
full of the Loan pursuant to Section 2.8, (ii) the date of the occurrence of an
Event of Default pursuant to Section 7.1, and (iii) the Maturity Date.
Termination Notice: As defined in Section 6.24.
Transaction: As defined in Section 3.1.
Transaction Documents: (i) This Agreement, (ii) the Purchase
Agreement, (iii) the Hedging Agreement, (iv) the guaranty, dated as of the date
hereof, given by Fidelity in favor of the Deal Agent, (v) the guaranty, dated as
of the date hereof, given by RAI in favor of the Deal Agent, (vi) the liquidity
purchase agreement, dated as of the date hereof, by and among the Lender, the
Investors, the Deal Agent, and the Liquidity Agent, (vii) the custodial
agreement, dated as of the date hereof, by and among the Borrower, the Servicer,
the Deal Agent and the Collateral Custodian, and (viii) any additional document
the execution of which is necessary or incidental to carrying out the terms of
the foregoing documents.
23
UCC: The Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
United States: The United States of America.
Unreimbursed Servicer Advances: At any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Section 2.7 and which the
Servicer has determined in its sole discretion will not be recoverable from
Collections with respect to the related Contract.
Unsecured Promissory Note: That certain Unsecured Promissory
Note, dated as of February 4, 1999, made by Fidelity and payable to the order of
Resource Leasing, Inc., a Delaware corporation.
Vehicle: Any motor vehicle which is subject to a Contract
included in the Collateral.
Warranty Event: As to any Asset, the occurrence and
continuance of a material breach of any representation or warranty relating to
such Contract.
Section 1.2 Other Terms.
------------
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9. The word "including" shall mean "including without
limitation," and the word "herein" shall refer to this Agreement and not to any
particular Section herein unless expressly stated.
Section 1.3 Computation of Time Periods.
----------------------------
Unless otherwise stated in this Agreement, in the computation
of a period of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
ARTICLE II
THE LOAN
Section 2.1 The Loan; Grant of Security.
----------------------------
(a) On the terms and conditions hereinafter set forth, the
Lender shall, on the Closing Date, make the Loan to the Borrower in an amount
equal to the lesser of (i) the Borrowing Base and (ii) the Credit Limit.
24
(b) In order to secure the payment of the Principal, Interest,
Aggregate Unpaids, and all other amounts payable with respect to the Loan and
under the Fee Letter, and in order to secure the performance and observance of
all of the covenants and conditions contained in this Agreement and in the Fee
Letter, the Borrower hereby Grants to the Deal Agent, for the ratable benefit of
the Secured Parties, a first priority security interest in all of the
Collateral, including Collections, any and all replacements, substitutions,
distributions on and proceeds and products thereof. The Borrower shall xxxx its
records (including, without limitation, its computer records and tapes) to
evidence the Grant and the interest of the Deal Agent on behalf of the Secured
Parties in the Collateral.
(c) The Borrower may, within 60 days, but no later than 45
days, prior to the then existing Maturity Date, by written notice to the Deal
Agent (and delivery to the Deal Agent of a new Opinion of Counsel in
substantially the same form and substance as that certain Opinion of Counsel
delivered as of the Closing Date and rendered by Xxxxxx, Xxxxx & Xxxxxxx LLP
with respect to certain federal income tax consequences, such new opinion given
with respect to such extension), make written request for VFCC and the Investors
to extend the Maturity Date for an additional period of 364 days. The Deal Agent
will give prompt notice to VFCC and each of the Investors of its receipt of such
request for extension of the Maturity Date. VFCC and each Investor shall make a
determination, in their sole discretion and after a full credit review, not less
than 15 days prior to the then applicable Maturity Date as to whether or not it
will agree to extend the Maturity Date; provided, however, that the failure of
VFCC or any Investor to make a timely response to the Borrower's request for
extension of the Maturity Date shall be deemed to constitute a refusal by VFCC
or the Investor, as the case may be, to extend the Maturity Date. The Maturity
Date shall only be extended upon the consent of both (i) VFCC and (ii) 100% of
the Investors.
Section 2.2 Procedures for the Loan.
------------------------
Subject to the conditions described in Section 2.1, the Loan
shall be made pursuant to the terms of a Borrowing Certificate and Assignment in
the form of Exhibit E hereto, after receipt by the Lender of a Notice of
Borrowing delivered by the Borrower to the Deal Agent (with a copy to the
Collateral Custodian) at least one Business Day prior to the proposed Closing
Date. Such Notice of Borrowing shall specify (a) the aggregate amount of the
Borrowing Base and (b) the proposed Closing Date. Following receipt of such
Notice of Borrowing, the Deal Agent will consult with VFCC in order to assist
VFCC in determining whether or not to fund the Loan. If VFCC declines to fund
the Loan, the Loan will be made by the Investors. On the Closing Date, VFCC or
each Investor shall, upon satisfaction of the applicable conditions set forth in
Article III, make available to the Borrower in same day funds, at such bank or
other location reasonably designated by Borrower in its Notice of Borrowing
given pursuant to this Section 2.2, an amount equal to (i) the Principal of the
Borrowing Base, in the case of a purchase by VFCC, or (ii) such Investor's pro
rata share of the Principal related to such Borrowing Base, in case the Loan is
made by the Investors.
25
Section 2.3 Determination of Interest.
The Deal Agent shall determine the Interest (including unpaid
Interest, if any, due and payable on a prior Payment Date) to be paid on each
Payment Date for the Interest Period and shall advise the Servicer thereof on
the first Business Day after the Interest Period.
Section 2.4 Settlement Procedures Prior to a Termination Date.
The provisions of this Section 2.4 shall apply during the term
of this Agreement prior to the occurrence of a Termination Date.
(a) On each Payment Date, the Servicer shall pay to the
following Persons, from (i) the Collection Account, to the extent of available
funds, and (ii) a Servicer Advance if made or required pursuant to Section 6.3,
the following amounts in the following order of priority:
(i) FIRST, pro rata to each Hedge Counterparty, any amounts,
including any Hedge Breakage Costs, owing that Hedge Counterparty under
its respective Hedging Agreement in respect of any Hedge
Transaction(s), for the payment thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fee, for the payment thereof;
(v) FIFTH, to the extent not paid for by Fidelity, to the
Backup Servicer, in an amount equal to any accrued and unpaid Backup
Servicing Fee, for the payment thereof;
(vi) SIXTH, to the extent not paid for by Fidelity, to the
Collateral Custodian, in an amount equal to any accrued and unpaid
Custodial Fee, for the payment thereof;
(vii) SEVENTH, to the extent not paid for by Fidelity, to the
Deal Agent for the ratable payment to each Lender, in an amount equal
to any accrued and unpaid Program Fees for such Payment Date;
(viii) EIGHTH, to the Deal Agent, in the amount of unpaid
Increased Costs and/or Taxes, for payment to the Lenders in respect
thereof;
(ix) NINTH, to the Deal Agent for the ratable payment to each
Lender, in an amount equal to any accrued and unpaid Interest (for the
related Interest Period), with priority to any arrearage;
26
(x) TENTH, to the Deal Agent for payment necessary to reduce
the Principal to an amount equal to the Borrowing Base as of the
immediately proceeding Determination Date; and
(xi) ELEVENTH, any remaining amount shall be distributed to
the Borrower.
(b) Notwithstanding anything to the contrary contained in this Section
2.4 or any other provision in this Agreement, if on any Business Day the
aggregate outstanding amount of Principal shall exceed the Borrowing Base, the
Borrower shall contribute Eligible Contracts or remit to the Deal Agent a
payment, no later than the close of business of the Deal Agent on the next
succeeding Business Day, in such amount as may be necessary so that the
outstanding Principal is an amount less than or equal to the Borrowing Base.
Section 2.5 Settlement Procedures Following a Termination
----------------------------------------------
Date.
-----
The provisions of this Section 2.5 shall apply during the term
of this Agreement after the occurrence of a Termination Date.
(a) On each Payment Date, the Servicer shall pay to the
following Persons, from (i) the Collection Account, to the extent of available
funds and (ii) a Servicer Advance if made or required pursuant to Section 6.3,
the following amounts in the following order of priority:
(i) FIRST, pro rata to each Hedge Counterparty, any amounts,
including any Hedge Breakage Costs, owing that Hedge Counterparty under
its respective Hedging Agreement in respect of any Hedge
Transaction(s), for the payment thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fee, for the payment thereof;
(v) FIFTH, to the extent not paid for by Fidelity, to the
Backup Servicer, in an amount equal to any accrued and unpaid Backup
Servicing Fee, for the payment thereof;
(vi) SIXTH, to the extent not paid for by Fidelity, to the
Collateral Custodian, in an amount equal to any accrued and unpaid
Custodial Fee, for the payment thereof;
27
(vii) SEVENTH, to the extent not paid for by Fidelity, to the
Deal Agent, for the ratable payment to each Lender in an amount equal
to any accrued and unpaid Program Fees for such Payment Date;
(viii) EIGHTH, to the Deal Agent, in the amount of unpaid
Increased Costs and/or Taxes, for payment to the Lenders in respect
thereof;
(ix) NINTH, to the Deal Agent for the ratable payment to each
Lender, in an amount equal to any accrued and unpaid Interest (for the
related Interest Period), with priority to any arrearage;
(x) TENTH, to the Deal Agent for the ratable payment to each
Lender, in an amount to reduce the Principal to zero and to pay in full
the Aggregate Unpaids; and
(xi) ELEVENTH, any remaining amount shall be distributed to
the Borrower.
(b) Notwithstanding anything to the contrary contained in this
Section 2.5 or any other provision in this Agreement, if on any Business Day the
aggregate outstanding amount of Principal shall exceed the Borrowing Base, the
Borrower shall contribute Eligible Contracts or remit to the Deal Agent a
payment, no later than the close of business of the Deal Agent on the next
succeeding Business Day, in such amount as may be necessary so that the
outstanding Principal is an amount less than or equal to the Borrowing Base.
Section 2.6 Collections and Allocations.
----------------------------
(a) Collections. The Servicer shall transfer, or cause to be
transferred, all Collections on deposit in the form of available funds in the
Lock-Box Account to the Collection Account by the close of business on the
Business Day such Collections are received in the Lock-Box Account. The Servicer
shall promptly (but in no event later than two Business Days after the receipt
thereof) deposit all Collections received directly by it in the Collection
Account. The Servicer shall make such deposits or payments on the date indicated
therein by electronic funds transfer through the automated clearing house
system, or by wire transfer, in immediately available funds.
(b) Servicer Deposit. On the Closing Date, the Servicer will
deposit (in immediately available funds) into the Collection Account all
Collections received after the Cut Off Date and through and including the
Closing Date, in respect of Contracts included in the Collateral.
(c) Excluded Amounts. The Servicer may withdraw from the
Collection Account any Collections constituting Excluded Amounts if the Servicer
has, prior to such withdrawal, delivered to the Deal Agent a report setting
forth the calculation of such Excluded Amounts in a format reasonably
satisfactory to the Deal Agent.
28
Section 2.7 Payments, Computations, Etc.
----------------------------
(a) Unless otherwise expressly provided herein, all amounts to
be paid or deposited by the Borrower or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m.
(Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the Agent's Account. The
Borrower shall, to the extent permitted by law, pay to the Secured Parties
interest on all amounts not paid or deposited when due hereunder at 1% per annum
above the Base Rate, payable on demand; provided, however, that such interest
rate shall not at any time exceed the maximum rate permitted by applicable law.
Such interest shall be retained by the Deal Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date for
distribution by the Deal Agent of such overdue amount to the Secured Parties, in
which case such interest accruing after such date shall be for the account of,
and distributed by the Deal Agent to the Secured Parties. All computations of
interest and all computations of Interest and other fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
(b) Whenever any payment hereunder 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, interest or any fee payable
hereunder, as the case may be.
(c) If the Loan requested by the Borrower pursuant to Section
2.2 is not, for any reason whatsoever related to a default or nonperformance by
the Borrower, made or effectuated, as the case may be, on the date specified
therefor, the Borrower shall indemnify such Lender against any reasonable loss,
cost or expense incurred by such Lender, including, without limitation, any loss
(including loss of anticipated profits, net of anticipated profits in the
reemployment of such funds in the manner determined by such Lender), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Loan.
Section 2.8 Optional Prepayment.
--------------------
Upon thirty (30) days written notice to the Deal Agent, as
agent for the Lender, the Borrower shall have the right to repay in whole or in
part the outstanding Principal, provided that all Hedge Transactions have been
terminated. On the Payment Date next succeeding any such notice, the Borrower
shall pay to the Deal Agent, as agent for the Lender, an amount equal to the sum
of (a) the Aggregate Unpaids, (b) all Interest accrued and to accrue, as
reasonably determined by the Deal Agent, and (c) all accrued and unpaid
Commitment Fees, Program Fees, Backup Servicing Fees, Custodial Fees, Increased
Costs, Taxes, Hedge Breaking Costs, Breakage Costs and any other amounts payable
by the Borrower hereunder or under or with respect to any Hedging Agreement, and
the proceeds of such purchase will be deposited into the Collection Account and
paid in accordance with Section 2.5(a).
29
Section 2.9 Fees.
-----
(a) Fidelity, in its individual capacity, shall pay to the
Deal Agent from the Collection Account on each Payment Date, monthly in arrears,
a fee (the "Program Fee") agreed to between Fidelity and the Deal Agent in the
Fee Letter.
(b) The Servicer shall be entitled to receive a fee (the
"Servicing Fee"), monthly in arrears in accordance with Sections 2.4(a) and
2.5(a), as applicable, which fee shall be equal to the product of (i) the
Servicing Fee Rate agreed to between the Servicer and the Deal Agent in the
Servicing Fee Letter and (ii) ADCB on the immediately preceding Determination
Date.
(c) The Backup Servicer shall be entitled to receive the
Backup Servicing Fee in accordance with Section Sections 2.4(a) and 2.5(a), as
applicable.
(d) The Collateral Custodian shall be entitled to receive the
Custodial Fee in accordance with Sections Section 2.4(a) and 2.5(a), as
applicable.
(e) The Borrower shall pay to the Deal Agent, on the Closing
Date, the Structuring Fee in immediately available funds.
Section 2.10 Increased Costs; Capital Adequacy; Illegality.
----------------------------------------------
(a) If either (i) the introduction of or any change
(including, without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any law or regulation or
(ii) the compliance by a Lender or any Affiliate thereof (each of which, an
"Affected Party") with any guideline or request from any central bank or other
governmental agency or authority (whether or not having the force of law), (A)
shall subject an Affected Party to any Tax (except for Taxes on the overall net
income of such Affected Party or its branch) with respect to the Loan or the
Collateral, or any right to make the Loan hereunder, or on any payment made
hereunder or (B) shall impose, modify or deem applicable any reserve requirement
(including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement,
if any, included in the determination of Interest), special deposit or similar
requirement against assets of, deposits with or for the amount of, or credit
extended by, any Affected Party or (C) shall impose any other condition
affecting the Loan or the Collateral or a Lender's rights hereunder, the result
of which is to increase the cost to any Affected Party or to reduce the amount
of any sum received or receivable by an Affected Party under this Agreement,
then within ten days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Borrower shall pay directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in
the interpretation of any law, guideline, rule, regulation, directive or request
or (ii) compliance by any Affected Party with any law, guideline, rule,
regulation, directive or request from any central bank or other governmental
authority or agency (whether or not having the force of law), including, without
limitation, compliance by an Affected Party with any request or directive
30
regarding capital adequacy, has or would have the effect of reducing the rate of
return on the capital of any Affected Party as a consequence of its obligations
hereunder or arising in connection herewith to a level below that which any such
Affected Party could have achieved but for such introduction, change or
compliance (taking into consideration the policies of such Affected Party with
respect to capital adequacy) by an amount deemed by such Affected Party to be
material, then from time to time, within ten days after demand by such Affected
Party (which demand shall be accompanied by a statement setting forth the basis
for such demand), the Borrower shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction.
(c) If as a result of any event or circumstance similar to
those described in clauses (a) or (b) of this section, any Affected Party is
required to compensate a bank or other financial institution providing liquidity
support, credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of Purchases
hereunder, then within ten days after demand by such Affected Party, the
Borrower shall pay to such Affected Party such additional amount or amounts as
may be necessary to reimburse such Affected Party for any amounts paid by it.
(d) In determining any amount provided for in this section,
the Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this section shall submit to the Borrower a
certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error.
(e) If a Lender shall notify the Deal Agent that a Eurodollar
Disruption Event as described in clause (i) of the definition of "Eurodollar
Disruption Event" has occurred, the Deal Agent shall in turn so notify the
Borrower, whereupon all Principal in respect of which Interest accrues at the
Adjusted Eurodollar Rate shall immediately be converted into Principal in
respect of which Interest accrues at the Base Rate.
Section 2.11 Taxes.
------
(a) All payments made by an Obligor in respect of a Contract
and all payments made by the Borrower or the Servicer under this Agreement will
be made free and clear of and without deduction or withholding for or on account
of any Taxes, unless such withholding or deduction is required by law. In such
event, the Borrower or the Servicer (as the case may be) shall pay to the
appropriate taxing authority any such Taxes required to be deducted or withheld
and the amount payable to each Lender or the Deal Agent (as the case may be)
will be increased (such increase, the "Additional Amount") such that every net
payment made under this Agreement after deduction or withholding for or on
account of any Taxes (including, without limitation, any Taxes on such increase)
is not less than the amount that would have been paid had no such deduction or
withholding been deducted or withheld. The foregoing obligation to pay
Additional Amounts, however, will not apply with respect to (i) net income or
franchise taxes imposed on a Lender or the Deal Agent, respectively, with
respect to payments required to be made by the Borrower or Servicer under this
Agreement, by a taxing jurisdiction in which such Lender or Deal Agent is
31
organized, conducts business or is subject to Taxes on a net income basis as of
the Closing Date (as the case may be), or (ii) a participant to the extent such
withholding or deduction was required as of the date of the participation. If a
Lender or the Deal Agent pays any Taxes in respect of which the Borrower is
obligated to pay Additional Amounts under this Section 2.11(a), the Borrower
shall promptly reimburse such Lender or Deal Agent in full.
(b) The Borrower will indemnify each Lender and the Deal Agent
for the full amount of Taxes in respect of which the Borrower is required to pay
Additional Amounts (including, without limitation, any Taxes imposed by any
jurisdiction on such Additional Amounts) paid by such Lender or the Deal Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto; provided, however, that
such Lender or the Deal Agent, as appropriate, making a demand for indemnity
payment shall provide the Borrower, at its address set forth under its name on
the signature pages hereof, with a certificate from the relevant taxing
authority or from a responsible officer of such Lender or the Deal Agent stating
or otherwise evidencing that response such Lender or the Deal Agent has made
payment of such Taxes and will provide a copy of or extract from documentation,
if available, furnished by such taxing authority evidencing assertion or payment
of such Taxes. This indemnification shall be made within ten days from the date
the Lender or the Deal Agent (as the case may be) makes written demand therefor.
(c) Within 30 days after the date of any payment by the
Borrower of any Taxes, the Borrower will furnish to the Deal Agent, at its
address set forth under its name on the signature pages hereof, appropriate
evidence of payment thereof.
(d) If a Lender or a participant with respect to this
Agreement is not created or organized under the laws of the United States or a
political subdivision thereof, such Lender or participant shall, to the extent
that it may then do so under applicable laws and regulations, deliver to the
Borrower with a copy to the Deal Agent (i) within 15 days after the date hereof,
or, if later, the date on which such Lender or participant becomes a Lender
hereof or participant or with respect hereto two (or such other number as may
from time to time be prescribed by applicable laws or regulations) duly
completed copies of IRS Form W-8, Form 4224 or Form 1001 (or any successor forms
or other certificates or statements which may be required from time to time by
the relevant United States taxing authorities or applicable laws or
regulations), as appropriate, to permit the Borrower to make payments hereunder
for the account of such Lender or participant, as the case may be, without
deduction or withholding of United States federal income or similar Taxes and
(ii) upon the obsolescence of or after the occurrence of any event requiring a
change in, any form or certificate previously delivered pursuant to this Section
2.11(d), copies (in such numbers as may from time to time be prescribed by
applicable laws or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under applicable laws or
regulations to permit the Borrower to make payments hereunder for the account of
such Lender or participant, without deduction or withholding of United States
federal income or similar Taxes. If a Lender or participant is created or
organized under the laws of the United States or a political subdivision
thereof, but is not a corporation, such Lender or participant shall, to the
extent that it may then do so under applicable laws and regulations, deliver to
32
the Borrower with a copy to the Deal Agent within 15 days of the date hereof,
or, if later, the date such Lender or participant becomes a Lender hereof or
becomes a participant or with respect hereto, a duly competed IRS Form W-9. The
Lender shall notify the Borrower of any participants with respect to its rights
under this Agreement.
(e) For any period with respect to which a Lender, or
participant, or the Deal Agent has failed to provide the Borrower with the
appropriate form, certificate or statement described in clause (d) of this
section (other than if such failure is due to a change in law occurring after
the date of this Agreement), the Deal Agent or such Lender or participant, as
the case may be, shall not be entitled to indemnification under clauses (a) or
(b) of this section with respect to any Taxes.
(f) Within 30 days of the written request of the Borrower
therefor, the Deal Agent and the Lenders and participants, as appropriate, shall
execute and deliver to the Borrower such certificates, forms or other documents
which can be furnished consistent with the facts and which are reasonably
necessary to assist the Borrower in applying for refunds of Taxes remitted
hereunder; provided, however, that the Deal Agent, the Lenders and participants
shall not be required to deliver such certificates, forms or other documents if
in their respective sole discretion it is determined that the deliverance of
such certificate, form or other document would have a material adverse affect on
the Deal Agent, any Lender or participant; and provided further, however, that
the Borrower shall reimburse the Deal Agent or any such Lender or participant
for any reasonable expenses incurred in the delivery of such certificate, form
or other document.
(g) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Lenders in connection with this Agreement or the funding or maintenance of the
Loan hereunder, the Lenders are required to compensate a bank or other financial
institution in respect of Taxes under circumstances similar to those described
in this section then within ten days after demand by the Lenders, the Borrower
shall pay to the Lenders such additional amount or amounts as may be necessary
to reimburse the Lenders for any amounts paid by them.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this section shall survive the termination of this Agreement.
Section 2.12 Assignment of the Purchase Agreement.
-------------------------------------
The Borrower hereby represents, warrants and confirms to the
Deal Agent that the Borrower has assigned to the Deal Agent, for the ratable
benefit of the Secured Parties hereunder, all of the Borrower's right and title
to and interest in the Purchase Agreement. The Borrower confirms that following
an Event of Default the Deal Agent shall have the sole right to enforce the
Borrower's rights and remedies under the Purchase Agreement for the benefit of
the Secured Parties, but without any obligation on the part of the Deal Agent,
the Lenders or any of their respective Affiliates, to perform any of the
obligations of the Borrower under the Purchase Agreement. The Borrower further
confirms and agrees that such assignment to the Deal Agent shall terminate upon
33
the Collection Date; provided, however, that the rights of the Deal Agent and
the Secured Parties pursuant to such assignment with respect to rights and
remedies in connection with any indemnities and any breach of any
representation, warranty or covenants made by the Originator pursuant to the
Purchase Agreement, which rights and remedies survive the termination of the
Purchase Agreement, shall be continuing and shall survive any termination of
such assignment.
Section 2.13 Substitution of Contracts.
--------------------------
On any day prior to the occurrence of the Termination Date,
the Borrower may, and upon the request of the Deal Agent shall, subject to the
conditions set forth in this Section 2.13, replace any Contract (a) which is a
Defaulted Contract, (b) which is subject to a Warranty Event, or (c) in respect
of which the Obligor thereunder has requested the rewriting and/or restructuring
of such Contract with one or more other Contracts (each, a "Substitute
Contract"), provided that no such replacement shall occur unless each of the
following conditions is satisfied as of the date of such replacement and
substitution:
(i) the Borrower has previously recommended to the Deal Agent
(with a copy to the Collateral Custodian) in writing that the Contract to be
replaced should be replaced (each, a "Replaced Contract");
(ii) each Substitute Contract is an Eligible Contract on the
date of substitution;
(iii) after giving effect to any such substitution, the
aggregate outstanding Principal does not exceed the lesser of the (i) Borrowing
Base and (ii) the Credit Limit;
(iv) the aggregate Discounted Contract Balance of such
Substitute Contracts shall be equal to or greater than the aggregate Discounted
Contract Balances of Contracts being replaced;
(v) such Substitute Contracts, at the time of substitution by
the Borrower, shall have approximately the same weighted average life as the
replaced Contracts;
(vi) all representations and warranties of the Borrower
contained in Sections 4.1 and 4.2 shall be true and correct on and as of the
date of substitution of any such Substitute Contract;
(vii) the substitution of any Substitute Contract does not
cause an Event of Default to occur; and
(viii) the Borrower shall deliver to the Deal Agent on the
date of such substitution a certificate of a Responsible Officer certifying that
each of the foregoing is true and correct as of such date.
34
In addition, the Borrower shall deliver to the Collateral Custodian the related
Contract File as required by Section 3.2. In connection with any such
substitution, the Deal Agent as agent for the Secured Parties shall,
automatically and without further action, be deemed to release to the Borrower,
free and clear of any Lien created pursuant to this Agreement, all of the right,
title and interest of the Deal Agent as agent for the Secured Parties in, to and
under such Replaced Contract, and the Deal Agent as agent for the Secured
Parties shall be deemed to represent and warrant that it has the corporate
authority and has taken all necessary corporate action to accomplish such
transfer, but without any other representation and warranty, express or implied.
Any right of the Deal Agent as agent for the Secured Parties to substitute any
Contract in the Collateral pursuant to this Section 2.13 shall be in addition
to, and without limitation of, any other rights and remedies that the Deal Agent
as agent for the Secured Parties or any Secured Party may have to require the
Borrower or the Servicer, as applicable, to substitute for, or accept release
of, any Contract pursuant to the terms of this Agreement.
ARTICLE III
CONDITIONS OF THE ADVANCE
Section 3.1 Conditions Precedent to the Loan.
---------------------------------
The advance of the Loan is subject to the condition precedent
that the Deal Agent shall have received on or before the Closing Date the items
listed in Schedule I, each (unless otherwise indicated) dated such date, in form
and substance satisfactory to the Deal Agent and the Lenders. The advance of the
Loan and the right of the Servicer to remit Collections to the Borrower pursuant
to Section 2.4 (each, a "Transaction") shall be subject to the further
conditions precedent that:
(a) with respect to the advance of the Loan, the Servicer
shall have delivered to the Deal Agent, on or prior to the Closing Date in form
and substance satisfactory to the Deal Agent:
(i) a Borrowing Certificate and Assignment (Exhibit E), and
(ii) a Notice of Borrowing (Exhibit F); and
(b) on the date of such Transaction the following statements
shall be true and the Borrower shall be deemed to have certified that:
(i) The representations and warranties contained in Sections
4.1 and 4.2 are true and correct on and as of such day as though made
on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Transaction which constitutes an Event of Default,
(iii) On and as of such day, after giving effect to such
Transaction, (A) the outstanding Principal does not exceed the lesser
of (I) the Borrowing Base and (II) the Credit Limit, and (B) the
Overcollateralization shall not be less than the Minimum
Overcollateralization,
35
(iv) On and as of such day, the Borrower and the Servicer each
has performed all of the agreements contained in this Agreement to be
performed by such person at or prior to such day,
(v) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
the Loan or remittance of Collections in accordance with the provisions
hereof,
(vi) Copies of all amendments to the Stock Purchase Agreement,
its exhibits, the disclosure letter, or related transaction documents
have been furnished to the Deal Agent,
(vii) Xxxxxx Xxxxxxxx has furnished the Deal Agent audit
results with respect to stratification and pool confirmation, an oral
verification with lessees, a tape to file the audit, and an annualized
loss analysis,
(viii) For the purpose of consummating the acquisition of the
stock of the Originator by Fidelity, the Deal Agent has received
confirmation that an amount equal to or greater than the excess of (A)
the "Purchase Price" as defined in the Section 2.2 of the Stock
Purchase Agreement over (B) Principal as of the Closing Date was
provided by RAI to Fidelity on or before the Closing Date in the form
of subordinated debt as evidenced by the fully executed Subordinated
Promissory Note and the fully executed Unsecured Promissory Note, and
both such notes are in the physical possession of the Deal Agent, and
(ix) No events of default in transaction documents relating to
JLA Funding Corporation II or JLA Funding Corporation III have occurred
and are continuing;
(c) on the date of such Transaction all documents executed in
connection with the acquisition by Fidelity of the stock of the Originator shall
be in form and substance satisfactory to the Deal Agent, including, without
limitation:
(i) an amendment to the Stock Purchase Agreement in the form
of the draft of Amendment No. 3 to the Stock Purchase Agreement
previously furnished to the Deal Agent and its counsel,
(ii) the Escrow Agreement, in the form of Exhibit 7.1(h) to
the Stock Purchase Agreement, executed by an escrow agent which is a
responsible financial institution acceptable to the Deal Agent,
36
(iii) opinions of counsel delivered on the Closing Date
substantially in the form of the drafts previously furnished to the
Deal Agent and its counsel, with such changes therein as shall be
requested by or acceptable to the Deal Agent,
(iv) documents evidencing a permanent waiver of the events of
default in the Sale and Servicing Agreement and Indenture of JLA
Funding Corporation II, a Delaware corporation, resulting from ultimate
parent bankruptcy proceedings,
(v) documents evidencing a permanent waiver of the events of
default in the Sale and Servicing Agreement and Indenture of JLA
Funding Corporation III, a Delaware corporation, resulting from
ultimate parent bankruptcy proceedings, and
(vi) documents evidencing a waiver of the event of default in
the Sale and Servicing Agreement and Indenture of JLA Funding
Corporation II with respect to the average default calculation for a
period acceptable to the Deal Agent which shall not be less than three
months; and
(d) on the date of such Transaction, the Deal Agent shall have
received such other approvals, opinions or documents as the Deal Agent may
reasonably require.
Section 3.2 Delivery of Contract Files.
---------------------------
As a condition subsequent to the advance of the Loan or
substitution of Substitute Contracts made hereunder, the Borrower shall deliver
to the Collateral Custodian, no less than (i) two Business Days prior to such
advance or (ii) five Business Days prior to such substitution, the related
Contract Files; provided, however, the Borrower shall deliver to the Collateral
Custodian no less than one Business Day the Contract Files related to Eligible
Contracts contributed to cause the Overcollateralization to equal or exceed the
Minimum Overcollateralization.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Borrower.
-----------------------------------------------
The Borrower represents and warrants as follows:
(a) Organization and Good Standing. The Borrower is a limited
liability company duly organized and validly existing in good standing under the
laws of the State of Delaware, and has full limited liability company power,
authority and legal right to own or lease its properties and conduct its
business as such properties are presently owned or leased and as such business
is presently conducted, and to execute, deliver and perform its obligations
under this Agreement and the Purchase Agreement.
37
(b) Due Qualification. The Borrower is duly qualified to do
business and is in good standing as a limited liability company, and has
obtained or will obtain all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on its ability to perform its
obligations hereunder.
(c) Due Authorization. The execution and delivery of this
Agreement, the Purchase Agreement, and the Fee Letter, and the consummation of
the transactions provided for herein and therein have been duly authorized by
the Borrower by all necessary limited liability company action on the part of
the Borrower.
(d) No Conflict. The execution and delivery of this Agreement,
the Purchase Agreement, and the Fee Letter, the performance by the Borrower of
the transactions contemplated hereby and thereby and the fulfillment of the
terms hereof and thereof will not conflict with or result in any breach of any
of the material terms and provisions of, and will not constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the
Borrower is a party or by which it or any of its property is bound.
(e) No Violation. The execution and delivery of this
Agreement, the Purchase Agreement, and the Fee Letter, the performance of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not conflict with or violate, in any material respect,
any Requirements of Law applicable to the Borrower.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Borrower, threatened against the
Borrower, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement, the Purchase Agreement or the Fee Letter, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, the
Purchase Agreement or the Fee Letter, or (iii) seeking any determination or
ruling that could reasonably be expected to be adversely determined, and if
adversely determined, would materially and adversely affect the performance by
the Borrower of its obligations under this Agreement, the Purchase Agreement or
the Fee Letter.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Borrower of this
Agreement, the Purchase Agreement, and the Fee Letter, the performance by the
Borrower of the transactions contemplated by this Agreement, the Purchase
Agreement, and the Fee Letter, and the fulfillment of the terms hereof and
thereof by the Borrower, have been obtained.
(h) Solvency. The Borrower is Solvent and transactions
contemplated by this Agreement, the Purchase Agreement, and the Fee Letter do
not and will not impair such Solvent state of the Borrower.
38
(i) Selection Procedures; Credit and Collection Policy. No
procedures believed by the Borrower to be materially adverse to the interests of
the Lenders were utilized by the Borrower in identifying and/or selecting the
Contracts in the Collateral. In addition, each Contract shall have been
underwritten in accordance with and satisfy the standards of any Credit and
Collection Policy which has been established by the Borrower or the Originator
and is then in effect. Such Credit and Collection Policy or procedure may be
amended from time to time in the Borrower's or the Originator's normal course of
business provided that the Borrower shall not materially change such credit and
collection policy or procedure without the prior written consent of the Deal
Agent.
(j) Taxes. The Borrower has filed or caused to be filed all
Tax returns which, to its knowledge, are required to be filed. The Borrower has
paid or made adequate provisions for the payment of all Taxes and all
assessments made against it or any of its property (other than any amount of Tax
the validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of the Borrower), and no Tax lien has been filed and, to
the Borrower's knowledge, no claim is being asserted, with respect to any such
Tax, fee or other charge.
(k) Agreements Enforceable. This Agreement, the Purchase
Agreement, and the Fee Letter constitute the legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with their
respective terms, except as such enforceability may be limited by Insolvency
Laws and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(l) Exchange Act Compliance. The proceeds of the Loan will not
be used by the Borrower to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(m) No Liens. Each Asset, together with the Contract related
thereto, shall, at all times, be owned by the Borrower free and clear of any
Adverse Claim except as provided herein, and upon the advance of the Loan, any
Substitution, or remittance of Collections, the Secured Parties shall acquire
(subject to recordation where necessary) a valid and perfected first priority
undivided ownership interest in each Asset then existing or thereafter arising
and Collections with respect thereto, free and clear of any Adverse Claim except
as provided hereunder. No effective financing statement or other instrument
similar in effect covering any Asset or Collections with respect thereto shall
at any time be on file in any recording office except such as may be filed in
favor of the Deal Agent relating to this Agreement.
(n) Reports Accurate. No Monthly Report (if prepared by the
Borrower, or to the extent that information contained therein is supplied by the
Borrower), information, exhibit, financial statement, document, book, record or
report furnished or to be furnished by the Borrower to the Deal Agent or a
Lender in connection with this Agreement is or will be inaccurate in any
material respect as of the date it is or shall be dated or (except as otherwise
disclosed to the Deal Agent or such Lender, as the case may be, at such time) as
of the date so furnished, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
39
(o) Location of Offices. The principal place of business and
chief executive office of the Borrower and the office where the Borrower keeps
all the Records are located at the address of the Borrower referred to in
Section 11.2 hereof (or at such other locations as to which the notice and other
requirements specified in Section 5.2(m) shall have been satisfied).
(p) Lock-Boxes. The names and addresses of all the Lock-Box
Banks, together, with the account numbers of the Lock-Box Accounts of the
Originator at such Lock-Box Banks and the names, addresses and account numbers
of all accounts to which Collections of the Assets outstanding before the
advance hereunder has been made, are specified in Schedule II (which shall be
deemed to be amended in respect of terminating or adding any Lock-Box Account or
Lock-Box Bank upon satisfaction of the notice and other requirements specified
in respect thereof).
(q) Tradenames. Except as described in Schedule III, the
Borrower has no trade names, fictitious names, assumed names or "doing business
as" names or other names under which it has done or is doing business.
(r) Purchase Agreement. The Purchase Agreement is the only
agreement pursuant to which the Borrower purchases Assets.
(s) Value Given. (i) The Borrower shall have given reasonably
equivalent value to the Originator in consideration for the transfer to the
Borrower of the Assets under the Purchase Agreement, (ii) no such transfer shall
have been made for or on account of an antecedent debt owed by the Originator to
the Borrower, (iii) no such transfer is or may be voidable or subject to
avoidance under any section of the Bankruptcy Code, and (iv) no event or
circumstance has occurred that would constitute an Event of Default pursuant to
Section 7.1 hereof.
(t) Accounting. The Borrower accounts for the transfers to it
from the Originator of interests in Assets and Collections under the Purchase
Agreement as sales of such Assets and for the Loan as debt of the Borrower in
its books, records and financial statements, in each case consistent with GAAP
and with the requirements set forth herein.
(u) Separate Entity. The Borrower is operated as an entity
with assets and liabilities distinct from those of the Originator and any
Affiliates thereof (other than the Borrower), and the Borrower hereby
acknowledges that the Deal Agent and the Secured Parties are entering into the
transactions contemplated by this Agreement in reliance upon the Borrower's
identity as a separate legal entity from the Originator and from each such other
Affiliate of the Originator.
(v) Security Interest. The Borrower has granted a security
interest (as defined in the UCC) to the Deal Agent, as agent for the Secured
Parties, in the Assets and Collections, which is enforceable in accordance with
applicable law upon execution and delivery of this Agreement. Upon the filing of
UCC-1 financing statements naming the Deal Agent as secured party and the
Borrower as debtor, the Deal Agent, as agent for the Secured Parties, shall have
a first priority perfected security interest in the Assets and Collections
(except for any Permitted Liens). All filings (including, without limitation,
such UCC filings) as are necessary in any jurisdiction to perfect the interest
of the Deal Agent as agent for the Secured Parties, in the Collateral have been
made.
40
(w) Investments. The Borrower does not own or hold directly or
indirectly, any Investment.
(x) Investment Company Act. The Borrower is not, and is not
controlled by, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(y) Special Purpose Entity.
(i) The Borrower shall respect and appropriately document the
separate and independent nature of its activities, as compared with
those of any other Person, take all reasonable steps to continue its
identity as a separate legal entity, and make it apparent to Persons
that the Borrower is an entity with assets and liabilities distinct
from those of any other Person. Without limiting the foregoing, the
Borrower:
(A) shall maintain a principal executive and
administrative office through which its business is conducted
separately from those of any other Person, and, to the extent
that the Borrower and any other Persons have offices in
contiguous space, there shall be fair and appropriate
allocation of overhead costs and expenses related to services
performed by any employee of an Affiliate among them, and each
such entity shall bear its fair share of such expenses and
expenses relating to services;
(B) shall engage only in those transactions described in
Section 3.1 of its limited liability company agreement and
matters necessarily incident thereto;
(C) shall have stationery and other business forms and a
mailing address and a telephone number separate from that of
any other Person;
(D) shall maintain an arm's-length relationship with its
Affiliates and enter into transactions with Affiliates only on
commercially reasonable terms, including without limitation,
ensuring that, to the extent that it jointly contracts with
any of its members or Affiliates to do business with vendors
or service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such
entities and that each such entity shall bear its fair share
of such costs and shall ensure that, to the extent that the
Borrower contracts or does business with vendors or service
providers where the goods and services provided are partially
for the benefit of any other Person, the costs incurred in so
doing shall be fairly allocated to or among such entities for
whose benefit the goods and services are provided and that
each such entity shall bear its fair share of such costs;
41
(E) shall at all times be adequately capitalized in light
of its contemplated business, shall at all times provide for
its own operating expenses and liabilities from its own funds,
shall not allow its funds to be diverted to any other Person
or for other than the use of the Borrower, and shall not,
except as may be expressly permitted by agreements of the
Borrower, allow its funds to be commingled with those of any
Affiliate of the Borrower or any other Person;
(F) shall maintain its assets and transactions separately
from those of any other Person, reflect such assets and
transactions in financial statements separate and distinct
from those of any other Person, evidence such assets and
transactions by appropriate entries in books and records
separate and distinct from those of any other Person and to
the extent that the financial statements or the books and
records of the Borrower are consolidated with those of any
other Person, the fact of such consolidation shall be noted in
a footnote to such Person's financial statements or books and
records, as the case may be;
(G) shall ensure that all material transactions between
the Borrower and any of its Affiliates shall be only on an
arm's-length basis;
(H) shall hold itself out to the public under its own name
as a legal entity separate and distinct from any other Person,
shall act solely in its own name and through its own
authorized officers and agents, and no Affiliate of the
Borrower shall be appointed to act as agent by the Borrower,
except as may be expressly permitted by any written agreements
of the Borrower;
(I) shall ensure that decisions with respect to its
business and daily operations shall be independently made by
the Borrower (although the officer making any particular
decision may also be an officer or director of any Affiliate
of the Borrower) and shall not be dictated by an Affiliate of
the Borrower;
(J) shall have, if appropriate, UCC-1 financing
statements, with respect to all assets purchased from any
other Person;
(K) shall file its own tax returns or, if it is a member
of a consolidated group, will join in the consolidated return
of such group as a separate member thereof and shall ensure
that any financial reports required of the Borrower shall
comply with GAAP and shall be issued separately from, but may
be consolidated with, any reports prepared for any of its
Affiliates;
(L) shall ensure that any tax payments made on the
Borrower's behalf are allocated appropriately;
(M) shall comply with all provisions of its limited
liability company agreement and shall observe all necessary,
appropriate and customary limited liability formalities;
42
(N) shall maintain its bank accounts separate from any
other Person; and
(O) shall correct any known misunderstanding regarding its
separate identity.
Failure to comply with any of the foregoing covenants shall not affect
the status of the Borrower as a separate legal entity.
(ii) The Borrower shall not:
(A) incur any indebtedness for borrowed money, or assume
or guaranty any indebtedness for borrowed money of any other
entity, other than (I) any indebtedness incurred in connection
with the sale or financing of leases to any third-party
purchaser or lender, including, without limitation, the Loan,
(II) any indebtedness to the Originator or any Affiliate
thereof incurred in connection with the acquisition of Leases,
which indebtedness to the Originator or such Affiliate shall
be subordinated to all other obligations of the Borrower,
(III) any indebtedness incurred in connection with the entry
by the Borrower into interest rate swap, hedge and other
related agreements, as set forth in Section 3.1 of its limited
liability company agreement, and (IV) any trade payables
incurred in the ordinary cause of its business as set forth in
Section 3.1 of its limited liability company agreement;
(B) direct or participate in the management of any other
Person's operations, and no other Person shall be permitted to
direct or participate in the management of the Borrower;
(C) hold itself out as having agreed to pay, or as being
liable, primarily or secondarily, for any obligations of any
other Person, except as may be expressly permitted in any
written agreements of the Borrower;
(D) become liable as a guarantor or otherwise with respect
to any debt or contractual obligation of any other Person;
(E) make any payment or distribution of assets with
respect to any obligation of any other Person or grant any
lien, security interest or encumbrance on any of its assets to
secure any obligation of any other Person;
(F) make loans, advances or otherwise extend credit to any
other Person, except on an arm's-length basis, and shall not
permit any Affiliate of the Borrower to advance funds to the
Borrower or otherwise supply funds to, or guaranty debts of,
the Borrower, except as may be expressly permitted by any
written agreements of the Borrower;
43
(G) fail to maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person;
(H) acquire the obligations or securities of its
Affiliates;
(I) shall not identify itself as a division of any other
Person;
(J) file or consent to the filing of any petition to take
advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment
for the benefit of creditors, except pursuant to Section
7.3(b) of its limited liability company agreement;
(K) transfer any direct or indirect ownership interest in
the Borrower such that the transferee owns, in the aggregate
with the ownership interests of its Affiliates and family
members in the Borrower, more than a 49% interest in the
Borrower, unless such transfer is accompanied by the delivery
of an acceptable non-consolidation opinion to the Lender and
to any applicable Rating Agency concerning, as applicable, the
Borrower, the new transferee and/or their respective owners;
(L) acquire the obligations or securities of its
Affiliates or owners, including partners, members or
shareholders, as applicable;
(M) buy or hold evidence of indebtedness issued by any
other person or entity (other than cash and investment-grade
securities);
(N) identify itself as a division of any other person or
entity; and
(O) take or refrain from taking, as applicable, each of
the activities specified in the assumptions set forth in the
opinions of Xxxxxx, Xxxxx & Xxxxxxx LLP, delivered on the
Closing Date as a condition to the Loan.
Failure to comply with any of the foregoing covenants shall not affect
the status of the Borrower as a separate legal entity.
(iii) The Borrower shall have an Independent Manager, and the
Independent Manager cannot be removed without the prior appointment of
a successor Independent Manager. In addition, as long as the Loan is
outstanding, upon the bankruptcy, dissolution or withdrawal of the
Independent Manager or upon any event that causes the Independent
Manager to cease to be the Independent Manager, a successor Independent
Manager shall be appointed by the Borrower's managing member promptly
thereafter. Any such appointment of a successor Independent Manager
shall require the prior consent of the Deal Agent, and such consent
shall not be unreasonably withheld. As long as the Loan is outstanding,
the Borrower and any member, manager or other Person on behalf of the
Borrower, may take the following actions only with the prior written
approval of the Independent Manager (including, with respect to the
Independent Manager, the approval of its two Independent Directors):
44
(A) make an assignment for the benefit of creditors;
(B) file a voluntary petition in bankruptcy or make or
commence an insolvency filing or proceeding or any similar
filing or proceeding;
(C) file a petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or
regulation;
(D) file an answer or other pleading admitting or failing
to contest the material allegations of a petition filed
against the Borrower in any proceeding of the type described
in subclauses (A) through (C) of this Subsection (iii);
(E) seek, consent to, or acquiesce in the appointment of a
trustee, receiver or liquidator of the Borrower or of all or
any substantial part of the Borrower's properties;
(F) amend the Borrower's limited liability company
agreement;
(G) voluntarily dissolve and wind up, or consolidate or
merge the Borrower or sell all or substantially all of the
assets of the Borrower;
(H) admit in writing its inability to pay its debts
generally as they become due or take any action in furtherance
of the foregoing; or
(I) engage in any business activity not set forth in
Section 3.1 of its limited liability company agreement.
To the fullest extent permitted by law, the Independent Manager shall
not be guilty of breaching any fiduciary duty to any Member by refusing
to consent to any of the above listed actions, and
(iv) Notwithstanding anything in this Agreement, as long as
the Loan is outstanding, (A) the Borrower may not take any of the
actions set forth in subsection (G) of Subparagraph (ii) of this
Section, and (B) Sections 3.1, 7.1, 7.2, 7.3, 8.1, Article IX and
Article XI of the Borrower's limited liability company agreement, in
effect as of the Closing Date, may not be amended.
(z) Confirmation from the Originator. The Borrower has
received in writing from the Originator confirmation that, so long as the
Borrower is not "insolvent" within the meaning of the Bankruptcy Code, the
Originator will not cause the Borrower to file a voluntary petition under the
Bankruptcy Code or any other bankruptcy or insolvency laws. Each of the Borrower
and the Originator is aware that in light of the circumstances described in the
preceding sentence and other relevant facts, the filing of a voluntary petition
under the Bankruptcy Code for the purpose of making any Asset in the Borrowing
Base or any other assets of the Borrower available to satisfy claims of the
creditors of the Originator would not result in making such assets available to
satisfy such creditors under the Bankruptcy Code.
45
(aa) Accuracy of Representations and Warranties. Each representation or
warranty by the Borrower contained herein or in any certificate or other
document furnished by the Borrower pursuant hereto or in connection herewith is
true and correct in all material respects.
The representations and warranties set forth in this section shall survive the
Grant of the Assets to the Deal Agent as agent for the Secured Parties. Upon
discovery by the Borrower, the Servicer, any Secured Party, the Liquidity Agent
or the Deal Agent of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the others.
Section 4.2 Representations and Warranties of Borrower
-------------------------------------------
Relating to the Agreement and the Contracts.
--------------------------------------------
The Borrower hereby represents and warrants to the Deal Agent,
each Secured Party, the Liquidity Agent and each Investor that, as of the
Closing Date:
(a) Binding, Obligation, Valid Transfer and Security Interest.
----------------------------------------------------------
(i) This Agreement and the Purchase Agreement each constitute
legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with its terms, except as such
enforceability may be limited by Insolvency Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(ii) This Agreement constitutes a Grant in all Collateral to
the Deal Agent as agent for the Secured Parties. Upon the filing of the
financing statements described in Section 6.8(c), the Deal Agent as
agent for the Secured Parties shall have a first priority perfected
security interest in all Collateral, subject only to Permitted Liens.
Neither the Borrower nor any Person claiming through or under Borrower
shall have any claim to or interest in the Collection Account and,
except for the interest of Borrower in such property, as a debtor for
purposes of the UCC.
(b) Eligibility of Contracts. As of the Closing Date, (i)
Schedule I to this Agreement and the information contained in the Borrowing
Certificate delivered pursuant to Section 2.2 is an accurate and complete
listing in all material respects of all the Contracts in the Collateral as of
the Closing Date and the information contained therein with respect to the
identity of such Contracts and the amounts owing thereunder is true and correct
in all material respects as of the Cut Off Date, (ii) each such Contract is an
Eligible Contract, (iii) each such Contract and the related Equipment or Vehicle
is free and clear of any Lien of any Person (other than Permitted Liens) and in
compliance with all Requirements of Law applicable to the Borrower, and (iv)
with respect to each such Contract, all consents, licenses, approvals or
authorizations of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Borrower in
connection with the transfer of an interest in such Contract and the related
Equipment or Vehicle to the Deal Agent as agent for the Secured Parties have
been duly obtained, effected or given and are in full force and effect.
46
(c) Notice of Breach. The representations and warranties set
forth in this Section 4.2 shall survive the advance of the Loan and the Grant in
the Collateral to the Deal Agent as agent for the Secured Parties. Upon
discovery by the Borrower, the Servicer, any Secured Party, the Deal Agent, the
Liquidity Agent or any Investor of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the others. Failure by any Secured Party, the Deal
Agent, the Liquidity Agent or any Investor to give such notice shall not in any
manner effect, alter, modify or limit the rights and remedies of any such
Persons under this Agreement, the Fee Agreement, or otherwise.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
Section 5.1 General Covenants.
------------------
Until the date on which all Aggregate Unpaids have been
indefeasibly paid in full, the Borrower hereby covenants that:
(a) Compliance with Laws, Preservation of Corporate Existence.
The Borrower will comply in all material respects with all applicable laws,
rules, regulations and orders and preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges.
Section 5.2 Covenants of Borrower.
----------------------
The Borrower hereby covenants that:
(a) Contracts Not to be Evidenced by Instruments. The Borrower
will take no action to cause any Contract which is not, as of the Closing Date,
evidenced by an Instrument, to be so evidenced except in connection with the
enforcement or collection of such Contract.
(b) Security Interests. The Borrower will not sell, pledge,
assign or transfer to any other Person, or grant, create, incur, assume or
suffer to exist any Lien on any Contract in the Collateral or related Equipment
or Vehicle, whether now existing or hereafter transferred hereunder, or any
interest therein, and the Borrower will not sell, pledge, assign or suffer to
exist any Lien on its interest, if any, hereunder. The Borrower will promptly
notify the Deal Agent of the existence of any Lien on any Contract in the
Collateral or related Equipment or Vehicle and the Borrower shall defend the
right, title and interest of the Deal Agent as agent for the Secured Parties in,
to and under the Contracts in the Collateral and the related Equipment, against
all claims of third parties; provided, however, that nothing in this Section
5.2(b) shall prevent or be deemed to prohibit the Borrower from suffering to
exist Permitted Liens upon any of the Contracts in the Collateral or any related
Equipment or Vehicles.
47
(c) Delivery of Collections. The Borrower agrees to pay to the
Servicer promptly (but in no event later than two Business Days after receipt)
all Collections received by Borrower in respect of the Contracts in the
Collateral.
(d) Compliance with the Law. Borrower hereby agrees to comply
in all material respects with all Requirements of Law applicable to Borrower,
the Contracts and the Equipment.
(e) Distributions. The Borrower shall not declare or pay,
directly or indirectly, any dividend or make any other distribution (whether in
cash or other property) with respect to the profits, assets or capital of the
Borrower or any Person's interest therein, or purchase, redeem or otherwise
acquire for value any of its capital stock now or hereafter outstanding, except
that so long as no Event of Default has occurred and is continuing and no Event
of Default would occur as a result thereof or after giving effect thereto and
the Borrower would continue to be Solvent as a result thereof and after giving
effect thereto, the Borrower may declare and pay cash or stock dividends on its
capital stock.
(f) Separate Corporate Existence. The Borrower shall be in
compliance with the Special Purpose Entity requirements set forth in Section
4.1(y).
(g) Location of Borrower, Records; Instruments. The Borrower
(i) shall not move outside the Commonwealth of Pennsylvania, the location of its
chief executive office, without 30 days' prior written notice to the Deal Agent
and (ii) shall not move, or consent to the Collateral Custodian or Servicer
moving, the Contract Files from the possession of the Collateral Custodian
thereof on the Closing Date, without 30 days' prior written notice to the Deal
Agent and (iii) will promptly take all actions required of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Deal Agent as agent for the Secured Parties in all Assets in the
Collateral. The Borrower will give the Deal Agent prompt notice of a change
within the Commonwealth of Pennsylvania of the location of its chief executive
office.
(h) Accounting of Purchases. The Borrower will not account for
or treat (whether in financial statements or otherwise) the transactions
contemplated hereby in any manner other than as indebtedness of the Borrower to
a Lender. The Borrower will not account for or treat (whether in financial
statements or otherwise) the transaction contemplated by the Purchase Agreement
in any manner other than as the sale, or absolute assignment, of the Assets by
the Originator to the Borrower, as the case may be.
(i) ERISA Matters. The Borrower will not (i) engage or permit
any ERISA Affiliate to engage in any prohibited transaction for which an
exemption is not available or has not previously been obtained from the United
States Department of Labor; (ii) permit to exist any accumulated funding
48
deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the
Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to a Multiemployer Plan that
the Borrower or any ERISA Affiliate may be required to make under the agreement
relating to such Multiemployer Plan or any law pertaining thereto; (iv)
terminate any Benefit Plan so as to result in any liability; or (e) permit to
exist any occurrence of any reportable event described in Title IV of ERISA.
(j) Originator Assets. With respect to each Asset acquired by
the Borrower, the Borrower will (i) acquire such Asset pursuant to and in
accordance with the terms of the Purchase Agreement, (ii) take all action
necessary to perfect, protect and more fully evidence the Borrower's ownership
of such Asset, including, without limitation, (A) filing and maintaining,
effective financing statements (Form UCC-1) against the Originator 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 as may be
necessary or appropriate and (iii) take all additional action that the Deal
Agent may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in the Assets and interest
therein.
(k) Debt; Investments. The Borrower will not incur any debt
other than the debt arising under the Transaction Documents. The Borrower will
not make any Investments other than Permitted Investments.
(l) Change in the Purchase Agreement. The Borrower will not
amend, modify, waive or terminate any terms or conditions of the Purchase
Agreement.
(m) Credit and Collection Policy. The Borrower shall not cause
or permit any changes to be made to the Credit and Collection Policy in any
manner that would materially and adversely affect the collectibility of the
Contracts sold hereunder without the prior written consent of the Deal Agent,
which consent shall not be unreasonably withheld.
Section 5.3 Release of Lien on Equipment and Vehicles.
------------------------------------------
At the same time as (a) any Contract in the Collateral expires
by its terms and all amounts in respect thereof have been paid by the related
Obligor and deposited in the Collection Account or (b) any Contract becomes a
Prepaid Contract and all amounts in respect thereof have been paid by the
related Obligor and deposited in the Collection Account, the Deal Agent as agent
for the Lenders will, to the extent requested by the Servicer, release its
interest in such Contract and the related Equipment or Vehicle; provided,
however, that the Deal Agent as agent for the Lenders will make no
representation or warranty, express or implied, with respect to any such
Contract or Equipment or Vehicle. Nothing in this section shall diminish the
Servicer's obligations pursuant to Section 6.1(c) with respect to the proceeds
of any such sale.
49
Section 5.4 Hedging of Contracts.
---------------------
(a) On or prior to the Closing Date, the Borrower shall enter
into one or more Hedge Transactions, provided that each such Hedge Transaction
shall:
(i) be entered into with a Hedge Counterparty and governed
by a Hedging Agreement;
(ii) have a scheduled Termination Date that coincides with
the last Scheduled Payment due to occur for the
Contracts;
(iii) provide a notional amount from time to time equal to one
hundred percent (100%) of the Principal (the "Hedged
Level"), or the aggregate amount (discounted to the
present value at the "Swap Rate" defined below) of all
remaining Scheduled Payments on the Contracts (the
"Hedged Amount");
(iv) provide that the Hedge Counterparty's payment
obligations shall be calculated by reference to the
Hedge Amount and a per annum rate determined by
reference to the LIBOR Rate, as determined on the
immediately preceding Payment Date;
(v) provide that the Borrower's payment obligations shall be
calculated by reference to the Hedged Amount and a per
annum fixed rate agreed to between the Borrower and the
Hedge Counterparty (the "Swap Rate"); and
(vi) provide for net payments to be paid on each Payment Date
and on any early Termination Date thereunder (A) on
behalf of the Borrower, solely out of funds in the
Collection Account and (B) by the Hedge Counterparty for
deposit into the Collection Account.
On each date following the Closing Date, the aggregate notional amount (adjusted
for constant payment rate) of such Hedging Agreement shall be equal to or
greater than the product of one hundred percent (100%) and the Principal on such
date. The Borrower shall assign to the Deal Agent on behalf of the Lender all of
the Borrower's rights under the Hedging Agreements relating to the Contracts.
(b) As additional security hereunder, the Borrower hereby
assigns to the Deal Agent, as agent for the Secured Parties, all right, title
and interest of the Borrower in each Hedging Agreement, each Hedge Transaction,
and all present and future amounts payable by a Hedge Counterparty to the
Borrower under or in connection with the respective Hedging Agreement and Hedge
Transaction(s) with that Hedge Counterparty ("Hedge Collateral"), and grants a
security interest to the Deal Agent, as agent for the Secured Parties, in the
Hedge Collateral. The Borrower acknowledges that, as a result of that
assignment, the Borrower may not, without the prior written consent of the Deal
Agent, exercise any rights under any Hedging Agreement or Hedge Transaction,
except for the Borrower's right under any Hedging Agreement to enter into Hedge
50
Transactions in order to meet the Borrower's obligations under this Section 5.4.
Nothing herein shall have the effect of releasing the Borrower from any of its
obligations under any Hedging Agreement or any Hedge Transaction, nor be
construed as requiring the consent of the Deal Agent, any Lender, or any Hedge
Counterparty for the performance by the Borrower of any such obligations.
Section 5.5 Release of Ineligible Contracts.
--------------------------------
In the event of a breach of any representation or warranty set
forth in Section 4.2 with respect to a Contract in the Collateral (each such
Contract, an "Ineligible Contract"), no later than the earlier of (i) knowledge
by the Borrower of such Contract becoming an Ineligible Contract and (ii)
receipt by the Borrower from the Deal Agent or Servicer of written notice
thereof, the Borrower shall either (a) accept the release of each such
Ineligible Contract and any related Equipment or Vehicle selected by the
Servicer as to which such breach related, and the Deal Agent as agent for the
Secured Parties shall release to the Borrower, without recourse, representation
or warranty, all of its right, title and interest in such Ineligible Contract;
or (b) subject to the satisfaction of the conditions in Section 2.13, substitute
for such Ineligible Contract a Substitute Contract. In any of the foregoing
instances, the Borrower shall accept the retransfer of each such Ineligible
Contract, and the ADCB shall be reduced by the Discounted Contract Balance of
each such Ineligible Contract and, if applicable, increased by the Discounted
Contract Balance of each such Substitute Contract. On and after the date of
retransfer, the Ineligible Contract so retransferred shall not be included in
the Collateral and, as applicable, the Substitute Contract shall be included in
the Collateral. In consideration of such retransfer, without substitution, the
Borrower shall, on the date of retransfer of such Ineligible Contract, make a
deposit to the Collection Account (for allocation pursuant to Sections 2.4(a)
and 2.5(a), as applicable) in immediately available funds in an amount equal to
the Discounted Contract Balance of such Ineligible Contract. Upon each
retransfer to the Borrower of such Ineligible Contract, the Deal Agent, as agent
for the Secured Parties, shall automatically and without further action be
deemed to release to the Borrower, without recourse, representation or warranty,
all the right, title and interest of the Deal Agent, as agent for the Secured
Parties in, to and under such Ineligible Contract and all monies due or to
become due with respect thereto, the related Equipment or Vehicle and all
proceeds of such Ineligible Contract and Recoveries and Insurance Proceeds
relating thereto and all rights to security for any such Ineligible Contract,
and all proceeds and products of the foregoing. The Deal Agent, as agent for the
Secured Parties, shall, at the sole expense of the Servicer execute such
documents and instruments of release as may be prepared by the Servicer on
behalf of the Borrower and take other such actions as shall reasonably be
requested by the Borrower to effect the transfer of such Ineligible Contract
pursuant to this subsection.
Section 5.6 Retransfer of Assets.
---------------------
In the event of a breach of any representation or warranty set
forth in Section 4.2 hereof which breach could reasonably be expected to have a
material adverse affect on the rights of the Secured Parties or the Deal Agent,
as agent of the Secured Parties, or on the ability of the Borrower to perform
its obligations hereunder, by notice then given in writing to the Borrower, the
Deal Agent may direct the Borrower to accept the release of all of the Assets,
51
in which case the Borrower shall be obligated to accept release of such Assets
on a Payment Date specified by the Borrower (such date, the "Release Date") and
to terminate all Hedge Transactions prior to the Release Date. The Borrower
shall deposit on the Release Date an amount equal to the deposit amount provided
below for such Assets in the Collection Account for distribution to the Secured
Parties in accordance with Section 2.4 or 2.5, as applicable. The deposit amount
(the "Release Amount") for such release will be equal to the (a) sum of (i) the
Aggregate Unpaids, (ii) all Interest accrued and to accrue, as reasonably
determined by the Deal Agent, and (iii) all Hedge Breakage Costs and any other
amounts payable by Borrower under or with respect to any Hedging Agreement minus
(b) the amount, if any, available in the Collection Account on such Payment
Date. On the Release Date, provided that full Release Amount has been deposited
into the Collection Account, the security interest of the Secured Parties in the
Assets shall be transferred to the Borrower; and the Deal Agent as agent for the
Secured Parties shall, at the sole expense of the Servicer, execute and deliver
such instruments of release, in each case without recourse, representation or
warranty, as shall be prepared and reasonably requested by the Servicer on
behalf of the Borrower. If the Deal Agent gives a notice directing the Borrower
to accept such a release as provided above, the obligation of Borrower to accept
a release pursuant to this Section 5.6 shall constitute the sole remedy
respecting a breach of the representations and warranties contained in Section
4.2 available to the Secured Parties and the Deal Agent on behalf of the Secured
Parties.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties.
-----------------------------------
(a) Appointment of Initial Servicer and Collateral Custodian.
Fidelity Leasing, Inc. is hereby appointed as Servicer pursuant to this
Agreement. Fidelity Leasing, Inc. accepts the appointment and agrees to act as
the Servicer pursuant to this Agreement. Xxxxxx Trust and Savings Bank is hereby
appointed as Collateral Custodian pursuant to this Agreement. Xxxxxx Trust and
Savings Bank accepts the appointment and agrees to act as the Collateral
Custodian pursuant to this Agreement.
(b) General Duties. The Servicer will manage, service,
administer, collect and enforce the Assets in the Collateral on behalf of the
Lenders (the "Servicing Duties") and will have full power and authority to do
any and all things in connection with the performance of the Servicing Duties
which it deems necessary or desirable provided, however, nothing it does may
contravene the provisions of this Agreement. The Servicer will perform the
Servicing Duties with reasonable care, using that degree of skill and attention
that a prudent person engaging in such activities would exercise, but in any
event shall not act with less care than the Servicer exercises with respect to
all comparable contracts that it services for itself or others. The Servicing
Duties will include, without limitation, collection and posting of all payments,
responding to inquiries of Obligors regarding the Assets in the Collateral,
investigating delinquencies and making Servicer Advances, remitting payments to
52
the Deal Agent in a timely manner, furnishing monthly, quarterly and annual
statements with respect to collections and payments in accordance with the
provisions of this Agreement, and using its best efforts to maintain the
perfected first priority security interest of the Deal Agent as agent for the
Secured Parties in the Assets. The Servicer will follow customary standards,
policies, and procedures and will have full power and authority, acting alone,
to do any and all things in connection with the performance of the Servicing
Duties that it deems necessary or desirable. If the Servicer commences a legal
proceeding to enforce a Defaulted Contract or commences or participates in a
legal proceeding (including a bankruptcy proceeding) relating to or involving an
Asset in the Collateral, the Deal Agent as agent for the Secured Parties will be
deemed to have automatically assigned its interest in the related Contract to
the Servicer to the extent necessary for purposes of commencing or participating
in any such proceeding as a party or claimant, and the Servicer is authorized
and empowered by the Secured Parties, pursuant to this Section 6.1(b), to
execute and deliver, on behalf of itself and the Deal Agent as agent for the
Secured Parties, any and all instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceedings. If in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, then the Deal Agent will, at the Servicer's expense and direction,
take steps on behalf of the Deal Agent as agent for the Secured Parties to
enforce the Contract, including bringing suit in the name of the Deal Agent as
agent for the Secured Parties.
(c) Disposition Upon Termination of Contract. Upon the
termination of a Contract included in the Collateral as a result of a default by
the Obligor thereunder the Servicer will use commercially reasonable efforts to
dispose of any related Equipment or Vehicle. Without limiting the generality of
the foregoing, the Servicer may dispose of any such Equipment or Vehicle by
purchasing such Equipment or Vehicle or by selling such Equipment or Vehicle to
any of its Affiliates for a purchase price equal to the fair market value
thereof, any such sale to be evidenced by a certificate of a Responsible Officer
of the Servicer delivered to the Deal Agent setting forth the Contract, the
Equipment, the sale price of the Equipment or Vehicle and certifying that such
sale price is the fair market value of such Equipment or Vehicle.
(d) Further Assurances. The Deal Agent will, at the sole
expense of the Servicer, furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
(e) Custodial Duties. The Collateral Custodian shall take and
retain custody of the Contract Files delivered by the Borrower pursuant to
Section 3.3 hereof in accordance with the terms and conditions of this
Agreement, all for the benefit of the Secured Parties and subject to the Lien
thereon in favor of the Deal Agent as agent for the Secured Parties. Within five
Business Days of its receipt of any Contract File, the Collateral Custodian
shall review the related Contract to verify that such Contract has been executed
and has no missing or mutilated pages and to confirm (in reliance on the related
contract number and Lessee name) that such Contract is referenced on the related
53
list of Contracts. In order to facilitate the foregoing review by the Collateral
Custodian, in connection with each delivery of Contract Files hereunder to the
Collateral Custodian, the Servicer shall provide to the Collateral Custodian an
electronic file (in EXCEL or a comparable format) that contains the related list
of Contracts or which otherwise contains the Contract number and the name of the
Lessee with respect to each related Contract. If, at the conclusion of such
review, the Collateral Custodian shall determine that such Contract is not
executed or in proper form on its face, or that it is not referenced on such
list of Contracts, the Collateral Custodian shall promptly notify the Borrower
and the Deal Agent of such determination by providing a written report to such
Persons setting forth, with particularity, the lack of execution of such
Contract, that such Contract has missing or mutilated pages, or the fact that
such Contract was not referenced on the related list of Contracts. In addition,
unless instructed otherwise in writing by the Borrower or the Deal Agent within
10 days of the Collateral Custodian's delivery of such report, the Collateral
Custodian shall return any Contract not referenced on such list of Contracts to
the Borrower. Other than the foregoing, the Collateral Custodian shall not have
any responsibility for reviewing any Contract File.
(f) In taking and retaining custody of the Contract Files, the
Collateral Custodian shall be deemed to be acting as the agent of the Deal Agent
as agent for the Secured Parties; provided, however, that the Collateral
Custodian makes no representations as to the existence, perfection or priority
of any Lien on the Contract Files or the instruments therein; and provided,
further, that the Collateral Custodian's duties as agent shall be limited to
those expressly contemplated herein. All Contract Files shall be kept in
fireproof vaults or cabinets at the locations specified on Schedule IV attached
hereto, or at such other office as shall be specified to the Deal Agent by the
Collateral Custodian in a written notice delivered at least 45 days prior to
such change. All Contract Files shall be placed together in a separate file
cabinet with an appropriate identifying label and maintained in such a manner so
as to permit retrieval and access. All Contract Files shall be clearly
segregated from any other documents or instruments maintained by the Collateral
Custodian. The Collateral Custodian shall clearly indicate that such Contract
Files are the sole property of the Borrower and that the Borrower has granted an
interest therein to the Deal Agent on behalf of the Secured Parties. In
performing its duties, the Collateral Custodian shall use the same degree of
care and attention as it employs with respect to similar Contracts which it
holds as Collateral Custodian.
(g) Concerning the Collateral Custodian.
------------------------------------
(i) The Collateral Custodian may conclusively rely on and
shall be fully protected in acting upon any certificate, instrument,
opinion, notice, letter, telegram or other document delivered to it and
which in good faith it reasonably believes to be genuine and which has
been signed by the proper party or parties. The Collateral Custodian
may rely conclusively on and shall be fully protected by in acting upon
(A) the written instructions of any designated officer of the Deal
Agent or (B) the verbal instructions of the Deal Agent.
54
(ii) The Collateral Custodian may consult counsel satisfactory
to it and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
(iii) The Collateral Custodian shall not be liable for any
error of judgment, or for any act done or step taken or omitted by it,
in good faith, or for any mistakes of fact or law, or for anything
which it may do or refrain from doing in connection herewith except in
the case of its willful misconduct or grossly negligent performance or
omission.
(iv) The Collateral Custodian makes no warranty or
representation and shall have no responsibility (except as expressly
set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Contracts, and will not be required to and will
not make any representations as to the validity or value (except as
expressly set forth in this Agreement) of any of the Contracts. The
Collateral Custodian shall not be obligated to take any legal action
hereunder which might in its judgment involve any expense or liability
unless it has been furnished with an indemnity reasonably satisfactory
to it.
(v) The Collateral Custodian shall have no duties or
responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement and no covenants or
obligations shall be implied in this Agreement against the Collateral
Custodian.
(vi) The Collateral Custodian shall not be required to expend
or risk its own funds in the performance of its duties hereunder.
(vii) It is expressly agreed and acknowledged that the
Collateral Custodian is not guaranteeing performance of or assuming any
liability for the obligations of the other parties hereto or any
parties to the Contracts.
Section 6.2 Collection of Payments.
-----------------------
(a) Collection Efforts, Modification of Contracts. The
Servicer will make reasonable efforts to collect all payments called for under
the terms and provisions of the Contracts in the Collateral as and when the same
become due, and will follow those collection procedures which it follows with
respect to all comparable Contracts that it services for itself or others. The
Servicer may not waive, modify or otherwise vary any provision of a Contract.
The Servicer may in its discretion waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing any Contract in
the Collateral.
(b) Prepaid Contract. The Servicer may not permit a Contract
in the Collateral to become a Prepaid Contract (which shall not include a
Contract that becomes a Prepaid Contract due to a Casualty Loss), unless such
prepayment will result in the Collection Account receiving an amount (the
"Prepayment Amount") not less than the sum of (i) the Discounted Contract
55
Balance on the date of such prepayment, (ii) any outstanding Servicer Advances
thereon (and to the extent not included therein any accrued and unpaid interest)
and (iii) all Hedge Breakage Costs owing to the relevant Hedge Counterparty for
any termination of one or more Hedge Transactions, in whole or in part, as
required by the terms of any Hedging Agreement as the result of any such
Contract becoming a Prepaid Contract.
(c) Acceleration. The Servicer shall accelerate the maturity
of all or any Scheduled Payments under any Contract in the Collateral under
which a default under the terms thereof has occurred and is continuing (after
the lapse of any applicable grace period) promptly after such Contract becomes a
Defaulted Contract.
(d) Taxes and other Amounts. To the extent provided for in any
Contract in the Collateral, the Servicer will use its best efforts to collect
all payments with respect to amounts due for taxes, assessments and insurance
premiums relating to such Contracts or the Equipment or Vehicles and remit such
amounts to the appropriate Governmental Authority or insurer on or prior to the
date such payments are due.
(e) Payments to Lock-Box Account. On or before the Closing
Date, the Servicer shall have instructed all Obligors to make all payments in
respect of the Contracts in the Collateral to a Lock-Box or directly to a
Lock-Box Account.
(f) Establishment of the Collection Account. The Servicer
shall cause to be established, on or before the Closing Date, and maintained in
the name of the Deal Agent as agent for the Secured Parties, with an office or
branch of a depository institution or trust company organized under the laws of
the United States of America or any one of the States thereof or the District of
Columbia (or any domestic branch of a foreign bank) a segregated corporate trust
account (the "Collection Account"); provided, however, that at all times such
depository institution or trust company shall be a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a foreign
bank), (i) (A) which has either (I) a long-term unsecured debt rating of "A" or
better by S&P and "A-2" or better by Xxxxx'x or (II) a short-term unsecured debt
rating or certificate of deposit rating of "A-1" or better by S&P or "P-1" or
better by Xxxxx'x, (B) the parent corporation of which has either (I) a
long-term unsecured debt rating of "A-" or better by S&P and "A-3" or better by
Xxxxx'x or (II) a short-term unsecured debt rating or certificate of deposit
rating of "A-1" or better by S&P and "P-1" or better by Xxxxx'x or (C) is
otherwise acceptable to the Deal Agent and (ii) whose deposits are insured by
the Federal Deposit Insurance Corporation (any such depository institution or
trust company, a "Qualified Institution").
Section 6.3 Servicer Advances.
------------------
For each Monthly Period, if the Servicer determines that any
Scheduled Payment (or portion thereof) which was due and payable pursuant to a
Contract in the Collateral during such Monthly Period was not received prior to
the end of such Monthly Period, the Servicer shall make an advance in an amount
up to the amount of such delinquent Scheduled Payment (or portion thereof) (any
such advance, a "Servicer Advance"). Notwithstanding the preceding sentence, (a)
56
the Servicer shall be required to make a Servicer Advance with respect to any
Contract if, and only if, the Servicer determines (such determination to be
conclusive and binding) in good faith that such Servicer Advance will ultimately
be recoverable from future collections on, or the liquidation of, the Collateral
(and, in the case of Contracts related to Vehicles, liquidation of the Vehicles)
and payments by one or more Hedge Counterparties under one or more Hedging
Agreements, (b) the Servicer's obligation to make a Servicer Advance for any
Contract shall cease on the day such Contract becomes a Defaulted Contract or is
charged-off pursuant to the Servicer's Credit and Collection Policies and (c)
any successor Servicer, including the Backup Servicer, will not be obligated to
make any Servicer Advances. The Servicer will deposit any Servicer Advances into
the Collection Account on or prior to 11:00 a.m. (Charlotte, North Carolina
time) on the related Payment Date, in immediately available funds.
Section 6.4 Realization Upon Defaulted Contract.
------------------------------------
The Servicer will use reasonable efforts to repossess or
otherwise comparably convert the ownership of any Equipment and Vehicles
relating to a Defaulted Contract and will act as sales and processing agent for
Equipment and Vehicles which it repossesses. The Servicer will follow such other
practices and procedures as it deems necessary or advisable and as are customary
and usual in its servicing of contracts and other actions by the Servicer in
order to realize upon such Equipment and Vehicles, which practices and
procedures may include reasonable efforts to enforce all obligations of Obligors
and repossessing and selling such Equipment and Vehicles at public or private
sale in circumstances other than those described in the preceding sentence.
Without limiting the generality of the foregoing, the Servicer may sell any such
Equipment to the Servicer or its Affiliates for a purchase price equal to the
then fair market value thereof, any such sale to be evidenced by a certificate
of a Responsible Officer of the Servicer delivered to the Deal Agent setting
forth the Contract, the Equipment, the sale price of the Equipment (or Vehicle)
and certifying that such sale price is the fair market value of such Equipment
(or Vehicle). In any case in which any such Equipment or Vehicle has suffered
damage, the Servicer will not expend funds in connection with any repair or
toward the repossession of such Equipment or Vehicle unless it reasonably
determines that such repair and/or repossession will increase the Recoveries by
an amount greater than the amount of such expenses. The Servicer will remit to
the Collection Account the Recoveries received in connection with the sale or
disposition of Equipment or Vehicle relating to a Defaulted Contract.
Section 6.5 Maintenance of Insurance Policies.
----------------------------------
(a) In the case of Equipment leases, (i) the Servicer shall
use its best efforts to ensure that each Obligor maintains an Insurance Policy
with respect to the related Equipment in an amount at least equal to the sum of
the Discounted Contract Balance of the related Contract and shall ensure that
each such Insurance Policy names the Deal Agent, as agent for the Secured
Parties, as loss payee and as an insured thereunder; provided, however, that the
Servicer, in accordance with its Credit and Collection Policy, may allow
Obligors to self-insure, (ii) the Borrower and the Servicer hereby assign all of
57
their right, title and interest (together with a respective security interest)
in each Insurance Policy to the Deal Agent, as agent for the Secured Parties,
and (iii) the Servicer shall require that each Obligor maintain property damage
liability insurance during the term of each Contract in amounts and against
risks customarily insured against by the Obligor on Equipment owned by it. If an
Obligor fails to maintain the insurance required in this Section 6.5(a), the
Servicer shall purchase and maintain such insurance on behalf of, and at the
expense of, the Obligor. In connection with its activities as Servicer, the
Servicer agrees to present, on behalf of the Deal Agent as agent for the Secured
Parties, claims to the insurer under each policy required in this Section
6.5(a), and to settle, adjust and compromise such claims, in each case,
consistent with the terms of each Contract. The Servicer's policies required in
this Section 6.5(a) with respect to the related Equipment will insure against
liability for personal injury and property damage relating to such Equipment.
All policies required in this Section 6.5(a) will name the Deal Agent as agent
for the Secured Parties as loss payee and as an insured thereunder and will
contain a breach of warranty clause.
(b) In the case of Vehicle leases, the Servicer shall use its
best efforts to ensure that the Obligor under each such lease have, and maintain
in full force and effect during the term of such lease, a comprehensive and
collision damage insurance policy covering the actual cash value of the Vehicle
to which such lease relates and naming the Borrower, the Lender, and the Deal
Agent as a loss payee and additional insured, as well as public liability,
bodily injury and property damage coverage equal to the greater of the amounts
required by applicable state law or industry standards and naming the Borrower,
the Lender and the Deal Agent as an additional insured. The Servicer shall remit
to the Deal Agent as agent for the Lender any proceeds of any such insurance
policy in this Section 6.5(b) that the Servicer may receive with respect to any
Vehicle lease. In addition to the other provisions of this Section 6.5(b), the
Servicer or the Subservicer shall have, and maintain in full force and effect
during the term of any Vehicle lease, a "single interest insurance policy" which
insures against any risk of loss in respect to any Vehicle due to a failure of
the lessee to provide adequate insurance for any mistake or omission in titling
and any risk associated with the lessee's misuse, loss, theft or conversion of
the related Vehicle. Upon its termination as Servicer, the Servicer shall either
continue the coverage described in this Section 6.5(b) for the benefit of the
Borrower and the Lender, or provide for equivalent coverage by any substitute or
successor Servicer.
(c) In the event that at any time proceeds of such insurance
policy described in Section 6.5(a) and Section 6.5(b) would be recoverable and
otherwise paid to the Borrower as loss payee but for the fact that: (i) such
insurance policy has lapsed (without the obtaining by the related Obligor (or
the Servicer, on behalf of such Obligor) of a new insurance policy meeting the
requirements of Section 6.5(a) and Section 6.5(b)), (ii) the Servicer has failed
to maintain the Lender's rights to receive all proceeds of such insurance policy
up to the full amount of the Obligor's obligations under the related lease (but
not excluding the policy limits), or (iii) such insurance policy has not been
maintained in full force and effect prior to the operation of such lease, the
Servicer shall, as soon as reasonably practicable, remit an amount of cash equal
to such amounts as would at such time otherwise be recoverable in respect of
such Vehicle as Insurance Proceeds. The foregoing obligation of the Servicer
shall survive the resignation of the Servicer or any termination of it as
Servicer under this Agreement.
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Section 6.6 Representations and Warranties of Servicer.
-------------------------------------------
The Servicer represents and warrants to the Deal Agent, as
agent for the Secured Parties, the Secured Parties, the Collateral Custodian and
Backup Servicer that, as of the Closing Date, insofar as any of the following
affects the Servicer's ability to perform its obligations pursuant to this
Agreement in any material respect:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of Pennsylvania with all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified to do
business as a corporation, is in good standing, and has obtained all licenses
and approvals as required under the laws of all jurisdictions in which the
ownership or lease of its property and or the conduct of its business (other
than the performance of its obligations hereunder) requires such qualification,
standing, license or approval, except to the extent that the failure to so
qualify, maintain such standing or be so licensed or approved would not have an
adverse effect on the interests of the Borrower or of the Secured Parties. The
Servicer is qualified to do business as a corporation, is in good standing, and
has obtained all licenses and approvals as required under the laws of all states
in which the performance of its obligations pursuant to this Agreement requires
such qualification, standing, license or approval and where the failure to
qualify or obtain such license or approval would have a material adverse effect
on its ability to perform hereunder.
(c) Power and Authority. The Servicer has the corporate power
and authority to execute and deliver this Agreement and to carry out its terms.
The Servicer has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action. The execution, delivery and
performance of this Agreement does not contravene the Servicer's Certificate of
Incorporation or by-laws.
(d) No Violation. The consummation of the transactions
contemplated by, and the fulfillment of the terms of, this Agreement by the
Servicer (with or without notice or lapse of time) will not (i) conflict with,
result in any breach of any of the terms or provisions of, or constitute a
default under, the articles of incorporation or by-laws of the Servicer, or any
term of any agreement, indenture, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it or any of its property is bound,
(ii) result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, or (iii) violate any law, regulation, order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority applicable to the Servicer or any of its properties.
59
(e) No Consent. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Servicer or any of its
properties is required to be obtained by or with respect to the Servicer in
order for the Servicer to enter into this Agreement or perform its obligations
hereunder.
(f) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable against the Servicer
in accordance with its terms, except as such enforceability may be limited by
(i) applicable Insolvency Laws and (ii) general principles of equity (whether
considered in a suit at law or in equity).
(g) No Proceeding. There are no proceedings or investigations
pending or threatened against the Servicer, before any Governmental Authority
(i) asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might (in the reasonable judgment of
the Servicer) materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this Agreement.
(h) Reports Accurate. No Servicer Certificate, information,
exhibit, financial statement, document, book, record or report furnished or to
be furnished by the Servicer to the Deal Agent or a Lender in connection with
this Agreement is or will be inaccurate in any material respect as of the date
it is or shall be dated or (except as otherwise disclosed to the Deal Agent or
such Lender, as the case may be, at such time) as of the date so furnished, and
no such document contains or will contain any material misstatement of fact or
omits or shall omit to state a material fact or any fact necessary to make the
statements contained therein not misleading.
Section 6.7 Representations and Warranties of Backup Servicer
-------------------------------------------------
and Collateral Custodian.
-------------------------
Each of the Backup Servicer and the Collateral Custodian
represents and warrants to the Deal Agent, as agent for the Secured Parties, and
the Secured Parties that, as of the Closing Date, insofar as any of the
following affects the Backup Servicer's or the Collateral Custodian's, as the
case may be, ability to perform its obligations pursuant to this Agreement in
any material respect:
(a) Organization and Good Standing. Xxxxxx is an Illinois
banking corporation duly organized, validly existing and in good standing under
the laws of the State of Illinois with all requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted and to enter into and perform its obligations pursuant to this
Agreement.
(b) Power and Authority. Each of the Backup Servicer and the
Collateral Custodian has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms. Each of the Backup Servicer
and the Collateral Custodian has duly authorized the execution, delivery and
performance of this Agreement by all requisite corporate action.
(c) No Violation. The consummation of the transactions
contemplated by, and the fulfillment of the terms of, this Agreement by the
Backup Servicer and the Collateral Custodian will not (i) conflict with, result
in any breach of any of the terms or provisions of, or constitute a default
under, the charter or bylaws of the Backup Servicer or the Collateral Custodian,
or any term of any material agreement, indenture, mortgage, deed of trust or
other instrument to which the Backup Servicer or the Collateral Custodian is a
party or by which it or any of its property is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to Xxxxxx and Savings Bank or any of its properties that might (in
the reasonable judgment of the Backup Servicer or the Collateral Custodian, as
the case may be) materially and adversely affect the performance by the Backup
Servicer or the Collateral Custodian of its obligations under, or the validity
or enforceability of, this Agreement.
60
(d) No Consent. No consent, approval, authorization, order,
registration, filing, qualification, license or permit (collectively, the
"Consents") of or with any Governmental Authority having jurisdiction over the
Backup Servicer or the Collateral Custodian or any of its respective properties
is required to be obtained by or with respect to the Backup Servicer or the
Collateral Custodian in order for the Backup Servicer or the Collateral
Custodian, as the case may be, to enter into this Agreement or perform its
obligations hereunder (except with respect to performance only, such Consents as
the Backup Servicer or the Collateral Custodian, as the case may be, may need to
obtain prior to the commencement of its performance of its duties hereunder in
the certain jurisdictions outside of Illinois, provided that in lieu of
obtaining for itself the requisite Consents, the Backup Servicer or the
Collateral Custodian, as the case may be, may and shall be permitted to delegate
the performance of its duties to parties having the requisite Consents in such
jurisdictions; provided, however, in the case of such delegation of performance
the Backup Servicer or the Collateral Custodian, as the case may be, shall not
be relieved of their responsibility under this Agreement with respect to such
duties).
(e) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of Xxxxxx, enforceable against the Backup Servicer
and the Collateral Custodian in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).
(f) No Proceeding. There are no proceedings or investigations
pending or, to the best of its knowledge, threatened, against the Backup
Servicer or the Collateral Custodian, before any Governmental Authority (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might (in the reasonable judgment of
the Backup Servicer or the Collateral Custodian, as the case may be) materially
and adversely affect the performance by the Backup Servicer or the Collateral
Custodian of its obligations under, or the validity or enforceability of, this
Agreement.
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Section 6.8 Covenants of Servicer.
----------------------
The Servicer hereby covenants that:
(a) Compliance with Law. The Servicer will comply with all
laws and regulations of any Governmental Authority applicable to the Servicer or
the Contracts in the Collateral and related Equipment, Vehicles, and Contract
Files or any part thereof.
(b) Obligations with Respect to Contracts; Modifications. The
Servicer will duly fulfill and comply with all obligations on the part of the
Borrower to be fulfilled or complied with under or in connection with each
Contract in the Collateral and will do nothing to impair the rights of the Deal
Agent as agent for the Secured Parties or of the Secured Parties in, to and
under the Assets. The Servicer will perform such obligations under the Contracts
in the Collateral and will not change or modify the Contracts.
(c) Preservation of Security Interest. The Servicer will
execute and file such financing and continuation statements and any other
documents which may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Deal Agent as agent
for the Secured Parties in, to and under the Assets.
(d) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, the Servicer will not institute
against the Borrower or VFCC, or join any other Person in instituting against
the Borrower or VFCC, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 6.8(d) will
survive the termination of this Agreement.
Section 6.9 Covenants of Backup Servicer and Collateral
-------------------------------------------
Custodian.
----------
Each of the Backup Servicer and the Collateral Custodian
hereby covenants that:
(a) Contract Files. The Collateral Custodian will not dispose
of any documents constituting the Contract Files in any manner which is
inconsistent with the performance of its obligations as the Collateral Custodian
pursuant to this Agreement and will not dispose of any Contract except as
contemplated by this Agreement.
(b) Compliance with Law. Each of the Backup Servicer and the
Collateral Custodian will comply with all laws and regulations of any
Governmental Authority applicable to the Backup Servicer and the Collateral
Custodian.
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(c) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, neither the Backup Servicer nor the
Collateral Custodian will institute against the Borrower or VFCC, or join any
other Person in instituting against the Borrower or VFCC, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 6.9(d) will survive the termination of this
Agreement.
(d) Location of Contract Files. The Contract Files shall
remain at all times in the possession of the Collateral Custodian at the address
set forth herein unless notice of a different address is given in accordance
with the terms hereof.
(e) No Changes in Backup Servicer and Collateral Custodian
Fee. The Backup Servicer and Collateral Custodian will not make any changes to
the fees set forth in the Backup Servicer and Collateral Custodian Fee Letter
without the prior written approval of the Deal Agent.
(f) Year 2000 Compatibility. The Backup Servicer and
Collateral Custodian shall take all action necessary to assure that, prior to
January 1, 2000, the Backup Servicer and Collateral Custodian's computer system
is able to operate and effectively process data including dates on and after
January 1, 2000 ("Year 2000 Compatibility"). At the request of the Deal Agent,
the Backup Servicer and Collateral Custodian shall provide assurance acceptable
to the Deal Agent of the Backup Servicer and Collateral Custodian's Year 2000
Compatibility.
Section 6.10 Servicing Compensation.
-----------------------
As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") in respect of each Monthly Period (or
portion thereof) equal to one-twelfth of the product of (A) the Servicing Fee
Rate and (B) the ADCB as on the most recent Determination Date, such Servicing
Fee to be payable monthly in arrears on each Payment Date to the extent of funds
available therefor pursuant to the provisions of Sections 2.4 or 2.5, as
applicable.
Section 6.11 Custodial Compensation.
-----------------------
As compensation for its custodial activities hereunder and
reimbursement for its expenses, the Collateral Custodian shall be entitled to
receive a custodial fee (the "Custodial Fee") as provided in the Backup Servicer
and Collateral Custodian Fee Letter.
Section 6.12 Payment of Certain Expenses by Servicer.
----------------------------------------
The Servicer will be required to pay all expenses incurred by
it in connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
63
Agreement for the account of the Borrower, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.4. The Servicer
will be required to pay all reasonable fees and expenses owing to any bank or
trust company in connection with the maintenance of the Collection Account and
the Lock-Box Account. The Servicer shall be required to pay such expenses for
its own account and shall not be entitled to any payment therefor other than the
Servicing Fee.
Section 6.13 Reports.
--------
(a) Monthly Report. With respect to each Determination Date
and the related Monthly Period, the Servicer will provide to the Borrower, the
Deal Agent and the Backup Servicer, on the related Reporting Date, a monthly
statement (a "Monthly Report"), signed by a Responsible Officer of the Servicer
and substantially in the form of Exhibit C.
(b) Servicer's Certificate. Together with each Monthly Report,
the Servicer shall submit to the Lender a certificate (a "Servicer's
Certificate"), signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit D.
(c) Financial Statements. The Servicer will submit to the
Lender and the Backup Servicer, within 45 days of the end of each of its fiscal
quarters, commencing with the quarter ended March 31, 1999, unaudited financial
statements (including a balance sheet, statements of income and cash flow, and
an analysis of delinquencies and losses for each fiscal quarter) as of the end
of each such fiscal quarter. The Servicer will submit to the Lender, within 90
days of the end of each of its fiscal years, commencing with the fiscal year
ending September 30, 1999, audited financial statements (including a balance
sheet, statements of income and cash flow, and an analysis of delinquencies and
losses for each fiscal year describing the causes thereof and sufficient to
determine whether an Event of Default has occurred or is reasonably likely to
occur and otherwise reasonably satisfactory to the Deal Agent) as of the end of
each such fiscal year.
Section 6.14 Annual Statement as to Compliance.
The Servicer will provide to the Deal Agent and the Backup
Servicer, on or prior to December 31 of each year, commencing with the year
ending December 31, 1999, an annual report signed by a Responsible Officer of
the Servicer certifying that (a) a review of the activities of the Servicer, and
the Servicer's performance pursuant to this Agreement, for the period ending on
the last day of the immediately preceding fiscal year has been made under such
Person's supervision and (b) the Servicer has performed or has caused to be
performed in all material respects all of its obligations under this Agreement
throughout such year and no Servicer Default has occurred and is continuing (or
if a Servicer Default has so occurred and is continuing, specifying each such
event, the nature and status thereof and the steps necessary to remedy such
event, and, if a Servicer Default occurred during such year and no notice
thereof has been given to the Deal Agent, specifying such Servicer Default and
the steps taken to remedy such event).
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Section 6.15 Annual Independent Public Accountant's Servicing
------------------------------------------------
Reports.
--------
The Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer) to furnish to the Deal Agent and the Backup Servicer, on or prior to
December 31 of each year, commencing December 31, 1999, (a) a report relating to
the previous fiscal year to the effect that (i) such firm has reviewed certain
documents and records relating to the servicing of the Contracts in the
Collateral, and (ii) based on such examination, such firm is of the opinion that
the Monthly Reports for such year were prepared in compliance with this
Agreement, except for such exceptions as it believes to be immaterial and such
other exceptions as will be set forth in such firm's report and (b) a report
covering the preceding fiscal year to the effect that such accountants have
applied certain agreed-upon procedures to certain documents and records relating
to the servicing of Contracts under this Agreement, compared the information
contained in the Servicer's Certificates delivered during the period covered by
such report with such documents and records and that no matters came to the
attention of such accountants that caused them to believe that such servicing
was not conducted in compliance with this Article VI of this Agreement, except
for such exceptions as such accountants shall believe to be immaterial and such
other exceptions as shall be set forth in such statement. In the event such firm
requires the Backup Servicer to agree to the procedures performed by such firm,
the Servicer shall direct the Backup Servicer in writing to so agree; it being
understood and agreed that the Backup Servicer will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Backup Servicer makes no independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
Section 6.16 Adjustments.
------------
If (a) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Contract in the Collateral and such
Collection was received by the Servicer in the form of a check which is not
honored for any reason or (b) the Servicer makes a mistake with respect to the
amount of any Collection and deposits an amount that is less than or more than
the actual amount of such Collection, the Servicer shall appropriately adjust
the amount subsequently deposited into the Collection Account to reflect such
dishonored check or mistake. Any Scheduled Payment in respect of which a
dishonored check is received shall be deemed not to have been paid.
Section 6.17 Merger or Consolidation of the Servicer.
----------------------------------------
The Servicer shall not consolidate with or merge into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless the Servicer is the surviving entity and unless:
(a) the Servicer has delivered to the Deal Agent and the
Backup Servicer an Officer's Certificate and an Opinion of Counsel each stating
that any consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section 6.17 and that all conditions precedent herein
provided for relating to such transaction have been complied with and, in the
case of the Opinion of Counsel, that such supplemental agreement is legal, valid
and binding with respect to the Servicer and such other matters as the Deal
Agent may reasonably request;
65
(b) the Servicer shall have delivered notice of such
consolidation, merger, conveyance or transfer to the Deal Agent; and
(c) after giving effect thereto, no Event of Default or event
which with notice or lapse of time would constitute an Event of Default shall
have occurred.
Section 6.18 Limitation on Liability of the Servicer and
-------------------------------------------
Others.
-------
Except as provided herein, neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer shall be under any
liability to the Deal Agent, the Secured Parties or any other Person for any
action taken or for refraining from the taking of any action pursuant to this
Agreement whether arising from express or implied duties under this Agreement;
provided, however, that this provision shall not protect the Servicer or any
such Person against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of its willful misconduct hereunder.
Section 6.19 Indemnification of the Borrower, the Backup
-------------------------------------------
Servicer, the Collateral Custodian, the Deal
--------------------------------------------
Agent and the Secured Parties.
------------------------------
The Servicer shall indemnify and hold harmless the Borrower,
the Backup Servicer, the Collateral Custodian, the Deal Agent, the Liquidity
Agent and each Secured Party and their respective officers, directors, employees
and agents (collectively, the "Indemnified Persons") from and against any loss,
liability, expense, damage or injury suffered or sustained by any Indemnified
Person by reason of any acts, omissions or alleged acts or omissions of the
Servicer, including, but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim, but
excluding allocations of overhead expenses of any such Indemnified Party or
other non-monetary damages of any such Indemnified Party. Notwithstanding the
foregoing, the Servicer shall not indemnify an Indemnified Person if such loss,
liability, expense, damage or injury results or arises (a) as a result of fraud,
gross negligence or breach of fiduciary duty by such Indemnified Person; and (b)
under any federal, state or local income or franchise taxes or any other Tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Borrower, the Backup Servicer, the Collateral Custodian, the Deal Agent, the
Liquidity Agent or the Secured Parties in connection herewith to any taxing
authority. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof. If the
Servicer has made any indemnity payment pursuant to this Section 6.19 and such
payment fully indemnified the recipient thereof and the recipient thereafter
collects any payments from others in respect of such Indemnified Amounts, the
recipient shall repay to the Servicer an amount equal to the amount it has
collected from others in respect of such indemnified amounts.
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If for any reason the indemnification provided above in this
Section 6.19 is unavailable to the Indemnified Person or is insufficient to hold
an Indemnified Person harmless, then Servicer shall contribute to the amount
paid or payable by such Indemnified Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Person on the one hand and
Servicer on the other hand but also the relative fault of such Indemnified
Person as well as any other relevant equitable considerations.
The parties hereto agree that the provisions of this Section
6.19 shall not be interpreted to provide recourse to the Borrower against loss
by reason of the bankruptcy or insolvency (or other credit condition) of, or
default by, a related Obligor on any Asset in the Collateral.
Any indemnification pursuant to this Section shall not be
payable from the Assets.
The obligations of the Servicer under this Section 6.19 shall
survive the resignation or removal of the Deal Agent, the Liquidity Agent, the
Backup Servicer or the Collateral Custodian and the termination of this
Agreement.
Section 6.20 The Servicer Not to Resign.
---------------------------
The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon the Servicer's determination that (a) the
performance of its duties hereunder is or becomes impermissible under applicable
law and (b) there is no reasonable action which the Servicer could take to make
the performance of its duties hereunder permissible under applicable law. Any
such determination permitting the resignation of the Servicer shall be evidenced
as to clause (a) above by an Opinion of Counsel to such effect delivered to the
Deal Agent and the Backup Servicer. No such resignation shall become effective
until a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 6.25.
Section 6.21 Access to Certain Documentation and Information
------------------------------------------------
Regarding the Contracts.
------------------------
The Collateral Custodian shall provide to the Deal Agent
access to the Contract Files and all other documentation regarding the Contracts
in the Collateral and the related Equipment or Vehicles in such cases where the
Deal Agent is required in connection with the enforcement of the rights or
interests of the Secured Parties, or by applicable statutes or regulations to
review such documentation, such access being afforded without charge but only
(a) upon two business days prior written request, (b) during normal business
hours and (c) subject to the Servicer's and Collateral Custodian's normal
security and confidentiality procedures. Prior to the Closing Date and
periodically thereafter at the discretion of the Deal Agent, the Deal Agent may
review the Servicer's collection and administration of the Contracts in order to
assess compliance by the Servicer with the Servicer's written policies and
procedures, as well as with this Agreement and may conduct an audit of the
Contracts and Contract Files in conjunction with such a review. Such review
shall be reasonable in scope and shall be completed in a reasonable period of
time.
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Section 6.22 Backup Servicer.
----------------
(a) On or before the date on which the initial Purchase
occurs, until the receipt by the Servicer of a Termination Notice, the Backup
Servicer shall perform, on behalf of the Deal Agent and the Secured Parties, the
following duties and obligations:
(i) On or before the Closing Date, the Backup Servicer shall
accept from the Servicer delivery of the information required to be set
forth in the Monthly Reports in hard copy and on computer tape;
provided, however, the computer tape is in an MS-DOS, PC readable ASCII
format or format to be agreed upon by the Backup Servicer and the
Servicer on or prior to closing.
(ii) Not later than 12:00 noon (New York City time) two
Business Days prior to each Reporting Date, the Backup Servicer shall
accept delivery of tape from the Servicer, which shall include but not
be limited to the following information: the name, number and name of
the related Lessee for each Contract, the collection status, the
contract status, the principal balance and the ADCB (the "Tape").
The Servicer shall provide, or cause the Subservicer to
provide, the Tape on each Reporting Date as described above.
(b) On or before the date on which the initial Purchase
occurs, and until the receipt by the Servicer of a Termination Notice, the
Backup Servicer shall perform, on behalf of the Secured Parties and the Deal
Agent, the following duties and obligations:
(i) Prior to the related Payment Date, the Backup Servicer
shall review the Monthly Report to ensure that it is complete on its
face and that the following items in such Monthly Report have been
accurately calculated, if applicable, and reported: (A) the ADCB, (B)
the Backup Servicing Fee, (C) the Average ADCB, (D) the accounts that
are 30-60 days past due, (E) the accounts that are 61-90 days past due,
(E) the accounts that are 90+ days past due, (F) the accounts that are
Defaulted Contracts, (G) the Delinquency Ratio and (H) the Default
Ratio. The Backup Servicer shall notify the Deal Agent and the Servicer
of any disagreements with the Monthly Report based on such review not
later than the Business Day preceding such Payment Date to such
Persons.
(ii) If the Servicer disagrees with the report provided under
paragraph (i) above by the Backup Servicer or if the Servicer or any
subservicer has not reconciled such discrepancy, the Backup Servicer
agrees to confer with the Servicer to resolve such disagreement on or
prior to the next succeeding Determination Date and shall settle such
discrepancy with the Servicer if possible, and notify the Deal Agent of
the resolution thereof. The Servicer hereby agrees to cooperate at its
own expense, with the Backup Servicer in reconciling any discrepancies
herein. If within 20 days after the delivery of the report provided
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under paragraph (i) above by the Backup Servicer, such discrepancy is
not resolved, the Backup Servicer shall promptly notify the Deal Agent
of the continued existence of such discrepancy. Following receipt of
such notice by the Deal Agent, the Servicer shall deliver to the Deal
Agent, the Secured Parties, and the Backup Servicer no later than the
related Payment Date a certificate describing the nature and amount of
such discrepancies and the actions the Servicer proposes to take with
respect thereto.
With respect to the foregoing, the Backup Servicer, in the
performance of its duties and obligations hereunder, is entitled to rely
conclusively, and shall be fully protected in so relying, on the contents of
each Tape, including, but not limited to, the completeness and accuracy thereof,
provided by the Servicer.
(c) After the receipt of an effective Termination Notice by
the Servicer in accordance with this Agreement, all authority, power, rights and
responsibilities of the Servicer, under this Agreement, whether with respect to
the Contracts or otherwise shall pass to and be vested in the Backup Servicer,
subject to and in accordance with the provisions of Section 6.25, as long as the
Backup Servicer is not prohibited by an applicable provision of law from
fulfilling the same, as evidenced by an Opinion of Counsel.
(d) Any Person (i) into which the Backup Servicer may be
merged or consolidated, (ii) which may result from any merger or consolidation
to which the Backup Servicer shall be a party, or (iii) which may succeed to the
properties and assets of the Backup Servicer substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Backup Servicer hereunder, shall be the
successor to the Backup Servicer under this Agreement without further act on the
part of any of the parties to this Agreement.
(e) As compensation for its back-up servicing obligations
hereunder, the Backup Servicer shall be entitled to receive the Backup Servicing
Fee in respect of each Monthly Period (or portion thereof) until the first to
occur of the date on which the Backup Servicer becomes a Successor Servicer,
resigns or is removed as Backup Servicer or termination of this Agreement.
(f) The Backup Servicer may resign at any time by not less
than 120 days notice to the Deal Agent, the Liquidity Agent, the Servicer, the
Borrower and the Originator, if the Backup Servicer finds a replacement backup
servicer approved in writing by the Deal Agent. In addition, the Backup Servicer
may be removed without cause by the Deal Agent by notice then given in writing
to the Servicer, the Borrower and the Backup Servicer. In the event of any such
resignation or removal, the Backup Servicer may be replaced by (i) the Servicer,
acting with the consent of the Deal Agent or (ii) if no such replacement is
appointed within 30 days following such removal or resignation, by the Deal
Agent.
(g) The Backup Servicer undertakes to perform only such duties
and obligations as are specifically set forth in this Agreement, it being
expressly understood by all parties hereto that there are no implied duties or
obligations of the Backup Servicer hereunder. Without limiting the generality of
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the foregoing, the Backup Servicer, except as expressly set forth herein, shall
have no obligation to supervise, verify, monitor or administer the performance
of the Servicer or the Subservicer. The Backup Servicer may act through its
agents, attorneys and custodians in performing any of its duties and obligations
under this Agreement, it being understood by the parties hereto that the Backup
Servicer will be responsible for any misconduct or negligence on the part of
such agents, attorneys or custodians acting on the routine and ordinary
day-to-day operations for and on behalf of the Backup Servicer. Neither the
Backup Servicer nor any of its officers, directors, employees or agents shall be
liable, directly or indirectly, for any damages or expenses arising out of the
services performed under this Agreement other than damages or expenses which
result from the gross negligence or willful misconduct of it or them or the
failure to perform materially in accordance with this Agreement.
(h) The Backup Servicer shall not be liable for any obligation
of the Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document delivered
to the Backup Servicer hereunder or on which the Backup Servicer must rely in
order to perform its obligations hereunder, and the Borrower, Secured Parties,
Deal Agent, Liquidity Agent, Collateral Custodian and Backup Servicer, shall
look only to the Servicer to perform such obligations. The Backup Servicer, and
the Collateral Custodian shall have no responsibility and shall not be in
default hereunder or incur any liability for any failure, error, malfunction or
any delay in carrying out any of their respective duties under this Agreement if
such failure or delay results from the Backup Servicer acting in accordance with
information prepared or supplied by a Person other than the Backup Servicer or
the failure of any such other Person to prepare or provide such information. The
Backup Servicer shall have no responsibility, shall not be in default and shall
incur no liability for (i) any act or failure to act of any third party,
including the Servicer (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Asset or Contract under applicable law,
(iv) the breach or inaccuracy of any representation or warranty made with
respect to any Asset, Contract or any item of Equipment, or (v) the acts or
omissions of any successor Backup Servicer.
Section 6.23 Identification of Records.
--------------------------
The Servicer shall clearly and unambiguously identify each
Contract in the Collateral and the related Equipment in its computer or other
records to reflect that such Contracts and Equipment have been transferred to
and are owned by the Borrower and that a security interest therein has been
Granted by the Borrower pursuant to this Agreement.
Section 6.24 Servicer Defaults.
------------------
If any one of the following events (a "Servicer Default")
shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Deal Agent as required by
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this Agreement including, without limitation, while Fidelity is Servicer, any
payment required to be made under the Backup Servicer and Collateral Custodian
Fee Letter, or to deliver any required Monthly Report or other Required Reports
hereunder on or before the date occurring two Business Days after the date such
payment, transfer, deposit, instruction of notice or report is required to be
made or given, as the case may be, under the terms of this Agreement;
(b) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or the Purchase Agreement which has a
material adverse effect on the Secured Parties, which continues unremedied for a
period of 30 days after the first to occur of (i) the date on which written
notice of such failure requiring the same to be remedied shall have been given
to the Servicer by the Deal Agent and (ii) the date on which the Servicer
becomes aware thereof;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Secured Parties and which continues to be unremedied for a
period of 30 days after the first to occur of (i) the date on which written
notice of such incorrectness requiring the same to be remedied shall have been
given to the Servicer by the Deal Agent and (ii) the date on which the Servicer
becomes aware thereof;
(d) an Insolvency Event shall occur with respect to the
Servicer;
(e) any material delegation of the Servicer's duties which is
not permitted by Section 6.28;
(f) any financial or Asset information reasonably requested by
the Deal Agent or the Lender as provided herein is not reasonably provided as
requested;
(g) the rendering against the Servicer of a final judgment,
decree or order for the payment of money in excess of U.S. $100,000 and the
continuance of such judgment, decree or order unsatisfied and in effect for any
period of 61 consecutive days without a stay of execution;
(h) the failure of the Servicer to make any payment due with
respect to aggregate recourse debt or other obligations with an aggregate
principal amount exceeding U.S. $1,000,000 or the occurrence of any event or
condition which would permit acceleration of such recourse debt or other
obligations if such event or condition has not been waived;
(i) any change in the management of the Servicer relating to
the positions of President, CEO, Chairman of the Board and Executive Vice
President;
(j) any change in the control of the Servicer which takes the
form of either a merger or consolidation in which the Servicer is not the
surviving entity; or
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(k) the failure of the Servicer to make such operational
changes at the Originator as itemized for the Lender in due diligence within a
reasonable period of time, including (i) separation of the Vendor Service
Manager role into a credit role and a marketing role, (ii) implementation of
more rigorous asset value testing procedures in the underwriting and collections
process, (iii) modification and/or replacement of the Originator's collections
and charge-off policies with those of the Borrower and Servicer, and (iv)
implementation of a treasury/compliance function which will ensure accurate and
timely internal and external reporting.
Notwithstanding anything herein to the contrary, so long as any such Servicer
Default shall not have been remedied, the Deal Agent, by written notice to the
Servicer (with a copy to the Backup Servicer) (a "Termination Notice"), may
terminate all of the rights and obligations of the Servicer as Servicer under
this Agreement.
Section 6.25 Appointment of Successor Servicer.
----------------------------------
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 6.24, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Deal Agent in writing or, if no
such date is specified in such Termination Notice or otherwise specified by the
Deal Agent, until a date mutually agreed upon by the Servicer and the Deal
Agent. The Deal Agent may at the time described in the immediately preceding
sentence in its sole discretion, appoint the Backup Servicer as the Servicer
hereunder, and the Backup Servicer shall on such date assume all obligations of
the Servicer hereunder, and all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Backup Servicer; provided, however,
that the Successor Servicer shall not (i) be responsible or liable for any past
actions or omissions of the outgoing Servicer or (ii) be obligated to make
Servicer Advances. In the event that the Deal Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unwilling
or unable to assume such obligations on such date, the Deal Agent shall as
promptly as possible appoint a successor servicer (the Backup Servicer or any
such other successor, the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Deal Agent. If the Deal Agent within 60 days of receipt of a Termination Notice
is unable to obtain any bids from Eligible Servicers and the Servicer delivers
an Officer's Certificate to the effect that it cannot in good faith cure the
Servicer Default which gave rise to a transfer of servicing, then the Deal Agent
shall offer the Borrower the right to accept retransfer of all the Assets and
the Borrower may accept re-transfer of all the Assets, provided, however, that
if the long-term unsecured debt obligations of the Borrower are not rated at the
time of such purchase at least investment grade by each rating agency providing
a rating in respect of such long-term unsecured debt obligations, no such
re-transfer shall occur unless the Borrower shall deliver an Opinion of Counsel
reasonably acceptable to the Deal Agent that such re-transfer would not
constitute a fraudulent conveyance of the Borrower. The amount to be paid and
deposited in respect of such re-transfer shall be equal to the sum of the
Principal outstanding plus all Interest that has accrued thereon and that will
accrue thereon. In the event that a Successor Servicer has not been appointed
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and has not accepted its appointment at the time when the Servicer ceases to act
as Servicer, the Deal Agent shall petition a court of competent Jurisdiction to
appoint any established financial institution having a net worth of not less
than U.S. $50,000,000 and whose regular business includes the servicing of
Contracts as the Successor Servicer hereunder.
(b) Upon its appointment, the Backup Servicer (subject to
Section 6.25(a)) or the Successor Servicer, as applicable, shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Backup Servicer or the Successor Servicer, as applicable.
(c) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this
Agreement and shall pass to and be vested in the Borrower and, without
limitation, the Borrower is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Servicer agrees to cooperate with the Borrower in
effecting the termination of the responsibilities and rights of the Servicer to
conduct servicing on the Contracts in the Collateral.
(d) Upon the Backup Servicer receiving notice that it is
required to serve as the Servicer hereunder pursuant to the foregoing provisions
of this Section 6.25, the Backup Servicer will promptly begin the transition to
its role as Servicer.
(e) The Backup Servicer shall be entitled to receive its
reasonable costs incurred in transitioning to Servicer.
Section 6.26 Notification.
-------------
Upon the Servicer becoming aware of the occurrence of any
Servicer Default, the Servicer shall promptly give written notice thereof to the
Deal Agent and the Backup Servicer.
Section 6.27 Protection of Right, Title and Interest to
------------------------------------------
Assets.
-------
(a) The Servicer shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any other
necessary documents covering the right, title and interest of the Deal Agent as
agent for the Secured Parties and of the Secured Parties to the Assets to be
promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the Deal
Agent as agent for the Secured Parties hereunder to all property comprising the
Assets. The Servicer shall deliver to the Deal Agent file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recording, registration or filing.
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The Borrower shall cooperate fully with the Servicer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 6.27(a).
(b) The Servicer will give the Deal Agent at least 30 days'
prior written notice of any relocation of any office from which it services
Contracts in the Collateral or keeps the Contract Files or of its principal
executive office and whether, as a result of such relocation, the applicable
provisions of the UCC or any other applicable law governing the perfection of
interests in property would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the security interest of the Deal Agent
as agent for the Secured Parties in the Contracts in the Collateral and the
proceeds thereof. The Servicer will at all times maintain each office from which
it services Contracts in the Collateral within the United States of America.
Section 6.28 Subservicers.
-------------
The Servicer shall have the right to delegate to the
Subservicer the performance of the duties and obligations of the Servicer
hereunder. The Deal Agent shall be provided a copy by the Servicer of any
written contracts with the Subservicer. Notwithstanding the performance of any
of its obligations hereunder by the Subservicer, the Servicer shall remain
obligated and liable to the Deal Agent and the Lenders for the servicing of the
Contracts in accordance with the provisions of this Agreement, without any
diminution of such obligation or of any liability by virtue of such performance
by the Subservicer. The fees and expenses of any such Subservicer shall be as
agreed between the Servicer and such Subservicer from time to time and neither
the Issuer, the Deal Agent nor any Lender shall have any responsibility
therefor. Servicer covenants and agrees that in the event the Deal Agent and the
Lenders shall notify the Servicer that they have reason to believe that the
Subservicer would be unable to perform its obligations hereunder, the Servicer
shall terminate all of the rights and obligations of the Subservicer.
Section 6.29 Release of Contract Files.
--------------------------
The Borrower may, with the prior written consent of the Deal
Agent (such consent not to be unreasonably withheld), require that the
Collateral Custodian release each Contract File (a) delivered to the Collateral
Custodian in error, (b) for which a Substitute Contract has been substituted in
accordance with Section 2.13, (c) as to which the lien on the related Equipment
has been so released pursuant to Section 5.3, (d) which has been retransferred
to the Borrower pursuant to Section 5.5 or 5.6, or (e) which is required to be
redelivered to the Borrower in connection with the termination of this
Agreement, in each case by submitting to the Collateral Custodian and the Deal
Agent a written request substantially in the form of Exhibit G hereto (signed by
both the Borrower and the Deal Agent) specifying the Contracts to be so released
and reciting that the conditions to such release have been met (and specifying
the section or sections of this Agreement being relied upon for such release).
The Collateral Custodian shall upon its receipt of each such request for release
executed by the Borrower and the Deal Agent promptly, but in any event within 5
Business Days, release the Contract Files so requested to the Borrower.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
------------------
Each of the following events shall constitute an Event of
Default (an "Event of Default") under this Agreement:
(a) as of any Reporting Date, the Delinquency Ratio for the
preceding Determination Date exceeds 5.0%;
(b) as of any Reporting Date, the Default Ratio for the
preceding Determination Date exceeds 3.0%;
(c) the Overcollateralization is less than the Minimum
Overcollateralization, and the Borrower does not, within one Business Day,
contribute Eligible Contracts and/or pay down the outstanding balance of the
Loan in an amount sufficient to cause the Overcollateralization to equal or
exceed the Minimum Overcollateralization;
(d) the Borrower is not in compliance with the Portfolio
Concentration Criteria, and such noncompliance is not cured within 5 Business
Days;
(e) a Servicer Default occurs and is continuing;
(f) (i) failure on the part of the Borrower to make any
payment or deposit required by the terms of this Agreement on the day such
payment or deposit is required to be made or
(ii) failure on the part of the Borrower to observe or perform
any of its covenants or agreements set forth in this Agreement, which
failure has a material adverse effect on the interests of the Deal
Agent, any Secured Party, the Liquidity Agent or any Investor and which
continues unremedied for a period of 30 days or more after written
notice to Borrower; provided, that only a five Business Day cure period
shall apply in the case of a failure by the Borrower to observe its
covenants not to grant a security interest or otherwise intentionally
create a Lien on the Contracts;
(g) any representation or warranty made by the Borrower in
this Agreement or any information required to be given by the Borrower to the
Deal Agent to identify Contracts pursuant to this Agreement, shall prove to have
been incorrect in any material respect when made or delivered and which
continues to be incorrect in any material respect for a period of 30 days after
written notice or actual knowledge thereof;
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(h) the occurrence of an Insolvency Event relating to the
Originator, the Borrower or the Servicer;
(i) the Borrower shall become, or become controlled by, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "40 Act") or the arrangements contemplated by this Agreement
shall require registration as an "investment company" within the meaning of the
40 Act;
(j) a regulatory, tax or accounting body has ordered that the
activities of the Borrower or any Affiliate of the Borrower, contemplated hereby
be terminated or, as a result of any other event or circumstance, the activities
of the Borrower contemplated hereby may reasonably be expected to cause the
Borrower or any of its respective Affiliates to suffer materially adverse
regulatory, accounting or tax consequences; or
(k) any (i) breach of any provision set forth in the
Subordinated Promissory Note or the Unsecured Promissory Note, or (ii) amendment
of either of such notes without the prior written approval of the Deal Agent.
Section 7.2 Remedies.
---------
(a) Upon the occurrence of an Event of Default the Termination
Date shall be deemed to have occurred automatically. Upon the occurrence of an
Event of Default other than that referred to in Section 7.1(h) in addition to
the other remedies provided for herein, the Deal Agent and the Lender may
declare the Principal and all other Aggregate Unpaids to be immediately due and
payable, together with all Interest thereon and fees and expenses accruing under
this Agreement, and shall have all rights and remedies provided under the UCC
and other applicable laws, which rights shall be cumulative. Upon the occurrence
of an Event of Default referred to in Section 7.1(h), in addition to the
remedies provided herein, such amounts referenced in the immediately preceding
sentence shall immediately and automatically become due and payable without any
further action by any Person. Upon such declaration or such automatic
acceleration, the balance then outstanding under this Agreement shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower and the Servicer.
(b) Upon the occurrence of an Event of Default, and in
addition to the remedies provided herein, the Deal Agent and the Lender shall
have the right to obtain physical possession of the Servicer's records and all
other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come into the
possession of the Borrower or any third party acting for the Borrower, and the
Borrower shall deliver to the Deal Agent such assignments as the Deal Agent
shall request. The Borrower shall be responsible for paying any fees of any
Servicer resulting from the termination of a Servicer due to an Event of
Default. The Deal Agent shall have the right to demand transfer of all servicing
rights and obligations to a new servicer acceptable to the Deal Agent (such new
servicer shall receive a servicing fee or any other amounts necessary to assure
the ability of the Deal Agent to find an appropriate successor servicer). The
Deal Agent and the Lender shall be entitled to specific performance of all
agreements of the Borrower contained in this Agreement.
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(c) Without limiting the generality of the foregoing
provisions of this Section 7.2, the Deal Agent and the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell (on a servicing
released basis, at the Deal Agent or the Lender's option), lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Deal Agent or the Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Deal Agent and the Lender shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Borrower, which right or
equity is hereby waived or released. The Borrower further agrees, at the Deal
Agent or the Lender's request, to assemble the Collateral and make it available
to the Deal Agent or the Lender at places which the Deal Agent or the Lender
shall reasonably select, whether at the Borrower's premises or elsewhere. The
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender hereunder, including without limitation reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the amounts owing to
the Lender hereunder in respect of Principal, Interest, fees, expenses,
indemnification or otherwise, in such order as the Lender may elect, and only
after such application and after the payment by the Lender of any other amount
required or permitted by any provision of law, including without limitation
Section 9-504(1)(c) of the UCC, need the Lender account for the surplus, if any,
to the Borrower. To the extent permitted by applicable law, the Borrower waives
all claims, damages and demands it may acquire against the Deal Agent and the
Lender arising out of the exercise by the Deal Agent or the Lender of any of its
rights hereunder, other than those claims, damages and demands arising from the
gross negligence or willful misconduct of the Deal Agent or the Lender. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition. The Borrower shall remain liable for
any deficiency (together with all Interest thereon and fees and expenses
accruing under this Agreement) if the proceeds of any sale or other disposition
of the Collateral are insufficient to pay the amounts owing to the Lender and
the fees and disbursements of any attorneys employed by the Lender to collect
such deficiency.
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(d) The Deal Agent's and the Lender's duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Deal Agent or the Lender, as the case may be, deals
with similar property for its own account. Neither the Deal Agent, the Lender
nor any of their directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnities by the Borrower.
----------------------------
Without limiting any other rights which the Deal Agent, the
Backup Servicer, the Collateral Custodian, the Liquidity Agent, the Secured
Parties or any of their respective Affiliates may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify the Deal Agent, the
Backup Servicer, the Collateral Custodian, the Liquidity Agent, the Secured
Parties, and each of their respective Affiliates and officers, directors,
employees and agents thereof from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by, but
excluding allocations of overhead expenses of any such Indemnified Party or
other non-monetary damages of any such Indemnified Party any of them arising out
of or as a result of this Agreement or the Grant of the Collateral or in respect
of any Asset or any Contract, excluding, however, Indemnified Amounts to the
extent resulting from negligence or willful misconduct on the part of the Deal
Agent, the Backup Servicer, the Collateral Custodian, the Liquidity Agent, such
Secured Parties or such Affiliate. If the Borrower has made any indemnity
payment pursuant to this Section 8.1 and such payment fully indemnified the
recipient thereof and the recipient thereafter collects any payments from others
in respect of such Indemnified Amounts then, the recipient shall repay to the
Borrower an amount equal to the amount it has collected from others in respect
of such indemnified amounts. Without limiting the foregoing, the Borrower shall
indemnify the Deal Agent, the Backup Servicer, the Collateral Custodian, the
Liquidity Agent, the Secured Parties and each of their respective Affiliates and
officers, directors, employees and agents thereof for Indemnified Amounts
relating to or resulting from:
(a) any Contract treated as or represented by the Borrower to
be an Eligible Contract which is not at the applicable time an Eligible
Contract;
(b) reliance on any representation or warranty made or deemed
made by the Borrower, the Servicer (if the Originator or one of its
Affiliates) or any of their respective officers under or in connection
with this Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;
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(c) the failure by the Borrower or the Servicer (if the
Originator or one of its Affiliates) to comply with any term, provision
or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any applicable law, rule or
regulation with respect to any Asset, the related Contract, or the
nonconformity of any Asset, the related Contract with any such
applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the relevant
Lender or to transfer to such Lender, an undivided ownership interest
in the Assets, together with all Collections, free and clear of any
Adverse Claim whether existing as of the Closing Date or at any time
thereafter;
(e) the failure to maintain, as of the close of business on
each Business Day prior to the Termination Date, an amount of Principal
outstanding which is less than or equal to the lesser of (i) the Credit
Limit on such Business Day, or (ii) the Borrowing Base on such Business
Day;
(f) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Assets which are, or are purported to be, Collateral, whether at
the time of any Grant or at any subsequent time;
(g) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Asset which is, or is purported to be, Collateral (including,
without limitation, a defense based on such Asset or the related
Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the merchandise or services
related to such Asset or the furnishing or failure to furnish such
merchandise or services;
(h) any failure of the Borrower or the Servicer (if the
Originator or one of its Affiliates) to perform its duties or
obligations in accordance with the provisions of this Agreement or any
failure by the Originator, the Borrower or any Affiliate thereof to
perform its respective duties under the Contracts;
(i) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or
services which are the subject of any Asset or Contract;
(j) the failure by Borrower to pay when due any Taxes for
which the Borrower is liable, including without limitation, sales,
excise or personal property taxes payable in connection with the
Collateral;
(k) any repayment by the Deal Agent, the Liquidity Agent or a
Secured Party of any amount previously distributed in reduction of
Principal or payment of Interest or any other amount due hereunder or
under any Hedging Agreement, in each case which amount the Deal Agent,
the Liquidity Agent or a Secured Party believes in good faith is
required to be repaid;
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(l) the commingling of Collections of Assets in the Collateral
at any time with other funds;
(m) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of the Loan or reinvestments or
the ownership of the Collateral or in respect of any Asset or Contract;
(n) any failure by the Borrower to give reasonably equivalent
value to the Originator in consideration for the transfer by the
Originator to the Borrower of any Assets or any attempt by any Person
to void or otherwise avoid any such transfer under any statutory
provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
(o) the failure of the Borrower, the Originator or any of
their respective agents or representatives to remit Collections to the
Servicer or the Deal Agent.
Any amounts subject to the indemnification provisions of this Section
8.1 shall be paid by the Borrower solely pursuant to the provisions of Sections
2.4 and 2.5 hereof, as the case may be, to the Deal Agent within two Business
Days following the Deal Agent's demand therefor.
If for any reason the indemnification provided above in this
Section 8.1 is unavailable to the Indemnified Person or is insufficient to hold
an Indemnified Person harmless, then Servicer shall contribute to the amount
paid or payable by such Indemnified Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Person on the one hand and the
Borrower on the other hand but also the relative fault of such Indemnified
Person as well as any other relevant equitable considerations.
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
Section 9.1 Authorization and Action.
-------------------------
(a) Each Secured Party hereby designates and appoints the Deal
Agent as Deal Agent hereunder, and authorizes the Deal Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the Deal Agent by the terms of this Agreement together with such powers as are
reasonably incidental thereto. The Deal Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Deal
Agent shall be read into this Agreement or otherwise exist for the Deal Agent.
In performing its functions and duties hereunder, the Deal Agent shall act
solely as agent for the Secured Parties and does not assume nor shall be deemed
to have assumed any obligation or relationship of trust or agency with or for
the Borrower or any of its successors or assigns. The Deal Agent shall not be
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required to take any action which exposes the Deal Agent to personal liability
or which is contrary to this Agreement or applicable law. The appointment and
authority of the Deal Agent hereunder shall terminate at the indefeasible
payment in full of the Aggregate Unpaids.
(b) Each Investor hereby designates and appoints First Union
as Liquidity Agent hereunder, and authorizes the Liquidity Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the Liquidity Agent by the terms of this Agreement together with such powers as
are reasonably incidental thereto. The Liquidity Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Investor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Liquidity Agent shall be read into this Agreement or otherwise exist for the
Liquidity Agent. In performing its functions and duties hereunder, the Liquidity
Agent shall act solely as agent for the Investors and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Borrower or any of its successors or assigns. The Liquidity Agent
shall not be required to take any action which exposes the Liquidity Agent to
personal liability or which is contrary to this Agreement or applicable law. The
appointment and authority of the Liquidity Agent hereunder shall terminate at
the indefeasible payment in full of the Aggregate Unpaids.
Section 9.2 Delegation of Duties.
---------------------
(a) The Deal Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Deal
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
(b) The Liquidity Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The
Liquidity Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
Section 9.3 Exculpatory Provisions.
-----------------------
(a) Neither the Deal Agent nor any of its directors, officers,
agents or employees shall be (i) liable for any action lawfully taken or omitted
to be taken by it or them under or in connection with this Agreement (except for
its, their or such Person's own gross negligence or willful misconduct or, in
the case of the Deal Agent, the breach of its obligations expressly set forth in
this Agreement), or (ii) responsible in any manner to any of the Secured Parties
for any recitals, statements, representations or warranties made by the Borrower
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Borrower to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Deal Agent shall not be under any obligation to any Secured
Party to ascertain or to inquire as to the observance or performance of any of
the agreements or covenants contained in, or conditions of, this Agreement, or
to inspect the properties, books or records of the Borrower. The Deal Agent
shall not be deemed to have knowledge of any Event of Default unless the Deal
Agent has received notice from the Borrower or a Secured Party.
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(b) Neither the Liquidity Agent nor any of its directors,
officers, agents or employees shall be (i) liable for any action lawfully taken
or omitted to be taken by it or them under or in connection with this Agreement
(except for its, their or such Person's own gross negligence or willful
misconduct or, in the case of the Liquidity Agent, the breach of its obligations
expressly set forth in this Agreement), or (ii) responsible in any manner to the
Deal Agent or any of the Secured Parties for any recitals, statements,
representations or warranties made by the Borrower contained in this Agreement
or in any certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this Agreement or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other document furnished in connection herewith, or for
any failure of the Borrower to perform its obligations hereunder, or for the
satisfaction of any condition specified in Article III. The Liquidity Agent
shall not be under any obligation to the Deal Agent or any Secured Party to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrower. The Liquidity Agent
shall not be deemed to have knowledge of any Event of Default unless the
Liquidity Agent has received notice from the Borrower, the Deal Agent or a
Secured Party.
Section 9.4 Reliance.
---------
(a) The Deal Agent shall in all cases be entitled to rely, and
shall be fully protected in relying, upon any document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Deal Agent. The Deal Agent shall
in all cases be fully justified in failing or refusing to take any action under
this Agreement or any other document furnished in connection herewith unless it
shall first receive such advice or concurrence of VFCC or the Required Investors
or all of the Secured Parties, as applicable, as it deems appropriate or it
shall first be indemnified to its satisfaction by the Secured Parties, provided
that unless and until the Deal Agent shall have received such advice, the Deal
Agent may take or refrain from taking any action, as the Deal Agent shall deem
advisable and in the best interests of the Secured Parties. The Deal Agent shall
in all cases be fully protected in acting, or in refraining from acting, in
accordance with a request of VFCC or the Required Investors or all of the
Secured Parties, as applicable, and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Secured Parties.
(b) The Liquidity Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Liquidity Agent. The Liquidity
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Agent shall in all cases be fully justified in failing or refusing to take any
action under this Agreement or any other document furnished in connection
herewith unless it shall first receive such advice or concurrence of Required
Investors as it deems appropriate or it shall first be indemnified to its
satisfaction by the Investors, provided that unless and until the Liquidity
Agent shall have received such advice, the Liquidity Agent may take or refrain
from taking any action, as the Liquidity Agent shall deem advisable and in the
best interests of the Investors. The Liquidity Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with a request
of the Required Investors and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Investors.
Section 9.5 Non-Reliance on Deal Agent, Liquidity Agent and
-----------------------------------------------
Other Lenders.
--------------
Each Secured Party expressly acknowledges that neither the
Deal Agent, the Liquidity Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Deal Agent or the Liquidity Agent
hereafter taken, including, without limitation, any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Deal Agent or the Liquidity Agent. Each Secured Party represents and warrants to
the Deal Agent and to the Liquidity Agent that it has and will, independently
and without reliance upon the Deal Agent, the Liquidity Agent or any other
Secured Party and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement or Hedging Agreement, as the case may be.
Section 9.6 Reimbursement and Indemnification.
----------------------------------
The Investors agree to reimburse and indemnify VFCC, the Deal
Agent, the Liquidity Agent and each of their respective officers, directors,
employees, representatives and agents ratably according to their pro rata
shares, to the extent not paid or reimbursed by the Borrower (i) for any amounts
for which VFCC, the Liquidity Agent, acting in its capacity as Liquidity Agent,
or the Deal Agent, acting in its capacity as Deal Agent, is entitled to
reimbursement by the Borrower hereunder and (ii) for any other expenses incurred
by VFCC, the Liquidity Agent, acting in its capacity as Liquidity Agent, or the
Deal Agent, in its capacity as Deal Agent and acting on behalf of the Secured
Parties, in connection with the administration and enforcement of this
Agreement.
Section 9.7 Deal Agent and Liquidity Agent in their Individual
--------------------------------------------------
Capacities.
-----------
The Deal Agent, the Liquidity Agent and each of their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower or any Affiliate of the
Borrower as though the Deal Agent or the Liquidity Agent, as the case may be,
were not the Deal Agent or the Liquidity Agent, as the case may be, hereunder.
With respect to the acquisition of interests in the Loan pursuant to this
Agreement, the Deal Agent, the Liquidity Agent and each of their respective
Affiliates shall have the same rights and powers under this Agreement as any
83
Lender and may exercise the same as though it were not the Deal Agent or the
Liquidity Agent, as the case may be, and the terms "Investor," "Lender,"
"Investors" and "Lenders" shall include the Deal Agent or the Liquidity Agent,
as the case may be, in its individual capacity.
Section 9.8 Successor Deal Agent or Liquidity Agent.
----------------------------------------
(a) The Deal Agent may, upon 5 days' notice to the Borrower
and the Secured Parties, and the Deal Agent will, upon the direction of all of
the Secured Parties (other than the Deal Agent, in its individual capacity)
resign as Deal Agent. If the Deal Agent shall resign, then the Required
Investors during such 5-day period shall appoint from among the Secured Parties
a successor agent. If for any reason no successor Deal Agent is appointed by the
Required Investors during such 5-day period, then effective upon the expiration
of such 5-day period, the Secured Parties shall perform all of the duties of the
Deal Agent hereunder and the Borrower shall make all payments in respect of the
Aggregate Unpaids or under any fee letter delivered by the Originator to the
Deal Agent and the Secured Parties directly to the applicable Secured Party and
for all purposes shall deal directly with the Secured Party. After any retiring
Deal Agent's resignation hereunder as Deal Agent, the provisions of this Article
VIII and Article IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Deal Agent under this Agreement.
(b) The Liquidity Agent may, upon 5 days' notice to the
Borrower, the Deal Agent and the Investors, and the Liquidity Agent will, upon
the direction of all of the Investors (other than the Liquidity Agent, in its
individual capacity) resign as Liquidity Agent. If the Liquidity Agent shall
resign, then the Required Investors during such 5-day period shall appoint from
among the Investors a successor Liquidity Agent. If for any reason no successor
Liquidity Agent is appointed by the Required Investors during such 5-day period,
then effective upon the expiration of such 5-day period, the Investors shall
perform all of the duties of the Liquidity Agent hereunder and all payments in
respect of the Aggregate Unpaids. After any retiring Liquidity Agent's
resignation hereunder as Liquidity Agent, the provisions of this Article VIII
and Article IX shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Liquidity Agent under this Agreement.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Assignments and Participations.
-------------------------------
(a) Each Investor may upon at least 30 days' notice to VFCC,
the Deal Agent, the Liquidity Agent and S&P and Xxxxx'x, assign to one or more
banks or other entities all or a portion of its rights and obligations under
this Agreement; provided, however, that (i) each such assignment shall be of a
constant, and not a varying percentage of all of the assigning Investor's rights
and obligations under this Agreement, (ii) the amount of the Loan of the
assigning Investor being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
84
shall in no event be less than the lesser of (A) $15,000,000 or an integral
multiple of $1,000,000 in excess of that amount and (B) the full amount of the
assigning Investor's Loan, (iii) each such assignment shall be to an Eligible
Assignee, (iv) the parties to each such assignment shall execute and deliver to
the Deal Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, together with a processing and recordation fee of $3,500 or such
lesser amount as shall be approved by the Deal Agent, (v) the parties to each
such assignment shall have agreed to reimburse the Deal Agent, the Liquidity
Agent and VFCC for all fees, costs and expenses (including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for each of the Deal
Agent, the Liquidity Agent and VFCC) incurred by the Deal Agent, the Liquidity
Agent and VFCC, respectively, in connection with such assignment and (vi) there
shall be no increased costs, expenses or taxes incurred by the Deal Agent, the
Liquidity Agent or VFCC upon such assignment or participation, and provided
further that upon the effective date of such assignment the provisions of
Section 3.03(f) of the Administration Agreement shall be satisfied. Upon such
execution, delivery and acceptance by the Deal Agent and the Liquidity Agent and
the recording by the Deal Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be the date of
acceptance thereof by the Deal Agent and the Liquidity Agent, unless a later
date is specified therein, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of an Investor hereunder and (ii) the Investor assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Investor's
rights and obligations under this Agreement, such Investor shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Investor assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Investor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Investor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of VFCC or the performance or observance by VFCC of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Deal Agent or the
Liquidity Agent, such assigning Investor or any other Investor 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; (v) such assigning Investor and such assignee confirm that such
assignee is an Eligible Assignee; (vi) such assignee appoints and authorizes
85
each of the Deal Agent and the Liquidity Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
such agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as an Investor.
(c) On behalf of the Borrower, the Deal Agent shall maintain
at its address referred to herein a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders, the participants, the Investors and the Commitment
of, and the interest of, the Loan owned by each investor from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and VFCC, the Borrower and the Investors may
treat each Person whose name is recorded in the Register as an Investor
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by VFCC, the Liquidity Agent or any Investor at any reasonable
time and from time to time upon reasonable prior notice.
(d) Subject to the provisions of Section 10.1(a), upon its
receipt of an Assignment and Acceptance executed by an assigning Investor and an
assignee, the Deal Agent and the Liquidity Agent shall each, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit B
hereto, accept such Assignment and Acceptance, and the Deal Agent shall then (i)
record the information contained therein in the Register and (ii) give prompt
notice thereof to VFCC.
(e) Each Investor may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Loan owned by it); provided, however, that (i) such
Investor's obligations under this Agreement (including, without limitation, its
Commitment hereunder) shall remain unchanged, (ii) such Investor shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Deal Agent and the other Investors shall continue to
deal solely and directly with such Investor in connection with such Investor's
rights and obligations under this Agreement, and provided further that the Deal
Agent shall have confirmed that upon the effective date of such participation
the provisions of Section 3.03(f) of the Administration Agreement shall be
satisfied. Notwithstanding anything herein to the contrary, each participant
shall have the rights of an Investor (including any right to receive payment)
under Sections 2.12 and 2.13; provided, however, that no participant shall be
entitled to receive payment under either such Section in excess of the amount
that would have been payable under such Section by the Borrower to the Investor
granting its participation had such participation not been granted, and no
Investor granting a participation shall be entitled to receive payment under
either such Section in an amount which exceeds the sum of (i) the amount to
which such Investor is entitled under such Section with respect to any portion
of the Loan owned by such Investor which is not subject to any participation
plus (ii) the aggregate amount to which its participants are entitled under such
Sections with respect to the amounts of their respective participations. With
respect to any participation described in this Section 10.1, the participant's
86
rights as set forth in the agreement between such participant and the applicable
Investor to agree to or to restrict such Investor's ability to agree to any
modification, waiver or release of any of the terms of this Agreement or to
exercise or refrain from exercising any powers or rights which such Investor may
have under or in respect of this Agreement shall be limited to the right to
consent to any of the matters set forth in Section 11.1 of this Agreement.
(f) Each Investor may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.1, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or VFCC furnished to such
Investor by or on behalf of the Borrower or VFCC.
(g) In the event (i) an Investor ceases to qualify as an
Eligible Assignee, or (ii) an Investor makes demand for compensation pursuant to
Section 2.9 or Section 2.10, VFCC may, and, upon the direction of the Borrower
and prior to the occurrence of an Event of Default, shall, in any such case,
notwithstanding any provision to the contrary herein, replace such Investor with
an Eligible Assignee by giving three Business Days' prior written notice to such
Investor. In the event of the replacement of an Investor, such Investor agrees
(A) to assign all of its rights and obligations hereunder to an Eligible
Assignee selected by VFCC upon payment to such Investor of the amount of such
Investor's Principal together with any accrued and unpaid Interest thereon and
all other amounts owing to such Investor hereunder and (B) to execute and
deliver an Assignment and Acceptance and such other documents evidencing such
assignment as shall be necessary or reasonably requested by VFCC or the Deal
Agent. In the event that any Investor ceases to qualify as an Eligible Assignee,
such affected Investor agrees (I) to give the Deal Agent, the Borrower and VFCC
prompt written notice thereof and (II) subject to the following proviso, to
reimburse the Deal Agent, the Liquidity Agent, the Borrower, VFCC and the
relevant assignee for all fees, costs and expenses (including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for each
of the Deal Agent, the Liquidity Agent, the Borrower and VFCC and such assignee)
incurred by the Deal Agent, the Liquidity Agent, the Borrower, VFCC and such
assignee, respectively, in connection with any assignment made pursuant to this
Section 10.1(g) by such affected Investor; provided, however, that such affected
Investor's liability for such costs, fees and expenses shall be limited to the
amount of any up-front fees paid to such affected Investor at the time that it
became a party to this Agreement.
(h) Nothing herein shall prohibit any Investor from pledging
or assigning as collateral any of its rights under this Agreement to any Federal
Reserve Bank in accordance with applicable law and any such pledge or collateral
assignment may be made without compliance with Section 10.1(a) or Section
10.1(b).
(i) In the event any Investor causes increased costs, expenses
or taxes to be incurred by the Deal Agent, Liquidity Agreement or VFCC in
connection with the assignment or participation of such Investor's rights and
obligations under this Agreement to an Eligible Assignee then such Investor
agrees that it will make reasonable efforts to assign such increased costs,
expenses or taxes to such Eligible Assignee in accordance with the provisions of
this Agreement.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendments and Waivers.
-----------------------
(a) Except as provided in this Section 11.1, no amendment, waiver or
other modification of any provision of this Agreement shall be effective without
the written agreement of the Borrower, the Deal Agent and the Required
Investors; provided, however, that no such amendment, waiver or modification
affecting the rights or obligations of any Hedge Counterparty, the Backup
Servicer or the Collateral Custodian shall be effective as against that Hedge
Counterparty, the Backup Servicer and/or the Collateral Custodian, as the case
may be, without the written agreement of such Persons. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) No amendment, waiver or other modification of this Agreement shall:
(i) without the consent of each affected Lender, (A) extend
the Maturity Date or the date of any payment or deposit of Collections
by the Borrower or the Servicer, (B) reduce the rate or extend the time
of payment of Interest (or any component thereof), (C) reduce any fee
payable to the Deal Agent for the benefit of the Lenders, (D) except
pursuant to Article X hereof, change the amount of the Principal of any
Lender, an Investor's pro rata share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this Section 11.1(b), (F) consent to or permit the
assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (G) amend or modify any defined
term (or any defined term used directly or indirectly in such defined
term) used in clauses (A) through (E) above in a manner which would
circumvent the intention of the restrictions set forth in such clauses;
or
(ii) without the written consent of the Deal Agent, amend,
modify or waive any provision of this Agreement if the effect thereof
is to affect the rights or duties of such Agent.
(c) Notwithstanding the foregoing provisions of this Section 11.1,
without the consent of the Investors, the Deal Agent may, with the consent of
the Borrower amend this Agreement solely to add additional Persons as Investors
hereunder. Any modification or waiver shall apply to each of the Lenders equally
and shall be binding upon the Borrower, the Lenders and the Deal Agent.
Section 11.2 Notices, Etc.
-------------
All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or specified in such party's
88
Assignment and Acceptance or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice by
mail, five days after being deposited in the United States mail, first class
postage prepaid, (b) notice by telex, when telexed against receipt of answer
back, or (c) notice by facsimile copy, when verbal communication of receipt is
obtained, except that notices and communications pursuant to Article 11 shall
not be effective until received with respect to any notice sent by mail or
telex.
Section 11.3 Ratable Payments.
-----------------
If any Secured Party, whether by setoff or otherwise, has
payment made to it with respect to any portion of the Aggregate Unpaids owing to
such Secured Party (other than payments received pursuant to Section 8.1 in a
greater proportion than that received by any other Secured Party), such Secured
Party agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Secured Parties so
that after such purchase each Secured Party will hold its ratable proportion of
the Aggregate Unpaids; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Secured Party, such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.
Section 11.4 No Waiver, Rights and Remedies.
-------------------------------
No failure on the part of the Deal Agent, the Collateral
Custodian, the Backup Servicer or a Secured Party to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right. The
rights and remedies herein provided are cumulative and not exclusive of any
rights and remedies provided by law.
Section 11.5 Binding Effect; Benefit of Agreement.
-------------------------------------
This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Deal Agent, the Backup Servicer, the Collateral Custodian,
the Secured Parties and their respective successors and permitted assigns and,
in addition, the provisions of 2.4(a)(i) and 2.5(a)(i) shall inure to the
benefit of each Hedge Counterparty, whether or not that Hedge Counterparty is a
Secured Party.
Section 11.6 Term of this Agreement.
-----------------------
This Agreement, including, without limitation, the Borrower's
obligation to observe its covenants set forth in Article V, and the Servicer's
obligation to observe its covenants set forth in Article VI, shall remain in
full force and effect until the Collection Date; provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Borrower pursuant to Articles III and IV and
the indemnification and payment provisions of Article VIII and Article IX and
the provisions of Section 11.9 and Section 11.10 shall be continuing and shall
survive any termination of this Agreement.
89
Section 11.7 Governing Law; Consent to Jurisdiction; Waiver of
-------------------------------------------------
Objection to Venue.
-------------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE SECURED PARTIES,
THE BORROWER, THE LIQUIDITY AGENT AND THE DEAL AGENT HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
Section 11.8 Waiver of Jury Trial.
---------------------
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE SECURED
PARTIES, THE BORROWER AND THE DEAL AGENT WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 11.9 Costs, Expenses and Taxes.
--------------------------
(a) In addition to the rights of indemnification granted to
the Deal Agent, the Liquidity Agent, the Backup Servicer, the Collateral
Custodian, the Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under Article VIII hereof, the Borrower
agrees to pay on demand all costs and expenses of the Deal Agent, the Liquidity
Agent, the Backup Servicer, the Collateral Custodian and the Secured Parties
incurred in connection with the preparation, execution, delivery, administration
(including periodic auditing), amendment or modification of, or any waiver or
consent issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith (excluding any Hedging Agreement),
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Deal Agent, the Liquidity Agent, the Backup Servicer, the
Collateral Custodian and the Secured Parties with respect thereto and with
respect to advising the Deal Agent, the Liquidity Agent, the Backup Servicer,
the Collateral Custodian and the Secured Parties as to their respective rights
and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith (excluding any Hedging Agreement), and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Deal Agent, the Liquidity Agent, the Backup Servicer, the
Collateral Custodian or the Secured Parties in connection with the enforcement
of this Agreement and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement).
90
(b) The Borrower shall pay on demand any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
the other documents to be delivered hereunder or any agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Lender in connection with this Agreement or the funding or maintenance of
Purchases hereunder.
(c) The Borrower shall pay on demand all other costs, expenses
and Taxes (excluding income taxes) incurred by any Issuer or any shareholder of
such Issuer ("Other Costs"), including, without limitation, all costs and
expenses incurred by the Deal Agent in connection with periodic audits of the
Borrower's or the Servicer's books and records and the cost of rating such
Issuer's commercial paper with respect to financing its purchase of Borrowing
Bases hereunder by independent financial rating agencies.
Section 11.10 No Proceedings.
---------------
Each of the Borrower, the Deal Agent, the Liquidity Agent, the
Servicer, the Subservicer, the Backup Servicer, the Collateral Custodian and the
Secured Parties hereby agrees that it will not institute against, or join any
other Person in instituting against, VFCC any proceedings of the type referred
to in the definition of Insolvency Event hereunder until one year and one day
have elapsed since the last day on which any Commercial Paper Notes remained
outstanding.
Section 11.11 Recourse Against Certain Parties.
---------------------------------
(a) No recourse under or with respect to any obligation,
covenant or agreement (including, without limitation, the payment of any fees or
any other obligations) of any Secured Party as contained in this Agreement or
any other agreement, instrument or document entered into by it pursuant hereto
or in connection herewith shall be had against any administrator of such Secured
Party or any incorporator, affiliate, stockholder, officer, employee or director
of such Secured Party or of any such administrator, as such, by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that the
agreements of such Secured Party contained in this Agreement and all of the
other agreements, instruments and documents entered into by it pursuant hereto
or in connection herewith are, in each case, solely the corporate obligations of
such Secured Party, provided that, in the case of VFCC, such liabilities shall
be paid only after the repayment in full of all Commercial Paper Notes and all
other liabilities contemplated in the program documents with respect to VFCC,
and that no personal liability whatsoever shall attach to or be incurred by any
administrator of such Secured Party or any incorporator, stockholder, affiliate,
officer, employee or director of such Secured Party or of any such
administrator, as such, or any of them, under or by reason of any of the
91
obligations, covenants or agreements of such Secured Party contained in this
Agreement or in any other such instrument, document or agreement, or which are
implied therefrom, and that any and all personal liability of every such
administrator of such Secured Party and each incorporator, stockholder,
affiliate, officer, employee or director of such Secured Party or of any such
administrator, or any of them, for breaches by such Secured Party of any such
obligations, covenants or agreements, which liability may arise either at common
law or in equity, by statute or constitution, or otherwise, is hereby expressly
waived as a condition of, and in consideration for, the execution of this
Agreement.
(b) Notwithstanding anything contained in this Agreement, VFCC
shall have no obligation to pay any amount required to be paid by it hereunder
to any of the Liquidity Agent, the Deal Agent, any Investor, the Collateral
Custodian, or the Backup Servicer in excess of any amount available to VFCC
after paying or making provision for the payment of its Commercial Paper Notes.
All payment obligations of VFCC hereunder are contingent upon the availability
of funds in excess of the amounts necessary to pay Commercial Paper Notes; and
each of the Liquidity Agent, the Deal Agent, each Investor, the Collateral
Custodian, and the Backup Servicer agrees that they shall not have a claim under
Section 101(5) of the Bankruptcy Code if and to the extent that any such payment
obligation exceeds the amount available to VFCC to pay such amounts after paying
or making provision for the payment of its Commercial Paper Notes.
(c) The provisions of this Section 11.11 shall survive the
termination of this Agreement.
Section 11.12 Protection of Ownership Interests of the
-----------------------------------------
Lenders; Intent of Parties; Security Interest.
----------------------------------------------
(a) The Borrower agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and documents, and
take all actions, that may reasonably be necessary or desirable, or that the
Deal Agent may reasonably request, to perfect, protect or more fully evidence
the Grant and the interests of the Secured Parties in and to the Collateral, or
to enable the Deal Agent or the Secured Parties to exercise and enforce their
rights and remedies hereunder.
(b) If the Borrower or the Servicer fails to perform any of
its obligations hereunder after five Business Days' notice from the Deal Agent,
the Deal Agent or any Secured Party may (but shall not be required to) perform,
or cause performance of, such obligation; and the Deal Agent's or such Secured
Party's costs and expenses incurred in connection therewith shall be payable by
the Borrower (if the Servicer that fails to so perform is the Borrower or an
Affiliate thereof) as provided in Article VIII, as applicable. The Borrower
irrevocably authorizes the Deal Agent and appoints the Deal Agent as its
attorney-in-fact to act on behalf of the Borrower (i) to execute on behalf of
the Borrower as debtor and to file financing statements necessary or desirable
in the Deal Agent's sole discretion to perfect and to maintain the perfection
and priority of the interest of the Secured Parties in the Assets and (ii) to
file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Assets as a financing statement in such
offices as the Deal Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Secured Parties in the Assets. This appointment is coupled with an interest and
is irrevocable.
92
(c) The parties hereto intend that this Agreement constitutes
a security agreement and the transactions effected hereby constitute secured
loans by the Lenders to the Borrower under applicable law. For such purpose, the
Borrower hereby transfers, conveys, assigns and grants to the Deal Agent, for
the benefit of the Secured Parties, a continuing security interest in all
Assets, all Collections, all Hedging Agreements and the proceeds of the
foregoing to secure the repayment of all Principal, all payments at any time due
or accrued in respect of the Interest, all Aggregate Unpaids, and all other
payments at any time due (whether accrued or due) by the Borrower hereunder
(including without limit any amount owing under Article VIII hereof), under any
Hedging Agreement (including, without limitation, payments in respect of the
termination of any such Hedging Agreement) or under any fee letter to the Deal
Agent and each Lender.
Section 11.13 Confidentiality.
----------------
(a) Each of the Deal Agent, the Secured Parties, the Liquidity
Agent, the Servicer, the Collateral Custodian, the Backup Servicer and the
Borrower shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and all information with respect
to the other parties, including all information regarding the business of the
Borrower and the Servicer hereto and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each such party and its officers
and employees may (i) disclose such information to its external accountants,
attorneys, investors, potential investors and the agents of such Persons
("Excepted Persons"), provided, however, that each Excepted Person shall, as a
condition to any such disclosure, agree for the benefit of the Deal Agent, the
Secured Parties, the Liquidity Agent, the Servicer, the Collateral Custodian,
the Backup Services and the Borrower that such information shall be used solely
in connection with such Excepted Person's evaluation of, or relationship with,
the Borrower and its affiliates, (ii) disclose the existence of the Agreement,
but not the financial terms thereof, (iii) disclose such information as is
required by an applicable law or an order of an judicial or administrative
proceeding and (iv) disclose the Agreement and such information in any suit,
action, proceeding or investigation (whether in law or in equity or pursuant to
arbitration) involving any of the Transaction Documents or any Hedging Agreement
for the purpose of defending itself, reducing its liability, or protecting or
exercising any of its claims, rights, remedies, or interests under or in
connection with any of the Transaction Documents or any Hedging Agreement. It is
understood that the financial terms that may not be disclosed except in
compliance with this Section 11.13(a) include, without limitation, all fees and
other pricing terms, and all Events of Default, Servicer Defaults, and priority
of payment provisions
93
(b) Anything herein to the contrary notwithstanding, the
Borrower and the Servicer each hereby consents to the disclosure of any
nonpublic information with respect to it (i) to the Deal Agent, the Liquidity
Agent, the Collateral Custodian, the Backup Servicer or the Secured Parties by
each other, (ii) by the Deal Agent or the Lenders to any prospective or actual
assignee or participant of any of them or (iii) by the Deal Agent, the Liquidity
Agent or a Lender to any Rating Agency, Commercial Paper dealer or provider of a
surety, guaranty or credit or liquidity enhancement to a Lender and to any
officers, directors, employees, outside accountants and attorneys of any of the
foregoing, provided each such Person is informed of the confidential nature of
such information. In addition, the Secured Parties, the Liquidity Agent and the
Deal Agent may disclose any such nonpublic information as required pursuant to
any law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
(c) Notwithstanding anything herein to the contrary, the
foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is or becomes publicly known, (ii) disclosure of any and all
information (A) if required to do so by any applicable statute, law, rule or
regulation, (B) to any government agency or regulatory body having or claiming
authority to regulate or oversee any respects of the Collateral Custodian's or
Backup Servicer's business or that of their affiliates, (C) pursuant to any
subpoena, civil investigative demand or similar demand or request of any court,
regulatory authority, arbitrator or arbitration to which the Collateral
Custodian or Backup Servicer or an affiliate or an officer, director, employer
or shareholder thereof is a party, (D) in any preliminary or final offering
circular, registration statement or contract or other document pertaining to the
transactions contemplated herein approved in advance by the Borrower or Servicer
or (E) to any affiliate, independent or internal auditor, agent, employee or
attorney of the Collateral Custodian or Backup Servicer having a need to know
the same, provided that the Collateral Custodian or Backup Servicer advises such
recipient of the confidential nature of the information being disclosed, or
(iii) any other disclosure authorized by the Borrower or Servicer.
Section 11.14 Execution in Counterparts; Severability;
----------------------------------------
Integration.
------------
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 when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than any fee letter delivered by the Originator to the Deal Agent and the
Lenders.
94
Section 11.15 Year 2000 Compliance.
---------------------
(a) The Servicer has (i) initiated a review and assessment of
all areas within its business and operations (including those affected by
suppliers, vendors and service providers) that could be adversely affected by
the risk that computer applications used by the Borrower or the Servicer, as
applicable (or by such suppliers, vendors or service providers), may be unable
to recognize and perform properly date sensitive functions involving certain
dates prior to and any date after December 31, 1999 (the "Year 2000 Problem")
and (ii) initiated a plan and timeline for addressing the Year 2000 Problem on a
timely basis. Based upon the foregoing, each of the Borrower and the Servicer
believes that all computer applications (including those of its suppliers,
vendors and service providers) that are material to its business and operations
are reasonably expected on or before September 30, 1999 to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that failure to do so
could not reasonably be expected to (A) have a material adverse effect on the
Borrower, the Servicer, the Loan, the Collateral, the Deal Agent or the Lender,
or (B) result in an Event of Default.
(b) Subject to the foregoing, the Servicer (i) has initiated a
review and assessment of all computer applications of the Borrower and the
Servicer (including, but not limited to those of its subsidiaries), and of its
suppliers, vendors and service providers that are material to its business or
which are related to or involved in the collection management or servicing of
the Assets (the "Asset Systems") and (ii) reasonably expects that the Asset
Systems are Year 2000 Compliant or will be Year 2000 Compliant on or before
September 30, 1999, and thereafter, except to the extent that failure to do so
could not reasonably be expected to (A) have a material adverse effect on the
Borrower, the Servicer, the Loan, the Collateral, the Deal Agent or the Lender,
or (B) result in an Event of Default.
(c) The Servicer reasonably expects that the costs of all
assessment, remediation, testing and integration related to the Borrower's and
the Servicer's plans for becoming Year 2000 Compliant will not have a material
adverse effect on the financial condition or operations of the Borrower or the
Servicer.
(d) The Borrower and the Servicer, as applicable, shall
promptly notify the Deal Agent in the event it discovers or determines that any
Asset Systems will not be Year 2000 Compliant on or before September 30, 1999
and thereafter except to the extent that such failure could not reasonably be
expected to (i) have a material adverse effect on the Borrower, the Servicer,
the Loan, the Collateral, the Deal Agent or the Lender, or (ii) result in an
Event of Default.
(e) The Borrower and the Servicer will deliver to the Deal
Agent, simultaneously with any quarterly or annual financial statements, an
Officer's Certificate signed by the chief financial officer or chief accounting
officer thereof, that no material event, problems or conditions have occurred,
to the best of management's knowledge, which in the opinion of management would
(i) prevent or materially delay the Borrower's or the Servicer's, as applicable,
plan to become Year 2000 Compliant or (ii) cause or be likely to cause the
Borrower's or the Servicer's representations and warranties set forth herein
with respect to becoming Year 2000 Compliant to no longer be true; provided,
however, that such letter, report, certificate or statement need not be
delivered after January 1, 2000 for so long as the Borrower and the Servicer, as
applicable, remains Year 2000 Compliant.
95
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWER: FIDELITY LEASING SPE III, LLC, a Delaware
limited liability company
By: JLA Credit Corporation, a Delaware
corporation, its Managing Member
By: ______________________________
Name: ______________________________
Title: ______________________________
Fidelity Leasing SPE III, LLC
c/o Fidelity Leasing, Inc.
0000 Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Crit Xxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
THE SERVICER: FIDELITY LEASING, INC., a Pennsylvania
corporation
By: __________________________________
Name: __________________________________
Title: __________________________________
Fidelity Leasing, Inc.
0000 Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Crit Xxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
THE INVESTORS: FIRST UNION NATIONAL BANK, a national banking
association
By: __________________________________
Name: __________________________________
Title: __________________________________
First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Capital Markets Credit
Administration
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
VFCC: VARIABLE FUNDING CAPITAL CORPORATION,
a Delaware corporation
By: First Union Capital Markets Corp., a North
Carolina corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
First Union Capital Markets Corp.
Xxx Xxxxx Xxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Conduit Administration
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
THE DEAL AGENT: FIRST UNION CAPITAL MARKETS CORP., a
North Carolina corporation
By: __________________________________
Name: __________________________________
Title: __________________________________
First Union Capital Markets Corp.
Xxx Xxxxx Xxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Conduit Administration
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
THE LIQUIDITY AGENT: FIRST UNION NATIONAL BANK, a national
banking association
By: __________________________________
Name: __________________________________
Title: __________________________________
First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Capital Markets Credit
Administration
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
THE COLLATERAL CUSTODIAN XXXXXX TRUST AND SAVINGS BANK, an Illinois
AND BACK-UP SERVICER: banking corporation
By: __________________________________
Name: __________________________________
Title: __________________________________
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administrator
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
EXHIBIT A
FORM OF LOCK-BOX NOTICE
____________ ___, 1999
[Name and Address of Lock-Box Bank]
Re: JLA Credit Corporation
Lock-Box No. _____________
Lock-Box Account No. ___________
Ladies and Gentleman:
JLA Credit Corporation (the "Assignor") hereby notifies you
that in connection with certain transactions involving the Assignor's accounts
receivables, the Assignor will transfer exclusive ownership and control of its
lock-box number _____________ (the "Lock-Box") and the corresponding lock-box
account no. ____________ maintained with you (the "Lock-Box Account") to First
Union Capital Market Corp., as deal agent (the "Agent"). These transfers will
become effective upon your receipt of notice of effectiveness, substantially in
the form attached hereto as Attachment 1 (the "Notice of Effectiveness"), which
shall be delivered via facsimile transmission to your attention.
In connection with the foregoing, the Assignor and the Agent
hereby instruct you, beginning on the date of receipt of the Notice of
Effectiveness: (a) to collect the monies, checks, instruments and other items of
payment mailed to the Lock-Box, (b) to deposit into the Lock-Box Account all
such monies, checks, instruments and other items of payment (unless otherwise
instructed by the Agent), and (c) to transfer all funds deposited and collected
in the Lock-Box Account pursuant to instructions given to you by the Agent from
time to time.
You are hereby further instructed: (a) that unless and until
the Agent notifies you to the contrary, you shall make such transfers from the
Lock-Box Account at such times and in such manner as the Assignor, in its
capacity as servicer for the Agent, shall from time to time instruct to the
extent such instructions are not inconsistent with the instructions set forth
herein, and (b) to permit the Assignor (in its capacity as servicer for the
Agent) and the Agent to obtain upon request any information relating to the
Lock-Box Account, including, without limitation, any information regarding the
balance or activity of the Lock-Box Account.
The Assignor also hereby notifies you that, beginning on the
date of receipt by facsimile of the Notice of Effectiveness from the Agent,
notwithstanding anything herein or elsewhere to the contrary, the Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lock-Box and the Lock-Box Account, including, without
limitation, the right to specify when payments are to be made out of or in
connection with the Lock-Box and the Lock-Box Account. The Agent acts as agent
for persons having a continuing interest in all of the checks and their proceeds
and all monies and earnings, if any, thereon in the Lock-Box Account, and you
shall be the Agent's agent for the purpose of holding and collection such
property. The monies, checks, instruments and other items of payment mailed to
the Lock-Box and the funds deposited into the Lock-Box Account will not be
subject to deduction, set-off, banker's lien, or any other right in favor of any
person other than the Agent (except that you may set off (a) all amounts due to
you in respect of your customary fees and expenses for the routine maintenance
and operation of the Lock-Box Account, and (b) the face amount of any checks
returned unpaid because of uncollected or insufficient funds).
This Agreement may not be terminated at any time by the
Assignor or you, without the prior written consent of the Agent. Neither this
Agreement nor any provisions hereof may be changed, amended, modified or waived
orally but only by an instrument in writing signed by the Agent and the
Assignor.
You shall not assign or transfer your rights or obligations
hereunder (other than to the Agent) without the prior written consent of the
Agent and the Assignor. Subject to the preceding sentence, this Agreement shall
be binding upon each of the parties hereto and their respective successors and
assigns, and shall inure to the benefit of, and be enforceable by, the Agent,
each of the parties hereto and their respective successors and assigns.
You hereby represent that the person signing this Agreement on
your behalf is duly authorized by you to so sign.
You agree to give the Agent and the Assignor prompt notice if
the Lock-Box or the Lock-Box Account becomes subject to any writ, judgment,
warrant of attachment, execution or similar process.
Any notice, demand or other communications required or
permitted to be given hereunder shall be in writing and may be (a) personally
served, (b) sent by courier service, (c) telecopied, or (d) sent by United
States mail, and shall be deemed to have been given when (a) delivered in
person, (b) delivered by courier service, (c) upon receipt of the telecopy, or
(d) three Business Days after deposit in the United States mail (registered or
certified, with postage prepaid and properly addressed); provided, however, that
notices to the Agent hereunder shall not be effective until actually received by
the Agent. For the purposes hereof, (i) the addresses of the parties hereto
shall be as set forth below each party's name below, or, as to each party, at
such other address as may be designated by such party in a written notice to the
other and the Agent, and (ii) the address of the Agent shall be Xxx Xxxxx Xxxxx
Xxxxxx, XX0, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attn.: Conduit Administration, or
at such other address as may be designated by the Agent in a written notice to
each of the parties hereto.
Please agree to the terms of, and acknowledge receipt of, this
Agreement by signing in the space provided below.
Very truly yours,
JLA CREDIT CORPORATION, a Delaware
corporation
By: _______________________________
Name: _______________________________
Title: _______________________________
[Address]
[Attention:]
Telecopy #:
ACKNOWLEDGED AND AGREED:
[Name of Lock-Box Bank]
By: __________________________
Name: __________________________
Title: __________________________
Date: __________________________
[Address]
[Attention:]
ATTACHMENT 1
TO EXHIBIT A
NOTICE OF EFFECTIVENESS
TO LOCK-BOX NOTICE
VIA FACSIMILE TRANSMISSION
TO: [Name of Lock-Box Bank]
DATED: [Date]
ATTENTION:
Re: Lock-Box No. _______________
Lock-Box Account No. ________
Ladies and Gentlemen:
Pursuant to the Lock-Box Agreement between JLA Credit
Corporation and you, dated as of _____________ (the "Agreement"), we hereby give
you notice that the transfers of the above-referenced Lock-Box and the Lock-Box
Account, as described in the Agreement, are effective as of the date hereof. You
are hereby instructed to comply immediately with the instructions set forth in
the Agreement and, until we notify you to the contrary, to transfer all funds
deposited and collected in Lock-Box Account to account number _________ at
---------------------.
FIRST UNION CAPITAL MARKETS CORP., a
North Carolina corporation, as Agent
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
ACKNOWLEDGED AND AGREED:
[Name of Lock-Box Bank]
By: _________________________
Name: _________________________
Title: _________________________
Dated: _________________________
[Address]
[Attention:]
Telecopy #:
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________ __, 1999
Reference is made to the Receivables Credit Agreement dated as
of February 4, 1999 (the "Agreement"), among Fidelity Leasing SPE III, LLC, as
the Borrower, Fidelity Leasing, Inc., as the Servicer, the Investors named
therein, Variable Funding Capital Corporation ("VFCC"), as a Lender, First Union
Capital Markets Corp., as the Deal Agent, First Union National Bank, as the
Liquidity Agent, and Xxxxxx Trust and Savings Bank, as the Collateral Custodian
and Backup Servicer. Terms defined in the Agreement are used herein with the
same meaning.
_____________________ (the "Assignor") and
______________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Agreement as of
the date hereof which represents the percentage interest specified in Section 1
of Schedule 1 of all outstanding rights and obligations of the Assignor under
the Agreement, including, without limitation, such interest in the Assignor's
Commitment and the Principal of Assets owned by the Assignor. After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
Principal of Assets owned by the Assignee will be as set forth in Section 2 of
Schedule 1.
2. The Assignor (a) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement or any other instrument or document
furnished pursuant thereto; and (c) makes no representation or warranty and
assumes no responsibility with respect to the financial conditions of VFCC or
the performance or observance by VFCC of any of its obligations under the
Agreement or any other instrument or document furnished pursuant thereto.
3. The Assignee (a) confirms that it has received a copy of
the Agreement, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (b) agrees
that it will, independently and without reliance upon the Deal Agent, the
Liquidity Agent, the Assignor or any other Investor 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 the Agreement; (c)
confirms that it is an Eligible Assignee; (d) appoints and authorizes the
Liquidity Agent each to take such action as agent on its behalf and to exercise
such powers under the Agreement as are delegated to the Liquidity Agent,
together with such powers as are reasonably incidental thereto; and (e) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Agreement are required to be performed by it as an Investor.
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Liquidity Agent
for acceptance. The effective date of this Assignment and Acceptance (the
"Transfer Date") shall be the date of acceptance thereof by the Liquidity Agent,
unless a later date is specified in Section 3 of Schedule 1.
5. Upon such acceptance by the Liquidity Agent, as of the
Transfer Date, (a) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of an Investor thereunder, and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish is rights and be released
from its obligations under the Agreement.
6. Upon such acceptance by the Liquidity Agent, from and after
the Transfer Date, the Deal Agent and the Liquidity Agent shall make, or cause
to be made, all payments under the Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fee with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Agreement for
periods prior to the Transfer Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
[ASSIGNOR]
By: ______________________________
Name: ______________________________
Title: ______________________________
Address for notice
[Address]
By: ______________________________
Name: ______________________________
Title: ______________________________
Address for notice
[Address]
Acknowledged and accepted this ____ day of
________, ________
FIRST UNION NATIONAL BANK, a national banking
association, as Liquidity Agent
By: ___________________________
Name: ___________________________
Title: ___________________________
Acknowledged and accepted this ____ day of
________, ________
FIRST UNION CAPITAL MARKETS CORP., a North Carolina
corporation, as Deal Agent
By: ___________________________
Name: ___________________________
Title: ___________________________
Schedule 1
to
Assignment and Acceptance
Dated _______ ___, 1999
Section 1.
Percentage Interest: ________________%
Section 2.
Assignee's Commitment: $_________________
Aggregate Outstanding Principal of Assets: $________________
Section 3.
Transfer Date: _____________ ___, 1999
EXHIBIT C
FORM OF MONTHLY REPORT
[SET FORTH ON FOLLOWING PAGES]
EXHIBIT D
FORM OF SERVICER'S CERTIFICATE
This Servicer's Certificate is delivered pursuant to the provisions of Section
____ of the Receivables Credit Agreement, dated as of February 4, 1999, among
Fidelity Leasing SPE III, LLC, as Borrower, Fidelity Leasing, Inc., as Servicer,
the Investors named therein, Variable Funding Capital Corporation, as a Lender,
First Union Capital Markets Corp., as the Deal Agent, First Union National Bank,
as the Liquidity Agent, and Xxxxxx Trust and Savings Bank, as the Collateral
Custodian and Back-up Servicer (hereinafter as such agreement may have been, or
may from time to time be amended, supplemented or otherwise modified (the
"Receivables Credit Agreement"). This Servicer's Certificate relates to
[applicable Monthly Period (the "Monthly Period") or applicable Collection
Period (the "Collection Period"), as the case may be] and relating to
[applicable Payment Date], (the "Payment Date") and the Monthly Report for such
Monthly Period, which Monthly Report is set forth on attached Schedule A.
A. Capitalized terms used but not otherwise defined herein have
the meanings assigned them in the Receivables Credit Agreement
referred to above. References to certain subsections herein
are references to the respective subsections of the
Receivables Credit Agreement.
B. The Servicer is the Servicer under the Receivables Credit
Agreement.
C. The undersigned hereby certifies to the Deal Agent and the
Lenders that all of the information set forth on attached
Schedule A is true and accurate in all material respects as of
the date hereof.
IN WITNESS WHEREOF, the undersigned has caused this Servicer's Certificate to be
duly executed this [___] day of [_________], 1999.
FIDELITY LEASING, INC.,
a Pennsylvania corporation, as Servicer
By: ________________________________
Name: ________________________________
Title: ________________________________
EXHIBIT E
FORM OF BORROWING CERTIFICATE AND ASSIGNMENT
THIS BORROWING CERTIFICATE AND ASSIGNMENT, dated as of
________________ __, 1999, is given by Fidelity Leasing SPE III, LLC, as
Borrower (the "Borrower"), in favor of FIRST UNION CAPITAL MARKETS CORP., as
Deal Agent (the "Deal Agent").
1. Reference is made to the Receivables Credit Agreement,
dated as of February 4, 1999 (the "Agreement"), by and among Fidelity Leasing
SPE III, LLC, as the Borrower, Fidelity Leasing, Inc., as the Servicer, the
Investors named therein, Variable Funding Capital Corporation, as a Lender,
First Union Capital Markets Corp., as the Deal Agent, First Union National Bank,
as the Liquidity Agent, and Xxxxxx Trust and Savings Bank, as the Collateral
Custodian and Backup Servicer. All capitalized terms shall have the meanings set
forth in the Agreement.
2. The Borrower does hereby sell, transfer, assign, set over
and convey to the Deal Agent, all right, title and interest of the Borrower in
and to the Assets listed on Schedule 1 hereto (each, a "Sold Asset").
3. The Borrower does hereby make the representations and
warranties referred to in Section 4.1 and 4.2 of the Agreement with respect to
each Sold Asset with full force and effect as if fully set forth herein.
IN WITNESS WHEREOF, the Borrower has caused this Borrowing
Certificate and Assignment to be executed by its manager thereunto duly
authorized, as of the date first above written.
FIDELITY LEASING SPE III, LLC, a Delaware
limited liability company
By: JLA Credit Corporation, a Delaware
corporation, its Managing Member
By: _________________________
Name: _________________________
Title: _________________________
EXHIBIT F
FORM OF NOTICE OF BORROWING
I, _____________, ______________ of JLA Credit Corporation, Managing
Member of Fidelity Leasing SPE III, LLC, as the borrower (the "Borrower"),
hereby certify as follows, with respect to that certain Receivables Credit
Agreement (the "Agreement"), dated as of February 4, 1999, by and among the
Borrower, Fidelity Leasing, Inc., as the Servicer (the "Servicer"), the
Investors named therein, Variable Funding Capital Corporation, as a Lender,
First Union Capital Markets Corp., as the Deal Agent, First Union National Bank,
as the Liquidity Agent, and Xxxxxx Trust and Savings Bank, as the Collateral
Custodian and Back-up Servicer, as amended from time to time. All capitalized
terms shall have the meanings set forth in the Agreement.
The Borrower hereby requests that the Loan be funded in
accordance of the following terms:
(a) The aggregate amount of the Loan shall be
___________________.
(b) The date the funding of the Loan shall be
____________________.
The representations and warranties contained in Section 4.1
and 4.2 of the Agreement are true and correct as though made on the date hereof.
No event has occurred and is continuing, or would result from
making the Loan on the date hereof, which constitutes an Event of Default.
As of the date hereof, the aggregate outstanding Principal
(after giving effect to the Loan funded on the date hereof) does not exceed the
Credit Limit. For purposes hereof, the Credit Limit has been recalculated based
upon amounts and percentages as the date hereof.
On and as of such day, the Borrower and the Servicer has each
performed in all material respects all of the agreements contained in the
Agreement to be performed by such Person at or prior to such day.
No law, rule or regulation prohibits, and no order, judgment
or decree of any federal, state or local court or governmental body, agency or
instrumentality prohibits or enjoins, the funding the Loan occurring on the date
hereof.
IN WITNESS WHEREOF, the undersigned has caused this Notice of
Borrowing to be duly executed this ____ day of February, 1999.
FIDELITY LEASING SPE III, LLC, a Delaware limited liability
company
By: JLA Credit Corporation, a Delaware corporation, its
Managing Member
By: ______________________
Name: ______________________
Title: ______________________
EXHIBIT G
FORM OF
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
[Delivery Date]
BY FACSIMILE: (000) 000-0000
-----------------------------
FIRST UNION CAPITAL MARKETS CORP.
Xxx Xxxxx Xxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Conduit Administration
Re: Receivables Credit Agreement, dated as of February 4, 1999 (the
"Agreement"), by and among Fidelity Leasing SPE III, LLC, as the
Borrower (the "Borrower"), Fidelity Leasing, Inc., as the Servicer,
the Investors named therein, Variable Funding Capital Corporation, as
a Lender, First Union Capital Markets Corp., as the Deal Agent (the
"Deal Agent"), First Union National Bank, as the Liquidity Agent, and
Xxxxxx Trust and Savings Bank, as the Collateral Custodian and Backup
Servicer (the "Collateral Custodian").
Ladies and Gentlemen:
In connection with the administration of the contracts held by you as the
Collateral Custodian on behalf of the Deal Agent under the Agreement, we request
the release, and acknowledge receipt, of the contract file for the contracts
described below, for the reason indicated.
Obligor's Name Address & Zip Code:
----------------------------------
Contract Number:
----------------
Reason for Requesting Documents (check one and recite applicable section in the
-------------------------------
Agreement)
____ 1. Contract Paid in Full. (The Borrower hereby certifies that all
amounts received in connection therewith have been credited to the
account of the Deal Agent.) The Agreement, Section ____.
____ 2. Contract Liquidated By ___________________________ (The Borrower
hereby certifies that all proceeds of foreclosure, insurance,
condemnation or other liquidation have been finally received and
credited to the account of the Deal Agent.) The Agreement, Section
____.
____ 3. Contract in Foreclosure. The Agreement, Section ____.
____ 4. Other (explain) ______________________. The Agreement, Section ____.
If box 1 or 2 above is checked, and if all or part of the contract file was
previously released to us, please release to us our previous request and receipt
on file with you, as well as any additional documents in your possession
relating to the specified contract.
If box 3 or 4 above is checked, upon our return of all of the above documents to
you as the Collateral Custodian, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
FIDELITY LEASING SPE III, LLC, a Delaware limited liability
company
By: JLA Credit Corporation, a Delaware corporation, its
Managing Member
By: ______________________
Name: ______________________
Title: ______________________
APPROVED:
FIRST UNION CAPITAL MARKET CORP.,
a North Carolina corporation
By: ________________________
Name: ________________________
Title: ________________________
ACKNOWLEDGMENT OF DOCUMENTS
RETURNED BY THE COLLATERAL CUSTODIAN:
XXXXXX TRUST AND SAVINGS BANK,
an Illinois banking corporation
By: ______________________
Name: ______________________
Title: ______________________
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.1 of the Agreement, each of the
following items must be delivered to the Deal Agent prior to the Closing Date:
1. A copy of this Agreement duly executed by the Borrower and
the Servicer;
2. Officer's Certificates of each of the Borrower and of the
Servicer, each dated the date of this Agreement, certifying (a) that the names
and true signatures of the incumbent officers of such Person authorized to sign
this Agreement and the other documents to be delivered by it hereunder, on which
certificate the Deal Agent, the Liquidity Agent and the Lender may conclusively
rely until such time as the Deal Agent shall receive from the Borrower or the
Servicer, as the case may be, a revised certificate meeting the requirements of
this paragraph (2), (b) that the copy of the certificate of formation of the
Borrower and the certificate of incorporation of the Servicer attached thereto
is a complete and correct copy and that such documents have not been amended,
modified or supplemented and is in full force and effect, (c) that the copy of
the limited liability company agreement of the Borrower attached thereto is a
complete and correct copy and that such limited liability company agreement has
not been amended, modified or supplemented and is in full force and effect, (d)
that the copy of the by-laws of the Servicer attached thereto is a complete and
correct copy and that such by-laws have not been amended, modified or
supplemented and are in full force and effect, and (e) that the resolutions of
such Person's members or board of directors approving and authorizing the
execution, delivery and performance by such Person of this Agreement and the
documents related thereto;
3. Good standing certificate for the Borrower issued by the
Secretary of State of the State of Delaware;
4. Good standing certificate for the Servicer issued by the
Secretary of State of the Commonwealth of Pennsylvania;
5. Qualification to do Business Certificate of the Borrower
issued by the Secretary of State of the Commonwealth of Pennsylvania;
6. Acknowledgment copies of proper financing statements, dated
a date reasonably near to the Closing Date, describing the Assets and naming the
Originator as debtor and the Borrower as secured party, or other, similar
instruments or documents, as may be necessary or, in the opinion of the Deal
Agent, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Borrower's interests in all Assets;
7. Acknowledgment copies of proper financing statements, dated
a date reasonably near to the Closing Date, describing the Assets and naming the
Borrower as debtor and the Deal Agent, on behalf of the Lender, as secured
party, or other, similar instruments or documents, as may be necessary or, in
the opinion of the Deal Agent or the Lender, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Lender's
interests in all Assets;
8. Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Assets previously granted by the Borrower;
9. Certified copies of requests for information or copies (or
a similar search report certified by a party acceptable to the Deal Agent),
dated a date reasonably near to the Closing Date, listing all effective
financing statements which name the Borrower (under its present name and any
previous name) as debtor and which are filed in the applicable jurisdictions
together with copies of such financing statements (none of which, other than the
financing statements filed in connection with this transaction, shall cover any
Assets or Contracts);
10. An accurate and complete listing in all material respects
of all the Contracts in the Borrowing Base as of the Closing Date;
11. Payment of the Structuring Fee and the estimated legal
fees and expenses of counsel to the Deal Agent; and
12. Opinions of Xxxxxx, Xxxxx & Xxxxxxx LLP, Ledgewood Law
Firm, and Xxxxxxxx, Xxxxxx & Finger, P.A., counsel to the Borrower, and Skadden,
Arps, Slate, Xxxxxxx & Xxxx, Xxxxxxx Law Offices, and Reiko Kasano, counsel to
JLC, all such opinions in form and substance acceptable to the Deal Agent.
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Xxxxx Fargo, Account Number: 05969
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND
"DOING BUSINESS AS" NAMES
None.
SCHEDULE IV
LOCATION OF CONTRACT FILES
The Contracts are located at the following offices of Xxxxxx:
Xxxxxx Trust and Saving Bank
000 Xxxx Xxxxxx Xxxxxx
Lower Level West - Document Custody Department
Xxxxxxx, Xxxxxxxx 00000
SCHEDULE V
LIST OF CONTRACTS
[SET FORTH ON FOLLOWING PAGES]
SCHEDULE VI
COMMITMENT OF EACH INVESTOR
First Union National Bank - $153,000,000.