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EXHIBIT 10.14
EXECUTION COPY
SECURED CREDIT LINE AGREEMENT
dated as of ▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ BUSINESS CREDIT RECEIVABLES CORP. II
as the Company
DVI BUSINESS CREDIT CORPORATION
as Servicer
and
CS FIRST BOSTON MORTGAGE CAPITAL CORP.
as Lender
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SECURED CREDIT LINE AGREEMENT
SECURED CREDIT LINE AGREEMENT, dated as of August 22, 1996, among CS FIRST
BOSTON MORTGAGE CAPITAL CORP. a Delaware corporation, having an office at ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Lender"), DVI BUSINESS
CREDIT RECEIVABLES CORP. II, a Delaware corporation having an office at ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and DVI BUSINESS CREDIT
CORPORATION, a Delaware corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of purchasing revolving
credit loans backed by healthcare receivables originated by healthcare providers
in the course of rendering medical services;
WHEREAS, in connection with the transactions contemplated hereby, the
Company desires to obtain a line of credit from the Lender pursuant to which
Advances, in a maximum aggregate principal amount at any one time outstanding
not to exceed $50,000,000, may be made to the Company from time to time prior to
the Line Termination Date;
WHEREAS, the Lender is willing, on the terms and subject to the conditions
hereinafter set forth, including Section 2.11, to extend such line of credit and
to make Advances to the Company; and
WHEREAS, the proceeds of Advances will be used to pay the acquisition
price of Loans as provided in the Contribution and Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto hereby agree as follows:
ARTICLE II
DEFINED TERMS
SECTION II.1. Definitions. The capitalized terms used herein shall have
the meanings specified in Appendix A attached hereto.
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ARTICLE III
ADVANCES
SECTION III.1. The Advances. (a) Upon the terms and subject to the
conditions of this Agreement, including Section 2.11, the Lender shall advance
funds to the Company from time to time up to the Line Amount (such borrowing,
the "Line") in one or more advances (each, an "Advance"); provided that the
aggregate principal amount of Advances outstanding at any time shall not exceed
the Line Amount. Each Advance shall be made on the Business Day after delivery
of a Borrowing Notice, provided such Business Day is prior to the Line
Termination Date (each such date, a "Funding Date") and shall be deposited by
the Lender to such account as the Company may direct.
(b) Each Advance shall bear interest from the related Funding Date to, but
excluding, the date of repayment in full of such Advance on the outstanding
principal balance of such Advance at the Applicable Rate in effect from time to
time with respect to such Advance. Any Monthly Interest which is not paid on the
Payment Date on which it is due shall bear interest at the Applicable Rate in
effect from time to time.
(c) The Lender shall record in its records, or at its option on the
schedule attached to the Secured Note, the date and amount of each Advance made
hereunder, each repayment thereof, and the other information provided for
thereon. The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the Secured
Note. The failure so to record any such information or any error in so recording
any such information shall not, however, limit or otherwise affect the actual
obligations of the Company hereunder or under the Secured Note to repay the
principal amount of all Advances made to it, together with all interest accruing
thereon.
(d) After the making of each Advance, the Lender shall deliver to the
Company a written confirmation of such Advance in substantially the form
attached hereto as Exhibit B (each, a "Confirmation") and the Company's
acceptance of the proceeds of the related Advance shall constitute the Company's
agreement to the terms of such Confirmation.
SECTION III.2. Advance Amount. The amount of each Advance
(a) shall not in the case of each Advance, be less than $1,000,000
in principal amount (unless otherwise consented to in writing by the
Lender); and
(b) shall equal the outstanding principal balance of all Eligible
Loans to be pledged to the Collateral Agent for the benefit of the Lender
in connection with such Advance.
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SECTION III.3. Termination Date; Maturity of Advances. The line of credit
offered by the Lender hereunder shall terminate on the earlier of (a) March 15,
1997 (or such later date as agreed to in writing by the Lender) and (b) the
occurrence of an Event of Default which continues beyond the applicable cure
period, if any (the "Line Termination Date"). On the Line Termination Date, the
Line Amount shall be automatically reduced to $0. Each Advance shall mature on
the earliest of (a) the Line Termination Date and (b) the closing of a
Securitized Offering (the "Maturity Date").
SECTION III.4. Prepayment. Each Advance is pre-payable on any day upon at
least two Business Days' prior written notice by the Company to the Lender and
the Collateral Agent without premium or penalty, in whole or in part; provided
that the principal amount prepaid shall be at least $500,000; and provided
further that such prepayment is made solely with funds on deposit in the Loan
Accounts or representing proceeds of a Securitized Offering. Any such prepayment
shall be made by the Collateral Agent from such funds in accordance with the
written request of the Lender.
SECTION III.5. Extension Option. In the event that all outstanding
Advances are not repaid in whole on or prior to the Line Termination Date, the
Lender shall have the option on or before the Line Termination Date, in its sole
discretion, to extend the Line Termination Date on a week-to-week basis through
the last Business Day of each succeeding week at an Applicable Rate equal to
LIBOR plus 5%. If the Lender elects to extend the Line Termination Date as
aforesaid, it shall deliver notice of such election to the Company and the
Collateral Agent no later than 3:00 p.m. on the Business Day preceding the then
scheduled Line Termination Date (any such preceding date, an "Election Date").
If no such notice is delivered, all outstanding Advances shall be due and
payable without any further action by the Lender on the Line Termination Date,
and in such event the Lender may exercise all rights and remedies available to
it as the holder of a first perfected security interest under the Uniform
Commercial Code of the State of New York (the "New York UCC") and any and all
other rights hereunder and under applicable law.
SECTION III.6. Payment of Interest and Principal. Interest accruing on an
Advance and principal prepayments thereof out of Collections with respect
thereto shall be payable on each Payment Date as set forth in Section 2.9. In
addition, all accrued and unpaid Monthly Interest and the unpaid principal
amount of each Advance will be payable in full on the Maturity Date for such
Advance unless extended as set forth in Section 2.5.
SECTION III.7. Secured Note. The Line shall be evidenced by a secured
promissory note of the Company in the form attached hereto as Exhibit A (the
"Secured Note").
SECTION III.8. Form of Payment. All payments to be made to the Lender with
respect to principal and interest on the Advances and all other Secured
Obligations shall be made in immediately available funds by wire transfer to
such account as the Lender may direct the Company from time to time in writing.
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SECTION III.9. Allocation of Collections. Based upon the information
contained in the Servicer Report, all Collections during each Collection Period
with respect to Loans financed by an Advance shall be applied on each Payment
Date in the following amounts and in the following order:
(a) So long as no Event of Default shall have occurred and then be
continuing, the Collateral Agent shall pay from the Principal Account the
Principal Collections for the Related Collection Period (net of any amounts
reborrowed pursuant to Section 2.9(d)) and any amounts withdrawn from the Cash
Collateral Account in accordance with Section 5.1(b) hereof on each Payment Date
to the Persons, in the amounts and in the priority set forth below (based solely
on the information set forth in the related Servicer Report):
(i) to the Lender, an amount equal to the Monthly Principal, if any,
payable on such Payment Date; provided that, amounts payable to the Lender
pursuant to this Section 2.9(a) may, at the prior written direction of the
Lender, be paid to the Company on account of any Advance being made by the
Lender on such Payment Date. Amounts so applied shall be deemed to have
reduced the principal balance of the Advance that matured on such Payment
Date;
(ii) to each Borrower, the applicable Deferred Payment; and
(iii) to the Company, any remaining Principal Collections on deposit
in the Principal Account with respect to the Related Collection Period;
provided, however, that no funds shall be distributed to the Company
pursuant to this clause (iii) unless, after giving effect to such
distribution, the Company shall be in compliance with the Collateral
Coverage Condition.
(b) So long as no Event of Default shall have occurred and then be
continuing, the Collateral Agent shall pay from the Finance Charge Account the
Interest Collections for the Related Collection Period (net of any amounts
reborrowed pursuant to Section 2.9(d)) and any amounts withdrawn from the Cash
Collateral Account in accordance with Section 5.1(b) and (c) hereof on each
Payment Date to the Persons, in the amounts and in the priority set forth below
(based solely on the information set forth on the related Servicer Report);
provided, however, that the failure of the Servicer to deliver a Servicer Report
shall not preclude the Collateral Agent from paying Monthly Interest, and the
Collateral Agent shall distribute such Monthly Interest on the then current
Advance Balance upon written direction from the Lender specifying the amount
thereof:
(i) to the Lender, an amount equal to the sum of (x) the Monthly
Interest and (y) any unpaid Monthly Interest from all prior Payment Dates
(with interest thereon in accordance with Section 2.1(b);
(ii) to the Collateral Agent, the Collateral Agent Fee due to
the Collateral
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Agent on such Payment Date;
(iii) to the Servicer, if DVI Business Credit Corporation or any
Affiliate thereof is then acting as Servicer, an amount equal to the sum
of (x) one-half of the Servicing Fee due on such Payment Date, (y) any
unpaid Servicing Fee payable pursuant to this clause (iii) from all prior
Payment Dates and (z) any out-of-pocket expenses for which the Servicer is
entitled to reimbursement pursuant to Section 4.04(a) of the Contribution
and Servicing Agreement; provided, however, that if DVI Business Credit
Corporation or any Affiliate thereof is not then acting as Servicer, then
the amount to be paid to the Servicer under this Section 2.9(b)(iii) shall
be the entire Servicing Fee due on such Payment Date, any unpaid Servicing
Fee from all prior Payment Dates and any out-of-pocket expenses for which
the Servicer is entitled to reimbursement pursuant to Section 4.04(a) of
the Contribution and Servicing Agreement;
(iv) to the Collateral Agent for deposit in the Cash Collateral
Account, an amount equal to the excess, if any, of (1) the Required Cash
Collateral Account Balance for such Payment Date over (2) funds then on
deposit in the Cash Collateral Account;
(v) to the Collateral Agent, the reasonable and documented
out-of-pocket expenses incurred by the Collateral Agent in connection with
its administration of the transactions hereunder;
(vi) to the Servicer, if DVI Business Credit Corporation or any
Affiliate thereof is then acting as Servicer, an amount equal to the sum
of (x) one-half of the Servicing Fee due on such Payment Date and (y) any
unpaid Servicing Fee payable pursuant to this clause (vi) from all prior
Payment Dates;
(vii) to each Borrower, the applicable Deferred Payment; and
(viii) to the Company, any remaining Interest Collections for the
Related Collection Period; provided, however, that no funds shall be
distributed to the Company pursuant to this clause (ix) unless the Company
is in compliance with the Collateral Coverage Condition.
(c) If at any time any amount or portion thereof previously distributed
pursuant to Section 2.9(a) or (b) shall have been recovered, or shall be subject
to recovery, in any proceeding with respect to the Company or otherwise, then
for purposes of determining future distributions pursuant to Section 2.9(a) or
(b) such amount or portion thereof shall be deemed not to have been previously
so distributed.
(d) Subject to the availability of funds on deposit in the Principal
Account on any day, upon delivery of a Reborrowing Certificate in the form
attached hereto as Exhibit E by the Company to the Collateral Agent and the
Lender on a Business Day, the Collateral Agent shall
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by 4:30 p.m. New York City time on the date of delivery of the Reborrowing
Certificate if such Reborrowing Certificate is delivered prior to 1:30 p.m. New
York City time on the date of delivery of the Reborrowing Certificate or by
12:00 noon New York City time on the Business Day next succeeding the date of
delivery of the Reborrowing Certificate if such Reborrowing Certificate is
delivered after 1:30 p.m. New York City time, from funds remaining on deposit in
the Principal Account after any distributions required to be made on such day
pursuant to Sections 2.9(a) and (b) have been made, release the Reborrowing
Amount requested in the Reborrowing Certificate; provided that no Event of
Default or Potential Event of Default shall have occurred which is continuing or
would result from the application of the Reborrowing Amount; and provided
further that the proposed use of the proceeds of the Reborrowing Amount would
not cause the requirements of Section 2.12, 2.13 or 2.14 to be violated.
(e) So long as no Event of Default shall have occurred and then be
continuing and the Company shall be in compliance with the Collateral Coverage
Condition, the Collateral Agent shall, upon receipt of an Officers' Certificate
from the Servicer which states that all Loans and other amounts owing under a
Revolving Credit Agreement have been paid in full and that the Collateral
Coverage Condition is satisfied and will continue to be satisfied after giving
effect to the requested release, release from the Loan Accounts any subsequent
Collections received in respect of such Loan and remit such amounts to such
Company.
SECTION III.10. Securitized Offering. All proceeds of any Securitized
Offering shall be paid to the Lender to the extent of (a) the accrued and
unpaid interest on Advances and (b) the outstanding Advance Balance.
SECTION III.11. Conditions to the Making of Advances. (a) The
effectiveness of this Agreement and the obligation of the Lender to make the
initial Advance shall be subject to the delivery of each of the following
documents, on or prior to such effectiveness, in form and substance satisfactory
to the Lender:
(i) Secured Note. The Secured Note duly executed by the Company
in an original principal amount equal to the Line Amount;
(ii) Certificate of Incorporation. The certificate of incorporation
of the Company and the Servicer, each duly certified by the Secretary of
State of the jurisdiction of its incorporation, together with a copy of
the by-laws of each of the Company and the Servicer, duly certified by the
Secretary or an Assistant Secretary of the Company or the Servicer, as
applicable;
(iii) Resolutions. (1) Copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery
and performance of this Agreement, the Contribution and Servicing
Agreement, pursuant to which Loans will be purchased with the proceeds of
the initial Advance and those documents and matters
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required of it with respect thereto, duly certified by the Secretary or
Assistant Secretary of the Company;
(2) Copies of resolutions of the Board of Directors of each of the
Servicer authorizing or ratifying the execution, delivery and performance
of this Agreement and those documents and matters required of it with
respect to this Agreement, duly certified by the Secretary or Assistant
Secretary of the Servicer;
(iv) Consents. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if
any) with respect to this Agreement;
(v) Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of each of the Company and the Servicer certifying the
names of the individual or individuals authorized to sign this Agreement
and the other Related Agreements to be executed by such party, together
with a sample of the true signature of each such individual (the Lender
may conclusively rely on each such certificate until formally advised by a
like certificate of any changes therein);
(vi) Opinions of Counsel. Opinions of counsel from counsel
acceptable to the Lender covering such matters as the Lender shall
request and satisfactory in form and substance to the Lender;
(vii) Good Standing Certificates. Certificates of good standing
for the Company, the Seller and the Guarantor in the jurisdiction of
its organization and the jurisdiction of its principal place of
business;
(viii) Search Reports. A written search report from a Person
satisfactory to the Lender listing all effective financing statements that
name the Company, the Servicer, the Seller, any Borrower or any Originator
as debtor or assignor and that are filed in the jurisdictions in which
filings were made pursuant to subsection (ix) below, together with copies
of such financing statements, and tax and judgment lien search reports
from a Person satisfactory to the Lender showing no evidence of any tax or
judgment liens filed against the Company, the Seller, the Servicer, any
Borrower or any Originator;
(ix) Evidence. Evidence (which may be telephonic) of the filing of
proper financing statements on Form UCC-1, (i) naming the Company as
secured party and the Seller as debtor, (ii) naming the Seller as secured
party and each Borrower as debtor, (iii) naming the applicable Originator
as debtor and the applicable Borrower as secured party, and (iv) naming
the Company as debtor and the Lender as secured party, or other similar
instruments or documents, as may be necessary or, in the reasonable
opinion of the Lender, desirable under the UCC of all applicable
jurisdictions to perfect the interest of the Collateral Agent, on behalf
of the Lender, in the Collateral;
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(x) No Material Adverse Change. A certificate of the Chief Financial
Officer of the Company, the Seller and the Guarantor certifying that since
March 31, 1996, there has been no material adverse change in the financial
condition, business or results of operations of the Company or the Seller;
(xi) Capitalization of the Company. Evidence, in form and substance
satisfactory to the Lender, that as of the initial Funding Date, the
Company has been capitalized with equity in cash equal to or greater than
$750,000;
(xii) Establishment of Accounts. Evidence, in form and substance
satisfactory to the Lender, that the Borrower Lockbox Accounts, the
Finance Charge Account, the Principal Account and the Cash Collateral
Account have been established;
(xiii) Initial Cash Collateral Account Deposit. Evidence, in
form and substance reasonably satisfactory to the Lender that the
Required Cash Collateral Account Balance has been deposited in the Cash
Collateral Account;
(xiv) Contribution and Servicing Agreement. The Contribution and
Servicing Agreement shall have been executed and delivered by the Company
and the Seller in form and substance satisfactory to the Lender, shall be
in full force and effect with all conditions precedent to the initial sale
of Loans thereunder having been satisfied and with no defaults, and each
of the Company and the Seller shall have performed all its obligations
thereunder which, pursuant to the terms of the Contribution and Servicing
Agreement, are required to be performed prior to the making of the initial
Advance;
(xv) Revolving Credit Agreements. Each Revolving Credit Agreement
pursuant to which Loans made by DVIBC will be acquired by the Company with
the proceeds of the initial Advance shall have been executed and delivered
by DVIBC and the applicable Borrower, in form and substance satisfactory
to the Lender, shall be in full force and effect with all conditions
precedent to the making of Loans thereunder having been satisfied and with
no defaults, and each of the Seller and such Borrower shall have performed
all its obligations thereunder which, pursuant to the terms of the
applicable Revolving Credit Agreement, are required to be performed prior
to the making of Loans thereunder;
(xvi) Rating Letters. The Secured Note shall have been rated
"BBB-" by the Rating Agency;
(xvii) Guaranty. The Guaranty shall have been executed and delivered
in form and substance satisfactory to the Lender; and
(xviii) Additional Conditions. There shall have been satisfied
such other conditions as the Lender shall reasonably request.
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(b) All Advances (including the initial Advance) shall be subject to the
further conditions precedent that (a) the Lender, the Collateral Agent and the
Rating Agency shall have received a completed and duly executed Borrowing Notice
therefor in substantially the form attached hereto as Exhibit F and a completed
and duly executed Daily Servicer Report for the date of such Borrowing Notice,
in each case, no later than 3:00 p.m. New York City time on the Business Day
preceding the Funding Date for such Advance, (b) the Company shall have
delivered to the Collateral Agent in accordance with the terms of the Collateral
Agreement the Loan Documents with respect to each Loan listed on the Loan
Schedule attached to the applicable Borrowing Notice and (c) on the Funding Date
for such Advance, the following statements shall be true (and the Company, by
accepting the amount of such Advance, shall be deemed to have represented and
warranted that): (i) the representations and warranties contained in Sections
7.1 and 7.2 are true and correct (in all material respects to the extent any
such representations and warranties do not incorporate a materiality limitation
in their terms) on and as of such Funding Date as if made on and as of such
date, (ii) no Event of Default, Potential Event of Default or Servicer Event of
Default has occurred and is continuing or would result from the making of such
Advance or from the application of the proceeds of such Advance, (iii) the Line
Termination Date shall not have occurred, (iv) such Funding Date shall be at
least 5 Business Days after the immediately preceding Funding Date if the amount
of the Advance requested in the related Borrowing Notice is less than
$1,000,000, (v) the Required Cash Collateral Account Balance shall be on deposit
in the Cash Collateral Account after giving effect to all distributions and
Advances on such Funding Date, (vi) the Lender shall have received payment of
all its fees and reimbursement for all its out-of-pocket costs incurred in
connection with entering into or enforcing this Agreement, (vii) the Rating
Agency shall not have downgraded its rating of the Secured Note or the Servicer
or placed the Servicer on "credit watch" for downgrade, (viii) the Lender,
Ascendant Capital, Inc. and the Rating Agency shall have received from the
Servicer the information specified in Schedule 1 to this Agreement with respect
to each Borrower under any Loan to be acquired with the proceeds of such Advance
and the requirements of Section 2.14 shall have been satisfied, (ix) the
Company, the Seller, each applicable Borrower and the Servicer shall have taken
all such other actions and delivered all such other instruments, documents and
agreements as are required pursuant to the terms of the Contribution and
Servicing Agreement and each applicable Revolving Credit Agreement, and (x) the
Lender shall have received such other documents and instruments, and the
Company, the Seller, each Borrower and the Servicer shall have taken all such
other actions and delivered all such other instruments, documents and agreements
as the Lender shall reasonably request.
Notwithstanding anything in this Agreement to the contrary, the Lender
shall not be obligated to make an Advance hereunder with respect to any Loans
unless and until (i) the Lender shall have satisfactorily completed a due
diligence review of the Loans proposed to be acquired, and (ii) the Seller and
the Borrower thereunder shall have entered into a Revolving Credit Agreement
with respect to such Loans on terms and conditions and in form and substance
satisfactory to the Lender, including representations and warranties for such
Loans.
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In addition, the Lender shall have no obligation to fund an Advance if, as of
the Funding Date for such Advance: (i) any representation of the Company or the
Servicer contained herein, or of the Company or the Seller in the Contribution
and Servicing Agreement or of the Seller or the Borrower under the relevant
Revolving Credit Agreement is not true and correct in all material respects as
of such date or the Company is not in compliance in all material respects with
the terms hereof and thereof as of such date; or (ii) in the opinion of counsel
to the Lender, funding such Advance would constitute a violation of law or
conflict with any material rule, regulation or order of any state or federal
court, regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Lender.
SECTION III.12. Eligible Payor Concentration Tests. The Company shall not
use the proceeds of any Advance or Reborrowing Amount to acquire a Loan if and
to the extent that, after giving effect to the acquisition of such Loan, the
Loans subject to the Lien of the Collateral Agent would be secured by Eligible
Receivables that, with respect to any Borrower, exceed any of the maximum
percentages specified in Schedule 2, except to the extent that, after giving
effect to the making of such Advance and the acquisition of the Loans proposed
to be acquired with the proceeds of such Advance, (a) the sum of (i) voluntary
capital contributions of cash made by the Seller to the Company pursuant to
Section 1.02(g) of the Contribution and Servicing Agreement which are then held
in the Cash Collateral Account, (ii) the unpaid principal balance of all
Eligible Loans then subject to the Lien of the Collateral Agent under the
Collateral Agreement (other than those Eligible Loans secured by Eligible
Receivables in excess of any of the maximum percentages specified in Schedule 2,
including those Loans proposed to be acquired with the proceeds of such
Advance), and (iii) Principal Collections on deposit in the Principal Account
would equal or exceed (b) the Advance Balance. Any exception to compliance with
the foregoing will be permitted with the prior approval of the Lender if, and
only if, the Rating Agency confirms that such exception will not result in a
reduction or withdrawal of the then current rating of the Secured Note.
SECTION III.13. Borrower Concentration Tests. The Company shall not use
the proceeds of any Advance or Reborrowing Amount to acquire a Loan if and to
the extent that, after giving effect to the acquisition of such Loan, the Loans
subject to the Lien of the Collateral Agent would, with respect to any Borrower,
exceed any of the maximum percentages specified in Schedule 3, except to the
extent, that, after giving effect to the making of such Advance and the
acquisition of the Loans proposed to be acquired with the proceeds of such
Advance, (a) the sum of (i) voluntary capital contributions of cash made by the
Seller to the Company pursuant to Section 1.02(g) of the Contribution and
Servicing Agreement which are then held in the Cash Collateral Account, (ii) the
unpaid principal balance of all Eligible Loans then subject to the Lien of the
Collateral Agent under the Collateral Agreement (other than those Eligible Loans
secured by Eligible Receivables in excess of any of the maximum percentages
specified in Schedule 3, including those Loans proposed to be acquired with the
proceeds of such Advance), and (iii) Principal Collections on deposit in the
Principal Account would equal or exceed (b) the Advance Balance. Any exception
to compliance with the foregoing will be permitted with the prior approval of
the Lender if, and only if, the Rating
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Agency confirms that such exception will not result in a reduction or withdrawal
of the then current rating of the Secured Note; provided that, without the prior
written consent of the Lender and the Rating Agency, in no event will the
aggregate outstanding balance of all Loans to any one Borrower which are subject
to the Lien of the Collateral Agent exceed (a) $4.0 million on any day as of
which the aggregate outstanding balance of all Loans subject to the Lien of the
Collateral Agent is between $10 million and $15 million, (b) $5.25 million on
any day as of which the aggregate outstanding balance of all Loans subject to
the Lien of the Collateral Agent is between $15 million and $24 million, (c)
$5.75 million on any day as of which the aggregate outstanding balance of all
Loans subject to the Lien of the Collateral Agent is between $24 million and $39
million and (d) $7 million on any day as of which the aggregate outstanding
balance of all Loans subject to the Lien of the Collateral Agent is between $39
million and $50 million.
SECTION III.14 Additional Borrowers; Borrower Defaults. (a) It shall be an
additional condition precedent to the making of each Advance and to the payment
of any Reborrowing Amount on behalf of the Company that: (i) each Borrower under
Loans to be acquired by the Company with the proceeds of such Advance or
Reborrowing Amount shall have entered into a Revolving Credit Agreement with the
Seller in substantially the form attached hereto as Exhibit C or such other form
as is acceptable to the Lender, (ii) if such Borrower is a special purpose
entity, the Lender shall have received an opinion of counsel addressed to the
Lender to the effect that the sale of Receivables to such Borrower by its parent
constitutes a true sale and addressing the issue of non-consolidation, in form
acceptable to the Lender, (iii) if the Borrower is a special-purpose
bankruptcy-remote entity, the Lender shall have received and approved certified
copies of the articles of incorporation and bylaws of such Borrower, (iv) the
Rating Agency shall have confirmed in writing that the making of Loans to such
Borrower shall not result in the reduction or withdrawal of the then current
rating of the Secured Note (provided, however, that, with respect to a new
Borrower, if the Rating Agency does not object to the Company's acquisition of
Loans made to such Borrower within 6 days after written notice thereof by the
Company, this item (iv) shall be deemed to have been satisfied), (v) the
Servicer shall have delivered to the Collateral Agent Wire Instructions for such
Borrower and (vi) the Borrower Lockbox Account for such Borrower shall have been
established and the Servicer on behalf of the Company shall have delivered the
notices with respect thereto as required under Section 5.1 of the Collateral
Agreement.
(b) No proceeds of any Advance or Reborrowing Amount shall be used by the
Company to acquire Loans made to any Borrower which is not an Eligible Borrower
or with respect to which a Borrower Default has occurred unless the Lender has
consented thereto in writing and the Rating Agency has delivered written
confirmation to the Lender, the Servicer and the Collateral Agent that the
acquisition of Loans made to such Borrower will not result in the reduction or
withdrawal of the then current rating of the Secured Note.
SECTION III.15. Certain Waivers. The Company waives presentment, demand
for payment, notice of dishonor and protest, notice of the creation of any of
the Secured
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Obligations and all other notices whatsoever to the Company with respect to the
Secured Obligations. The obligations of the Company under this Agreement and the
Secured Note shall not be affected by (i) the failure of the Lender or the
holder of the Secured Note or holders of any of the Secured Obligations to
assert any claim or demand or to exercise or enforce any right, power or remedy
against the Company or the Collateral or otherwise, (ii) any extension or
renewal for any period (whether or not longer than the original period) or
exchange of any of the Secured Obligations or the release or compromise of any
obligation of any nature of any Person with respect thereto, (iii) the
surrender, release or exchange of all or any part of any property (including the
Collateral) securing payment and performance of any of the Secured Obligations
or the compromise or extension or renewal for any period (whether or not longer
than the original period) of any obligations of any nature of any Person with
respect to any such property, and (iv) any other act, matter or thing which
would or might, in the absence of this provision, operate to release, discharge
or otherwise prejudicially affect the obligations of the Company.
SECTION III.16. Determination of LIBOR. (a) On each LIBOR Determination
Date, the Lender shall determine LIBOR for the next succeeding Interest Accrual
Period for a period equal to one month on the basis of the offered LIBOR
quotations, appearing on Telerate Page 3750 as of 11:00 a.m., London Time, on
such LIBOR Determination Date. If such rate does not appear on Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. Dollars are offered by the Reference Banks at
approximately 11:00 a.m., London Time, on the LIBOR Determination Date to prime
banks in the London interbank market for a period of one month commencing on
that day. The Lender will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that day will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that day will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by the Lender at approximately 11:00 a.m., New York City
time, on that day for loans in U.S. Dollars to leading European banks for a
period of one month commencing on that day.
(b) If necessary, on each LIBOR Determination Date, the Lender shall
designate the banks that shall act as the Reference Banks for the succeeding
Interest Accrual Period and shall notify the Collateral Agent on such LIBOR
Determination Date. The Collateral Agent may conclusively rely and shall be
fully protected in relying upon the rates provided to it by the Lender.
(c) The establishment of LIBOR, and the subsequent calculation of the
Applicable Rate for each Interest Accrual Period by the Lender, in the absence
of manifest error, shall be final and binding.
ARTICLE IV
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USE OF PROCEEDS; GRANT OF SECURITY INTEREST
SECTION IV.1. Purpose of Loan. The Company agrees that the Line shall be
used solely to acquire Eligible Loans secured by Eligible Receivables which
shall be pledged along with the other Collateral to secure the Secured
Obligations, as such Loans are identified to the Lender in writing and/or in
electronic form from time to time in a manner designated by the Lender in
writing to the Company from time to time.
SECTION IV.2. Grant of Security Interest. As security for the Advances and
all of the other Secured Obligations, the Company hereby confirms the grant to
the Collateral Agent, acting on behalf of the Lender pursuant to the Collateral
Agreement, of a security interest and Lien in all of the Company's right, title
and interest in and to each item constituting the Collateral now and hereafter,
including all future Loans and each Revolving Credit Agreement executed in
connection therewith.
SECTION IV.3. Borrower Lockbox Accounts. The Company shall direct each
Borrower (a) to make payments under the Loans to such Borrower into a Borrower
Lockbox Account established in the name of the Company, (b) to direct each
Eligible Payor (other than an Eligible Payor referred to in subsection (3) of
the definition of "Eligible Payor") to make payments in respect of the
Receivables of such Borrower into such Borrower Lockbox Account referred to in
(a) above and (c) to direct each Eligible Payor referred to in subsection (3) of
the definition of "Eligible Payor" to make payments in respect of its
Receivables of such Borrower into a Borrower Lockbox Account established in the
name of such Borrower.
ARTICLE V
FINANCING STATEMENTS
SECTION V.1. UCC Financing Statements. In connection with the pledge of
the Loans and other Collateral, the Company shall prepare and deliver to the
Lender or its agent not less than five (5) Business Days prior to the date of
any Advance or the delivery of a Reborrowing Certificate, Uniform Commercial
Code ("UCC") financing statements executed by the Company and acceptable to the
Lender, for filing in such jurisdictions as the Lender shall request. The Lender
shall be entitled to file such UCC financing statements in the applicable
jurisdictions. The Company agrees to reimburse the Lender for the amount of any
filing fees paid by the Lender in connection with the filing of such UCC
financing statements within thirty days of receipt from the Lender of an invoice
documenting such amounts.
ARTICLE VI
THE CASH COLLATERAL ACCOUNT
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SECTION VI.1. Cash Collateral Account. (a) Prior to the making of the
initial Advance, the Company shall deposit in the Cash Collateral Account an
amount equal to the Required Cash Collateral Account Balance. The Company shall
also immediately deposit into the Cash Collateral Account the amount of any
capital contribution made by DVIBC pursuant to Section 1.02(g) of the
Contribution and Servicing Agreement to the extent directed by the Seller.
(b) No later than 10:00 a.m. (New York City time) on the Business Day
prior to each Payment Date, the Collateral Agent shall, in accordance with a
direction set forth in the Servicer Report, make a draw on the Cash Collateral
Account in an amount equal to the lesser of (x) the amount then on deposit in
the Cash Collateral Account and (y) the extent by which funds then held by the
Collateral Agent are not sufficient to pay the Monthly Interest and Monthly
Principal, if any, on such Payment Date. The proceeds of any such draws will be
used by the Collateral Agent to pay the Monthly Interest and Monthly Principal,
if any, due on such Payment Date.
(c) On each Payment Date, the Collateral Agent, in accordance with a
direction set forth in the Servicer's Report, shall withdraw the excess, if any,
of (i) amounts on deposit in the Cash Collateral Account (determined after
giving effect to any draws made pursuant to Section 5(b)) over (ii) the then
current Required Cash Collateral Account Balance and deposit such amounts into
the Finance Charge Account to be applied in accordance with the priorities set
forth in Section 2.9(b) hereof.
(d) On the first Business Day after the date on which the Collateral
Agreement terminates pursuant to the terms thereof and all Secured Obligations
have been paid in full, the Collateral Agent shall, upon written certification
thereof by the Servicer, withdraw all amounts then on deposit in the Cash
Collateral Account and deliver such amounts to the Company or its designee.
ARTICLE VII
THE GUARANTY
SECTION VII.1. Claims on Guaranty. Not later than 3:00 p.m. New York City
time on the Business Day immediately preceding a Payment Date, the Collateral
Agent shall determine if the funds then held by the Collateral Agent in the Loan
Accounts, together with amounts withdrawn from the Cash Collateral Account
pursuant to Sections 5.1(b) and (c), are sufficient to pay in full the Monthly
Interest and Monthly Principal payable on such Payment Date. If there is an
insufficiency, the Collateral Agent shall submit a claim to the Guarantor in the
form of Exhibit D with respect to such insufficiency; provided that submission
of a claim in such form shall not be the exclusive or only means of drawing on
the Guaranty, and the
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provisions of this Article VI shall not be deemed to limit the Lender's rights
(or the rights of the Collateral Agent on the Lender's behalf) under the
Guaranty. The proceeds of any such draw will be used by the Collateral Agent to
pay the Monthly Interest and/or Monthly Principal payable on such Payment Date,
as applicable.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION VIII.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Lender as of the Closing Date and each
Funding Date (or such earlier date as shall be set forth therein):
(a) Organization and Good Standing. The Company has been duly
organized and is validly existing and in good standing under the laws of
its state of incorporation, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned
and such business is presently conducted and has power, authority and
legal right to acquire, own and service the Loans, the Loan Documents and
the Receivables.
(b) Due Qualification. The Company is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications (except where the failure to be so qualified or in good
standing or the failure to have such licenses and approvals could not
individually or in the aggregate have a material adverse effect on the
Collateral or the business or condition (financial or otherwise) of the
Company or impair the enforceability of any Loan or the related Loan
Documents or Receivables).
(c) Power and Authority. The Company has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Company by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights and by general principles of equity.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any
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material breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of the Company, or any indenture, agreement or
other instrument to which the Company is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than the Collateral Agreement); nor violate any law or,
to the best of the Company's knowledge, any order, rule or regulation
applicable to the Company of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best of the Company's knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Company or its properties:
(A) asserting the invalidity of this Agreement; (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement; or
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Company of its obligations under,
or the validity or enforceability of, this Agreement, the Contribution and
Servicing Agreement, the Collateral Agreement or the Secured Note.
(g) Company Not Insolvent. The Company is not the subject of
any pending federal, state or other bankruptcy, insolvency or similar
proceedings.
(h) Loans and Receivables. The representations and warranties of the
Seller regarding the Loans, the Loan Documents and the Receivables
contained in Section 2 of the Contribution and Servicing Agreement are
true and correct in all material respects and the representations and
warranties of each Borrower under its Revolving Credit Agreement shall be
true and correct in all material respects as of the making of each Loan
under such Revolving Credit Agreement. The Lender and the Collateral
Agent, acting on the Lender's behalf, may rely on such representations and
warranties to the same extent as if such representations and warranties
were set forth by the Company herein.
(i) Title to Collateral. With respect to each item of Collateral,
including, without limitation, the Loans and the Receivables, the Company
either (A) owns good and marketable title thereto or (B) has a first
priority perfected security interest therein, in each case, free and clear
of all Liens, charges or claims which Lien or Liens would have a material
adverse effect on the value of the Collateral or the collectibility of the
Receivables.
(j) Taxes. The Company has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or
charges which are being diligently contested in good
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faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
(k) Employee Benefit Plans. The Company does not sponsor and is not
required to make any contribution to any Pension Plan. No steps have been
taken by the PBGC, DVI or any Affiliate thereof to terminate any Plan
which would result in any material liability to the Company, and no
contribution failure has occurred with respect to any Pension Plan
maintained by the Company or any member of the Controlled Group sufficient
to give rise to a Lien under section 302(f) of ERISA. No condition exists
or event or transaction has occurred with respect to any Plan which might
reasonably be expected to result in the incurrence by the Company or any
member of the Controlled Group of any material liability, fine or penalty
to or on account of a Plan pursuant to Sections 302, 409, 502(c), 502(i),
502(l), 4062, 4063, 4064, 4068 or 4071 of ERISA or Section 401(a)(29),
4971, 4975 or 4980, of the Code.
(l) Margin Regulations. The Company is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Advance will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or
X. Terms for which meanings are provided in F.R.S. Board Regulation G, U
or X or any regulations substituted therefor, as from time to time in
effect, are used in this paragraph with such meanings.
(m) Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Company in writing to
the Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby (including the Contribution and Servicing
Agreement, true and complete copies of which were furnished to the Lender
in connection with its execution and delivery hereof) is, and all other
such factual information hereafter furnished by or on behalf of the
Company to the Lender in writing will be, true and accurate in every
material respect on the date as of which such information is dated or
certified, as of the date of execution and delivery of this Agreement by
the Lender and as of the applicable Funding Date, and such information is
not, or shall not be, as the case may be, incomplete by omitting to state
any material fact necessary to make such information not misleading in any
material respect, in each case, in light of the circumstances under which
such information was furnished.
(n) Financial Statements. All financial statements or certificates
of DVI or any of its Subsidiaries or any of their respective officers
furnished to the Lender are true and complete and fairly present in all
material respects the financial condition, results of operations and cash
flows of DVI, or such Subsidiary, as the case may be, in each case as of
the date thereof or for the period indicated, as the case may be and,
since the date of such financial statements or certificates, or the period
indicated therein, as applicable, no event or condition has occurred and
is continuing which would have a
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material adverse effect on the ability of the Company to perform its
obligations under this Agreement, the Secured Note, the Collateral
Agreement, the Contribution and Servicing Agreement or any Related
Agreement.
(o) Enforcement of Rights and Remedies. The Company shall take all
action necessary or required by the Lender to enforce any right or remedy
the Company may have against the Seller under the Contribution and
Servicing Agreement and against a defaulting Borrower under its Revolving
Credit Agreement. The Company shall not compromise, settle or otherwise
settle a claim the Company may have against the Seller or any such
Borrower or grant any waiver or any other relief to the Seller or such
Borrower without the prior written consent of Lender.
(p) Perfected Security Interest. Upon the funding of any
Advance, the Lender shall have a perfected security interest of first
priority under applicable law in the related Collateral.
SECTION VIII.2. Representations and Warranties Regarding Loans and
Receivables. The Company hereby represents and warrants to the Lender, as of the
Closing Date, each Funding Date and each delivery of a Reborrowing Certificate,
or, with respect to any Substitute Loans, Additional Loans and the related
Receivables and Loan Documents, as of the related Substitute Date or Addition
Date:
(a) Prior to the making of each Advance or payment to the Company of
any Reborrowing Amount, the Company will (A) be the sole owner of, and
have good and marketable title to, the related Loans and Loan Documents
and (B) have a valid and perfected first priority perfected security
interest in the Receivables that have been pledged as collateral security
for such Loan.
(b) The Grant of such Loan and related Eligible Receivables to the
Collateral Agent on behalf of the Lender will not violate the terms or
provisions of any such Loan Document or Receivable or any other agreement
to which the Seller then is a party or by which it is bound.
(c) At the time each item of Loan Collateral is assigned to the
Collateral Agent, such Loan Collateral will be free and clear of all Liens
other than the Lien of the Seller pursuant to the applicable Revolving
Credit Agreement and there will be no delinquent taxes or other
outstanding charges arising by, through or under the Company affecting the
Loan Collateral that are or may be Liens prior to, equal or coordinate
with, or subordinate to, the Lien of the Collateral Agent under the
Collateral Agreement.
(d) At the time each item of Loan Collateral is assigned to the
Collateral Agent, each Loan, the related Receivables and the related Loan
Documents will be a
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legal, valid and binding full recourse obligation of the Borrower or the
Eligible Payor, as the case may be, thereunder, enforceable by the Company
(and by the Collateral Agent as assignee of the Company) against such
Borrower or the Eligible Payor, as the case may be, in accordance with the
terms thereof, except as the enforcement of Eligible Government
Receivables against the Eligible Payor may be limited by the
anti-assignment provisions of applicable Federal law relating to Medicaid,
Medicare and CHAMPUS and except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights, and will be in full force
and effect, and any and all obligations of the Company and of such
Borrower or Eligible Payor, as the case may be, under any federal, state
or local law including, without limitation, usury, truth-in-lending and
equal credit opportunity laws applicable to such Loan or Receivables, as
the case may be, will have been complied with, and the Seller will have no
knowledge of any challenge or dispute by the Borrower under such Loan or
by an Eligible Payor with respect to any Receivables or of the bankruptcy
or insolvency of any such Borrower or Eligible Payor.
(e) At the time each item of Loan Collateral is assigned to the
Collateral Agent, the Company will not be in the process of terminating
any related Loan or any related Loan Document or making any plans for any
such termination. Furthermore, as of the date on which a Loan is
transferred and assigned to the Collateral Agent pursuant to the terms
hereof (i) there shall have been no default under any Loan Document which
is reasonably likely to have a material adverse effect on such Loan, the
related Receivables or such Loan Document and (ii) no event shall have
occurred and be continuing which with notice, the lapse of time or both
would constitute a default under such Loan, the related Receivables or
such Loan Document.
(f) Each Loan will have been originated by the Seller in the
ordinary course of its business in accordance with the its regular credit
approval process delivered to and approved by the Lender and does not
contravene any laws, rules or regulations applicable thereto. No Loan will
have been selected on any basis which would have any adverse effect on the
Lender.
(g) The sum of all Loans payable by any single Borrower will not
exceed any of the applicable limitations set forth in Schedule 3 hereto
(except as may otherwise be permitted under Section 2.13).
(h) With respect to any single Borrower, the sum of the Net
Collectible Values of all Eligible Receivables payable by any single
Eligible Payor to such Borrower shall not exceed any of the applicable
limitations set forth in Schedule 2 hereto (except as may otherwise be
permitted under Section 2.12).
(i) The obligation of each Borrower to repay each Loan is absolute
and unconditional, without any right of set-off by such Borrower and
without regard to any event affecting the Receivables subject to such
Loan. The obligation of each Eligible
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Payor to pay each Receivable is absolute and unconditional, without any
right of set-off by such Eligible Payor.
(j) There will be no facts or circumstances existing as of the time
each item of Loan Collateral is assigned to the Collateral Agent which
give rise to any right of rescission, offset, counterclaim or defense to
the obligations of any Borrower or any Eligible Payor, as the case may be,
to pay all amounts due with respect to any Loan or any Receivable, as the
case may be, and neither the operation of any of the terms applicable to
any Loan or any Receivable nor the exercise of any right thereunder will
render such Loan or such Receivable, as the case may be, unenforceable in
whole or in part or subject to any right of rescission, offset,
counterclaim or defense and no such right of rescission, offset,
counterclaim or defense will have been asserted with respect thereto.
(k) At the time each item of Loan Collateral is assigned to the
Collateral Agent, no Loan, Receivable or Loan Document will have been
amended, altered or modified in any way which would individually or in the
aggregate materially adversely affect the Company's rights thereunder or
prohibit payment to the Collateral Agent by the Borrower or (except in
respect of Eligible Government Receivables) any Eligible Payor, as the
case may be, and no provision of any Loan or Loan Document will have been
waived, except in writing, and copies of all such writings will be
attached to the related Loan Documents, and no Receivable securing any
such Loan will have been released, in whole or in part, from such Loan.
(l) No Loan or Receivable will have been originated in, or be
subject to the laws of, any jurisdiction whose laws would make the
assignment and transfer thereof pursuant to the terms hereof or any
transaction contemplated hereby or by the Collateral Agreement unlawful.
(m) All parties to each Loan and the related Loan Documents had
requisite authority and capacity to execute such Loan.
(n) No right of the Company with respect to a Borrower's or Eligible
Payor's failure to pay any payment due under any Loan or Receivable, as
the case may be, has been waived by the Company or by any Borrower.
(o) Each Loan Document that constitutes either "chattel paper" or an
"instrument" under the UCC as in effect in the applicable jurisdiction is
in the possession of the Collateral Agent. Each of the Loan Documents that
constitutes an "instrument" has been endorsed to the Collateral Agent or
its order. There is only one original executed copy of each Loan Document
that constitutes "chattel paper" or an "instrument" under the applicable
UCC.
(p) At the time each item of Loan Collateral is assigned to the
Collateral
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Agent, after giving effect to such assignment, the Collateral Coverage
Condition has been satisfied.
(q) The Borrower Lockbox Accounts identified on Schedule 7.2(q)
hereto have been established and are in existence on the Closing Date and
such schedule accurately sets forth the following information as to each
Borrower Lockbox Account:
(A) the name of the Borrower for whose benefit the account
was established;
(B) the name of the depository institution maintaining such
account; and
(C) the account number.
(r) Each Loan is an Eligible Loan.
(s) No consent or approval is required for the assignment and
transfer of any Loan Document pursuant to the terms of this Agreement and
the Collateral Agreement, except for such consents or approvals as have
been obtained.
SECTION VIII.3. Representations and Warranties of the Servicer. The
Servicer makes the following representations on which the Lender is deemed to
have relied in making Advances hereunder. The representations speak as of the
execution and delivery of the Agreement (or as of the date a Person becomes
Servicer in the case of a third-party successor to the Servicer which is not the
Collateral Agent):
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its state of incorporation, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned
and such business is presently conducted and has power, authority and
legal right to acquire, own and service the Loans, the Loan Documents and
the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications (except where the failure to be so qualified or in good
standing or the failure to have such licenses and approvals could not
individually or in the aggregate have a material adverse effect on the
Collateral or the business or condition (financial or otherwise) of the
Servicer or impair the enforceability of any Loan or the related Loan
Documents or Receivables).
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and
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performance of this Agreement have been duly authorized by the Servicer by
all necessary corporate action.
(d) 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 the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights and by general principles of equity.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any material breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of the Servicer,
or any indenture, agreement or other material instrument to which the
Servicer is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other material instrument (other than the
Collateral Agreement); nor violate any law or, to the best of the
Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best of the Servicer's knowledge, threatened, before
any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(A) asserting the invalidity of this Agreement; (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement; or
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement, the Collateral
Agreement, the Contribution and Servicing Agreement or the Secured Note.
(g) Financial Statements. All financial statements or certificates
of the Servicer or any of its officers furnished to the Lender are true
and complete in all material respects and do not omit to disclose any
material liabilities or other facts relevant to the Servicer's condition.
All such financial statements have been prepared in accordance with GAAP.
(h) No Change. There has been no change in the business, operations,
financial condition, properties or prospects of the Servicer and its
subsidiaries, taken as a whole since the date set forth in the Servicer's
most recent 10-K or 10-Q filing under the Securities Exchange Act of 1934,
as amended, which would have a material adverse effect on the ability of
the Servicer to perform its obligations under this Agreement, the
Collateral Agreement or any Related Agreement.
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SECTION VIII.4. Enforcement of Rights Against the Seller and Borrowers.
The Servicer shall take all action necessary or required by the Lender to
enforce any right or remedy the Company may have against the Seller under the
Contribution and Servicing Agreement and against a defaulting Borrower under a
Revolving Credit Agreement. The Servicer shall not compromise otherwise settle a
claim the Company may have against the Seller or any such Borrower or grant any
waiver or any other relief to the Seller or such Borrower without the prior
written consent of the Lender.
SECTION VIII.5. Purchase Upon Breach; Contribution and Servicing
Agreement. The Company, the Servicer or the Lender (or the Collateral Agent on
the Lender's behalf), as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of a breach of any of the
Seller's representations and warranties set forth in Section 2 of the
Contribution and Servicing Agreement which materially and adversely affects the
interest of the Lender in respect of any Loan, Loan Documents or Receivables.
The Company shall cause the Seller to (a) replace such Loan and the related Loan
Documents and Receivables with a Substitute Loan in accordance with the
provisions of Section 7 of the Contribution and Servicing Agreement or (b)
purchase from the Company the Loan and the related Loan Documents and
Receivables that are affected by such breach unless, in each such instance such
breach has been cured, or waived in all respects by the Lender, within 30 days
following the Company's discovery or receipt of notice of such breach. In the
event of a repurchase of a Loan, the Company shall cause the Seller to remit to
the Collateral Agent the Repurchase Amount of such Loan on or prior to 2:00 p.m.
New York City time on the second Business Day prior to the Payment Date
immediately following the date on which the Seller has become obligated to
repurchase such Loan. The Collateral Agent shall, to the extent received,
deposit immediately that portion of the Repurchase Amount representing the
unpaid principal balance of the replaced Loans in the Principal Account, and
that portion of the Repurchase Amount representing unpaid interest and other
income payable on the replaced Loans in the Finance Charge Account, in
accordance with the written instructions of the Servicer. The sole remedy of the
Collateral Agent or the Lender against the Seller with respect to such a breach
of a representation or a warranty (absent fraud on the part of the Seller or the
applicable Borrower with respect to such breach) shall be to require the Seller
to purchase or substitute Loans pursuant to the Contribution and Servicing
Agreement and/or to enforce, as assignee of the Seller, the applicable
Borrower's obligations under the related Revolving Credit Agreement with respect
to such breach. In the event that the Seller fails to purchase or substitute for
any Loan it is required to replace or repurchase pursuant to the Contribution
and Servicing Agreement, the Collateral Agent, upon written direction of the
Lender, shall enforce the Company's rights against the Seller under and in
accordance with the terms of the Contribution and Servicing Agreements, as
assigned to the Collateral Agent, to require the purchase or replacement of the
Loan and the related Loan Documents and Receivables.
SECTION VIII.6. Release of Loans Following Substitution or Purchase. In
the event
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that (i) the Seller shall have substituted a Substitute Loan for a Predecessor
Loan in accordance with Section 7 of the Contribution and Servicing Agreement or
(ii) the Seller shall have purchased a Loan in accordance with Section 5.02 of
the Contribution and Servicing Agreement, the Predecessor Loan shall be released
from the Lien of the Collateral Agreement when the Collateral Agent shall have
received (i) an Officers' Certificate from the Servicer stating that each of the
conditions set forth in the Collateral Agreement and the Contribution and
Servicing Agreement with respect to such substitution or repurchase has been
duly satisfied, (ii) with respect to any such substitution, such documentation
required to be delivered pursuant to Section 7.01(b) of the Contribution and
Servicing Agreement and (iii) the Repurchase Amount payable pursuant to Section
5.02 of the Contribution and Servicing Agreement.
SECTION VIII.7. Release of Loans Upon Final Payment. In the event that the
Collateral Agent shall have received an Officers' Certificate from the Servicer
that no further payments on, or in respect of, any Loan or the related
Receivables are or will be due and payable, then, so long as no Event of Default
shall have occurred and then be continuing such Loan and the related Receivables
shall be released from the Lien of the Collateral Agreement.
ARTICLE VIII
COVENANTS
SECTION VIII.1. Covenants. The Company agrees with the Lender that, until
all Secured Obligations have been paid and performed in full, the Company, will
perform the obligations set forth in this Article VIII.
SECTION VIII.2. Corporate Existence, Etc. (a) The Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and the rights, licenses and franchises of the Company,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Collateral
Agreement, the Secured Note, this Agreement, the Contribution and Servicing
Agreement, the Loans or any of the Receivables.
(b) The Company shall at all times observe and comply in all material
respects with (i) all laws, regulations and court orders applicable to it, (ii)
all requirements of law in the declaration and payment of dividends on its
Capital Stock, and (iii) all requisite and appropriate corporate and other
formalities (including, without limitation, annual and all other appropriate
meetings of the Company's board of directors and, if required by law, its
charter or otherwise, meetings and votes of shareholders to authorize corporate
action) in the management of its business and affairs and the conduct of the
transactions contemplated hereby and by the Contribution and Servicing
Agreement.
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(c) The Company will, at all times: (i) maintain (A) corporate and
financial books and records separate from those of any other Person and (B)
minutes of the meetings and other proceedings of its shareholders and board of
directors; (ii) continuously maintain the resolutions, agreements and other
instruments underlying the transactions contemplated hereby and by the
Contribution and Servicing Agreement as official records of the Company; (iii)
act solely in its corporate name and through its duly authorized officers or
agents to maintain an arm's-length relationship with the Seller and its
Affiliates; (iv) pay all of its operating expenses and liabilities from its own
funds; (v) maintain an office and telephone number separate from that of the
Seller on the premises currently rented by the Seller; and (vi) maintain its
assets separately from the assets of the Seller.
(d) The Company shall conduct its business solely in its own name through
its duly authorized officers or agents so as to not mislead others as to the
identity of the corporation with which those others are concerned, and
particularly will avoid the appearance of conducting business on behalf of the
Seller or any of its Affiliates or that the assets of the Company are available
to pay the creditors of the Seller or any of its Affiliates. Without limiting
the generality of the foregoing, all oral and written communications, including
without limitation, letters, invoices, purchase orders, contracts, statements
and loan applications, will be made solely in the name of the Company.
(e) The Company will be operated so as not to be substantively
consolidated for bankruptcy purposes with the Seller.
(f) At least one director of the Company shall at all times be a person
who is not a director, officer or employee of any direct or ultimate parent, or
Affiliate of the Seller.
SECTION VIII.3. Protection of Collateral; Further Assurances. The Company
will from time to time execute and deliver all such supplements and amendments
hereto and all such UCC financing statements, continuation statements,
instruments of further assurance, and other instruments, and will take such
other action as may be necessary or advisable to:
(a) Grant more effectively all or any portion of the Collateral;
(b) maintain or preserve the Lien of the Collateral Agent or
carry out more effectively the purposes of this Agreement or the
Collateral Agreement;
(c) publish notice of, or protect the validity of, any Grant made or
to be made pursuant to the Collateral Agreement and perfect the security
interest contemplated thereby in favor of the Collateral Agent in the
Loans and the related Receivables;
(d) enforce or cause the Servicer to enforce any of the Loans
and the related Receivables; or
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(e) preserve and defend title to the Collateral and preserve and
defend the rights of the Collateral Agent and the Lender in such
Collateral against the claims of all Persons.
The Company, upon the Company's failure to do so, hereby designates the Lender
its agent and attorney-in-fact to execute any UCC financing statement,
continuation statement or other document or instrument required pursuant to this
Section 8.3; provided, however, that such designation shall not be deemed
relieve the Company from its obligations to comply with the foregoing covenants.
SECTION VIII.4. Compliance Certificates. The Company will deliver to the
Collateral Agent and the Rating Agency, within 90 days after the end of each
fiscal year, a written statement signed by the Managing Director or Controller
of the Company, stating as to each signer thereof, that:
(a) a review of the activities of the Company during such year and
of its performance under this Agreement and the Collateral Agreement has
been made under his supervision;
(b) to the best of such officers' knowledge, based on such review,
the Company has fulfilled all of its obligations under this Agreement and
the Collateral Agreement throughout such year; and
(c) whether the officer knows of any Potential Events of Default or
Events of Default under this Agreement throughout such year or, if there
has been a Default in the fulfillment of any such obligation, specifying
each such Potential Event of Default or Event of Default known to him and
the nature and status thereof and the nature of the action taken with
respect thereto.
SECTION VIII.5. Performance of Obligations. (a) The Company will
punctually perform and observe all of its obligations and agreements
contained in this Agreement, the Collateral Agreement, the Secured Note and
the Contribution and Servicing Agreement.
(b) The Company will clearly ▇▇▇▇ its books and records to reflect each
assignment and transfer of the Loans and the Receivables from the Seller.
(c) If any Authorized Officer shall have knowledge of the occurrence of a
Servicer Event of Default, the Company shall promptly notify the Collateral
Agent and the Lender thereof, and shall specify in such notice the action, if
any, the Company is taking in respect of such default. Unless consented to by
the Lender, the Company may not waive any default under or amend the
Contribution and Servicing Agreement.
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SECTION VIII.6. Negative Covenants. The Company will not:
(a) sell, transfer, exchange or otherwise dispose of any portion
of the Collateral except as expressly permitted by this Agreement;
(b) claim any credit on, or make any deduction from, the principal
of, or interest on, the Secured Note by reason of the payment of any taxes
levied or assessed upon any portion of the Collateral;
(c) engage in any business or activity other than in connection
with, or relating to the ownership of, the Collateral, the issuance of the
Secured Note, the specific transactions contemplated hereby, and similar
activities with respect to ownership and financing of other pools of
loans, receivables and other financial assets;
(d) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
(e) (A) permit the validity or effectiveness of this Agreement or
any Grant hereunder or under the Collateral Agreement to be impaired, or
permit the Lien of the Collateral Agreement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations under this Agreement, except as
may be expressly permitted hereby, (B) permit any Lien, charge, security
interest, mortgage or other encumbrance to be created on or to extend to
or otherwise arise upon or burden the Collateral or any part thereof or
any interest therein or the proceeds thereof other than the Lien of the
Collateral Agent, or (C) permit the Lien of the Collateral Agreement not
to constitute a valid first priority perfected security interest in the
Collateral;
(f) conduct its business or engage in any activity in violation of
the provisions contained in its certificate of incorporation or amend
Sections 3, 5, 6, 9 or 10 of its certificate of incorporation without the
unanimous consent of all directors;
(g) at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or
other law that would prohibit or forgive the Company from paying all or
any portion of the principal of or interest on the Secured Note as
contemplated herein or in the Secured Note, wherever enacted, now or at
any time hereafter in force, or that may affect the covenants or the
performance of this Agreement; and (to the extent that it may lawfully do
so) the Company hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the
execution of any power granted to the Collateral Agent, but will suffer
and permit the execution of every such power as though no such law had
been enacted;
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(h) issue or register the transfer of any of its Capital Stock
to any Person other than DVIBC;
(i) merge or consolidate with any other Person. The Company
will keep all of its material assets within the United States at all
times. The Company will not make any material change in its business;
(j) take any action or permit any action to be taken by others which
would release any Person from any of such Person's covenants or
obligations under any Loan or any other instrument included in the
Collateral, or which would result in the amendment, hypothecation,
subordination, termination, or discharge of, or impair the validity or
effectiveness of, any Loan, Loan Document or such other instrument, except
as expressly provided in this Agreement or the Contribution and Servicing
Agreement;
(k) (1) commence any case, proceeding or other action under any
existing or future bankruptcy, insolvency or similar law seeking to have
an order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, (2) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part
of its assets, (3) make a general assignment for the benefit of creditors,
or (4) take any action in furtherance of, or consenting or acquiescing in,
any of the foregoing;
(l) contract for, create, incur, assume or suffer to exist any Lien
upon any of its property or assets, whether now owned or hereafter
acquired, except for the Lien created by the Collateral Agreement;
(m) contract for, create, incur, assume or suffer to exist any
Indebtedness other than (x) the Secured Note and (y) trade payables and
expense accruals incurred in the ordinary course and which are incidental
to the Company's permitted activities;
(n) make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing, or
otherwise), endorse (except for the endorsement of checks for collection
or deposit) or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION VIII.7. Information as to the Company. The Company shall file with
the Collateral Agent, the Lender and the Rating Agency:
(a) within 15 days after it files them with the Commission, copies
of the annual
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reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Guarantor is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
(b) immediately upon becoming aware of the existence of any
condition or event which constitutes a Potential Event of Default or an
Event of Default, a written notice describing its nature and period of
existence and what action the Company is taking or proposes to take with
respect thereto; and
(c) promptly upon the Company's becoming aware of:
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any pending or proposed court or administrative
proceeding
which involves or may involve the possibility, individually or in the
aggregate, of materially and adversely affecting the properties, business,
profits or condition (financial or otherwise) of the Company or the
validity or enforceability of the Related Agreements, a written notice
specifying the nature of such investigation or proceeding and what action
the Company is taking or proposes to take with respect thereto and
evaluating its merits.
SECTION VIII.8. Payment of Taxes and Other Claims. The Company will pay or
discharge or cause to be paid or discharged, before any penalty accrues from the
failure to so pay or discharge, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or upon the income, profits or
property (including any property that is part of the Collateral) of the Company
and (2) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a Lien upon the property of the Company; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate provision has been made or where
the failure to effect such payment or discharge is not adverse in any material
respect to the Lender. The Company and DVI are members of an affiliated group
within the meaning of section 1504 of the Code which has filed, and will
continue to file, a consolidated return for federal income tax purposes, and the
Company shall be included in consolidated federal income tax returns filed by
DVI for such affiliated group.
SECTION VIII.9. Indemnification. The Company agrees to indemnify and hold
harmless the Lender, the Collateral Agent, and their respective directors,
officers, employees and agents) (each an "Indemnified Party") against any and
all liabilities, losses, damages, penalties, costs and expenses (including the
fees and expenses of counsel and the costs of
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defense and legal fees and expenses) which may be incurred or suffered by such
Indemnified Party as a result of claims, actions, suits or judgments asserted or
imposed against it and arising out of the transactions contemplated hereby or by
the Contribution and Servicing Agreement, including, without limitation, any
tort claims and any fines or penalties arising from any violation of the laws or
regulations of the United States or any state or local government or
governmental authority, except to the extent the foregoing result from the gross
negligence, bad faith or willful misconduct of such Indemnified Party.
SECTION VIII.10. Loan Documents to Collateral Agent. On or prior to each
Funding Date, Addition Date or Substitute Date, as applicable, the Company shall
deliver to the Collateral Agent the original counterpart of each Loan Document
that constitutes "chattel paper" or an "instrument", as such terms are defined
in the UCC. On the Initial Funding Date, the Company shall deliver to the
Collateral Agent a computer disk containing the information set forth in
Schedule 1 to this Agreement as of the Initial Funding Date.
SECTION VIII.11. Collection of Moneys. If at any time the Company shall
receive any payment on or in respect of any Loan or Receivables, it shall hold
such payment in trust for the benefit of the Collateral Agent and the Lender,
shall segregate such payment from the other property of the Company, and shall
deliver such payment to the Collateral Agent by wire transfer of immediately
available funds for deposit in the applicable Loan Accounts immediately upon the
Company's receipt of available funds in respect of such payment.
SECTION VIII.12. Opinion of Counsel. Within 10 Business Days after a
request by the Lender (which shall not be made more frequently than once in any
6 month period), the Company shall deliver to the Collateral Agent, the Rating
Agency and the Lender an Opinion of Counsel (which opinion may be delivered by
internal counsel to the Guarantor, DVI or the Company) as to the continued
perfection of the Collateral Agent's security interests in the Loans and the
Receivables.
SECTION VIII.13. Special Purpose Entity. The Company shall at all
times be a Special Purpose Entity.
SECTION 8.14. Daily Servicer Report. On or before 2:00 p.m. (New York City
time) on each Business Day, the Servicer shall deliver to the Collateral Agent
and the Lender a Daily Servicer Report, in substantially the form attached
hereto as Exhibit G, specifying with respect to each Borrower: (i) the name of
such Borrower, (ii) the outstanding principal balance of all Loans to such
Borrower, (iii) the Borrowing Base for such Borrower, (iv) the Commitment for
such Borrower, (v) the amount of collections received by such Borrower in
respect of Eligible Receivables subject to the Lien of the Collateral Agent
during the preceding 150 day period, (vi) the Lending Formula Amount for such
Borrower and (vii) the amount of the unused credit available to be drawn on such
day by such Borrower under its Revolving Credit Agreement, and also specifying
(1) the outstanding Advance Balance on such date, (2) the sum of items (w), (x)
and (y) in the definition of "Collateral Coverage Condition" and (3)
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whether the Collateral Coverage Condition is satisfied as of such date.
ARTICLE IX
CUSTODY OF RECEIVABLES DOCUMENTS; RELEASE OF FILES
SECTION IX.1. Company as Custodian. (a) The Company shall act as custodian
on behalf of the Lender and shall take and maintain custody of all documents and
instruments evidencing or otherwise relating to the Receivables securing the
Loans (the "Receivables Documents"), except for any Receivables Documents that
constitute "chattel paper" or "instruments" under the UCC in effect in the
jurisdiction governing the origination of such Receivable. The Company shall
review the Receivables Documents upon receipt for completeness using such
sampling or other techniques acceptable to the Lender. The Company shall store
such Receivables Documents in locked storage locations specified in writing to
the Lender. Such storage location shall be marked to indicate that a first
priority security interest in the Receivables evidenced by such Receivables
Documents has been granted to the Lender. Notwithstanding anything to the
contrary contained herein, the Company and the Lender may provide for other
custodial arrangements reasonably satisfactory to the Lender. The Company shall
release any and all Receivables Documents to the Lender upon the Lender's
request.
(b) The Company, as custodian, shall not provide access to such
Receivables Documents to any Person (other than the Servicer or designated
employees performing the custodial function set forth herein) unless the Company
has obtained the prior written consent of the Lender. The Company shall not
release any Receivables Documents to any Person, other than (i) the Lender,
unless Company has received the prior written consent of the Lender or (ii) to
another custodian acceptable to the Lender pursuant to other custodial
arrangements satisfactory to the Lender.
SECTION IX.2. Release of Files following Payment of Secured Obligations.
Upon payment in full of the Secured Obligations the Lender agrees to direct the
Collateral Agent in writing to deliver to the Company, at the Company's expense,
(a) a letter specifying that the Collateral Agent has no further interest in the
related Loan Documents and (b) such instruments necessary to release the
Collateral Agent's Lien for the benefit of the Lender thereon.
ARTICLE X
EVENTS OF DEFAULT
SECTION X.1. Events of Default. "Event of Default," wherever used herein,
means any one of the following (whatever the reason for such Event of Default
and whether it shall be
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voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) failure of the Company to make any payment of Monthly
Interest on any Payment Date, which failure continues for one day;
(b) failure of the Company to make any payment of (A) Monthly
Principal, or (B) any other amount due and owing under this Agreement or
the Secured Note when it becomes due and payable;
(c) default in the performance, or breach, of any covenant set
forth in Section 8.2, 8.5(c) or 8.6;
(d) default in the performance, or breach, of any covenant of the
Company in this Agreement, the Secured Note or the Collateral Agreement
(other than a default described in (a), (b) or (c) above), the
Contribution and Servicing Agreement or the other Related Agreements and
continuance of such default or breach for a period of 30 days after the
earliest of (A) any officer of the Company first acquiring knowledge
thereof and (B) the Collateral Agent's giving written notice thereof to
the Company;
(e) a default by the Company that continues beyond the grace period
under any other indebtedness or a failure by the Company to pay an
uncontested judgment in an amount in excess of $100,000;
(f) if any representation or warranty of the Company or the Seller
made in this Agreement or the Contribution and Servicing Agreement or any
other writing provided to the Lender in connection with the foregoing
documents shall prove to be incorrect in any material respect as of the
time when the same shall have been made; provided, however, that the
breach of any representation or warranty made by the Seller in Section
2.03 or 2.04 of the Contribution and Servicing Agreement with respect to
any of the Loans subject thereto shall not constitute an Event of Default
if the Seller substitutes one or more Substitute Loans in compliance with
the requirements set forth in Section 7.01 of the Contribution and
Servicing Agreement or repurchases such Loan and the related Receivables
in compliance with the requirements set forth in Section 5.02 of the
Contribution and Servicing Agreement; provided further that a breach of a
representation or warranty contained in Section 7.2(g) or (h) which does
not result from a violation or breach of the requirements of Section 2.12
or Section 2.13 shall not constitute an Event of Default pursuant to this
Section 10.1(f) (the foregoing shall not be deemed to affect or limit any
rights or remedies the Lender may have pursuant to other provisions of
this Agreement or any other Related Agreement);
(g) the entry by a court having jurisdiction in the premises of (A)
a decree or
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order for relief in respect of any of the Guarantor, the Seller or the
Company in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization, or other similar law or
(B) a decree or order adjudging any of the Guarantor, the Seller or the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of any such Person under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of any such Person or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days;
(h) the commencement by any of the Guarantor, the Seller or the
Company of a voluntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in respect
of any of the Guarantor, the Seller or the Company in an involuntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
similar official of any such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the failure of any such Person to pay its debts generally as
they become due, or the taking of corporate action by any such Person in
furtherance of any such action;
(i) any Guarantor Event of Default shall have occurred and then
be continuing;
(j) the Asset Coverage Percentage shall be less than 125% on any
day;
(k) the Servicer shall fail to deliver the Servicer Report for a
monthly reporting period to the Lender and the Rating Agency on or before
the applicable Determination Date;
(l) the Guarantor shall fail to be the owner, of record and
beneficially, of 100% of all outstanding capital stock, of all classes of
the Seller or the Seller shall fail to be the owner, of record and
beneficially, of 100% of all outstanding capital stock, of all classes of
the Company;
(m) the Company shall fail to satisfy the Collateral Coverage
Condition and such failure shall continue unremedied for a period of one
day after the earlier of (a) the
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Company becoming aware of such failure or (b) the completion and delivery
of the next succeeding Servicer Report as required under the Contribution
and Servicing Agreement;
(n) the amount of funds on deposit in the Cash Collateral Account
shall be less than the Required Cash Collateral Account Balance and such
deficiency continues unremedied for a period of one day after the earlier
of (a) the Company becoming aware of such deficiency or (b) the completion
and delivery of the next succeeding Servicer Report as required under the
Contribution and Servicing Agreement;
(o) there shall occur a Change of Control with respect to DVI;
(p) there shall occur default in the performance, or breach, of any
covenant of the Company, the Guarantor, the Seller or the Servicer
contained in any material agreement (other than a default described in any
other provision of this Section 10.1), which default or breach continues
for a period of 15 days after the earliest of (A) any officer of the
Company, the Guarantor, the Seller or the Servicer first acquiring
knowledge thereof and (B) the Collateral Agent's giving written notice
thereof to the Company, the Guarantor, the Seller or the Servicer, as
applicable and could have a material adverse effect on (1) the financial
condition, assets or operations of the Company, the Servicer, the
Guarantor, (2) the ability of the Company, the Servicer, the Guarantor to
perform its respective obligations under any Related Agreement, (3) on the
enforceability of any Related Agreement or (4) on the priority or
perfection of the Collateral Agent's Lien on the Collateral;
(q) any event shall occur or condition exist which could have a
material adverse effect on (1) the financial condition, assets or
operations of the Company, the Servicer, the Guarantor, (2) the ability of
the Company, the Servicer, the Guarantor to perform its respective
obligations under any Related Agreement, (3) on the enforceability of any
Related Agreement or (4) on the priority or perfection of the Collateral
Agent's Lien on the Collateral; or
(r) a Servicer Event of Default shall have occurred and be
continuing.
Upon the occurrence of an Event of Default pursuant to clause (a) of this
Section 10.1, the Company shall have the right, within five (5) Business Days
after receipt of written notice thereof from the Collateral Agent of the
occurrence of such Event of Default, to cure such Event of Default by making
payment to the Collateral Agent of such unpaid amount plus interest thereon at a
rate per annum equal to the Applicable Rate. If the Company makes such payment
within such timeframe, no Event of Default shall exist pursuant to clause (a) of
this Section 10.1.
SECTION X.2. Remedies Upon Default. (a) During the continuance of one or
more
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Events of Default the Lender may immediately declare the principal of the
Secured Note to be immediately due and payable, together with all interest
thereon and fees, expenses and other amounts owing under this Agreement;
provided that, upon the occurrence of the Event of Default referred to in
10.1(g) or (h), such amounts shall immediately and automatically become due and
payable without any further action by any person or entity. Upon such
declaration or such automatic acceleration, the balance then outstanding on the
Secured Note shall become immediately due and payable without presentation,
demand or further notice of any kind to the Company.
(b) During the continuance of one or more Events of Default, the Lender
shall have the right to obtain physical possession of all files of the Company
relating to the Collateral and all documents relating to the Collateral which
are then or may thereafter come in to the possession of the Company or any third
party acting for the Company. The Lender shall be entitled to specific
performance of all agreements of the Company contained in this Agreement, the
Contribution and Servicing Agreement and the Collateral Agreement.
(c) During the continuance of one or more Events of Default, the Lender
shall have the right to withdraw all funds on deposit in the Loan Accounts, the
Concentration Account and the Cash Collateral Account for application to pay
amounts due to the Lender under the Secured Note, the Secured Credit Line
Agreement, the Contribution and Servicing Agreement, the Guaranty and the
Collateral Agreement, collect and receive all further payments made on the
Collateral, and if any such payments are received by the Company, the Company
shall not commingle the amounts received with other funds of the Company and
shall promptly pay them over to the Lender. In addition, the Lender shall have
the right to dispose of the Collateral as provided herein, or as provided in the
other documents executed in connection herewith, or in any commercially
reasonable manner, or as provided by law. Such disposition may be on either a
servicing-released or a servicing-retained basis at the sole option of the
Lender. The Lender shall have all other rights of secured lenders under
applicable law. The Lender shall be entitled to place the Loans which it
recovers after an Event of Default in a pool for issuance of asset-backed
securities and to sell such securities subject to the applicable requirements of
the New York UCC. The Lender shall also be entitled to sell any or all of such
Loans individually subject to the applicable requirements of the New York UCC.
The specification in this Section of manners of disposition of collateral as
being commercially reasonable shall not preclude the use of other commercially
reasonable methods (as contemplated by the New York UCC) at the option of the
Lender.
(d) After the occurrence and during the continuance of an Event of
Default, the Lender shall have the right to appropriate and apply to the payment
of the Secured Obligations (whether or not then due) any and all balances,
credits, deposits, accounts or moneys of the Company or DVI then or thereafter
maintained with the Lender.
(e) All rights and remedies of the Lender may be exercised by the
Collateral Agent on the Lender's behalf.
-35-
37
SECTION X.3. No Waiver. The failure to exercise any of the rights and
remedies set forth in this Agreement shall not constitute a waiver of the right
to exercise the same or any other option at any subsequent time in respect of
the same Event of Default or any other Event of Default. The acceptance by the
Lender of any payment hereunder which is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any of the foregoing rights and remedies at that
time or at any subsequent time or nullify any prior exercise of any such rights
and remedies without the express consent of Lender, except as and to the extent
otherwise provided by law.
SECTION X.4. Limitation. In any action or proceeding involving any state
corporate law, or any state or Federal bankruptcy, insolvency, reorganization,
fraudulent transfer or other law affecting the rights of creditors generally, if
the security interest and lien created by the Company under the Collateral
Agreement would otherwise, taking into account the provisions of this Section
10.4, be held or determined to be void, invalid or unenforceable on account of
the amount of the Collateral subject to such security interest and lien, then,
notwithstanding any other provision hereof of the contrary, the amount of such
Collateral shall, without any further action by the Company, the Lender or any
other Person, be automatically limited and reduced to the highest amount that is
valid and enforceable as determined in such action or proceeding.
ARTICLE XI
MISCELLANEOUS
SECTION XI.1. Power of Attorney. The Company hereby authorizes the Lender,
at the Company's expense, to file such financing statement or statements
relating to the Collateral without the Company's signature thereon as the Lender
at its option may deem reasonably appropriate, and appoints the Lender as the
Company's attorney-in-fact to execute any such financing statement or statements
in the Company's name and to perform all other acts which the Lender deems
appropriate to perfect and continue the security interest granted hereby, and to
protect, preserve and upon the occurrence and during the continuance of an Event
of Default realize upon the Collateral, including the right to endorse notes,
complete blanks in documents and sign assignments on behalf of the Company as
its attorney-in-fact. This Power of Attorney is coupled with an interest and is
irrevocable without the Lender's consent.
SECTION XI.2. Nature of Agreement. This Agreement shall be governed by New
York Law, and, together with the Collateral Agreement, constitute a security
agreement within the meaning of the New York UCC.
SECTION XI.3. Intent. It is understood each of the parties intends that
the Lender's rights to liquidate the Loans delivered to it hereunder or to
exercise any other remedies pursuant to Section 10.2, is a contractual right to
liquidate such Loans as described in Section
-36-
38
555 and 559 of Title 11 of the United States Code, as amended, subject only to
Company's rights hereunder.
SECTION XI.4. Assignment. No assignment by the Company of this Agreement
shall be permitted without the prior written consent of Lender. The Company
acknowledges that the Lender may pledge, assign, sell, transfer, grant a
security interest in or convey by any means, including by means of a repurchase
agreement, the Secured Note and the related Collateral, by pledge or assignment
of the Secured Note and/or such Collateral, and the Company waives any and all
claims, rights, demands, causes of action and remedies relating to such action
by the Lender.
SECTION XI.5. Lender May Act Through Affiliates or Agents. The Lender may,
from time to time, designate one or more Affiliates or agents for the purpose of
performing any action hereunder.
SECTION XI.6. Notices. All demands, notices and communications relating to
this Agreement shall be in writing and shall be deemed to have been duly given
if mailed, by first-class, registered or certified mail, return receipt
requested, by overnight courier, by personal delivery or by telecopier
transmission with electronic confirmation of receipt, in each case, to the other
party or parties at the address shown below, or such other address as may
hereafter be furnished to the other party or parties by like notice. Any such
demand, notice or communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee (as
evidenced, in the case of registered or certified mail, by the date noted on the
return receipt or, in the case of telecopier transmission, by an electronic
confirmation of receipt).
If to the Company:
DVI Business Credit Receivables Corp. II
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
DVI Business Credit Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
-37-
39
If to the Lender:
CS First Boston
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director, Credit
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Collateral Agent:
Bankers Trust Company
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust and Agency Group - Structured Finance
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇/6684
SECTION XI.7. No Oral Modifications; Successors and Assigns. No provisions
of this Agreement shall be waived or modified except by a writing duly signed by
the authorized agents of the Lender and the Company. This Agreement shall be
binding upon the successors and assigns of the parties hereto; provided that,
this Agreement shall not be assignable by the Company without the prior written
consent of the Lender.
SECTION XI.8. Third Party Beneficiary. The Collateral Agent shall be a
third-party beneficiary of this Secured Credit Line Agreement with respect to,
and to the extent of, the rights and benefits granted to the Collateral Agent
herein.
-38-
40
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written:
DVI BUSINESS CREDIT RECEIVABLES CORP. II
By: ___________________________________
Name:
Title:
CS FIRST BOSTON MORTGAGE CAPITAL
CORP., as Lender
By: ___________________________________
Name:
Title:
DVIBC, as Servicer
By: ___________________________________
Name:
Title:
41
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions............................................... 1
ARTICLE II
ADVANCES
SECTION 2.1. The Advances.............................................. 2
SECTION 2.2. Advance Amount............................................ 2
SECTION 2.3. Termination Date; Maturity of Advances.................... 3
SECTION 2.4. Prepayment................................................ 3
SECTION 2.5. Extension Option.......................................... 3
SECTION 2.6. Payment of Interest and Principal......................... 3
SECTION 2.7. Secured Note.............................................. 3
SECTION 2.8. Form of Payment........................................... 3
SECTION 2.9. Allocation of Collections................................. 4
SECTION 2.10. Securitized Offering...................................... 6
SECTION 2.11. Conditions to the Making of Advances...................... 6
SECTION 2.12. Eligible Payor Concentration Tests........................ 10
SECTION 2.13. Borrower Concentration Tests.............................. 10
SECTION 2.14 Additional Borrowers; Borrower Defaults................... 11
SECTION 2.15. Certain Waivers........................................... 11
SECTION 2.16. Determination of LIBOR.................................... 12
ARTICLE III
USE OF PROCEEDS; GRANT OF SECURITY INTEREST
SECTION 3.1. Purpose of Loan........................................... 13
SECTION 3.2. Grant of Security Interest................................ 13
SECTION 3.3. Borrower Lockbox Accounts................................. 13
ARTICLE IV
FINANCING STATEMENTS
SECTION 4.1. UCC Financing Statements.................................. 13
-i-
42
ARTICLE V
THE CASH COLLATERAL ACCOUNT
SECTION 5.1. Cash Collateral Account................................... 14
ARTICLE VI
THE GUARANTY
SECTION 6.1. Claims on Guaranty........................................ 14
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Company............. 15
SECTION 7.2. Representations and Warranties Regarding Loans and
Receivables............................................... 18
SECTION 7.3. Representations and Warranties of the Servicer............ 21
SECTION 7.4. Enforcement of Rights Against the Seller and Borrowers.... 23
SECTION 7.5. Purchase Upon Breach; Contribution and Servicing Agreement 23
SECTION 7.6. Release of Loans Following Substitution or Purchase....... 24
SECTION 7.7. Release of Loans Upon Final Payment....................... 24
ARTICLE VIII
COVENANTS
SECTION 8.1. Covenants................................................. 24
SECTION 8.2. Corporate Existence, Etc.................................. 24
SECTION 8.3. Protection of Collateral; Further Assurances.............. 25
SECTION 8.4. Compliance Certificates................................... 26
SECTION 8.5. Performance of Obligations................................ 26
SECTION 8.6. Negative Covenants........................................ 27
SECTION 8.7. Information as to the Company............................. 28
SECTION 8.8. Payment of Taxes and Other Claims......................... 29
SECTION 8.9. Indemnification........................................... 29
SECTION 8.10. Loan Documents to Collate................................. 30
SECTION 8.11. Collection of Moneys...................................... 30
SECTION 8.12. Opinion of Counsel........................................ 30
SECTION 8.13. Special Purpose Entity.................................... 30
SECTION 8.14. Daily Servicer Report..................................... 30
-ii-
43
ARTICLE IX
CUSTODY OF RECEIVABLES DOCUMENTS; RELEASE OF FILES
SECTION 9.1. Company as Custodian...................................... 31
SECTION 9.2. Release of Files following Payment of Secured Obligations. 31
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1. Events of Default......................................... 31
SECTION 10.2. Remedies Upon Default..................................... 34
SECTION 10.3. No Waiver................................................. 35
SECTION 10.4. Limitation................................................ 36
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Power of Attorney......................................... 36
SECTION 11.2. Nature of Agreement....................................... 36
SECTION 11.3. Intent.................................................... 36
SECTION 11.4. Assignment................................................ 37
SECTION 11.5. Lender May Act Through Affiliates or Agents............... 37
SECTION 11.6. Notices................................................... 37
SECTION 11.7. No Oral Modifications; Successors and Assigns............. 38
SECTION 11.8. Third Party Beneficiary................................... 38
APPENDIX A - Defined Terms
EXHIBIT A - Form of Secured Note
EXHIBIT B - Form of Confirmation
EXHIBIT C - Form of Revolving Credit Agreement
EXHIBIT D - Form of Claim on Guaranty
SCHEDULE 1 - Required Information
SCHEDULE 2 - Eligible Payor Concentration Limits
SCHEDULE 3 - Borrower Concentration Tests
SCHEDULE 7.2(q) - Provider Lockbox Accounts
EXHIBIT E - Form of Reborrowing Certificate
EXHIBIT F - Form of Borrowing Notice
EXHIBIT G - Form of Daily Servicer Report
-iii-
44
EXHIBIT A
FORM OF SECURED NOTE
45
EXHIBIT B
FORM OF CONFIRMATION
DVI BUSINESS CREDIT
RECEIVABLES CORP., II,
as Company
___________ __, ____
This letter hereby confirms that CS First Boston Mortgage Capital Corp.,
as Lender under the Secured Credit Line Agreement, dated August 22, 1996,
between the Company, DVI Business Credit Corporation, as Servicer, and us (the
"Secured Credit Line Agreement") made an Advance in the amount of $___________
to the Company on _______, ____.
The Company's acceptance of the proceeds of the aforementioned Advance
shall constitute your agreement to the statements made in and the terms of this
Confirmation letter.
All capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Secured Credit Line Agreement.
CS FIRST BOSTON MORTGAGE CAPITAL
CORP.
By: ___________________________
Name:
Title:
46
EXHIBIT C
FORM OF REVOLVING CREDIT AGREEMENT
47
EXHIBIT D
FORM OF CLAIM ON GUARANTY
DVI, Inc.,
as Guarantor
_______________, ____
Re: Guaranty (the "Guaranty") dated as of August 22, 1996 given
by DVI, Inc. in connection with the Secured Credit Line
Agreement (the "Secured Credit Line Agreement") dated as of
▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Business Credit Receivables Corp.
II, as borrower, DVI Business Credit Corporation, as
servicer, and CS First Boston Mortgage Capital Corp. (the
"Lender"), as lender
Bankers Trust Company (the "Collateral Agent"), as Collateral Agent for
the Lender, hereby notifies you that (a) the Monthly Interest payable on the
_________, 199__ Payment Date (the "Applicable Payment Date") is $_______, (b)
the Monthly Principal payable on the Applicable Payment Date is $________ (c)
the aggregate funds on deposit in the Loan Accounts on the date hereof which,
together with amounts withdrawn from the Cash Collateral Account pursuant to the
provisions of the Secured Credit Line Agreement, are available to pay the
Monthly Interest and Monthly Principal payable on the Applicable Payment Date
are $________, and (d) the additional funds needed to pay the Monthly Interest
and Monthly Principal payable on the Applicable Payment Date are $_________ (the
"Shortfall").
Accordingly, the Collateral Agent hereby makes demand on DVI, Inc. under
the Guaranty in the amount of the Shortfall and directs DVI, Inc. to make
payment under the Guaranty and deliver to the Collateral Agent immediately, in
immediately available funds, the amount of the Shortfall.
Capitalized terms used herein but not defined herein shall have the
meaning specified in the Definitions List attached as Appendix A to the Secured
Credit Line Agreement.
BANKERS TRUST COMPANY,
as Collateral Agent
By: ______________________
Name:
Title:
48
EXHIBIT E
FORM OF REBORROWING CERTIFICATE
BANKERS TRUST COMPANY,
as Collateral Agent
CS FIRST BOSTON MORTGAGE
CAPITAL CORP., as Lender
___________ __, ____
The undersigned, an Authorized Officer of DVI Business Credit Receivables
Corp. II, (the "Company"), pursuant to Section 2.9(d) of the Secured Credit Line
Agreement (the "Secured Credit Line Agreement") dated as of August 22, 1996
among the Company, as borrower, DVI Business Credit Corporation, as servicer,
and CS First Boston Mortgage Capital Corp., as lender, hereby certifies and
requests the following on behalf of the Company:
(1) The Company requests that $________ be withdrawn from the Principal
Account and distributed to each Borrower on behalf of the Company in accordance
with the table below and in accordance with the Wire Instructions for such
Borrower.
(2) The proceeds requested in (1) above will be used to acquire one or
more Loans from the Contributor. The following table details the name of the
Borrower under each Loan to be acquired, the aggregate principal balance of
Loans to be acquired with respect to each Borrower, the amount specified in the
Daily Servicer Report for the date hereof as the amount available to be drawn by
such Borrower on the date hereof under its Revolving Credit Agreement and the
amount to be distributed from the Principal Account to each Borrower:
================================================================================
Available Amount to be
Principal Credit as Transferred to
Balance of Specified in Borrower from
Borrower Loans to be Daily Servicer the Principal
Acquired Report Account
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
(3) No Event of Default or Potential Event of Default has occurred which
is
49
continuing or would result from the application of the Reborrowing Amount.
(4) The proposed use of the proceeds of the Reborrowing Amount will not
cause the requirements of Section 2.12, 2.13, or 2.14 of the Secured Credit Line
Agreement to be violated, and all conditions precedent provided for in Section
2.14 have been met and fulfilled.
The Company hereby directs the Collateral Agent to wire transfer to each
Borrower specified in the table above, from the funds on deposit in the
Principal Account in accordance with the Wire Instructions for such Borrower,
the amount specified for such Borrower in the table above.
All capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Secured Credit Line Agreement.
DVI BUSINESS CREDIT RECEIVABLES
CORP. II
By: ___________________________
Name:
Title:
50
EXHIBIT F
FORM OF BORROWING NOTICE
BANKERS TRUST COMPANY,
as Collateral Agent
CS FIRST BOSTON MORTGAGE
CAPITAL CORP.,
as Lender
DUFF & ▇▇▇▇▇▇ CREDIT
RATING CO.,
as Rating Agency
___________ __, ____
The undersigned, an Authorized Officer of DVI Business Credit Receivables
Corp. II, (the "Company"), pursuant to Section 2.11(b) of the Secured Credit
Line Agreement (the "Secured Credit Line Agreement") dated as of August 22, 1996
among the Company, as borrower, DVI Business Credit Corporation, as servicer,
and CS First Boston Mortgage Capital Corp., as lender, hereby certifies and
requests the following on behalf of the Company:
(1) The Company requests that the Lender make an Advance in the amount of
$________.
(2) The proceeds requested in (1) above will be used to acquire one or
more Loans. The following table details the name of the Borrower under each Loan
to be acquired, the aggregate principal balance of Loans to be acquired with
respect to each Borrower, the amount specified in the Daily Servicer Report for
the date hereof as the amount available to be drawn by such Borrower on the date
hereof under its Revolving Credit Agreement and the portion of such Advance
allocable to the Loans of such Borrower:
================================================================================
Available Portion of
Principal Credit as Advance
Balance of Specified in Allocable to
Borrower Loans to be Daily Servicer Borrower
Acquired Report
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
51
(3) The Company hereby represents and warrants that (i) the
representations and warranties contained in Sections 7.1 and 7.2 of the Secured
Credit Line Agreement are true and correct (in all material respects to the
extent any such representations and warranties do not incorporate a materiality
limitation in their terms) on and as of the date hereof, (ii) no Event of
Default, Potential Event of Default or Servicer Event of Default has occurred
and is continuing or would result from the making of the Advance requested
hereunder and (iii) all other conditions precedent to the making of the Advance
requested hereunder pursuant to the Secured Credit Line Agreement have been
satisfied in all respects as of the date hereof.
The Company hereby directs the Lender to wire transfer to the Company the
amount specified in item (1).
All capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Secured Credit Line Agreement.
DVI BUSINESS CREDIT RECEIVABLES
CORP. II
By: ___________________________
Name:
Title:
52
EXHIBIT G
FORM OF DAILY SERVICER REPORT
CS FIRST BOSTON MORTGAGE
CAPITAL CORP., as Lender
BANKERS TRUST COMPANY,
as Collateral Agent
___________ __, ____
The undersigned, an Authorized Officer of DVI Business Credit Corporation, (the
"Servicer"), pursuant to Section 8.14 of the Secured Credit Line Agreement (the
"Secured Credit Line Agreement") dated as of ▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Business
Credit Receivables Corp., II, as borrower, the Servicer, and CS First Boston
Mortgage Capital Corp., as lender, hereby certifies on behalf of the Servicer
that:
(1) The following table details the amount available to be drawn by
each Borrower under its Revolving Credit Agreement on the date hereof:
======================================================================================
Borrower Aggregate Borrowing Commitment Collections Lending Amount of
Principal Base on Formula Credit
Balance of Eligible Amount Available
Loans Receivables* to Be Drawn
Outstanding
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
======================================================================================
(2) The outstanding Advance Balance on the date hereof is $____________.
(3) The sum of voluntary capital contributions made by the Seller to the
Company pursuant to Section 1.02(g) of the Contribution and Servicing Agreement
which amounts shall then be held in the Cash Collateral Account, the unpaid
principal balance of all Eligible Loans then subject to the Lein of the
Collateral Agreement and Principal Collections on deposit in the Principal
Account is $___________.
__________________
* During the 150 day period preceding the date hereof.
53
(4) As of the date hereof, the Collateral Coverage Condition [is] [is not]
satisfied in that the sum indicated in (3) above [equals or exceeds] [is less
than] the Advance Balance.
All capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Secured Credit Line Agreement.
DVI BUSINESS CREDIT CORPORATION
By: ___________________________
Name:
Title:
54
SCHEDULE 1
REQUIRED INFORMATION
- THREE YEARS OF FINANCIAL STATEMENTS
If the provider does not have audited financial statement, include
reviewed financial statements.
Audited financial statements are mandatory for any provider receiving in
excess of $2 million of financing.
- PROVIDER NARRATIVE (INCLUDING THE FOLLOWING SECTIONS)
1. Business overview
2. Personnel
3. Contractual Allowance procedures
4. Billing procedures
5. Payor remittances procedures
6. Collection procedures
7. Information technology capabilities
8. Litigation Review - Material Litigation involving LEXIS/NEXIS search
9. General observations and concerns with provider
- CONTRACTUAL ALLOWANCE DERIVATION
Please include a brief summary of how DVI developed the contractual
allowance value for each provider.
- INITIAL BORROWING BASE/PURCHASE--one page analysis netting down from
Gross Receivables to Advanced Amount
- NEW SELLER FORM
This form should include seller specific information regarding its pool
of receivables, such as
55
- Financial class stratification for purchased receivables (including
Medicare, Medicaid, commercial insurers, CHAMPUS, CHAMPVA, Blue
Cross/Blue Shield and managed care)
- Aging of receivables financed (by the following aging buckets:
0-30, 31-60, 61-90, 91-120, 121-150)
- All Commercial Payors greater than 1% of the Loan to the Provider
(list the Payors, the ratings and the exposure)
- Medicare and Medicaid Offset experience over the past 3 years,
and that value multiplied by 1.5X
-2-
56
SCHEDULE 2
ELIGIBLE PAYOR CONCENTRATION LIMITS
PAYOR CLASS MAXIMUM
PERCENTAGE OF
BORROWING BASE
(ii) Eligible Receivables payable by 15%
Blue Cross and Blue Shield plans
(iii) Eligible Receivables payable by 20%(1)
any one state Medicaid program
(iv) Eligible Receivables payable by 5%
any one Blue Cross and Blue
Shield plan
(v) Eligible Receivables payable by 20%
any commercial insurer, HMO or
PPO if such payor has a
long-term rating of "AAA" from
DCR or if such payor is not
rated by DCR then has a
long-term rating of "AAA" from
Standard & Poor's Rating Agency
("S&P")
(vi) Eligible Receivables payable by 15%
any commercial insurer, HMO or
PPO if such payor has a
long-term rating of "AA-" or
better but less than "AAA" from
DCR or if such payor is not
rated by DCR then has a
long-term rating of "AA-" or
better but than "AAA" from S&P
(vii) Eligible Receivables payable by 7.5%
any commercial insurer, HMO or
PPO if such payor has a
long-term rating of "A-" or
better but less than "AA" from
DCR or if such payor is not
rated by DCR then has a
long-term rating of "A-" or
better but less than "AA-" from
S&P
(viii) Eligible Receivables payable by 5%
any commercial insurer, HMO or
PPO if such payor has a
long-term rating of
57
MAXIMUM
PERCENTAGE
OF
BORROWING
PAYOR CLASS BASE
"BBB-" or better but less than
"A-" from DCR or if such payor
is not rated by DCR then has a
long-term rating of "BBB-" or
better but less than "A-" from
S&P
(ix) Eligible Receivables payable by 5%
any commercial insurer, HMO or
PPO if such payor has a
long-term rating of below "BBB-"
from DCR and for payors which
are unrated by DCR, which have
long-term ratings below "BBB-"
from S&P
(x) Eligible Receivables payable by 3%
any one institutional Payor
(1) Plus a 15% cash reserve for any excess over 20%.
58
SCHEDULE 3
BORROWER CONCENTRATION TESTS
TOTAL LOAN AMOUNT(1)
-----------------------------------------------------------
BORROWERS $0-$9 $10-$15 $16 - $24 $25 - $39 $40-$50
--------------------------------------------------------------------------------
Maximum Loan Amount $3.00 $3.00 $4.00 15% 15%
for the largest
Borrower
Maximum Loan Amount $1.50 $2.50 $3.00 10% 10%
for all other
Borrowers
Aggregate Loan $9.00 $11.50 $13.00 55% 55%
Amount for the five
largest Borrowers
Maximum Loan Amount $3.00 $4.00 $5.25 20% 20%
for the largest SPC
Borrower
Maximum Loan Amount $1.50 $2.75 $3.50 20% 20%
for all other SPC
Borrowers
------------------
(1) In millions of dollars or as a percentage of the total Loan amount.
59
SCHEDULE 7.2(q)
BORROWER LOCKBOX ACCOUNTS
NONE