EXHIBIT 10.1
RECEIVABLES FINANCING AGREEMENT
Dated as of May 30, 2006
Among
▇▇▇▇▇ FUNDING II, LLC
as the Borrower
and
the financial institutions from time to time party hereto as Lenders
and
CITICORP USA, INC.
as the Program Agent
and
HLI OPERATING COMPANY, INC.
as Servicer
HL RECEIVABLES FINANCING AGREEMENT
SCHEDULES
SCHEDULE 1.01-1 - Special Concentration Limits
SCHEDULE 1.01-2 - Credit and Collection Policy
SCHEDULE 1.01-3 - Commitments
SCHEDULE 1.01-4 - Originators and Notice Information
SCHEDULE 1.01-5 - Deductions from NRPB
SCHEDULE 3.01 - List of Closing Documents
SCHEDULE 4.01(f) - Material Litigation
SCHEDULE 4.01(k) - Deposit Banks
SCHEDULE 6.09(b) - Facility Account
ANNEXES
ANNEX A - Assignment and Acceptance
ANNEX B - Form of Borrower Report
ANNEX C - Form of Daily Report
ANNEX D - Form of Deposit Account Agreement
ANNEX E - Form of Funds Transfer Letter
ANNEX F - Form of Weekly Report
ANNEX G - Form of Note
ANNEX H - Form of Parent Undertaking (Servicer)
ANNEX I - Form of Parent Undertaking (Originators)
HL RECEIVABLES FINANCING AGREEMENT
EXECUTION COPY
RECEIVABLES FINANCING AGREEMENT
Dated as of May 30, 2006
THIS RECEIVABLES FINANCING AGREEMENT (as amended, restated,
supplemented and otherwise modified from time to time, this "Agreement") is
entered into among ▇▇▇▇▇ FUNDING II, INC., a Delaware corporation (the
"Borrower"), the financial institutions from time to time party hereto (each a
"Lender" and collectively, the "Lenders"), CITICORP USA, INC., a Delaware
corporation ("CUSA"), as program agent (the "Program Agent") for the Lenders,
and HLI OPERATING COMPANY, INC., a Delaware corporation ("HLIOC"), as Servicer
(as defined below).
PRELIMINARY STATEMENT. SPE I (as defined below) has acquired, and
may continue to acquire, Transferred Assets (as hereinafter defined) from the
Originators (as defined below), either by purchase or by contribution to the
capital of SPE I, as determined from time to time by the Originators and SPE I.
The Borrower has acquired, and may continue to acquire, Transferred Assets from
SPE I, either by purchase or by contribution to the capital of the Borrower, as
determined from time to time by the Borrower and SPE I. The Borrower wishes to
obtain loans from the Lenders which will be secured by the Transferred Assets
and the other Collateral (as defined below). The Lenders are prepared to make
such loans on the terms set forth herein. Accordingly, the parties agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Account Control Agreement" means an account control agreement in
form and substance satisfactory to the Program Agent with respect to each
deposit account in the name of the Borrower other than the Deposit Accounts,
among the bank at which such deposit account is held, the Borrower and the
Program Agent, providing for, inter alia, the perfection of Program Agent's
security interest in such deposit account, as amended, restated, supplemented
and otherwise modified from time to time.
"Advances" has the meaning specified in Section 2.01(a).
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement.
"Affected Person" has the meaning specified in Section 2.06(a).
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person.
"Affiliated Obligor" means any Obligor that is an Affiliate of
another Obligor.
"Agreement" has the meaning specified in the preamble.
"Alternate Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times equal to
the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time as Citibank's base rate; and
(b) 1/2 of one percent above the Federal Funds Rate.
"Amortization Period" means the period commencing on the day
following the last day of the Revolving Period and ending on the later of the
Commitment Termination Date and the date on which no Obligations shall be
outstanding.
"Anti-Money Laundering Laws" means the BSA and all applicable
requirements of law and government guidance on BSA compliance and on the
prevention and detection of money laundering violations under 18 U.S.C. Sections
1956 and 1957.
"Anti-Terrorism Laws" means the OFAC Laws and Regulations, the
Executive Orders and the USA Patriot Act.
"Applicable Margin" means, (i) with respect to Eurodollar Rate
Tranches, a per annum rate equal to 2.50% and (ii) with respect to Base Rate
Tranches, a per annum rate equal to 1.50%.
"Approved Fund" means any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.
"Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Lender, an Eligible Assignee and the Program Agent,
pursuant to which such Eligible Assignee may become a party to this Agreement,
in substantially the form of Annex A hereto.
"Bankruptcy Code" means the Bankruptcy Code, 11 U.S.C. Section 101
et seq., as amended, any similar or successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
"Base Rate Tranche" means all or a portion of an Advance which bears
interest at a rate per annum determined on the basis of the Alternate Base Rate.
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"Beneficiary" means, as of any date, the Lenders, the Affected
Persons, the Indemnified Parties and the Program Agent.
"▇▇▇▇ of Sale" means that certain ▇▇▇▇ of Sale and Assignment of
Assets dated the date hereof between HL Funding I, LLC and HL Funding II, Inc.
"Borrower" has the meaning specified in the preamble.
"Borrower Materials" has the meaning specified in Section 10.13(b).
"Borrower Report" means a report in substantially the form of Annex
B hereto and containing such additional information as the Program Agent may
reasonably request from time to time, furnished by the Servicer pursuant to
Section 6.02(g), or in such other form as mutually agreed to by the Program
Agent, the Servicer and the Borrower.
"Borrower's Account" means any account in the name of the Borrower,
designated pursuant to the Funds Transfer Letter, which shall be subject to an
Account Control Agreement.
"Borrowing Base" means, at any time, an amount equal to (i) 85.0% of
the Net Receivables Pool Balance at such time less (ii) Reserves at such time.
"BSA" means the Bank Secrecy Act, 31 U.S.C. Sections 5311 et seq.
"Business Day" means any day on which (a) banks are not authorized
or required to close in New York, New York and (b) if this definition of
"Business Day" is utilized in connection with the Eurodollar Rate, dealings are
carried out in the London interbank market.
"Capital Lease" means any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" of any Person means the obligations of
such Person to pay rent or other amounts under any Capital Lease, which
obligations should be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Change in Control" means the occurrence of any of the following:
(a) any person or group of persons (within the meaning of the Securities
Exchange Act of 1934, as amended), shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended) of 35% or more of the
issued and outstanding Voting Stock of Parent, (b) during any period of twelve
consecutive Months, individuals who at the beginning of such period constituted
the board of directors of the Parent (together with any new directors whose
election by the board of directors of Parent or whose nomination for election by
the stockholders of Parent was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose elections or nomination for election was previously so
HL RECEIVABLES FINANCING AGREEMENT
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approved) cease for any reason other than death or disability to constitute the
majority of the directors then in office, (c) Parent shall cease to own and
control, directly or indirectly, all of the economic and voting rights
associated with all of the outstanding Stock of the Originators or HLIOC, (d)
the occurrence of a "Change of Control", as defined in the Indenture or other
agreement that governs the terms of any Material Debt; (e) the Originators shall
cease to own and control all of the economic and voting rights associated with
all of the outstanding Stock of SPE I, or (f) SPE I shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding Stock of Borrower.
"Charter Documents" means, with respect to any corporation or
limited liability company, such Person's articles or certificate of
incorporation or formation and such entity's bylaws or operating agreement.
"Citibank" means Citibank, N.A., a national banking association, its
successors and assigns.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" has the meaning specified in Section 2.09.
"Collections" means, with respect to any Receivable, (a) all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and (b) any Deemed Collection.
"Commitment" means, as to each Lender, its obligation to make
Advances hereunder, in an aggregate principal amount at any one time outstanding
not to exceed the Dollar amount set forth opposite such Lender's name on
Schedule 1.01-3 or in the Assignment and Acceptance pursuant to which such
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.
"Commitment Termination Date" means the earliest of (a) June 3,
2008, (b) the date declared (or deemed to be declared) as such by the Program
Agent pursuant to Section 7.01 hereof and (c) the date which is 5 Business Days
after the Program Agent's receipt of written notice from Borrower pursuant to
Section 2.01(b) hereof that it wishes to terminate the facility evidenced by
this Agreement and the other Transaction Documents.
"Communications" has the meaning specified in Section 10.13(a).
"Concentration Limit" for any Obligor means at any time 20.00%
("Normal Concentration Limit"), or a Special Concentration Limit for such
Obligor designated on Schedule 1.01-1 hereto and, after the date of this
Agreement a Special Concentration Limit for any Obligor which reflects (a)
subject to the definition of "Special Concentration Limit" set forth herein, a
lower amount than any Normal Concentration Limit, which is designated by the
Program Agent upon not less than five (5) Business Days' prior written notice to
the Borrower or (b) a higher amount than any Normal Concentration Limit, which
is designated by the Program Agent and the Required Lenders in a writing
delivered to the Borrower; provided that in the case of an Obligor with any
Affiliated Obligor, the Concentration Limit shall be calculated as if such
HL RECEIVABLES FINANCING AGREEMENT
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Obligor and such Affiliated Obligor are one Obligor; provided further that the
Program Agent may reduce in the Program Agent's reasonable discretion, or the
Program Agent and the Required Lenders may increase, any Special Concentration
Limit (including, without limitation, the Special Concentration Limits set forth
on Schedule 1.01-1 hereto) upon five Business Days' prior notice to the
Borrower.
"Contract" means an agreement between any Originator and a Person,
pursuant to or under which such Person shall be obligated to pay for goods or
services sold by any Originator from time to time.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement dated as of April 11, 2005, among HLIOC as borrower, Parent, the
"Lenders" and "Issuers" party thereto, Citicorp North America, Inc. as
administrative agent for the "First Lien Lenders" and "Term C Lenders", ▇▇▇▇▇▇
Commercial Paper Inc. as syndication agent, General Electric Capital Corporation
as documentation agent, and Citigroup Global Markets Inc. and ▇▇▇▇▇▇ Brothers
Inc. as joint book-running lead managers and joint lead arrangers, as amended,
restated, supplemented or otherwise modified from time to time.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Borrower and the Originators in effect
on the date of this Agreement and described in Schedule 1.01-2 hereto, as
modified in compliance with this Agreement.
"Cure Period" means the period beginning on and including a Pool
Non-compliance Date and ending on the first Business Day after such Pool
Non-compliance Date.
"CUSA" has the meaning specified in the preamble.
"Daily Report" means an Officer's Certificate of the Servicer
substantially in the form of Annex C hereto, or in such other form as mutually
agreed to by the Program Agent, the Servicer and the Borrower, which report is
to be delivered during the Daily Reporting Period in accordance with Section
6.02(g)(i).
"Daily Reporting Period" means any time following the occurrence and
during the continuation of an Event of Termination or an Incipient Event of
Termination that the Program Agent has designated in writing to the Borrower and
the Servicer as the "Daily Reporting Period."
"Debt" of any Person means, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, or that bear interest, (c)
all indebtedness of such Person created by or arising under any conditional sale
or other title retention agreement relating to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of a default are limited to repossession or sale of such
property), (d) all indebtedness for the deferred purchase price of property or
services other than unsecured trade payables incurred in the ordinary course of
business that are (i) not more than 90 days overdue or (ii) being contested in
good faith and by appropriate proceedings if adequate reserves therefor have
been established on the books of such Person in accordance with GAAP, (e) all
Debt of
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others secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Adverse Claim on property
(including accounts and general intangibles) owned or acquired by such Person,
whether or not the Debt secured thereby has been assumed, (f) all Guarantees by
such Person of Debt of others, (g) all Capital Lease Obligations of such Person
and the present value of future rental payments under all synthetic leases, (h)
all reimbursement obligations and all obligations with respect to letters of
credit, surety bonds and performance bonds, whether or not matured, (i) all
obligations of such Person upon which interest charges are customarily paid, (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (k) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any Stock of stock equivalents of such
Person, valued, in the case of redeemable preferred stock, at the greater of its
voluntary liquidation preference and its involuntary liquidation preference plus
accrued and unpaid dividends, and (l) all payments that such Person would have
to make in the event of an early termination on the date Debt of such Person is
being determined in respect of Hedging Agreements of such Person.
"Deemed Collection" means any Collections (as defined in clause (a)
of the definition thereof) deemed to have been received pursuant to Section
2.03(d)(i) or (ii).
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for 90
or more days from the original due date;
(b) as to which the Servicer has received notice that the Obligor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 7.01(g);
(c) which, consistent with the Credit and Collection Policy, would
be written off the applicable Originator's or the Borrower's books as
uncollectible; or
(d) as to which the applicable Originator or the Borrower has (or
consistent with the Credit and Collection Policy should have) established a
specific reserve for non-payment.
"Defaulting Originator" means an Originator that has become a
"Defaulting Originator" in accordance with Section 7.01.
"Defaulting Originator Percentage" means, with respect to any
Defaulting Originator, a percentage equal to (a) the aggregate Outstanding
Balance of Receivables originated by such Defaulting Originator as of the date
on which such Originator became a Defaulting Originator, divided by (b) the
aggregate Outstanding Balance of Receivables as of the date on which such
Originator became a Defaulting Originator.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid
for 31 or more days from the original due date; or
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(ii) which, consistent with the Credit and Collection Policy,
would be classified as delinquent by such Originator or the
Borrower.
"Deposit Account" means an account maintained at a bank into which
(a) Collections in the form of checks and other items are deposited that have
been sent to one or more related Lockboxes by Obligors and/or (b) Collections in
the form of electronic funds transfers and other items are paid directly by
Obligors.
"Deposit Account Agreement" means an agreement, in substantially the
form of Annex D, providing for, among other things, control by the Program Agent
over one or more Deposit Accounts and associated Lockboxes.
"Deposit Bank" means any of the banks holding one or more Deposit
Accounts.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon five (5)
Business Days' prior written notice by the Program Agent in the exercise of its
reasonable discretion to the Borrower.
"Designated Person" has the meaning specified in Section 4.01(t).
"Determination Date" means (a) the twelfth Business Day after the
end of each Month other than January of each year, and (b) the fifteenth
Business Day after the end of January of each year; provided that if an Event of
Termination has occurred and is continuing, the Program Agent or the Borrower
may designate more frequent Determination Dates.
"Diluted Receivable" means that portion (and only that portion) of
any Receivable which is either (a) reduced or canceled as a result of (i) any
defective, rejected or returned goods or services or any failure by an
Originator to deliver any goods or provide any services or otherwise to perform
under the underlying Contract, (ii) any change in the terms of or cancellation
of, a Contract or any cash discount, discount for quick payment or other
adjustment by an Originator which reduces the amount payable by the Obligor on
the related Receivable (except any such change or cancellation resulting from or
relating to the financial inability to pay or insolvency of the Obligor of such
Receivable) or (iii) any set-off by an Obligor in respect of any claim by such
Obligor as to amounts owed by it on the related Receivable (whether such claim
arises out of the same or a related transaction or an unrelated transaction) or
(b) subject to any specific dispute, offset, counterclaim or defense whatsoever
(except the discharge in bankruptcy of the Obligor thereof); provided that
Diluted Receivables are calculated assuming that all chargebacks are resolved in
the Obligor's favor.
"E-Mail Report" has the meaning specified in Section 6.02(g).
"Eligible Assignee" means (i) any Affiliate of any Lender, (ii) any
other Lender, (iii) an Approved Fund or (iv) any other Person; provided, that in
the case of clause (iv) above, the relevant Person must also be approved by the
Program Agent and the Borrower (which approval by the Borrower shall not be
unreasonably withheld or delayed by the Borrower at any time or the Program
Agent if such Person is a national or state-chartered banking association,
HL RECEIVABLES FINANCING AGREEMENT
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corporation or the equivalent thereof and shall not be required if an Event of
Termination or an Incipient Event of Termination has occurred and is
continuing).
"Eligible Institution" means a depository institution organized
under the laws of the United States of America or any state thereof or the
District of Columbia (or any domestic branch of a foreign bank authorized under
any such laws), (a) whose senior long-term unsecured debt obligations are rated
at least A- or better by S&P and A3 or better by Moody's, (b) which is subject
to regulation regarding fiduciary funds on deposit substantially similar to 12
C.F.R. Section 9.10(b), if applicable, and (c) which has a combined capital and
surplus of at least $100,000,000.
"Eligible Investments" means book-entry securities entered on the
books of the registrar of such securities and held in the name or on behalf of
the Program Agent, negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Program
Agent or its nominee) which evidence:
(a) readily marketable direct obligations of the Government of the
United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the United States;
(b) insured demand deposits, time deposits or certificates of
deposit of any commercial bank that (i) is a member of the Federal Reserve
System, (ii) issues (or the parent of which issues) commercial paper rated, at
the time of the investment or contractual commitment to invest therein, as
described in clause (d), (iii) is organized under the laws of the United States
or any state thereof and (iv) has combined capital and surplus of at least
$500,000,000;
(c) repurchase obligations with a term of not more than ten days for
underlying securities of the types described in clauses (a) and (b) above
entered into with any bank of the type described in clause (b) above;
(d) commercial paper (maturing no later than the Business Day prior
to the first Regular Payment Date or Regular Payment Date following the date of
purchase) having, at the time of the investment or contractual commitment to
invest therein, the highest short-term rating from each of S&P and Moody's; or
(e) units of taxable money market funds (which may be 12b-1 funds,
as contemplated under the rules promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940), which funds have the
highest rating available for such securities from S&P and Moody's or which have
been designated in writing by S&P and Moody's as eligible investments.
"Eligible Receivable" means, at any time, a Receivable:
(i) (A) the Obligor of which is a United States resident which
is not a Governmental Entity, and is not an Affiliate of the Parent,
any Originator, SPE I or Borrower, (B) the Obligor of which is a
Governmental Entity within the United States but only to the extent
that the aggregate Outstanding Balance of all
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Receivables of all Obligors that are Governmental Entities within
the United States are not in excess of 2.0% of the aggregate
Outstanding Balance of all Receivables or (C) the Obligor of which
is a Canada resident which is not a Governmental Entity, and is not
an Affiliate of the Parent, any Originator, SPE I or Borrower but
only to the extent that the aggregate Outstanding Balance of all
Receivables of all Obligors under this clause (C) are not in excess
of 6.0% of the aggregate Outstanding Balance of all Receivables;
(ii) the Obligor of which, at the later of the date of this
Agreement and the date such Receivable is created, is a Designated
Obligor;
(iii) which is not a Defaulted Receivable;
(iv) the Obligor of which is not the Obligor of any Defaulted
Receivables which in the aggregate constitute 25% or more of the
aggregate Outstanding Balance of all Receivables of such Obligor;
(v) which has been billed and, according to the Contract
related thereto, is required to be paid in full within 60 days of
the original billing date therefor;
(vi) which is an obligation representing all or part of the
sales price of merchandise, insurance or services within the meaning
of Section 3(c)(5) of the Investment Company Act of 1940, as
amended, and the nature of which is such that financing such
Receivable with the proceeds of notes would constitute a "current
transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended;
(vii) which is an "account" or a "payment intangible" within
the meaning of Article 9 of the UCC of the applicable jurisdictions
governing the perfection of the security interest created by this
Agreement in the Receivables;
(viii) which is denominated and payable only in United States
dollars in the United States;
(ix) which arises under a Contract which, together with such
Receivable, (A) is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such
Receivable, (B) is not subject to any Adverse Claim or any dispute
or defense whatsoever (except the potential discharge in bankruptcy
of such Obligor) and is not settled on a net basis, and (C) is
governed by the laws of one of the United States of America or the
provinces of Canada; provided, that if it is governed by the laws of
a province of Canada, (1) such Receivable shall not be
interest-bearing, (2) no withholding tax or other deductions shall
be imposed by applicable law on such Receivable and (3) the Contract
therefor shall not contain any prohibition or restriction on
assignment unless the Obligor thereof has waived such prohibition or
restriction in writing;
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(x) which, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws,
rules and regulations relating to usury, consumer protection, truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with
respect to which none of the Borrower, SPE I, any Originator, HL
Funding I, LLC, HL Funding II, Inc., the Servicer or the Obligor is
in violation of any such law, rule or regulation in any material
respect;
(xi) which arises under a Contract which does not contain an
enforceable provision requiring the Obligor thereunder to consent to
(A) the transfer, sale or assignment of the Obligor's payment
obligation by the Originator pursuant to the Originator Purchase
Agreement, by HL Funding I, LLC pursuant to the Receivables Purchase
Agreement, by HL Funding II, Inc. pursuant to the ▇▇▇▇ of Sale, or
by SPE I pursuant to the Secondary Purchase Agreement, as
applicable, or (B) the grant of a security interest therein pursuant
to this Agreement;
(xii) which was generated in the ordinary course of the
applicable Originator's business;
(xiii) which has not been extended, rewritten or otherwise
modified from the original terms thereof (except as permitted by
Section 6.02(c));
(xiv) the transfer, sale or assignment of which in accordance
with the Transaction Documents does not contravene any applicable
law, rule or regulation;
(xv) which satisfies all applicable requirements of the Credit
and Collection Policy;
(xvi) which is not a Tooling Receivable;
(xvii) as to which the applicable Originator has satisfied and
fully performed all obligations required to be fulfilled by it and
the applicable Originator is not a Defaulting Originator; and
(xviii) which is not otherwise deemed to be ineligble by the
Program Agent in its commercially reasonable discretion upon not
less than five (5) Business Days' prior written notice to the
Borrower of such ineligibility;
and, "Eligible Receivables" shall not include any Receivable:
(a) to the extent such Receivable constitutes sales or
use taxes;
(b) to the extent such Receivable constitutes claims
that are in the system that have yet to be billed;
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(c) to the extent such Receivable constitutes any
amounts relating to the items listed in Schedule 1.01-5 hereof; or
(d) to the extent such Receivable is subject to off-set
or counterclaim.
So long as no Event of Termination or Servicer Default has occurred
and continuing, compliance with the eligibility criteria set forth
in clauses (i)(A) (to the extent that such clause relates to the
residency of any Obligor), (ix)(B), (c) or (d) above shall be
reflected on each Weekly Report and Daily Report as of the Borrower
Report delivered (or required to be delivered) on the most recent
Determination Date.
"Enforceability Exceptions" means exceptions to the enforceability
of an obligation arising under bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally,
and general principles of equity (regardless of whether considered in a
proceeding at equity or at law).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Parent, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30 day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Parent or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Parent or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Parent or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; (g) the receipt by the Parent or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Parent or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; or (h) the existence
of any event or condition that could reasonably be expected to constitute
grounds under ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
HL RECEIVABLES FINANCING AGREEMENT
11
"Eurodollar Rate" means, for any Fixed Period for any Eurodollar
Rate Tranche, an interest rate per annum equal to the rate per annum appearing
on Page 3750 of the Telerate Service (or on any successor or substitute page of
such Telerate Service, or any successor to or substitute for such Telerate
Service, providing rate quotations comparable to those currently provided on
such page of such Telerate Service, as determined by the Program Agent from time
to time for purpose of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 A.M.,
London time, two Business Days prior to the commencement of such Fixed Period,
as the rate for dollar purchases with a maturity comparable to such Fixed
Period. In the event such rate is not available at such time for any reason,
then the "Eurodollar Rate" with respect to such Eurodollar Rate Tranche for such
Fixed Period shall mean the Alternate Base Rate as in effect from time to time
during such Fixed Period.
"Eurodollar Rate Reserve Percentage" of any Lender for any
Eurodollar Rate Tranche means the reserve percentage applicable two Business
Days before the first day of such Fixed Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) (or if more than one such percentage shall be applicable, the daily
average of such percentages for those days in such Fixed Period during which any
such percentage shall be so applicable) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the interest rate on Eurocurrency Liabilities is determined) having a term equal
to such Fixed Period.
"Eurodollar Rate Tranche" means all or a portion of an Advance which
bears interest at a rate per annum determined on the basis of the Eurodollar
Rate.
"Event of Termination" has the meaning specified in Section 7.01.
"Executive Order" has the meaning specified in Section 4.01(t).
"Existing Securitization Program" means that certain trade
receivables securitization program evidenced by, among other documents, (a) that
certain Receivables Financing Agreement dated as of December 9, 2004 among HL
Funding II, Inc., as borrower, the Servicer, as servicer, the "investors,"
"investor agents" and "banks" from time to time party thereto, and Citicorp
North America, Inc., as program agent and as disbursement agent, (b) that
certain Originator Purchase Agreement dated as of December 9, 2004 among the
"originators" from time to time party thereto and HL Funding I, LLC and (c) that
certain Secondary Purchase Agreement dated as of December 9, 2004 between HL
Funding I, LLC and HL Funding II, Inc., in each case, as amended, supplemented
or otherwise modified from time to time prior to the date hereof.
"Facility Account" has the meaning specified in Section 6.09(a).
"Facility Amount" means $65,000,000, as such amount may be (i)
increased pursuant to Section 2.12 or 10.01 hereof or (ii) reduced pursuant to
Section 2.01(b). References
HL RECEIVABLES FINANCING AGREEMENT
12
to the unused portion of the Facility Amount shall mean, at any time, the
Facility Amount, as then reduced pursuant to Section 2.01(b), minus the then
Facility Principal under this Agreement.
"Facility Increase" has the meaning specified in Section 2.12.
"Facility Principal" means, at any time, the aggregate outstanding
Principal of Advances under this Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average (rounded upwards, if necessary, to the next 1/100 of
1%) of the quotations for such day on such transactions received by the Program
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Agreement" has the meaning specified in Section 2.04(b).
"Fees" means the fees payable under the Fee Agreement and the Unused
Fees.
"Final Payment Date" has the meaning assigned to it in Section
2.04(c).
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer, vice president of financial accounting or
controller of the relevant Person.
"Fixed Period" means, with respect to any Rate Tranche, the period
commencing on the date of this Agreement and ending on the last day of the Month
in which this Agreement is executed and thereafter a period from the first day
of each Month to the last day of such Month.
"Fund" means any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans of the type contemplated by this Agreement and similar
extensions of credit in the ordinary course of its business.
"Funds Transfer Letter" means a letter in substantially the form of
Annex E hereto executed and delivered by the Borrower to the Program Agent, as
the same may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means the United States of America, any state,
any political subdivision of a state and any agency or instrumentality of the
United States of America or any state or political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
HL RECEIVABLES FINANCING AGREEMENT
13
"Guarantee" means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to Debt of
another Person (or with respect to any trade payables, not constituting Debt, of
a foreign Subsidiary of such Person), if the purpose or intent of such Person in
incurring the Guarantee is to provide assurance to the obligee of such Debt (or
such trade payables) that such Debt (or trade payables) will be paid or
discharged, or that any agreement relating thereto will be complied with, or
that any holder of such Debt (or such trade payables) will be protected (in
whole or in part) against loss in respect thereof, including (a) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of Debt of another Person (or such trade payables) and
(b) any liability of such Person for Debt of another Person (or such trade
payables) through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such Debt (or such trade payables) or any
security therefor, or to provide funds for the payment or discharge of such Debt
(whether in the form of a loan, advance, stock purchase, capital contribution or
otherwise), (ii) to maintain the solvency or any balance sheet item, level of
income or financial condition of another Person, (iii) to make take-or-pay or
similar payments, if required, regardless of non-performance by another party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Debt (or such trade payables) against loss or
(v) to supply funds to, or in any other manner invest in, such other Person
(including to pay for property or services irrespective of whether such property
is received or such services are rendered), if in the case of any agreement
described under clause (i), (ii), (iii), (iv) or (v) above the primary purpose
or intent thereof is to provide assurance that Debt of another Person (or such
trade payables) will be paid or discharged, that any agreement relating thereto
will be complied with or that any holder of such Debt (or such trade payables)
will be protected (in whole or in part) against loss in respect thereof. The
amount of any Guarantee shall be equal to the amount of the Debt (or such trade
payables) so guaranteed or otherwise supported.
"Hedging Agreement" means any rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of the foregoing transactions) or any combination of the
foregoing transactions.
"HLIOC" has the meaning specified in the preamble.
"Incipient Event of Termination" means an event that but for notice
or lapse of time or both would constitute an Event of Termination; provided,
however, that an Incipient Event of Termination shall not become an Event of
Termination until the grace period applicable thereto, if any, shall have
passed.
"Indemnified Amounts" has the meaning specified in Section 6.07.
"Indemnified Party" has the meaning specified in Section 6.07.
HL RECEIVABLES FINANCING AGREEMENT
14
"Indenture" means that certain Indenture dated as of June 3, 2003,
between HLIOC and U.S. Bank National Association, as trustee, as amended,
restated, supplemented and otherwise modified from time to time.
"Independent Director" means, a Person who (a) is not a stockholder,
director, officer, employee or associate, or any relative of the foregoing, of
any Other Company, (b) has (i) prior experience as an independent director for a
corporation whose Charter Documents required the unanimous consent of all
independent directors or managers, as applicable, thereof before such
corporation could consent to the institution of bankruptcy or insolvency
proceedings against it or could file a petition seeking relief under any
applicable federal or state law relating to bankruptcy and (ii) at least three
years of employment experience with one or more entities that provide, in the
ordinary course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities, and (c) is otherwise reasonably
acceptable to the Program Agent.
"Initial Advance" has the meaning specified in Section 3.02.
"Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the date hereof by and among the Program Agent, SPE I, HL Funding I,
LLC, HL Funding II, Inc., the Borrower, the Parent, the Originators, and
Citicorp North America, Inc., in its capacity as administrative agent under the
Credit Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Lenders" means each of the Persons listed on the signature pages
hereto as "Lenders" and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 10.03.
"Liquidation Fee" means, for any Fixed Period for any Eurodollar
Rate Tranche during which a reduction of Principal is made for any reason on any
day other than the last day of such Fixed Period, the amount, if any, by which
(a) the additional Yield (calculated without taking into account any Liquidation
Fee or any shortened duration of such Fixed Period pursuant to the definition
thereof) which would have accrued from the date of such repayment to the last
day of such Fixed Period on the reductions of Principal of the Advance relating
to such Fixed Period had such reductions remained as Principal, exceeds (b) the
income, if any, received by the Lenders which hold such Advance from the
investment of the proceeds of such reductions of Principal.
"Lists" has the meaning specified in Section 4.01(t).
"Lockbox" means a post office box administered by a Deposit Bank for
the purpose of receiving Collections, which is the subject of a Deposit Account
Agreement.
"Material Adverse Change" means, with respect to any Person, a
material adverse change in the business, assets, operations, property, prospects
or other condition (financial or otherwise) of such Person or such Person and
its Subsidiaries taken as a whole.
HL RECEIVABLES FINANCING AGREEMENT
15
"Material Adverse Effect" means a material adverse effect on (a) the
collectibility of the Receivables, (b) the ability of the Borrower, the
Servicer, the Parent, SPE I, HL Funding I, LLC, HL Funding II, Inc. or any
Originator to perform any of its respective material obligations under the
Transaction Documents to which it is a party, (c) the legality, validity or
enforceability of the Transaction Documents (including, without limitation, the
validity, enforceability or priority of the security interests granted hereunder
or thereunder) or the rights of or benefits available to the Program Agent or
the Lenders under the Transaction Documents or (d) the business, assets,
operations, condition (financial or otherwise), property, or prospects of
Borrower, SPE I, any Originator or the Parent and its Subsidiaries, taken as a
whole.
"Material Debt" means Debt of any one or more of the Parent and its
Subsidiaries in an aggregate principal amount exceeding
$17,500,000.
"Month" means a calendar month.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Receivables Pool Balance" means at any time the Outstanding
Balance of Eligible Receivables reduced by (without duplication) the aggregate
amount by which the Outstanding Balance of Eligible Receivables of each Obligor
exceeds (i) in the case of each Obligor subject to a Special Concentration
Limit, the product of (A) the Special Concentration Limit for such Obligor
multiplied by (B) the Net Receivables Pool Balance, and (ii) in the case of all
other Obligors, the product of (A) the Concentration Limit for such Obligor
multiplied by (B) the Net Receivables Pool Balance.
"Normal Concentration Limit" has the meaning specified in the
definition of "Concentration Limit".
"Note" means a promissory note of the Borrower, in substantially the
form of Annex G hereto, evidencing Advances.
"Obligations" has the meaning specified in Section 2.09.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"OFAC" has the meaning specified in Section 4.01(t).
"OFAC Laws and Regulations" has the meaning specified in Section
4.01(t).
"Originator" means each of the Persons designated as such on
Schedule 1.01-4, as such Schedule 1.01-4 may, notwithstanding Section 10.01
hereof, be amended, restated, supplemented or otherwise modified from time to
time with the written consent of the Program Agent, Required Lenders and the
Borrower upon the Borrower's delivery of such opinions, UCC financing statements
and any other documents as the Program Agent and Required Lenders may reasonably
request in connection therewith.
HL RECEIVABLES FINANCING AGREEMENT
16
"Originator Purchase Agreement" means the Purchase Agreement dated
as of the date of this Agreement among the Originators, as sellers, and SPE I,
as purchaser, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Other Companies" means the Originators, Parent, SPE I, HL Funding
I, LLC, HL Funding II, Inc. and all of their respective Affiliates except the
Borrower.
"Other Taxes" has the meaning specified in Section 2.08.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Outstanding Balance of Eligible Receivables" which means the
Outstanding Balance of all Eligible Receivables less the aggregate amount of
Collections deposited in the Facility Account at such time for payment on
account of any otherwise Eligible Receivables, the Obligor of which has not been
identified.
"Parent" means ▇▇▇▇▇ Lemmerz International, Inc., a Delaware
corporation.
"Parent Undertaking (Servicer)" means the Undertaking Agreement
dated as of the date hereof in favor of the Lenders and the Program Agent and
relating to obligations of the Servicer, substantially in the form of Annex H
hereto, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Parent Undertaking (Originators)" means the Undertaking Agreement
dated as of the date hereof made by the Parent and HLIOC in favor of SPE I and
relating to obligations of the Originators, substantially in the form of Annex I
hereto, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Parent Undertakings" means the Parent Undertaking (Servicer) and
the Parent Undertaking (Originators).
"Participant" has the meaning assigned to such term in Section
10.03(g).
"Payment Date" means (a) the fifth Business Day of each Month (the
"Regular Payment Date"), and, (b) if any amounts required to be paid hereunder
on such Regular Payment Date are not paid in the amount so required on such
date, each subsequent Business Day until such amounts are paid in full.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a Governmental
Entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302
HL RECEIVABLES FINANCING AGREEMENT
17
of ERISA, and in respect of which the Parent or any ERISA Affiliate has any
liability or is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Platform" has the meaning specified in Section 10.13(b).
"Pool Non-compliance Date" means any Business Day on which the
Borrowing Base is less than the Facility Principal.
"Principal" means the original principal amount of an Advance by a
Lender pursuant to this Agreement, in each case reduced from time to time by
Collections distributed on account of Principal pursuant to Section 2.03;
provided that if such Principal shall have been reduced by any distribution and
thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such Principal shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made.
"Process Agent" has the meaning specified in Section 10.10.
"Program Agent" has the meaning specified in the preamble.
"Public Lender" has the meaning specified in Section 10.13(b).
"Purchase Agreements" means, collectively, the Originator Purchase
Agreement, the Secondary Purchase Agreement, the Receivables Purchase Agreement
and the ▇▇▇▇ of Sale.
"Ratable Share" means, at any time in respect of any Lender, the
percentage obtained by dividing the amount of such Lender's Commitment at such
time by the aggregate amount of the Commitments of all the Lenders at such time;
provided, however, if all of the Commitments are terminated pursuant to the
terms of this Agreement, then "Ratable Share" means, in respect of any Lender,
the percentage obtained by dividing the outstanding Principal owing to such
Lender at such time by the aggregate outstanding Principal owing to all the
Lenders at such time.
"Ratably" means, at any time, to allocate to each Person within a
group of Persons based upon the quotient of (x) the outstanding amount of a type
of obligations owing to such Person at such time and (y) the aggregate
outstanding amount of such type of obligations owing to all of the Persons in
such group at such time.
"Rate Tranche" means a Base Rate Tranche or a Eurodollar Rate
Tranche. Unless the Eurodollar Rate is not available at such time for any
reason, each Rate Tranche shall be a Eurodollar Rate Tranche. If the Eurodollar
Rate is not available for any reason, each Rate Tranche shall be a Base Rate
Tranche.
"Receivable" means all indebtedness and other obligations of an
Obligor resulting from the provision or sale of goods or services by any
Originator under a Contract (whether constituting an account, instrument,
chattel paper, payment intangible or general intangible), including Tooling
Receivables, and includes the right to payment of any interest, finance
HL RECEIVABLES FINANCING AGREEMENT
18
charges, rebates, administration fees, data fees, late payment charges,
delinquency charges, extension or collection fees and all other obligations of
such Obligor with respect thereto.
"Receivables Purchase Agreement" means the purchase agreement, dated
as of the date of this Agreement, between HL Funding I, LLC, as a seller, and
SPE I, as purchaser, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Register" has the meaning specified in Section 10.03(c).
"Regular Payment Date" has the meaning specified in the defined term
"Payment Date".
"Related Security" means with respect to any Receivable:
(a) all of the Borrower's interest in goods, if any, (including
returned goods) relating to any sale giving rise to such Receivable;
(b) all security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise, together with
all financing statements filed against an Obligor describing any collateral
securing such Receivable;
(c) guaranties, letters of credit, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise;
(d) the Contract and all other books, records and other information
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and related property and rights, subject to the rights
of any licensors and to applicable law) relating to such Receivable or any other
Related Security and the related Obligor;
(e) prepayment penalties, indemnities, warranties, insurance
policies and proceeds and premium refunds thereof; and
(f) all proceeds of the foregoing.
"Release" has the meaning specified in Section 2.03(b)(iv).
"Reports" means the Daily Reports, the Weekly Reports and the
Borrower Reports.
"Required Lenders" shall mean (a) two or more Lenders having in the
aggregate more than fifty percent (50%) of the Commitments of all of the
Lenders, or (b) if the Commitments have been terminated, two or more Lenders
having in the aggregate more than fifty percent (50%) of the aggregate
outstanding Principal; provided that if at any time there is only one Lender
party hereto, "Required Lender" shall mean such Lender.
HL RECEIVABLES FINANCING AGREEMENT
19
"Reserves" (a) such reserves as the Program Agent may determine from
time to time based upon its reasonable credit judgment and (b) such reserves as
the Program Agent may from time to time establish that the Program Agent
reasonably determines are necessary to preserve the value of, or the Program
Agent's lien on, the Collateral, in each case, upon not less than five (5)
Business Days' prior written notice to the Borrower.
"Revolving Period" means the period beginning on the date on which
this Agreement becomes effective and terminating on the close of business on the
Business Day immediately preceding the Termination Date for all Rate Tranches.
"S&P" means Standard and Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and its successors.
"SEC" means the Securities and Exchange Commission.
"Secondary Purchase Agreement" means the purchase agreement, dated
as of the date of this Agreement, between SPE I, as a seller, and Borrower, as
purchaser, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Servicer" means at any time the Person then authorized pursuant to
Section 6.01 to administer and collect Receivables.
"Servicer Default" means the occurrence of any of the following
events with respect to the Servicer: (a) a proceeding of the type described in
Section 7.01(g) instituted by or against the Servicer (without giving effect to
any grace period provided therein), (b) the failure of the Servicer to make any
payment or deposit required to be made by it hereunder when due, (c) the
Servicer shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part to be
performed or observed and such failure remains unremedied for fifteen (15) days,
(d) any representation or warranty made or deemed to be made by the Servicer
under this Agreement, any Borrower Report, Daily Report, Weekly Report or any
other Transaction Document shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered, (e) the occurrence of
any Event of Termination under this Agreement, or (f) any Incipient Event of
Termination (other than an Incipient Event of Termination arising solely because
of the occurrence of an event that but for notice or lapse of time or both would
constitute a Servicer Default).
"Servicer Fee" has the meaning specified in Section 2.04(a).
"Solvent" shall mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its Debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur Debts or
liabilities beyond such Person's ability to pay as such Debts and liabilities
mature; (d) such Person is not engaged in a business or transaction, and is not
about to engage in a business or transaction, for which such Person's property
would constitute an unreasonably small capital; and (e) such Person generally is
not paying its Debts or
HL RECEIVABLES FINANCING AGREEMENT
20
liabilities as such Debts or liabilities become due. The amount of contingent
liabilities (such as litigation, guaranties and pension plan liabilities) at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can reasonably be
expected to become an actual or matured liability.
"SOXA" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended.
"Special Concentration Limit" has the meaning specified in the
definition of "Concentration Limit"; provided, that, except as contemplated in
Schedule 1.01-1 hereof, the Special Concentration Limit for Ford Motor Company
or General Motors Corporation may not be reduced without the prior written
consent of the Required Lenders and the Borrower.
"SPE I" means ▇▇▇▇▇ Funding I, LLC, a Delaware limited liability
company.
"Stock" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company, trust or equivalent entity,
whether voting or non-voting.
"Subsidiaries" means any corporation or other entity of which
securities having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Borrower, an Originator, HL Funding I, LLC, HL
Funding II, Inc., the Parent or SPE I, as the case may be, or one or more
Subsidiaries, or by the Borrower, an Originator, HL Funding I, LLC, HL Funding
II, Inc., Parent or SPE I, as the case may be, and one or more Subsidiaries.
"Taxes" has the meaning specified in Section 2.08.
"Termination Date" for any Rate Tranche means, the earlier of (i)
the Business Day which the Borrower so designates by notice to the Program Agent
at least one Business Day in advance for such Rate Tranche and (ii) the
Commitment Termination Date.
"Tooling Receivable" means an obligation of any Person to pay for
(i) tooling or equipment purchased or built by an Originator for the purpose of
manufacturing products for such Person or (ii) services rendered in connection
with building tooling for the purposes of manufacturing products for such
Person, including in each case, the right to payment of any interest, sales
taxes, finance charges, returned check or late charges and other obligations of
such Person with respect thereto.
"Transaction Document" means any of this Agreement, the Purchase
Agreements, the Parent Undertakings, the Intercreditor Agreement, the Deposit
Account Agreements, the Account Control Agreements, the Fee Agreement, each
Assignment and Acceptance, each Borrower Report, each Weekly Report, each Daily
Report, all other agreements and documents delivered and/or related hereto or
thereto, as each may be amended, restated, supplemented and otherwise modified
from time to time.
"Transfer Event Date" means the day following delivery by the
Program Agent to any Deposit Bank or other bank or financial institution at
which any Deposit Account, Lockbox,
HL RECEIVABLES FINANCING AGREEMENT
21
Borrower's Account or other deposit account in the name of the Borrower is held,
of written notice that such Deposit Bank or other bank or financial institution
shall remit all amounts deposited in the applicable Deposit Account, Lockbox,
Borrower's Account or deposit account directly to the Facility Account or as
otherwise designated by the Program Agent and shall not follow the instructions
of Servicer, Borrower, or any other Person, which notice may only be given by
the Program Agent at any time during (a) the occurrence and continuation of a
Servicer Default, an Incipient Event of Termination or an Event of Termination,
or (b) which the Parent ceases to have a senior unsecured long-term debt rating
of at least BB+ by S&P and Ba1 by Moody's.
"Transferred Assets" means all Receivables, Related Security,
Collections, Deposit Accounts, Lockboxes and all proceeds of the foregoing.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unused Fee" has the meaning assigned to it in Section 2.04(c).
"Voting Stock" means Stock of any Person having ordinary power to
vote in the election of members of the board of directors, managers, trustees or
other controlling Persons, of such Person (irrespective of whether, at the time,
Stock of any other class or classes of such entity shall have or might have
voting power by reason of the happening of any contingency).
"Weekly Report" means a report in substantially the form of Annex F
hereto and containing such additional information as Program Agent may
reasonable request from time to time, furnished by the Servicer, pursuant to
Section 6.02(g), or in such other form as mutually agreed to by the Program
Agent, the Servicer and the Borrower.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Title IV of ERISA.
"Yield" means for each Rate Tranche for each Fixed Period, an amount
equal to,
Rate x P x ED/360 +LF
ED = the actual number of days elapsed during such portion
of such Fixed Period.
LF = the Liquidation Fee, if any, for such portion of such
Rate Tranche for such Fixed Period.
P = the average daily Principal (or portion thereof
allocated to such Rate Tranche) during such Fixed
Period.
Rate = (i) in respect of any Base Rate Tranche, an amount
equal to the sum of (A) the Alternate Base Rate then in
effect and (B) the Applicable Margin with respect
thereto and (ii) in
HL RECEIVABLES FINANCING AGREEMENT
22
respect of any Eurodollar Rate Tranche, an amount equal
to the sum of (B) the Eurodollar Rate with respect to
such Fixed Period and (B) the Applicable Margin with
respect thereto; provided, that, should an Event of
Termination occur and be continuing, the "Rate" shall be
at a rate equal to 2% per annum above the rate
applicable to a Base Rate Tranche.
SECTION 1.02. Other Terms and Constructions. Under this Agreement,
all accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all accounting determinations made and all financial
statements prepared hereunder shall be made and prepared in accordance with
GAAP. All terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9. The
words "herein," "hereof," and "hereunder" and other words of similar import
refer to this Agreement as a whole, including the exhibits and schedules hereto,
as the same may from time to time be amended, modified or supplemented and not
to any particular section, subsection, or clause contained in this Agreement,
and all references to Sections, Annexes and Schedules shall mean, unless the
context clearly indicates otherwise, the Sections hereof and the Annexes and
Schedules attached hereto, the terms of which Schedules are hereby incorporated
into this Agreement. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience and do not define, limit,
construe or describe the scope or intent of the provisions of this Agreement.
Each of the definitions set forth in Section 1.01 hereof shall be equally
applicable to both the singular and plural forms of the defined terms.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Loan Facility.
(a) On the terms and conditions hereinafter set forth, the Lenders
shall make loans (the "Advances") to the Borrower from time to time during the
period from the date hereof to and including the Commitment Termination Date.
Under no circumstances shall the Lenders be obligated to make any such Advance,
if after giving effect to such Advance (i) the Facility Principal would exceed
the lesser of (A) the Borrowing Base and (B) the Facility Amount or (ii) the
outstanding Principal of the Advances made by any such Lender would exceed such
Lender's Commitment.
(b) The Borrower may at any time upon at least five Business Days'
notice to the Program Agent, terminate the facility provided for in this
Agreement in whole or, from time to time, reduce in part the unused portion of
the Facility Amount; provided that each partial reduction shall be in the amount
of at least $1,000,000 or an integral multiple thereof.
HL RECEIVABLES FINANCING AGREEMENT
23
SECTION 2.02. Making Advances.
(a) Each Advance by any of the Lenders shall be made on at least
three Business Days' notice (or such shorter period agreed to by the Program
Agent and the Lenders) from the Borrower to the Program Agent, provided that
Advances shall be made not more than ten (10) times in any Month. Each such
notice of an Advance shall specify (i) the amount requested to be paid to the
Borrower (such amount, which shall not be less than $1,000,000, being referred
to herein as the initial "Principal" of the Advance then being made), (ii) the
allocation of such amount among each of the Lender (which shall be determined
based upon the respective Ratable Shares of the Lenders) and (iii) the date of
such Advance (which shall be a Business Day). If requested by any Lender, the
Advances made by such Lender shall be evidenced by a Note to the order of such
Lender.
(b) On the date of each such Advance, the Lenders shall, upon
satisfaction of the applicable conditions set forth in this Article II and
Article III, make available to the Borrower in same day funds, at the account
set forth in the Funds Transfer Letter, an aggregate amount equal to the initial
Principal of such Advance.
(c) Each Lender's obligation shall be several in proportion to its
Commitment hereunder, such that the failure of any Lender to make available to
the Borrower any funds in connection with any Advance shall not relieve any
other Lender of its obligation, if any, hereunder to make funds available on the
date of such Advance, but no Lender shall be responsible for the failure of any
other Lender to make funds available in connection with any Advance.
SECTION 2.03. Settlement Procedures. Notwithstanding anything herein
to the contrary, this Section 2.03 shall only be effective from and after the
making of the Initial Advance.
(a) Deposits Into The Facility Account. On each Business Day, prior
to 2 P.M. (New York City time), the Servicer shall transfer all Collections on
deposit in the Deposit Accounts to the Facility Account, and the Borrower shall,
or shall cause the Servicer to, transfer to the Facility Account all Deemed
Collections received from an Originator, SPE I or HL Funding I, LLC.
(b) Facility Account Disbursements During Revolving Period. On each
Business Day during the Revolving Period, prior to 5 P.M. (New York City time)
the Program Agent shall, from funds on deposit in the Facility Account, at such
time and in the following order:
(i) first, if a Pool Non-compliance Date shall have occurred
and be continuing, disburse an amount to the Lenders, Ratably in an aggregate
amount sufficient to reduce the outstanding Facility Principal such that the
Facility Principal, after giving effect to such application thereof, equals the
Borrowing Base;
(ii) second, if such Business Day is a Payment Date, the
Program Agent shall distribute the funds on deposit in the Facility Account in
the following order:
HL RECEIVABLES FINANCING AGREEMENT
24
(A) to the Program Agent, for itself, Obligations in respect
of any express reimbursement or indemnities then due to Program
Agent and in respect of the accrued and unpaid amounts then due to
the Program Agent under the Fee Agreement;
(B) ratably to the Lenders, based on the Ratable Shares of the
Lenders, to the accrued and unpaid Unused Fees;
(C) Ratably to the Lenders, all unpaid Yield accrued on the
Facility Principal during or prior to the Fixed Period most recently
ended; and
(D) to the Servicer (if the Servicer is other than an
Originator or one of its Affiliates), the accrued and unpaid
Servicer Fee for the immediately preceding Month;
(iii) third, if any Obligations (other than pursuant to
clauses (i) or (ii) above) are then due and payable by Borrower to any
Beneficiary, pay to each such Beneficiary (Ratably in accordance with the
amounts owing to each), the Obligations so due and payable); and
(iv) fourth, remit any remaining Collections to the Borrower
for application in accordance with Section 2.03(f) below (any such remittance, a
"Release"); provided, that if the conditions precedent for such Release set
forth in Section 3.02 are not satisfied, the Program Agent shall retain such
Collections in the Facility Account for application on the next Business Day in
accordance with this Section 2.03; provided further that the Borrower may
instruct the Servicer to direct the Program Agent to hold in the Facility
Account all or a portion of the Collections otherwise to be Released for
application on the next Business Day in accordance with this Section 2.03.
(c) Facility Account Disbursements During Amortization Period. On
the first Business Day of each week during the Amortization Period or more
frequently in the sole discretion of the Program Agent, prior to 5 P.M. (New
York City Time) the Program Agent shall, from funds on deposit in the Facility
Account, at such time and in the following order:
(i) pay to the Servicer (if the Servicer is other than an
Originator or one of its Affiliates) the accrued and unpaid Servicer Fee;
(ii) pay to the Program Agent, for itself, Obligations in
respect of any express reimbursement or indemnities then due to Program Agent
and in respect of the accrued and unpaid amounts then due to the Program Agent
under the Fee Agreement;
(iii) pay to the Lenders, in accordance with the Ratable
Shares of the Lenders, for payment in full of all accrued and unpaid Unused Fees
payable hereunder;
(iv) pay to the Lenders, in accordance with the Ratable Shares
of the Lenders, for payment in full of all unpaid Yield accrued on the Facility
Principal to but excluding such date;
HL RECEIVABLES FINANCING AGREEMENT
25
(v) pay to the Lenders, in accordance with the Ratable Shares
of the Lenders, in reduction of the Facility Principal until Facility Principal
is reduced to zero;
(vi) pay Ratably to the accounts as directed in writing by the
applicable Beneficiaries, for the ratable payment of any other amounts due the
applicable Beneficiaries under the Transaction Documents;
(vii) pay to the Servicer (if the Servicer is an Originator or
one of its Affiliates), the accrued and unpaid Servicer Fee; and
(viii) after the payment in full of the amounts specified in
clauses (i) through (vii) above, pay the remaining amounts to the Servicer to be
applied in accordance with Section 2.03(f).
Following the Commitment Termination Date and upon payment in full to all of the
Lenders of the Facility Principal, all accrued and unpaid Yield thereon and all
other amounts due the Beneficiaries under the Transaction Documents, payment in
full to the Servicer of the Servicer Fee, all amounts, if any, remaining in the
Facility Account shall be distributed by the Program Agent to the Borrower;
provided, however, that if at any time after the payment that would have
otherwise resulted in such payment in full, any amount of such payment (a
"Rescinded Amount") is rescinded or must otherwise be returned for any reason,
effective upon such rescission or return such payment in full shall
automatically be deemed, as between the Beneficiaries and the Borrower, never to
have occurred, and the Borrower shall be required, to the extent it received any
amounts under this Section 2.03(c), to remit to the Program Agent an amount
equal to the Rescinded Amount.
(d) Allocation of Collections.
(i) If on any day any Receivable becomes (in whole or in part)
a Diluted Receivable, the Borrower shall be deemed to have received on such day
a Collection of such Receivable in the amount of such Diluted Receivable;
(ii) If on any day any of the representations or warranties
contained in Section 4.01(h) is no longer true with respect to any Receivable,
the Borrower shall be deemed to have received on such day a Collection of such
Receivable in full;
(iii) Except with respect to Deemed Collections, or as
otherwise required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivables shall be applied to the Receivables
of such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables; and
(iv) If and to the extent the Program Agent or any of the
Lenders shall be required for any reason to pay over to an Obligor any amount
received on its behalf hereunder, such amount shall be deemed not to have been
so received but rather to have been retained by the Borrower and, accordingly,
the Program Agent or the Lenders, as the case may
HL RECEIVABLES FINANCING AGREEMENT
26
be, shall have a claim against the Borrower for such amount, payable when and to
the extent that any distribution from or on behalf of such Obligor is made in
respect thereof.
(e) Required Payment of Yield, Fees and Other Obligations.
(i) To the extent that as of any Regular Payment Date the
amounts retained in the Facility Account with respect to any Fixed Period are
insufficient to pay all the accrued but unpaid Yield and Fees, the Borrower
shall be obligated to pay to the Program Agent on the Regular Payment Date, for
the account of the Lenders and the Program Agent, an amount equal to the balance
of such accrued and unpaid amounts by deposit of such amount to the Facility
Account. The Program Agent shall subsequently distribute such funds as set forth
in Section 2.03(a) or (b), as applicable.
(ii) To the extent that as of any Regular Payment Date the
amounts deposited to the Facility Account with respect to any Fixed Period are
insufficient to pay all the accrued but unpaid (if payable to a Servicer other
than an Originator or one of its Affiliates) Servicer Fee, the Borrower shall be
obligated to pay to the Facility Account for the benefit of the Servicer (if
applicable), an amount equal to the balance of such accrued and unpaid amounts
by deposit of such amount to the Facility Account. The Program Agent shall
subsequently distribute such funds as set forth in Section 2.03(a) or (b), as
applicable.
(f) Borrower Disbursements. Any Collections remitted to the Borrower
pursuant to Section 2.03(b)(iv) or Section 2.03(c)(viii) shall be applied by the
Servicer, on behalf of the Borrower: (i) first, if so requested by the Borrower,
to pay or prepay (or set aside for the payment or prepayment of) Advances, (ii)
second, to pay the purchase price for Transferred Assets to be acquired by the
Borrower from SPE I on such day under the Secondary Purchase Agreement, (iii)
third, to repay the principal of, and accrued and unpaid interest on, the
Subordinated Note (as such term is defined in the Secondary Purchase Agreement),
and (iv) fourth, in such other manner as the Borrower may specify and that is
not prohibited by the terms of the Facility Documents.
SECTION 2.04. Fees.
(a) The Borrower shall pay to the Servicer a fee (the "Servicer
Fee") of 0.50% per annum on the average daily Outstanding Balance of the
Receivables from the date of this Agreement until the later of the last
Termination Date for all Rate Tranches or the date on which the Facility
Principal is reduced to zero, payable in arrears on (i) each Payment Date if
such Servicer is not an Originator or one of its Affiliates, and (ii) on each
Regular Payment Date if such Servicer is an Originator or one of its Affiliates.
Upon three Business Days' notice to the Borrower, the Program Agent, the
Servicer (if not the Originator, the Borrower or its designee or an Affiliate of
the Borrower) may elect to be paid, as such fee, another percentage per annum on
the average daily Outstanding Balance of the Receivables, but in no event in
excess of 110% of the reasonable costs and expenses of the Servicer in
administering and collecting the Receivables. The Servicer Fee shall be payable
only from Collections pursuant to, and subject to the priority of payment set
forth in, Section 2.03. So long as HLIOC is acting as the Servicer hereunder,
amounts paid as the Servicer Fee pursuant to this Section 2.04(a) shall reduce,
on a dollar-for-dollar basis, the obligation of the Borrower to pay the
"Servicer Fee" pursuant to
HL RECEIVABLES FINANCING AGREEMENT
27
Section 6.03 of the Secondary Purchase Agreement, provided that such obligation
of the Borrower to pay the Servicer Fee shall in no event be reduced below zero.
(b) The Borrower shall pay to the Program Agent certain fees in the
amounts and on the dates set forth in a separate fee agreement dated April 25,
2006 between HLIOC and the Program Agent (as amended and restated pursuant to a
letter agreement of even date among the Borrower, HLIOC and the Program Agent,
as the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Fee Agreement").
(c) Beginning on the date hereof until the Commitment Termination
Date (the "Final Payment Date"), an unused fee (the "Unused Fee") shall accrue
and be payable by the Borrower to the Program Agent for the ratable benefit of
each Lender based upon such Lender's Ratable Share, in an amount equal to the
sum of the "Daily Unused Fee" for each day in the immediately preceding Month,
or with respect to the Final Payment Date in an amount equal to the sum of the
"Daily Unused Fee" for each day in the Month in which such Final Payment Date
occurs and, if no Unused Fee has yet been paid for the immediately preceding
Month, for each day in the immediately preceding Month. The "Daily Unused Fee"
for any day is equal to the sum of the following for each Lender: (a) the
difference between such Lender's Commitment on such day and such Lender's
Advances outstanding on such day, multiplied by (b) 0.50%, and divided by (c)
360.
(d) On the date hereof, the Borrower shall pay to the Agent for the
benefit of each Lender based upon such Lender's Ratable Share, a one-time
closing fee equal to the product of (i) 0.50% and (ii) the aggregate amount of
the Commitments of all the Lenders as of the date hereof. The closing fee is
fully earned on the date paid and is not refundable for any reason whatsoever.
SECTION 2.05. Payments and Computations, Etc.
(a) Unless otherwise specified herein, all amounts to be paid or
deposited by the Borrower or the Servicer hereunder shall be paid or deposited
no later than 2 P.M. (New York City time) on the day when due in same day funds
to the Facility Account.
(b) Each of the Borrower and the Servicer shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by it when
due hereunder, at an interest rate per annum equal to 2% per annum above the
Alternate Base Rate, payable on demand.
(c) All computations of interest under clause (b) above and all
computations of Yield, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed. Whenever any payment or deposit to be made
hereunder shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment or deposit.
(d) All amounts to be paid hereunder shall be paid in the lawful
money of the United States of America.
HL RECEIVABLES FINANCING AGREEMENT
28
(e) Notwithstanding anything to the contrary contained herein, the
obligations of the Borrower under this Agreement are solely the obligations of
the Borrower payable solely from the Collateral. No recourse under any
obligation, covenant or agreement of the Borrower contained in this Agreement or
implied therefrom shall be had against any member, stockholder, manager,
officer, director, incorporator, employee, agent or any Affiliate of the
Borrower, and any and all liability for breaches by the Borrower for any such
obligations, covenants or agreements, either at common law or equity, or by
statute, rule or regulation, of every such member, stockholder, manager,
officer, director, incorporator, employee, agent or Affiliate is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement; provided, that the foregoing shall not relieve any such Person
from any liability it might otherwise have as a result of fraudulent actions
taken or omissions made by them; provided, further, that the foregoing shall not
relieve Parent, HLIOC, Servicer, HL Funding I, LLC, HL Funding II, Inc, SPE I or
any Originator from its own contractual obligations under any of the Transaction
Documents.
SECTION 2.06. Increased Costs.
(a) If CUSA, any Lender, any entity which purchases or enters into a
commitment to make Advances or interests therein, or any of their respective
Affiliates (each an "Affected Person") determines that (i) the adoption of, or
any change in or in the interpretation of, any law, treaty or governmental rule,
regulation or order after the date of this Agreement regarding capital adequacy,
(ii) compliance with any such law, treaty, rule or regulation or order or (iii)
compliance with any such guideline or request from any central bank or other
Governmental Entity (whether or not having the force of law) shall have the
effect of reducing the rate of return on such Affected Person's capital as
consequence of its obligations hereunder to a level below that which such
Affected Person could have achieved but for such adoption, change, compliance or
interpretation, then, upon demand by such Affected Person (with a copy to the
Program Agent), the Borrower shall pay to such Affected Person, from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person for such reduction. A certificate as to such
amounts setting forth in reasonable detail the reason for charging such
additional amounts submitted to the Borrower and the Program Agent by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(b) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements
referred to in Section 2.07) in or in the interpretation of any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
shall have the effect of increasing the cost to any Lender of agreeing to make
or making or maintaining any Advance in respect of which Yield is computed by
reference to the Eurodollar Rate, then, upon demand by such Lender (with a copy
to the Program Agent), the Borrower shall pay to such Lender, from time to time
as specified by such Lender, additional amounts sufficient to compensate such
Lender for such increased costs. A certificate as to such amounts setting forth
in reasonable detail the reason for charging such additional amounts submitted
to the Borrower and the Program Agent and such Affected Person shall be
conclusive and binding for all purposes, absent manifest error.
HL RECEIVABLES FINANCING AGREEMENT
29
(c) If any Affected Person shall incur any loss, cost or expense as
a result of the failure of any Advance to be made on the date specified in the
applicable Funds Transfer Letter for any reason (other than the failure of such
Affected Person to fund any such Advance), the Borrower shall, upon demand by
such Affected Person, immediately pay such Affected Person the amount of such
losses, costs and expenses, without duplication of amounts otherwise payable
hereunder. Upon the request of Borrower, such Affected Party shall submit to the
Borrower a certificate as to such amounts showing the basis for calculation of
such amounts, which certificate shall, in the absence of manifest error, be
conclusive and binding for all purposes.
SECTION 2.07. Additional Yield on Advances Bearing a Eurodollar
Rate. The Borrower shall pay to any Lender, so long as such Lender shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional Yield on the unpaid Principal
of Advances of such Lender during each Fixed Period Principal of Advances in
respect of which Yield is computed by reference to the Eurodollar Rate, for such
Fixed Period, at a rate per annum equal at all times during such Fixed Period to
the remainder obtained by subtracting (a) the Eurodollar Rate for such Fixed
Period from (b) the rate obtained by dividing such Eurodollar Rate referred to
in clause (a) above by that percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Lender for such Fixed Period, payable on each date on
which Yield is payable on such Advances. Such additional Yield shall be
determined by such Lender and notice thereof given to the Borrower by such
Lender (with a copy to the Program Agent) within 30 days after any Yield payment
is made with respect to which such additional Yield is requested. A certificate
as to such additional Yield setting forth the calculation of such additional
Yield submitted to the Borrower and the Program Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.08. Taxes.
(a) Any and all payments and deposits required to be made hereunder
or under any other Transaction Document by the Servicer or the Borrower shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) net income taxes that are imposed by the
United States and franchise taxes, (ii) net income taxes or franchise taxes that
are imposed on an Affected Person by a state or foreign jurisdiction (or any
political subdivision thereof) under the laws of which such Affected Person is
organized or in which such Affected Person is conducting business through an
office or agency located in such jurisdiction and (iii) in the case of each
Lender, taxes measured by such Lender's net income or net profit and franchise
taxes imposed on it as a result of a present or former connection between such
Lender and the jurisdiction of the Governmental Entity imposing such tax or any
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower or the Servicer shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any
Affected Person, (i) the Borrower shall make an additional payment to such
Affected Person, in an amount sufficient so that, after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.08), such Affected Person receives an amount equal to the sum it
would have received had no such deductions been made,
HL RECEIVABLES FINANCING AGREEMENT
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(ii) the Borrower or the Servicer, as the case may be, shall make such
deductions and (iii) the Borrower or the Servicer, as the case may be, shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or other documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or under any other
Transaction Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Transaction Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Affected Person for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.08) paid by such Affected Person and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted; provided, however,
that the Borrower shall not have any obligation under this Section 2.08(c) to
any Affected Person in respect of penalties, interest and other similar
liabilities attributable to such indemnified Taxes and Other Taxes if such
penalties, interest or other similar liabilities are caused by or result from
the gross negligence or willful misconduct of such Affected Person, as
determined by a court of competent jurisdiction in a final non-appealable
judgment or order. This indemnification shall be made within thirty days from
the date the Affected Person makes written demand therefor (and a copy of such
demand shall be delivered to the Program Agent). A certificate as to the amount
of such indemnification submitted to the Borrower and the Program Agent by such
Affected Person, setting forth, in reasonable detail, the basis for and the
calculation thereof, shall be conclusive and binding for all purposes absent
manifest error.
The relevant Affected Person shall promptly notify the Borrower upon
receipt by such Affected Person of notice of any claim, assessment or dispute
relating to any tax proceeding for which the Borrower has liability pursuant to
this clause (c) and shall promptly forward to the Borrower any communications
received from or sent to any tax authority in connection with any such tax
proceeding; provided, however, that a failure by such Affected Person to give
such notice or take any other action will not affect its rights to
indemnification pursuant to this clause (c) except to the extent the Borrower is
prejudiced as a consequence of such failure.
The Borrower shall have the sole right to control, contest, resolve
and defend, any tax proceeding to the extent such proceeding pertains to a Tax
or Other Tax that the Borrower has paid pursuant to this clause (c); provided,
however, that (i) the Borrower shall provide the relevant Affected Person with a
timely and reasonably detailed account of each stage of any such tax proceeding,
(ii) the Borrower shall consult with such Affected Person before taking any
significant action in connection with any such tax proceeding, (iii) the
Borrower shall consult with such Affected Person and offer such Affected Person
an opportunity to comment before submitting any written materials prepared or
furnished in connection with any such tax proceeding, and (iv) the Borrower
shall not settle any such tax proceeding without the consent of such Affected
Person, such consent not to be unreasonably withheld, conditioned or delayed.
The Borrower shall bear any expenses incurred by it in connection with any tax
proceeding to which this clause (c) applies.
HL RECEIVABLES FINANCING AGREEMENT
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(d) Each Affected Person which is organized outside the United
States and which is entitled to an exemption from, or reduction of, withholding
tax under the laws of the United States as in effect on the date hereof (or, in
the case of any Person which becomes an Affected Person after the date hereof,
on the date on which it so becomes an Affected Person with respect to any
payments under this Agreement) shall, on or prior to the date hereof (or, in the
case of any Person who becomes an Affected Person after the date hereof, on or
prior to the date on which it so becomes an Affected Person), deliver to the
Borrower such certificates, documents or other evidence, as required by the
Internal Revenue Code of 1986, as amended or Treasury Regulations issued
pursuant thereto, including Internal Revenue Service Form W-8BEN or Form W-8ECI
and any other certificate or statement of exemption required by Treasury
Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version
thereof, properly completed and duly executed by such Affected Person as will
permit such payments to be made without withholding or at a reduced rate. On or
before the date that the most recent form, certificate or document previously
provided expires or becomes obsolete, or promptly after the occurrence of any
event requiring a change in the most recent form, certificate or document
previously provided, each such Affected Person shall deliver to the Borrower any
new certificates, documents or other evidence as described in the preceding
sentence as will permit payments under this Agreement to be made without
withholding or at a reduced rate (but only so long as such Affected Person is
legally able to do so).
(e) The Borrower shall not be required to pay any amounts to any
Affected Person in respect of Taxes and Other Taxes pursuant to clauses (a), (b)
and (c) above if the obligation to pay such amounts is attributable to the
failure by such Affected Person to comply with the provisions of clause (d)
above; provided, however, that should an Affected Person become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrower shall
take such steps as such Affected Person shall reasonably request to assist such
Affected Person to recover such Taxes.
(f) If any Affected Person determines in its sole discretion that it
has actually received any refund of tax in connection with any deduction or
withholding or payment of any additional amount by the Borrower pursuant to this
Section 2.08 such Affected Person shall reimburse the Borrower in an amount
equal to such refund, after tax, and net of all expenses incurred by such Person
in connection with such refund. The Borrower shall return such amount to the
applicable Person in the event that such Person is required to repay such refund
of tax. Nothing contained in this paragraph shall interfere with the right of
each of the Affected Persons to arrange its tax affairs in whatever manner it
thinks fit, nor to disclose any information or any computations relating to its
tax affairs or to do anything that would prejudice its ability to benefit from
other credits, relief, remissions or repayments to which it may be entitled.
SECTION 2.09. Security Interest. To secure the performance by the
Borrower of all the terms, covenants and agreements on the part of the Borrower
(whether as Borrower or otherwise) to be performed under this Agreement, the
Transaction Documents or any other document delivered in connection with this
Agreement in accordance with the terms thereof, including the punctual payment
when due of all obligations of the Borrower hereunder or thereunder, whether for
Principal, Yield, Fees, indemnification payments, expenses or otherwise (all of
the foregoing, collectively, the "Obligations"), the Borrower hereby grants to
the Program Agent for its benefit and the benefit of the Beneficiaries, a
security interest in, all of the
HL RECEIVABLES FINANCING AGREEMENT
32
Borrower's right, title and interest in and to the following (collectively, the
"Collateral") (a) the Purchase Agreements and the Parent Undertakings,
including, without limitation, (i) all rights of the Borrower to receive monies
due or to become due under or pursuant to the Purchase Agreements or the Parent
Undertakings, (ii) all security interests and property subject thereto from time
to time purporting to secure payment of monies due or to become due under or
pursuant to the Purchase Agreements or the Parent Undertakings, (iii) all rights
of the Borrower to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Purchase Agreements or the Parent Undertakings,
(iv) claims of the Borrower for damages arising out of or for breach of or
default under the Purchase Agreements or the Parent Undertakings, and (v) the
right of the Borrower to compel performance and otherwise exercise all remedies
thereunder, (b) all Transferred Assets, whether now owned and existing or
hereafter acquired or arising, and all other assets, including, without
limitation, accounts, chattel paper, instruments, payment intangibles and
general intangibles (as those terms are defined in the UCC), including undivided
interests in any of the foregoing, (c) the Lockboxes, Deposit Accounts,
Borrower's Account and any other deposit accounts, (d) all other property or
interests in property, and (e) to the extent not included in the foregoing, all
proceeds of any and all of the foregoing.
SECTION 2.10. Sharing of Payments. If any Lender (for purposes of
this Section only, referred to as a "Recipient") shall obtain payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the Principal of, or Yield on, any Advance or portion
thereof owned by it in excess of its ratable share of payments made on account
of the Principal of, or Yield on (other than additional Yield payable pursuant
to Section 2.07 hereof), all of the Advances held by the Lenders, such Recipient
shall forthwith purchase from the Lenders which received less than their ratable
share participations in the Advances made by such Persons as shall be necessary
to cause such Recipient to share the excess payment ratably with each such other
Person; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such Recipient, such purchase from each such other
Person shall be rescinded and each such other Person shall repay to the
Recipient the purchase price paid by such Recipient for such participation to
the extent of such recovery, together with an amount equal to such other
Person's ratable share (according to the proportion of (a) the amount of such
other Person's required payment to (b) the total amount so recovered from the
Recipient) of any interest or other amount paid or payable by the Recipient in
respect of the total amount so recovered.
SECTION 2.11. Right of Setoff. Without in any way limiting the
provisions of Section 2.09, the Program Agent and each Lender is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence and during the continuance of an Event of Termination to set-off,
appropriate and apply (without presentment, demand, protest or other notice
which are hereby expressly waived) any deposits and any other indebtedness held
or owing by the Program Agent or such Lender to, or for the account of, the
Borrower, the Servicer or any Originator against any amount owing by the
Borrower, the Servicer or such Originator, respectively, to such Person or to
the Program Agent on behalf of such Person (even if contingent or unmatured).
SECTION 2.12. Facility Increase.
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33
(a) General. The Borrower may request, in writing, to increase the
aggregate Commitments by up to $10,000,000 (the "Facility Increase"); provided,
however, that such increase will only become effective if (i) the Borrower shall
have given the Program Agent at least 5 Business Days' notice of its intention
to effect a Facility Increase and the desired amount of such Facility Increase,
(ii) no Event of Termination or Incipient Event of Termination has occurred and
is continuing, (iii) one or more Lenders or Eligible Assignees agree to
participate in such Facility Increase, (iv) the conditions precedent to an
Advance set forth in Section 3.02 are satisfied as of such date, and (v) if
requested by the Program Agent, an opinion of counsel to the Borrower in form
and substance and from counsel satisfactory to the Program Agent addressing such
matters as the Program Agent may reasonably request shall be delivered to the
Program Agent.
(b) Procedures. The Borrower shall have the right to offer such
increase to (x) the existing Lenders, and each existing Lender will have the
right, but not the obligation, to commit to all or a portion of the proposed
increase or (y) other Eligible Assignees reasonably acceptable to the Program
Agent; provided, however, that the minimum aggregate Commitment of each such new
Eligible Assignee accepting a Commitment as part of such Facility Increase
equals or exceeds $1,000,000, and such Lender or Eligible Assignee executes an
assumption agreement (in form and substance reasonably satisfactory to the
Program Agent) pursuant to which such Lender agrees to commit to all or a
portion of such Facility Increase and, in the case of an Eligible Assignee, to
be bound by the terms of this Agreement as a Lender. On the effective date
provided for in such assumption agreement providing for a Facility Increase
(each a "Facility Increase Effective Date"), the Commitments will be increased
by the additional amount committed to by each Lender or Eligible Assignee on the
Facility Increase Effective Date. In the event there are Lenders and Eligible
Assignees that have committed to a Facility Increase in excess of the maximum
amount requested (or permitted), then the Program Agent shall have the right to
allocate such commitments, first to Lenders and then to Eligible Assignees, on
whatever basis the Program Agent determines is appropriate in consultation with
the Borrower.
(c) Funding of Facility Increase. On the Facility Increase Effective
Date, each Lender and Eligible Assignee providing a portion of the Facility
Increase shall transfer immediately available funds to the Program Agent in an
amount equal to its Ratable Share (after giving effect to such Facility
Increase) of outstanding Principal. The Program Agent shall distribute such
amounts among the Lenders such that, after giving effect to such distribution
and the Facility Increase, the quotient of (x) the Principal owing to any Lender
and (y) the aggregate outstanding Principal owing to all Lenders, shall equal
such Lender's Ratable Share.
(d) Number of Requests and Maximum Increase. The Borrower may make
more than one request for a Facility Increase; provided, however, that the
aggregate amount of the Facility Increase effected pursuant to all such requests
does not exceed $10,000,000.
HL RECEIVABLES FINANCING AGREEMENT
34
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions Precedent to Effectiveness of the
Agreement. The effectiveness of this Agreement is subject to the conditions
precedent that the Program Agent shall have received on or before the date of
such Advance the following, each (unless otherwise indicated) dated such date,
in form and substance satisfactory to the Program Agent
(a) An executed copy of this Agreement, the Funds Transfer Letter,
an agreement of the Process Agent pursuant to which it agrees to act as such as
called for by Section 9.10(a), the Parent Undertakings, the Intercreditor
Agreement, the Notes, the Purchase Agreements and each other Transaction
Document on the list of closing documents attached hereto as Schedule 3.01;
(b) A certificate of the secretary or assistant secretary of the
Borrower, the Parent, the Originators, the Servicer, HL Funding I, LLC, HL
Funding II, Inc. and SPE I certifying (i) and attaching true and correct copies
of the Charter Documents, together with the certification with respect to any
certificate of incorporation or formation by the secretary of state of the
jurisdiction of organization of such Person, (ii) the names and true signatures
of their respective officers authorized to sign this Agreement and the other
Transaction Documents, and (iii) copies of the resolutions (or similar
authorization, if not a corporation) of such Person's board of directors (or
similar governing body or Persons, if not a corporation) approving this
Agreement, the Purchase Agreements, the Parent Undertakings and any other
Transaction Documents to which it is a party and certified copies of all
documents evidencing other necessary corporate or limited liability company, as
the case may be, action and governmental approvals, if any, with respect to this
Agreement, the Purchase Agreements, the Parent Undertakings and any such
Transaction Documents. One such certificate will be acceptable for any number of
such Persons;
(c) Certificates as to the good standing of each of the Borrower,
SPE I, each Originator, HL Funding I, LLC, HL Funding II, Inc. and Parent from
the Secretary of State of the jurisdiction of such Person's organization and
from each other jurisdiction (i) in which with respect to Borrower, HL Funding
I, LLC, HL Funding II, Inc. and SPE I, the nature of such Person's business
requires it to be so qualified and (ii) in which with respect to each Originator
and Parent, the nature of such Person's business requires it to be so qualified
except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect;
(d) Copies of proper financing statements, duly filed on or before
the date hereof under the UCC of all jurisdictions that the Program Agent may
deem necessary or desirable in order to perfect the ownership and security
interests contemplated by this Agreement and the Purchase Agreements;
(e) Copies of proper financing statements, if any, necessary to
release all security interests and other rights of any Person in the Collateral;
HL RECEIVABLES FINANCING AGREEMENT
35
(f) Completed requests for information, dated on or before the date
hereof, listing all effective financing statements filed in the jurisdictions
referred to in clause (c) above and in any other jurisdictions reasonably
requested by the Program Agent that name the Borrower, SPE I, HL Funding I, LLC,
HL Funding II, Inc. or any Originator as debtor, together with copies of such
financing statements (none of which, except those being released or terminated
in connection with the closing, shall cover any Collateral);
(g) Favorable opinions of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
as counsel for the Borrower, SPE I, the Parent, the Servicer, HL Funding I, LLC,
HL Funding II, Inc. and the Originators, as applicable, and such other legal
counsel acceptable to Program Agent, as to corporate, enforceability,
non-contravention, perfection, true sale and substantive consolidation matters
and as to such other matters as the Program Agent may reasonably request;
(h) Executed copy of the Fee Agreement, together with payment of any
Fees called for thereby;
(i) Evidence satisfactory to the Program Agent that all actions
necessary under the Indenture and the Credit Agreement to permit the
transactions contemplated by the Transaction Documents have been taken; and
(j) Evidence satisfactory to the Program Agent that all obligations
under the Existing Securitization Program will have been satisfied concurrently
with the making of the Initial Advance and that all Adverse Claims created
pursuant to the Existing Securitization Transaction shall have been released.
SECTION 3.02. Conditions Precedent to All Advances and Releases.
Each Advance (including the initial Advance (the "Initial Advance")) and Release
shall be subject to the further conditions precedent that:
(a) in the case of each Advance, the Servicer shall have delivered
to the Program Agent no later than 1:00 PM on the Business Day of such Advance,
in form and substance satisfactory to the Program Agent, a completed Borrower
Report and a completed Daily Report containing information covering the most
recently ended reporting period for which information is required pursuant to
Section 6.02(g) and demonstrating that both before and after giving effect to
such Advance no Event of Termination or Incipient Event of Termination under
Section 7.01(h) or (i) has or would occur;
(b) on the date of such Advance or Release the following statements
shall be true (and acceptance of the proceeds of such Advance or Release shall
be deemed a representation and warranty by the Borrower and the Servicer (each
as to itself) that such statements are then true:
(i) The representations and warranties in this Agreement are
correct on and as of the date of such Advance or Release as though made on and
as of such date,
HL RECEIVABLES FINANCING AGREEMENT
36
(ii) No event has occurred and is continuing, or would result
from such Advance or Release, that constitutes an Event of Termination or an
Incipient Event of Termination,
(iii) There shall have been sold or contributed to the
purchaser thereunder pursuant to each Purchase Agreement, all Transferred Assets
of the seller thereunder arising on or prior to such date;
(c) the Program Agent shall have received such other approvals,
opinions or documents as the Program Agent may reasonably request; and
(d) prior to the making of the Initial Advance, (i) the Program
Agent shall have received a Daily Report for the Business Day immediately
preceding the Initial Advance and a Borrower Report for the preceding Month and
(ii) the Program Agent shall have received fully executed copies of Deposit
Account Agreements with respect to all Deposit Accounts and Lockboxes and an
Account Control Agreement with respect to the Borrower's Account.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower hereby represents and warrants as follows, which representations and
warranties shall be deemed repeated on each day on which an Advance is made or a
Release is made:
(a) The Borrower is a corporation organized, duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
its organizational identification number is ▇▇-▇▇▇▇▇▇▇, and it is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Borrower of the
Transaction Documents to which it is a party and the other documents to be
delivered by it hereunder, including the Borrower's use of the proceeds of
Advances, (i) are within the Borrower's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene (A) the
Borrower's Charter Documents, (B) any law, rule or regulation applicable to the
Borrower, (C) any contractual restriction binding on or affecting the Borrower
or its property or (D) any order, writ, judgment, award, injunction or decree
binding on or affecting the Borrower or its property, and (iv) do not result in
or require the creation of any Adverse Claim upon or with respect to any of its
properties (except for the interest created pursuant to this Agreement). Each of
the Transaction Documents to which the Borrower is a party has been duly
executed and delivered by the Borrower.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of the Transaction
Documents to which it is a party or any other document to be delivered
thereunder, except for the filing of UCC financing statements which are referred
to herein and therein.
HL RECEIVABLES FINANCING AGREEMENT
37
(d) Each of the Transaction Documents to which it is a party
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, subject to the Enforceability
Exceptions.
(e) Since its date of formation, there has been no Material Adverse
Change with respect to Borrower.
(f) (i) Except as disclosed in the Parent's or any Originator's
publicly available SEC filings or otherwise disclosed in writing to the Program
Agent after the date hereof, there is no pending or threatened action,
investigation or proceeding affecting the Borrower before any court,
governmental agency or arbitrator and (ii) except as set forth in Schedule
4.01(f) or as otherwise disclosed by the Parent in its publicly available SEC
filings, there is no pending or threatened action, investigation or proceeding
affecting the Parent or any of its other Subsidiaries before any court,
governmental agency or arbitrator which if determined adversely to any of them,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(g) No proceeds of any Advances will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(h) The Borrower is the legal and beneficial owner of the Collateral
free and clear of any Adverse Claim. The Program Agent for the benefit of the
Lenders has a valid and perfected first priority security interest in the
Collateral. No effective financing statement or other instrument similar in
effect covering any Collateral is on file in any recording office, except those
filed in favor of the Program Agent relating to this Agreement and those filed
pursuant to the Purchase Agreements. Subject to the final sentence of the
definition of "Eligible Receivable" set forth therein, each Receivable
characterized in any Report or other written statement made by or on behalf of
the Borrower as an Eligible Receivable, or included in the Net Receivables Pool
Balance is, as of the date of such Report or other statement (or, if applicable,
as of a date certain specified in such report), an Eligible Receivable and is
properly included in the Net Receivables Pool Balance.
(i) Each Report (in each case if prepared by the Borrower or one of
its Affiliates, or to the extent that information contained therein is supplied
by the Borrower or an Affiliate), and all written information, exhibits,
financial statements, documents, books, records and reports furnished or to be
furnished at any time by or on behalf of the Borrower to the Program Agent or
the Lenders in connection with and before or after the date of this Agreement
are or will be accurate in all material respects as of the date so furnished
(or, if applicable, as of a date certain specified in such report), and no such
document contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading.
(j) The principal place of business and chief executive office of
the Borrower and the office where the Borrower keeps its books and records
concerning the Collateral are located at the address or addresses referred to in
Section 5.01(b).
HL RECEIVABLES FINANCING AGREEMENT
38
(k) The names and addresses of all the Deposit Banks, together with
the post office boxes and account numbers of the Lockboxes, Deposit Accounts,
Borrower's Account and all other deposit accounts of Borrower are as specified
in Schedule 4.01(k) hereto, as such Schedule 4.01(k) may be updated from time to
time pursuant to Section 5.01(g). The Lockboxes and Deposit Accounts are the
only post office boxes and bank accounts into which Collections of Receivables
are deposited or remitted. The Borrower has delivered to the Program Agent (i) a
fully executed Deposit Account Agreement with respect to each Deposit Account
and any associated Lockboxes and (ii) a fully executed Account Control Agreement
with respect to Borrower's Account and each other deposit account of Borrower.
(l) The Borrower has advised its independent certified public
accountants that the Program Agent have been authorized to review and discuss
with such accountants, as they may reasonably request, any and all financial
statements and other information of any kind that such accountants may have
which relate to the Collateral, and the Borrower has directed such accountants
to comply with any reasonable request of the Program Agent for such information.
(m) The Borrower is not known by and does not use any trade name or
doing-business-as name.
(n) The Borrower was incorporated on May 10, 2006, and the Borrower
did not engage in any business activities prior to the date of this Agreement.
The Borrower has no Subsidiaries. SPE I is the sole owner of the Stock issued by
the Borrower, all of which is validly issued, fully paid and nonassessable, and
there are no options, warrants or other rights to acquire any Stock in the
Borrower.
(o) The Borrower is Solvent.
(p) With respect to each Transferred Asset the Borrower (i) shall
have received such Transferred Asset as a contribution to the capital of the
Borrower by SPE I, (ii) shall have purchased such Transferred Asset from SPE I
in exchange for payment (made by the Borrower to SPE I in accordance with the
provisions of the Secondary Purchase Agreement) of cash or (iii) shall have
received such Transferred Asset partially as a capital contribution and
partially for payment in cash, in each case in an amount which constitutes fair
consideration and reasonably equivalent value. Each such sale referred to in the
preceding sentence shall not have been made for or on account of an antecedent
debt owed by SPE I to the Borrower.
(q) The Borrower has timely filed or caused to be filed all required
income tax and sales tax returns and reports and all other material tax returns
and reports required to have been filed and has paid or caused to be paid all
material taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower. The charges, accruals and reserves on the books of the
Borrower in respect of such taxes or charges imposed by a Governmental Entity
are, in the opinion of the Borrower, adequate for the payment thereof.
(r) The Borrower is not and, after giving effect to the transactions
contemplated hereby, will not be, required to be registered as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
HL RECEIVABLES FINANCING AGREEMENT
39
(s) Each Receivable (i) is of a nature that financing such
Receivable with the proceeds of notes would constitute a "current transaction"
within the meaning of Section 3(a)(3) of the Securities Act of 1933, as amended,
and (ii) is an obligation representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended.
(t) Anti-Terrorism Laws and Anti-Money Laundering Laws. The Borrower
is not and no Person who owns a controlling interest in or otherwise controls
the Borrower is or shall be, (i) listed on the Specially Designated Nationals
and Blocked Persons List maintained by the Office of Foreign Assets Control
("OFAC"), Department of the Treasury, and/or on any other similar list
(collectively, the "Lists") maintained by the OFAC pursuant to any authorizing
statute, Executive Order or regulation (collectively, "OFAC Laws and
Regulations"); or (ii) a Person (a "Designated Person") either (A) included
within the term "designated national" as defined in the Cuban Assets Control
Regulations, 31 C.F.R. Part 515, or (B) designated under Sections 1(a), 1(b),
1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published
September 25, 2001) or similarly designated under any related enabling
legislation or any other similar Executive Orders (collectively, the "Executive
Orders"). The Borrower is not (x) a Person or entity with which any Lender is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law or (y) a Person or entity that commits, threatens or
conspires to commit or supports "terrorism" as defined in the Executive Orders
or (z) is affiliated or associated with a Person or entity listed in the
preceding clause (x) or clause (y). None of the Borrower, its Affiliates,
brokers or other agents acting in any capacity in connection with the
transactions contemplated hereunder (I) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Orders or (II) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
(u) No Violation of Anti-Money Laundering Laws. Neither the Borrower
nor any holder of a direct or indirect interest in the Borrower (i) is under
investigation by any governmental authority for, or has been charged with, or
convicted of, money laundering under 18 U.S.C. Sections 1956 and 1957, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (ii) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (iii) has had any of its funds seized
or forfeited in an action under any Anti-Money Laundering Laws.
SECTION 4.02. Representations and Warranties of the Servicer. The
Servicer hereby represents and warrants as follows, which representations and
warranties shall be deemed repeated on each day during the Revolving Period:
(a) The Servicer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business, and is in good standing, in every jurisdiction
where the nature of its business requires it to be so qualified, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
(b) The execution, delivery and performance by the Servicer of this
Agreement and any other documents to be delivered by it hereunder (i) are within
the Servicer's
HL RECEIVABLES FINANCING AGREEMENT
40
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) do not contravene (A) the Servicer's charter or by-laws, (B) any
law, rule or regulation applicable to the Servicer, the breach of which could
reasonably be expected to result in a Material Adverse Effect, (C) any material
contractual restriction binding on or affecting the Servicer or its property or
(D) any order, writ, judgment, award, injunction or decree binding on or
affecting the Servicer or its property, and (iv) do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties. This Agreement has been duly executed and
delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Servicer of this Agreement or
any other document to be delivered by it hereunder.
(d) Each of the Transaction Documents to which it is a party
constitutes the legal, valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with its terms, subject to the Enforceability
Exceptions.
(e) Since January 31, 2006, there has been no Material Adverse
Change with respect to the Servicer.
(f) Except as set forth in Schedule 4.01(f), there is no pending or
threatened action, investigation or proceeding affecting the Servicer or any of
its Subsidiaries before any court, governmental agency or arbitrator which if
determined adversely, could reasonably be expected to result in a Material
Adverse Effect.
(g) On each day during the Revolving Period (and after giving effect
to any Advance to be made on such day or the repayment of Facility Principal to
be made on such day), the Facility Principal is not greater than the Borrowing
Base. Subject to the final sentence of the definition of "Eligible Receivable"
set forth therein, each Receivable characterized in any Report or other written
statement made by or on behalf of Servicer as an Eligible Receivable or included
in the Net Receivables Pool Balance is, as of the date of such Report or
statement (or, if applicable, as of a date certain specified in such
information), an Eligible Receivable and properly included in the Net
Receivables Pool Balance.
(h) Specified on Schedule 4.01(k) hereto (as amended by the Servicer
from time to time in accordance with Section 6.08(a)) are (i) the Lockbox
numbers and (ii) the names, addresses and ABA numbers of all the Deposit Banks,
together with the account numbers of the Deposit Accounts, and the name of a
contact person at each Deposit Bank.
(i) The Servicer has notified (or has caused the Originators to
notify) the Obligor on each Receivable (or the Obligors are otherwise
contractually required to) to make payments on such Receivable to either one of
the Lockboxes or one of the Deposit Accounts.
(j) Each Report (delivered by the Servicer), and all written
information, exhibits, financial statements, documents, books, records and
reports furnished or to be furnished at any time by or on behalf of the Servicer
to the Program Agent or the Lenders in connection
HL RECEIVABLES FINANCING AGREEMENT
41
with and before or after the date of this Agreement are or will be accurate in
all material respects as of the date so furnished (or, if applicable, as of a
date certain specified in such report), and no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
(k) The Servicer Fee will compensate the Servicer for (i) performing
the functions of a servicer, administrator and collector of the Transferred
Assets as an agent for the Borrower and the Program Agent, including billing,
collecting and posting all payments, responding to inquiries of Obligors and
investigating delinquencies and (ii) its services as the administrator of the
Transferred Assets, including accounting for Collections and the furnishing,
periodically of the Reports to the Program Agent. The Servicer Fee will also
reimburse the Servicer for certain taxes, accounting fees, data-processing costs
and other costs associated with administering the Transferred Assets.
(l) The servicer arrangements set forth herein were arrived at as a
result of arm's-length negotiations and are typical of servicer arrangements
made for servicing, administering and collecting assets such as the Receivables
in transactions of this type.
(m) Anti-Terrorism Laws and Anti-Money Laundering Laws. The Servicer
is not and no Person who owns a controlling interest in or otherwise controls
the Servicer is or shall be, (i) listed on the Specially Designated Nationals
and Blocked Persons List maintained by the OFAC, Department of the Treasury,
and/or on any List maintained by the OFAC pursuant to any OFAC Laws and
Regulations; or (ii) a Designated Person. The Servicer is not (x) a Person or
entity with which any Lender is prohibited from dealing or otherwise engaging in
any transaction by any Anti-Terrorism Law or (y) a Person or entity that
commits, threatens or conspires to commit or supports "terrorism" as defined in
the Executive Orders or (z) is affiliated or associated with a Person or entity
listed in the preceding clause (x) or clause (y). None of the Servicer, its
Affiliates, brokers or other agents acting in any capacity in connection with
the transactions contemplated hereunder (I) deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked
pursuant to the Executive Orders or (II) engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
(n) No Violation of Anti-Money Laundering Laws. Neither the Servicer
nor any holder of a direct or indirect interest in the Borrower (i) is under
investigation by any governmental authority for, or has been charged with, or
convicted of, money laundering under 18 U.S.C. Sections 1956 and 1957, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (ii) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (iii) has had any of its funds seized
or forfeited in an action under any Anti-Money Laundering Laws.
HL RECEIVABLES FINANCING AGREEMENT
42
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Borrower. Until the later of the
Commitment Termination Date and the date on which all Obligations shall be paid
in full:
(a) Compliance with Laws, Etc. The Borrower will comply in all
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges.
(b) Offices, Records, Name and Organization. The Borrower will keep
its principal place of business and chief executive office and the office where
it keeps its records concerning the Transferred Assets at the address of the
Borrower set forth on Schedule 1.01-4 hereto or, upon 30 days' prior written
notice to the Program Agent, at any other locations within the United States.
The Borrower will not change its name or its jurisdiction of organization,
unless (i) the Borrower shall have provided the Program Agent with at least 30
days' prior written notice thereof and (ii) no later than the effective date of
such change, all actions reasonably requested by the Program Agent to protect
and perfect the security interest in the Collateral have been taken and
completed. The Borrower also will maintain and implement (or cause the Servicer
to maintain or implement) administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Transferred Assets
in the event of the destruction of the originals thereof), and keep and maintain
(or cause the Servicer to maintain or implement) all documents, books, records
and other information reasonably necessary or advisable for the collection of
all Receivables (including, without limitation, records adequate to permit the
daily identification of each Receivable and all Collections of and adjustments
to each existing Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Borrower will, at its expense, timely and fully perform
and comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Transferred Assets and timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contract.
(d) Sales, Liens, Etc. Except for the security interest created
hereunder in favor of the Program Agent, the Borrower will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or with respect to any Collateral or assign any
right to receive income in respect thereof.
(e) Extension or Amendment of Receivables. Except as provided in
Section 6.02(c), the Borrower will not (and will not permit the Servicer or any
Originator to) extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. The Borrower
will not make any change (i) in the character of its business or (ii) in the
Credit and Collection Policy that would impair the collectibility of the
Receivables.
HL RECEIVABLES FINANCING AGREEMENT
43
(g) Change in Payment Instructions to Obligors. The Borrower will
not add or terminate any bank, post office box or bank account as a Deposit
Bank, Lockbox, Deposit Account, Borrower's Account or any other deposit account,
respectively, from those listed in Schedule 4.01(k) to this Agreement, or make
any change in its instructions to Obligors regarding payments to be made to the
Borrower or payments to be made to any such account or box, unless the Program
Agent shall have received notice of such addition, termination or change
(including an updated Schedule 4.01(k)) and a fully executed Deposit Account
Agreement or Account Control Agreement with each new Deposit Bank, or, as the
case may be, with respect to each new Lockbox, Deposit Account, Borrower's
Account or other deposit account. The Borrower shall maintain each Deposit
Account and Lockbox with documentation and instructions in form and substance
satisfactory to the Program Agent.
(h) Deposits to Lockboxes and Deposit Accounts. The Borrower will
(or will cause the Servicer or the Originators to) instruct all Obligors to
remit all their payments in respect of Receivables to Deposit Accounts or
Lockboxes associated therewith. If the Borrower shall receive any Collections
directly, it shall immediately (and in any event within one Business Day)
deposit the same to a Deposit Account. The Borrower will not deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any
Lockbox or Deposit Account, cash or cash proceeds other than Collections of
Receivables. The Borrower will maintain in full force and effect a Deposit
Account Agreement with respect to all Lockboxes and Deposit Accounts and an
Account Control Agreement with respect to each of Borrower's other deposit
accounts. The name of the owner on the Deposit Accounts and the tax
identification number with respect thereto on the Deposit Bank's records shall
be ▇▇▇▇▇ Funding II, Inc. and the tax identification number of ▇▇▇▇▇ Funding II,
Inc., respectively.
(i) Reporting Requirements. The Borrower will provide to the Program
Agent (in multiple copies, if requested by the Program Agent) the following:
(i) as soon as available and in any event prior to the date on
which the Parent is required to file a form 10-Q pursuant to SOXA, financial
information regarding HLIOC and its Subsidiaries consisting of consolidated
unaudited balance sheets as of the close of such quarter and the related
statements of income and cash flow for such quarter and that portion of the
fiscal year ending as of the close of such quarter, certified by a Financial
Officer of HLIOC as fairly presenting the consolidated financial position of
HLIOC and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP
(subject to the absence of footnote disclosure and normal year-end audit
adjustments);
(ii) as soon as available and in any event prior to the date
on which the Parent is required to file a form 10-K pursuant to SOXA, financial
information regarding HLIOC and its Subsidiaries consisting of consolidated and
consolidating balance sheets of HLIOC and its Subsidiaries as of the end of such
year and related statements of income and cash flows of HLIOC and its
Subsidiaries for such fiscal year, all prepared in conformity with GAAP and
certified, in the case of the consolidated financial statements, without
qualification as to the scope of the audit or as to HLIOC being a going concern
by KPMG, LLP or other independent public accountants of recognized national
standing acceptable to the Program Agent, together with a report of such
accounting firm stating that (A) such financial statements fairly present the
HL RECEIVABLES FINANCING AGREEMENT
44
consolidated financial position of HLIOC and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the period
indicated in conformity with GAAP applied on a basis consistent with prior years
(except for changes which such accountants shall concur and that shall have been
disclosed in the notes to such financial statements and (B) the examination by
such accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards, and
accompanied by a certificate stating that in the course of the regular audit of
the business of HLIOC and its Subsidiaries such accounting firm has obtained no
knowledge that a "Default" or "Event of Default" (under and as defined in the
Credit Agreement) has occurred and is continuing, or, if in the opinion of such
accounting firm, a default or potential event of default under the Credit
Agreement has occurred and is continuing, a statement as to the nature thereof;
(iii) (A) as soon as available, and in any event within 90
days after the end of each fiscal year of the Borrower, a balance sheet of the
Borrower as of the end of such fiscal year and a statement of income and
retained earnings of the Borrower for such fiscal year, certified by a Financial
Officer of the Borrower, and (B) as soon as available and in any event within 45
days after the end of the first, second and third quarterly accounting periods
in each fiscal year of the Borrower, a balance sheet of the Borrower as of the
end of such fiscal quarter and a statement of income and retained earnings of
the Borrower for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, certified by a Financial Officer of the
Borrower;
(iv) as soon as possible and in any event within five Business
Days after the occurrence of each Event of Termination or Incipient Event of
Termination, in each case of which the Borrower has actual knowledge, a
statement of a Financial Officer of the Borrower setting forth details of such
Event of Termination or Incipient Event of Termination and the action that the
Borrower has taken and proposes to take with respect thereto;
(v) promptly after the sending or filing thereof, copies of
all reports that the Parent sends to any of its security holders, and copies of
all reports and registration statements that the Parent or any of its
Subsidiaries files with the SEC or any national securities exchange;
(vi) promptly after the filing or receiving thereof, copies of
all reports and notices that the Parent or any ERISA Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or that the Parent or any ERISA Affiliate receives
from any of the foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Parent or any ERISA Affiliate is or
was, within the preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event or condition which
could, in the aggregate, result in the imposition of liability on the Parent
and/or any such ERISA Affiliate in excess of $1,000,000;
(vii) at least 30 days prior to any change in the name or
jurisdiction of organization of the Parent, any Originator, SPE I or the
Borrower, a notice setting forth the new name or jurisdiction of organization
and the effective date thereof;
HL RECEIVABLES FINANCING AGREEMENT
45
(viii) promptly after the Borrower obtains knowledge thereof,
notice of any "Event of Termination", "Incipient Event of Termination" or
"Facility Termination Date" (each as defined in and under any Purchase
Agreement);
(ix) so long as any Principal shall be outstanding, as soon as
possible and in any event no later than the day of occurrence thereof, notice
that any Originator has stopped selling to SPE I, pursuant to the Originator
Purchase Agreement, all newly arising or acquired Receivables; and notice that
SPE I has stopped selling or contributing Receivables pursuant to the Secondary
Purchase Agreement;
(x) at the time of the delivery of the financial statements
provided for in clauses (i), (ii) and (iii) of this paragraph, a certificate of
a Financial Officer of the Borrower to the effect that, to the best of such
officer's knowledge, no Incipient Event of Termination or Event of Termination
has occurred and is continuing or, if any Incipient Event of Termination or
Event of Termination has occurred and is continuing, specifying the nature and
extent thereof;
(xi) promptly after receipt thereof, copies of all notices
received by the Borrower from any Person under or with respect to any Purchase
Agreement or other Transaction Document; and
(xii) such other information respecting the Collateral or the
condition or operations, financial or otherwise, of the Borrower, the Parent,
HLIOC, SPE I, HL Funding I, LLC, HL Funding II, Inc. or any Originator as the
Program Agent may from time to time reasonably request, to the extent such
disclosure is permitted under applicable law, rule or regulation.
Reports and financial statements required to be delivered pursuant
to clauses (i), (ii) and (v) of this Section 5.01(i) shall be deemed to have
been delivered on the date on which the Parent posts such reports, or reports
containing such financial statements, on the Parent's website on the Internet at
▇▇▇▇://▇▇▇.▇▇▇▇▇-▇▇▇▇▇▇▇.▇▇▇ or when such reports, or reports containing such
financial statements, are posted on the SEC's website at ▇▇▇.▇▇▇.▇▇▇; provided
that the Parent shall deliver paper copies of the reports and financial
statements referred to in clauses (i), (ii) and (v) of this Section 5.01(i) to
the Program Agent or Lender who requests the Parent to deliver such paper copies
until written notice to cease delivering paper copies is given by the Program
Agent or Lender, as applicable.
(j) Separateness.
(i) The Borrower shall maintain at least one Independent
Director on its board of directors at all times.
(ii) The Borrower shall not direct or participate in the
management of any of the Other Companies' operations or of any other Person's
operations.
(iii) The Borrower shall conduct its business from an office
separate from that of the Other Companies and any other Person (but which may be
located in the same facility as one or more of the Other Companies). The
Borrower shall have stationery and other
HL RECEIVABLES FINANCING AGREEMENT
46
business forms and a mailing address and a telephone number separate from that
of the Other Companies and any other Person.
(iv) The Borrower shall at all times be adequately capitalized
in light of its contemplated business.
(v) The Borrower shall at all times provide for its own
operating expenses and liabilities from its
own funds.
(vi) The Borrower shall maintain its assets and transactions
separately from those of the Other Companies and any other Person and reflect
such assets and transactions in financial statements separate and distinct from
those of the Other Companies and any other Person and evidence such assets and
transactions by appropriate entries in books and records separate and distinct
from those of the Other Companies and any other Person. The Borrower shall hold
itself out to the public under the Borrower's own name as a legal entity
separate and distinct from the Other Companies. The Borrower shall not hold
itself out as having agreed to pay, or as being liable, primarily or
secondarily, for, any obligations of the Other Companies or any other Person.
(vii) The Borrower shall not maintain any joint account with
any Other Company or any other Person or become liable as a guarantor or
otherwise with respect to any Debt or contractual obligation of any Other
Company or any other Person.
(viii) The Borrower shall not make any payment or distribution
of assets with respect to any obligation of any Other Company or any other
Person or grant an Adverse Claim on any of its assets to secure any obligation
of any Other Company or any other Person.
(ix) The Borrower shall not make loans, advances or otherwise
extend credit to any of the Other Companies.
(x) The Borrower shall comply in all respects with its Charter
Documents and resolutions.
(xi) The Borrower shall not engage in any transaction with any
of the Other Companies, except as permitted by this Agreement and the other
Transaction Documents.
(k) Secondary Purchase Agreement. The Borrower will not amend, waive
or modify any provision of the Secondary Purchase Agreement or waive the
occurrence of any "Event of Termination" under the Secondary Purchase Agreement,
without in each case the prior written consent of the Program Agent. The
Borrower will perform all of its obligations under the Secondary Purchase
Agreement in all respects and will enforce the Secondary Purchase Agreement in
accordance with its terms.
(l) Nature of Business. The Borrower will not engage in any business
other than the purchase or acquisition of Transferred Assets from SPE I and the
transactions contemplated by this Agreement. The Borrower will not create or
form any Subsidiary.
HL RECEIVABLES FINANCING AGREEMENT
47
(m) Mergers, Etc. The Borrower will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), any of its assets
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets or capital stock or other ownership interest of, or enter into
any joint venture or partnership agreement with, any Person.
(n) Distributions, Etc. The Borrower will not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any of its Stock, or return any capital
to its shareholders as such, or purchase, retire, defease, redeem or otherwise
acquire for value or make any payment in respect of any Stock of the Borrower or
any warrants, rights or options to acquire any such Stock, now or hereafter
outstanding; provided, however, that the Borrower may declare and pay cash
dividends on its Stock to its shareholders so long as (i) no Event of
Termination or Incipient Event of Termination shall then exist or would occur as
a result thereof, (ii) such dividends are in compliance with all applicable law
including the laws of the State of Delaware, (iii) such dividends have been
approved by all necessary and appropriate corporate action of the Borrower, and
(iv) there are no amounts owing by the Borrower under the Subordinated Note (as
such term is defined in the Secondary Purchase Agreement). The Borrower will not
make or suffer to exist any loans or advances to, or extend any credit to, or
make any investments (by way of transfer of property, contributions to capital,
purchase of stock or securities or evidences of indebtedness, acquisition of the
business or assets, or otherwise) in, any Affiliate or any other Person except
for the purchase and receipt of capital contributions of Transferred Assets
pursuant to the terms of the Secondary Purchase Agreement.
(o) Debt. The Borrower will not incur any Debt, other than any Debt
incurred pursuant to this Agreement and the "Subordinated Loans" (as defined in
the Secondary Purchase Agreement).
(p) Charter Documents. The Borrower will not amend or delete or
modify its Charter Documents without the prior written consent of the Program
Agent.
(q) Chattel Paper. The Borrower will (i) ▇▇▇▇ the original copy of
all chattel paper that constituting Transferred Assets with a legend identifying
that a security interest therein has been granted to the Program Agent, (ii)
take all steps necessary to grant the Program Agent control of all electronic
chattel paper in accordance with the UCC, and (iii) hold in trust and safely
keep all chattel paper constituting Transferred Assets in separate filing
cabinets or other suitable containers at the location identified on Schedule
1.01-4 as the location at which such chattel paper is held or, if an Event of
Termination or Incipient Event of Termination shall have occurred and be
continuing, at such other locations as the Program Agent may specify.
SECTION 5.02. Covenant of the Borrower and the Servicer. Until the
latest of the Commitment Termination Date or the date on which no Obligations
shall be outstanding or the date all other amounts owed by the Borrower
hereunder to the Lenders or the Program Agent are paid in full, each of the
Borrower and the Servicer:
(a) Auditing. Will, at their respective expense, from time to time
during regular business hours as requested by the Program Agent permit the
Program Agent or their
HL RECEIVABLES FINANCING AGREEMENT
48
respective agents or representatives (including independent public accountants
or consultants, which may be the Borrower's or the Parent's independent public
accountants), (i) to conduct audits of the Collateral and the related books and
records and collections systems of the Borrower, the Servicer or any Originator,
as the case may be, (ii) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of the Borrower or the Servicer
relating to Collateral, and (iii) to visit the offices and properties of the
Borrower or the Servicer for the purpose of examining such materials described
in clause (ii) above, and to discuss matters relating to the Collateral or the
Borrower's, the Servicer's or any Originator's performance under the Transaction
Documents or under the Contracts with any of the officers or employees of the
Borrower or the Servicer having knowledge of such matters. In addition, the
Program Agent may appoint independent public accountants or other Persons
acceptable to the Program Agent (which shall not be the Parent's or the
Borrower's independent public accountants who perform regular financial
statement audits for the Parent and its Subsidiaries), to prepare and deliver to
the Program Agent a written report with respect to the Transferred Assets and
the Credit and Collection Policy (including, in each case, the systems,
procedures and records relating thereto) on a scope and in a form reasonably
requested by the Program Agent, and the Borrower shall reimburse the Program
Agent for all reasonable costs and reasonable expense incurred in connection
with this Section 5.02(a); provided, that so long as no Event of Termination
Event has occurred or is continuing, Borrower's reimbursement obligations
hereunder shall be limited to four such audits per calendar year (but without
such limitation for follow-up audits if an audit deficiency is described during
any such audit or follow-up audit).
(b) Anti-Terrorism and Anti-Money Laundering Law Notices. Shall
immediately notify the Program Agent if such Person obtains knowledge that any
holder of a direct or indirect interest in the Borrower or the Servicer, or any
director, manager or officer of any of such holder, (a) has been listed on any
of the Lists, (b) has become a Designated Person, (c) is under investigation by
any governmental authority for, or has been charged with or convicted of, money
laundering drug trafficking, terrorist-related activities or other money
laundering predicate crimes, or any violation of the BSA, (d) has been assessed
civil penalties under any Anti-Money Laundering Laws, or (e) has had funds
seized or forfeited in an action under any Anti-Money Laundering Laws.
ARTICLE VI
ADMINISTRATION AND COLLECTION
OF RECEIVABLES
SECTION 6.01. Designation of Servicer.
(a) The servicing, administration and collection of the Receivables
shall be conducted by the Servicer so designated hereunder from time to time.
Until the Program Agent gives notice to the Borrower of the designation of a new
Servicer in accordance with the terms hereof, HLIOC is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant to
the terms hereof. At any time after the occurrence and during the
HL RECEIVABLES FINANCING AGREEMENT
49
continuance of a Servicer Default, the Program Agent may and, at the request of
the Required Lenders, the Program Agent shall designate as Servicer any Person
(including itself) to succeed the Parent or any successor Servicer, if such
Person shall consent and agree to the terms hereof. The Servicer may, with the
prior consent of the Program Agent and each Lender, subcontract with any other
Person (except that in the case of an Originator no such consent is required)
for the servicing, administration or collection of the Receivables. Any such
subcontract shall not affect the Servicer's liability for performance of its
duties and obligations pursuant to the terms hereof, and shall automatically
terminate upon designation of a successor Servicer. The Lenders and the Program
Agent shall not be deemed parties to such subcontract and shall have no
liabilities, obligations or duties with respect to such subcontractor.
(b) HLIOC in its capacity as the Servicer shall not resign from the
obligations and duties hereby imposed on it except upon the reasonable
determination by the Servicer that the performance of its duties hereunder is no
longer permissible under applicable law and there is no reasonable action which
HLIOC could take to make the performance of its duties hereunder permissible
under applicable law. In any case, HLIOC agrees that, upon its resignation or
replacement as Servicer pursuant hereto, it will cooperate with the Program
Agent and the successor Servicer in effecting the termination of its
responsibilities and rights as Servicer hereunder, including, without
limitation: (i) assisting the successor Servicer in enforcing all rights under
the Collateral, (ii) transferring, promptly upon receipt, to the successor
Servicer any Collections or other amounts related to the Receivables, (iii)
transferring to the successor Servicer all books and records held by or under
the control of HLIOC, (iv) permitting the successor Servicer to have reasonable
access to all tapes, discs, diskettes and related property containing
information concerning the Collateral, and (v) in the Program Agent's
discretion, either continuing to use at the direction of the successor Servicer,
or taking all actions reasonably necessary to obtain a sublicense for a
successor Servicer to use, all computer software and hardware that may
facilitate the Servicer's access to and use of such information. Upon the
resignation or replacement of HLIOC as Servicer, HLIOC shall no longer be
entitled to the Servicer Fee accruing from and after the effective date of such
resignation or replacement.
SECTION 6.02. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Receivable from time to time, all
in accordance in all respects with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and Collection
Policy. The Borrower, the Program Agent and the Lenders hereby appoint the
Servicer, from time to time designated pursuant to Section 6.01, as agent for
themselves, to enforce their respective rights and interests in the Transferred
Assets. In performing its duties as Servicer, the Servicer shall exercise the
same care and apply the same policies as it would exercise and apply if it owned
such Transferred Assets and shall act in the best interests of the Borrower, the
Lenders and the Program Agent.
(b) The Servicer shall administer the Collections in accordance with
the procedures described in Section 2.03.
(c) If no Event of Termination or Incipient Event of Termination
shall have occurred and be continuing, HLIOC, while it is the Servicer, may, in
accordance with the Credit
HL RECEIVABLES FINANCING AGREEMENT
50
and Collection Policy, extend the maturity or adjust the Outstanding Balance of
any Receivable as it deems appropriate to maximize Collections thereof, or
otherwise amend or modify other terms of any Receivable, provided that the
classification of any such Receivable as a Delinquent Receivable or Defaulted
Receivable hereunder shall not be affected by any such extension.
(d) The Servicer shall hold in trust for the Borrower and each
Lender, in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Transferred Assets. The Servicer shall ▇▇▇▇ each
Originator's master data processing records evidencing the Transferred Assets
with a legend, acceptable to the Program Agent, evidencing that such Transferred
Assets have been sold to the Borrower; such an acceptable legend would be "This
writing and the obligations evidenced hereby have been sold to ▇▇▇▇▇ Funding II,
Inc. and ▇▇▇▇▇ Funding II, Inc. has pledged its interest therein to Citicorp
USA, Inc. ("CUSA"), in its capacity as program agent, and any pledge, assignment
or other transfer hereof or of an interest herein would be a violation of CUSA's
rights."
(e) The Servicer shall, as soon as practicable following receipt,
turn over to the Person entitled thereto any cash collections or other cash
proceeds received that are not Collections of the Receivables or proceeds of the
Collateral.
(f) The Servicer shall, from time to time at the request of the
Program Agent and furnish to the Program Agent (promptly after any such request)
a calculation of the amounts set aside for the Lenders pursuant to Section 2.03.
(g) The Servicer shall prepare and provide to the Program Agent:
(i) on each Business Day during a Daily Reporting Period, by
no later than 1:00 P.M. (New York City time), a Daily Report as of the prior
Business Day;
(ii) on the first Business Day of each calendar week, by no
later than 1:00 P.M. (New York City time), a Weekly Report as of the last day of
the immediately preceding week;
(iii) no later than 3:00 P.M. (New York City time) on each
Determination Date, a Borrower Report relating to the Receivables outstanding on
the last day of the immediately preceding Month; and
(iv) any other reports reasonably requested by Program Agent
upon ten Business Days' prior written notice to the Servicer.
The Servicer shall transmit Borrower Reports, the Weekly Reports and
the Daily Reports, to the Program Agent concurrently by facsimile and by
electronic mail (each an "E-Mail Report"). Each E-Mail Report shall be (A)
formatted as the Program Agent may designate from time to time and shall be
digitally signed and (B) sent to the Program Agent at an electronic mail address
designated by the Program Agent. Notwithstanding anything herein to the
contrary, the Servicer shall not be required to deliver any Report prior to the
making of the Initial Advance.
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SECTION 6.03. Certain Rights of the Program Agent.
(a) At any time after the occurrence and during the continuance of
an Event of Termination:
(i) the Program Agent may and, at the direction of the
Required Lenders, the Program Agent shall notify the Obligors of
Receivables, at any time and at the Borrower's expense, of the
security interest granted under this Agreement and the transactions
pursuant to the Purchase Agreements;
(ii) at the Borrower's expense, the Program Agent may, and, at
the direction of the Required Lenders, the Program Agent shall to
the extent permitted under applicable law, direct the Obligors of
Receivables that all payments thereunder be made directly to the
Program Agent or its designee; and
(iii) at the Program Agent's or the Required Lenders' request
and at the Borrower's expense, the Borrower shall notify each
Obligor of Receivables of the security interest in the Receivables
granted under this Agreement and the transactions pursuant to the
Purchase Agreements, and direct that payments be made directly to
the Program Agent or its designee.
(b) At any time after the occurrence and during the continuation of
an Incipient Event of Termination or Event of Termination:
(i) at the Program Agent's request and at the Borrower's
expense, the Borrower and the Servicer shall (A) assemble all of the
documents, instruments and other records (including, without
limitation, computer tapes and disks) that evidence or relate to the
Collateral , or that are otherwise necessary or desirable to collect
the Receivables, and shall make the same available to the Program
Agent at a place selected by the Program Agent or its designee, and
(B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections of Receivables in a
manner acceptable to the Program Agent and, promptly upon receipt,
remit all such cash, checks and instruments, duly indorsed or with
duly executed instruments of transfer, to the Program Agent or its
designee; and
(ii) the Borrower authorizes the Program Agent to take any and
all steps in the Borrower's name and on behalf of the Borrower
(other than as set forth in Section 6.03(a)) that are necessary or
desirable, in the determination of the Program Agent, to collect
amounts due under the Receivables, including, without limitation,
(i) endorsing the Borrower's name on checks and other instruments
representing Collections of Receivables and enforcing the Borrower's
rights under the other Collateral, (ii) paying or discharging any
taxes or Adverse Claims levied or placed on or threatened against
any of the Collateral, (iii) defending any suit, action or
proceeding with respect to the Collateral if the Borrower does not
defend such, suit action or proceeding brought against it or any
Collateral or if the Program Agent believes that the Borrower is not
pursuing such
HL RECEIVABLES FINANCING AGREEMENT
52
defense in a manner which will maximize the recovery to the
Beneficiaries, (iv) settling, compromising or adjusting any suit,
action or proceeding described above and, in connection therewith
and giving such discharges or releases as the Program Agent may deem
appropriate and (v) filing or prosecuting any claims in any court of
competent jurisdiction or before any arbitrator, or take any other
action otherwise deemed appropriate by the Program Agent for the
purpose of collecting on the Collateral any and all moneys due
hereunder and the other Transaction Documents and to enforce any
other right hereunder.
SECTION 6.04. Rights and Remedies.
(a) If the Servicer fails to perform any of its obligations under
this Agreement, the Program Agent may (but shall not be required to) itself
perform, or cause performance of, such obligation; and the Program Agent's costs
and expenses incurred in connection therewith shall be payable by the Servicer.
(b) The Borrower shall perform its obligations under the Contracts
related to the Receivables and the exercise by the Program Agent on behalf of
the Lenders of their rights under this Agreement shall not release the
Originators, the Servicer or the Borrower from any of their duties or
obligations with respect to any Receivables or related Contracts. Neither the
Program Agent, nor the Lenders shall have any obligation or liability with
respect to any Receivables or related Contracts, nor shall any of them or the
Borrower be obligated to perform the obligations of the Originators thereunder.
(c) In the event of any conflict between the provisions of Article
VI of this Agreement and Article VI of any Purchase Agreement, the provisions of
Article VI of this Agreement shall control.
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SECTION 6.05. Further Assurances. The Borrower agrees from time to
time, at its expense, to promptly execute and deliver all further instruments
and documents, and to take all further actions, that may be reasonably necessary
or desirable, or that the Program Agent may reasonably request, to perfect,
protect or more fully evidence the security interest granted hereunder, or to
enable the Lenders or the Program Agent to exercise and enforce their respective
rights and remedies hereunder and under the other Transaction Documents. Without
limiting the foregoing, the Borrower and each Originator hereby authorizes the
filing of any financing statements or continuation statements, and amendments to
financing statements, in any jurisdictions as the Program Agent may reasonably
determine are necessary to perfect the security interest granted to the Program
Agent pursuant to Section 2.09 hereof or the interests assigned pursuant to the
Purchase Agreements. Such financing statements filed against the Borrower may
describe the Collateral in the same manner specified in Section 2.09 hereof or
in any other manner as the Program Agent may reasonably determine is necessary
to ensure the perfection of such security interest, including, without
limitation, describing such property as all assets or all personal property of
the Borrower whether now owned or hereafter acquired.
SECTION 6.06. Covenants of the Servicer. Until the later of the
Commitment Termination Date and the date on which all Obligations shall be paid
in full, unless the Program Agent shall otherwise consent, the Servicer:
(a) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.02(c), will not extend, amend, waive or otherwise modify,
the terms of any Receivable.
(b) Change in Business or Credit and Collection Policy. Will not
make any change in the character of its business or make any change in the
Credit and Collection Policy that would impair the collectibility of the
Receivables. In the event that the Servicer or any Originator makes any change
to the Credit and Collection Policy, it shall, contemporaneously with such
change, provide the Program Agent with an updated Credit and Collection Policy
and a summary of all changes.
(c) Change in Payment Instructions to Obligors. Will not add or
terminate any bank, post office box or bank account as a Deposit Bank, Lockbox
or Deposit Account from those listed in Schedule 4.01(k) to this Agreement, or
make any change in its instructions to Obligors regarding payments to be made to
the Borrower or payments to be made to any such box or account, unless the
Program Agent shall have received notice of such addition, termination or change
(including an updated Schedule 4.01(k)) and a fully executed Deposit Account
Agreement with each new Deposit Bank or Account Lender or with respect to each
new such box or account.
(d) Deposits to Lockboxes and Deposit Accounts. Will (or will cause
the Borrower or the Originators to) (i) instruct all Obligors to remit all their
payments in respect of Receivables to Deposit Accounts or Lockboxes associated
therewith, and (ii) use ongoing commercially reasonable efforts to obtain
compliance with such instructions from those Obligors who have failed to so
comply. If the Servicer shall receive any Collections directly, it shall
immediately (and in any event within one Business Day) deposit the same to a
Deposit Account. The Servicer will not deposit or otherwise credit, or cause or
permit to be so deposited or
54
HL RECEIVABLES FINANCING AGREEMENT
credited, to any Lockbox or Deposit Account cash proceeds other than Collections
of Receivables.
(e) Maintenance of Records. Will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables and related Contracts in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
SECTION 6.07. Indemnities by the Servicer. Without limiting any
other rights that the Program Agent, the Lenders or any of their respective
Affiliates or members or any of their respective officers, directors, employees
or advisors (each, an "Indemnified Party") may have hereunder or under
applicable law (including, without limitation, the right to recover damages for
breach of contract), and in consideration of its appointment as Servicer, the
Servicer hereby agrees to indemnify each Indemnified Party from and against any
and all claims, losses, liabilities, damages and related costs and expenses
(including reasonable attorneys' fees and disbursements) (all of the foregoing
being collectively referred to as "Indemnified Amounts") arising out of or
resulting from any of the following (excluding, however, all claims, losses,
liabilities, damages and related costs and expenses arising (1) solely from a
breach of such Indemnified Party's obligations hereunder, as determined by a
final, nonappealable judgment of a court of competent jurisdiction, or (2) from
recourse for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy or financial inability to pay of the
applicable Obligor):
(i) any representation made or deemed made by the Servicer
pursuant to Section 4.02(g) hereof which shall have been incorrect in any
respect when made or deemed made or any other representation or warranty or
statement made or deemed made by the Servicer under or in connection with this
Agreement which shall have been false or incorrect in any respect when made or
deemed made;
(ii) the failure by the Servicer to comply with any applicable
law, rule or regulation with respect to any Transferred Asset; or the failure of
any Transferred Asset to conform to any such applicable law, rule or regulation;
(iii) any failure of the Servicer to perform its duties or
obligations in accordance with the provisions of this Agreement or otherwise
comply with any term, provision or covenant contained in this Agreement or any
Transaction Document to which it is a party;
(iv) the commingling of Collections of Receivables (or any
other Related Security) at any time by the Servicer with other funds;
(v) any Servicer Fees or other costs and expenses payable to
any replacement Servicer, to the extent in excess of the Servicer Fees payable
to the Servicer hereunder;
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(vi) any act or omission by the Servicer which reduces or
impairs the rights of the Program Agent or any Lender with respect to any
Collateral; or
(vii) any claim brought by any Person other than an
Indemnified Party arising from any activity by the Servicer or its Affiliates in
servicing, administering or collecting any Transferred Assets.
Any amounts subject to the indemnification provisions of this Section 6.07 shall
be paid by the Servicer to the related Indemnified Party within five (5)
Business Days following demand therefor accompanied by reasonable supporting
documentation with respect to such amounts. Notwithstanding anything to the
contrary in this Agreement, solely for purposes of this Section 6.07, any
representation, warranty or covenant qualified by materiality or the occurrence
of a Material Adverse Effect shall not be so qualified.
SECTION 6.08. Establishment of Deposit Accounts.
(a) Deposit Accounts. On or prior to the date of this Agreement, the
Servicer for the benefit of the Beneficiaries, shall establish and maintain or
cause to be established and maintained in the name of the Borrower (i) Lockboxes
to which Obligors will remit payments with respect to Receivables and (ii)
Deposit Accounts with an Eligible Institution. Obligors will be directed to
remit payments with respect to Receivables owing by them to a Lockbox or a
Deposit Account in accordance with the terms of Section 6.06(c). The Lockboxes
and Deposit Accounts shall be under the control of the Program Agent for the
benefit of the Beneficiaries, and on and after the Transfer Event Date, neither
the Borrower, the Servicer, the Parent nor any Person claiming by, through or
under the Borrower, the Servicer, or the Parent, shall have any right to
withdraw any amount from, any Lockbox or Deposit Account.
(b) No Changes to Lockboxes or Deposit Accounts. The Servicer will
not (i) make any change in any Lockbox numbers, the name, address or ABA number
of any Deposit Bank or Account Lender or the account number of any Deposit
Account from that set forth in Schedule 4.01(k) hereto or (ii) amend any
instruction to any Obligor or any instruction to or agreement with any Deposit
Bank or Account Lender with respect to any Lockbox or Deposit Account (other
than to (A) redirect payments of Obligors to a different Lockbox or Deposit
Account, (B) close unused Lockboxes and Deposit Accounts and (C) open new
Lockboxes and Deposit Accounts if the Program Agent shall have received executed
copies of the Deposit Account Agreements with each new Deposit Bank and an
updated Schedule 4.01(k)) unless the Program Agent shall have given its prior
consent to such change or amendment.
SECTION 6.09. Establishment of the Facility Account.
(a) The Borrower shall establish, with an Eligible Institution a
segregated non-interest bearing deposit account accessible only by the Program
Agent (the "Facility Account"), which shall be identified as the "Facility
Account for the ▇▇▇▇▇ Lemmerz Receivables Financing Agreement" and shall bear a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Beneficiaries. Except as specifically provided in Section 2.11
hereof and otherwise in this Agreement, the Program Agent agrees that it shall
have no right of set-off or banker's lien against and no right to otherwise
deduct from any funds held
HL RECEIVABLES FINANCING AGREEMENT
56
in the Facility Account for any amount owed to it by any Beneficiary, the
Borrower, SPE I, HL Funding I, LLC, HL Funding II, Inc.or any Originator. The
tax identification number associated with the Facility Account shall be that of
the Borrower.
(b) The Program Agent shall possess all right, title and interest in
and to all funds on deposit from time to time in, and all Eligible Investments
credited to, the Facility Account and in all proceeds thereof. The Facility
Account shall be under the sole dominion and control of the Program Agent for
the benefit of the Beneficiaries. If, at any time, the Facility Account is held
by an institution other than an Eligible Institution, the Program Agent (or the
Servicer, at the direction of the Program Agent and on its behalf) shall within
5 Business Days establish a new Facility Account meeting the conditions
specified in clause (a) above and shall transfer any cash and/or any investments
to such new Facility Account. Neither the Borrower, the Servicer nor any Person
or entity claiming by, through or under the Borrower, the Servicer or any such
Person or entity shall have any right, title or interest in, or any right to
withdraw any amount from, the Facility Account, except as expressly provided
herein. Schedule 6.09(b) identifies the Facility Account by setting forth the
identification name of such account, the account number of each such account,
the account designation of each such account and the name and location of the
institution with which such account has been established. If a substitute
Facility Account is established pursuant to this Section 6.09, the party
establishing such substitute Facility Account shall promptly provide to the
Servicer, an amended Schedule 6.09(b), setting forth the relevant information
for such substitute Facility Account.
(c) The Program Agent is hereby authorized, unless otherwise
directed by the Servicer, to effect transactions in Eligible Investments through
a capital markets Affiliate of the Program Agent, provided, that any transaction
through such an Affiliate will be on market terms comparable to those offered by
such Affiliate to non-Affiliates.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur and be continuing:
(a) The Servicer (i) shall fail to perform or observe any term,
covenant or agreement under this Agreement (other than as referred to in clause
(ii) or (iii) of this subsection (a)) and such failure, if capable of being
cured, shall remain unremedied for thirty (30) days, (ii) shall fail to make
when due any payment or deposit to be made by it under this Agreement and such
failure, in the case of payments on account of Yield or Fees only, shall remain
unremedied for three Business Days or (iii) shall fail to deliver any Report
when required and such failure shall remain unremedied for two Business Days
(provided, that the grace period in this clause (iii) may not be utilized more
than three times in any Month);
(b) The Borrower shall fail to make when due any payment or deposit
to be made by it under this Agreement (including the payment of any Deemed
Collections pursuant to Section 2.03(a)) and, in the case of payments on account
of Yield or Fees only, such failure shall remain unremedied for three Business
Days;
HL RECEIVABLES FINANCING AGREEMENT
57
(c) Any representation or warranty (unless such representation or
warranty relates solely to one or more specific Receivables inadvertently
incorrectly characterized as Eligible Receivables and either (i) immediately
following the removal of such Receivables from the Net Receivables Pool Balance
the Facility Principal is not greater than the Borrowing Base or (ii) the
Borrower shall have made any required payment of Deemed Collections in
accordance with Section 2.03(a) with respect to such Receivables) made or deemed
made by the Borrower, the Parent, any Originator, SPE I, HL Funding I, LLC or
the Servicer (or any of their respective officers) under or in connection with
this Agreement or any other Transaction Document or any information or report
delivered by the Borrower, the Parent, any Originator, SPE I, HL Funding I, LLC,
HL Funding II, Inc. or the Servicer pursuant to this Agreement or any other
Transaction Document shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered;
(d) The Borrower, SPE I, HL Funding I, LLC or any Originator shall
fail to perform or observe (i) any term, covenant or agreement contained in
Section 5.01(j) and (A) if such failure to perform or observe Section 5.01(j)
arises solely as a result of a breach of Section 5.01(j)(i) that was not caused
by an action of the Borrower or any Affiliate thereof (for example, the removal
or termination of the independent director), such failure shall remain
unremedied for 15 days or (B) if such failure to perform or observe Section
5.01(j) is the first, second or third failure to perform or observe Section
5.01(j) after the date hereof (other than any breach described in clause (i)(A)
above), such failure shall remain unremedied for 15 days, (ii) any term,
covenant or agreement contained in Sections 5.01(b), 5.01(d), 5.01(g), 5.01(h),
5.01(l), 5.01(m), 5.01(n), 5.01(o) or 5.01(p) or (iii) any other term, covenant
or agreement contained in this Agreement or any other Transaction Document
(other than as specified in clauses (a) through (c) above) on its part to be
performed or observed and any such failure shall remain unremedied for 30 days;
(e) The Borrower, the Parent, the Servicer, HLIOC, SPE I, HL Funding
I, LLC, HL Funding II, Inc. or any Originator shall fail to pay any principal of
or premium or interest on any of its Debt which is outstanding in a principal
amount of at least $10,000 in the aggregate in the case of the Borrower or SPE I
and $17,500,000 in the aggregate in the case of Parent, the Servicer, HLIOC, HL
Funding I, LLC, HL Funding II, Inc or any Originator when the same becomes due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof;
(f) The security interest created pursuant to Section 2.09 shall for
any reason cease to be a valid and perfected first priority security interest in
the Collateral, or there shall exist any Adverse Claims on the Collateral;
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58
(g) The Borrower, the Parent, the Servicer, HLIOC, SPE I, HL Funding
I, LLC, HL Funding II, Inc. or any Originator shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower, the
Parent, the Servicer, HLIOC, SPE I, HL Funding I, LLC or any Originator seeking
to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any proceeding or petition shall be instituted or
adopted for the winding up of the Borrower, HLIOC, HL Funding I, LLC, HL Funding
II, Inc. or SPE I (whether or not in the context of a bankruptcy or insolvency
proceeding); or the Borrower, the Parent, the Servicer, HLIOC, HL Funding I,
LLC, HL Funding II, Inc., SPE I or any Originator shall take any corporate or
other action to authorize any of the actions set forth above in this subsection
(g);
(h) The Facility Principal shall be greater than the Borrowing Base
upon the termination of the Cure Period;
(i) There shall have occurred any event which in the reasonable
discretion of the Program Agent may materially adversely affect (i) the
collectibility of the Receivables, (ii) the legality, validity or enforceability
of any Transaction Document, or (iii) the ability of the Borrower, the Parent,
any Originator or the Servicer to collect the Receivables or otherwise perform
its obligations under this Agreement and the other Transaction Documents;
(j) An "Event of Termination" or "Facility Termination Date" shall
occur under any Purchase Agreement, or any Purchase Agreement shall cease to be
in full force and effect;
(k) A Change in Control shall occur;
(l) One or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 (except to the extent covered by insurance as to
which the insurer has acknowledged such coverage in writing) shall be rendered
against (i) the Parent, any Originator or any of their respective Subsidiaries
(other than the Borrower, HL Funding I, LLC, HL Funding II, Inc. and SPE I) or
any combination thereof (other than the Borrower, HL Funding I, LLC and SPE I)
or (ii) the Servicer or any of its Subsidiaries (other than the Borrower, HL
Funding I, LLC, HL Funding II, Inc. and SPE I) or a combination thereof, and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be taken by a
judgment creditor to attach or levy upon any assets of the Parent, any
Originator, or the Servicer or any of their respective Subsidiaries (other than
the Borrower, HL Funding I, LLC, HL Funding II, Inc. and SPE I) to enforce any
such judgment;
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(m) One or more judgments for the payment of money shall be rendered
against the Borrower, HL Funding I, LLC, HL Funding II, Inc. or SPE I or any
action shall be taken by a judgment creditor to attach or levy upon any assets
of the Borrower, HL Funding I, LLC, HL Funding II, Inc. or SPE I;
(n) (i) The Parent or any ERISA Affiliate shall fail to pay when due
an amount or amounts aggregating in excess of $2,000,000 which it shall have
become liable to pay under Section 302 or Title IV of ERISA; or notice of intent
to terminate a Plan shall be filed under Title IV of ERISA by the Parent or any
ERISA Affiliate, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer, any Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause the Parent and/or one or more ERISA Affiliates to incur a current
payment obligation in excess of $2,000,000; or (ii) any other ERISA Event shall
have occurred that, in the opinion of the Program Agent, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent, the ERISA Affiliates and any Subsidiaries in
an aggregate amount exceeding $2,000,000;
(o) (i) The Parent shall fail to make any payment required by a
Parent Undertaking, (ii) the Parent shall fail to perform or observe any other
term, covenant or agreement contained in a Parent Undertaking and any such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to the Borrower by the Program Agent, or (iii) a Parent
Undertaking shall cease to be in full force and effect;
(p) A Servicer Default shall occur (other than a Servicer Default of
the type specified (i) in clause (c) of the definition thereof to the extent
that the failure to perform any term, covenant or agreement giving rise to such
Servicer Default remains unremedied for less than fifteen days or (ii) in clause
(f) of the definition thereof) or HLIOC shall resign or cease to perform as
Servicer hereunder other than as permitted pursuant to Section 6.02(b) or as a
result of termination or replacement by the Program Agent in accordance with
Article VI;
(q) The PBGC or the Internal Revenue Service shall, or shall
indicate its intention to, file notice of a lien pursuant to Section 4068 of
ERISA or Section 6320 of the Code with regard to the assets of the Parent, SPE
I, HL Funding I, LLC, HL Funding II, Inc., the Borrower or any Originator; or
(r) Any Transaction Document shall cease to be in full force and
effect, or the Borrower, any Originator, the Servicer, SPE I, HL Funding I, LLC,
HL Funding II, Inc. or the Parent shall attempt to terminate or assert the
invalidity or unenforceability of any Facility Document or any provision
thereof;
then, and in any such event, any or all of the following actions may be taken by
notice to the Borrower: (y) the Program Agent may in its discretion, and shall,
at the direction of the Required Lenders, declare the Commitment Termination
Date to have occurred (in which case the
HL RECEIVABLES FINANCING AGREEMENT
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Commitment Termination Date shall be deemed to have occurred), and (z) if such
event is a Servicer Default, and without limiting any other right under this
Agreement to replace the Servicer, the Program Agent may in its discretion, and
shall, at the direction of the Required Lenders, designate another Person to
succeed HLIOC as the Servicer; provided, that, automatically upon the occurrence
of any event (without any requirement for the passage of time or the giving of
notice) described in Section 7.01(g), the Commitment Termination Date shall
occur, HLIOC (if it is then serving as the Servicer) shall cease to be the
Servicer, and the Program Agent or its designee shall become the Servicer. Upon
any such declaration or designation or upon such automatic termination, the
Lenders and the Program Agent shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies provided
after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
Notwithstanding anything in the foregoing to the contrary, if any Event of
Termination set forth in Section 7.01(c), (d), (i) or (j) (with respect to the
Originator Purchase Agreement) shall have occurred and be continuing with
respect to any Originator (solely for the purposes of such determination, the
provisions of the Transaction Documents shall be construed as applying severally
to each Originator and not jointly), and if (1) such Originator is deemed a
"Defaulting Originator" in accordance with the Originator Purchase Agreement,
(2) the Program Agent shall have received written notice from such Originator of
its election to be treated as a "Defaulting Originator" hereunder within two
Business Days of the occurrence of such Event of Termination, (3) no other Event
of Termination shall have occurred and be continuing, and (4) the sum of (x) the
aggregate existing Defaulting Originator Percentages and (y) the Defaulting
Originator Percentage that would be applicable to such Originator if such
Originator were deemed a Defaulting Originator hereunder, would not exceed 15%,
then such Originator shall become a "Defaulting Originator" under the
Transaction Documents, and such Events of Termination as they relate to such
Defaulting Originator shall be deemed cured (and no longer applicable to such
Defaulting Originator) and the Commitment Termination Date may no longer be
declared solely as a result thereof.
From and after the earlier of (i) the date upon which HL Funding I, LLC and HL
Funding II, Inc. are dissolved and (ii) the date which the outstanding balance
of each of the Receivables transferred pursuant to the Receivables Purchase
Agreement is reduced to zero or is written off in a manner consistent with the
Credit and Collection Policy, each reference to HL Funding I, LLC and HL Funding
II, Inc. shall be deemed to be deleted from this Article VII without any action
by any Person.
ARTICLE VIII
THE PROGRAM AGENT
SECTION 8.01. Authorization and Action. Each Lender hereby appoints
and authorizes the Program Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Program Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. The Program Agent shall
not have any duties other than those expressly set forth in the Transaction
Documents, and no implied obligations or liabilities shall be read into
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any Transaction Document, or otherwise exist, against the Program Agent. The
Program Agent does not assume, nor shall it be deemed to have assumed, any
obligation to, or relationship of trust or agency with, the Borrower, SPE I, HL
Funding I, LLC, HL Funding II, Inc., the Parent, the Servicer or any Originator.
Notwithstanding any provision of this Agreement or any other Transaction
Document, in no event shall the Program Agent ever be required to take any
action which exposes the Program Agent to personal liability or which is
contrary to any provision of any Transaction Document or applicable law.
SECTION 8.02. Program Agent's Reliance, Etc. Neither the Program
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them as Program Agent under
or in connection with this Agreement (including, without limitation, the Program
Agent's servicing, administering or collecting Receivables as Servicer) or any
other Transaction Document, except for its or their own gross negligence or
willful misconduct as determined by a final, nonappealable judgment of a court
of competent jurisdiction. Without limiting the generality of the foregoing, the
Program Agent: (a) may consult with legal counsel (including counsel for the
Borrower, SPE I, HL Funding I, LLC, HL Funding II, Inc., the Parent, any
Originator and the Servicer), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to any Lender
(whether written or oral) and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement or any other Transaction Document; (c) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or any other
Transaction Document on the part of the Borrower, SPE I, HL Funding I, LLC, HL
Funding II, Inc., the Parent, any Originator or the Servicer or to inspect the
property (including the books and records) of the Borrower, SPE I, HL Funding I,
LLC, HL Funding II, Inc., the Parent, any Originator or the Servicer; (d) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Transaction Document or any other instrument or document furnished pursuant
hereto or thereto; and (e) shall incur no liability under or in respect of this
Agreement or any other Transaction Document by acting upon any notice (including
notice by telephone), consent, certificate or other instrument or writing (which
may be by telecopier or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 8.03. CUSA and Affiliates. The obligation of CUSA to make
Advances under this Agreement may be satisfied by any Affiliate of CUSA. With
respect to any Advance made by it, CUSA shall have the same rights and powers
under this Agreement as any Lender and may exercise the same as though it were
not the Program Agent. CUSA and any of its Affiliates may generally engage in
any kind of business with the Borrower, the Parent, any Originator, SPE I, HL
Funding I, LLC, HL Funding II, Inc., the Servicer or any Obligor, any of their
respective Affiliates and any Person who may do business with or own securities
of the Borrower, the Parent, any Originator, SPE I, HL Funding I, LLC, HL
Funding II, Inc., the Servicer or any Obligor or any of their respective
Affiliates, all as if CUSA were not the Program Agent and without any duty to
account therefor to any Beneficiary.
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SECTION 8.04. Indemnification of Program Agent. Each Lender agrees
to indemnify the Program Agent (to the extent not reimbursed by the Borrower,
the Parent or any Originator), ratably according to the respective Ratable
Shares of such Lender, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Program Agent in any way relating to or arising out
of this Agreement or any other Transaction Document or any action taken or
omitted by the Program Agent under this Agreement or any other Transaction
Document, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Program Agent's gross
negligence or willful misconduct as determined in a final, nonappealable
judgment of a court of competent jurisdiction.
SECTION 8.05. Delegation of Duties. The Program Agent may execute
any of its duties through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Program
Agent shall not be responsible for the negligence or misconduct of the Program
Agent or attorneys-in-fact selected by it with reasonable care.
SECTION 8.06. Action or Inaction by Program Agent. The Program Agent
shall in all cases be fully justified in failing or refusing to take action
under any Transaction Document unless it shall first receive such advice or
concurrence of the Lenders and assurance of its indemnification by the Lenders,
as it deems appropriate. The Program Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of any
Lender and such request or direction and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders and the Program Agent.
SECTION 8.07. Notice of Events of Termination. The Program Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Incipient Event of Termination or of any Event of Termination unless the Program
Agent has received written notice from any Lender, the Servicer, any Originator,
SPE I, HL Funding I, LLC, HL Funding II, Inc. or the Borrower stating that an
Incipient Event of Termination or Event of Termination has occurred hereunder
and describing such Incipient Event of Termination or Event of Termination. If
the Program Agent receives such a notice, it shall promptly give notice thereof
to each Lender. The Program Agent shall take such action concerning an Incipient
Event of Termination or an Event of Termination as may be directed by the
Required Lenders (subject to the other provisions of this Article VIII), but
until the Program Agent receives such directions, the Program Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
as the Program Agent deems advisable and in the best interests of the Lenders.
SECTION 8.08. Non-Reliance on Program Agent and Other Parties. Each
Lender expressly acknowledges that neither the Program Agent, any of its
Affiliates nor any of their respective, directors, officers, agents or employees
has made any representations or warranties to it and that no act by the Program
Agent hereafter taken, including any review of the affairs of the Borrower, the
Servicer, SPE I, HL Funding I, LLC, HL Funding II, Inc., the Parent or any
Originator, shall be deemed to constitute any representation or warranty by the
Program
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Agent. Each Lender represents and warrants to the Program Agent that,
independently and without reliance upon the Program Agent, any of its
Affiliates, or any other Lender and based on such documents and information as
it has deemed appropriate, it has made and will continue to make its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Borrower,
the Parent and the Originators, and the Advances and its own decision to enter
into this Agreement and to take, or omit, action under this Agreement or any
other Transaction Document. Except for items expressly required to be delivered
under this Agreement or any other Transaction Document by the Program Agent to
any Lender, the Program Agent shall not have any duty or responsibility to
provide any Lender with any information concerning the Borrower, the Servicer,
SPE I, HL Funding I, LLC, HL Funding II, Inc., the Parent or any Originator or
any of their Affiliates that comes into the possession of the Program Agent or
any of its directors, officers, agents, employees, attorneys-in-fact or
Affiliates.
SECTION 8.09. Successor Program Agents; Resignation of Program
Agents.
(a) Resignation. The Program Agent may resign from the performance
of its functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower and the Lenders.
(b) Appointment by Required Lenders. Upon any such notice of
resignation by the Program Agent, the Required Lenders shall have the right to
appoint a successor Program Agent selected from among the Lenders, which
appointment shall be subject to the prior written approval of Borrower (which
may not be unreasonably withheld, and shall not be required upon the occurrence
and during the continuance of an Event of Termination).
(c) Appointment by Retiring Program Agent. If a successor Program
Agent shall not have been appointed within the thirty (30) Business Day period
provided in paragraph (a) of this Section 8.09, the retiring Program Agent, with
the consent of Borrower (which may not be unreasonably withheld, and shall not
be required upon the occurrence and during the continuance of an Event of
Termination), shall then appoint a successor Program Agent who shall serve as
Program Agent until such time, if any, as the Required Lenders appoint a
successor Program Agent as provided above.
(d) Rights of the Successor and Retiring Program Agents. Upon the
acceptance of any appointment as Program Agent hereunder by a successor Program
Agent, such successor Program Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Program Agent
and the retiring Program Agent shall be discharged from its duties and
obligations hereunder thereafter to be performed. After the resignation of any
Program Agent hereunder, the provisions of this Article VIII shall inure to such
Persons' benefit as to any actions taken or omitted to be taken by it while it
was the Program Agent hereunder.
(e) Effectiveness of Resignation. The resignation of the Program
Agent shall be effective immediately upon the acceptance by a successor Program
Agent of appointment pursuant to this Section 8.09. However, if either (i) upon
the date of any resignation by the Program Agent determining, in its sole
discretion, that being such Program Agent poses a
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conflict of interest for such institution or (ii) otherwise within forty-five
(45) days after written notice is given of the retiring Program Agent's
resignation under this Section 8.09 no successor Program Agent shall have been
appointed and shall have accepted such appointment, then on (x) the circumstance
described in clause (i) above, the date of such resignation of, and (y)
otherwise such 45th day, (A) the retiring Program Agent's resignation shall
become effective, (B) the retiring Program Agent shall thereupon be discharged
from its duties and obligations under the Transaction Documents and (C) the
Required Lenders shall thereafter perform all duties of the retiring Program
Agent under the Transaction Documents until such time, if any, as the Required
Lenders appoint a successor Program Agent as provided above.
SECTION 8.10. Reports and Notices. The Program Agent hereby agrees
to provide each Lender with copies of all material notices, reports and other
documents provided to the Program Agent by the Borrower or the Servicer
hereunder which are not otherwise required to be provided by the Borrower or the
Servicer directly to the Lenders in accordance with the terms hereof.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Indemnities by the Borrower. Without limiting any
other rights that any Indemnified Party may have hereunder or under applicable
law (including, without limitation, the right to recover damages for breach of
contract), the Borrower hereby agrees to indemnify each Indemnified Party from
and against any and all Indemnified Amounts arising out of or resulting from
this Agreement or the other Transaction Documents or the use of proceeds of the
Advances or the security interest granted hereunder or in respect of any
Collateral, excluding, however, Indemnified Amounts to the extent found in a
final non-appealable judgment of a court of competent jurisdiction to have
resulted from (a) gross negligence or willful misconduct on the part of such
Indemnified Party, or (b) solely from a breach of such Indemnified Party's
obligations hereunder. Without limiting or being limited by the foregoing, the
Borrower shall pay on demand to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
(i) the characterization (A) in any Report, or (B) for the
purpose of inclusion of a Receivable in the Net Receivables Pool Balance in any
other written statement made by or on behalf of the Borrower to the Program
Agent, of any Receivable as an Eligible Receivable or as included in the Net
Receivables Pool Balance which, as of the date on which such information was
certified, is not an Eligible Receivable or should not be included in the Net
Receivables Pool Balance;
(ii) any representation or warranty or statement made or
deemed made by the Borrower (or any of its officers) under or in connection with
this Agreement or any of the other Transaction Documents which shall have been
incorrect in any respect when made or deemed made;
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(iii) the failure by the Borrower to comply with any
applicable law, rule or regulation with respect to any Receivable or Contract;
or the failure of any Receivable or Contract to conform to any such applicable
law, rule or regulation;
(iv) the failure to vest and maintain vested in the Program
Agent a first priority perfected security interest in the Collateral;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy or insolvency of the related Obligor) of an Obligor to
the payment of any Receivable (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the goods or services related to
such Receivable or the furnishing or failure to furnish such goods or services
(other than as a result of the bankruptcy or insolvency of the related Obligor)
or relating to collection activities with respect to such Receivable (if such
collection activities were performed by the Borrower acting as Servicer);
(vi) any failure of the Borrower to comply with any term,
provision or covenant contained in this Agreement or any other Transaction
Document to which it is a party, or to perform its duties or obligations under
the Contracts;
(vii) any products liability claim or personal injury or
property damage suit or other claim or suit arising out of or in connection with
goods or services which are the subject of any Receivable or Contract;
(viii) the commingling of Collections of Receivables at any
time with other funds;
(ix) any investigation, litigation or proceeding related to
this Agreement, any other Transaction Document or the use of proceeds of
Advances or in respect of any Receivable or any Collateral;
(x) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Borrower in servicing, administering or
collecting any Receivable;
(xi) the sale by any Originator to SPE I, the sale by SPE I to
the Borrower, the sale by HL Funding I, LLC to SPE I, the sale by HL Funding II,
Inc. to HL Funding I, Inc. or the purchase by the Borrower from SPE I of any
Receivable in violation of any applicable law, rule or regulation;
(xii) any Adverse Claim attaching to any Receivable or any
Collateral with respect thereto, except an Adverse Claim created under the
Transaction Documents;
(xiii) except to the extent such taxes constitute income taxes
incurred by such Indemnified Party arising out of or as a result of this
Agreement or the security interest in the Collateral, (A) the failure to pay
when due any and all stamp, sales, transfer, excise, personal property and other
taxes and fees payable by the Borrower or any Originator in connection with
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the Collateral or the execution, delivery, filing and recording of this
Agreement or the other agreements and documents to be delivered hereunder
(including any UCC financing statements) and (B) the payment by such Indemnified
Party of taxes, including, without limitation, any taxes imposed by any
jurisdiction on amounts payable and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, to the extent caused by
the Borrower's actions or failure to act in breach of this Agreement;
(xiv) any failure by the Borrower to give reasonably
equivalent value to SPE I in consideration for the transfer by SPE I to the
Borrower of any Transferred Assets, any failure by SPE I to give reasonably
equivalent value to HL Funding I, LLC in consideration for the transfer by HL
Funding I, LLC to SPE I of any Transferred Assets, any failure by the HL Funding
I, LLC to give reasonably equivalent value to HL Funding II LLC in consideration
for the transfer by HL Funding II, LLC to HL Funding I, LLC of any Transferred
Assets, any failure by SPE I to give reasonably equivalent value to Originators
in consideration for the transfer by Originators to SPE I of any Transferred
Assets, or any attempt by any Person to void any such transfers under any
statutory provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; and
(xv) the failure of any Lockbox processor or Deposit Bank to
remit any amounts or items of payment held in a Lockbox or Deposit Account
pursuant to the instructions of the Program Agent given in accordance with this
Agreement, the applicable Deposit Account Agreement or the other Transaction
Documents, whether by reason of the exercise of setoff rights or otherwise.
Any amounts subject to the indemnification provisions of this Section 9.01 shall
be paid by the Borrower to the related Indemnified Party within ten (10)
Business Days following demand therefor accompanied by reasonable supporting
documentation with respect to such amounts. Notwithstanding anything to the
contrary in this Agreement, solely for purposes of this Section 9.01, any
representation, warranty or covenant qualified by materiality or the occurrence
of a Material Adverse Effect shall not be so qualified.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments.
(a) General. Except to the extent otherwise set forth herein, no
amendment or waiver of any provision of this Agreement or consent to any
departure by the Borrower or HLIOC (as Servicer or otherwise) therefrom shall be
effective unless in a writing signed by the Required Lenders and the Program
Agent (and, in the case of any amendment, also signed by the Borrower and HLIOC)
and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that the signatures of the Borrower and HLIOC shall not be required for
the effectiveness of any amendment which modifies the representations,
warranties, covenants or responsibilities of the Servicer at any time when the
Servicer is not an Originator, the Parent or an Affiliate of such Originator or
the Parent or a successor Servicer is designated by the Program Agent pursuant
to
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Section 6.01; provided, further, however, that no amendment, waiver or
consent shall, unless in writing and signed by the Servicer in addition to the
Program Agent and the Required Lenders, affect the rights or duties of the
Servicer under this Agreement. No failure on the part of the Banks or the
Program Agent to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.
(b) Amendments, Consents and Waivers by all affected Lenders.
Notwithstanding the foregoing, any amendment, modification, termination, waiver
or consent with respect to any of the following provisions of this Agreement
shall be effective only by a written agreement, signed by each Lender affected
thereby:
(i) waiver of any of the conditions specified in Section 3.01 or
3.02 (except with respect to a condition based upon another provision in
this Agreement, the waiver of which requires only the concurrence of the
Required Lenders),
(ii) increase in the amount of any of the Commitments of such
Lender,
(iii) reduction of the principal of, rate or amount of Yield on
the Advances or any fees or other amounts payable to such Lender (other
than by the payment or prepayment thereof),
(iv) extension of the Commitment Termination Date or
postponement of any date on which any payment of principal of, or Yield
on, the Advances, any fees or other amounts payable to such Lender would
otherwise be due,
(v) change in the definitions of Commitment or Yield, and
(vi) the orders of priority set forth in Section 2.03.
(c) Amendments, Consents and Waivers by All Lenders. Any amendment,
modification, termination, waiver or consent with respect to any of the
following provisions of this Agreement shall be effective only by a written
agreement, signed by each Lender:
(i) release any substantial portion of the Collateral,
(ii) change in the (A) definition of Required Lenders or (B) the
aggregate Ratable Share of the Lenders which shall be required for the
Lenders or any of them to take action under this Agreement or the other
Transaction Documents,
(iii) amendment of Sections 2.10, 10.03, 10.04, this Section
10.01 or clause (i) of the definition of Borrowing Base, and
(iv) assignment of any right or interest in or under this
Agreement or any of the other Transaction Documents by Borrower.
(d) The Program Agent may, but shall have no obligation to, with the
written concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf
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of that Lender. Notwithstanding anything to the contrary contained in this
Section 10.01, no amendment, modification, waiver or consent shall affect the
rights or duties of the Program Agent hereunder or under the other Transaction
Documents, including this Article X, unless made in writing and signed by the
Program Agent in addition to the Lenders required above to take such action.
Notwithstanding anything herein to the contrary, in the event that Borrower
shall have requested, in writing, that any Lender agree to an amendment,
modification, waiver or consent with respect to any particular provision or
provisions hereof, and such Lender shall have failed to state, in writing, that
it either agrees or disagrees (in full or in part) with all such requests (it
being understood that any such statement of agreement may be subject to
satisfactory documentation and other conditions specified in such statement) on
or prior to date designated by the Program Agent (or such other time period as
may be designated in such amendment, modification, waiver or consent), then such
Lender shall be deemed to have disagreed with such request. Furthermore, in the
event that any Lender (other than CUSA or any Affiliate thereof) fails to agree
to any amendment, modification, waiver or consent requiring the unanimous
approval of the Lenders pursuant to Section 10.01(c), at the request of Borrower
or the Program Agent, the Lenders who have so agreed shall have the right (but
not the obligation) to, or to cause an Eligible Assignee to, purchase at par
from such Lender (at the face amount thereof) all Obligations and Commitment
held by such Lender. Each Lender agrees that if the Program Agent or Borrower
exercises its option hereunder, it shall promptly execute and deliver all
agreements and documentation necessary to effectuate such assignment as set
forth in Section 10.01. Any purchase of such Lender's Commitment and all other
Obligations owing to it must (i) occur within 30 Business Days from the date
that such Lender refuses to execute any amendment, waiver or consent which
requires the written consent of all of the Lenders and to which the Program
Agent, the other Lenders and Borrower have agreed and (ii) include an amount
payable to such Lender which is sufficient to compensate such Lender for any
loss, expense or liability as a result of any such purchase under this Section
10.01(d) which arises out of, or is in connection with, any funds acquired by
such Lender to make, continue or maintain any portion of the principal amount of
any Advance with a Eurodollar Rate Tranche applicable thereto.
SECTION 10.02. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, to each party hereto, at its address set
forth on Schedule 1.01-4 hereto or at such other address or telecopy number as
shall be designated by such party in a written notice to the other parties
hereto or, in the case of any Person that becomes a Lender hereunder after the
date hereof, in the Assignment and Acceptance executed by such Person. All
notices and other communications given to any party hereto shall be deemed to
have been given on the date of receipt.
SECTION 10.03. Assignability.
(a) This Agreement and the Lenders' rights and obligations herein
(including ownership of each Advance made by it) shall be assignable in whole or
in part by the Lenders and their successors and assigns to Eligible Assignees.
Each such assignor may, in connection with any such assignment, disclose to the
assignee or potential assignee any information relating to the Borrower, the
Servicer, SPE I, HL Funding I, LLC, HL Funding II, Inc., the Parent or any
Originator, including the Collateral furnished to such assignor by or on behalf
of the Borrower,
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the Parent, SPE I, HL Funding I, LLC, HL Funding II, Inc., Servicer, any
Originator or by the Program Agent; provided that, prior to any such disclosure,
the assignee or potential assignee agrees to preserve the confidentiality of any
such information which is confidential in accordance with the provisions of
Section 10.06 hereof.
(b) Each Lender may assign pursuant to Section 10.03(a) above to any
Eligible Assignee all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
any Advances made by it); provided, however, that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement,
(ii) the amount being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than the lesser of (x)
$10,000,000 and (y) all of the assigning Lender's Commitment, and
(iii) the parties to each such assignment shall execute and
deliver to the Program Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party to this Agreement and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish such
rights and be released from such obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(c) The Program Agent shall maintain at its address referred to in
Section 10.02 of this Agreement a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and aggregate outstanding
Principal of Advances or interests therein owned by, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Originators, the Program Agent, the Lenders may treat each person whose name is
recorded in the Register as a Lender under this Agreement for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice. Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee, the Program Agent shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.
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(d) Notwithstanding any other provision of this Section 9.03, any
Lender may at any time pledge or grant a security interest in all or any portion
of its rights (including, without limitation, rights to payment of Principal and
Yield) under this Agreement to secure obligations of such Lender to a Federal
Reserve Bank, without notice to or consent of the Borrower or the Program Agent;
provided that no such pledge or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
grantee for such Lender as a party hereto.
(e) Neither the Borrower, the Parent, SPE I, HL Funding I, LLC, HL
Funding II, Inc., any Originator or the Servicer may assign its rights or
obligations hereunder or any other Transaction Document or any interest herein
or therein without the prior written consent of the Program Agent and the
Required Lenders.
(f) Any Lender may, without the consent of the Borrower, sell
participations to one or more banks or other entities (each, a "Participant") in
all or a portion of its rights and obligations hereunder (including the
outstanding Advances); provided that following the sale of a participation under
this Agreement (i) the obligations of such Lender shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Servicer, the
Program Agent, and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which such Lender sells such
a participation shall provide that the Participant shall not have any right to
direct the enforcement of this Agreement or the other Transaction Documents or
to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that (i) reduces the
amount of Principal or Yield that is payable on account of any Advance or delays
any scheduled date for payment thereof or (ii) reduces any fees payable by the
Borrower to the Program Agent or such Lender (to the extent relating to payments
to the Participant) or delays any scheduled date for payment of such fees. The
Borrower acknowledges and agrees that the Lenders' source of funds may derive in
part from its Participants. Accordingly, references in Sections 2.06, 2.07,
2.08, 6.07 and 10.04 and the other terms and provisions of this Agreement and
the other Transaction Documents to determinations, reserve and capital adequacy
requirements, expenses, increased costs, reduced receipts and the like as they
pertain to the Lenders shall be deemed also to include those of its
Participants; provided that the Borrower shall not be required to pay higher
costs, expenses and indemnification amounts pursuant to this sentence than would
be required to be paid by the Borrower in the absence of the sale of any
participation by any Lender to a Participant as contemplated by this Section
10.03(h). The Lenders and the Program Agent may, in connection with any such
participation, disclose to Participants and potential Participants any
information relating to the Borrower, the Servicer, SPE I, HL Funding I, LLC, HL
Funding II, Inc., the Parent or the Originators, including the Collateral,
furnished to the Lenders or the Program Agent by or on behalf of the Borrower,
Parent, Servicer or any Originator; provided that, prior to any such disclosure,
such Participant or potential Participant agrees to preserve the confidentiality
of any such information which is confidential in accordance with the provisions
of Section 10.06 hereof.
HL RECEIVABLES FINANCING AGREEMENT
71
SECTION 10.04. Costs, Expenses and Taxes.
(a) Generally. Borrower agrees upon demand to pay, or reimburse the
Program Agent for, all of the Program Agent's reasonable internal and external
audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the Program
Agent's counsel, Sidley Austin LLP, local legal counsel, auditors, accountants,
appraisers, printers, and other consultants and agents), incurred by the Program
Agent in connection with (i) the Program Agent's audit and investigation of
Borrower and its Affiliates in connection with the preparation, negotiation, and
execution of the Transaction Documents and the Program Agent's periodic audits
of Borrower and its Affiliates; (ii) the preparation, negotiation, execution and
interpretation hereof (including, without limitation, the satisfaction or
attempted satisfaction of any of the conditions set forth in Article III), the
other Transaction Documents and any proposal letter or commitment letter issued
in connection therewith and the making of the Advances hereunder; (iii) the
creation, perfection or protection of the liens under the Transaction Documents
(including, without limitation, any reasonable fees and expenses for local
counsel in various jurisdictions); (iv) the ongoing administration hereof and of
the Advances, including consultation with attorneys in connection therewith and
with respect to the Program Agent's rights and responsibilities hereunder and
under the other Transaction Documents; (v) the protection, collection or
enforcement of any of the Obligations or the enforcement of any of the
Transaction Documents; (vi) the commencement, defense or intervention in any
court proceeding relating in any way to the Obligations, the Property, Borrower
or Borrower's Affiliates, this Agreement or any of the other Transaction
Documents; (vii) the response to, and preparation for, any subpoena or request
for document production with which the Program Agent is served or deposition or
other proceeding in which the Program Agent is called to testify, in each case,
relating in any way to the Obligations, the Property, Borrower or Borrower's
Affiliates, this Agreement or any of the other Transaction Documents; and (viii)
any amendments, consents, waivers, assignments, restatements, or supplements to
any of the Transaction Documents and the preparation, negotiation, and execution
of the same.
(b) Enforcement; Restructuring. Borrower further agrees to pay or
reimburse the Program Agent and the Lenders upon demand for all out-of-pocket
costs and expenses, including, without limitation, reasonable attorneys' fees
for counsel to the Program Agent and one counsel for the Lenders (including
allocated costs of internal counsel and costs of settlement), incurred by the
Program Agent or any Lender (i) in enforcing any Transaction Document or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of any Event of Termination; (ii) in connection
with any refinancing or restructuring of the credit arrangements provided
hereunder in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding; (iii) in commencing, defending or intervening in any litigation or
in filing a petition, complaint, answer, motion or other pleadings in any legal
proceeding relating to the Obligations, the Property, Borrower or Borrower's
Affiliates and related to or arising out of the transactions contemplated hereby
or by any of the other Transaction Documents; and (iv) in taking any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise)
described in clauses (i) through (iii) above.
HL RECEIVABLES FINANCING AGREEMENT
72
(c) Breakage Costs. Further, the Borrower agrees to pay any and all
breakage and other expenses of the Program Agent and the Lenders (including,
without limitation, reasonable attorneys' fees and disbursements and the cost
including accrued interest, of terminating or transferring any agreements such
as interest rate swaps, over-the-counter forward agreements and future contracts
engaged by the Lenders or the Program Agent) in connection with any reduction of
the Principal relating to the funding or maintenance of any Advance (or portion
thereof).
(d) Indemnification. The terms of this Section 10.04 shall not in
any way limit the rights of indemnification granted under Section 9.01 hereof.
SECTION 10.05. Waiver of Consequential and Punitive Damages. Each of
the Servicer and the Borrower agree that no Indemnified Party shall have any
liability to them or any of their security holders or creditors in connection
with this Agreement, the other Transaction Documents or the transactions
contemplated thereby on any theory of liability for any special, indirect,
consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings). The Borrower shall have no liability
to indemnify any Indemnified Party for punitive damages other than arising from
a third party claim.
SECTION 10.06. Confidentiality.
(a) Each of the Borrower and the Servicer agrees to maintain the
confidentiality of this Agreement in communications with third parties and
otherwise; provided that this Agreement may be disclosed (i) to third parties to
the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Program
Agent, (ii) to the legal counsel and auditors of the Borrower, the Parent, the
Originators and the Servicer if they agree to hold it confidential and (iii) to
the extent required by applicable law or regulation or by any court, regulatory
body or agency having jurisdiction over such party; and provided, further, that
such party shall have no obligation of confidentiality in respect of any
information which may be generally available to the public or becomes available
to the public through no fault of such party.
(b) Each Lender, and the Program Agent agrees to maintain the
confidentiality of all information with respect to the Borrower, each
Originator, the Parent or the Receivables (including the Borrower Reports)
furnished or delivered to it pursuant to this Agreement; provided, that such
information may be disclosed (i) to such party's legal counsel and auditors and
to such party's assignees and participants and potential assignees and
participants and their respective counsel if they agree to hold it confidential,
(ii) to the nationally recognized statistical rating agencies, (iii) to the
extent required by applicable law or regulation or by any court, regulatory body
or agency having jurisdiction over such party, (iv) in connection with
enforcement of any Beneficiary's rights and remedies hereunder or under the
other Transaction Documents, and (v) to any other Person with the Borrower's
prior written consent; and provided, further, that such party shall have no
obligation of confidentiality in respect of any information which may be
generally available to the public or becomes available to the public through no
fault of such party. Notwithstanding anything herein to the contrary, the
foregoing shall not be construed to prohibit (A) disclosure as required pursuant
to the Transaction Documents, (B) disclosure of any and all information (w) if
required to do so by any applicable
HL RECEIVABLES FINANCING AGREEMENT
73
statute, law, rule or regulation, or in working with any taxing authorities or
other governmental agencies, (x) to any government agency or regulatory body
having or claiming authority to regulate or oversee any respects of the Program
Agent's business or that of its affiliates, (y) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Program Agent or any affiliate
or an officer, director, employer or shareholder thereof is a party, or (z) to
any affiliate, independent or internal auditor, agent, employee or attorney of
the Program Agent having a need to know the same, provided that the Program
Agent advises such recipient of the confidential nature of the information being
disclosed.
(c) Notwithstanding any other provision herein or in any other
Transaction Document, each Lender, and the Program Agent hereby confirms that
the Borrower, the Originators and the Servicer (and each employee,
representative or other agent of such party) may disclose to any and all
Persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the transaction contemplated by this Agreement and the other
Transaction Documents.
SECTION 10.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE
WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 10.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
SECTION 10.09. Survival of Termination. The provisions of Sections
2.06, 2.07, 6.07, 9.01, 10.01, 10.04, 10.05, 10.06, 10.07, 10.10 and 10.12 shall
survive any termination of this Agreement.
SECTION 10.10. Consent to Jurisdiction.
(a) Each party hereto hereby irrevocably agrees and submits to the
non-exclusive jurisdiction of any New York State or Federal court sitting in New
York City in any action or proceeding arising out of or relating to this
Agreement or the other Transaction Documents, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court or, to the extent permitted
by law, in such Federal court. The parties hereto hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Borrower hereby
irrevocably appoints CT Corporation (the "Process Agent"), with an office on the
date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, as its agent to receive on behalf of the Borrower and its property
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. Such service may be made by mailing
or delivering a copy of such process to the Borrower in care of the Process
Agent at the Process Agent's above address, and the Borrower hereby irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
The parties hereto agree that a final judgment in any
HL RECEIVABLES FINANCING AGREEMENT
74
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit, on the judgment or in any other manner provided by law.
(b) Each of the Borrower, the Parent, the Servicer and the
Originators consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to it at its address
specified in Section 10.02. Nothing in this Section 10.10 shall affect the right
of any Lender or the Program Agent to serve legal process in any other manner
permitted by law.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement or any other Transaction Document.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED OR DELIVERED PURSUANT
HERETO.
SECTION 10.12. Trust Indenture Act. In the event that CUSA or any of
its Affiliates shall be or become an indenture trustee under the Trust Indenture
Act of 1939 (as amended, the "Trust Indenture Act") in respect of any securities
issued or guaranteed by the Borrower, SPE I, HL Funding I, LLC, HL Funding II,
Inc., or any Originator, the parties hereto acknowledge and agree that any
payment or property received in satisfaction of or in respect of any obligation
of the Borrower, SPE I, HL Funding I, LLC, HL Funding II, Inc. or any Originator
hereunder or under any other Transaction Document by or on behalf of CUSA in its
capacity as the Program Agent for the benefit of any Lender under any
Transaction Document (other than CUSA or an Affiliate of CUSA) and which is
applied in accordance with the Transaction Documents shall be deemed to be
exempt from the requirements of Section 311 of the Trust Indenture Act pursuant
to Section 311(b)(3) of the Trust Indenture Act.
SECTION 10.13. Electronic Communications.
(a) Borrower shall provide, and cause each of its Affiliates to
provide, to the Program Agent all information, documents and other materials
that such Person is obligated to furnish to the Program Agent pursuant to this
Agreement and the other Transaction Documents, including, without limitation,
all notices, requests, financial statements, financial and other reports,
certificates and other information materials, but excluding any such
communication that (i) relates to any request for Advances, (ii) relates to the
payment of any principal or other amount due hereunder prior to the scheduled
date therefor, (iii) provides notice of any Event of Termination or Incipient
Event of Termination hereunder or (iv) is required to be delivered to satisfy
any condition precedent to the effectiveness of this Agreement and/or any
Advances or other extension of credit hereunder (all such non-excluded
communications being referred to
HL RECEIVABLES FINANCING AGREEMENT
75
herein collectively as "Communications"), by transmitting the Communications in
an electronic/soft medium in a format acceptable to the Program Agent to
▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇, or such other electronic mail address as the Program
Agent shall identify in writing to Borrower. In addition, Borrower and its
Affiliates shall continue to provide the Communications in writing to the
Program Agent in the manner specified in the Transaction Documents but only to
the extent requested by the Program Agent.
(b) Borrower further agrees that the Program Agent may make the
Communications available to Borrower and its Affiliates by posting the
Communications on Intralinks, Fixed Income Director or a substantially similar
electronic transmission system (each such system, the "Platform"). Borrower
hereby acknowledges that certain of the Lenders may be "public-side" Lenders
(i.e., Lenders that do not wish to receive material non-public information with
respect to Borrower or its securities (each, a "Public Lender"), and Borrower
hereby agrees that all materials and/or information provided by or on behalf of
Borrower hereunder (collectively, the "Borrower Materials") may be posted on the
Platform and that (i) all Borrower Materials that are to be made available to
Public Lenders shall be clearly and conspicuously marked "PUBLIC" by Borrower,
which shall mean, at a minimum, that the word "PUBLIC" shall appear prominently
on the first page thereof, (ii) by marking the Borrower Materials "PUBLIC",
Borrower shall be deemed to have authorized the Program Agent, the Lenders and
their Affiliates to treat such Borrower Materials as not containing any material
non-public information with respect to Borrower or its securities for purposes
of United States Federal and state securities laws, (iii) all Borrower Materials
marked "PUBLIC" are permitted to be made available through a portion of the
Platform designated "Public Investor", and (iv) the Program Agent, Lenders and
their Affiliates shall be entitled to treat any Borrower Materials that are not
so marked "PUBLIC" as being suitable only for posting on a portion of the
Platform not designated "Public Investor". Notwithstanding the foregoing,
Borrower shall be under no obligation to ▇▇▇▇ any Borrower Materials "PUBLIC".
Nothing in this clause (b) shall limit in any way the applicability of Section
10.06. Nothing in this Section 10.13 shall prejudice the right of the Program
Agent to give any notice or other communication pursuant hereto or to any other
Transaction Document in any other manner specified herein or therein. Borrower
acknowledges that the distribution of material through an electronic medium is
not necessarily secure and that there are confidentiality and other risks
associated with such distribution.
(c) The Program Agent agrees that the receipt of the Communications
by the Program Agent at its e-mail address set forth in clause (a) above shall
constitute effective delivery of the Communications to the Program Agent for
purposes of each Transaction Document. Each Lender and Borrower agrees that
e-mail notice to it (at the address provided pursuant to the next sentence and
deemed delivered as provided in clause (d) below) specifying that Communications
have been posted to the Platform shall constitute effective delivery of such
Communications to such Person under the Transaction Documents. Each Lender and
Borrower agrees (A) to notify the Program Agent in writing (including by
electronic communication) from time to time to ensure that the Program Agent has
on record an effective e-mail address for such Person to which the foregoing
notices may be sent by electronic transmission and (B) that the foregoing
notices may be sent to such e-mail address.
(d) Each party hereto agrees that any electronic communication
referred to in this Section 10.13 shall be deemed delivered upon the posting of
a record of such
HL RECEIVABLES FINANCING AGREEMENT
76
Communication as "sent" in the e-mail system of the sending party or, in the
case of any such Communication to the Program Agent, upon the posting of a
record of such Communication as "received" in the e-mail system of the Program
Agent; provided, however, that if such Communication is received by the Program
Agent after the normal business hours of the Program Agent, such Communication
shall be deemed delivered at the opening of business on the next Business Day
for the Program Agent.
(e) BORROWER FURTHER ACKNOWLEDGES AND AGREES AS FOLLOWS: (A) THE
PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE"; (B) THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS; AND (C) NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT
PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL
THE PROGRAM AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE "AGENT
PARTIES") HAVE ANY LIABILITY TO BORROWER, ANY SUBSIDIARY OF BORROWER, ANY LENDER
OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF
BORROWER'S OR PROGRAM AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE
INTERNET, EXCEPT TO THE EXTENT LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(f) This Section 10.13 shall terminate on the date that no CUSA
Affiliate is the Program Agent under this Agreement.
SECTION 10.14. USA Patriot Act. Each Lender hereby notifies Borrower
that pursuant to the requirements of the USA Patriot Act, it is required to
obtain, verify and record information that identifies Borrower, which
information that will allow such Lender to identify Borrower in accordance with
its requirements. Borrower shall promptly, following a request by Program Agent
or any Lender, provide all documentation and other information that the Program
Agent or such Lender reasonably requests in order to comply with its ongoing
obligations under applicable "know your customer" and anti-money laundering
rules and regulations, including the USA Patriot Act.
SECTION 10.15. Optional Sale and Release of Certain Receivables.
(a) Subject to the conditions set forth below, from time to time,
the Borrower may sell and assign to the Servicer, all of its right, title and
interest in and to all or any portion of
HL RECEIVABLES FINANCING AGREEMENT
77
any Receivable that has been written off as uncollectible, in each case in
connection with a sale by the Servicer of such Receivable to a third party not
an Affiliate of Borrower or Servicer. The purchase price for such Receivables
shall be paid by the Servicer to the Borrower on the date of such sale and shall
equal the fair market value of such Receivables based on the price paid by the
third party to the Servicer and shall be acceptable to the Program Agent in its
reasonable credit judgment, which may be reduced by an amount agreed upon by the
Borrower, the Servicer and the Program Agent in an amount sufficient to
compensate the Servicer fairly for the service of arranging such sale. Any such
sale by the Borrower of such Receivables (i) shall occur on the same day as the
sale from the Servicer to the third party purchaser of the same Receivables,
(ii) shall be without representation, warranty or recourse of any kind by or
against Borrower, other than that the Borrower hereby represents to the Servicer
that, subject to the satisfaction of the conditions set forth in this Section
10.15 for the release of the Program Agent's security interest in such
Receivables shall not be subject to any Lien created by Borrower, and (iii)
shall not be governed or evidenced by any document or instrument that has not
been previously approved in writing by the Program Agent.
(b) On or prior to the fifth (5th) Business Day prior to the date on
which written-off Receivables as described in the preceding paragraph will be
sold by the Borrower (the "Sale Date"), the Borrower shall give the Program
Agent written notice upon which the Program Agent may conclusively rely, that
all or the designated portion of such Receivables then held by the Borrower are
to be sold to Servicer (the "Designated Receivables"). Any such sale shall be
effected as of the opening of business on the applicable Sale Date. The Borrower
shall be permitted to designate and sell all of its right, title and interest in
and to the Designated Receivables to the Servicer only upon satisfaction of the
condition that on or prior to the Sale Date, the Borrower shall have delivered
to the Program Agent for execution by the Program Agent (1) a written assignment
(a "Reassignment") assigning to the Borrower all right, title and interest in
and to the Designated Receivables, all Related Security with respect to the
Designated Receivables and all proceeds thereof and (2) a computer file or other
list of the Designated Receivables.
(c) Upon satisfaction of the above conditions on or prior to the
Sale Date, the Program Agent shall, at the expense of the Borrower, execute and
deliver the Reassignment to the Borrower. In addition, the Program Agent shall,
at the expense of the Borrower, take all other actions reasonably requested by
the Borrower and acceptable to the Program Agent, including facilitating the
filing by the Borrower of any UCC-3, upon the written direction of the Borrower,
necessary to terminate and release all liens, claims and security interests of
the Program Agent in the Designated Receivables, all Related Security with
respect to the Designated Receivables and all proceeds thereof created under
this Agreement. On the Sale Date, the Borrower shall cause the proceeds of the
sale of all Designated Receivables on such Sale Date to be deposited into the
Concentration Account.
* * *
HL RECEIVABLES FINANCING AGREEMENT
78
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER: ▇▇▇▇▇ FUNDING II, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
SERVICER: HLI OPERATING COMPANY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
SIGNATURE PAGE TO HL RECEIVABLES FINANCING AGREEMENT
PROGRAM AGENT: CITICORP USA, INC.,
as Program Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
VP & Director
LENDERS: CITICORP USA, INC., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
SIGNATURE PAGE TO HL RECEIVABLES FINANCING AGREEMENT
BANK OF AMERICA, N.A., as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
HL RECEIVABLES FINANCING AGREEMENT
81
THE CIT GROUP BUSINESS CREDIT, INC.,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
HL RECEIVABLES FINANCING AGREEMENT
82