EXHIBIT 10.7
EXECUTION VERSION
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U.S. $650,000,000
THIRD AMENDED AND RESTATED
LOAN CERTIFICATE AND SERVICING AGREEMENT
by and among
CAPITALSOURCE FUNDING LLC,
as the Seller
-------------
CAPITALSOURCE FINANCE LLC,
as the Originator and as the Servicer
-------------------------------------
VARIABLE FUNDING CAPITAL CORPORATION,
FAIRWAY FINANCE CORPORATION,
EIFFEL FUNDING, LLC,
and
HANNOVER FUNDING COMPANY LLC,
as the Purchasers
-----------------
WACHOVIA SECURITIES, INC.,
as the Administrative Agent and as the VFCC Agent
-------------------------------------------------
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ CORP.,
as the Fairway Agent
--------------------
CDC FINANCIAL PRODUCTS INC.,
as the Eiffel Agent
-------------------
NORDDEUTSCHE LANDESBANK GIROZENTRALE,
as the Hannover Agent
---------------------
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Backup Servicer and as the Collateral Custodian
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Dated as of February 25, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITION............................................................................... 4
Section 1.1 Certain Defined Terms........................................................... 4
Section 1.2 Other Terms..................................................................... 52
Section 1.3 Computation of Time Periods..................................................... 52
Section 1.4 Interpretation.................................................................. 52
ARTICLE II PURCHASE OF THE VARIABLE FUNDING CERTIFICATES............................................ 53
Section 2.1 The Variable Funding Certificates............................................... 53
Section 2.2 Procedures for Advances......................................................... 54
Section 2.3 Reduction of the Facility Amount; Mandatory and Optional Repayments............. 55
Section 2.4 Determination of Interest....................................................... 56
Section 2.5 Percentage Evidenced by each Variable Funding Certificate....................... 57
Section 2.6 Notations on Variable Funding Certificates...................................... 57
Section 2.7 Settlement Procedures During the Revolving Period............................... 57
Section 2.8 Settlement Procedures During the Amortization Period............................ 59
Section 2.9 Collections and Allocations..................................................... 60
Section 2.10 Payments, Computations, Etc..................................................... 61
Section 2.11 Optional Repurchase............................................................. 62
Section 2.12 Fees............................................................................ 62
Section 2.13 Increased Costs; Capital Adequacy; Illegality................................... 62
Section 2.14 Taxes........................................................................... 64
Section 2.15 Assignment of the Sale Agreement................................................ 65
Section 2.16 Substitution of Loans........................................................... 65
Section 2.17 Optional Sales.................................................................. 66
ARTICLE III CONDITIONS TO ADVANCES................................................................... 68
Section 3.1 Conditions to Closing and Initial Advance....................................... 68
Section 3.2 Conditions Precedent to All Advances............................................ 69
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................... 71
Section 4.1 Representations and Warranties of the Seller.................................... 71
Section 4.2 Representations and Warranties of the Seller Relating to the Agreement and
the Assets...................................................................... 81
Section 4.3 Representations and Warranties of the Servicer.................................. 82
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Section 4.4 Representations and Warranties of the Backup Servicer........................... 85
Section 4.5 Representations and Warranties of the Collateral Custodian...................... 85
Section 4.6 Breach of Certain Representations and Warranties................................ 86
ARTICLE V GENERAL COVENANTS........................................................................ 87
Section 5.1 Affirmative Covenants of the Seller............................................. 87
Section 5.2 Negative Covenants of the Seller................................................ 90
Section 5.3 Covenants of the Seller Relating to the Hedging of Loans........................ 92
Section 5.4 Affirmative Covenants of the Servicer........................................... 93
Section 5.5 Negative Covenants of the Servicer.............................................. 95
Section 5.6 Affirmative Covenants of the Backup Servicer.................................... 96
Section 5.7 Negative Covenants of the Backup Servicer....................................... 97
Section 5.8 Affirmative Covenants of the Collateral Custodian............................... 97
Section 5.9 Negative Covenants of the Collateral Custodian.................................. 97
ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS................................................ 97
Section 6.1 Designation of the Servicer..................................................... 97
Section 6.2 Duties of the Servicer.......................................................... 98
Section 6.3 Authorization of the Servicer................................................... 100
Section 6.4 Collection of Payments.......................................................... 100
Section 6.5 Servicer Advances............................................................... 102
Section 6.6 Realization Upon Charged-Off Loans.............................................. 102
Section 6.7 Maintenance of Insurance Policies............................................... 103
Section 6.8 Servicing Compensation.......................................................... 103
Section 6.9 Payment of Certain Expenses by Servicer......................................... 104
Section 6.10 Reports......................................................................... 104
Section 6.11 Annual Statement as to Compliance............................................... 105
Section 6.12 Annual Independent Public Accountant's Servicing Reports........................ 105
Section 6.13 Limitation on Liability of the Servicer and Others.............................. 105
Section 6.14 The Servicer Not to Resign...................................................... 106
Section 6.15 Servicer Defaults............................................................... 106
Section 6.16 Appointment of Successor Servicer............................................... 108
ARTICLE VII THE BACKUP SERVICER...................................................................... 110
Section 7.1 Designation of the Backup Servicer.............................................. 110
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Section 7.2 Duties of the Backup Servicer................................................... 110
Section 7.3 Merger or Consolidation......................................................... 111
Section 7.4 Backup Servicing Compensation................................................... 112
Section 7.5 Backup Servicer Removal......................................................... 112
Section 7.6 Limitation on Liability......................................................... 112
Section 7.7 The Backup Servicer Not to Resign............................................... 113
ARTICLE VIII THE COLLATERAL CUSTODIAN................................................................. 113
Section 8.1 Designation of Collateral Custodian............................................. 113
Section 8.2 Duties of Collateral Custodian.................................................. 113
Section 8.3 Merger or Consolidation......................................................... 115
Section 8.4 Collateral Custodian Compensation............................................... 115
Section 8.5 Collateral Custodian Removal.................................................... 115
Section 8.6 Limitation on Liability......................................................... 116
Section 8.7 The Collateral Custodian Not to Resign.......................................... 117
Section 8.8 Release of Documents............................................................ 117
Section 8.9 Return of Required Loan Documents............................................... 118
Section 8.10 Access to Certain Documentation and Information Regarding the Assets; Audits.... 118
ARTICLE IX SECURITY INTEREST........................................................................ 118
Section 9.1 Grant of Security Interest...................................................... 118
Section 9.2 Release of Lien on Assets....................................................... 119
Section 9.3 Further Assurances.............................................................. 120
Section 9.4 Remedies........................................................................ 120
Section 9.5 Waiver of Certain Laws.......................................................... 120
Section 9.6 Power of Attorney............................................................... 120
ARTICLE X TERMINATION EVENTS....................................................................... 121
Section 10.1 Termination Events.............................................................. 121
Section 10.2 Remedies........................................................................ 123
ARTICLE XI INDEMNIFICATION.......................................................................... 124
Section 11.1 Indemnities by the Seller....................................................... 124
Section 11.2 Indemnities by the Servicer..................................................... 127
Section 11.3 After-Tax Basis................................................................. 128
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ARTICLE XII THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS............................................ 128
Section 12.1 The Administrative Agent........................................................ 128
Section 12.2 VFCC Agent...................................................................... 131
Section 12.3 Eiffel Agent.................................................................... 132
Section 12.4 Fairway Agent................................................................... 134
Section 12.5 Hannover Agent.................................................................. 136
ARTICLE XIII MISCELLANEOUS............................................................................ 139
Section 13.1 Amendments and Waivers.......................................................... 139
Section 13.2 Notices, Etc.................................................................... 139
Section 13.3 Ratable Payments................................................................ 139
Section 13.4 No Waiver; Remedies............................................................. 140
Section 13.5 Binding Effect; Benefit of Agreement............................................ 140
Section 13.6 Term of this Agreement.......................................................... 140
Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue............ 140
Section 13.8 Waiver of Jury Trial............................................................ 141
Section 13.9 Costs, Expenses and Taxes....................................................... 141
Section 13.10 No Proceedings.................................................................. 142
Section 13.11 Recourse Against Certain Parties................................................ 142
Section 13.12 Protection of Right, Title and Interest in the Assets; Further Action
Evidencing Advances............................................................. 144
Section 13.13 Confidentiality................................................................. 145
Section 13.14 Execution in Counterparts; Severability; Integration............................ 146
Section 13.15 Waiver of Setoff................................................................ 146
Section 13.16 Assignments..................................................................... 147
Section 13.17 Heading and Exhibits............................................................ 147
Section 13.18 Loans Subject to Retained Interest Provisions................................... 147
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EXHIBITS
EXHIBIT A-1 Form of Borrowing Notice (Advances and Reduction of Facility Amount)
EXHIBIT A-2 Form of Borrowing Notice (Reinvestments of Principal Collections)
EXHIBIT A-3 Form of Borrowing Base Certificate
EXHIBIT B-1 Form of Variable Funding Certificate (VFCC)
EXHIBIT B-2 Form of Variable Funding Certificate (Eiffel)
EXHIBIT B-3 Form of Variable Funding Certificate (Fairway)
EXHIBIT B-4 Form of Variable Funding Certificate (Hannover)
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Hedging Agreement (including Schedule and Confirmation)
EXHIBIT E-1 Form of Officer's Certificate to Solvency (CapitalSource Funding LLC)
EXHIBIT E-2 Form of Officer's Certificate to Solvency (CapitalSource Finance LLC)
EXHIBIT F-1 Form of Officer's Closing Certificate (CapitalSource Funding LLC)
EXHIBIT F-2 Form of Officer's Closing Certificate (CapitalSource Finance LLC)
EXHIBIT G-1 Form of Power of Attorney(CapitalSource Funding LLC)
EXHIBIT G-2 Form of Power of Attorney(CapitalSource Finance LLC)
EXHIBIT H Form of Release of Required Loan Documents
EXHIBIT I Form of Assignment of Mortgage
EXHIBIT J Form of Servicer's Certificate
EXHIBIT K Form of Transferee Letter
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II List of Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Location of Required Loan Documents and Loan Files
SCHEDULE IV Loan List
SCHEDULE V Forms of Loans
SCHEDULE VI Credit and Collection Policy
SCHEDULE VII Diversity Score
APPENDICES
APPENDIX A Timeshare Mortgage Loan Criteria
APPENDIX B Schedule of Supplemental Definitions and Terms (Eiffel Only)
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THIRD AMENDED AND RESTATED
LOAN CERTIFICATE AND SERVICING AGREEMENT
THIS THIRD AMENDED AND RESTATED LOAN CERTIFICATE AND SERVICING
AGREEMENT (such agreement as amended, modified, waived, supplemented, replaced
or restated from time to time, the "Agreement") is made as of this February 25,
2003, by and among:
(1) CAPITALSOURCE FUNDING LLC, a Delaware limited liability
company, as the seller (together with its successors and assigns in such
capacity, the "Seller");
(2) CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company ("CapitalSource Finance"), as the originator (together with its
successors and assigns in such capacity, the "Originator"), and as the servicer
(together with its successors and assigns in such capacity, the "Servicer");
(3) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation
(together with its successors and assigns, "VFCC"), as a purchaser (together
with its successors and assigns in such capacity, a "Purchaser");
(4) FAIRWAY FINANCE CORPORATION, a Delaware corporation (together
with its successors and assigns, "Fairway"), as a purchaser (together with its
successors and assigns in such capacity, a "Purchaser");
(5) EIFFEL FUNDING, LLC, a Delaware limited liability company
(together with its successors and assigns, "Eiffel"), as a purchaser (together
with its successors and assigns in such capacity, a "Purchaser");
(6) HANNOVER FUNDING COMPANY LLC, a Delaware limited liability
company (together with its successors and assigns, "Hannover"), as a purchaser
(together with its successors and assigns in such capacity, a "Purchaser");
(7) WACHOVIA SECURITIES, INC. (f/k/a First Union Securities,
Inc.), a Delaware corporation (together with its successors and assigns, "WSI"),
as the agent for VFCC (together with its successors and assigns in such
capacity, the "VFCC Agent") and as the agent for the VFCC Agent and the Eiffel
Agent (together with its successors and assigns in such capacity, the
"Administrative Agent");
(8) BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ CORP., a Delaware corporation (together with
its successors and assigns, "BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇"), as the agent for Fairway
(together with its successors and assigns in such capacity, the "Fairway
Agent");
(9) CDC FINANCIAL PRODUCTS INC., a Delaware corporation (together
with its successors and assigns, "CDCFP"), as the agent for Eiffel (together
with its successors and assigns in such capacity, the "Eiffel Agent");
(10) NORDDEUTSCHE LANDESBANK GIROZENTRALE, a bank organized under
the laws of Germany (together with its successors and assigns, "▇▇▇▇ ▇▇"), as
the agent for Eiffel (together with its successors and assigns in such capacity,
the "Hannover Agent"); and
(11) ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION ("▇▇▇▇▇
Fargo"), not in its individual capacity but as the backup servicer (together
with its successors and assigns in such capacity, the "Backup Servicer"), and
not in its individual capacity but as the collateral custodian (together with
its successors and assigns in such capacity, the "Collateral Custodian").
R E C I T A L S
WHEREAS, the Seller, the Originator, the Servicer, VFCC and Eiffel, as
the original purchasers (in such capacity the "Original Purchasers"), the VFCC
Agent, the Eiffel Agent, the Administrative Agent, the Backup Servicer, and the
Collateral Custodian have heretofore executed and delivered an Amended and
Restated Loan Certificate and Servicing Agreement, dated as of April 24, 2002 as
amended by Amendment No. 1, dated as of August 29, 2002 (as so amended, the
"Original Loan Certificate and Servicing Agreement");
WHEREAS, the Original Purchasers, Fairway, the VFCC Agent, the Eiffel
Agent, the Fairway Agent, the Administrative Agent, the Backup Servicer, and the
Collateral Custodian have heretofore further executed and delivered a Second
Amended and Restated Loan Certificate and Servicing Agreement, dated as of
November 12, 2002 (the "Second Amended and Restated Loan Certificate and
Servicing Agreement"), which Second Amended and Restated Loan Certificate and
Servicing Agreement superseded, amended and restated the Original Loan
Certificate and Servicing Agreement;
WHEREAS, Section 13.1 of the Second Amended and Restated Loan
Certificate and Servicing Agreement provides that no amendment shall be
effective without the written agreement of the Seller, the Servicer, the Backup
Servicer, the Collateral Custodian, the Administrative Agent, the Purchasers and
the Hedge Counterparty;
WHEREAS, pursuant to Section 3.3 of the Liquidity Participation
Agreement, Wachovia, as agent bank, may not without the prior written consent of
Nomura Credit and Capital, Inc., as the participant (the "Participant"), and
Nomura Holding America, Inc., as the guarantor (the "Guarantor"), agree to any
amendment of the Second Amended and Restated Loan Certificate and Servicing
Agreement;
WHEREAS, the Seller, the Originator, the Servicer, the Original
Purchasers, Fairway, the VFCC Agent, the Eiffel Agent, the Fairway Agent, the
Administrative Agent, the Backup Servicer, the Collateral Custodian, and the
Hedge Counterparty hereby desire to amend and restate the Second Amended and
Restated Loan Certificate and Servicing Agreement to (i) make Hannover and the
Hannover Agent, parties thereto, (ii) increase the Facility Amount, and (iii)
make such other changes as are necessary or in the interests of the parties;
WHEREAS, each of the Seller, the Originator, the Servicer, the Original
Purchasers, Fairway, the VFCC Agent, the Eiffel Agent, the Fairway Agent, the
Administrative Agent, the Backup Servicer, the Collateral Custodian, and the
Hedge Counterparty consents to the
2
amendment and restatement of the Second Amended and Restated Loan Certificate
and Servicing Agreement pursuant to this Agreement; and
WHEREAS, all other conditions precedent to the execution of this
Agreement have been complied with.
NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises
and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
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ARTICLE I
DEFINITION
SECTION 1.1 CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are
defined above or in this Section 1.1. In addition, with respect to Eiffel only,
certain capitalized terms used throughout this Agreement are defined in the
Schedule of Supplemental Definitions and Terms attached to this Agreement as
Appendix B to be used solely for Eiffel's program documents.
(b) As used in this Agreement and its schedules, exhibits and
other attachments, unless the context requires a different meaning, the
following terms shall have the following meanings:
40 Act: Defined in Section 10.1(i).
ABF Loan: Any Senior Secured Loan (including a Loan to an SPE Obligor) secured
by accounts receivable, notes receivable and/or inventory of the related Obligor
or SPE Obligor; provided, however, with respect to inventory only, such
inventory may serve as collateral is not being financed by such Senior Secured
Loan.
Accrual Period: (a) with respect to each Advance (or portion thereof) funded at
an Interest Rate other than the VFCC CP Rate, Fairway CP Rate, Eiffel CP Rate or
the Hannover CP Rate (i) with respect to the first Payment Date, the period from
and including the Closing Date to but excluding such first Payment Date and (ii)
with respect to any subsequent Payment Date, the period from and including the
previous Payment Date to but excluding such subsequent Payment Date, and (b)
with respect to each Advance (or portion thereof) funded at an Interest Rate
equal to the VFCC CP Rate, Fairway CP Rate, Eiffel CP Rate or the Hannover CP
Rate (i) with respect to the first Payment Date, the period from and including
the Closing Date to and including the last day of the calendar month in which
the Closing Date occurs and (ii) with respect to any subsequent Payment Date,
the period ending on the last day of the calendar month immediately preceding
the month in which the Payment Date occurs and commencing on the first (1st) day
of such immediately preceding calendar month.
Acquired Loan: A Loan that is originated by a Person other than the Originator
and acquired by the Originator in a "true sale" transaction pursuant to an
acquisition agreement substantially in the form of the "Acquisition Agreement"
attached hereto as Schedule V or in such other form as shall be adopted by the
Originator and approved in writing by the Administrative Agent at least ten (10)
days prior to such Loan becoming part of the Asset Pool hereunder.
Addition Date: With respect to any Additional Loans, the date on which such
Additional Loans become part of the Asset Pool.
Additional Loans: All Loans that become part of the Asset Pool after the Closing
Date.
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Adjusted Advance Rate: On any date of determination, each of the adjusted
advance rates set forth below, as applicable, depending on the Diversity Score
(rounded to the nearest integer) on such date:
Diversity Score Adjusted Advance Rate
--------------- ---------------------
25 or higher 75.0%
23 - 24 74.0%
20 - 22 72.0%
16 - 19 70.0%
14 - 15 68.0%
12 - 13 65.0%
10 - 11 63.0%
1 - 9 60.0%
Adjusted Eurodollar Rate: For any Accrual Period, an interest rate per annum
equal to a fraction, expressed as a percentage and rounded upwards (if
necessary) to the nearest 1/100 of 1%, (i) the numerator of which is equal to
the LIBOR Rate for such Accrual Period and (ii) the denominator of which is
equal to 100% minus the Eurodollar Reserve Percentage for such Accrual Period.
Administrative Agent: WSI, in its capacity as administrative agent for the
Purchaser Agents, together with its successors and assigns, including any
successor appointed pursuant to ARTICLE XII.
Advance: Defined in Section 2.1(b).
Advance Amount: With respect to any Advance under a Variable Funding Certificate
and any Funding Date, subject to the terms and conditions hereof, an amount
equal to the product of (a) the applicable Advance Rate and (b) the Borrowing
Base.
Advance Rate: An amount equal to (a) 75% of the sum of the Outstanding Loan
Balances of all Senior Secured Loans in the Asset Pool that (i) satisfy the
Interest Coverage Requirement, (ii) are Timeshare Loans or (iii) are Material
Mortgage Loans that have a Loan-to-Value Ratio of 75% or less, (b) 65% of the
sum of the Outstanding Loan Balances of all other Senior Secured Loans in the
Asset Pool, and (c) 40% of the sum of the Outstanding Loan Balances of all
Subordinated Loans in the Asset Pool.
Advances Outstanding: On any day, the aggregate principal amount of all Advances
outstanding on such day, after giving effect to all repayments of Advances and
the makings of new Advances on such day; provided, that, the "Advances
Outstanding" under and as defined in the Original Loan Certificate and Servicing
Agreement as of the close of business on the Business Day immediately prior to
the Closing Date shall be deemed to be Advances Outstanding on and as of the
Closing Date under and for all purposes of this Agreement.
Affected Party: The Administrative Agent, the Purchaser Agents, the Purchasers,
each Liquidity Bank, all assignees and participants of the Purchasers and each
Liquidity Bank, any successor to WSI as Administrative Agent and any sub-agent
of the Administrative Agent.
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Affiliate: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or under common control with such Person,
or is a director or officer of such Person. For purposes of this definition,
"control" (including the terms "controlling," "controlled by" and "under common
control with") when used with respect to any specified Person means the
possession, direct or indirect, of the power to vote 20% or more of the voting
securities of such Person or to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
Agent's Account: The VFCC Agent's Account, the Fairway Agent's Account, the
Eiffel Agent's Account, or the Hannover Agent's Account, as applicable.
Agented Notes: With respect to any Revolving Loan or Term Loan, one or more
promissory notes of an Eligible Obligor wherein (a) the note(s) are originated
by the Originator in accordance with the Credit and Collection Policy as a part
of a syndicated loan transaction that has been fully consummated prior to such
Agented Notes becoming part of the Asset Pool hereunder, (b) upon an assignment
of the note under the Sale Agreement to the Seller, such original note will be
endorsed to the Administrative Agent and held by the Collateral Custodian, on
behalf of the Secured Parties, (c) the Seller, as assignee of the note, will
have all of the rights but none of the obligations of the Originator with
respect to such note and the Originator's right, title and interest in and to
the Related Property including the right to receive and collect payments
directly in its own name and to enforce its rights directly against the Obligor
thereof, (d) the note, if secured, is secured by an undivided interest in the
Related Property that also secures and is shared by, on a pro-rata basis, all
other holders of such Obligor's notes of equal priority and (e) the Originator
(or a wholly owned subsidiary of the Originator) is the collateral agent and
payment agent for all noteholders of such Obligor.
Aggregate Outstanding Loan Balance: With respect to all Eligible Loans included
as part of the Asset Pool, on any day, the sum of the Outstanding Loan Balances
of such Eligible Loans on such date, minus the Outstanding Loan Balance of all
Delinquent Loans. Notwithstanding anything to the contrary contained herein, for
purposes of determining the Aggregate Outstanding Loan Balance, if any portion
of a Loan is deemed to be "charged-off" in accordance with the provisions of the
definition of Charged-Off Loan, then the entire Loan shall have a zero (0)
Outstanding Loan Balance except in connection with the calculation of Average
Pool Charged-Off Ratio.
Aggregate Unpaids: At any time, an amount equal to the sum of all unpaid
Advances Outstanding, Interest, Breakage Costs, Hedge Breakage Costs and all
other amounts owed by the Seller to the Purchasers, the Purchaser Agents, the
Administrative Agent, the Backup Servicer and the Collateral Custodian hereunder
(including, without limitation, all Indemnified Amounts, other amounts payable
under Article XI and amounts required under Section 2.7, Section 2.8, Section
2.12, Section 2.13 and Section 2.14 to the Affected Parties or Indemnified
Parties) or under any Hedging Agreement (including, without limitation, payments
in respect of the termination of any such Hedging Agreement) or by the Seller or
any other Person under any fee letter (including, without limitation, the VFCC
Fee Letter, the Fairway Fee Letter, the Eiffel Fee Letter, the Hannover Fee
Letter, the Backup Servicer Fee Letter and the Collateral Custodian Fee Letter)
delivered in connection with the transactions contemplated by this Agreement
(whether due or accrued); provided, that, the "Aggregate Unpaids" under and as
defined in the Original
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Loan Certificate and Servicing Agreement as of the close of business on the
Business Day immediately prior to the Closing Date shall be deemed to be
Aggregate Unpaids on and as of the Closing Date under and for all purposes of
this Agreement.
Allocation Adjustment Event: With respect to each Loan included in the Assets
subject to the Retained Interest provisions of this Agreement, the occurrence of
any one or more of the following under and as defined in the CapitalSource
Commercial Loan Trust 2002-1 Transaction, the CapitalSource Commercial Loan
Trust 2002-2 Transaction and/or any other Permitted Securitization Transaction
rated by the Rating Agencies, as applicable: (i) a "Servicer Default", (ii) an
"Event of Default" or (iii) an "Accelerated Amortization Event".
Alternative Rate: An interest rate per annum equal to the Adjusted Eurodollar
Rate; provided, however, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs.
Amortization Period: The period beginning on the Termination Date and ending on
the Collection Date.
Applicable Law: For any Person or property of such Person, all existing and
future applicable laws, rules, regulations (including proposed, temporary and
final income tax regulations), statutes, treaties, codes ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority (including, without limitation, usury laws, the Federal Truth in
Lending Act, and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System), and applicable judgments, decrees, injunctions, writs,
awards or orders of any court, arbitrator or other administrative, judicial, or
quasi-judicial tribunal or agency of competent jurisdiction.
Asset: All right, title, and interest (whether now owned or hereafter acquired
or arising, and wherever located) of the Seller in all accounts, general
intangibles, instruments, chattel paper, documents, money, letters of credit,
advices of credit, deposit accounts, certificates of deposit, investment
property, goods, and other property consisting of, arising out of, or related to
any of the following: (i) the Existing Loans and Additional Loans, and all
monies due or to become due in payment under such Existing Loans and Additional
Loans on and after the related Cut-Off Date, including but not limited to all
Collections, but excluding any Excluded Amounts; (ii) all Related Security with
respect to the Loans referred to in clause (i); and (iii) all income and
Proceeds of the foregoing.
Asset Pool: At any time, all then outstanding Assets.
Assigned Loan: A Revolving Loan or Term Loan originated by a Person other than
the Originator in which a constant percentage interest has been assigned to the
Originator by such Person in accordance with the Credit and Collection Policy
and (i) such transaction has been fully consummated prior to such Loan becoming
part of the Asset Pool hereunder, (ii) the Originator is a party to a credit
agreement and/or an assignment agreement and a promissory note with the Obligor
with respect to such Loan, (iii) the agent bank receives payment directly from
the Obligor thereof on behalf of each lender that has been assigned a percentage
interest in such Revolving Loan or Term Loan, and (iv) such Loan is
substantially in the form of the
7
"Assigned Loan" attached hereto as Schedule V or such other form as shall be
adopted by the Originator and approved in writing by the Administrative Agent at
least ten (10) days prior to such Loan becoming part of the Asset Pool
hereunder; provided, however, any such Loan shall exclude any Retained Interest.
Assignment of Mortgage: As to each Loan secured by an interest in real property,
one or more assignments, notices of transfer or equivalent instruments, each in
recordable form and sufficient under the laws of the relevant jurisdiction to
reflect the transfer of the related mortgage, deed of trust, security deed or
similar security instrument and all other documents related to such Loan and to
the Seller and to grant a perfected lien thereon by the Seller in favor of the
Administrative Agent, on behalf of the Secured Parties, each such Assignment of
Mortgage to be substantially in the form of Exhibit I hereto.
Availability: At any time, an amount equal to the positive excess (if any) of
(i) the amount by which the lesser of (a) the Facility Amount and (b) the
Maximum Availability exceeds the amount necessary to cure any
Overcollateralization Shortfall and any Required Equity Shortfall minus (ii) the
Advances Outstanding on such day; provided, however, during the Amortization
Period, the Availability shall be zero.
Available Funds: With respect to any Payment Date, all amounts received in the
Collection Account (including, without limitation, any Collections on Assets
included in the Asset Pool and earnings from Permitted Investments in the
Collection Account and the Excess Spread Account) during the Collection Period
that ended on the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs.
Average Pool Charged-Off Ratio: As of any Determination Date, the percentage
equivalent of a fraction the numerator of which is equal to the sum of (1) the
Outstanding Loan Balance of all Loans (excluding equity and preferred stock
investments) that became Charged-Off Loans (net of Recoveries during such
Collection Period) during the Collection Period related to such Determination
Date and (2) the Outstanding Loan Balances of Loans (excluding equity and
preferred stock investments) that became Charged-Off Loans (net of Recoveries
during such Collection Periods) during the Collection Periods related to the
eleven (11) immediately preceding Determination Dates, and the denominator of
which is equal to a fraction the numerator of which is the sum of (1) the
Aggregate Outstanding Loan Balance (excluding equity and preferred stock
investments) as of the first (1st) day of the Collection Period related to such
Determination Date and (2) the Aggregate Outstanding Loan Balance (excluding
equity and preferred stock investments) as of the first (1st) day of the
immediately preceding eleven (11) Collection Periods and the denominator of
which is twelve (12).
Average Portfolio Charged-Off Ratio: As of any Determination Date, the
percentage equivalent of a fraction the numerator of which is equal to the sum
of (1) the Portfolio Outstanding Loan Balance of all Portfolio Loans (excluding
equity and preferred stock investments) that became Charged-Off Portfolio Loans
(net of Recoveries during such Collection Period) during the Collection Period
related to such Determination Date and (2) the Portfolio Outstanding Loan
Balances of all Portfolio Loans (excluding equity and preferred stock
investments) that became Charged-Off Portfolio Loans (net of Recoveries during
such Collection Periods) during the Collection Periods related to the eleven
(11) immediately preceding Determination Dates, and
8
the denominator of which is equal to a fraction the numerator of which is the
sum of (1) the Portfolio Aggregate Outstanding Loan Balance (excluding equity
and preferred stock investments) as of the first (1st) day of the Collection
Period related to such Determination Date and (2) the Portfolio Aggregate
Outstanding Loan Balance (excluding equity and preferred stock investments) as
of the first (1st) day of the immediately preceding eleven (11) Collection
Periods and the denominator of which is twelve (12).
Average Portfolio Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction (i) the numerator of which is equal to the
sum of (1) the Portfolio Delinquency Ratio on such Determination Date and (2)
the Portfolio Delinquency Ratio on the two (2) immediately preceding
Determination Dates and (ii) the denominator of which is equal to three (3).
Backup Servicer: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, not in its
individual capacity, but solely as Backup Servicer, its successor in interest
pursuant to Section 7.3 or such Person as shall have been appointed as Backup
Servicer pursuant to Section 7.5.
Backup Servicer Fee Letter: The Backup Servicer Fee Letter, dated as of
September 28, 2000, among the Servicer, the Administrative Agent, and the Backup
Servicer, as such letter may be amended, modified, supplemented, restated or
replaced from time to time.
Backup Servicer Fee Rate: The rate per annum set forth in the Backup Servicer
Fee Letter as the "Backup Servicer Fee Rate."
Backup Servicer Termination Notice: Defined in Section 7.5.
Backup Servicing Fee: Defined in the Backup Servicer Fee Letter.
Banded Floating Rate Loan: An Eligible Loan where the interest rate payable by
the Obligor thereof fluctuates between a lowest interest rate and a highest
interest rate allowable under its Required Loan Documents.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978 (11 U.S.C.
Section 101, et seq.), as amended from time to time.
Base Rate: On any date, a fluctuating interest rate per annum equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.
Benefit Plan: Any employee benefit plan as defined in Section 3(3) of ERISA in
respect of which the Seller or any ERISA Affiliate of the Seller is, or at any
time during the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇: Defined in the Preamble of this Agreement.
Borrowing Base: On any date of determination, the sum of (i) the Aggregate
Outstanding Loan Balance and (ii) the Outstanding Loan Balances of all
Additional Loans that are Eligible Loans to be included as part of the Asset
Pool on such date minus the amount (calculated without duplication) by which
such Eligible Loans exceed any applicable Pool Concentration Criteria.
9
Borrowing Base Certificate: Each certificate, in the form of Exhibit A-3,
required to be delivered by the Seller along with each Borrowing Notice.
Borrowing Notice: Each notice, in the form of Exhibit A-1 or A-2 (as
applicable), required to be delivered by the Seller (i) in respect of (a) the
Initial Advance and each incremental Advance, (b) any reduction of the Facility
Amount or repayment of Advances Outstanding, or (c) any reinvestment of
Principal Collections under Section 2.7(b); and (ii) on each Determination Date.
Breakage Costs: Collectively, the VFCC Breakage Costs, Fairway Breakage Costs,
the Eiffel Breakage Costs, and the Hannover Breakage Costs, if any.
Business Day: Any day other than a Saturday or a Sunday on which (a) banks are
not required or authorized to be closed in Minneapolis, Minnesota, New York
City, New York or Charlotte, North Carolina, and (b) if the term "Business Day"
is used in connection with the determination of the LIBOR Rate, dealings in
United States dollar deposits are carried on in the London interbank market.
Capital Lease Obligations: With respect to any Obligor on a Subordinated Loan,
for any period, the obligations of such Person to pay rent and other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP.
CapitalSource Commercial Loan Trust 2002-1 Transaction: That certain private
placement transaction of commercial loan-backed notes pursuant to Rule 144A and
Regulation S issued by CapitalSource Commercial Loan Trust 2002-1, which closed
May 16, 2002.
CapitalSource Commercial Loan Trust 2002-2 Transaction: That certain private
placement transaction of commercial loan-backed notes pursuant to Rule 144A and
Regulation S issued by CapitalSource Commercial Loan Trust 2002-2, which closed
October 30, 2002.
CDCFP: Defined in the Preamble of this Agreement.
Change-in-Control: Any of the following:
(a) The failure of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ and Farallon
Capital Partners L.P. and Affiliates thereof to own (directly or indirectly),
free and clear of all liens, at least 30% of the outstanding membership
interests of CapitalSource Holdings LLC;
(b) The failure of CapitalSource Holdings LLC to own (directly or
through wholly-owned subsidiaries), free and clear of all liens, 99.9% of the
outstanding voting membership interests of the Originator;
(c) the creation or imposition of any Lien on any limited
liability company membership interest in the Seller; or
(d) the failure by Originator to own all of the limited liability
company membership interests in the Seller.
10
Charged-Off Loan: A Loan (or portion thereof deemed to be "charged-off") as to
which any of the following first occurs: (i) the Servicer has determined or
should have reasonably determined in accordance with the Credit and Collection
Policy that such Loan is not collectible, (ii) (1) all or any portion of any one
or more payments remains unpaid for at least ninety (90) days from the original
due date for such payment, in which case not less than fifty percent (50%) of
the Outstanding Loan Balance of such Loan shall be deemed to be "charged-off"
for purposes of this Agreement, and (2) all or any portion of any one or more
payments remains unpaid for at least one hundred and eighty (180) days from the
original due date for such payment, in which case not less than one hundred
percent (100%) of the Outstanding Loan Balance of such Loan shall be deemed to
be "charged-off" for purposes of this Agreement, (iii) (1) the Obligor thereof
or any Person obligated thereon is subject to an Insolvency Event, in which case
not less than fifty percent (50%) of the Outstanding Loan Balance of such Loan
shall be deemed to be "charged-off" as of the date of the occurrence of such
Insolvency Event for purposes of this Agreement, (2) the Obligor thereof or any
Person thereon is generally unable to meet its financial obligations, (3) the
Obligor thereof or any Person obligated thereunder has suffered a material
adverse change which materially affects its viability as an ongoing concern, or
(4) adequate collateral or other source of payment does not exist to repay the
principal due under the Loan as determined by the Servicer, or (iv) the
Timeshare Cumulative Default Ratio is greater than or equal to twenty (20%)
percent, in which case not less than one hundred (100%) percent of the
Outstanding Loan Balance of such Timeshare Mortgage Loan shall be deemed to be
'charged-off' for purposes of this Agreement.
Charged-Off Portfolio Loan: A Portfolio Loan (or portion thereof deemed to be
"charged-off") as to which any of the following first occurs: (i) the Servicer
has determined or should have reasonably determined in accordance with the
Credit and Collection Policy (or such similar policies and procedures utilized
by the Servicer in servicing such Portfolio Loan) that such Portfolio Loan is
not collectible, (ii) (1) all or any portion of any one or more payments remains
unpaid for at least ninety (90) days from the original due date for such
payment, in which case not less than fifty percent (50%) of the Portfolio
Outstanding Loan Balance of such Portfolio Loan shall be deemed to be
"charged-off" for purposes of this Agreement, and (2) all or any portion of any
one or more payments remains unpaid for at least one hundred and eighty (180)
days from the original due date for such payment, in which case not less than
one hundred percent (100%) of the Portfolio Outstanding Loan Balance of such
Portfolio Loan shall be deemed to be "charged-off" for purposes of this
Agreement, (iii) (1) the Obligor thereof or any Person obligated thereon is
subject to an Insolvency Event, in which case not less than fifty percent (50%)
of the Portfolio Outstanding Loan Balance of such Portfolio Loan shall be deemed
to be "charged-off" as of the date of the occurrence of such Insolvency Event
for purposes of this Agreement, (2) the Obligor thereof or any Person obligated
thereon is generally unable to meet its financial obligations, (3) the Obligor
or any Person obligated thereon has suffered a material adverse change which
materially affects its viability as an ongoing concern, or (4) adequate
collateral or other source of payment does not exist to repay the principal due
under the Portfolio Loan as determined by the Servicer, or (iv) the Timeshare
Cumulative Default Ratio, (1) with respect to any Sterling Timeshare Loan (other
than the Sterling Timeshare Loans the Obligors of which are Delft Funding, LLC
and Legends Funding, LLC), is greater than or equal to twelve and one-half
(12.5%) percent, or (2) with respect to the Sterling Timeshare Loans the
Obligors of which are Delft Funding, LLC and Legends Funding, LLC, with respect
to such Portfolio Loan is greater than or equal to 20% in which case not less
than one hundred percent
11
(100%) of the Portfolio Outstanding Loan Balance of such Portfolio Loan shall be
deemed to be "charged-off" for purposes of this Agreement.
Clearing Agency: An organization registered as a "clearing agency" pursuant to
Section 17A of the Exchange Act.
Closing Date: February 25, 2003.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Collateral Custodian: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, not in
its individual capacity, but solely as Collateral Custodian, its successor in
interest pursuant to Section 8.3or such Person as shall have been appointed
Collateral Custodian pursuant to Section 8.5.
Collateral Custodian Fee: Defined in the Collateral Custodian Fee Letter.
Collateral Custodian Fee Letter: The Amended and Restated Collateral Custodian
Fee Letter, dated as of April 24, 2002, among the Originator, the Administrative
Agent and the Collateral Custodian, as such letter may be amended, modified,
supplemented, restated or replaced from time to time.
Collateral Custodian Termination Notice: Defined in Section 8.5.
Collection Account: Defined in Section 6.4(f).
Collection Date: The date following the Termination Date on which the Aggregate
Unpaids have been reduced to zero and indefeasibly paid in full.
Collection Period: Each calendar month.
Collections: (a) All cash collections and other cash proceeds of any Loans,
including, without limitation, Scheduled Payments, Finance Charges, Prepayments,
Insurance Proceeds, and all Recoveries or other amounts received in respect
thereof but excluding any Excluded Amounts, (b) any cash proceeds or other funds
received by the Seller or the Servicer with respect to any Related Security and
(c) all payments received pursuant to any Hedging Agreement or Hedge
Transaction.
Commercial Paper Notes: On any day, any short-term promissory notes of any
Purchaser issued by such Purchaser in the commercial paper market.
Commitment: With respect to each Purchaser, the commitment of such Purchaser to
make Advances in accordance herewith in an amount not to exceed (i) (a) prior to
the Termination Date, the dollar amount set forth opposite such Purchaser's
signature on the signature pages hereto under the heading "Commitment" and (b)
on or after the Termination Date, the aggregate Advances Outstanding or (ii)
with respect to each Advance, the Pro-Rata Share.
12
Commitment Fee: (a) With respect to VFCC, as defined in the VFCC Fee Letter, (b)
with respect to Fairway, as defined in the Fairway Fee Letter, (c) with respect
to Eiffel, as defined in the Eiffel Fee Letter, and (d) with respect to
Hannover, as defined in the Hannover Fee Letter.
Consolidated Free Cash Flow: With respect to any Obligor on a Subordinated Loan,
for any period, EBITDA less capital expenditures.
Consolidated Funded Indebtedness: As of any date of determination, all
outstanding Indebtedness of the Originator and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Subsidiary: With respect to any Obligor on a Subordinated Loan, as
of any date of determination, any Subsidiary or other Person the accounts of
which would be consolidated with those of the Obligor in its consolidated
financial statements if such statements were prepared as of such date.
Consolidated Tangible Net Worth: As of any date of determination, the assets
less the liabilities of the Originator and its Subsidiaries on a consolidated
basis, less intangible assets (including goodwill), all determined in accordance
with GAAP.
Contractual Obligation: With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.
CP Rate: The VFCC CP Rate, the Fairway CP Rate, the Eiffel CP Rate or the
Hannover CP Rate, as applicable.
Credit and Collection Policy: The written credit policies and procedures manual
of the Originator and the Servicer (which policies shall include without
limitation policies on a risk rating system, Loan Loss Reserve, due diligence
format, underwriting parameters and credit approval procedures) set forth on
Schedule VI, as may be as amended or supplemented from time to time in
accordance with Section 5.1(h) and Section 5.4(f).
Cut-Off Date: With respect to each Loan, the date on and after which Collections
on an Existing Loan are to be transferred to the Asset Pool, and with respect to
each Additional Loan, the date on and after which Collections on an Additional
Loan are to be transferred to the Asset Pool.
Deemed Collection: Defined in Section 2.3(c).
Delinquent Loan: A Loan (that is not a Charged-Off Loan) as to which either of
the following first occurs: (a) all or any portion of any one or more payments
thereunder remains unpaid for at least sixty (60) days from the original due
date for such payment, (b) the Timeshare Delinquency Ratio with respect to such
Loan is greater than or equal to (i) 7.5% in the case of Timeshare Loans to
Obligors that are special purpose entities (other than special purpose entities
with assets that relate to the properties at Tahoe Beach and Ski Club, Nevada,
Bethel Beach Club Resort and Spa, Florida, Surrey Vacation Resort, Missouri,
MMG/Berkeley Resorts, Florida, Sedona Springs Resort Properties, Arizona), and
(ii) 10.0% in the case of Timeshare Loans to Obligors
13
that are special purpose entities with assets that relate to the properties at
Tahoe Beach and Ski Club, Nevada, Bethel Beach Club Resort and Spa, Florida,
Surrey Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida, Sedona Springs
Resort Properties, Arizona, (c) consistent with the Credit and Collection Policy
such Loan would be classified as delinquent by the Servicer or the Originator.
Delinquent Portfolio Loan: A Portfolio Loan (that is not a Charged-Off Portfolio
Loan) as to which either of the following first occurs: (a) all or any portion
of any one or more payments thereunder remains unpaid for at least sixty (60)
days from the original due date for such payment, (b) the Timeshare Delinquency
Ratio with respect to such Portfolio Loan is greater than or equal to (i) 7.5%
in the case of Timeshare Loans to Obligors that are special purpose entities
(other than special purpose entities with assets that relate to the properties
at Tahoe Beach and Ski Club, Nevada, Bethel Beach Club Resort and Spa, Florida,
Surrey Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida, Sedona Springs
Resort Properties, Arizona), and (ii) 10.0% in the case of Timeshare Loans to
Obligors that are special purpose entities with assets that relate to the
properties at Tahoe Beach and Ski Club, Nevada, Bethel Beach Club Resort and
Spa, Florida, Surrey Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida,
Sedona Springs Resort Properties, Arizona, or (c) consistent with the Credit and
Collection Policy (or such similar policies and procedures utilized by the
Servicer in servicing such Portfolio Loan) such Portfolio Loan would be
classified as delinquent by the Servicer or the Originator. For the purpose of
determining the Portfolio Delinquency Ratio, with respect to any Timeshare Loan
(which is not otherwise deemed to be a Charged-Off Portfolio Loan) as to which
all or any portion of any one or more scheduled payments thereunder remains
unpaid for at least sixty (60) days from the original due date for such payment,
the entire unpaid balance of such Timeshare Loan will be deemed to be
"delinquent"; provided, however, the foregoing shall not affect the status of
any other Timeshare Loans securing a Loan.
Derivatives: Any exchange-traded or over-the-counter (i) forward, future,
option, swap, cap, collar, floor or foreign exchange contract or any combination
thereof, whether for physical delivery or cash settlement, relating to any
interest rate, interest rate index, currency, currency exchange rate, currency
exchange rate index, debt instrument, debt price, debt index, depository
instrument, depository price, depository index, equity instrument, equity price,
equity index, commodity, commodity price or commodity index, (ii) any similar
transaction, contract, instrument, undertaking or security, or (iii) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.
Determination Date: The last day of each Collection Period.
DIP Loan: Any Revolving Loan or Term Loan to an Obligor that is a Chapter 11
debtor under the Bankruptcy Code which is permitted by the Credit and Collection
Policy and also satisfies the following criteria: (a) the DIP Loan is duly
authorized by a final order of the applicable bankruptcy or federal district
court under the provisions of subsection (b), (c) or (d) of 11 U.S.C. Section
364, (b) the Obligor's bankruptcy case is still pending as a case under the
provisions of Chapter 11 of Title 11 of the Bankruptcy Code and has not been
dismissed or converted to a case under the provisions of Chapter 7 of Title 11
of the Bankruptcy Code, (c) the Obligor's obligations under such Loan have not
been (i) disallowed, in whole or in part, or (ii) subordinated, in whole or in
part, to the claims or interests of any other Person under the provisions of 11
U.S.C. Section 510,
14
(d) the DIP Loan is secured and the liens and security interests granted by the
applicable federal bankruptcy or district court in relation to the Loan have not
been subordinated, in whole or in part, to the liens or interests of any other
lender under the provisions of 11 U.S.C. Section 364(d) or otherwise, (e) the
Obligor is not in default on its obligations under the Loan, (f) neither the
Obligor nor any party in interest has filed a Chapter 11 plan with the
applicable federal bankruptcy or district court that, upon confirmation, would
(i) disallow or subordinate the Loan, in whole or in part, (ii) subordinate, in
whole or in part, any lien or security interest granted in connection with such
Loan, (iii) fail to provide for the repayment, in full and in cash, of the Loan
upon the effective date of such plan or (iv) otherwise impair, in any manner,
the claim evidenced by the Loan and (g) the DIP Loan is in the form of the "DIP
Loan Agreement" attached hereto as Schedule V or in such other form as shall be
adopted by the Originator and approved in writing by the Administrative Agent at
least ten (10) days prior to such Loan becoming part of the Asset Pool
hereunder. For the purposes of this definition, an order is a "final order" if
the applicable period for filing a motion to reconsider or notice of appeal in
respect of a permanent order authorizing the Obligor to obtain credit has lapsed
and no such motion or notice has been filed with the applicable federal
bankruptcy or district court or the clerk thereof.
Diversity Score: A single number that indicates the collateral concentration in
terms of both the Obligor and industry classification, which number is
calculated as described in Schedule VII hereto.
Dollars: Means, and the conventional "$" signifies, the lawful currency of the
United States.
EBITDA: With respect to any Obligor on a Subordinated Loan, for any period, the
consolidated net income of such Obligor and its Consolidated Subsidiaries for
such period, plus, to the extent deducted in determining consolidated net income
for such period, depreciation, interest, amortization and income taxes,
determined in accordance with GAAP, excluding, however, (i) all intercompany
items, (ii) all earnings attributable to equity interests in Persons that are
not Consolidated Subsidiaries unless actually received by the Obligor or a
Consolidated Subsidiary, (iii) all income arising from the forgiveness,
adjustment, or negotiated settlement of any Indebtedness, (iv) any extraordinary
items of income or expense (including gains and losses from asset sales), and
(v) any increase or decrease in income arising from any change in the Obligor's
method of accounting.
Eiffel: Defined in the Preamble of this Agreement.
Eiffel Agent: Defined in the Preamble of this Agreement.
Eiffel Agent's Account: A special account (ABA number ▇▇▇▇▇▇▇▇▇; account number
▇▇▇▇▇▇▇▇ (CTAS) in the name of Eiffel at Bankers Trust Company.
Eiffel Breakage Costs: Any amount or amounts as shall compensate Eiffel for any
loss, cost or expense incurred by Eiffel (as determined by the Eiffel Agent on
behalf of Eiffel, in the Eiffel Agent's sole discretion) as a result of (i) a
prepayment by the Seller of Advances Outstanding or Interest or (ii) any
difference between the Eiffel CP Rate and the Adjusted Eurodollar Rate. All
Eiffel Breakage Costs shall be due and payable hereunder upon demand.
15
Eiffel CP Rate: For any day during any Accrual Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by
Eiffel from time to time as interest on or otherwise (by means of interest rate
▇▇▇▇▇▇ or otherwise taking into consideration any incremental carrying costs
associated with short-term promissory notes issued by Eiffel maturing on dates
other than those certain dates on which Eiffel is to receive funds) in respect
of the promissory notes issued by Eiffel that are allocated, in whole or in
part, by the Eiffel Agent (on behalf of Eiffel) to fund or maintain the Advances
Outstanding funded by Eiffel during such period, as determined by the Eiffel
Agent (on behalf of Eiffel) and reported to the Seller and the Servicer, which
rates shall reflect and give effect to (i) the commissions of placement agents
and dealers in respect of such promissory notes, to the extent such commissions
are allocated, in whole or in part, to such promissory notes by the Eiffel Agent
(on behalf of Eiffel) and (ii) other borrowings by Eiffel, including, without
limitation, borrowings to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market; provided, however, that if any
component of such rate is a discount rate, in calculating the Eiffel CP Rate,
the Eiffel Agent shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per annum.
Eiffel Fee Letter: The Eiffel Fee Letter, dated as of April 24, 2002, among the
Seller, the Servicer, the Administrative Agent, and the Eiffel Agent, as amended
by Amendment No. 1 to Eiffel Fee Letter dated as of November 11, 2002, and by
Amendment No. 2 to Eiffel Fee Letter, dated as of February 25, 2003, and as such
letter may be amended, modified, supplemented, restated or replaced from time to
time.
Eligible Loan: On any date of determination, each Loan (A) for which the
Administrative Agent, Collateral Custodian and Backup Servicer have received the
following no later than 12:00 p.m. Charlotte, North Carolina time on the day
prior to the related Funding Date: (i) a faxed copy of the duly executed
original promissory note and Loan Checklist in a form and substance satisfactory
to the Administrative Agent and, if any Loans are closed in escrow, a
certificate (in the form of Exhibits F-1 or F-2, as applicable) from the closing
attorneys of such Loans certifying the possession of the Required Loan
Documents; provided, however, notwithstanding the foregoing, the Required Loan
Documents (including any UCCs included in the Required Loan Documents) shall be
in the possession of the Collateral Custodian within two (2) Business Days of
any related Funding Date as to any Additional Loans, (ii) a Borrowing Notice and
such Loan is accurately identified on the Loan List delivered by the Seller to
the Collateral Custodian and the Administrative Agent as part of the Borrowing
Notice or Monthly Report delivered by the Servicer, (iii) a Borrowing Base
Certificate, and (iv) a Certificate of Assignment (Exhibit A to the Sale
Agreement, including Schedule I thereto); provided, however, that if such Loan
is part of a capital contribution or Required Equity Contribution to the Seller
the Collateral Custodian shall have received the Required Loan Documents within
three (3) Business Days of receipt of the Certificate of Assignment, and (B)
that satisfies each of the following eligibility requirements:
(a) the Loan, together with the Related Security, has been
originated or acquired by the Originator, sold to the Seller pursuant to (and in
accordance with) the Sale Agreement and the Seller has good title, free and
clear of all Liens (other than permitted Liens), on such Loan and Related
Security;
16
(b) the Loan, (i) (together with the Collections and Related
Security related thereto) has been the subject of a grant by the Seller in favor
of the Administrative Agent, on behalf of the Secured Parties, of a first
priority perfected security interest, and (ii) with respect to which, at the
time of the sale of such Loan to the Seller, the Originator had a first priority
(other than Subordinated Loans) perfected security interest in the Related
Property relating to such Loan;
(c) at the time such Loan is included in the Asset Pool, the Loan
(i) is not (and since its origination by the Originator or, in the case of
Acquired Loans, acquisition by the Originator has never been) a Charged-Off
Loan, (ii) is not past due with respect to payments of principal or interest
(provided, that, if such Loan is past due at the time it is included in the
Asset Pool but not more than ten (10) days past due, the Originator and the
Servicer must reasonably believe that such Loan will promptly and in no event
later than the date of the next Scheduled Payment due on such Loan, be brought
current with respect to all payments due thereunder), and (iii) has never been
more than thirty (30) days past due (after giving effect to a five (5) day grace
period in determining the number of days past due), with respect to payments of
principal or interest, or, in the case of Acquired Loans, has never been more
than thirty (30) days past due in the twelve (12) months prior to acquisition;
(d) the Loan is an "eligible asset" as defined in Rule 3a-7 under
the 40 Act;
(e) the Loan is a contract the purchase of which with the proceeds
of Commercial Paper Notes would constitute a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended;
(f) the Loan is an "account", "chattel paper", "instrument" or a
"general intangible" within the meaning of Article 9 of the UCC of all
applicable jurisdictions;
(g) the Loan is to an Eligible Obligor and is denominated and
payable only in United States dollars in the United States and does not permit
the currency in which or country in which such Loan is payable to be changed;
(h) the Loan is evidenced by a promissory note, security agreement
or instrument and related loan documents that have been duly authorized and
executed, are in full force and effect and constitute the legal, valid, binding
and absolute and unconditional payment obligation of the related Obligor,
enforceable against such Obligor in accordance with their terms (subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and to general principles of equity, whether
considered in a suit at law or in equity), and there are no conditions precedent
to the enforceability or validity of the Loan that have not been satisfied or
validly waived;
(i) the Loan does not contravene in any material respect any
Applicable Laws (including, without limitation, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices, licensing and privacy)
and with respect to which no part thereof is in violation of any Applicable Law
in any material respect;
(j) the Loan, (i) satisfies all applicable requirements of and was
originated or acquired, underwritten and closed in accordance with the Credit
and Collection Policy (including
17
without limitation the execution by the Obligor of all documentation required by
the Credit and Collection Policy); (ii) does not contain a confidentiality
provision that restricts or purports to restrict the ability of the
Administrative Agent or any Secured Party to exercise their rights under this
Agreement, including, without limitation, their rights to review the Loan, the
Required Loan Documents and Loan File; (iii) was generated in the ordinary
course of the Originator's business; (iv) arises pursuant to loan documentation
with respect to which the Originator has performed all obligations required to
be performed by it thereunder; (v) has an original term to maturity (A) in the
case of Senior Secured Loans of not greater than five (5) years, or (B) in the
case of Subordinated Loans of not greater than seven (7) years; (vi) is not
subject to a guaranty by the Originator or any Affiliate thereof; (vii) is not a
consumer loan; and (viii) is executed on forms substantially in the form of
those attached hereto as Schedule V or in such other form as shall be adopted by
the Originator and approved in writing by the Administrative Agent at least ten
(10) days prior to such Loan becoming part of the Asset Pool hereunder;
(k) neither the assignment of the Loan under the Sale Agreement by
the Originator, the sale of the Loan hereunder or the granting of a security
interest hereunder by the Seller violates, conflicts with or contravenes any
Applicable Laws or any contractual or other restriction, limitation or
encumbrance;
(l) on or before the applicable Cut-Off Date, the Obligor of such
Loan shall have been directed to make all payments to the Lock-Box or directly
to the Lock-Box Account;
(m) the Loan requires the Obligor thereof to maintain adequate
property damage and liability insurance with respect to the real or personal
property constituting the Related Property and the same has been at all times
covered by adequate physical damage and liability insurance policies
satisfactory to the Administrative Agent;
(n) the Related Property (i) is located in the United States, (ii)
has not been foreclosed on, or repossessed from the current Obligor, by the
Servicer, and (iii) has not suffered any material loss or damage that has not
been repaired or restored;
(o) the Loan provides by its terms that the Obligor's payment
obligations are absolute and unconditional without any right of rescission,
setoff, counterclaim or defense for any reason against the Originator and the
Loan contains a clause that has the effect of unconditionally and irrevocably
obligating the Obligor to make periodic payments (including taxes) and
notwithstanding any damage to, defects in or destruction of the Related Property
or any other event, including obsolescence of any property or improvements;
(p) the Loan is not subject to any litigation, dispute, refund,
claims of rescission, setoff, netting, counterclaim or defense whatsoever,
including but not limited to, claims by or against the Obligor thereof or a
payor to or account debtor of such Obligor;
(q) the Loan requires the Obligor to maintain the Related Property
in good condition and to bear all the costs of operating and maintaining same,
including taxes and insurance relating thereto;
(r) the Loan provides (i) for periodic payments of interest and/or
principal in cash, which are due and payable on a monthly or quarterly basis
unless otherwise consented to in
18
writing by the Administrative Agent, and (ii) that the Servicer (or, with
respect to Assigned Loans, that the agent bank or a majority of the related
lenders) may accelerate all payments on the Loan if the Obligor is in default
under the Loan and any applicable grace period has expired;
(s) the Loan provides for cash payments that fully amortize the
Outstanding Loan Balance of such Loan on or by its maturity and does not provide
for such Outstanding Loan Balance to be discounted pursuant to a prepayment in
full;
(t) the Loan does not permit the Obligor to defer all or any
portion of the current cash interest due thereunder;
(u) the Loan does not permit the payment obligation of the Obligor
thereunder to be converted or exchanged for equity capital of such Obligor;
(v) the Loan shall not have been originated in, nor shall it be
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Loan under the Transaction Documents would be unlawful, void
or voidable;
(w) the Loan, together with the Required Loan Documents and Loan
File related thereto, is fully assignable and does not require the consent of or
notice to the Obligor or contain any other restriction on the transfer or the
assignment of the Loan other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Loan was sold to the Seller;
provided, however, that with respect to Loans which are secured by an interest
in commercial real estate, the Required Loan Documents may restrict the transfer
or the assignment of the related Loan so long as such Loan is freely assignable
or transferable to a Qualified Transferee;
(x) the Obligor of such Loan is legally responsible for all taxes
relating to the Related Security or other security relating to such Loan, and
all payments in respect of the Loan are required to be made free and clear of,
and without deduction or withholding for or on account of, any taxes, unless
such withholding or deduction is required by Applicable Law in which case the
Obligor thereof is required to make "gross-up" payments that cover the full
amount of any such withholding taxes on an after-tax basis;
(y) the Loan complies with the representations and warranties made
by the Seller and Servicer hereunder and all information provided by the Seller
or the Servicer with respect to the Loan is true and correct in all material
respects;
(z) the Loan and the Related Security have not been sold,
transferred, assigned or pledged by the Seller to any Person;
(aa) other than Participation Loans, Agented Notes and Assigned
Loans, with respect to the Originator's obligation to fund and the actual
funding of the Loan by the Originator, the Originator has not assigned or
granted participations to, in whole or in part, any Person;
(bb) no selection procedure adverse to the interests of the
Administrative Agent, the Purchaser Agents or the Secured Parties was utilized
by the Seller or Originator in the selection of Loan for inclusion in the Asset
Pool;
19
(cc) the Loan has not been compromised, adjusted, extended,
satisfied, rescinded, set-off or modified by the Seller, the Originator or the
Obligor with respect thereto, and no Loan is subject to compromise, adjustment,
extension, satisfaction, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deductible, reduction, termination or modification,
whether arising out of transactions concerning the Loan, or otherwise, by the
Seller, the Originator or the Obligor with respect thereto except for amendments
to such Loan otherwise permitted under Section 6.4(a) of this Agreement and in
accordance with the Credit and Collection Policy;
(dd) the particular Loan is not one as to which the Seller has
knowledge which should lead it to expect such Loan will not be paid in full;
(ee) with respect to any DIP Loan, the Originator or its assignee
has been granted a first priority lien status in respect of all or certain of
the Obligor's assets by final order of the applicable federal bankruptcy or
district court;
(ff) if the Obligor of such Loan is the Obligor of more than one
(1) Loan, all such Loans are cross-collateralized and cross-defaulted;
(gg) except with respect to DIP Loans, the Obligor of such Loan is
not the subject of an Insolvency Event or Insolvency Proceedings;
(hh) the Loan does not represent capitalized interest or payment
obligations relating to "put" rights;
(ii) the Loan is not a Loan or extension of credit by the
Originator to the Obligor for the purpose of making any past due principal,
interest or other payments due on such Loan;
(jj) the Loan is secured by a valid, perfected, first priority
(other than with respect to Subordinated Loans) security interest in all assets
that constitute the collateral for the Loan subject to Permitted Liens, and such
collateral shall include but not be limited to the intellectual property of the
Obligor (if any);
(kk) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the making or performance
of the Loan have been duly obtained, effected or given and are in full force and
effect;
(ll) the Originator (i) has completed to its satisfaction, in
accordance with the Credit and Collection Policy, a due diligence audit and
collateral assessment with respect to such Loan and (ii) has done nothing to
impair the rights of the Administrative Agent, the Purchaser Agents or the
Secured Parties with respect to the Loan, the Related Security, the Scheduled
Payments or any income or Proceeds therefrom;
(mm) the Loan is a Senior Secured Loan or Subordinated Loan;
(nn) no provision of the Loan has been waived, modified, or altered
in any respect, except in accordance with the Credit and Collection Policy and
by instruments duly authorized
20
and executed and contained in the Required Loan Documents; provided, however, no
such waiver, modification or alteration shall (i) alter the status of such Loan
as a Delinquent Loan or Charged-Off Loan, (ii) in the reasonable judgment of the
Administrative Agent, prevent or delay such Loan from becoming a Delinquent Loan
or Charged-Off Loan, or (iii) limit and/or impair the rights of the
Administrative Agent or the Secured Parties under this Agreement;
(oo) except with respect to Subordinated Loans, the Loan is not
subordinated to any other loan or financing to the related Obligor;
(pp) if the Loan is a Revolver, either it provides by its terms
that any future funding thereunder is in the Originator's sole and absolute
discretion or it is subject to the Retained Interest provision of this
Agreement;
(qq) the Face Amount of the Loan is the dollar amount thereof shown
on the books and records of the Originator and Seller;
(rr) with respect to Subordinated Loans the Originator has entered
into an intercreditor agreement or subordination agreement with, or provisions
for the benefit of, the senior lender, which agreement or provisions are
assignable to and have been assigned to the Seller, and which provide that any
standstill of remedies by the Originator or its assignee is limited (A) such
that there shall be no standstill of remedies (x) until after the Originator's
or assignee's receipt from the senior lender of a notice of default by the
Obligor under the senior debt and (y) unless a covenant default is also in
effect, and (B) to no longer than one hundred eighty (180) days in duration in
the aggregate in any given year;
(ss) with respect to any Acquired Loan or Assigned Loan, such Loan
has been re-underwritten by the Originator and satisfies all of the Originator's
underwriting criteria;
(tt) with respect to any Acquired Loan, the Administrative Agent
has received a satisfactory legal opinion concerning the acquisition of such
Loan by the Originator in a true sale transaction;
(uu) with respect to any Acquired Loan that was acquired in a pool
by the Originator along with one (1) or more other Acquired Loans, the
Administrative Agent has approved in writing such Loan for inclusion in the
Asset Pool and has completed its own due diligence with respect to such Loan;
(vv) with respect to Agented Notes, the related Loan Documents (a)
shall include a note purchase agreement containing provisions relating to the
appointment and duties of a payment agent and a collateral agent and
intercreditor and (if applicable) subordination provisions substantially similar
to the forms provided to and approved by the Administrative Agent and attached
hereto as Schedule V, and (b) are duly authorized, fully and properly executed
and are the valid, binding and unconditional payment obligation of the Obligor
thereof;
(ww) with respect to Agented Notes, the Originator (or a wholly
owned subsidiary of the Originator) has been appointed the collateral agent of
the security and the payment agent for all such notes prior to such Agented Note
becoming a part of the Collateral;
21
(xx) with respect to Agented Notes, if the entity serving as the
collateral agent of the security for all syndicated notes of the Obligor has or
will change from the time of the origination of the notes, all appropriate
assignments of the collateral agent's rights in and to the collateral on behalf
of the noteholders have been executed and filed or recorded as appropriate prior
to such Agented Note becoming a part of the Collateral;
(yy) with respect to any Agented Note, all required notifications,
if any, have been given to the collateral agent, the payment agent and any other
parties required by the Required Loan Documents of, and all required consents,
if any, have been obtained with respect to, the Originator's assignment of such
Agented Note and the Originator's right, title and interest in the Related
Property to the Borrower and the Administrative Agent's security interest
therein on behalf of the secured parties;
(zz) with respect to Agented Notes, the right to control the
actions of and replace the collateral agent and/or the paying agent of the
syndicated notes is to be exercised by a majority in interest of all holders of
such Agented Notes;
(aaa) with respect to Agented Notes, all syndicated notes of the
Obligor of the same priority are cross-defaulted, the Related Property securing
such notes is held by the collateral agent for the benefit of all holders of the
syndicated notes and all holders of such notes (a) have an undivided interest in
the collateral securing such notes, (b) share in the proceeds of the sale or
other disposition of such collateral on a pro-rata basis and (c) may transfer or
assign their right, title and interest in the Related Property;
(bbb) no portion of the proceeds used to make payments of principal
or interest on such Loan have come from a new loan by the Originator; and
(ccc) with respect to each Loan that is secured by Timeshare
Mortgage Loans and related collateral, unless the Administrative Agent otherwise
approves in writing, such Timeshare Mortgage Loans satisfy each of the criteria
set forth on Appendix A.
Eligible Obligor: On any date of determination, any Obligor that (i) is a
business organization (and not a natural person) duly organized and validly
existing under the laws of, and has its chief executive offices in, the United
States or any political subdivision thereof, and has a billing address within
the United States, (ii) is a legal operating entity or holding company (except
with respect to a Loan to an SPE Obligor), (iii) has not entered into the Loan
primarily for personal, family or household purposes, (iv) is not a Governmental
Authority, (v) is not an Affiliate of any party hereto, (vi) is not in the
gaming, nuclear waste, biotechnology, natural resources or real estate
development industry, (vii) is not the subject of an Insolvency Proceeding
(except with respect to a DIP Loan), (viii) as of the applicable Cut-Off Date,
has an Eligible Risk Rating, and (ix) is not an Obligor of a Charged-Off Loan or
Delinquent Loan; provided, however, the foregoing clause (vi) shall not be
deemed to prohibit an Obligor in the biotechnology industry except for where
such Obligor's business consists of conducting proprietary research on new drug
development or an Obligor in the real estate development business except where
real estate development is the primary business of such Obligor from being
Eligible Obligors if they otherwise satisfy each of the foregoing criteria for
eligibility.
22
Eligible Repurchase Obligations: Repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (c)(ii) and (c)(iv) of the definition of Permitted
Investments.
Eligible Risk Rating: With respect to a designated Obligor, a "Loan Rating 1,"
"Loan Rating 2," or "Loan Rating 3" in accordance with the Credit and Collection
Policy.
Environmental Laws: Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 331 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300, et
seq.), the Environmental Protection Agency's regulations relating to underground
storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.), and the rules and regulations
thereunder, each as amended or supplemented from time to time.
Equity Contribution: On any date of determination, an amount equal to the
excess, if any, of (a) the sum of (i) the Borrowing Base on such date plus (ii)
all Principal Collections on deposit in the Principal Collections Account and
the Excess Spread Account on such date, minus (b) the Advances Outstanding on
such date.
ERISA: The United States Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
ERISA Affiliate: (a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Seller, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Code) with the Seller, or
(c) a member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Seller, any corporation described in clause (a) above
or any trade or business described in clause (b) above.
Eurocurrency Liabilities: Defined in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
Eurodollar Disruption Event: The occurrence of any of the following: (a) any
Liquidity Bank shall have notified the Administrative Agent of a determination
by such Liquidity Bank or any of its assignees or participants that it would be
contrary to law or to the directive of any central bank or other governmental
authority (whether or not having the force of law) to obtain United
23
States dollars in the London interbank market to fund any Advance, (b) any
Liquidity Bank shall have notified the Administrative Agent of the inability,
for any reason, of such Liquidity Bank or any of its assignees or participants
to determine the Adjusted Eurodollar Rate, (c) any Liquidity Bank shall have
notified the Administrative Agent of a determination by such Liquidity Bank or
any of its assignees or participants that the rate at which deposits of United
States dollars are being offered to such Liquidity Bank or any of its assignees
or participants in the London interbank market does not accurately reflect the
cost to such Liquidity Bank, such assignee or such participant of making,
funding or maintaining any Advance or (d) any Liquidity Bank shall have notified
the Administrative Agent of the inability of such Liquidity Bank or any of its
assignees or participants to obtain United States dollars in the London
interbank market to make, fund or maintain any Advance.
Eurodollar Reserve Percentage: For any period means the percentage, if any,
applicable during such period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
without limitation, any basic, emergency, supplemental, marginal or other
reserve requirements) with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities having a term of one (1) month.
Excess Spread Account: Defined in Section 6.4(g).
Exchange Act: The United States Securities Exchange Act of 1934, as amended.
Excluded Amounts: (a) Any amount received in the Lock-Box by, on or with respect
to any Asset in the Asset Pool, which amount is attributable to the payment of
any tax, fee or other charge imposed by any Governmental Authority on such
Asset, (b) any amount representing a reimbursement of insurance premiums and (c)
any amount with respect to any Loan retransferred or substituted for upon the
occurrence of a Warranty Event (if the Seller has decided that such Loan is no
longer to be included in the Asset Pool) or that is otherwise replaced by a
Substitute Loan (if the Seller has decided that such Loan is no longer to be
included in the Asset Pool), to the extent such amount is attributable to a time
after the effective date of such replacement.
Existing Loans: Each Loan purchased by the Seller under the Sale Agreement and
owned by the Seller on the Closing Date.
Extended Timeshare Loan: A Timeshare Loan that has been amended, rewritten,
extended or otherwise modified in any manner to permit the related Obligor or
Mortgagor additional time to make any payment due thereunder.
Extension Request Date: With respect to the Seller's right to request an
extension of the Facility Termination Date occurring in 2006 pursuant to Section
2.1(c), shall mean February 24, 2004.
Face Amount: With respect to any Loan, the Outstanding Loan Balance thereof
shown on the applicable Loan List.
24
Facility Amount: $650,000,000, as such amount may vary from time to time upon
the written agreement of the parties hereto; provided, that, such amount may not
at any time exceed the aggregate Commitments then in effect; provided, further,
that, on or after the Termination Date, the Facility Amount shall mean the
Advances Outstanding.
Facility Termination Date: Three (3) years from February 25, 2003, or such later
date as the Administrative Agent and each Purchaser Agent, in its sole
discretion, shall notify the Seller of in writing.
Fairway: Defined in the Preamble of this Agreement.
Fairway Agent: Defined in the Preamble of this Agreement.
Fairway Agent's Account: A special account (ABA number ▇▇▇▇▇▇▇▇▇; account number
254580-4) in the name of Fairway at ▇▇▇▇▇▇ Trust and Savings Bank.
Fairway Breakage Costs: Any amount or amounts as shall compensate Fairway for
any loss, cost or expense incurred by Fairway (as determined by the Fairway
Agent on behalf of Fairway, in the Fairway Agent's sole discretion) as a result
of (i) a prepayment by the Seller of Advances Outstanding or Interest or (ii)
any difference between the Fairway CP Rate and the Adjusted Eurodollar Rate. All
Fairway Breakage Costs shall be due and payable hereunder upon demand.
Fairway CP Rate: For any day during any Accrual Period, a rate of interest equal
to the per annum rate (expressed as a percentage and an interest yield
equivalent and calculated on the basis of a 360-day year) or, if more than one
rate, the weighted average thereof, paid or payable by Fairway from time to time
as interest on or otherwise in respect of the Commercial Paper Notes issued by
Fairway that are allocated, in whole or in part, by the Fairway Agent to fund
the purchase or maintenance of such Advances Outstanding (and which may also, in
the case of a pool-funded conduit purchaser, be allocated in part to the funding
of other assets of Fairway and which Commercial Paper Notes need not mature on
the last day of any Accrual Period) during such Accrual Period as determined by
the Fairway Agent, which rates shall reflect and give effect to (i) certain
documentation and transaction costs (including dealer and placement agent
commissions) associated with the issuance of Fairway's Commercial Paper Notes,
and (ii) other borrowings by Fairway, including borrowings to fund small or odd
dollar amounts that are not easily accommodated in the commercial paper market,
to the extent such amounts are allocated, in whole or in part, by the Fairway
Agent to fund Fairway's purchase or maintenance of such Advances Outstanding
during such Accrual Period; provided, that if any component of such rate is a
discount rate, in calculating the "Fairway CP Rate" for such day, the Fairway
Agent shall for such component use the rate resulting from converting such
discount rate to an interest bearing equivalent rate per annum.
Fairway Fee Letter: The Fairway Fee Letter Agreement, dated as of November 12,
2002, among the Seller, the Servicer, the Administrative Agent, and the Fairway
Agent, as amended by Amendment No. 1 to Fairway Fee Letter, dated as of February
25, 2003, and as such letter may be amended, modified, supplemented, restated or
replaced from time to time.
FDIC: The Federal Deposit Insurance Corporation, and any successor thereto.
25
Federal Funds Rate: For any period, a fluctuating interest rate per annum equal
for each day during such period to the weighted average of the overnight federal
funds rates as in Federal Reserve Board Statistical Release H.15(519) or any
successor or substitute publication selected by the Administrative Agent (or, if
such day is not a Business Day, for the next preceding Business Day), or, if,
for any reason, such rate is not available on any day, the rate determined, in
the sole opinion of the Administrative Agent, to be the rate at which overnight
federal funds are being offered in the national federal funds market at 9:00
a.m. Charlotte, North Carolina time.
Finance Charges: With respect to any Loan, any interest or finance charges owing
by an Obligor pursuant to or with respect to such Loan.
Fitch: Fitch, Inc. or any successor thereto.
Fixed Rate Loan: An Eligible Loan that is other than a Floating Rate Loan.
Fixed Rate Loan Percentage: As of any date of determination, the percentage
equivalent of a fraction (i) the numerator of which is equal to the sum of the
Outstanding Loan Balances of all Fixed Rate Loans and Banded Floating Rate Loans
that are within 0.50% of the maximum interest rate allowable under their
Required Loan Documents as of such date, and (ii) the denominator of which is
equal to the Aggregate Outstanding Loan Balance as of such date.
Floating Rate Loan: An Eligible Loan where the interest rate payable by the
Obligor thereof is based on the Prime Rate or LIBOR Rate, plus some specified
interest percentage in addition thereto, and the Loan provides that such
interest rate will reset immediately upon any change in the related Prime Rate
or LIBOR Rate.
Funding Date: The third (3rd) Business Day following the Closing Date, and as to
any incremental Advance, any Business Day that is one (1) Business Day
immediately following the receipt by the Administrative Agent and each Purchaser
Agent of a Borrowing Notice (along with a Borrowing Base Certificate) in
accordance with Section 2.2.
GAAP: Generally accepted accounting principles as in effect from time to time in
the United States.
Governmental Authority: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator having jurisdiction over such Person.
Guarantor: Defined in the Recitals of this Agreement.
Guaranty: The Guaranty, dated as of November 12, 2002, by CapitalSource Finance
in favor of Wachovia, as Hedge Counterparty, as amended, modified, waived,
supplemented or restated from time to time.
H.15: Federal Reserve Statistical Release H.15.
Hannover: Defined in the Preamble of this Agreement.
26
Hannover Agent: Defined in the Preamble of this Agreement.
Hannover Agent's Account: A special account (ABA number ▇▇▇-▇▇▇-▇▇▇; account
number 507-944-941) in the name of Hannover and entitled "Hannover Funding
Company Account, Attention ▇▇▇▇▇▇ ▇▇▇▇▇" at ▇▇▇▇▇ Manhattan Bank.
Hannover Breakage Costs: Any amount or amounts as shall compensate Hannover for
any loss, cost or expense incurred by Hannover (as determined by the Hannover
Agent on behalf of Hannover, in the Hannover Agent's sole discretion) as a
result of (i) a prepayment by the Seller of Advances Outstanding or Interest or
(ii) any difference between the Hannover CP Rate and the Adjusted Eurodollar
Rate. All Hannover Breakage Costs shall be due and payable hereunder upon
demand.
Hannover CP Rate: For any day during any Accrual Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by
Hannover from time to time as interest on or otherwise (by means of interest
rate ▇▇▇▇▇▇ or otherwise taking into consideration any incremental carrying
costs associated with short-term promissory notes issued by Hannover maturing on
dates other than those certain dates on which Hannover is to receive funds) in
respect of the promissory notes issued by Hannover that are allocated, in whole
or in part, by the Hannover Agent (on behalf of Hannover) to fund or maintain
the Advances Outstanding funded by Hannover during such period, as determined by
the Hannover Agent (on behalf of Hannover) and reported to the Seller and the
Servicer, which rates shall reflect and give effect to (i) the commissions of
placement agents and dealers in respect of such promissory notes, to the extent
such commissions are allocated, in whole or in part, to such promissory notes by
the Hannover Agent (on behalf of Hannover) and (ii) other borrowings by
Hannover, including, without limitation, borrowings to fund small or odd dollar
amounts that are not easily accommodated in the commercial paper market;
provided, however, that if any component of such rate is a discount rate, in
calculating the Hannover CP Rate, the Hannover Agent shall for such component
use the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum.
Hannover Fee Letter: The Hannover Fee Letter, dated as of February 25, 2003,
among the Seller, the Servicer, the Administrative Agent, and the Hannover
Agent, as such letter may be amended, modified, supplemented, restated or
replaced from time to time.
Hedge Amount: On any day, amount equal to the product of (a) the product of (i)
the Borrowing Base and (ii) the Fixed Rate Loan Percentage and (b) one (1) minus
the Overcollateralization Percentage.
Hedge Assets: Defined in Section 5.3(b).
Hedge Breakage Costs: For any Hedge Transaction, any amount payable by the
Seller for the early termination of that Hedge Transaction or any portion
thereof.
Hedge Counterparty: Wachovia and any other entity that (a) on the date of
entering into any Hedge Transaction (i) is an interest rate swap dealer that has
been approved in writing by the Administrative Agent (which approval shall not
be unreasonably withheld), and (ii) has a long-term unsecured debt rating of not
less than "A" by S&P, not less than "A2" by ▇▇▇▇▇'▇ and not
27
less than "A-" by Fitch (if such entity is rated by Fitch) ("Long-term Rating
Requirement") and a short-term unsecured debt rating of not less than "A-1" by
S&P, not less than "P-1" by ▇▇▇▇▇'▇ and not less than "F-1" by Fitch (if such
entity is rated by Fitch) ("Short-term Rating Requirement"), and (b) in a
Hedging Agreement (i) consents to the assignment of the Seller's rights under
the Hedging Agreement to the Administrative Agent pursuant to Section 5.3(b) and
(ii) agrees that in the event that ▇▇▇▇▇'▇, S&P or Fitch reduces its long-term
unsecured debt rating below the Long-term Rating Requirement, or reduces its
short-term unsecured debt rating below the Short-term Rating Requirement, it
shall transfer its rights and obligations under each Hedging Transaction to
another entity that meets the requirements of clause (a) and (b) hereof and has
entered into a Hedging Agreement with the Seller on or prior to the date of such
transfer.
Hedge Notional Amount: For any Advance, the aggregate notional amount in effect
on any day under all Hedge Transactions entered into pursuant to Section 5.3(a)
for that Advance.
Hedge Percentage: On any day, that (a) the Aggregate Outstanding Loan Balance
exceeds $150,000,000, an amount equal to 100% for Fixed Rate Loans if the sum of
the Outstanding Loan Balances of all Fixed Rate Loans exceeds $50,000,000 or (b)
the Aggregate Outstanding Loan Balance is less than or equal to $150,000,000, an
amount equal to 100% for Fixed Rate Loans if the sum of the Outstanding Loan
Balances of all Fixed Rate Loans exceeds $20,000,000. The 'Hedge Percentage' for
Floating Rate Loans is 0%. The `Hedge Percentage' for Banded Floating Rate
Loans, on any day, is an amount equal to 100% if the interest rate on any such
Loan is within 0.50% of the maximum interest rate allowable under its Required
Loan Documents.
Hedge Transaction: Each interest rate or index rate swap transaction between the
Seller and a Hedge Counterparty that is entered into pursuant to Section 5.3(a)
and is governed by a Hedging Agreement.
Hedged Rate: For any Advance, the interest rate payable to the Hedge
Counterparty under the Hedge Transaction related to such Advance computed as of
the Cut-Off Date under or with respect to the Loan to which that Advance
relates.
Hedging Agreement: Each agreement between the Seller and a Hedge Counterparty
that governs one or more Hedge Transactions entered into pursuant to Section
5.3(a), which agreement shall consist of a "Master Agreement" in a form
published by the International Swaps and Derivatives Association, Inc., together
with a "Schedule" thereto substantially in the form of Exhibit D hereto or such
other form as the Administrative Agent shall approve in writing subject to the
satisfaction of the Rating Agency Condition, and each "Confirmation" thereunder
confirming the specific terms of each such Hedge Transaction.
Highest Required Investment Category: (i) With respect to ratings assigned by
▇▇▇▇▇'▇, "Aa2" or "P-1" for one (1) month instruments, "Aa2" and "P-1" for three
(3) month instruments, "Aa3" and "P-1" for six (6) month instruments and "Aa2"
and "P-1" for instruments with a term in excess of six (6) months, (ii) with
respect to rating assigned by S&P, "A-1" for short-term instruments and "A" for
long-term instruments, and (iii) with respect to rating assigned by Fitch (if
such investment is rated by Fitch), "F-1+" for short-term instruments and "AAA"
for long-term instruments.
28
Increased Costs: Any amounts required to be paid by the Seller to an Affected
Party pursuant to Section 2.13.
Indebtedness: With respect to any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current liabilities incurred in the ordinary course of
business and payable in accordance with customary trade practices) or that is
evidenced by a note, bond, debenture or similar instrument, (b) all obligations
of such Person under leases that shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases, (c)
all obligations of such Person in respect of acceptances issued or created for
the account of such Person, (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, (e) all indebtedness,
obligations or liabilities of that Person in respect of Derivatives, and (f)
obligations under direct or indirect guaranties in respect of obligations
(contingent or otherwise) to purchase or otherwise acquire, or to otherwise
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kind referred to in clauses (a) through (e) above.
Indemnified Amounts: Defined in Section 11.1.
Indemnified Parties: Defined in Section 11.1.
Industry: The industry of an Obligor as determined by reference to the two (2)
digit standard industry classification or North American Industry Classification
System codes.
Industry Diversity Score: Defined in Schedule VII.
Industry Classification Group: Any of the ▇▇▇▇▇'▇ industry classification groups
for Obligors listed on Annex I to Schedule VII under the heading "Obligors'
Industry Group Classification".
Initial Advance: The first Advance.
Insolvency Event: With respect to a specified Person, (a) the filing of a decree
or order for relief by a court having jurisdiction in the premises in respect of
such Person or any substantial part of its property in an involuntary case under
any applicable Insolvency Law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty (60)
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
Insolvency Laws: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of
29
payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
Insolvency Proceeding: Any case, action or proceeding before any court or other
Governmental Authority relating to any Insolvency Event.
Instrument: Any "instrument" (as defined in Article 9 of the UCC), other than an
instrument that constitutes part of chattel paper.
Insurance Policy: With respect to any Loan, an insurance policy covering
liability and physical damage to or loss of the Related Property.
Insurance Proceeds: Any amounts payable or any payments made on or with respect
to a Loan under any Insurance Policy.
Intercreditor Agreement: The Intercreditor and Lockbox Administration Agreement,
dated as of May 16, 2002, among ▇▇▇▇▇ Fargo, as the indenture trustee, Bank of
America, N.A., as the lockbox bank, WSI, as the administrative agent, each of
the parties that from time to time executes a joinder thereto, CapitalSource
Finance, as the originator, as the original servicer and as the lockbox
servicer, and CapitalSource Funding LLC, as the owner of the account and as the
owner of the lockbox, as amended, modified, waived, supplemented or restated
from time to time.
Interest: For each Accrual Period and each Advance outstanding, the sum of the
products (for each day during such Accrual Period) of:
IR X P X 1
-
D
where:
IR = the Interest Rate applicable on such day;
P = the principal amount of such Advance on such day; and
D = 360 or, to the extent the Interest Rate is based on the
Base Rate, 365 or 366 days, as applicable.
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Interest in excess of the maximum permitted
by Applicable Law and (ii) Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
Interest Collections: Any and all amounts received in respect of any interest,
fees or other similar charges (including any Finance Charges) on or with respect
to a Loan from or on behalf of any Obligor that are deposited into the
Collection Account, or received by or on behalf of the Seller by the Servicer or
Originator in respect of a Loan, in the form of cash, checks, wire
30
transfers, electronic transfers or any other form of cash payment (net of any
payment owed by the Seller to, and including any receipts from, any Hedge
Counterparties).
Interest Coverage Ratio: With respect to any Obligor, the percentage equivalent
of a fraction the numerator of which is equal to (a) the related Obligor's
Consolidated Free Cash Flow during such period and (b) the denominator of which
is equal to the Interest Expense of such Obligor during such period.
Interest Coverage Requirement: With respect to any Obligor, as of any
Determination Date, an Interest Coverage Ratio of greater than or equal to 1:1.
Interest Expense: With respect to any Obligor, for any period, the total
interest expense for all obligations of such Obligor (including, without
limitation Capital Lease Obligations and hedging agreements) determined on a
consolidated basis, without duplication, for such Obligor and its Consolidated
Subsidiaries in accordance with GAAP.
Interest Rate: For any Accrual Period and for each Advance outstanding by a
Purchaser for each day during such Accrual Period:
(i) to the extent the Purchaser has funded the applicable
Advance through the issuance of commercial paper, a rate equal to the
applicable CP Rate; or
(ii) to the extent the Purchaser did not fund the
applicable Advance through the issuance of commercial paper, a rate
equal to the Alternative Rate;
provided, however, the Interest Rate shall be the Base Rate for any Accrual
Period for any Advance as to which the related Purchaser has funded the making
or maintenance thereof by a sale of an interest therein to any Liquidity Bank
under the applicable Liquidity Agreement on any day other than the first day of
such Accrual Period and without giving such Liquidity Bank(s) at least two (2)
Business Days' prior notice of such assignment.
ISDA Definitions: The 1991 ISDA Definitions, and any supplements thereto
including the 1998 Supplement to the 1991 ISDA Definitions, prepared by the
International Swaps and Derivatives Association, Inc.
Issuer: VFCC, Fairway, Eiffel, Hannover and any other Purchaser whose principal
business consists of issuing commercial paper or other securities to fund its
acquisition or maintenance of receivables, accounts, instruments, chattel paper,
general intangibles and other similar assets.
LIBOR Rate: For any day during any Accrual Period and any Advance or portion
thereof, an interest rate per annum equal to:
(1) the posted rate for thirty (30) day deposits in
United States Dollars appearing on Telerate page 3750 as of 11:00 a.m.
(London time) on the Business Day which is the second (2nd) Business
Day immediately preceding the applicable Funding Date (with respect to
the initial Accrual Period for such Advance) and as of the second (2nd)
Business Day immediately preceding the first (1st) day of the
applicable Accrual Period (with respect to all subsequent Accrual
Periods for such Advance); or
31
(2) if no such rate appears on Telerate page 3750 at such
time and day, then the LIBOR Rate shall be determined by Wachovia at
its principal office in Charlotte, North Carolina as its rate (each
such determination, absent manifest error, to be conclusive and binding
on all parties hereto and their assignees) at which thirty (30) day
deposits in United States Dollars are being, have been, or would be
offered or quoted by Wachovia to major banks in the applicable
interbank market for Eurodollar deposits at or about 11:00 a.m.
(Charlotte, North Carolina time) on such day.
LIBOR Spread: As of any date of determination, the number obtained by adding (a)
the amount obtained by (i) multiplying the Outstanding Loan Balance of each Loan
included in the Borrowing Base as of such date by an amount equal to the Loan
Rate on such Loan (taking into account any Hedge Transactions on such Loan)
minus the LIBOR Rate as of such date, (ii) summing the amounts determined
pursuant to clause (a)(i) for all Loans included in the Borrowing Base as of
such date and (iii) dividing such sum by the sum of the Outstanding Loan
Balances of all Loans included in the Borrowing Base as of such date, and (b)
the amount obtained by (i) multiplying the Outstanding Loan Balance of each Loan
not included in the Borrowing Base as of such date by an amount equal to the
Loan Rate on such Loan minus the LIBOR Rate as of such date (taking into account
any Hedge Transactions on such Loan), (ii) summing the amounts determined
pursuant to clause (b)(i) for all Loans not included in the Borrowing Base as of
such date and (iii) dividing such sum by the sum of the Outstanding Loan
Balances of all Loans included in the Borrowing Base as of such date, and
rounding the sum of clauses (a) and (b) up to the next 0.001%.
Lien: Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person's assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties).
Liquidation Expenses: With respect to (a) any Loan, the aggregate amount of all
out-of-pocket expenses reasonably incurred by the Servicer (including amounts
paid to any subservicer) and any reasonably allocated costs of counsel (if any),
in each case in accordance with the Servicer's customary procedures in
connection with the repossession, refurbishing and disposition of any related
assets securing such Loan upon or after the expiration or earlier termination of
such Loan and other out-of-pocket costs related to the liquidation of any such
assets, including the attempted collection of any amount owing pursuant to such
Loan if it is a Charged-Off Loan, and if requested by the Administrative Agent,
the Servicer and Originator must provide to the Administrative Agent a breakdown
of the Liquidation Expenses for any Loan along with any supporting documentation
therefor, and (b) any Portfolio Loan, the aggregate amount of all out-of-pocket
expenses reasonably incurred by the Servicer (including amounts paid to any
subservicer) and any reasonably allocated costs of counsel (if any), in each
case in accordance with the Servicer's customary procedures in connection with
the repossession, refurbishing and disposition of any related assets securing
such Portfolio Loan upon or after the expiration or earlier termination of such
Portfolio Loan and other out-of-pocket costs related to the liquidation of any
such assets, including the attempted collection of any amount owing pursuant to
such Portfolio Loan if it is a Charged-Off Portfolio Loan, and if requested by
the Administrative Agent, the Servicer and Originator must provide to the
Administrative Agent a breakdown of the Liquidation Expenses for any Portfolio
Loan along with any supporting documentation therefor.
32
Liquidity Agreement: (a) with respect to VFCC, collectively (i) the Liquidity
Purchase Agreement, dated as of April 5, 2002 among VFCC, as seller, the
Liquidity Banks named therein, WSI, as Deal Agent and documentation agent, and
Wachovia, as liquidity agent and eligible credit enhancer, and (ii) the Amended
and Restated Liquidity Purchase Agreement, dated as of April 5, 2002 among VFCC,
as seller, the Liquidity Banks named therein, WSI, as Deal Agent and
documentation agent, and Wachovia, as liquidity agent, as such agreements are
amended, supplemented, waived, modified or restated from time to time, (b) with
respect to Fairway, the Liquidity Asset Purchase Agreement, dated as of February
25, 2003, among Fairway, as issuer, the Liquidity Banks named therein and BMO
▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent, as such agreement may be amended, supplemented, waived,
modified or restated from time to time, (c) with respect to Eiffel, the
Liquidity Asset Purchase Agreement, dated as of April 24, 2002, among Eiffel, as
issuer, the Liquidity Banks named therein, and CDCFP, as agent for the Liquidity
Banks and as program administrator, as such agreement may be amended,
supplemented, waived, modified or restated from time to time; and (d) with
respect to Hannover, the Liquidity Asset Purchase Agreement, dated as of
February 25, 2003, among Hannover, as issuer, the Liquidity Banks named therein,
and ▇▇▇▇ ▇▇, as agent for the Liquidity Banks and as program administrator, as
such agreement may be amended, supplemented, waived, modified or restated from
time to time.
Liquidity Bank: The Person or Persons who provide liquidity support to VFCC,
Fairway, Eiffel or Hannover pursuant to a Liquidity Agreement in connection with
the issuance by such Purchaser of Commercial Paper Notes.
Liquidity Factor Reduction Event: With respect to each Loan included in the
Assets subject to the Retained Interest provisions of this Agreement, a
"Liquidity Factor Reduction Event" under and as defined in the CapitalSource
Commercial Loan Trust 2002-1 Transaction, the CapitalSource Commercial Loan
Trust 2002-2 Transaction and/or any Permitted Securitization Transaction rated
by the Rating Agencies, as applicable.
Liquidity Participation Agreement: The Liquidity Participation Agreement, dated
as of April 5, 2002, by and among Wachovia, as agent bank, the Participant, and
the Guarantor, as amended, modified, restated, replaced, waived, substituted,
supplemented or extended from time to time.
Loan: Any Senior Secured Loan or Subordinated Loan identified on a Loan List or
contributed to the Seller and included as part of the Asset Pool.
Loan Checklist: The list delivered by or on behalf of the Seller to the
Collateral Custodian that identifies the items contained in the related Loan
File.
Loan Files: With respect to any Loan and Related Security, copies of each of the
Required Loan Documents and duly executed originals (to the extent required by
the Credit and Collection Policy) and copies of any other Records relating to
such Loan and Related Security.
Loan List: The Loan List provided by the Seller to the Administrative Agent and
the Collateral Custodian, in the form of Schedule IV hereto, as such list may be
amended, supplemented or modified from time to time in accordance with this
Agreement.
33
Loan Loss Reserve: With respect to each Watchlist Loan, an amount available to
cover any losses with respect to such Watchlist Loan equal to the amounts set
forth in the Credit and Collection Policy.
Loan Rate: With respect to each Loan in an Accrual Period, the current cash pay
interest rate , taking into account any collateral management and unused line
fees, for such Loan in such period as specified in the underlying note or
related Required Loan Documents.
Loan-to-Value Ratio or LTV: With respect to any Loan, as of any date of
determination, the percentage equivalent of a fraction (i) the numerator of
which is equal to the total commitment amount of such Loan as of the date of its
origination and (ii) the denominator of which is equal to the total discounted
collateral value of the collateral securing such Loan that is subject to a first
priority lien in favor of the Originator.
Lock-Box: The post office box to which Collections are remitted for retrieval by
a Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box Account, the
details of which are contained in Schedule II.
Lock-Box Account: The account maintained at the Lock-Box Bank for the purpose of
receiving Collections, the details of which are contained in Schedule II, as
such schedule may be amended from time to time.
Lock-Box Agreement: The Amended and Restated Three Party Agreement Relating to
Lockbox Services and Control (with Activation Upon Notice), dated as of May 16,
2002, among ▇▇▇▇▇ Fargo, as the indenture trustee, Bank of America, N.A., as the
lockbox bank, WSI, as the administrative agent, CapitalSource Finance, as the
originator, as the original servicer and as the lockbox servicer, and
CapitalSource Funding LLC, as the owner of the account and as the owner of the
lockbox, as amended, modified, waived, supplemented or restated from time to
time.
Lock-Box Bank: Bank of America, N.A., or any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
Material Adverse Effect: With respect to any event or circumstance, means a
material adverse effect on (a) the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Originator, the Servicer
or the Seller, (b) the validity, enforceability or collectibility of this
Agreement or any other Transaction Document or the validity, enforceability or
collectibility of the Loans generally or any material portion of the Loans, (c)
the rights and remedies of the Administrative Agent, the Purchasers, the
Purchaser Agents and the Secured Parties, (d) the ability of the Seller, the
Servicer, the Backup Servicer or the Collateral Custodian to perform its
obligations under this Agreement or any Transaction Document, or (e) the status,
existence, perfection, priority or enforceability of the Administrative Agent's,
the Purchaser Agents', or the Secured Parties' interest in the Assets.
Material Mortgage Loan: Any Loan for which the underlying Related Property
consisting of real property owned by the Obligor (i) represents 25% or more
(measured by the book value of the three most valuable parcels of real property
as of the date of such Loan) of (a) the original commitment for such Loan and
(b) the fair value of the underlying Obligor and Related Property as a whole and
(ii) is material to the operations of the related business; provided, however,
that a
34
Material Mortgage Loan shall not include certain parcels of real property of
which the Obligor is in the process of disposing.
Materials of Environmental Concern: Any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Laws, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
Maximum Availability: At any time, subject to the Minimum Overcollateralization
Amount, an amount equal to the product of the Borrowing Base and the Weighted
Average Advance Rate, plus the amount on deposit in the Principal Collections
Account received in reduction of the Outstanding Loan Balance of any Eligible
Loan; provided, however, during the Amortization Period, the Maximum
Availability shall be equal to the Advances Outstanding.
Minimum Overcollateralization Amount: As of any date of determination, an amount
equal to the greater of (a) the Required Equity Contribution or (b) the product
of (i) the Minimum Overcollateralization Percentage on such date and (ii) the
Borrowing Base on such date.
Minimum Overcollateralization Percentage: On any date of determination, the
greater of (a) one (1) minus the percentage equivalent of a fraction the
numerator of which is equal to the Maximum Availability on such date and the
denominator of which is equal to the Aggregate Outstanding Loan Balance on such
date, (b) 30% or (c) 100% minus the applicable Adjusted Advance Rate on such
date.
Minimum Pool Yield: A Pool Yield equal to 2.0%.
Monthly Report: Defined in Section 6.10(b).
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
▇▇▇▇▇'▇ Rating Condition: With respect to any action or series of related
actions or proposed transaction or series of proposed transactions, that Moody's
shall have notified the Seller, the Administrative Agent and the Purchaser
Agents in writing that such action or series of related actions or the
consummation of such proposed transaction or series of related transactions will
not result in a reduction or withdrawal of the rating issued by Moody's on the
Closing Date with respect to any outstanding Variable Funding Certificate as a
result of such action or series of related actions or the consummation of such
proposed transaction or series of related transactions.
Mortgage: With respect to any Timeshare Mortgage Loan, the mortgage, deed of
trust, lease, trust certificate or other security document creating a Lien on
the related Mortgage Property securing such Timeshare Mortgage Loan.
Mortgage Instruments: With respect to any Timeshare Mortgage Loan, (i) the
original related Mortgage Note; (ii) the original related Mortgage, lease or
trust certificate, as applicable; (iii) the original related lender's title
insurance policy, if any; (iv) the original of any assumption or other
agreement(s) modifying such Mortgage Note, Mortgage or title insurance policy
(including, without limitation, any extension agreement(s)); (v) all original
related intermediate Assignments
35
of Mortgage made by holders prior to the Originator; (vi) the original related
Assignment of Mortgage made by the Originator; and (vii) a copy of any related
warranty or grant deed or similar transfer document containing an assumption of
such Timeshare Mortgage Loan.
Mortgage Loan Documents: With respect to any Timeshare Mortgage Loan, (i) the
related Timeshare Mortgage Instruments; (ii) in connection with Mortgaged
Property involving a fee interest in real property, a copy of the related
warranty deed with evidence of recording thereon; (iii) the original related
truth-in-lending disclosure statement executed by the related Mortgagor; and
(iv) the original related declaration of understanding and representations by
such Mortgagor.
Mortgage Note: With respect to any Timeshare Mortgage Loan, the promissory note
or other instrument of indebtedness evidencing such Timeshare Mortgage Loan
(including, without limitation, any agreement to assume the obligations of the
Mortgagor under the Timeshare Mortgage Loan).
Mortgaged Property: With respect to any Timeshare Mortgage Loan, the timeshare
estate representing (i) a fee interest in the real property at one of the
projects securing such Timeshare Mortgage Loan or (ii) a leasehold, fractional
ownership interest in or right to use a vacation club and its resorts.
Mortgagor: With respect to any Timeshare Mortgage Loan, the obligor or obligors,
collectively, on the related Mortgage Note.
Multiemployer Plan: A "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the immediately
preceding five (5) years contributed to by the Seller or any ERISA Affiliate on
behalf of its employees.
▇▇▇▇ ▇▇: Defined in the Preamble of this Agreement.
Obligor: With respect to any Loan, any Person or Persons obligated to make
payments pursuant to or with respect to such Loan, including any guarantor
thereof. For purposes of calculating any of the Pool Concentration Criteria, all
Loans in the Asset Pool or to be transferred to the Asset Pool the Obligor of
which is an Affiliate of another Obligor shall be aggregated with all Loans of
such other Obligor; for example, if Corporation A is an Affiliate of Corporation
B, and the aggregate Outstanding Loan Balance of all of Corporation A's Loans in
the Asset Pool constitutes 10% of the Aggregate Outstanding Loan Balance and the
aggregate Outstanding Loan Balance all of Corporation B's Loans in the Asset
Pool constitutes 10% of the Aggregate Outstanding Loan Pool Balance, the
combined Obligor concentration for Corporation A and Corporation B would be 20%.
For purposes of the Pool Concentration Criteria, with respect to Loans secured
by Timeshare Loans only, all such Loans in the Asset Pool or to be transferred
to the Asset Pool the Obligor of which has assets (including, without
limitation, timeshare inventory assets, Mortgage Notes, Mortgages or Mortgaged
Properties) securing its Loan all or any portion of which relate to the same
timeshare project or relate to a timeshare project developed by the same
developer as another Obligor, shall be aggregated with all Loans of such other
Obligor; for example, if Corporation A has assets (including, without
limitation, timeshare inventory assets, Mortgage Notes, Mortgages or Mortgaged
Properties) securing its Loan all or any portion of which relate to the same
timeshare project or relate to a timeshare project
36
developed by the same developer as those of Corporation B, and the aggregate
Outstanding Loan Balance of all of Corporation A's Loans in the Asset Pool
constitutes 10% of the Aggregate Outstanding Loan Balance and the aggregate
Outstanding Loan Balance all of Corporation B's Loans in the Asset Pool
constitutes 10% of the Aggregate Outstanding Loan Pool Balance, the combined
Obligor concentration for Corporation A and Corporation B would be 20%.
Officer's Certificate: A certificate signed by a Responsible Officer of the
Seller or the Servicer, as the case may be, and delivered to the Collateral
Custodian.
Opinion of Counsel: A written opinion of counsel, which opinion and counsel are
acceptable to the Administrative Agent in its sole discretion.
Optional Sale: Defined in Section 2.17(a).
Optional Sale Date: Any Business Day, provided forty-five (45) days written
notice is given in accordance with Section 2.17(a).
Original Loan Certificate and Servicing Agreement: Defined in the Recitals of
this Agreement.
Original Purchaser: Defined in the Recitals of this Agreement.
Originator: Defined in the Preamble of this Agreement.
Outstanding Loan Balance: With respect to any Eligible Loan included as part of
the Asset Pool, the sum of (i) the portion of all future Scheduled Payments
becoming due under or with respect to such Eligible Loan plus (ii) any past due
Scheduled Payments with respect to such Eligible Loan (other than with respect
to those payments to the extent a Servicer Advance is outstanding with respect
thereto).
Overcollateralization Amount: As of any date of determination, an amount equal
to the product of (i) the Overcollateralization Percentage on such date and (ii)
the Borrowing Base on such date.
Overcollateralization Percentage: As of any date of determination, the
percentage equivalent of (a) one (1) minus (b) a fraction (i) the numerator of
which is equal to the Advances Outstanding on such date and (ii) the denominator
of which is equal to the Aggregate Outstanding Loan Balance as of such date.
Overcollateralization Shortfall: As of any date of determination, the positive
difference, if any, of (a) the Minimum Overcollateralization Amount on such date
minus (b) the Overcollateralization Amount on such date.
Participant: Defined in the Recitals of this Agreement.
Participation Loan: A Revolving Loan or Term Loan to an Obligor, originated by
the Originator and serviced by the Servicer in the ordinary course of its
business, in which a participation interest has been granted to another Person
in accordance with the Credit and Collection Policy and (i) such transaction has
been fully consummated, pursuant to a participation agreement in the form of the
"Participation Loan Agreement" attached hereto as Schedule V or in such other
form
37
as shall be adopted by the Originator and approved in writing by the
Administrative Agent at least ten (10) days prior to such Loan becoming part of
the Asset Pool hereunder, (ii) such Loan is represented by a separate promissory
note, and (iii) the Originator has the right to receive and collect payments
directly in its own name, and to enforce its rights directly against the Obligor
thereof including the right to proceed against collateral; provided, however,
any such Loan shall exclude any Retained Interest.
Payment Date: The fifteenth (15th) day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day.
Permitted Investments: With respect to any Payment Date means negotiable
instruments or securities or other investments maturing on or before such
Payment Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Business Day immediately preceding the next Payment Date immediately following
such date of determination, and (c) that evidence:
(1) direct obligations of, and obligations fully
guaranteed as to full and timely payment by, the United States (or by
any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States);
(2) demand deposits, time deposits or certificates of
deposit of depository institutions or trust companies incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the
Seller's investment or contractual commitment to invest therein, the
commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from Fitch and
each Rating Agency in the Highest Required Investment Category granted
by Fitch and such Rating Agency, which in the case of Fitch, shall be
"F-1+";
(3) commercial paper, or other short term obligations,
having, at the time of the Seller's investment or contractual
commitment to invest therein, a rating in the Highest Required
Investment Category granted by each Rating Agency, which in the case of
Fitch, shall be "F-1+";
(4) demand deposits, time deposits or certificates of
deposit that are fully insured by the FDIC and either have a rating on
their certificates of deposit or short-term deposits from Moody's and
S&P of "P-1" and "A-1", respectively, and if rated by Fitch, from Fitch
of "F-1+";
(5) notes that are payable on demand or bankers'
acceptances issued by any depository institution or trust company
referred to in clause (ii) above;
38
(6) investments in taxable money market funds or other
regulated investment companies having, at the time of the Seller's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category from ▇▇▇▇▇'▇, S&P and Fitch (if
rated by Fitch) or otherwise subject to satisfaction of the Rating
Agency Condition;
(7) time deposits (having maturities of not more than
ninety (90) days) by an entity the commercial paper of which has, at
the time of the Seller's investment or contractual commitment to invest
therein, a rating of the Highest Required Investment Category granted
by Fitch and each Rating Agency;
(8) Eligible Repurchase Obligations with a rating
acceptable to the Rating Agencies, which in the case of Fitch, shall be
"F-1+" and in the case of S&P shall be "A-1"; or
(9) any negotiable instruments or securities or other
investments subject to satisfaction of the Rating Agency Condition.
The Collateral Custodian may pursuant to the direction of the Servicer or
Administrative Agent, as applicable, purchase or sell to itself or an Affiliate,
as principal or agent, the Permitted Investments described above.
Permitted Liens: Any of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced (a) Liens
for state, municipal or other local taxes if such taxes shall not at the time be
due and payable, (b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens, arising in
the ordinary course of business securing obligations that are not overdue for a
period of more than thirty (30) days, and (c) Liens granted pursuant to or by
the Transaction Documents.
Permitted Securitization Transaction: Any financing transaction undertaken by
the Seller or an Affiliate of the Seller that is secured, directly or
indirectly, by the Assets or any portion thereof or any interest therein,
including any sale, lease, whole loan sale, asset securitization, secured loan
or other transfer.
Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
Pool Charged-Off Ratio: As of any Determination Date, the product of (i) twelve
(12) and (ii) the percentage equivalent of a fraction, (a) the numerator of
which is equal to the sum of the Outstanding Loan Balances of all Eligible Loans
that became Charged-Off Loans (net of Recoveries during such Collection Period)
during the Collection Period related to such Determination Date and (b) the
denominator of which is equal to the Aggregate Outstanding Loan Balance as of
the first (1st) day of the Collection Period related to such Determination Date.
39
Pool Concentration Criteria: On any day, each of the concentration limitations
as set forth below, which concentration limitations (unless otherwise indicated)
shall be measured on the basis of a percentage of the Aggregate Outstanding Loan
Balance:
(1) the sum of the Outstanding Loan Balances of all Loans
to a single Obligor (including Affiliates thereof) shall not exceed
$20,000,000;
(2) the sum of the Outstanding Loan Balances of all Loans
the Obligors of which are resident of the same State shall not exceed
20%, with the exception of the State of Florida, which shall not exceed
30%;
(3) the sum of the Outstanding Loan Balances of all Loans
the Obligors of which are in the same Industry (except the nursing care
facility industry, North American Industry Classification System code
6231) shall not exceed 20%;
(4) the sum of the Outstanding Loan Balances of all Loans
the Obligors of which are in the nursing care facility industry (North
American Industry Classification System code 6231) shall not exceed
25%;
(5) the sum of the Outstanding Loan Balances of all
Subordinated Loans shall not exceed 20%;
(6) the sum of the Outstanding Loan Balances of all
Revolving Loans shall not be more than 60%;
(7) the sum of the Outstanding Loan Balances of all DIP
Loans shall not exceed 10%;
(8) the sum of the Outstanding Loan Balances of Loans
paying interest other than on a monthly basis shall not exceed 10%;
(9) the average Outstanding Loan Balance to a single
Obligor shall not exceed $6,000,000;
(10) the sum of the Outstanding Loan Balances of the six
(6) Eligible Loans with the largest Outstanding Loan Balances shall not
exceed the greater of (i) $50,000,000, or (ii) 25%;
(11) the weighted average Eligible Risk Rating for all
Eligible Obligors shall not exceed the rating or grade selected by the
Administrative Agent (in its reasonable discretion) after notice to the
Seller and the Servicer of such selection;
(12) Subordinated Loans shall be underwritten to have an
Interest Coverage Ratio of not less than 1:25 to 1;
(13) the sum of the Outstanding Loan Balances of Assigned
Loans shall not exceed 40%;
40
(14) the sum of the Outstanding Loan Balances of Acquired
Loans shall not exceed 25%;
(15) the sum of the Outstanding Loan Balances of all
Extended Timeshare Loans shall not exceed 5% (measured based on the sum
of the Outstanding Loan Balances of all Timeshare Loans);
(16) the Pool Weighted Average Life shall not be greater
than three (3) years;
(17) the sum of the Outstanding Loan Balances of all Loans
(other than ABF Loans and Material Mortgage Loans) shall not exceed
40%;
(18) the sum of the Outstanding Loan Balances of all
Material Mortgage Loans shall not exceed 35%;
(19) the LIBOR Spread shall not be less than 5.00%;
(20) the sum of the Outstanding Loan Balances of all
Timeshare Loans secured by a Lien on unsold timeshare intervals shall
not exceed 10%; and
(21) the sum of the Outstanding Loan Balances of Timeshare
Loans secured by Mortgaged Property of the type described in clause
(ii) of the definition of Mortgaged Property where the leasehold,
fractional ownership interest in or right to use a vacation club and
its resorts is for an interval of between one (1) to (3) three months
in duration, shall not exceed 5%.
Pool Rate: As of any Determination Date, the annualized percentage equivalent of
a fraction, (a) the numerator of which is equal to all Interest Collections on
Loans included in the Aggregate Outstanding Loan Balance as of the first (1st)
day of the Collection Period related to such Determination Date that are
deposited into the Collection Account during such Collection Period, and (b) the
denominator of which is equal to the Aggregate Outstanding Loan Balance as of
the first (1st) day of such Collection Period.
Pool Weighted Average Life: At any point in time, the number obtained by (i) for
each Loan included in the Borrowing Base as of such point in time, multiplying
each Scheduled Payment by the number of months from such point in time until
such Scheduled Payment is due; (ii) summing all of the products calculated
pursuant to clause (i); (iii) dividing the sum calculated pursuant to clause
(ii) by the sum of all successive Scheduled Payments due on all Loans included
in the Borrowing Base as of such point in time; and (iv) dividing the amount
calculated pursuant to clause (iii) by 12.
Pool Yield: On any day, the positive difference, if any, of (a) the Pool Rate on
such day and (b) the sum of (i) the Interest Rate, (ii) the Program Fee Rate,
and (iii) the Servicing Fee Rate on such day.
Pooled Debtor: With respect to any Loan to an SPE Obligor, any Person or Persons
obligated to make payments to such SPE Obligor with respect to the loans made by
and/or owned by such SPE Obligor.
41
Portfolio Aggregate Outstanding Loan Balance: With respect to all Portfolio
Loans, on any day, the sum of the Portfolio Outstanding Loan Balances of such
Portfolio Loans on such date. Notwithstanding anything to the contrary contained
herein, for purposes of determining the Portfolio Aggregate Outstanding Loan
Balance, if any portion of a Portfolio Loan is deemed to be "charged-off" in
accordance with the provisions of the definition of Charged-Off Portfolio Loan,
then the entire Portfolio Loan shall have a zero (0) Outstanding Loan Balance
except in connection with the calculation of the Average Portfolio Charged-Off
Ratio.
Portfolio Charged-Off Ratio: As of any Determination Date, the product of (i)
twelve (12) and (ii) the percentage equivalent of a fraction, (a) the numerator
of which is equal to the sum of the Portfolio Outstanding Loan Balances of all
Portfolio Loans (excluding equity and preferred stock investments) that became
Charged-Off Portfolio Loans (net of Recoveries during such Collection Period)
during the Collection Period related to such Determination Date and (b) the
denominator of which is equal to the Portfolio Aggregate Outstanding Loan
Balance (excluding equity and preferred stock investments) as of the first (1st)
day of the Collection Period related to such Determination Date.
Portfolio Delinquency Ratio: As of any Determination Date, the percentage
equivalent of a fraction, (i) the numerator of which is equal to the sum of the
Portfolio Outstanding Loan Balances of all Delinquent Portfolio Loans on such
date and (ii) the denominator of which is equal to the Portfolio Aggregate
Outstanding Loan Balance on such date.
Portfolio Loan: Any loan owned or serviced by the Originator (including each
Loan).
Portfolio Outstanding Loan Balance: With respect to any Portfolio Loan, the sum
of (i) the portion of all future Scheduled Payments becoming due under or with
respect to such Portfolio Loan plus (ii) any past due Scheduled Payments with
respect to such Portfolio Loan.
Prepaid Loan: Any Loan (other than a Charged-Off Loan) that was terminated or
has been prepaid in full or in part prior to its scheduled expiration date.
Prepayment Amount: Defined in Section 6.4(b).
Prepayments: Any and all (i) partial or full prepayments on or with respect to a
Loan (including, with respect to any Loan and any Collection Period, any
Scheduled Payment, Finance Charge or portion thereof that is due in a subsequent
Collection Period that the Servicer has received, and pursuant to the terms of
Section 6.4(b) expressly permitted the related Obligor to make, in advance of
its scheduled due date, and that will be applied to such Scheduled Payment on
such due date), (ii) Recoveries, and (iii) Insurance Proceeds.
Prime Rate: The rate announced by Wachovia from time to time as its prime rate
in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Wachovia in connection with extensions of credit to debtors.
Principal Collections: Any and all amounts received in respect of any principal
due and payable under the Loans from or on behalf of Obligors that are deposited
into the Principal Collections Account, or received by or on behalf of the
Seller by the Servicer or Originator in respect of
42
Loans, in the form of cash, checks, wire transfers, electronic transfers or any
other form of cash payment.
Principal Collections Account: Defined in Section 6.4(f).
Proceeds: With respect to any Asset, whatever is receivable or received when
such Asset is sold, liquidated, foreclosed, exchanged, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes all rights to
payment with respect to any insurance relating to such Asset.
Program Fee: (a) With respect to VFCC, as defined in the VFCC Fee Letter, (b)
with respect to Fairway, as defined in the Fairway Fee Letter, (c) with respect
to Eiffel, as defined in the Eiffel Fee Letter, and (d) with respect to
Hannover, as defined in the Hannover Fee Letter.
Program Fee Rate: On any day, the rate set forth in the VFCC Fee Letter, the
Fairway Fee Letter, the Eiffel Fee Letter or the Hannover Fee Letter, as
applicable, as the "Program Fee Rate."
Pro-Rata Share: (i) the percentage obtained by dividing each Purchaser's, as
applicable, Commitment (as determined under subsection (i)(a) of the definition
of Commitment) by the aggregate Commitments of all the Purchasers (as determined
under subsection (i)(a) of the definition of Commitment).
Purchaser: (i) VFCC, (ii) Fairway, (iii) Eiffel, or (iv) Hannover, as the
context requires, and "Purchasers" means collectively (a) VFCC, (b) Fairway, (c)
Eiffel, and (d) Hannover.
Purchaser Agent: The VFCC Agent, the Fairway Agent, the Eiffel Agent or the
Hannover Agent, as the context requires, and "Purchaser Agents" means
collectively the VFCC Agent, the Fairway Agent, the Eiffel Agent and the
Hannover Agent.
Qualified Institution: Defined in Section 6.4(f).
Qualified Transferee:
(a) The Seller, each Purchaser Agent and any Affiliate thereof, or
the Administrative Agent or any Affiliate of the Administrative Agent; or
(b) any other Person which:
(i) has at least $50,000,000 in capital/statutory surplus
or shareholders' equity (except with respect to a pension advisory firm
or similar fiduciary); and
(ii) is regularly engaged in the business of making or
owning commercial real estate loans or operating commercial real estate
properties; and
(iii) is one of the following:
43
(A) an insurance company, bank, savings and loan
association, investment bank, trust company, commercial credit
corporation, pension plan, pension fund, pension fund advisory
firm, mutual fund, real estate investment trust, governmental
entity or plan, or
(B) an investment company, money management firm
or a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act of 1933, as amended, or an
"institutional accredited investor" within the meaning of
Regulation D under the Securities Act of 1933, as amended; or
(C) the trustee, collateral agent or
administrative agent in connection with (x) a securitization
of the subject Loan through the creation of collateralized
debt or loan obligations or (y) an asset-backed commercial
paper funded transaction funded by a commercial paper conduit
whose commercial paper notes are rated at least "A-1" by S&P
or at least "P-1" by Moody's, or (z) a repurchase transaction
funded by a an entity which would otherwise be a Qualified
Transferee so long as the "equity interest" (other than any
nominal or de minimis equity interest) in the special purpose
entity that issues notes or certificates in connection with
any such collateralized debt or loan obligation, asset-backed
commercial paper funded transaction or repurchase transaction
is owned by one or more entities that are Qualified
Transferees under subclauses (A) or (B) above; or
(D) any entity Controlled (as defined below) by
any of the entities described in subclauses (i), (ii) or (iii)
above.
For purposes of this definition only, "Control" means the ownership,
directly or indirectly, in the aggregate of more than fifty percent
(50%) of the beneficial ownership interests of an entity and the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through
the ability to exercise voting power, by contract or otherwise, and
"Controlled" has the meaning correlative thereto.
Quarterly Determination Date: March 31, June 30, September 30 and December 31 of
each calendar year.
Rating Agency: Each of S&P, Moody's and any other rating agency that has been
requested to issue a rating with respect to the commercial paper notes issued by
the Issuers.
Rating Agency Condition: With respect to any action or series of related actions
or proposed transaction or series of related proposed transactions, that each of
S&P and Moody's shall have notified the Seller, the Administrative Agent and the
Purchaser Agents in writing that such action or series of related actions or the
consummation of such proposed transaction or series of related transactions will
not result in a Ratings Effect.
Rating Confirmation: With respect to any Purchaser, a confirmation by each of
the Rating Agencies that a proposed amendment, waiver or other modification
shall not result in a
44
downgrade or withdrawal of such Rating Agency's then current rating of the
Commercial Paper Notes.
Ratings Effect: With respect to any action or series of related actions or
proposed transaction or series of related proposed transactions, a reduction or
withdrawal of the rating issued by a Rating Agency on the Closing Date with
respect to any outstanding Variable Funding Certificate as a result of such
action or series of related actions or the consummation of such proposed
transaction or series of related transactions.
Records: All Loan and other documents, books, records and other information
(including without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) executed in connection
with the origination or acquisition of the Assets or maintained with respect to
the Assets and the related Obligors that the Seller, the Originator or the
Servicer have generated, in which the Seller, the Originator or the Servicer
have acquired an interest pursuant to the Sale Agreement or in which the Seller,
the Originator or the Servicer have otherwise obtained an interest.
Recoveries: As of the time any Related Property or any other related property is
sold, discarded (after a determination by the Servicer that such Related
Property or any other related property has little or no remaining value) or
otherwise determined to be fully liquidated by the Servicer in accordance with
the Credit and Collection Policy (or such similar policies and procedures
utilized by the Servicer in servicing the Portfolio Loans) with respect to any
Charged-Off Loan or Charged-Off Portfolio Loan, the proceeds from the sale of
the Related Property or any other related property, the proceeds of any related
Insurance Policy, any other recoveries with respect to such Charged-Off Loan or
Charged-Off Portfolio Loan, the Related Property, any other related property,
and amounts representing late fees and penalties, net of Liquidation Expenses
and amounts, if any, received that are required under such Loan or Portfolio
Loan, as applicable, to be refunded to the related Obligor.
Related Property: With respect to a Loan, any property or other assets pledged
as collateral to the Originator to secure repayment of such Loan, including all
Proceeds from any sale or other disposition of such property or other assets.
Related Security: All of the Seller's right, title and interest in and to:
(a) any Related Property securing a Loan and all Recoveries
related thereto;
(b) all Required Loan Documents, Loan Files related to any Loans,
Records, and the documents, agreements, and instruments included in the Loan
File or Records, including without limitation, rights of recovery of the Seller
against the Originator;
(c) all Insurance Policies with respect to any Loan;
(d) all security interests, liens, guaranties, warranties, letters
of credit, accounts, bank accounts, mortgages or other encumbrances and property
subject thereto from time to time purporting to secure or support payment of any
Loan, together with all UCC financing statements or similar filings signed by an
Obligor relating thereto;
45
(e) the Collection Account, the Excess Spread Account, each Lock
Box and all Lock Box Accounts, together with all cash and investments in each of
the foregoing other than amounts earned on investments therein;
(f) any Hedging Agreement and any payment from time to time due
thereunder;
(g) the Sale Agreement and the assignment to the Administrative
Agent of all UCC financing statements filed by the Seller against the Originator
under or in connection with the Sale Agreement;
(h) the "Assets" under and as defined in the Original Loan
Certificate and Servicing Agreement; and
(i) the proceeds of each of the foregoing.
Replaced Loan: Defined in Section 2.16(a).
Reporting Date: The date that is three (3) Business Days prior to each Payment
Date.
Required Advance Reduction Amount: On any day, an amount equal to the positive
difference, if any, of (a) Advances Outstanding on such day minus (b) the
Maximum Availability on such day.
Required Equity Contribution: An Equity Contribution, at all times prior to the
Termination Date, of at least $75,000,000.
Required Equity Shortfall: On any day, the positive difference, if any, of (a)
the Required Equity Contribution on such day minus (b) the actual amount of the
Equity Contribution as of such day.
Required Loan Documents: With respect to: (a) any Loan (other than an Assigned
Loan), the duly executed original of each of the following: the promissory note,
any related loan agreement, the Loan Checklist, participation agreement (if set
forth on the Loan Checklist), acquisition agreement (if set forth on the Loan
Checklist), subordination agreement (if set forth on the Loan Checklist),
intercreditor agreement (if set forth on the Loan Checklist), security
agreements or instruments, UCC financing statements, guarantee (if set forth on
the Loan Checklist), for each Loan secured by real property, an Assignment of
Mortgage, and for all Loans with a promissory note, an assignment (which may be
by endorsement or allonge), signed by an officer of the Originator and by an
Officer of the Seller; and (b) any Assigned Loan (if such Loan is identified as
an Assigned Loan on the Loan Checklist), (i) the duly executed original of each
of the following: the promissory note including an assignment (which may be by
endorsement or allonge), signed by an officer of the Originator and by an
officer of the Seller, and the assignment agreement and (ii) duly executed
originals (if set forth on the Loan Checklist) or copies of each of the
following: any related loan agreement, subordination agreement (if set forth on
the Loan Checklist), intercreditor agreement (if set forth on the Loan
Checklist), security agreements or instruments, UCC financing statements,
guarantee (if set forth on the Loan Checklist), for each Assigned Loan secured
by real property, an Assignment of Mortgage.
46
Required Reports: Collectively, the Monthly Report, the Servicer's Certificate
required pursuant to Section 6.10(c)), the financial statements of the Servicer
required pursuant to Section 6.10(d), the annual statements as to compliance
required pursuant to Section 6.11, and the annual independent public
accountant's report required pursuant to Section 6.12.
Responsible Officer: With respect to any Person, any duly authorized officer of
such Person with direct responsibility for the administration of this Agreement
and also, with respect to a particular matter, any other duly authorized officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Restricted Junior Payment: (i) any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Seller now or
hereafter outstanding, except a dividend payment solely in interests of that
class of membership interests or in any junior class of membership interests of
the Seller; (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any class of the
Seller now or hereafter outstanding, (iii) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire membership interests of Seller now or
hereafter outstanding, and (iv) any payment of management fees by the Seller
(except for reasonable management fees to the Originator or its Affiliates in
reimbursement of actual management services performed).
Retained Interest: (A) With respect to any Revolving Loan or any Loan with an
unfunded commitment on the part of the Originator that does not provide by its
terms that funding thereunder is in Originator's sole and absolute discretion
and that is transferred by the Originator to the Seller and/or by the Seller to
the Purchaser, all of the obligations, if any, to provide additional funding
with respect to such Revolving Loan, and (B) with respect to any Assigned Loan,
any Participation Loan or any Agented Note that is transferred by the Originator
to the Seller and/or by the Seller to the Purchasers, (i) all of the
obligations, if any, of the agent(s) under the documentation evidencing such
Assigned Loan, Participation Loan, or Agented Note and (ii) the applicable
portion of the interests, rights and obligations under the documentation
evidencing such Assigned Loan, Participation Loan, or Agented Note that relate
to such portion(s) of the indebtedness that is owned by another lender or is
being retained by the Originator pursuant to clause (A) of this definition.
Revolving Loan: A Loan that is a line of credit arising from an extension of
credit by the Originator to an Obligor in the form of the "Revolving Loan
Agreement" attached hereto as Schedule V or such other form as shall be adopted
by the Originator and approved in writing by the Administrative Agent at least
ten (10) days prior to such Loan becoming part of the Asset Pool hereunder;
provided, however, any such Loan shall exclude any Retained Interest.
Revolving Period: The period commencing on the Closing Date and ending on the
day immediately preceding the Termination Date.
S&P: Standard & Poor's, a division of The McGraw Hill Companies, Inc., and any
successor thereto.
47
Sale Agreement: The Amended and Restated Sale and Contribution Agreement, dated
as of April 24, 2002, between the Originator and the Seller, as amended,
modified, supplemented, replaced or restated from time to time.
Scheduled Payments: With respect to any Loan, each monthly, quarterly, or annual
payment of principal required to be made by the Obligor thereof under the terms
of such Loan; in all cases, excluding any payment in the nature of, or
constituting, interest.
Secured Party: (i) each Purchaser, (ii) the Administrative Agent and each
Purchaser Agent, and (iii) each Hedge Counterparty that is either a Purchaser or
an Affiliate of the VFCC Agent if that Affiliate is a Hedge Counterparty that
executes a counterpart of this Agreement agreeing to be bound by the terms of
this Agreement applicable to a Secured Party.
Seller: Defined in the Preamble of this Agreement.
Senior Secured Loan: Any Type of Loan secured by a first priority lien on the
Obligor's assets and which has a Loan-to-Value Ratio of less than 90%.
Servicer: CapitalSource Finance, and each successor (in the same capacity)
appointed as Successor Servicer pursuant to Section 6.16(a).
Servicer Advance: An advance of Scheduled Payments made by the Servicer pursuant
to Section 6.5.
Servicer Default: Defined in Section 6.15.
Servicer Termination Notice: Defined in Section 6.15.
Servicer's Certificate: Defined in Section 6.10(c).
Servicing Fee: Defined in Section 2.12(b).
Servicing Fee Rate: 1.0% per annum.
Solvent: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the property of such
Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of the property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute unreasonably small capital.
48
SPE Obligor: With respect to any Loan, an Obligor that (a) is organized as a
special purpose entity and is not an operating entity and (b) has as its primary
assets loans to, and a security interest in the assets of, Pooled Debtors.
Sterling Timeshare Loans. The Timeshare Mortgage Loans acquired from Sterling
Bank & Trust, FSB and ▇▇▇▇▇▇▇▇▇▇▇▇ Investment, LLC pursuant to a Facility Sale
Agreement, dated as of April 12, 2002, by the following SPE Obligors: Delft
Funding, LLC, Leeward Funding, LLC, Mauna Loa Funding, LLC, VI Funding, LLC,
Alexander Funding, LLC, South ▇▇▇▇▇▇ Funding, LLC, Paradise Canyon Funding, LLC,
Legends Funding, LLC and VO Receivables Funding, LLC.
Subordinated Loan: Any Type of Loan other than a Senior Secured Loan.
Subsidiary: As to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by such Person.
Substitute Loan: On any day, an Eligible Loan that meets each of the conditions
for substitution set forth in Section 2.16.
Successor Servicer: Defined in Section 6.16(a).
Supplemental Interest: With respect to any Loan, any warrants, equity or other
equity interests or interests convertible into or exchangeable for any such
interests received by the Originator or its Affiliates from the Obligor in
connection with such Loan.
Tape: Defined in Section 7.2(b)(2).
Taxes: Any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Governmental Authority.
Termination Date: The earliest of (a) the date of the termination of the
Facility Amount pursuant to Section 2.3, (b) the Business Day designated by the
Seller to the Administrative Agent and each Purchaser Agent as the Termination
Date at any time following two (2) Business Days' prior written notice thereof
to the Administrative Agent and each Purchaser Agent, (c) the earlier of the
date any Liquidity Agreement or the Liquidity Participation Agreement shall
cease to be in full force and effect or the "Participation Termination Date"
under and as defined in the Liquidity Participation Agreement shall occur, (d)
the date of the declaration of the Termination Date pursuant to Section 10.2(a)
or the date of the automatic occurrence of the Termination Date pursuant to
Section 10.2(b), and (e) the second (2nd) Business Day prior to the Facility
Termination Date.
Termination Event: Defined in Section 10.1.
49
Term Loan: A Loan that is a term loan that has been fully funded and does not
contain any unfunded commitment on the part of the Originator arising from an
extension of credit by the Originator to an Obligor in the form of the "Term
Loan Agreement" attached hereto as Schedule V or such other form as shall be
adopted by the Originator and approved in writing by the Administrative Agent at
least ten (10) days prior to such Loan becoming part of the Asset Pool
hereunder.
Timeshare Cumulative Default Ratio: With respect to any Timeshare Loan to an
Obligor that is a special purpose entity, as of any Determination Date, (a) the
percentage equivalent of a fraction, the numerator of which is the sum of the
outstanding loan balances of the Timeshare Mortgage Loans at any time included
in the assets of such special purpose entity as to which at any time all or any
portion of any one or more payments remained unpaid for at least ninety (90)
days from the original due date for such payment as of such Determination Date,
and (b) the denominator of which is equal to the aggregate outstanding loan
balance of the Timeshare Mortgage Loans (determined as of the date such
Timeshare Mortgage Loans were first originated) included in the assets of such
special purpose entity.
Timeshare Delinquency Ratio: With respect to any Timeshare Loan to an Obligor
that is a special purpose entity, as of any Determination Date, (a) the
percentage equivalent of a fraction, the numerator of which is the sum of the
outstanding loan balances of the Timeshare Mortgage Loans included in the assets
of such special purpose entity as to which all or any portion of any one or more
payments remains unpaid for at least sixty (60) days from the original due date
for such payment during the Collection Period related to such Determination
Date, and (b) the denominator of which is equal to the aggregate outstanding
loan balance of the Timeshare Mortgage Loans included in the assets of such
special purpose entity.
Timeshare Developer: With respect to any timeshare resort or vacation club
(including any accompanying recreational facilities) relating to any Timeshare
Loan, the Person or Persons, including any Affiliate or guarantor thereof,
responsible for the construction, development, maintenance or operation thereof.
Timeshare Loan: A Material Mortgage Loan secured by Mortgage Notes and Mortgages
or a purchase facility under which a SPE Obligor purchases Mortgage Notes.
Timeshare Mortgage Loan: A loan evidenced by a promissory note secured by a
Mortgage creating a Lien on a Mortgaged Property.
Transaction: Defined in Section 3.2.
Transaction Documents: The Agreement, the Sale Agreement, the Hedging Agreement,
the Guaranty, the Lock-Box Agreement, the Intercreditor Agreement, each Variable
Funding Certificate, the VFCC Fee Letter, the Fairway Fee Letter, the Eiffel Fee
Letter, the Hannover Fee Letter, the Backup Servicer Fee Letter, the Collateral
Custodian Fee Letter, any UCC financing statements filed pursuant to the terms
of this Agreement, and any additional document the execution of which is
necessary or incidental to carrying out the terms of the foregoing documents.
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Transition Expenses: The reasonable costs (including reasonable attorneys' fees)
of the Backup Servicer incurred in connection with the transferring the
servicing obligations under this Agreement and amending this Agreement to
reflect such transfer in an amount not to exceed $50,000.
Type of Loan: With respect to any Loan, shall mean a reference to whether such
loan is a Revolving Loan, Term Loan, DIP Loan, Participation Loan, Assigned
Loan, Acquired Loan, Agented Notes, Banded Floating Rate Loan or Timeshare Loan.
UCC: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.
United States: The United States of America.
Unmatured Termination Event: Any event that, with the giving of notice or the
lapse of time, or both, would become a Termination Event.
Variable Funding Certificate: Defined in Section 2.1.
VFCC: Defined in the Preamble of this Agreement.
VFCC Agent: WSI or any other entity that has been appointed as the administrator
for VFCC.
VFCC Agent's Account: A special account (account number 2000002391825) in the
name of the Administrative Agent maintained at Wachovia.
VFCC Breakage Costs: Any amount or amounts as shall compensate VFCC for any
loss, cost or expense incurred by VFCC (as determined by the VFCC Agent on
behalf of VFCC, in the VFCC Agent's sole discretion) as a result of (i) a
prepayment by the Seller of Advances Outstanding or Interest or (ii) any
difference between the VFCC CP Rate and the Adjusted Eurodollar Rate. All VFCC
Breakage Costs shall be due and payable hereunder upon demand.
VFCC CP Rate: For any day during any Accrual Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by
VFCC from time to time as interest on or otherwise (by means of interest rate
▇▇▇▇▇▇ or otherwise taking into consideration any incremental carrying costs
associated with short-term promissory notes issued by VFCC maturing on dates
other than those certain dates on which VFCC is to receive funds) in respect of
the promissory notes issued by VFCC that are allocated, in whole or in part, by
the VFCC Agent (on behalf of VFCC) to fund or maintain the Advances Outstanding
funded by VFCC during such period, as determined by the VFCC Agent (on behalf of
VFCC) and reported to the Seller and the Servicer, which rates shall reflect and
give effect to (i) the commissions of placement agents and dealers in respect of
such promissory notes, to the extent such commissions are allocated, in whole or
in part, to such promissory notes by the VFCC Agent (on behalf of VFCC) and (ii)
other borrowings by VFCC, including, without limitation, borrowings to fund
small or odd dollar amounts that are not easily accommodated in the commercial
paper market; provided, however, that if any component of such rate is a
discount rate, in calculating the VFCC CP Rate, the VFCC Agent shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum.
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VFCC Fee Letter: The VFCC Fee Letter Agreement, dated as of April 24, 2002,
among the Seller, the Servicer, the Administrative Agent, and the VFCC Agent, as
amended by Amendment No. 1 to VFCC Fee Letter Agreement dated as of November 11,
2002, and by Amendment No. 2 to VFCC Fee Letter, dated as of February 25, 2003,
and as such letter may be amended, modified, supplemented, restated or replaced
from time to time.
Wachovia: Wachovia Bank, National Association, a national banking association in
its individual capacity, and its successors and assigns.
Warranty Event: As to any Loan, the discovery that as of the related Cut-Off
Date or Funding Date there had existed a breach of any representation or
warranty relating to such Loan and the continuance of such breach through any
applicable determination date or beyond any applicable cure period.
Warranty Loan: Any Loan that fails to satisfy any criteria of the definition of
Eligible Loan; provided, however, that notwithstanding the foregoing, for
purposes of determining what is a Warranty Loan, the criteria set forth in
clauses (c), (g) and (dd) of the definition of Eligible Loan and clauses (vi),
(viii) and (ix) in the definition of Eligible Obligor shall apply only as of the
applicable Cut-Off Date of such Loan.
Watchlist Loan: Any Loan (that is not a Charged-Off Loan or Delinquent Loan) as
to which the Servicer has discovered circumstances which lead the Servicer to
reasonably expect loss or non-payment by the Obligor thereof.
Weighted Average Advance Rate: For any Advances Outstanding on any day, the
weighted average of the Advance Rates applicable to the Eligible Loans backing
such Advances on such day, weighted on the basis of the Aggregate Outstanding
Loan Balance.
SECTION 1.2 OTHER TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and used but not specifically defined herein, are used herein
as defined in such Article 9.
SECTION 1.3 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
SECTION 1.4 INTERPRETATION.
In each Transaction Document, unless a contrary intention appears:
(1) the singular number includes the plural number and
vice versa;
52
(2) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by the Transaction Documents;
(3) reference to any gender includes each other gender;
(4) reference to day or days without further
qualification means calendar days;
(5) reference to any time means Charlotte, North Carolina
time;
(6) reference to any agreement (including any Transaction
Document), document or instrument means such agreement, document or
instrument as amended, supplemented or modified and in effect from time
to time in accordance with the terms thereof and, if applicable, the
terms of the other Transaction Documents, and reference to any
promissory note includes any promissory note that is an extension or
renewal thereof or a substitute or replacement therefor; and
(7) reference to any Applicable Law means such Applicable
Law as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations promulgated thereunder and reference to any Section or
other provision of any Applicable Law means that provision of such
Applicable Law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such Section or other provision.
ARTICLE II
PURCHASE OF THE VARIABLE FUNDING CERTIFICATES
SECTION 2.1 THE VARIABLE FUNDING CERTIFICATES.
(a) On the terms and conditions hereinafter set forth, on the
Closing Date, the Seller shall deliver to each of the Purchaser Agents, at the
applicable address set forth on the signature pages of this Agreement, duly
executed variable funding certificates (each a "Variable Funding Certificate" or
"VFC"), in substantially the form of Exhibits ▇-▇, ▇-▇, ▇-▇ and B-4, dated as of
the date of this Agreement, in an aggregate face amount equal to the Facility
Amount, and otherwise duly completed. Each Variable Funding Certificate shall
evidence an undivided ownership interest in the Assets purchased by each
applicable Purchaser in an amount equal, at any time, to the percentage
equivalent of a fraction (i) the numerator of which is the Advances outstanding
under the applicable VFC on such day, and (ii) the denominator of which is the
total aggregate Advances Outstanding on such day. Interest shall accrue, and
each VFC shall be payable, as described herein. The VFC purchased by (1) VFCC
shall be in the name of "Wachovia Securities, Inc., as the VFCC Agent" and shall
be in the face amount equal to $300,000,000, (2) Fairway shall be in the name of
"BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp., as the Fairway Agent" and shall be in the face amount
equal to $150,000,000, (iii) Eiffel shall be in the name of "▇▇▇▇ & Co., as
nominee for Deutsche Bank Trust Company Americas, Collateral Trustee for Eiffel
Funding, LLC" and shall be in the face amount equal to $125,000,000, and (iv)
Hannover
53
shall be in the name of "Norddeutsche Landesbank Girozentrale, as the Hannover
Agent" and shall be in the face amount equal to $75,000,000.
(b) On the terms and conditions hereinafter set forth, from the
Closing Date to, but not including, the Termination Date, the Seller may, at its
option, request the Purchasers to make advances of funds under the VFCs in an
amount up to the Advance Amount (each, an "Advance") and VFCC, Fairway and
Eiffel shall make such Advance in an amount equal to their Pro-Rata Share of
such requested Advance; provided, that, in no event shall the Purchasers make
any Advance if, after giving effect to such Advance the aggregate Advances
Outstanding hereunder would exceed the lesser of (i) the Facility Amount or (ii)
the Maximum Availability. Notwithstanding anything contained in this Section
2.1or elsewhere in this Agreement to the contrary, no Purchaser shall be
obligated to provide its Purchaser Agent or the Seller with aggregate funds in
connection with an Advance that would exceed such Purchaser's unused Commitment
then in effect. Each Advance made by the Purchasers hereunder is subject to the
interests of the Hedge Counterparties under Section 2.7(a)(i) and Section 2.8(1)
of this Agreement.
(c) The Seller may, within sixty (60) days but not less than
forty-five (45) days prior to the expiration of any Liquidity Agreement in the
case of an extension of any Liquidity Agreement or the applicable Extension
Request Date in the case of an extension of the Facility Termination Date, by
written notice to each Purchaser Agent, make request (i) for each applicable
Liquidity Bank to extend the term of such Liquidity Agreement for an additional
period of 182 days (in the case of the initial extension only of the Liquidity
Agreement with respect to Eiffel) or for a period of 364 days and (ii) for each
Purchaser Agent to extend the Facility Termination Date for an additional period
of 364 days. Each Purchaser Agent will give prompt notice to the applicable
Purchaser and each applicable Liquidity Bank of its receipt of such request, and
each Purchaser and each Liquidity Bank shall make a determination, in their sole
discretion, not less than fifteen (15) days prior to the Facility Termination
Date or the expiration of any Liquidity Agreement (as applicable) as to whether
or not it will agree to the extension requested. The failure of a Purchaser
Agent or a Liquidity Bank to provide timely notice of its decision to the Seller
shall be deemed to constitute a refusal by such Purchaser or such Liquidity Bank
(as applicable) to extend the Facility Termination Date or the term of the
Liquidity Agreement, respectively; provided, further, that, in no event shall
the Facility Termination Date be extended beyond February 24, 2006 under
foregoing clause (ii) of this Section 2.1(c). In the event that the term of any
Liquidity Agreement or any related participation is not extended for a period of
up to 364 days, the Termination Date shall be extended for a period of 90 days
and notice of such termination shall be provided by each Purchaser Agent to the
Backup Servicer, the Collateral Custodian, the Seller and the Servicer. Unless
approved by each Purchaser Agent, only one such ninety (90) day extension of the
Termination Date, as described in this Section 2.1(c), may occur. The Seller
confirms that each Liquidity Bank and each Purchaser, in their sole and absolute
discretion, without regard to the value or performance of the Assets or any
other factor, may elect not to extend any Liquidity Agreement or Facility
Termination Date (as applicable).
SECTION 2.2 PROCEDURES FOR ADVANCES.
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(a) Each Advance hereunder shall be effected by the Seller (or the
Servicer on its behalf) delivering to the Administrative Agent and each
Purchaser Agent (with a copy to the Collateral Custodian and the Backup
Servicer) a duly completed Borrowing Notice (along with a Borrowing Base
Certificate) no later than 12:00 p.m. at least one (1) Business Day prior to the
proposed Funding Date. Each Borrowing Notice (along with a Borrowing Base
Certificate) shall (i) specify the desired amount of such Advance, which amount
must be at least equal to $250,000 per Purchaser, (ii) specify the date of such
Advance, (iii) specify the Loans to be financed on such Funding Date (including
the appropriate file number; Outstanding Loan Balance for each Loan and
identifying each Loan by Type of Loan and whether such Loan is a Senior Secured
Loan or Subordinated Loan) and (iv) include a representation that all conditions
precedent for an Advance described in Article III hereof have been met. Each
Borrowing Notice shall be irrevocable.
(b) On the date of each Advance, each Purchaser shall, upon
satisfaction of the applicable conditions set forth in Article III, make
available to the Seller in same day funds, at such bank or other location
reasonably designated by Seller in its Borrowing Notice given pursuant to this
Section 2.2, an amount equal to its Pro-Rata Share of the lesser of (i) the
amount requested by the Seller for such Advance, (ii) an amount equal to the
Availability on such Funding Date or (iii) the Facility Amount.
(c) On each Funding Date, the obligation of each Purchaser to
remit its Pro-Rata Share of any such Advance shall be several from that of each
other Purchaser and the failure of any Purchaser to so make such amount
available to the Seller shall not relieve any other Purchaser of its obligation
hereunder.
SECTION 2.3 REDUCTION OF THE FACILITY AMOUNT; MANDATORY AND
OPTIONAL REPAYMENTS.
(a) The Seller may, upon at least twenty (20) Business Days' prior
written notice (such notice to be received by the Administrative Agent and each
Purchaser Agent no later than 5:00 p.m. (North Carolina time) on such day) to
the Administrative Agent and each Purchaser Agent, terminate in whole or reduce
in part the portion of the Facility Amount that exceeds the sum of the Advances
Outstanding, accrued Interest, Breakage Costs and Hedge Breakage Costs;
provided, however, that each partial reduction of the Facility Amount shall be
in an aggregate amount equal to at least $1,000,000. Each notice of reduction or
termination pursuant to this Section 2.3(a) shall be irrevocable.
(b) The Seller may, upon one (1) Business Days' prior written
notice (such notice to be received by the Administrative Agent, the Hedge
Counterparty and each Purchaser Agent no later than 5:00 p.m. (North Carolina
time) on such day) to the Administrative Agent and each Purchaser Agent, reduce
the Advances Outstanding by remitting, in accordance with their Pro-Rata Share,
to each Purchaser Agent, for payment to the respective Purchasers, (i) cash and
(ii) instructions to reduce such Advances Outstanding, related accrued Interest,
Breakage Costs and Hedge Breakage Costs; provided, that, no such reduction shall
be given effect (1) unless the Seller has complied with the terms of any Hedging
Agreement requiring that one or more Hedge Transactions be terminated in whole
or in part as the result of any such reduction of the Advances Outstanding, and
Seller has paid all Hedge Breakage Costs owing to the relevant
55
Hedge Counterparty for any such termination (2) if a Termination Event or
Unmatured Termination Event has occurred, is continuing or would result from
such reduction. Any reduction of the Advances Outstanding shall be in a minimum
amount of $500,000. Any such reduction will occur only if sufficient funds have
been remitted to pay all such amounts in the succeeding sentence in full. Upon
receipt of such amounts, the Purchaser Agents shall apply such amounts first to
the pro-rata reduction of the Advances Outstanding, second to the payment of
related accrued Interest on the amount of the Advances Outstanding to be repaid
by paying such amounts to the respective Purchasers, and third to the payment of
any Breakage Costs and Hedge Breakage Costs. Any notice relating to any
prepayment pursuant to this Section 2.3(b) shall be irrevocable.
(c) If on any day (i) the Administrative Agent, as agent for the
Secured Parties, does not own or have a valid and perfected first priority
security interest in each of the Assets or (ii) any Loan which has been
represented by the Seller to be an Eligible Loan is later determined not to have
been an Eligible Loan at the time such representation was made by Seller, upon
the earlier of the Seller's receipt of notice from the Administrative Agent or
the Seller becoming aware thereof and the Seller's failure to cure such breach
within thirty (30) days, the Seller shall be deemed to have received on such day
a collection (a "Deemed Collection") of such Loan in full and shall on such day
pay to the Administrative Agent, on behalf of the Purchasers, an amount equal to
the Outstanding Loan Balance of such Loan to be applied to the pro-rata
reduction of the principal of each VFC. In connection with any such Deemed
Collection, the Administrative Agent, as agent for the Secured Parties, shall
automatically and without further action, be deemed to transfer to the Seller,
free and clear of any Lien created by the Administrative Agent, all of the
right, title and interest of the Administrative Agent, as agent for the Secured
Parties, in, to, and under the Loan with respect to which the Administrative
Agent has received such Deemed Collection, but without any other representation
and warranty of any kind, express or implied.
SECTION 2.4 DETERMINATION OF INTEREST.
(a) The VFCC Agent shall determine the VFCC CP Rate and the
Interest (including unpaid Interest, if any, due and payable on a prior Payment
Date but excluding the Fairway CP Rate, the Eiffel CP Rate and the Hannover CP
Rate) to be paid by the Seller with respect to each Advance on each Payment Date
for the related Accrual Period and shall advise the Servicer thereof on the
third (3rd) Business Day prior to such Payment Date.
(b) The Eiffel Agent shall determine the Eiffel CP Rate (including
unpaid Interest related to the Eiffel CP Rate, if any, due and payable to a
prior Payment Date) to be paid by the Seller with respect to each Advance on
each Payment Date for the related Accrual Period and shall advise the Servicer
thereof on the third (3rd) Business Day prior to such Payment Date.
(c) The Fairway Agent shall determine the Fairway CP Rate
(including unpaid Interest related to the Fairway CP Rate, if any, due and
payable to a prior Payment Date) to be paid by the Seller with respect to each
Advance on each Payment Date for the related Accrual Period and shall advise the
Servicer thereof on the third (3rd) Business Day prior to such Payment Date.
56
(d) The Hannover Agent shall determine the Hannover CP Rate
(including unpaid Interest related to the Hannover CP Rate, if any, due and
payable to a prior Payment Date) to be paid by the Seller with respect to each
Advance on each Payment Date for the related Accrual Period and shall advise the
Servicer thereof on the third (3rd) Business Day prior to such Payment Date.
SECTION 2.5 PERCENTAGE EVIDENCED BY EACH VARIABLE FUNDING
CERTIFICATE.
The variable percentage ownership interest in the Assets represented by
each VFC shall be initially computed on its date of purchase. Thereafter, until
the Termination Date, each VFC shall be automatically recomputed (or deemed to
be recomputed) on each day prior to the Termination Date. The variable
percentage ownership interest in the Assets represented by each VFC as computed
(or deemed recomputed) as of the close of business on the day immediately
preceding the Termination Date shall remain constant at all times on and after
the Termination Date. The variable percentage ownership interest in the Assets
represented by each VFC shall become zero when its Advances and Interest have
been indefeasibly paid in full.
SECTION 2.6 NOTATIONS ON VARIABLE FUNDING CERTIFICATES.
Each Purchaser Agent is hereby authorized to enter on a schedule
attached to the VFC a notation (which may be computer generated) with respect to
each Advance under the VFC made by the related Purchaser of: (a) the date and
principal amount thereof, and (b) each repayment of principal thereof, and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of any Purchaser Agent to make any such
notation on the schedule attached to the VFC shall not limit or otherwise affect
the obligation of the Seller to repay the Advances in accordance with their
respective terms as set forth herein.
SECTION 2.7 SETTLEMENT PROCEDURES DURING THE REVOLVING PERIOD.
(a) On each Payment Date during the Revolving Period, the Servicer
shall direct the Collateral Custodian to pay pursuant to the Monthly Report to
the following Persons, from (1) the Collection Account, to the extent of
Available Funds, and (2) Servicer Advances received with respect to the
immediately preceding Collection Period that ended on the last day of the
calendar month immediately preceding the calendar month in which such Payment
Date occurs, the following amounts in the following order of priority:
(i) FIRST, pro rata to each Hedge Counterparty, any
amounts, (other than any Hedge Breakage Costs and any payments due in
respect of the termination of any Hedging Transaction), owing to that
Hedge Counterparty under its respective Hedging Agreement in respect of
any Hedge Transaction(s), for the payment thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fees to the end of the preceding
Collection Period, for the payment thereof;
57
(iv) FOURTH, to the extent not paid for by the Originator,
pro rata to the Backup Servicer and the Collateral Custodian, in an
amount equal to any accrued and unpaid Backup Servicing Fees,
Collateral Custodian Fees and Transition Expenses, for the payment
thereof;
(v) FIFTH, to each Purchaser Agent, pro rata in
accordance with the amount of Advances Outstanding hereunder for the
account of the applicable Purchaser, in an amount equal to any accrued
and unpaid Interest, Program Fee, Commitment Fee and Breakage Costs,
for the payment thereof;
(vi) SIXTH, to each Purchaser Agent, if the Required
Advance Reduction Amount is greater than zero or an
Overcollateralization Shortfall exists, an amount necessary to reduce
the Required Advance Reduction Amount to zero and an amount necessary
to cure such Overcollateralization Shortfall, pro rata in accordance
with the amount of Advances Outstanding hereunder for the account of
the applicable Purchaser, for the payment thereof;
(vii) SEVENTH, if any Required Equity Shortfall exists, an
amount necessary to cure such Required Equity Shortfall, to the Excess
Spread Account, for the payment thereof;
(viii) EIGHTH, pro-rata to each Hedge Counterparty, any
Hedge Breakage Costs and payments due in termination of any Hedge
Transaction, owing to that Hedge Counterparty under its respective
Hedging Agreement, for the payment thereof;
(ix) NINTH, to the Administrative Agent, each Purchaser
Agent, the applicable Purchaser, the Backup Servicer, the Collateral
Custodian, the Affected Parties, the Indemnified Parties or the Secured
Parties, pro rata in accordance with the amount owed to such Person
under this NINTH clause, all other amounts, including Increased Costs
but other than Advances Outstanding, then due under this Agreement, for
the payment thereof; and
(x) TENTH, any remaining amount shall be distributed to
the Seller.
(b) On the terms and conditions hereinafter set forth, from time
to time during the Revolving Period, the Servicer may, to the extent of any
Principal Collections on deposit in the Principal Collections Account, withdraw
such funds for the purpose of reinvesting in additional Eligible Loans, provided
the following conditions are satisfied:
(1) all conditions precedent set forth in Section 3.2(b)
have been satisfied;
(2) the Servicer provides same day written notice to the
Administrative Agent and Collateral Custodian by facsimile (to be
received no later than 1:00 p.m. (Charlotte, North Carolina time) on
such day) of the request to withdraw Principal Collections and the
amount thereof;
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(3) the notice required in clause (ii) above shall be
accompanied by a Borrowing Notice in the form of Exhibit A-2 and a
Borrowing Base Certificate and the same are executed by the Seller and
at least one (1) Responsible Officer of the Servicer;
(4) the Collateral Custodian provides to the
Administrative Agent by facsimile (to be received no later than 1:00
p.m. (Charlotte, North Carolina time) on that same date) a statement
reflecting the total amount on deposit on such day in the Principal
Collections Account; and
(5) upon the satisfaction of the conditions set forth in
clauses (i) through (iv) above, and the Administrative Agent's
confirmation of available funds, the Administrative Agent will instruct
the Collateral Custodian by facsimile on such day to release funds from
the Principal Collections Account to the Servicer in an amount not to
exceed the lesser of (A) the amount requested by the Servicer and (B)
the amount on deposit in the Principal Collections Account on such day.
SECTION 2.8 SETTLEMENT PROCEDURES DURING THE AMORTIZATION PERIOD.
On each Payment Date during the Amortization Period, the Servicer shall
direct the Collateral Custodian to pay pursuant to the Monthly Report to the
following Persons, from (i) the Collection Account, to the extent of Available
Funds, and (ii) Servicer Advances received with respect to the immediately
preceding Collection Period, the following amounts in the following order of
priority:
(1) FIRST, pro rata to each Hedge Counterparty, any
amounts, (including any Hedge Breakage Costs and any payments due in
respect of the termination of any Hedge Transaction in an amount not to
exceed $250,000 in the aggregate for all Hedging Agreements), owing to
that Hedge Counterparty under its respective Hedging Agreement in
respect of any Hedge Transaction(s), for the payment thereof;
(2) SECOND, to the Servicer, in an amount equal to any
unreimbursed Servicer Advances, for the payment thereof;
(3) THIRD, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fees to the end of the preceding
Collection Period, for the payment thereof;
(4) FOURTH, to the extent not paid for by the Originator,
pro rata to the Backup Servicer and the Collateral Custodian, in an
amount equal to any accrued and unpaid Backup Servicing Fees,
Collateral Custodian Fees and Transition Expenses, for the payment
thereof;
(5) FIFTH, to each Purchaser Agent, pro rata in
accordance with the amount of Advances Outstanding hereunder for the
account of the applicable Purchaser, in an amount equal to any accrued
and unpaid Interest, Program Fee, Commitment Fee and Breakage Costs,
for the payment thereof;
(6) SIXTH, to each Purchaser Agent, pro rata in
accordance with the amount of Advances Outstanding hereunder for the
account of the applicable Purchaser, in an
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amount necessary to reduce the Advances Outstanding and Aggregate
Unpaids to zero, for the payment thereof;
(7) SEVENTH, to each Purchaser Agent, if the Required
Advance Reduction Amount is greater than zero or an
Overcollateralization Shortfall Exists, an amount necessary to reduce
the Required Advance Reduction Amount to zero and an amount necessary
to cure such Overcollateralization Shortfall, pro rata in accordance
with the amount of Advances Outstanding hereunder for the account of
the applicable Purchaser, for the payment thereof;
(8) EIGHTH, if any Required Equity Shortfall exists, an
amount necessary to cure such Required Equity Shortfall, to the Excess
Spread Account, for the payment thereof;
(9) NINTH, pro-rata to each Hedge Counterparty, any Hedge
Breakage Costs and payments due in termination of any Hedge
Transaction, owing to that Hedge Counterparty under its respective
Hedging Agreement to the extent not reimbursed pursuant to clause FIRST
above, for the payment thereof;
(10) TENTH, to the Administrative Agent, each Purchaser
Agent, the applicable Purchaser, the Backup Servicer, the Collateral
Custodian, the Affected Parties, the Indemnified Parties or the Secured
Parties, pro rata in accordance with the amount owed to such Person
under this TENTH clause, all other amounts, including Increased Costs
but other than Advances Outstanding, then due under this Agreement, for
the payment thereof; and
(11) ELEVENTH, any remaining amount shall be distributed
to the Seller.
SECTION 2.9 COLLECTIONS AND ALLOCATIONS.
(a) Collections. The Servicer shall promptly identify any
collections received as being on account of Interest Collections, Principal
Collections or other Collections and shall transfer, or cause to be transferred,
all Collections received directly by it or on deposit in the form of available
funds in the Lock-Box Accounts to the Collection Account by the close of
business on the second (2nd) Business Day after such Collections are received.
In transferring Collections to the Collection Account, the Servicer shall
segregate Principal Collections and transfer the same to the corresponding
Principal Collections Account. The Servicer shall make such deposits or payments
on the date indicated therein by wire transfer, in immediately available funds.
The Servicer shall further include a statement as to the amount of Principal
Collections and Interest Collections on deposit in the Collection Account on
each Reporting Date in the Monthly Report delivered pursuant to Section 6.10(b).
(b) Initial Deposits. On the Closing Date and on each Addition
Date thereafter, the Servicer will deposit (in immediately available funds) into
the Collection Account all Collections received after the applicable Cut-Off
Date and through and including the Closing Date or Addition Date, as the case
may be, in respect of Eligible Loans being transferred to and included as part
of the Asset Pool on such date.
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(c) Excluded Amounts. With the prior written consent of the
Administrative Agent and each Purchaser Agent, which consent shall not be
unreasonably withheld (a copy of which will be provided by the Servicer to the
Backup Servicer), the Servicer may withdraw from the Collection Account any
deposits thereto constituting Excluded Amounts if the Servicer has, prior to
such withdrawal and consent, delivered to the Administrative Agent and each
Purchaser Agent a report setting forth the calculation of such Excluded Amounts
in a format satisfactory to the Administrative Agent and each Purchaser Agent in
their sole discretion.
(d) Investment of Funds. Until the occurrence of a Termination
Event, to the extent there are uninvested amounts deposited in the Collection
Account, and the Excess Spread Account, all amounts shall be invested in
Permitted Investments selected by the Servicer that mature no later than the
Business Day immediately preceding the next Payment Date; from and after the
occurrence of a Termination Event, to the extent there are uninvested amounts in
the Collection Account, and the Excess Spread Account (net of losses and
investment expenses), all amounts may be invested in Permitted Investments
selected by the Administrative Agent that mature no later than the Business Day
immediately preceding the next Payment Date. All earnings (net of losses and
investment expenses) thereon shall be retained or deposited into the Collection
Account and shall be applied pursuant to the provisions of Section 2.7 and
Section 2.8.
SECTION 2.10 PAYMENTS, COMPUTATIONS, ETC.
(a) Unless otherwise expressly provided herein, all amounts to be
paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m.
(Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the applicable Purchaser Agent's
Account and if not received before such time shall be deemed received on the
next Business Day. The Seller shall, to the extent permitted by law, pay to the
Secured Parties interest on all amounts not paid or deposited when due hereunder
at 2% per annum above the Base Rate, payable on demand; provided, however, that
such interest rate shall not at any time exceed the maximum rate permitted by
Applicable Law. Such interest shall be for the account of, and distributed by
each Purchaser Agent, to each applicable Purchaser. All computations of interest
and all computations of Interest and other fees hereunder shall be made on the
basis of a year consisting of 360 days (other than calculations with respect to
the Base Rate which shall be based on a year consisting of 365 or 366 days, as
applicable) for the actual number of days (including the first but excluding the
last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of Interest or any fee payable hereunder, as the case
may be. For avoidance of doubt, to the extent that Available Funds are
insufficient on any Payment Date to satisfy the full amount of any Increased
Costs pursuant to clause NINTH of Section 2.7(a) or clause TENTH of Section 2.8,
such unpaid amounts shall remain due and owing and shall accrue Interest until
repaid in full.
(c) If any Advance requested by the Seller and approved by the
applicable Purchaser and the Purchaser Agents, pursuant to Section 2.2, is not,
for any reason made or effectuated, as
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the case may be, on the date specified therefor, the Seller shall indemnify the
applicable Purchaser against any reasonable loss, cost or expense incurred by
the applicable Purchaser including, without limitation, any loss (including loss
of anticipated profits, net of anticipated profits in the reemployment of such
funds in the manner determined by each Purchaser), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
the applicable Purchaser to fund or maintain such Advance.
SECTION 2.11 OPTIONAL REPURCHASE.
At any time following the Termination Date when the Borrowing Base is
less than fifteen (15%) percent of the Borrowing Base as of the Termination
Date, the Seller may notify the Administrative Agent and each Purchaser Agent in
writing of its intention to purchase all remaining Assets; provided, that, all
Hedge Transactions have been terminated in accordance with their terms. On the
Payment Date next succeeding any such notice, the Seller shall purchase all such
Assets for a price equal to the Aggregate Unpaids and the proceeds of such
purchase will be deposited into the Collection Account and paid in accordance
with Section 2.8.
SECTION 2.12 FEES.
(a) The Servicer on behalf of the Seller shall pay in accordance
with Section 2.7(a)(v) and Section 2.8(5), as applicable, to the VFCC Agent,
Fairway Agent, the Eiffel Agent and the Hannover Agent from the Collection
Account to the extent funds are available on each Payment Date, monthly in
arrears, the applicable Program Fee and the applicable Commitment Fee agreed to
between the Seller and the VFCC Agent, Fairway Agent, the Eiffel Agent and the
Hannover Agent in the VFCC Fee Letter, the Fairway Fee Letter, the Eiffel Fee
Letter and the Hannover Fee Letter, as applicable.
(b) The Servicer shall be entitled to receive a fee (the
"Servicing Fee"), monthly in arrears in accordance with Section 2.7(a)(iii) and
Section 2.8(3), as applicable, which fee shall be equal to the product of (i)
the Servicing Fee Rate, (ii) Aggregate Outstanding Loan Balance, as of the first
(1st) day of the immediately preceding Collection Period and (iii) the actual
number of days in such Collection Period divided by 360.
(c) The Backup Servicer shall be entitled to receive the Backup
Servicing Fee in accordance with Section 2.7(a)(iv) and Section 2.8(4), as
applicable.
(d) The Collateral Custodian shall be entitled to receive the
Collateral Custodian Fee in accordance with Section 2.7(a)(iv) and Section
2.8(4), as applicable.
(e) The Seller shall pay to Mayer, Brown, ▇▇▇▇ & Maw as counsel to
the Administrative Agent, and Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, as counsel to the
Participant, the Fairway Agent and the Hannover Agent, and ▇▇▇▇▇ ▇▇▇▇, LLP, as
counsel to the Eiffel Agent, respectively, on the Closing Date, their reasonable
estimated fees and out-of-pocket expenses in immediately available funds and
shall pay all additional reasonable fees and out-of-pocket expenses of Mayer,
Brown, ▇▇▇▇ & Maw, Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, LLP, within thirty
(30) Business Days after receiving an invoice for such amounts.
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
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(a) If either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or regulation or (ii) the
compliance by an Affected Party with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
shall (a) subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to any
ownership interest in the Assets, or any right to make Advances hereunder, or on
any payment made hereunder, (b) impose, modify or deem applicable any reserve
requirement (including, without limitation, any reserve requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding any reserve
requirement, if any, included in the determination of Interest), special deposit
or similar requirement against assets of, deposits with or for the amount of, or
credit extended by, any Affected Party or (c) impose any other condition
affecting the ownership interest in the Assets conveyed to the Purchasers
hereunder or the Purchasers' rights hereunder, the result of which is to
increase the cost to any Affected Party or to reduce the amount of any sum
received or receivable by an Affected Party under this Agreement, then within
ten (10) days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Servicer shall pay (and to the extent the Servicer does not make such payment
the Seller shall pay) directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten (10) days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Servicer shall pay (and to the extent the Servicer does not
make such payment the Seller shall pay) directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction. For the avoidance of doubt, if the issuance of Interpretation No. 46
by the Financial Accounting Standards Board or any other change in accounting
standards or the issuance of any other pronouncement, release or interpretation,
causes or requires the consolidation of all or a portion of the assets and
liabilities of the Originator or Seller with the assets and liabilities of the
Administrative Agent, any Purchaser Agent, any Purchaser or any Liquidity Bank,
such event shall constitute a circumstance on which such Affected Party may base
a claim for reimbursement under this Section 2.13.
(c) If as a result of any event or circumstance similar to those
described in clause (a) or (b) of this Section 2.13, any Affected Party is
required to compensate a bank or other financial institution providing liquidity
support, credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of Advances
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hereunder, then within ten (10) days after demand by such Affected Party, the
Servicer shall pay (or to the extent the Servicer does not make such payment the
Seller shall pay) to such Affected Party such additional amount or amounts as
may be necessary to reimburse such Affected Party for any amounts payable or
paid by it.
(d) In determining any amount provided for in this Section 2.13,
the Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.13 shall submit to the
Servicer a written description as to such additional or increased cost or
reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.
(e) If the applicable Purchaser shall notify their respective
Purchaser Agent that a Eurodollar Disruption Event as described in clause (a) of
the definition of "Eurodollar Disruption Event" has occurred, such Purchaser
Agent shall in turn so notify the Seller, whereupon all Advances Outstanding of
the affected Purchaser in respect of which Interest accrues at the Adjusted
Eurodollar Rate shall immediately be converted into Advances Outstanding in
respect of which Interest accrues at the Base Rate.
SECTION 2.14 TAXES.
(a) All payments made by an Obligor in respect of a Loan and all
payments made by the Seller or the Servicer under this Agreement will be made
free and clear of and without deduction or withholding for or on account of any
Taxes. If any Taxes are required to be withheld from any amounts payable to the
Administrative Agent, the Purchaser Agents, any Affected Party or any Secured
Party, then the amount payable to such Person will be increased (such increase,
the "Additional Amount") such that every net payment made under this Agreement
after withholding for or on account of any Taxes (including, without limitation,
any Taxes on such increase) is not less than the amount that would have been
paid had no such deduction or withholding been deducted or withheld. The
foregoing obligation to pay Additional Amounts, however, will not apply with
respect to net income or franchise taxes imposed on the Purchasers, any Affected
Party, the Administrative Agent or the Purchaser Agents, respectively, with
respect to payments required to be made by the Seller or Servicer under this
Agreement, by a taxing jurisdiction in which the Purchasers, any Affected Party,
the Administrative Agent or the Purchaser Agents, are organized, conducts
business or is paying taxes (as the case may be).
(b) The Servicer will indemnify (and to the extent the
indemnification provided by the Servicer is insufficient the Seller will
indemnify) each Affected Party for the full amount of Taxes payable by such
Person in respect of Additional Amounts and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. All payments
in respect of this indemnification shall be made within ten (10) days from the
date a written invoice therefor is delivered to the Seller.
(c) Within thirty (30) days after the date of any payment by the
Seller and the Servicer of any Taxes, the Seller and the Servicer will furnish
to the Administrative Agent and each of the Purchaser Agents at its address set
forth under its name on the signature pages hereof, appropriate evidence of
payment thereof.
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(d) If a Purchaser is not created or organized under the laws of
the United States or a political subdivision thereof, such Purchaser shall
deliver to the Seller, with a copy to the Administrative Agent, (i) within
fifteen (15) days after the date hereof, two (or such other number as may from
time to time be prescribed by Applicable Laws) duly completed copies of IRS Form
W-8BEN or Form W-8ECI (or any successor forms or other certificates or
statements that may be required from time to time by the relevant United States
taxing authorities or Applicable Laws), as appropriate, to permit the Seller to
make payments hereunder for the account of such Purchaser without deduction or
withholding of United States federal income or similar Taxes and (ii) upon the
obsolescence of or after the occurrence of any event requiring a change in, any
form or certificate previously delivered pursuant to this Section 2.14(d),
copies (in such numbers as may from time to time be prescribed by Applicable
Laws or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under Applicable Laws or
regulations to permit the Seller and the Servicer to make payments hereunder for
the account of such Purchaser without deduction or withholding of United States
federal income or similar Taxes.
(e) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Purchasers in connection with this Agreement or the funding or maintenance of
Advances hereunder, the Purchasers are required to compensate a bank or other
financial institution in respect of Taxes under circumstances similar to those
described in this Section 2.14, then, within ten (10) days after demand by the
Purchasers, the Servicer shall pay (or to the extent the Servicer does not make
such payment the Seller shall pay) to the Purchasers such additional amount or
amounts as may be necessary to reimburse the Purchasers for any amounts paid by
them.
(f) Without prejudice to the survival of any other agreement of
the Seller and the Servicer hereunder, the agreements and obligations of the
Seller and the Servicer contained in this Section 2.14 shall survive the
termination of this Agreement.
SECTION 2.15 ASSIGNMENT OF THE SALE AGREEMENT.
The Seller hereby assigns to the Administrative Agent, for the ratable
benefit of the Secured Parties hereunder, all of the Seller's right, title and
interest in and to, but none of its obligations under, the Sale Agreement and
any UCC financing statements filed under or in connection therewith. In
furtherance and not in limitation of the foregoing, the Seller hereby assigns to
the Administrative Agent for the benefit of the Secured Parties its right to
indemnification under Article VIII of the Sale Agreement. The Seller confirms
that the Administrative Agent on behalf of the Secured Parties shall have the
sole right to enforce the Seller's rights and remedies under the Sale Agreement
and any UCC financing statements filed under or in connection therewith for the
benefit of the Secured Parties.
SECTION 2.16 SUBSTITUTION OF LOANS.
On any day prior to the occurrence of a Termination Event (and after
the Termination Date at the discretion of the Administrative Agent with the
consent of the Purchaser Agents), the Seller may, subject to the conditions set
forth in this Section 2.16 and subject to the other restrictions contained
herein, replace any Loan with one or more Eligible Loans (each, a
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"Substitute Loan"); provided, that, no such replacement shall occur unless each
of the following conditions is satisfied as of the date of such replacement and
substitution:
(a) the Seller has recommended to the Administrative Agent (with a
copy to the Collateral Custodian) in writing that the Loan to be replaced should
be replaced (each a "Replaced Loan");
(b) each Substitute Loan is an Eligible Loan on the date of
substitution;
(c) after giving effect to any such substitution, the Advances
Outstanding do not exceed the lesser of (i) the Facility Amount and (ii) the
Maximum Availability;
(d) for purposes only of substitutions pursuant to Section 4.6
undertaken because a Loan has become a Warranty Loan, the aggregate Outstanding
Loan Balance of such Substitute Loans shall be equal to or greater than the
aggregate Outstanding Loan Balances of the Replaced Loans;
(e) for purposes only of substitutions pursuant to Section 4.6
undertaken because a Loan has become a Warranty Loan, such Substitute Loans, at
the time of substitution by the Seller, shall have no greater weighted average
life than the Replaced Loan;
(f) all representations and warranties of the Seller contained in
Section 4.1 and Section 4.2 shall be true and correct as of the date of
substitution of any such Substitute Loan;
(g) the substitution of any Substitute Loan does not cause a
Termination Event or Unmatured Termination Event to occur;
(h) the sum of the Outstanding Loan Balance of all Substitute
Loans does not exceed 20% of the Facility Amount, calculated on an annualized
basis commencing with the Closing Date;
(i) the sum of the Outstanding Loan Balance of all Substitute
Loans substituted for Delinquent Loans, Charged-Off Loans and Warranty Loans
shall not exceed 10% of the Facility Amount, calculated on an annualized basis
commencing with the Closing Date; and
(j) the Seller shall deliver to the Administrative Agent on the
date of such substitution a certificate of a Responsible Officer certifying that
each of the foregoing is true and correct as of such date.
In addition, the Seller shall in connection with such substitution
deliver to the Collateral Custodian the related Required Loan Documents. In
connection with any such substitution, the Administrative Agent, as agent for
the Secured Parties, shall, automatically and without further action, be deemed
to transfer to the Seller, free and clear of any Lien created pursuant to this
Agreement, all of the right, title and interest of the Administrative Agent, as
agent for the Secured Parties, in, to and under such Replaced Loan, but without
any representation and warranty of any kind, express or implied.
SECTION 2.17 OPTIONAL SALES.
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(a) On any Optional Sale Date, the Seller shall have the right to
prepay all or a portion of the Advances Outstanding in connection with the sale
and assignment to the Seller by the Administrative Agent, on behalf of the
Secured Parties, of the Assets (each, an "Optional Sale"), subject to the
following terms and conditions:
(1) The Seller shall have given the Administrative Agent
at least forty-five (45) Business Days' prior written notice of its
intent to effect an Optional Sale, unless such notice is waived or
reduced by the Administrative Agent;
(2) Any Optional Sale shall be in connection with a
Permitted Securitization Transaction;
(3) Unless an Optional Sale is to be effected on a
Payment Date (in which case the relevant calculations with respect to
such Optional Sale shall be reflected on the applicable Monthly
Report), the Servicer shall deliver to the Administrative Agent a
certificate and evidence to the reasonable satisfaction of the
Administrative Agent (which evidence may consist solely of a
certificate from the Servicer) that the Seller shall have sufficient
funds on the related Optional Sale Date to effect the contemplated
Optional Sale in accordance with this Agreement. In effecting an
Optional Sale, the Seller may use the Proceeds of sales of the Assets;
(4) After giving effect to the Optional Sale and the
assignment to the Seller of the Assets on any Optional Sale Date, (x)
the remaining Advances Outstanding shall not exceed the lesser of the
Facility Amount and the Maximum Availability, (y) the representations
and warranties contained in Section 4.1 hereof shall continue to be
correct in all material respects, except to the extent relating to an
earlier date, (z) the eligibility of any Loan remaining as part of the
Assets after the Optional Sale will be redetermined as of the Optional
Sale Date, (aa) the Pool Concentration Criteria will be redetermined as
of the Optional Sale Date, and (bb) neither an Unmatured Termination
Event nor a Termination Event shall have resulted;
(5) On the related Optional Sale Date, the Administrative
Agent, each Purchaser Agent, on behalf of the applicable Purchaser and
the Hedge Counterparties, shall have received, as applicable, in
immediately available funds, an amount equal to the sum of (i) the
portion of the Advances Outstanding to be prepaid plus (ii) an amount
equal to all unpaid Interest to the extent reasonably determined by the
Purchaser Agents to be attributable to that portion of the Advances
Outstanding to be paid in connection with the Optional Sale plus (iii)
an aggregate amount equal to the sum of all other amounts due and owing
to the Administrative Agent, the Collateral Custodian, the Backup
Servicer, the Purchaser Agents, the applicable Purchaser, the Affected
Parties and the Hedge Counterparties, as applicable, under this
Agreement and the other Transaction Documents, to the extent accrued to
such date and to accrue thereafter (including, without limitation,
Breakage Costs and Hedge Breakage Costs); provided, that, the
Administrative Agent and each Purchaser Agent shall have the right to
determine whether the amount paid (or proposed to be paid) by the
Seller on the Optional Sale Date is sufficient to satisfy the
requirements of clauses (iii), (iv) and (v) and is
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sufficient to reduce the Advances Outstanding to the extent requested
by the Seller in connection with the Optional Sale; and
(6) On or prior to each Optional Sale Date, the Seller
shall have delivered to the Administrative Agent a list specifying all
Loans to be sold and assigned pursuant to such Optional Sale.
(b) In connection with any Optional Sale, following receipt by the
Purchaser Agents of the amounts referred to in clause (v) above, there shall be
sold and assigned to the Seller without recourse, representation or warranty all
of the right, title and interest of the Administrative Agent, the Purchaser
Agents, the Purchasers and the Secured Parties in, to and under the portion of
the Assets so retransferred and such portion of the Assets so retransferred
shall be released from the Lien of this Agreement (subject to the requirements
of clause (iv) above).
(c) The Seller hereby agrees to pay the reasonable legal fees and
expenses of the Administrative Agent, each Purchaser Agent and the Secured
Parties in connection with any Optional Sale (including, but not limited to,
expenses incurred in connection with the release of the Lien of the
Administrative Agent, the Secured Parties and any other party having an interest
in the Assets in connection with such Optional Sale).
(d) In connection with any Optional Sale, on the related Optional
Sale Date, the Administrative Agent, on behalf of the Secured Parties, shall, at
the expense of the Seller (i) execute such instruments of release with respect
to the portion of the Assets to be retransferred to the Seller, in recordable
form if necessary, in favor of the Seller as the Seller may reasonably request,
(ii) deliver any portion of the Assets to be retransferred to the Seller in its
possession to the Seller and (iii) otherwise take such actions, and cause or
permit the Collateral Custodian to take such actions, as are necessary and
appropriate to release the Lien of the Administrative Agent and the Secured
Parties on the portion of the Assets to be retransferred to the Seller and
release and deliver to the Seller such portion of the Assets to be retransferred
to the Seller.
ARTICLE III
CONDITIONS TO ADVANCES
SECTION 3.1 CONDITIONS TO CLOSING AND INITIAL ADVANCE.
The Purchasers shall not be obligated to make any Advance hereunder on
the occasion of the Initial Advance, nor shall any Purchaser, Administrative
Agent, the Purchaser Agents, the Backup Servicer and the Collateral Custodian be
obligated to take, fulfill or perform any other action hereunder, until the
following conditions have been satisfied, in the sole discretion of, or waived
in writing by, the Administrative Agent and each Purchaser Agent:
(a) Each Transaction Document shall have been duly executed by,
and delivered to, the parties thereto, and the Administrative Agent and each
Purchaser Agent shall have received such other documents, instruments,
agreements and legal opinions as the Administrative Agent and each Purchaser
Agent shall reasonably request in connection with the transactions contemplated
by this Agreement, including, without limitation, all those specified in the
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Schedule of Documents attached hereto as Schedule I, each in form and substance
satisfactory to the Administrative Agent and each Purchaser Agent;
(b) The Administrative Agent and each Purchaser Agent shall have
received (i) satisfactory evidence that the Seller and the Servicer have
obtained all required consents and approvals of all Persons, including all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Transaction Documents to which each is a party
and the consummation of the transactions contemplated hereby or thereby or (ii)
an Officer's Certificate from each of the Seller and the Servicer in form and
substance reasonably satisfactory to the Administrative Agent and each Purchaser
Agent affirming that no such consents or approvals are required; it being
understood that the acceptance of such evidence or officer's certificate shall
in no way limit the recourse of the Administrative Agent, each Purchaser Agent
or any Secured Party against the Originator or the Seller for a breach of the
Originator's and the Seller's representation or warranty that all such consents
and approvals have, in fact, been obtained;
(c) The Seller, the Servicer and the Originator shall each be in
compliance in all material respects with all Applicable Laws and shall have
delivered to the Administrative Agent and each Purchaser Agent as to this and
other closing matters certification in the form of Exhibit F-1 and/or F-2;
(d) The Seller and the Servicer shall have delivered to the
Administrative Agent and each Purchaser Agent duly executed Powers of Attorney
in the form of Exhibits G-1 and G-2;
(e) On or prior to the date of the Initial Advance, (i) the VFCC
Agent shall have received $8,259,109.31 by or on behalf of Fairway representing
its net Pro-Rata Share of previously funded Advances, (ii) the VFCC Agent shall
have received $14,040,485.83 by or on behalf of Eiffel representing its net
Pro-Rata Share of previously funded Advances; and (iii) the VFCC Agent shall
have received $47,076,923.08 by or on behalf of Hannover representing its net
Pro-Rata Share of previously funded Advances.
(f) The Seller and the Servicer shall each have delivered to the
Administrative Agent and each Purchaser Agent a certificate as to Solvency in
the form of Exhibits E-1 and E-2 and a perfection certificate in form reasonably
acceptable to the Administrative Agent.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Each Advance to the Seller by the applicable Purchaser (each, a
"Transaction") shall be subject to the further conditions precedent that:
(a) (1) With respect to any Advance (including the Initial
Advance), the Servicer shall have delivered to the Administrative Agent and each
Purchaser Agent (with a copy to the Collateral Custodian and the Backup
Servicer), no later than 12:00 p.m. Charlotte, North Carolina time, one (1)
Business Day prior to the related Funding Date in a form and substance
satisfactory to the Administrative Agent and each Purchaser Agent, (i) a
Borrowing Notice (Exhibit A-1), Borrowing Base Certificate (Exhibit A-3), Loan
List and Monthly Report, if applicable, and (ii) a Certificate of Assignment
(Exhibit A to the Sale Agreement including Schedule I, thereto) and containing
such additional information as may be reasonably requested
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by the Administrative Agent and each Purchaser Agent, and (2) with respect to
any reduction in Advances Outstanding pursuant to Section 2.3(b) or any
reinvestment of Principal Collections permitted by Section 2.7(b), the Servicer
shall have delivered to the Administrative Agent and each Purchaser Agent (with
a copy to the Backup Servicer) at least one (1) Business Day prior to any
reduction of Advances Outstanding or same day notice no later than 1:00 p.m.
Charlotte, North Carolina time on such day for any reinvestment of Principal
Collections a Borrowing Notice (Exhibit A-2) and a Borrowing Base Certificate
(Exhibit A-3) executed by the Servicer and the Seller;
(b) On the date of such Transaction the following statements shall
be true and the Seller shall be deemed to have certified that:
(1) The representations and warranties contained in
Section 4.1, Section 4.2 and Section 4.3 are true and correct on and as
of such day as though made on and as of such day and shall be deemed to
have been made on such day;
(2) No event has occurred and is continuing, or would
result from such Transaction, that constitutes a Termination Event or
Unmatured Termination Event;
(3) On and as of such day, after giving effect to such
Transaction, the Advances Outstanding shall not exceed the lesser of
(x) the Facility Amount and (y) the Maximum Availability;
(4) After giving effect to such Advance, reduction of
Advances Outstanding or reinvestment of Principal Collections, there is
not and will be no deficiency in the Minimum Overcollateralization
Amount;
(5) On and as of such day, the Seller and the Servicer
each has performed all of the covenants and agreements contained in
this Agreement to be performed by such person at or prior to such day;
and
(6) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Advance or incremental Advance by the Purchaser in accordance with
the provisions hereof, the reduction of Advances Outstanding, the
reinvestment of Principal Collections or any other transaction
contemplated herein;
(c) The Seller shall have delivered to the Collateral Custodian
(with a copy to the Backup Servicer and the Administrative Agent) no later than
12:00 p.m. Charlotte, North Carolina time one (1) Business Day prior to any
Funding Date, a faxed copy of the duly executed original promissory notes of the
Loans and, if any Loans are closed in escrow, a certificate (in the form of
Exhibit J) from the closing attorneys of such Loans certifying the possession of
the Required Loan Documents; provided, however, notwithstanding the foregoing,
the Required Loan Documents (including any UCCs included in the Required Loan
Documents) shall be in the possession of the Collateral Custodian within two (2)
Business Days of any related Funding Date as to any Additional Loans;
(d) The Seller shall not have requested the Termination Date to
occur;
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(e) The Facility Termination Date shall not have occurred;
(f) On the date of such Transaction, the Administrative Agent and
each Purchaser Agent shall have received such other approvals, opinions or
documents as the Administrative Agent and each Purchaser Agent may reasonably
require;
(g) The Required Equity Contribution shall have been made to the
Seller;
(h) The Administrative Agent shall have received from the Seller
all hedging confirms;
(i) The Seller and Servicer shall have delivered to the
Administrative Agent and each Purchaser Agent all reports required to be
delivered as of the date of such Transaction;
(j) The Seller shall have delivered to the Administrative Agent
and each Purchaser Agent an Officer's Certificate (which may be part of the
Borrowing Notice) in form and substance reasonably satisfactory to the
Administrative Agent and each Purchaser Agent certifying that each of the
foregoing conditions precedent has been satisfied;
(k) With respect to any Acquired Loan intended to be included as a
part of the Asset Pool, the Administrative Agent and each Purchaser Agent shall
have received an opinion of counsel in accordance with Schedule I; and
(l) The Seller shall have paid all fees required to be paid,
including all fees required hereunder and under the VFCC Fee Letter, the Fairway
Fee Letter, the Eiffel Fee Letter and the Hannover Fee Letter and shall have
reimbursed the Purchasers, the Administrative Agent and each Purchaser Agent for
all fees, costs and expenses of closing the transactions contemplated hereunder
and under the other Transaction Documents, including the reasonable attorney
fees and any other legal and document preparation costs incurred by the
Purchasers, the Administrative Agent and each Purchaser Agent.
The failure of the Seller to satisfy any of the foregoing conditions
precedent in respect of any Advance shall give rise to a right of the
Administrative Agent and each Purchaser Agent, which right may be exercised at
any time on the demand of any Purchaser Agent, to rescind the related Advance
and direct the Seller to pay to the Administrative Agent for the benefit of the
applicable Purchaser an amount equal to the Advances made during any such time
that any of the foregoing conditions precedent were not satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants as follows:
(a) Organization and Good Standing. The Seller has been duly
organized, and is validly existing as a limited liability company in good
standing, under the laws of the State of
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Delaware, with all requisite company power and authority to own or lease its
properties and conduct its business as such business is presently conducted, and
had at all relevant times, and now has all necessary power, authority and legal
right to acquire, own and sell the Assets in the Asset Pool.
(b) Due Qualification. The Seller is duly qualified to do business
and is in good standing as a limited liability company, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such qualification,
licenses or approvals.
(c) Power and Authority; Due Authorization; Execution and
Delivery. The Seller (i) has all necessary power, authority and legal right to
(a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (b) carry out the terms of the Transaction Documents to
which it is a party, (c) sell and assign an ownership interest in the Assets,
and (d) receive Advances and sell the Assets on the terms and conditions
provided herein and (ii) has duly authorized by all necessary company action the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and the sale and assignment of an ownership
interest in the Assets on the terms and conditions herein provided. This
Agreement and each other Transaction Document to which the Seller is a party
have been duly executed and delivered by the Seller.
(d) Binding Obligation. This Agreement and each other Transaction
Document to which the Seller is a party constitutes a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
respective terms, except as such enforceability may be limited by Insolvency
Laws and by general principles of equity (whether considered in a suit at law or
in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party and the fulfillment of the terms hereof and thereof will not (i)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the Seller's operating agreement or any Contractual Obligation of the Seller,
(ii) result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the Seller's properties pursuant to the terms of any such
Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.
(f) No Proceedings. There is no litigation, proceeding or
investigation pending or, to the best knowledge of the Seller, threatened
against the Seller, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any other Transaction Document to which the
Seller is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Seller is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental Authority
(if any) required for the due execution,
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delivery and performance by the Seller of this Agreement and any other
Transaction Document to which the Seller is a party have been obtained.
(h) Bulk Sales. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not require compliance
with any "bulk sales" act or similar law by Seller.
(i) Solvency. The Seller is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under this Agreement and any
other Transaction Document to which the Seller is a party do not and will not
render the Seller not Solvent and the Seller shall deliver to the Administrative
Agent and each Purchaser Agent on the Closing Date a certification in the form
of Exhibit F-1.
(j) Selection Procedures. No procedures believed by the Seller to
be adverse to the interests of the Purchaser were utilized by the Seller in
identifying and/or selecting the Loans in the Asset Pool. In addition, each Loan
shall have been underwritten in accordance with and satisfy the standards of any
Credit and Collection Policy that has been established by the Seller or the
Originator and is then in effect.
(k) Taxes. The Seller has filed or caused to be filed all tax
returns that are required to be filed by it. The Seller has paid or made
adequate provisions for the payment of all Taxes and all assessments made
against it or any of its property (other than any amount of Tax the validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on the
books of the Seller), and no tax lien has been filed and, to the Seller's
knowledge, no claim is being asserted, with respect to any such Tax, fee or
other charge.
(l) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including, without limitation, the use of the
proceeds from the sale of the Assets) will violate or result in a violation of
Section 7 of the Securities Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Seller does
not own or intend to carry or purchase, and no proceeds from the Advances will
be used to carry or purchase, any "margin stock" within the meaning of
Regulation U or to extend "purpose credit" within the meaning of Regulation U.
(m) Security Interest.
(1) This Agreement creates a valid and continuing
security interest (as defined in the applicable UCC) in the Assets in
favor of the Administrative Agent, on behalf of the Secured Parties,
which security interest is prior to all other Liens (except for
Permitted Liens), and is enforceable as such against creditors of and
purchasers from the Seller;
(2) the Loans, along with the related Loan Files,
constitute either a "general intangible," an "instrument," an
"account," "investment property," or "chattel paper," within the
meaning of the applicable UCC;
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(3) the Seller owns and has good and marketable title to
the Assets free and clear of any Lien (other than Permitted Liens),
claim or encumbrance of any Person;
(4) the Seller has received all consents and approvals
required by the terms of any Loan to the sale and granting of a
security interest in the Loans hereunder to the Administrative Agent,
on behalf of the Secured Parties;
(5) the Seller has caused the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under Applicable Law in order to perfect the security
interest in the Assets granted to the Administrative Agent, on behalf
of the Secured Parties, under this Agreement;
(6) other than the security interest granted to the
Administrative Agent, on behalf of the Secured Parties, pursuant to
this Agreement, the Seller has not pledged, assigned, sold, granted a
security interest in or otherwise conveyed any of the Assets. The
Seller has not authorized the filing of and is not aware of any
financing statements against the Seller that include a description of
collateral covering the Assets other than any financing statement (A)
relating to the security interest granted to the Seller under the Sale
Agreement, or (B) that has been terminated. The Seller is not aware of
the filing of any judgment or tax lien filings against the Seller;
(7) all original executed copies of each underlying
promissory note that constitute or evidence each Loan has been, or
subject to the delivery requirements contained herein, will be
delivered to the Collateral Custodian;
(8) the Seller has received a written acknowledgment from
the Collateral Custodian that the Collateral Custodian or its bailee is
holding the underlying promissory notes that constitute or evidence the
Loans solely on behalf of and for the benefit of the Secured Parties;
and
(9) none of the underlying promissory notes that
constitute or evidence the Loans has any marks or notations indicating
that they have been pledged, assigned or otherwise conveyed to any
Person other than the Administrative Agent, on behalf of the Secured
Parties.
(n) Reports Accurate. All Monthly Reports (if prepared by the
Seller, or to the extent that information contained therein is supplied by the
Seller), information, exhibits, financial statements, documents, books, records
or reports furnished or to be furnished by the Seller to the Administrative
Agent, each Purchaser Agent or any Purchaser in connection with this Agreement
are true, complete and correct.
(o) Location of Offices. The Seller's location (within the meaning
of Article 9 of the UCC) is Delaware. The office where the Seller keeps all the
Records is at the address of the Seller referred to in Section 13.2 hereof (or
at such other locations as to which the notice and other requirements specified
in Section 5.2(g) shall have been satisfied). The Seller's Federal Employee
Identification Number is correctly set forth on Exhibit I. The Seller has not
changed its name, whether by amendment of its certificate of formation, by
reorganization or otherwise, and has not changed its location within the four
(4) months preceding the Closing Date.
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(p) Lock-Boxes. The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the Seller at such
Lock-Box Banks and the names, addresses and account numbers of all accounts to
which Collections of the Assets outstanding before the Initial Advance hereunder
have been sent, are specified in Schedule II (which shall be deemed to be
amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in Section
5.2(k)). The Seller has not granted any Person other than the Administrative
Agent and Collateral Custodian an interest in any Lock-Box Account at a future
time or upon the occurrence of a future event.
(q) Tradenames. The Seller has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which it has
done or is doing business, except that the Originator and the Servicer are
currently doing business as "CSF" in New York and "CSFL, LLC" in Texas.
(r) Sale Agreement. The Sale Agreement is the only agreement
pursuant to which the Seller purchases Assets.
(s) Value Given. The Seller shall have given reasonably equivalent
value to the Originator in consideration for the transfer to the Seller of the
Assets under the Sale Agreement, no such transfer shall have been made for or on
account of an antecedent debt owed by the Originator to the Seller, and no such
transfer is or may be voidable or subject to avoidance under any section of the
Bankruptcy Code.
(t) Accounting. The Seller accounts for the transfers to it from
the Originator of interests in Assets under the Sale Agreement as financings of
such Assets for tax and consolidated accounting purposes (with a notation that
it is treating the transfers as a sale for legal and all other purposes on its
books, records and financial statements, in each case consistent with GAAP and
with the requirements set forth herein).
(u) Special Purpose Entity. The Seller has not and shall not:
(1) engage in any business or activity other than the
purchase and receipt of Assets and related assets from the Originator
under the Sale Agreement, the sale of Assets under the Transaction
Documents, and such other activities as are incidental thereto;
(2) acquire or own any material assets other than (a) the
Assets and related assets from the Originator under the Sale Agreement
and (b) incidental property as may be necessary for the operation of
the Seller;
(3) merge into or consolidate with any Person or
dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case first obtaining the consent
of the Administrative Agent and each Purchaser Agent;
(4) fail to preserve its existence as an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization or formation, or
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without the prior written consent of the Administrative Agent and each
Purchaser Agent, amend, modify, terminate or fail to comply with the
provisions of its operating agreement, or fail to observe limited
liability company formalities;
(5) own any Subsidiary or make any investment in any
Person without the consent of the Administrative Agent and each
Purchaser Agent;
(6) except as permitted by this Agreement and the
Lock-Box Agreement, commingle its assets with the assets of any of its
Affiliates, or of any other Person;
(7) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than
indebtedness to the Secured Parties hereunder or in conjunction with a
repayment of all Advances owed to the Purchaser, except for trade
payables in the ordinary course of its business; provided, that, such
debt is not evidenced by a note and is paid when due;
(8) become insolvent or fail to pay its debts and
liabilities from its assets as the same shall become due;
(9) fail to maintain its records, books of account and
bank accounts separate and apart from those of any other Person;
(10) enter into any contract or agreement with any Person,
except upon terms and conditions that are commercially reasonable and
intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than such
Person;
(11) seek its dissolution or winding up in whole or in
part;
(12) fail to correct any known misunderstandings regarding
the separate identity of Seller and the Originator or any principal or
Affiliate thereof or any other Person;
(13) guarantee, become obligated for, or hold itself out
to be responsible for the debt of another Person;
(14) make any loan or advances to any third party,
including any principal or Affiliate, or hold evidence of indebtedness
issued by any other Person (other than cash and investment-grade
securities);
(15) fail to file its own separate tax return, or file a
consolidated federal income tax return with any other Person, except as
may be required by the Internal Revenue Code and regulations;
(16) fail either to hold itself out to the public as a
legal entity separate and distinct from any other Person or to conduct
its business solely in its own name in order not (a) to mislead others
as to the identity with which such other party is transacting
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business, or (b) to suggest that it is responsible for the debts of any
third party (including any of its principals or Affiliates);
(17) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(18) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or make
an assignment for the benefit of creditors;
(19) except as may be required by the Internal Revenue
Code and regulations, share any common logo with or hold itself out as
or be considered as a department or division of (a) any of its
principals or affiliates, (b) any Affiliate of a principal or (c) any
other Person;
(20) permit any transfer (whether in any one or more
transactions) of any direct or indirect ownership interest in the
Seller to the extent it has the ability to control the same, unless the
Seller delivers to the Administrative Agent and each Purchaser Agent an
acceptable non-consolidation opinion and the Administrative Agent
consents to such transfer;
(21) fail to maintain separate financial statements,
showing its assets and liabilities separate and apart from those of any
other Person;
(22) fail to pay its own liabilities and expenses only out
of its own funds;
(23) fail to pay the salaries of its own employees in
light of its contemplated business operations;
(24) acquire the obligations or securities of its
Affiliates or stockholders;
(25) fail to allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate;
(26) fail to use separate invoices and checks bearing its
own name;
(27) pledge its assets for the benefit of any other
Person, other than with respect to payment of the indebtedness to the
Secured Parties hereunder;
(28) fail at any time to have at least one (1) independent
director (an "Independent Director") who is not and has not been for at
least five (5) years a director, officer, employee, trade credit or
shareholder (or spouse, parent, sibling or child of the foregoing) of
(a) the Servicer, (b) the Seller, (c) any principal of the Servicer,
(d) any Affiliate of the Servicer, or (e) any Affiliate of any
principal of the Servicer; provided, however, such Independent Director
may be an independent director of another special purpose entity
affiliated with the Servicer or fail to ensure that all limited
liability
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company action relating to the selection, maintenance or replacement of
the Independent Director are duly authorized by the unanimous vote of
the board of directors (including the Independent Director);
(29) to provide that the unanimous consent of all
directors (including the consent of the Independent Director) is
required for the Seller to (a) dissolve or liquidate, in whole or part,
or institute proceedings to be adjudicated bankrupt or insolvent, (b)
institute or consent to the institution of bankruptcy or insolvency
proceedings against it, (c) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, (d) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the Seller, (e) make any
assignment for the benefit of the Seller's creditors, (f) admit in
writing its inability to pay its debts generally as they become due, or
(g) take any action in furtherance of any of the foregoing; and
(30) take or refrain from taking, as applicable, each of
the activities specified in the non-consolidation opinion of ▇▇▇▇▇▇
▇▇▇▇▇ LLP, dated as of April 24, 2002, upon which the conclusions
expressed therein are based.
(v) Confirmation from the Originator. The Seller has received in
writing from the Originator confirmation that the Originator will not cause the
Seller to file a voluntary petition under the Bankruptcy Code or Insolvency
Laws. Each of the Seller and the Originator is aware that in light of the
circumstances described in the preceding sentence and other relevant facts, the
filing of a voluntary petition under the Bankruptcy Code for the purpose of
making any Assets or any other assets of the Seller available to satisfy claims
of the creditors of the Originator would not result in making such assets
available to satisfy such creditors under the Bankruptcy Code.
(w) Investment Company Act. The Seller is not, and is not
controlled by, an "investment company" within the meaning of the 40 Act, as
amended, or is exempt from the provisions of the 40 Act.
(x) ERISA. The present value of all benefits vested under all
"employee pension benefit plans," as such term is defined in Section 3 of ERISA,
maintained by the Seller, or in which employees of the Seller are entitled to
participate, as from time to time in effect (herein called the "Pension Plans"),
does not exceed the value of the assets of the Pension Plan allocable to such
vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies,
withdrawals or reportable events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Seller to any material tax, penalty or
other liability. No notice of intent to terminate a Pension Plan has been
billed, nor has any Pension Plan been terminated under Section 4041(f) of ERISA,
nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer a Pension Plan and no event has
occurred or condition exists that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
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(y) PUHCA. The Seller is not a "holding company" or a "subsidiary
holding company" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or any successor statute.
(z) Compliance with Law. The Seller has complied in all respects
with all Applicable Laws to which it may be subject, and no Asset in the Asset
Pool contravenes any Applicable Laws (including, without limitation, laws, rules
and regulations relating to licensing, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy).
(aa) Credit and Collection Policy. The Seller has complied in all
material respects with the Credit and Collection Policy with respect to all of
the Assets.
(bb) Collections. The Seller acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.
(cc) Set-Off, etc. Other than Subordinated Loans, no Asset has been
compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or
modified by the Seller, the Originator or the Obligor thereof, and no Asset is
subject to compromise, adjustment, extension, satisfaction, subordination,
rescission, set-off, counterclaim, defense, abatement, suspension, deferment,
deduction, reduction, termination or modification, whether arising out of
transactions concerning the Asset or otherwise, by the Seller, the Originator or
the Obligor with respect thereto, except for amendments to such Asset otherwise
permitted under Section 6.4(a) of this Agreement and in accordance with the
Credit and Collection Policy.
(dd) Full Payment. The Seller has no knowledge of any fact which
should lead it to expect that any Asset will not be paid in full.
(ee) Accuracy of Representations and Warranties. Each
representation or warranty by the Seller contained herein or in any certificate
or other document furnished by the Seller pursuant hereto or in connection
herewith is true and correct in all material respects.
(ff) Representations and Warranties in Sale Agreement. The
representations and warranties made by the Originator to the Seller in the Sale
Agreement are hereby remade by the Seller on each date to which they speak in
the Sale Agreement as if such representations and warranties were set forth
herein. For purposes of this Section 4.1(ff), such representations and
warranties are incorporated herein by reference as if made by the Seller to the
Administrative Agent, each Purchaser Agent and each of the Secured Parties under
the terms hereof mutatis mutandis.
(gg) Reaffirmation of Representations and Warranties by the Seller.
On each day that any Advance is made hereunder, the Seller shall be deemed to
have certified that all representations and warranties described in Section 4.1
hereof are correct on and as of such day as though made on and as of such day.
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(hh) Participation, Acquired and Assigned Loans. The participations
created with respect to the Participation Loans and the sale to the Originator
with respect to the Acquired and Assigned Loans do not violate any provisions of
the underlying Required Asset Documents and such documents do not contain any
express or implied prohibitions on participations or sales of such Loans.
(ii) Environmental.
(1) Each item of the Related Property is in compliance
with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to such Related Property and there
are no conditions relating to such Related Property that could give
rise to liability under any applicable Environmental Laws.
(2) None of the Related Property contains, or has
previously contained, any Materials of Environmental Concern at, on or
under the Related Property in amounts or concentrations that constitute
or constituted a violation of, or could give rise to liability under,
Environmental Laws.
(3) None of the Seller, the Originator nor the Servicer
has received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard
to any of the Related Property, nor does any such Person have knowledge
or reason to believe that any such notice will be received or is being
threatened.
(4) Materials of Environmental Concern have not been
transported or disposed of from the Related Property, or generated,
treated, stored or disposed of at, on or under any of the Related
Property or any other location, in each case by or on behalf of the
Seller, the Originator and/or the Servicer in violation of, or in a
manner that would be reasonably likely to give rise to liability under,
any applicable Environmental Law.
(5) No judicial proceeding or governmental or
administrative action is pending or, to the best knowledge of the
Seller, the Originator and/or the Servicer, threatened, under any
Environmental Law to which any of the Seller, the Originator and/or the
Servicer is or will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements,
outstanding under any Environmental Law with respect to any of the
Seller, the Originator, the Servicer or the Related Property.
(6) There has been no release or threat of release of
Materials of Environmental Concern at or from any of the Related
Property, or arising from or related to the operations (including,
without limitation, disposal) of any of the Seller, the Originator
and/or the Servicer in connection with the Related Property in
violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
(jj) USA PATRIOT Act. Neither the Seller nor any Affiliate of the
Seller is (i) a country, territory, organization, person or entity named on an
Office of Foreign Assets Control (OFAC) list, (ii) a Person that resides or has
a place of business in a country or territory named
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on such lists or which is designated as a "Non-Cooperative Jurisdiction" by the
Financial Action Task Force on Money Laundering, or whose subscription funds are
transferred from or through such a jurisdiction; (iii) a "Foreign Shell Bank"
within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does not
have a physical presence in any country and that is not affiliated with a bank
that has a physical presence and an acceptable level of regulation and
supervision; or (iv) a person or entity that resides in or is organized under
the laws of a jurisdiction designated by the United States Secretary of the
Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special
measures due to money laundering concerns.
The representations and warranties in Section 4.1(m) shall survive the
termination of this Agreement and such representations and warranties may not be
waived by any party hereto.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING
TO THE AGREEMENT AND THE ASSETS.
The Seller hereby represents and warrants, as of the Closing Date and
as of each Addition Date:
(a) Binding Obligation, Valid Transfer and Security Interest.
(1) This Agreement and each other Transaction Document to
which the Seller is a party each constitute a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its respective terms, except as such enforceability may be limited
by Insolvency Laws and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
(2) This Agreement constitutes a valid transfer to the
Administrative Agent, as agent for the Secured Parties, of all right,
title and interest of the Seller in, to and under all Assets in the
Asset Pool, free and clear of any Lien of any Person claiming through
or under the Seller or its Affiliates, except for Permitted Liens. If
the conveyances contemplated by this Agreement are determined to be
transfer for security, then this Agreement constitutes a grant of a
security interest in all Assets in the Asset Pool to the Administrative
Agent, as agent for the Secured Parties, which upon the delivery of the
Required Loan Documents to the Collateral Custodian and the filing of
the financing statements described in Section 4.1(m) and, in the case
of Additional Loans on the applicable Addition Date, shall be a first
priority perfected security interest in all Assets in the Asset Pool,
subject only to Permitted Liens. Neither the Seller nor any Person
claiming through or under Seller shall have any claim to or interest in
the Collection Account or the Excess Spread Account and, if this
Agreement constitutes the grant of a security interest in such
property, except for the interest of Seller in such property as a
debtor for purposes of the UCC.
(b) Eligibility of Assets. As of the Closing Date and each
Addition Date, (i) the Loan List and the information contained in the Borrowing
Notice delivered pursuant to Section 2.2 is an accurate and complete listing in
all material respects of all Assets in the Asset Pool as of the Cut-Off Date and
the information contained therein with respect to the identity of such Assets
and the amounts owing thereunder is true and correct in all material respects as
of the related
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Cut-Off Date, (ii) each such Loan that is part of the Borrowing Base is an
Eligible Loan as of such date, (iii) each such Asset is free and clear of any
Lien of any Person (other than Permitted Liens) and in compliance with all
Applicable Laws, (iv) with respect to each such Asset, all consents, licenses,
approvals or authorizations of or registrations or declarations of any
Governmental Authority required to be obtained, effected or given by the Seller
in connection with the transfer of an ownership interest in such Assets to the
Administrative Agent as agent for the Secured Parties have been duly obtained,
effected or given and are in full force and effect, and (v) the representations
and warranties set forth in Section 4.2(a) are true and correct with respect to
each Asset.
(c) No Fraud. Each Loan was originated without any fraud or
material misrepresentation by the Originator or, to the best of the Seller's
knowledge, on the part of the Obligor.
SECTION 4.3 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer represents and warrants as follows:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, with all requisite company
power and authority to own or lease its properties and to conduct its business
as such business is presently conducted and to enter into and perform its
obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business as a limited liability company and is in good standing as a limited
liability company, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property and or the conduct
of its business requires such qualification, licenses or approvals.
(c) Power and Authority; Due Authorization; Execution and
Delivery. The Servicer (i) has all necessary power, authority and legal right to
(a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (b) carry out the terms of the Transaction Documents to
which it is a party, and (ii) has duly authorized by all necessary company
action the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party. This Agreement and each other
Transaction Document to which the Servicer is a party have been duly executed
and delivered by the Servicer.
(d) Binding Obligation. This Agreement and each other Transaction
Document to which the Servicer is a party constitutes a legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its respective terms, except as such enforceability may be limited by Insolvency
Laws and general principles of equity (whether considered in a suit at law or in
equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party and the fulfillment of the terms hereof and thereof will not (i)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the
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Servicer's operating agreement or any Contractual Obligation of the Servicer,
(ii) result in the creation or imposition of any Lien upon any of the Servicer's
properties pursuant to the terms of any such Contractual Obligation, other than
this Agreement, or (iii) violate any Applicable Law.
(f) No Proceedings. There is no litigation, proceedings or
investigations pending or, to the best knowledge of the Servicer, threatened
against the Servicer, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any other Transaction Document to which the
Servicer is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Servicer is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.
(g) All Consents Required. All approvals, authorizations,
consents, orders, licenses or other actions of any Person or of any Governmental
Authority (if any) required for the due execution, delivery and performance by
the Servicer of this Agreement and any other Transaction Document to which the
Servicer is a party have been obtained.
(h) Reports Accurate. All Servicer Certificates and other written
and electronic information, exhibits, financial statements, documents, books,
records or reports furnished by the Servicer to the Administrative Agent, each
Purchaser Agent or any Purchaser in connection with this Agreement are accurate,
true and correct.
(i) Credit and Collection Policy. The Servicer has complied in all
material respects with the Credit and Collection Policy with regard to the
origination, underwriting and servicing of the Assets.
(j) Collections. The Servicer acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.
(k) Bulk Sales. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" act or similar law by
the Servicer.
(l) Solvency. The Servicer is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under this Agreement and any
other Transaction Document to which the Servicer is a party do not and will not
render the Servicer not Solvent and the Servicer shall deliver to the
Administrative Agent and each Purchaser Agent on the Closing Date a
certification in the form of Exhibit G.
(m) Taxes. The Servicer has filed or caused to be filed all tax
returns that are required to be filed by it. The Servicer has paid or made
adequate provisions for the payment of all Taxes and all assessments made
against it or any of its property (other than any amount of Tax the validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on the
books of the Servicer), and no tax lien has been filed and, to the Servicer's
knowledge, no claim is being asserted, with respect to any such Tax, fee or
other charge.
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(n) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including, without limitation, the use of the
Proceeds from the sale of the Assets) will violate or result in a violation of
Section 7 of the Securities Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Servicer
does not own or intend to carry or purchase, and no proceeds from the Advances
will be used to carry or purchase, any "margin stock" within the meaning of
Regulation U or to extend "purpose credit" within the meaning of Regulation U.
(o) Security Interest. The Servicer will take all steps necessary
to ensure that the Seller has granted a security interest (as defined in the
UCC) to the Administrative Agent, as agent for the Secured Parties, in the
Assets, which is enforceable in accordance with Applicable Law upon execution
and delivery of this Agreement. Upon the filing of UCC-1 financing statements
naming the Administrative Agent as secured party and the Seller as debtor, the
Administrative Agent, as agent for the Secured Parties, shall have a first
priority perfected security interest in the Assets (except for any Permitted
Liens). All filings (including, without limitation, such UCC filings) as are
necessary for the perfection of the Secured Parties' security interest in the
Assets have been (or prior to the applicable Advance will be) made.
(p) ERISA. The present value of all benefits vested under all
"employee pension benefit plans," as such term is defined in Section 3 of ERISA,
maintained by the Servicer, or in which employees of the Servicer are entitled
to participate, as from time to time in effect (herein called the "Pension
Plans"), does not exceed the value of the assets of the Pension Plan allocable
to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies,
withdrawals or reportable events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Servicer to any material tax, penalty
or other liability. No notice of intent to terminate a Pension Plan has been
billed, nor has any Pension Plan been terminated under Section 4041(f) of ERISA,
nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
(q) Investment Company Act. The Servicer is not, and is not
controlled by, an "investment company" within the meaning of the 40 Act, as
amended, or is exempt from the provisions of the 40 Act.
(r) USA PATRIOT Act. Neither the Servicer nor any Affiliate of the
Servicer is (i) a country, territory, organization, person or entity named on an
OFAC list, (ii) a Person that resides or has a place of business in a country or
territory named on such lists or which is designated as a "Non-Cooperative
Jurisdiction" by the Financial Action Task Force on Money Laundering, or whose
subscription funds are transferred from or through such a jurisdiction; (iii) a
"Foreign Shell Bank" within the meaning of the USA PATRIOT Act, i.e., a foreign
bank that does not have a physical presence in any country and that is not
affiliated with a bank that has a physical presence and an acceptable level of
regulation and supervision; or (iv) a person or entity that resides in or is
organized under the laws of a jurisdiction designated by the United
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States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT
Act as warranting special measures due to money laundering concerns.
SECTION 4.4 REPRESENTATIONS AND WARRANTIES OF THE BACKUP
SERVICER.
The Backup Servicer in its individual capacity and as Backup Servicer
represents and warrants as follows:
(a) Organization and Corporate Power. It is a duly organized and
validly existing national banking association in good standing under the laws of
the United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Backup Servicer under this
Agreement.
(b) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized by all necessary association action on its part, either in its
individual capacity or as Backup Servicer, as the case may be.
(c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Backup Servicer is a party or by which
it or any of its property is bound.
(d) No Violation. The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or Governmental Authority
applicable to the Backup Servicer, required in connection with the execution and
delivery of this Agreement, the performance by the Backup Servicer of the
transactions contemplated hereby and the fulfillment by the Backup Servicer of
the terms hereof have been obtained.
(f) Validity, Etc. This Agreement constitutes the legal, valid and
binding obligation of the Backup Servicer, enforceable against the Backup
Servicer in accordance with its terms, except as such enforceability may be
limited by applicable Insolvency Laws or general principles of equity (whether
considered in a suit at law or in equity).
SECTION 4.5 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
CUSTODIAN.
The Collateral Custodian in its individual capacity and as Collateral
Custodian represents and warrants as follows:
(a) Organization and Corporate Power. It is a duly organized and
validly existing national banking association in good standing under the laws of
the United States. It has full
85
corporate power, authority and legal right to execute, deliver and perform its
obligations as Collateral Custodian under this Agreement.
(b) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized by all necessary association action on its part, either in its
individual capacity or as Collateral Custodian, as the case may be.
(c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Collateral Custodian is a party or by
which it or any of its property is bound.
(d) No Violation. The execution and delivery of this Agreement,
the performance of the Transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or Governmental Authority
applicable to the Collateral Custodian, required in connection with the
execution and delivery of this Agreement, the performance by the Collateral
Custodian of the transactions contemplated hereby and the fulfillment by the
Collateral Custodian of the terms hereof have been obtained.
(f) Validity, Etc. The Agreement constitutes the legal, valid and
binding obligation of the Collateral Custodian, enforceable against the
Collateral Custodian in accordance with its terms, except as such enforceability
may be limited by applicable Insolvency Laws and general principles of equity
(whether considered in a suit at law or in equity).
SECTION 4.6 BREACH OF CERTAIN REPRESENTATIONS AND WARRANTIES.
If on any day a Loan is (or becomes) a Warranty Loan, no later than two
(2) Business Days following the earlier of knowledge by the Seller of such Loan
becoming a Warranty Loan or receipt by the Seller from the Administrative Agent
or the Servicer of written notice thereof, the Seller shall either: (a) make a
deposit to the Collection Account (for allocation pursuant to Section 2.7 or
Section 2.8, as applicable) in immediately available funds in an amount equal to
the sum of (i) the Outstanding Loan Balance of each such Warranty Loan on such
date, (ii) any outstanding Servicer Advances thereon, (iii) any accrued and
unpaid interest, and (iv) all Hedge Breakage Costs owed to the relevant Hedge
Counterparty for any termination of one or more Hedge Transactions, in whole or
in part, as required by the terms of any Hedging Agreement (collectively, the
"Retransfer Price"); or (b) subject to the satisfaction of the conditions in
Section 2.16, substitute for such Warranty Loan a Substitute Loan. In either of
the foregoing instances, the Seller may (in its discretion) accept retransfer of
each such Warranty Loan and any Related Security and the Borrowing Base shall be
reduced by the Outstanding Loan Balance of each such Warranty Loan and, if
applicable, increased by the Outstanding Loan Balance of each Substitute Loan.
Upon confirmation of the deposit of such Retransfer Price into the Collection
86
Account or the delivery by the Seller of a Substitute Loan for each Warranty
Loan (the "Retransfer Date"), such Warranty Loan shall not be included in the
Borrowing Base (and, if and when the Seller elects to accept the retransfer of
such Warranty Loan, the Asset Pool) and, as applicable, the Substitute Loan
shall be included in the Asset Pool. Upon the Retransfer Date of each Warranty
Loan, the Administrative Agent, as agent for the Secured Parties, shall (if and
when the Seller elects to accept the retransfer of such Warranty Loan)
automatically and without further action be deemed to transfer, assign and
set-over to the Seller, without recourse, representation or warranty, all the
right, title and interest of the Administrative Agent, as agent for the Secured
Parties in, to and under such Warranty Loan and all future monies due or to
become due with respect thereto, the Related Security, all Proceeds of such
Warranty Loan, Recoveries and Insurance Proceeds relating thereto, all rights to
security for any such Warranty Loan, and all Proceeds and products of the
foregoing. The Administrative Agent, as agent for the Secured Parties, shall (if
and when the Seller elects to accept the retransfer of such Warranty Loan), at
the sole expense of the Servicer, execute such documents and instruments of
transfer as may be prepared by the Servicer on behalf of the Seller and take
other such actions as shall reasonably be requested by the Seller to effect the
transfer of such Warranty Loan pursuant to this Section 4.6.
ARTICLE V
GENERAL COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE SELLER.
From the date hereof until the Collection Date:
(a) Compliance with Laws. The Seller will comply in all material
respects with all Applicable Laws, including those with respect to the Assets or
any part thereof.
(b) Preservation of Company Existence. The Seller will preserve
and maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material
Adverse Effect.
(c) Performance and Compliance with Assets. The Seller will, at
its expense, timely and fully perform and comply (or cause the Originator to
perform and comply pursuant to the Sale Agreement) with all provisions,
covenants and other promises required to be observed by it under the Assets and
all other agreements related to such Assets.
(d) Keeping of Records and Books of Account. The Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Assets 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 or any portion of the Assets in the Asset
Pool.
(e) Originator's Assets. With respect to the Assets acquired by
the Seller, the Seller will (i) acquire such Assets pursuant to and in
accordance with the terms of the Sale Agreement,
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(ii) (at the Servicer's expense) take all action necessary to perfect, protect
and more fully evidence the Seller's ownership of such Assets free and clear of
any Lien other than the Lien created hereunder and Permitted Liens, including,
without limitation, (a) filing and maintaining (at the Servicer's expense),
effective financing statements against the Originator in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate, (iii) permit the Administrative Agent, each Purchaser Agent or
their respective agents or representatives to visit the offices of the Seller
during normal office hours and upon reasonable notice examine and make copies of
all documents, books, records and other information concerning the Assets and
discuss matters related thereto with any of the officers or employees of the
Seller having knowledge of such matters, and (iv) take all additional action
that the Administrative Agent or any Purchaser Agent may reasonably request to
perfect, protect and more fully evidence the respective interests of the parties
to this Agreement in the Assets.
(f) Delivery of Collections. The Seller will pay to the Servicer
promptly (but in no event later than two (2) Business Days after receipt) all
Collections received by Seller in respect of the Assets included in the Asset
Pool and cause the same to be promptly deposited into the Collection Account by
the Servicer in accordance with Section 5.4(l).
(g) Separate Limited Liability Company Existence. The Seller shall
be in compliance with the Special Purpose Entity requirements set forth in
Section 4.1(u).
(h) Credit and Collection Policy. The Seller will (a) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (b) furnish to the Administrative Agent and each Purchaser Agent,
prior to its effective date, prompt notice of any material changes in the Credit
and Collection Policy. The Seller will not agree to or otherwise permit to occur
any material change in the Credit and Collection Policy without the prior
consent of the Administrative Agent and each Purchaser Agent (which consent
shall not be unreasonably withheld).
(i) Termination Events. The Seller will provide the Administrative
Agent and each Purchaser Agent with immediate written notice of the occurrence
of each Termination Event and each Unmatured Termination Event of which the
Seller has knowledge or has received notice. In addition, no later than two (2)
Business Days following the Seller's knowledge or notice of the occurrence of
any Termination Event or Unmatured Termination Event, the Seller will provide to
the Administrative Agent and each Purchaser Agent a written statement of the
chief financial officer or chief accounting officer of Seller setting forth the
details of such event and the action that the Seller proposes to take with
respect thereto.
(j) Taxes. The Seller will file and pay any and all Taxes required
to meet the obligations of the Transaction Documents.
(k) Use of Proceeds. The Seller will use the proceeds of the
Advances only to acquire Assets or to make distributions to its members in
accordance with the terms hereof.
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(l) Obligor Notification Forms. The Seller shall furnish the
Administrative Agent with an appropriate power of attorney to send (at the
Administrative Agent's discretion after the occurrence of a Termination Event or
an Unmatured Termination Event) Obligor notification forms to give notice to the
Obligors of the Secured Parties' interest in the Assets and the obligation to
make payments as directed by the Administrative Agent.
(m) Adverse Claims. The Seller will not create, or participate in
the creation of, or permit to exist, any Liens in relation to each Lock-Box
Account other than as disclosed to the Administrative Agent and each Purchaser
Agent and existing as of the date of this Agreement.
(n) Seller's Assets. With respect to each Asset acquired by the
Secured Parties, the Seller will (i) take all action necessary to perfect,
protect and more fully evidence the Secured Parties' ownership of such Asset,
including, without limitation, (a) filing and maintaining (at the Servicer's
expense), effective financing statements against the Seller in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate and (ii) take all additional action that the Administrative Agent
may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in such Assets.
(o) Notices. The Seller will furnish to the Administrative Agent
and each Purchaser Agent:
(1) Income Tax Liability. Within ten (10) Business Days
after the receipt of revenue agent reports or other written proposals,
determinations or assessments of the Internal Revenue Service or any
other taxing authority which propose, determine or otherwise set forth
positive adjustments to the Tax liability of any Affiliated group
(within the meaning of Section 1504(a)(l) of the Internal Revenue Code
of 1986 (as amended from time to time)) which equal or exceed
$1,000,000 in the aggregate, telephonic, telex or telecopy notice
(confirmed in writing within five (5) Business Days) specifying the
nature of the items giving rise to such adjustments and the amounts
thereof;
(2) Auditors' Management Letters. Promptly after the
receipt thereof, any auditors' management letters are received by the
Seller or by its accountants;
(3) Representations. Forthwith upon receiving knowledge
of same, the Seller shall notify the Administrative Agent and each
Purchaser Agent if any representation or warranty set forth in Section
4.1 was incorrect at the time it was given or deemed to have been given
and at the same time deliver to the Administrative Agent and each
Purchaser Agent a written notice setting forth in reasonable detail the
nature of such facts and circumstances. In particular, but without
limiting the foregoing, the Seller shall notify the Administrative
Agent and each Purchaser Agent in the manner set forth in the preceding
sentence before any Funding Date of any facts or circumstances within
the knowledge of the Seller which would render any of the said
representations and warranties untrue at the date when such
representations and warranties were made or deemed to have been made;
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(4) ERISA. Promptly after receiving notice of any
"reportable event" (as defined in Title IV of ERISA) with respect to
the Seller (or any Affiliate thereof), a copy of such notice;
(5) Proceedings. As soon as possible and in any event
within three (3) Business Days after any executive officer of the
Seller receives notice or obtains knowledge thereof, of any settlement
of, material judgment (including a material judgment with respect to
the liability phase of a bifurcated trial) in or commencement of any
material labor controversy, material litigation, material action,
material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Assets, the Transaction Documents,
the Secured Parties' interest in the Assets, or the Seller, the
Servicer or the Originator or any of their Affiliates; provided,
however, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the
Assets, the Transaction Documents, the Secured Parties' interest in the
Assets, or the Seller, the Servicer or the Originator or any of their
Affiliates in excess of $1,000,000 or more shall be deemed to be
material for purposes of this Section 5.1(o); and
(6) Notice of Material Events. Promptly upon becoming
aware thereof, notice of any other event or circumstances that, in the
reasonable judgment of the Seller, is likely to have a Material Adverse
Effect.
(p) Notice to S&P. The Seller will furnish to S&P prompt written
notice of any material amendment to any DIP Loan.
(q) Other. The Seller will furnish to the Administrative Agent and
each Purchaser Agent promptly, from time to time, such other information,
documents, records or reports respecting the Assets or the condition or
operations, financial or otherwise, of Seller or Originator as the
Administrative Agent and each Purchaser Agent may from time to time reasonably
request in order to protect the interests of the Administrative Agent, each
Purchaser Agent or the Secured Parties under or as contemplated by this
Agreement.
SECTION 5.2 NEGATIVE COVENANTS OF THE SELLER.
From the date hereof until the Collection Date:
(a) Other Business. Seller will not (i) engage in any business
other than the transactions contemplated by the Transaction Documents, (ii)
incur any Indebtedness, obligation, liability or contingent obligation of any
kind other than pursuant to this Agreement or under any Hedging Agreement
required by Section 5.3(a), or (iii) form any Subsidiary or make any Investments
in any other Person.
(b) Assets Not to be Evidenced by Instruments. The Seller will
take no action to cause any Asset that is not, as of the Closing Date or the
related Addition Date, as the case may be, evidenced by an Instrument, to be so
evidenced except in connection with the enforcement or collection of such Asset.
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(c) Security Interests. Except as otherwise permitted herein and
in respect of any Optional Sale and Permitted Securitization, the Seller will
not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Asset, whether now existing or
hereafter transferred hereunder, or any interest therein, and the Seller will
not sell, pledge, assign or suffer to exist any Lien on its interest, if any,
hereunder. The Seller will promptly notify the Administrative Agent and each
Purchaser Agent of the existence of any Lien on any Assets and the Seller shall
defend the right, title and interest of the Administrative Agent as agent for
the Secured Parties in, to and under the Assets in the Asset Pool against all
claims of third parties; provided, however, that nothing in this Section 5.2(c)
shall prevent or be deemed to prohibit the Seller from suffering to exist
Permitted Liens upon any of the Assets in the Asset Pool.
(d) Mergers, Acquisitions, Sales, etc. The Seller will not be a
party to any merger or consolidation, or purchase or otherwise acquire any of
the assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, convey or lease any of its
assets, or sell or assign with or without recourse any Assets or any interest
therein (other than pursuant hereto or to the Sale Agreement).
(e) Deposits to Special Accounts. Except as otherwise provided in
the Lock-Box Agreement, the Seller will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account cash or
cash proceeds other than Collections in respect of Assets in the Asset Pool.
(f) Restricted Payments. The Seller shall not make any Restricted
Junior Payment, except that, so long as no Termination Event or Unmatured
Termination Event has occurred and is continuing or would result therefrom, the
Seller may declare and make distributions to its members on their membership
interests.
(g) Change of Name or Location of Loan Files. The Seller shall not
(x) change its name, move the location of its principal place of business and
chief executive office, change the offices where it keeps the records from the
location referred to in Section 13.2, or change the jurisdiction of its
formation, or (y) move, or consent to the Collateral Custodian or Servicer
moving, the Required Loan Documents and Loan Files from the location thereof on
the Closing Date, unless the Seller has given at least thirty (30) days' written
notice to the Administrative Agent and has taken all actions required under the
UCC of each relevant jurisdiction in order to continue the first priority
perfected security interest of the Administrative Agent, as agent for the
Secured Parties, in the Assets.
(h) Accounting of Purchases. Other than for tax and consolidated
accounting purposes, the Seller will not account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby in any
manner other than as a sale of the Assets by the Seller to the Secured Parties.
Other than for tax and consolidated accounting purposes, the Seller will not
account for or treat (whether in financial statements or otherwise) the
transactions contemplated by the Sale Agreement in any manner other than as a
sale of the Assets by the Originator to the Seller.
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(i) ERISA Matters. The Seller will not (a) engage or permit any
ERISA Affiliate to engage in any prohibited transaction for which an exemption
is not available or has not previously been obtained from the United States
Department of Labor, (b) permit to exist any accumulated funding deficiency, as
defined in Section 302(a) of ERISA and Section 412(a) of the Code, or funding
deficiency with respect to any Benefit Plan other than a Multiemployer Plan, (c)
fail to make any payments to a Multiemployer Plan that the Seller or any ERISA
Affiliate may be required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto, (d) terminate any Benefit Plan
so as to result in any liability, or (e) permit to exist any occurrence of any
reportable event described in Title IV of ERISA.
(j) Operating Agreement; Sale Agreement. The Seller will not
amend, modify, waive or terminate any provision of its operating agreement or
the Sale Agreement without the prior written consent of the Administrative Agent
and each Purchaser Agent.
(k) Changes in Payment Instructions to Obligors. The Seller will
not add or terminate any bank as a Lock-Box Bank or any Lock-Box Account from
those listed in Schedule II or make any change, or permit Servicer to make any
change, in its instructions to Obligors regarding payments to be made to Seller
or Servicer or payments to be made to any Lock-Box Bank, unless the
Administrative Agent has consented to such addition, termination or change
(which consent shall not be unreasonably withheld) and has received duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank or with
respect to each new Lock-Box Account, as the case may be.
(l) Extension or Amendment of Assets. The Seller will not, except
as otherwise permitted in Section 6.4(a), extend, amend or otherwise modify, or
permit the Servicer to extend, amend or otherwise modify, the terms of any Asset
(including the Related Security).
(m) Credit and Collection Policy. The Seller will not materially
amend, modify, restate or replace, in whole or in part, the Credit and
Collection Policy without the prior written consent of the Administrative Agent
and each Purchaser Agent (which consent will not be unreasonably withheld).
SECTION 5.3 COVENANTS OF THE SELLER RELATING TO THE HEDGING OF
LOANS.
(a) On or prior to each Funding Date, the Seller shall enter into
one or more Hedge Transactions for that Advance; provided, that, each such Hedge
Transaction shall:
(1) be entered into with a Hedge Counterparty and
governed by a Hedging Agreement;
(2) have a schedule of monthly calculation periods the
first of which commences on the Funding Date of that Advance and the
last of which ends on the last Scheduled Payment due to occur under or
with respect to the Loans to which that Advance relates;
(3) have an amortizing notional amount such that the
Hedge Notional Amount shall be at least equal to the product of the
Hedge Percentage and the portion of the Hedge Amount represented by
such Advance; and
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(4) provide for two series of monthly payments to be
netted against each other, one such series being payments to be made by
the Seller to a Hedge Counterparty (solely on a net basis) by reference
to a fixed rate for that Advance, and the other such series being
payments to be made by the Hedge Counterparty to the Administrative
Agent (solely on a net basis) at a floating rate equal to
"USD-LIBOR-BBA" (as defined in the ISDA Definitions), the net amount of
which shall be paid into the Collection Account (if payable by the
Hedge Counterparty) or from the Collection Account to the extent funds
are available under Section 2.7(a)(i) and Section 2.8(1) of this
Agreement (if payable by the Seller).
(b) As additional security hereunder, Seller hereby assigns to the
Administrative Agent, as agent for the Secured Parties, all right, title and
interest of the Seller in each Hedging Agreement, each Hedge Transaction, and
all present and future amounts payable by a Hedge Counterparty to Seller under
or in connection with the respective Hedging Agreement and Hedge Transaction(s)
with that Hedge Counterparty ("Hedge Assets"), and grants a security interest to
the Administrative Agent, as agent for the Secured Parties, in the Hedge Assets.
Seller acknowledges that, as a result of that assignment, Seller may not,
without the prior written consent of the Administrative Agent, exercise any
rights under any Hedging Agreement or Hedge Transaction, except for Seller's
right under any Hedging Agreement to enter into Hedge Transactions in order to
meet the Seller's obligations under Section 5.3(a) hereof. Nothing herein shall
have the effect of releasing the Seller from any of its obligations under any
Hedging Agreement or any Hedge Transaction, nor be construed as requiring the
consent of the Administrative Agent or any Secured Party for the performance by
Seller of any such obligations.
SECTION 5.4 AFFIRMATIVE COVENANTS OF THE SERVICER.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Servicer will comply in all material
respects with all Applicable Laws, including those with respect to the Assets or
any part thereof.
(b) Preservation of Company Existence. The Servicer will preserve
and maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material
Adverse Effect.
(c) Obligations and Compliance with Assets. The Servicer will duly
fulfill and comply with all obligations on the part of the Seller to be
fulfilled or complied with under or in connection with each Asset and will do
nothing to impair the rights of the Administrative Agent, as agent for the
Secured Parties, or of the Secured Parties in, to and under the Assets.
(d) Keeping of Records and Books of Account. The Servicer will
maintain and implement administrative and operating procedures (including
without limitation, an ability to recreate records evidencing Assets in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
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advisable for the collection of all Assets and the identification of the Assets
in the Asset Pool. The Servicer shall permit the Administrative Agent, each
Purchaser Agent or their respective agents or representatives, to visit the
offices of the Servicer during normal office hours and upon reasonable notice
and examine and make copies of all documents, books, records and other
information concerning the Assets and discuss matters related thereto with any
of the officers or employees of the Servicer having knowledge of such matters.
(1) The Servicer will on or prior to the date hereof,
▇▇▇▇ its master data processing records and other books and records
relating to the Assets with a legend, acceptable to the Administrative
Agent and each Purchaser Agent, describing the sale of the Assets (A)
from the Originator to the Seller, and (B) from the Seller to the
Purchaser.
(e) Preservation of Security Interest. The Servicer (at its own
expense) will execute and file such financing and continuation statements and
any other documents that may be required by any law or regulation of any
Governmental Authority to preserve and protect fully the security interest of
the Administrative Agent as agent for the Secured Parties in, to and under the
Assets.
(f) Credit and Collection Policy. The Servicer will (i) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (ii) furnish to the Administrative Agent and each Purchaser Agent,
prior to its effective date, prompt notice of any proposed material change in
the Credit and Collection Policy. Without the prior written consent of the
Administrative Agent and each Purchaser Agent (which consent will not be
unreasonably withheld), the Servicer will not agree to or otherwise permit to
occur any material change in the Credit and Collection Policy, which change
would impair the collectibility of any of the Assets or otherwise adversely
affect the interests or remedies of the Administrative Agent, each Purchaser
Agent or the Secured Parties under this Agreement or any other Transaction
Document.
(g) Termination Events. The Servicer will provide the
Administrative Agent and each Purchaser Agent with immediate written notice of
the occurrence of each Termination Event and each Unmatured Termination Event of
which the Servicer has knowledge or has received notice. In addition, no later
than two (2) Business Days following the Servicer's knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Servicer
will provide to the Administrative Agent and each Purchaser Agent a written
statement of the chief financial officer or chief accounting officer of the
Servicer setting forth the details of such event and the action that the
Servicer proposes to take with respect thereto.
(h) Taxes. The Servicer will file and pay any and all Taxes
required to meet the obligations of the Seller and the Servicer under the
Transaction Documents.
(i) Other. The Servicer will promptly furnish to the
Administrative Agent and each Purchaser Agent such other information, documents,
records or reports respecting the Assets or the condition or operations,
financial or otherwise, of the Seller or the Servicer as the Administrative
Agent and each Purchaser Agent may from time to time reasonably request in order
to protect the interests of the Administrative Agent, each Purchaser Agent or
Secured Parties under or as contemplated by this Agreement.
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(j) Proceedings. As soon as possible and in any event within three
(3) Business Days after any executive officer of the Servicer receives notice or
obtains knowledge thereof, of any settlement of, material judgment (including a
material judgment with respect to the liability phase of a bifurcated trial) in
or commencement of any material labor controversy material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Assets, the Transaction Documents, the Secured Parties'
interest in the Assets, or the Seller, the Servicer or the Originator or any of
their Affiliates; provided, however, notwithstanding the foregoing, any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Assets, the Transaction Documents, the Secured Parties' interest
in the Assets, or the Seller, the Servicer or the Originator or any of their
Affiliates in excess of $1,000,000 or more shall be deemed to be material for
purposes of this Section 5.4(j).
(k) Deposit of Collections. The Servicer shall promptly (but in no
event later than two (2) Business Days after receipt) deposit into the
Collection Account any and all Collections received by the Seller, the Servicer
or any of their Affiliates.
(l) Servicing of Participation, Acquired and Assigned Loans. With
respect to Participation Loans, Acquired Loans and Assigned Loans, the Servicer
shall: (i) segregate all Loan Files with respect to such Loans; (ii) keep
separate records with respect to such Loans; and (iii) identify each such Type
of Loan on the Servicing Reports required hereunder with respect to such Loans.
(m) Change-in-Control. Upon the occurrence of a Change-in-Control
(including any merger or consolidation of the Originator or transfer of
substantially all of its assets and its business), the Servicer shall (i)
provide the Administrative Agent, each Purchaser Agent, the Hedge Counterparties
and the Rating Agencies with notice of such Change-in-Control within thirty (30)
days after completion of the same, and (ii) satisfy the Rating Agency Condition
after completion of the same.
SECTION 5.5 NEGATIVE COVENANTS OF THE SERVICER.
From the date hereof until the Collection Date.
(a) Deposits to Special Accounts. Except as otherwise provided in
the Lock-Box Agreement, the Servicer will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account cash or
cash proceeds other than Collections in respect of the Assets in the Asset Pool.
(b) Mergers, Acquisition, Sales, etc. The Servicer will not
consolidate with or merge into any other Person or convey or transfer its
properties and assets substantially as an entirety to any Person, unless the
Servicer is the surviving entity and unless:
(1) the Servicer has delivered to the Administrative
Agent and each Purchaser Agent an Officer's Certificate and an Opinion
of Counsel each stating that any consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 5.5
and that all conditions precedent herein provided for relating to such
transaction have been complied with and, in the case of the Opinion of
Counsel, that such
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supplemental agreement is legal, valid and binding with respect to the
Servicer and such other matters as the Administrative Agent may
reasonably request;
(2) the Servicer shall have delivered notice of such
consolidation, merger, conveyance or transfer to the Administrative
Agent and each Purchaser Agent;
(3) after giving effect thereto, no Termination Event or
Servicer Default or event that with notice or lapse of time would
constitute either a Termination Event or a Servicer Default shall have
occurred;
(4) the Administrative Agent and each Purchaser Agent
have consented in writing to such consolidation, merger, conveyance or
transfer; and
(5) the Rating Agency Condition is satisfied with respect
thereto.
(c) Change of Name or Location of Loan Files. The Servicer shall
not (x) change its name, move the location of its principal place of business
and chief executive office, change the offices where it keeps records concerning
the Assets from the location referred to in Section 13.2, or change the
jurisdiction of its formation, or (y) move, or consent to the Collateral
Custodian moving, the Required Loan Documents and Loan Files from the location
thereof on the Closing Date, unless the Servicer has given at least thirty (30)
days' written notice to the Administrative Agent and has taken all actions
required under the UCC of each relevant jurisdiction in order to continue the
first priority perfected security interest of the Administrative Agent as agent
for the Secured Parties in the Assets in the Asset Pool.
(d) Change in Payment Instructions to Obligors. The Servicer will
not add or terminate any bank as a Lock-Box Bank or any Lock-Box Account from
those listed in Schedule II or make any change in its instructions to Obligors
regarding payments to be made to the Seller or the Servicer or payments to be
made to any Lock-Box Bank, unless the Administrative Agent has consented to such
addition, termination or change (which consent shall not be unreasonably
withheld) and has received duly executed copies of Lock-Box Agreements with each
new Lock-Box Bank or with respect to each new Lock-Box Account, as the case may
be.
(e) Extension or Amendment of Assets. The Servicer will not,
except as otherwise permitted in Section 6.4(a), extend, amend or otherwise
modify the terms of any Asset.
SECTION 5.6 AFFIRMATIVE COVENANTS OF THE BACKUP SERVICER.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Backup Servicer will comply in all
material respects with all Applicable Laws.
(b) Preservation of Existence. The Backup Servicer will preserve
and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
in each jurisdiction where the failure to preserve and maintain
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such existence, rights, franchises, privileges and qualification has had, or
could reasonably be expected to have, a Material Adverse Effect.
SECTION 5.7 NEGATIVE COVENANTS OF THE BACKUP SERVICER.
From the date hereof until the Collection Date:
(a) No Changes in Backup Servicer Fee. The Backup Servicer will
not make any changes to the Backup Servicer Fee set forth in the Backup Servicer
Fee Letter without the prior written approval of the Administrative Agent and
each Purchaser Agent.
SECTION 5.8 AFFIRMATIVE COVENANTS OF THE COLLATERAL CUSTODIAN.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Collateral Custodian will comply in
all material respects with all Applicable Laws.
(b) Preservation of Existence. The Collateral Custodian will
preserve and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation and qualify and remain qualified in good standing
in each jurisdiction where failure to preserve and maintain such existence,
rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.
(c) Location of Required Loan Documents. The Required Loan
Documents shall remain at all times in the possession of the Collateral
Custodian at the address set forth herein unless notice of a different address
is given in accordance with the terms hereof or unless the Administrative Agent
agrees to allow certain Required Loan Documents to be released to the Servicer
on a temporary basis in accordance with the terms hereof.
SECTION 5.9 NEGATIVE COVENANTS OF THE COLLATERAL CUSTODIAN.
From the date hereof until the Collection Date:
(a) Required Loan Documents. The Collateral Custodian will not
dispose of any documents constituting the Required Loan Documents in any manner
that is inconsistent with the performance of its obligations as the Collateral
Custodian pursuant to this Agreement and will not dispose of any Asset except as
contemplated by this Agreement.
(b) No Changes in Collateral Custodian Fee. The Collateral
Custodian will not make any changes to the Collateral Custodian Fee set forth in
the Collateral Custodian Fee Letter without the prior written approval of the
Administrative Agent and each Purchaser Agent.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 6.1 DESIGNATION OF THE SERVICER.
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(a) Initial Servicer. The servicing, administering and collection
of the Assets in the Asset Pool shall be conducted by the Person designated as
the Servicer hereunder from time to time in accordance with this Section 6.1.
Until the Administrative Agent gives to the Originator a Servicer Termination
Notice, the Originator is hereby designated as, and hereby agrees to perform the
duties and responsibilities of, the Servicer pursuant to the terms hereof.
(b) Successor Servicer. Upon the Servicer's receipt of a Servicer
Termination Notice (with a copy to the Backup Servicer and each Rating Agency)
from the Administrative Agent pursuant to the terms of Section 6.15, the
Servicer agrees that it will terminate its activities as Servicer hereunder in a
manner that the Administrative Agent reasonably believes will facilitate the
transition of the performance of such activities to a successor Servicer, and
the successor Servicer shall assume each and all of the Servicer's obligations
to service and administer the Assets in the Asset Pool, on the terms and subject
to the conditions herein set forth, and the Servicer shall use its best
reasonable efforts to assist the successor Servicer in assuming such
obligations.
(c) Subcontracts. The Servicer may, with the prior consent of the
Administrative Agent, subcontract with any other Person for servicing,
administering or collecting the Assets; provided, however, that the Servicer
shall remain liable for the performance of the duties and obligations of the
Servicer pursuant to the terms hereof and that any such subcontract may be
terminated upon the occurrence of a Servicer Default.
(d) Servicing Programs. In the event that the Servicer uses any
software program in servicing the Assets that it licenses from a third party,
the Servicer shall use its best reasonable efforts to obtain, either before the
Closing Date or as soon as possible thereafter, whatever licenses or approvals
are necessary to allow the Administrative Agent or the Servicer to use such
program.
SECTION 6.2 DUTIES OF THE SERVICER.
(a) Appointment. The Seller hereby appoints the Servicer as its
agent, as from time to time designated pursuant to Section 6.1, to service the
Assets and enforce its respective rights in and under such Assets. The Servicer
hereby accepts such appointment and agrees to perform the duties and obligations
with respect thereto as set forth herein. The Servicer and the Seller hereby
acknowledge that the Administrative Agent, each Purchaser Agent and the Secured
Parties are third party beneficiaries of the obligations undertaken by the
Servicer hereunder.
(b) Duties. The Servicer shall take or cause to be taken all such
actions as may be necessary or advisable to collect the Assets from time to
time, all in accordance with Applicable Laws, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. Without
limiting the foregoing, the duties of the Servicer shall include the following:
(1) preparing and submitting of claims to, and
post-billing liaison with, Obligors on each Asset;
(2) maintaining all necessary servicing records with
respect to the Assets and providing such reports to the Administrative
Agent and each Purchaser Agent in respect of the servicing of the
Assets (including information relating to its performance under
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this Agreement) as may be required hereunder or as the Administrative
Agent and each Purchaser Agent may reasonably request;
(3) maintaining and implementing administrative and
operating procedures (including, without limitation, an ability to
recreate servicing records evidencing the Assets in the event of the
destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or
advisable for the collection of the Assets;
(4) promptly delivering to the Administrative Agent, each
Purchaser Agent or the Collateral Custodian, from time to time, such
information and servicing records (including information relating to
its performance under this Agreement) as the Administrative Agent, each
Purchaser Agent or the Collateral Custodian may from time to time
reasonably request;
(5) identifying each Asset clearly and unambiguously in
its servicing records to reflect that such Asset is owned by the Seller
and that the Seller is selling an undivided ownership interest therein
to the Secured Parties pursuant to this Agreement;
(6) notifying the Administrative Agent and each Purchaser
Agent of any material action, suit, proceeding, dispute, offset,
deduction, defense or counterclaim (1) that is or is threatened to be
asserted by an Obligor with respect to any Asset (or portion thereof)
of which it has knowledge or has received notice; or (2) that is
reasonably expected to have a Material Adverse Effect;
(7) notifying the Administrative Agent and each Purchaser
Agent of any proposed change in the Credit and Collection Policy that
could have an adverse effect on the collectibility of the Assets, on
the Seller or on the interests of the Administrative Agent, each
Purchaser Agent or any Secured Party;
(8) using its best efforts to maintain the perfected
security interest of the Administrative Agent, as agent for the Secured
Parties, in the Assets;
(9) maintaining in the same manner as the Collateral
Custodian holds the Required Loan Documents, the Loan File (other than
Required Loan Documents) with respect to each Asset; and
(10) the Servicer shall make payments pursuant to the
terms of the Monthly Report in accordance with Section 2.7 and Section
2.8.
(c) Notwithstanding anything to the contrary contained herein, the
exercise by the Administrative Agent, each Purchaser Agent and the Secured
Parties of their rights hereunder shall not release the Servicer, the Originator
or the Seller from any of their duties or responsibilities with respect to the
Assets. The Secured Parties, the Administrative Agent, each Purchaser Agent and
the Collateral Custodian (except in the role of Backup Servicer) shall not have
any obligation or liability with respect to any Assets, nor shall any of them be
obligated to perform any of the obligations of the Servicer hereunder.
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(d) Any payment by an Obligor in respect of any Indebtedness owed
by it to the Originator or the Seller shall, except as otherwise specified by
such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Administrative Agent, be applied as a Collection of an Asset
of such Obligor (starting with the oldest such Asset) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other obligation of such Obligor.
SECTION 6.3 AUTHORIZATION OF THE SERVICER.
(a) Each of the Seller, the Administrative Agent, each Purchaser
Agent, each Purchaser and each Hedge Counterparty hereby authorizes the Servicer
(including any successor thereto) to take any and all reasonable steps in its
name and on its behalf necessary or desirable and not inconsistent with the sale
of the Assets in the Asset Pool to the applicable Purchaser and the Hedge
Counterparty, in the determination of the Servicer, to collect all amounts due
under any and all Assets, including, without limitation, endorsing any of their
names on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Assets and, after the delinquency of any Assets and to the extent
permitted under and in compliance with Applicable Law, to commence proceedings
with respect to enforcing payment thereof, to the same extent as the Originator
could have done if it had continued to own such Assets. The Originator, the
Seller and the Administrative Agent on behalf of the Secured Parties and each
Hedge Counterparty shall furnish the Servicer (and any successors thereto) with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder, and
shall cooperate with the Servicer to the fullest extent in order to ensure the
collectibility of the Assets. In no event shall the Servicer be entitled to make
the Secured Parties, any Hedge Counterparty, the Collateral Custodian, the
Administrative Agent or the Purchaser Agents a party to any litigation without
such party's express prior written consent, or to make the Seller a party to any
litigation (other than any routine foreclosure or similar collection procedure)
without the Administrative Agent's and each Purchaser Agent's consent.
(b) After a Termination Event has occurred and is continuing, at
the direction the Administrative Agent, the Servicer shall take such action as
the Administrative Agent may deem necessary or advisable to enforce collection
of the Assets; provided, however, that the Administrative Agent may, at any time
that a Termination Event or Unmatured Termination Event has occurred and is
continuing, notify any Obligor with respect to any Assets of the assignment of
such Assets to the Administrative Agent and direct that payments of all amounts
due or to become due be made directly to the Administrative Agent and each
Purchaser Agent or any servicer, collection agent or lock-box or other account
designated by the Administrative Agent and each Purchaser Agent and, upon such
notification and at the expense of the Seller, the Administrative Agent may
enforce collection of any such Assets, and adjust, settle or compromise the
amount or payment thereof.
SECTION 6.4 COLLECTION OF PAYMENTS.
(a) Collection Efforts, Modification of Assets. The Servicer will
use its best efforts to collect all payments called for under the terms and
provisions of the Assets included in the
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Asset Pool as and when the same become due in accordance with the Credit and
Collection Policy, and will follow those collection procedures that it follows
with respect to all comparable Assets that it services for itself or others. The
Servicer may not waive, modify or otherwise vary any provision of an Asset in a
manner that would impair the collectibility of the Asset or in any manner
contrary to the Credit and Collection Policy.
(b) Prepaid Loan. Prior to a Termination Event, the Servicer may
not voluntarily permit an Asset to become a Prepaid Loan, unless (x) the
Servicer provides a Substitute Loan in accordance with Section 2.16 or (y) such
prepayment will not result in the Collection Account receiving an amount (the
"Prepayment Amount") less than the sum of (a) the Outstanding Loan Balance on
the date of such payment, (b) any outstanding Servicer Advances thereon, (c) any
accrued and unpaid interest, and (d) all Hedge Breakage Costs owing to the
relevant Hedge Counterparty for any termination of one or more Hedge
Transactions, in whole or in part, as required by the terms of any Hedging
Agreement as the result of any such Asset becoming a Prepaid Loan. After a
Termination Event has occurred, the Servicer may not voluntarily permit an Asset
to become a Prepaid Loan unless the Servicer collects an amount equal to the sum
of (a) the Outstanding Loan Balance on the date of such prepayment, (b) any
outstanding Servicer Advances thereon, (c) any accrued and unpaid interest, and
(d) all Hedge Breakage Costs owing to the relevant Hedge Counterparty for any
termination of one or more Hedge Transactions, in whole or in part, as required
by the terms of any Hedging Agreement as the result of any such Asset becoming a
Prepaid Loan.
(c) Acceleration. If required by the Credit and Collection Policy,
the Servicer shall accelerate the maturity of all or any Scheduled Payments and
other amounts due under any Asset in which a default under the terms thereof has
occurred and is continuing (after the lapse of any applicable grace period)
promptly after such Asset becomes a Charged-Off Loan.
(d) Taxes and other Amounts. To the extent provided for in any
Asset, the Servicer will use its best efforts to collect all payments with
respect to amounts due for taxes, assessments and insurance premiums relating to
such Asset and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
(e) Payments to Lock-Box Account. On or before the applicable
Cut-Off Date, the Servicer shall have instructed all Obligors to make all
payments in respect of the Assets to the Lock-Box or directly to the Lock-Box
Account.
(f) Establishment of the Collection Account. The Servicer shall
cause to be established, on or before the Closing Date, with the Collateral
Custodian, and maintained in the name of the Administrative Agent as agent for
the Secured Parties, with an office or branch of a depository institution or
trust company a segregated corporate trust account entitled Collection Account
for Wachovia Securities, Inc., as Administrative Agent for the Secured Parties
(the "Collection Account"), and the Servicer shall further maintain a subaccount
within the Collection Account for the purpose of segregating, within two (2)
Business Days of the receipt of any Collections, Principal Collections (the
"Principal Collections Account"), over which the Collateral Custodian as agent
for the Secured Parties shall have control and from which neither the
Originator, Servicer nor the Seller shall have any right of withdrawal except in
accordance with Section 2.7(b); provided, however, that at all times such
depository institution or trust
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company shall be acceptable to the Administrative Agent and a depository
institution organized under the laws of the United States of America or any one
of the States thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) (a) that has either (1) a long-term unsecured debt rating of
"A" or better by S&P and "A2" or better by ▇▇▇▇▇'▇ or (2) a short-term unsecured
debt rating or certificate of deposit rating of "A-1" or better by S&P or "P-1"
or better by ▇▇▇▇▇'▇, (b) the parent corporation of which has either (1) a
long-term unsecured debt rating of "A" or better by S&P and "A2" or better by
▇▇▇▇▇'▇ or (2) a short-term unsecured debt rating or certificate of deposit
rating of "A-1" or better by S&P and "P-1" or better by ▇▇▇▇▇'▇ or (c) is
otherwise acceptable to the Administrative Agent and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation (any such depository
institution or trust company, a "Qualified Institution").
(g) Establishment of the Excess Spread Account. The Seller or the
Servicer on its behalf shall establish, on or before the Closing Date, with the
Collateral Custodian, and maintained in the name of the Seller and assigned to
the Administrative Agent, with a Qualified Institution an account into which
Collections shall be deposited for the purpose of funding the Required Equity
Shortfall (the "Excess Spread Account"). If the Seller fails at any time to
maintain the Required Equity Contribution, Collections shall be deposited into
the Excess Spread Account pursuant to Sections 2.7(a)(vii) and 2.8(viii), as
applicable, until such time as the Required Equity Contribution on any day
equals or exceeds $75,000,000. To the extent that, on any Payment Date, there
are funds on deposit in the Excess Spread Account in excess of those required to
fund the Required Equity Shortfall, an amount equal to such excess shall be
deposited, on such Payment Date, to the Collection Account for application in
accordance with Section 2.7 and Section 2.8, as applicable.
(h) Adjustments. If (i) the Servicer makes a deposit into the
Collection Account in respect of a Collection of an Asset and such Collection
was received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.
SECTION 6.5 SERVICER ADVANCES.
For each Collection Period, if the Servicer determines that any
Scheduled Payment (or portion thereof) that was due and payable pursuant to an
Asset during such Collection Period was not received prior to the last day of
such Collection Period, the Servicer may (in its sole and absolute discretion)
make an advance in an amount up to the amount of such delinquent Scheduled
Payment (or portion thereof). The Servicer will deposit any Servicer Advances
into the Collection Account on or prior to 9:00 a.m. (Charlotte, North Carolina
time) on the Business Day prior to the related Payment Date, in immediately
available funds. Notwithstanding anything to the contrary contained herein, no
Successor Servicer shall have any responsibility to make Servicer Advances.
SECTION 6.6 REALIZATION UPON CHARGED-OFF LOANS.
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The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property relating to a
Charged-Off Loan and will act as sales and processing agent for Related Property
that it repossesses. The Servicer will follow such other practices and
procedures as it deems necessary or advisable and as are customary and usual in
its servicing of contracts and other actions by the Servicer in order to realize
upon such Related Property, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Related Property at public or private sale in circumstances other
than those described in the preceding sentence. Without limiting the generality
of the foregoing, unless the Administrative Agent has specifically given
instruction to the contrary, the Servicer may sell any such Related Property to
the Servicer or its Affiliates for a purchase price equal to the then fair
market value thereof, any such sale to be evidenced by a certificate of a
Responsible Officer of the Servicer delivered to the Administrative Agent
setting forth the Loan, the Related Property, the sale price of the Related
Property and certifying that such sale price is the fair market value of such
Related Property. In any case in which any such Related Property has suffered
damage, the Servicer will not expend funds in connection with any repair or
toward the repossession of such Related Property unless it reasonably determines
that such repair and/or repossession will increase the Recoveries by an amount
greater than the amount of such expenses. The Servicer will remit to the
Collection Account the Recoveries received in connection with the sale or
disposition of Related Property relating to a Charged-Off Loan.
SECTION 6.7 MAINTENANCE OF INSURANCE POLICIES.
The Servicer will use its best efforts to ensure that each Obligor
maintains an Insurance Policy with respect to any Related Property in an amount
at least equal to the sum of the Outstanding Loan Balance of the related
Eligible Loan and shall ensure that each such Insurance Policy names the
Servicer as loss payee and as an insured thereunder and all of the Seller's
right, title and interest therein is fully assigned to the Administrative Agent,
as agent for the Secured Parties. Additionally, the Servicer will require that
each Obligor maintain property damage liability insurance during the term of
each Asset in amounts and against risks customarily insured against by the
Obligor on property owned by it. If an Obligor fails to maintain property damage
insurance, the Servicer may in its discretion purchase and maintain such
insurance on behalf of, and at the expense of, the Obligor. In connection with
its activities as Servicer, the Servicer agrees to present, on behalf of the
Administrative Agent, claims to the insurer under each Insurance Policy and any
such liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Asset. The Servicer's Insurance Policies
with respect to the Related Property will insure against liability for physical
damage relating to such Related Property in accordance with the requirements of
the Credit and Collection Policy. The Servicer hereby disclaims any and all
right, title and interest in and to any Insurance Policy and Insurance Proceeds
with respect to any Related Property, including any Insurance Policy with
respect to which it is named as loss payee and as an insured, and agrees that it
has no equitable, beneficial or other interest in the Insurance Polices and
Insurance Proceeds other than being named as loss payee and as an insured. The
Servicer acknowledges that with respect to the Insurance Policies and Insurance
Proceeds thereof that it is acting solely in the capacity as agent for the
Administrative Agent, as agent for the Secured Parties.
SECTION 6.8 SERVICING COMPENSATION.
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As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive the
Servicing Fee to the extent of funds available therefor pursuant to the
provisions of Section 2.7(a)(iii) or Section 2.8(3), as applicable.
SECTION 6.9 PAYMENT OF CERTAIN EXPENSES BY SERVICER.
The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Seller, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.6; provided,
however, for avoidance of doubt, to the extent Liquidation Expenses relate to a
Loan and a Retained Interest such Liquidation Expenses shall be allocated pro
rata. The Servicer will be required to pay all reasonable fees and expenses
owing to any bank or trust company in connection with the maintenance of the
Collection Account, the Excess Spread Account and the Lock-Box Account. The
Servicer shall be required to pay such expenses for its own account and shall
not be entitled to any payment therefor other than the Servicing Fee.
SECTION 6.10 REPORTS.
(a) Borrowing Notice. On each Funding Date, on each reduction of
Advances Outstanding pursuant to Section 2.3(b) and on each reinvestment of
Principal Collections pursuant to Section 2.7(b), the Seller (and the Servicer
on its behalf) will provide a Borrowing Notice, updated as of such date, to the
Administrative Agent and each Purchaser Agent (with a copy to the Collateral
Custodian).
(b) Monthly Report. On each Reporting Date, the Servicer will
provide to the Seller, the Administrative Agent, each Purchaser Agent, the
Backup Servicer, any Liquidity Bank and each Rating Agency, a monthly statement
including a Borrowing Base calculated as of the most recent Determination Date
(a "Monthly Report"), with respect to the related Collection Period, signed by a
Responsible Officer of the Servicer and the Seller and substantially in the form
of Exhibit C.
(c) On each Reporting Date, the Servicer will report as part of
the Monthly Report to the Administrative Agent, each Purchaser Agent, any
Liquidity Bank and each Rating Agency its Diversity Score calculation as of the
most recent Determination Date with respect to the related Collection Period.
(d) Servicer's Certificate. Together with each Monthly Report, the
Servicer shall submit to the Administrative Agent, each Purchaser Agent, any
Liquidity Bank and each Rating Agency a certificate (a "Servicer's
Certificate"), signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit J.
(e) Financial Statements. The Servicer will submit to the
Administrative Agent, each Purchaser Agent, each Purchaser, the Backup Servicer,
any Liquidity Bank and each Rating Agency, within forty-five (45) days of the
end of each of its fiscal quarters, commencing
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September 30, 2002, unaudited consolidated financial statements for the
Servicer, as of the end of each such fiscal quarter. The Servicer will submit to
the Administrative Agent, each Purchaser Agent, each Purchaser and the Backup
Servicer, within ninety (90) days of the end of each of its fiscal years,
commencing December 31, 2002, consolidated audited financial statements for the
Servicer, audited by a "big five" auditing firm as of the end of each such
fiscal year. For the purposes of this Section 6.10(d), the term financial
statements shall include a balance sheet, income statement and a cash flow
statement.
(f) Tax Returns. Upon demand by the Administrative Agent, each
Purchaser Agent, any Liquidity Bank and each Rating Agency, copies of all
federal, state and local Tax returns and reports filed by the Seller and
Servicer, or in which the Seller or Servicer was included on a consolidated or
combined basis (excluding sales, use and like taxes).
SECTION 6.11 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will provide to the Administrative Agent and each
Purchaser Agent, within ninety (90) days following the end of each fiscal year
of the Servicer, commencing with the fiscal year ending on December 31, 2002, a
fiscal report signed by a Responsible Officer of the Servicer certifying that
(a) a review of the activities of the Servicer, and the Servicer's performance
pursuant to this Agreement, for the fiscal period ending on the last day of such
fiscal year has been made under such Person's supervision and (b) the Servicer
has performed or has caused to be performed in all material respects all of its
obligations under this Agreement throughout such year and no Servicer Default
has occurred and is continuing.
SECTION 6.12 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S SERVICING
REPORTS.
The Servicer will cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish to the Administrative Agent, each Purchaser Agent, the Collateral
Custodian and the Backup Servicer, within ninety (90) days following the end of
each fiscal year of the Servicer, commencing with the fiscal year ending on
December 31, 2002: (i) a report relating to such fiscal year to the effect that
(a) such firm has reviewed certain documents and records relating to the
servicing of the Assets, and (b) based on such examination, such firm is of the
opinion that the Monthly Reports for such year were prepared in compliance with
this Agreement, except for such exceptions as it believes to be immaterial and
such other exceptions as will be set forth in such firm's report and (ii) a
report covering such fiscal year to the effect that such accountants have
applied certain agreed-upon procedures (which procedures shall have been
approved by the Administrative Agent and each Purchaser Agent) to certain
documents and records relating to the Assets under any Transaction Document,
compared the information contained in the Monthly Reports and the Servicer's
Certificates delivered during the period covered by such report with such
documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted in
compliance with this Article VI of this Agreement, except for such exceptions as
such accountants shall believe to be immaterial and such other exception as
shall be set forth in such statement.
SECTION 6.13 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS
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Except as provided herein, the Servicer shall not be under any
liability to the Administrative Agent, each Purchaser Agent, the Secured Parties
or any other Person for any action taken or for refraining from the taking of
any action pursuant to this Agreement whether arising from express or implied
duties under this Agreement; provided, however, notwithstanding anything to the
contrary contained herein nothing shall protect the Servicer against any
liability that would otherwise be imposed by reason of its willful misfeasance,
bad faith or negligence in the performance of duties or by reason of its willful
misconduct hereunder.
SECTION 6.14 THE SERVICER NOT TO RESIGN.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the Servicer's determination that (i) the performance
of its duties hereunder is or becomes impermissible under Applicable Law and
(ii) there is no reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent, each Purchaser Agent and the Backup Servicer. No such
resignation shall become effective until a Successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
6.2.
SECTION 6.15 SERVICER DEFAULTS.
If any one of the following events (a "Servicer Default") shall occur
and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit (including without limitation with respect to Collections) as required
by this Agreement which continues unremedied for a period of one (1) Business
Day;
(b) any failure by the Servicer to give instructions or notice to
the Administrative Agent and each Purchaser Agent as required by this Agreement,
or to deliver any required Monthly Report or other Required Reports hereunder on
or before the date occurring two (2) Business Days after the date such
instruction, notice or report is required to be made or given, as the case may
be, under the terms of this Agreement;
(c) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or the other Transaction Documents to which
the Servicer is a party and the same continues unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such failure requiring the same to be remedied shall have been given to the
Servicer by the Administrative Agent and each Purchaser Agent and (ii) the date
on which the Servicer becomes aware thereof;
(d) any representation, warranty or certification made by the
Servicer in any Transaction Document or in any certificate delivered pursuant to
any Transaction Document shall prove to have been incorrect when made, which has
a Material Adverse Effect on the Administrative Agent, any Purchaser Agent or
the Secured Parties and which continues to be unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such incorrectness requiring the same to be remedied shall have been given to
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the Servicer by the Administrative Agent or any Purchaser Agent and (ii) the
date on which the Servicer becomes aware thereof;
(e) an Insolvency Event shall occur with respect to the Servicer;
(f) any material delegation of the Servicer's duties that is not
permitted by Section 6.1;
(g) any financial or other information reasonably requested by the
Administrative Agent, any Purchaser Agent or any Purchaser is not provided as
requested within a reasonable amount of time following such request;
(h) the rendering against the Servicer of one or more final
judgments, decrees or orders for the payment of money in excess of United States
$2,000,000, individually or in the aggregate, and the continuance of such
judgment, decree or order unsatisfied and in effect for any period of more than
sixty (60) consecutive days without a stay of execution;
(i) the failure of the Servicer to make any payment due with
respect to any recourse debt or other obligations, which debt or other
obligations are in excess of United States $2,000,000, individually or in the
aggregate, or the occurrence of any event or condition that would permit
acceleration of such recourse debt or other obligations whether or not waived;
(j) the Servicer fails to maintain a GAAP balance sheet net worth
equal to at least 90% of the total drawn capital of the Servicer;
(k) any change in the management of the Servicer (whether by
resignation, termination, disability, death or lack of day to day management)
relating to ▇▇▇▇ ▇▇▇▇▇▇▇, unless the same is waived in writing by the
Administrative Agent and each Purchaser Agent;
(l) any change in the control of the Servicer that takes the form
of either a merger or consolidation that does not comply with the provisions of
Section 5.5;
(m) the Servicer fails in any material respect to comply with the
Credit and Collection Policy regarding the servicing of the Assets;
(n) the Servicer consents or agrees to, or otherwise permits to
occur, any amendment, modification, change, supplement or rescission of or to
the Credit and Collection Policy (after the adoption of same) in whole or in
part that could be reasonably expected to have a Material Adverse Effect upon
the Assets, the Administrative Agent, any Purchaser Agent or the Secured
Parties, without the prior written consent of the Administrative Agent and each
Purchaser Agent;
(o) CapitalSource Finance ceases to be the Servicer; or
(p) the Servicer fails to maintain the Loan Loss Reserve for any
Watchlist Loans;
then notwithstanding anything herein to the contrary, so long as any such
Servicer Default shall not have been remedied within any applicable cure period
prior to the date of the Servicer Termination Notice (defined below), the
Administrative Agent, by written notice to the Servicer
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(with a copy to the Backup Servicer and each Rating Agency) (a "Servicer
Termination Notice"), may terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement.
SECTION 6.16 APPOINTMENT OF SUCCESSOR SERVICER.
(a) On and after the receipt by the Servicer of a Servicer
Termination Notice pursuant to Section 6.15, the Servicer shall continue to
perform all servicing functions under this Agreement until the date specified in
the Servicer Termination Notice or otherwise specified by the Administrative
Agent in writing or, if no such date is specified in such Servicer Termination
Notice or otherwise specified by the Administrative Agent, until a date mutually
agreed upon by the Servicer and the Administrative Agent. The Administrative
Agent may at the time described in the immediately preceding sentence in its
sole discretion, appoint the Backup Servicer as the Servicer hereunder, and the
Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Backup Servicer. As compensation therefor,
the Backup Servicer shall be entitled to the Servicing Fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided herein; including, without limitation, Transition
Expenses. In the event that the Administrative Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unable to
assume such obligations on such date, the Administrative Agent shall as promptly
as possible appoint a successor servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Administrative Agent and each Purchaser Agent. In the
event that a Successor Servicer has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Administrative Agent shall
petition a court of competent jurisdiction to appoint any established financial
institution, having a net worth of not less than United States $50,000,000 and
whose regular business includes the servicing of Assets, as the Successor
Servicer hereunder.
(b) Upon its appointment, the Backup Servicer (subject to Section
6.16(a)) or the Successor Servicer, as applicable, shall be the successor in all
respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Backup Servicer or the Successor Servicer, as applicable; provided,
however, that the Backup Servicer or Successor Servicer, as applicable, shall
have (i) no liability with respect to any action performed by the terminated
Servicer prior to the date that the Backup Servicer or Successor Servicer, as
applicable, becomes the successor to the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer, (ii) no
obligation to perform any advancing obligations, if any, of the Servicer unless
it elects to in its sole discretion, (iii) no obligation to pay any taxes
required to be paid by the Servicer (provided that the Backup Servicer or
Successor Servicer, as applicable, shall pay any income taxes for which it is
liable), (iv) no obligation to pay any of the fees and expenses of any other
party to the transactions contemplated hereby, and (v) no liability or
obligation with respect to any Servicer indemnification obligations of any prior
Servicer, including the original Servicer. The indemnification obligations of
the Backup Servicer or the Successor Servicer, as applicable, upon becoming a
Successor Servicer, are expressly limited to those arising on account of its
failure to act in good faith and with reasonable care under the circumstances.
In addition, the
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Backup Servicer or Successor Servicer, as applicable, shall have no liability
relating to the representations and warranties of the Servicer contained in
Article IV. Further, for so long as the Backup Servicer shall be the Successor
Servicer, the provisions of Section 2.13, Section 2.14(b) and Section 2.14(e) of
this Agreement shall not apply to it in its capacity as Servicer.
(c) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this
Agreement and shall pass to and be vested in the Seller and, without limitation,
the Seller is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the Seller in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing of the Assets.
(d) Upon the Backup Servicer receiving notice that it is required
to serve as the Servicer hereunder pursuant to the foregoing provisions of this
Section 6.16, the Backup Servicer will promptly begin the transition to its role
as Servicer. Notwithstanding the foregoing, the Backup Servicer may, in its
discretion, appoint, or petition a court of competent jurisdiction to appoint,
any established servicing institution as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. As compensation, any Successor Servicer
(including, without limitation, the Administrative Agent) so appointed shall be
entitled to receive the Servicing Fee, together with any other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided herein that accrued prior thereto, including, without limitation,
Transition Expenses. In the event the Backup Servicer is required to solicit
bids as provided herein, the Backup Servicer shall solicit, by public
announcement, bids from banks and mortgage servicing institutions meeting the
qualifications set forth in Section 6.16(a) above. Such public announcement
shall specify that the Successor Servicer shall be entitled to the full amount
of the Servicing fee as servicing compensation, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise that accrued prior thereto. Within thirty (30) days after any such
public announcement, the Backup Servicer shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Backup
Servicer shall deduct from any sum received by the Backup Servicer from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder and the amount
of any unreimbursed Servicing Advances. After such deductions, the remainder of
such sum shall be paid by the Backup Servicer to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Backup
Servicer and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Backup Servicer to the Administrative Agent and each Purchaser Agent and the
Backup Servicer shall have consented thereto. The Backup Servicer shall not
resign as servicer until a Successor Servicer has been appointed and accepted
such appointment. Notwithstanding anything to the contrary contained herein, in
no event shall ▇▇▇▇▇ Fargo, in any capacity, be liable for any Servicing Fee or
for any differential in the amount of the Servicing Fee paid hereunder and the
amount necessary to
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induce any Successor Servicer under this Agreement and the transactions set
forth or provided for by this Agreement.
ARTICLE VII
THE BACKUP SERVICER
SECTION 7.1 DESIGNATION OF THE BACKUP SERVICER.
(a) Initial Backup Servicer. The backup servicing role with
respect to the Assets in the Asset Pool shall be conducted by the Person
designated as Backup Servicer hereunder from time to time in accordance with
this Section 7.1. Until the Administrative Agent shall give to ▇▇▇▇▇ Fargo a
Backup Servicer Termination Notice, ▇▇▇▇▇ Fargo is hereby designated as, and
hereby agrees to perform the duties and obligations of, a Backup Servicer
pursuant to the terms hereof.
(b) Successor Backup Servicer. Upon the Backup Servicer's receipt
of Backup Servicer Termination Notice from the Administrative Agent of the
designation of a replacement Backup Servicer pursuant to the provisions of
Section 7.5, the Backup Servicer agrees that it will terminate its activities as
Backup Servicer hereunder.
SECTION 7.2 DUTIES OF THE BACKUP SERVICER.
(a) Appointment. The Seller and the Administrative Agent, as agent
for the Secured Parties, each hereby appoints ▇▇▇▇▇ Fargo to act as Backup
Servicer, for the benefit of the Administrative Agent, each Purchaser Agent and
the Secured Parties, as from time to time designated pursuant to Section 7.1.
The Backup Servicer hereby accepts such appointment and agrees to perform the
duties and obligations with respect thereto set forth herein.
(b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 7.5, the Backup Servicer shall perform, on behalf of
the Administrative Agent and the Secured Parties, the following duties and
obligations:
(1) On or before the Closing Date, the Backup Servicer
shall accept from the Servicer delivery of the information required to
be set forth in the Monthly Reports (if any) in hard copy and on
computer tape; provided, however, the computer tape is in an MS DOS, PC
readable ASCII format or other format to be agreed upon by the Backup
Servicer and the Servicer on or prior to closing.
(2) Not later than 12:00 noon New York City time on each
Reporting Date, the Servicer shall deliver to the Backup Servicer,
Fitch and the Rating Agencies the loan tape, which shall include but
not be limited to the following information: (x) for each Asset in the
Asset Pool, the name and number of the related Obligor, the collection
status, the loan status, the date of each Scheduled Payment and the
Outstanding Loan Balance, (y) the Borrowing Base and (z) the Aggregate
Outstanding Loan Balance (the "Tape"). The Backup Servicer shall accept
delivery of the Tape.
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(3) Prior to the related Payment Date, the Backup
Servicer shall review the Monthly Report to ensure that it is complete
on its face and that the following items in such Monthly Report have
been accurately calculated, if applicable, and reported: (A) the
Borrowing Base, (B) the Backup Servicing Fee, (C) the Assets that are
current and not past due, (D) the Assets that are 1 - 30 days past due,
(E) the Assets that are ▇▇ - ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, (▇) the Assets that are
▇▇ - ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, (▇) the Assets that are 90+ days past due, (H)
the Pool Charged-Off Ratio, and (I) the Aggregate Outstanding Loan
Balance. The Backup Servicer by a separate written report shall notify
the Administrative Agent and the Servicer of any disagreements with the
Monthly Report based on such review not later than the Business Day
preceding such Payment Date to such Persons.
(4) If the Servicer disagrees with the report provided
under paragraph (iii) above by the Backup Servicer or if the Servicer
or any subservicer has not reconciled such discrepancy, the Backup
Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer if possible, and notify
the Administrative Agent of the resolution thereof. The Servicer hereby
agrees to cooperate at its own expense with the Backup Servicer in
reconciling any discrepancies herein. If within twenty (20) days after
the delivery of the report provided under paragraph (iii) above by the
Backup Servicer, such discrepancy is not resolved, the Backup Servicer
shall promptly notify the Administrative Agent of the continued
existence of such discrepancy. Following receipt of such notice by the
Administrative Agent, the Servicer shall deliver to the Administrative
Agent, the Secured Parties and the Backup Servicer no later than the
related Payment Date a certificate describing the nature and amount of
such discrepancies and the actions the Servicer proposes to take with
respect thereto.
(c) Reliance on Tape. With respect to the duties described in
Section 7.2(b), the Backup Servicer, is entitled to rely conclusively, and shall
be fully protected in so relying, on the contents of each Tape, including, but
not limited to, the completeness and accuracy thereof, provided by the Servicer.
SECTION 7.3 MERGER OR CONSOLIDATION.
Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup Servicer under this Agreement without further act on the part of any of
the parties to this Agreement provided such Person is organized under the laws
of the United States of America or any one of the States thereof or the District
of Columbia (or any domestic branch of a foreign bank), (i) (a) that has either
(1) a long-term unsecured debt rating of "A" or better by S&P and "A2" or better
by ▇▇▇▇▇'▇ or (2) a short-term unsecured debt rating or certificate of deposit
rating of "A-1" or better by S&P or "P-1" or better by ▇▇▇▇▇'▇, (b) the parent
corporation which has either (1) a long-term unsecured debt rating of "A" or
better by S&P and "A2" or better by ▇▇▇▇▇'▇ or (2) a short-term unsecured debt
rating or certificate of deposit rating of
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"A-1" or better by S&P and "P-1" or better by ▇▇▇▇▇'▇ or (c) is otherwise
acceptable to the Administrative Agent.
SECTION 7.4 BACKUP SERVICING COMPENSATION.
As compensation for its back-up servicing activities hereunder, the
Backup Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. To the extent that such Backup Servicing Fee is not paid by the
Servicer, the Backup Servicer shall be entitled to receive the unpaid balance of
its Backup Servicing Fee to the extent of funds available therefor pursuant to
Section 2.7(a)(iv) and Section 2.8(4), as applicable. The Backup Servicer's
entitlement to receive the Backup Servicing Fee shall cease (excluding any
unpaid outstanding amounts as of that date) on the earliest to occur of: (i) it
becoming the Successor Servicer, (ii) its removal as Backup Servicer pursuant to
Section 7.5, or (iii) the termination of this Agreement. Upon becoming Successor
Servicer pursuant to Section 6.16, the Backup Servicer shall be entitled to the
Servicing Fee.
SECTION 7.5 BACKUP SERVICER REMOVAL.
The Backup Servicer may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Backup Servicer (the
"Backup Servicer Termination Notice"). In the event of any such removal, a
replacement Backup Servicer may be appointed by the Administrative Agent.
SECTION 7.6 LIMITATION ON LIABILITY.
(a) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, nominees, attorneys
and custodians in performing any of its duties and obligations under this
Agreement, it being understood by the parties hereto that the Backup Servicer
will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations
for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of
its officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of
the Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document delivered
to the Backup Servicer hereunder or on which the Backup Servicer must rely in
order to perform its obligations hereunder, and the Secured Parties, the
Administrative Agent and the Collateral Custodian each agree to look only to the
Servicer to perform such obligations. The Backup Servicer shall have no
responsibility and shall not be in default hereunder or incur any liability for
any failure, error, malfunction or any delay in
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carrying out any of its duties under this Agreement if such failure or delay
results from the Backup Servicer acting in accordance with information prepared
or supplied by a Person other than the Backup Servicer or the failure of any
such other Person to prepare or provide such information. The Backup Servicer
shall have no responsibility, shall not be in default and shall incur no
liability for (i) any act or failure to act of any third party, including the
Servicer, (ii) any inaccuracy or omission in a notice or communication received
by the Backup Servicer from any third party, (iii) the invalidity or
unenforceability of any Asset under Applicable Law, (iv) the breach or
inaccuracy of any representation or warranty made with respect to any Asset, or
(v) the acts or omissions of any successor Backup Servicer.
SECTION 7.7 THE BACKUP SERVICER NOT TO RESIGN.
The Backup Servicer shall not resign (except with prior consent of the
Administrative Agent which consent shall not be unreasonably withheld) from the
obligations and duties hereby imposed on it except upon the Backup Servicer's
determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that
the Backup Servicer could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the
resignation of the Backup Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Administrative Agent and
each Purchaser Agent. No such resignation shall become effective until a
successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.
ARTICLE VIII
THE COLLATERAL CUSTODIAN
SECTION 8.1 DESIGNATION OF COLLATERAL CUSTODIAN.
(a) Initial Collateral Custodian. The role of collateral custodian
with respect to the Required Loan Documents shall be conducted by the Person
designated as Collateral Custodian hereunder from time to time in accordance
with this Section 8.1. Until the Administrative Agent shall give to ▇▇▇▇▇ Fargo
a Collateral Custodian Termination Notice, ▇▇▇▇▇ Fargo is hereby designated as,
and hereby agrees to perform the duties and obligations of, Collateral Custodian
pursuant to the terms hereof.
(b) Successor Collateral Custodian. Upon the Collateral
Custodian's receipt of a Collateral Custodian Termination Notice from the
Administrative Agent of the designation of a successor Collateral Custodian
pursuant to the provisions of Section 8.5, the Collateral Custodian agrees that
it will terminate its activities as Collateral Custodian hereunder.
SECTION 8.2 DUTIES OF COLLATERAL CUSTODIAN.
(a) Appointment. The Seller and the Administrative Agent each
hereby appoints ▇▇▇▇▇ Fargo to act as Collateral Custodian, for the benefit of
the Administrative Agent, as agent for the Secured Parties. The Collateral
Custodian hereby accepts such appointment and agrees to perform the duties and
obligation with respect thereto set forth herein.
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(b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 8.5, the Collateral Custodian shall perform on
behalf of the Administrative Agent and the Secured Parties, the following duties
and obligations:
(1) The Collateral Custodian shall take and retain
custody of the Required Loan Documents delivered by the Seller pursuant
to Section 3.2 hereof in accordance with the terms and conditions of
this Agreement, all for the benefit of the Secured Parties and subject
to the Lien thereon in favor of the Administrative Agent as agent for
the Secured Parties. Within five (5) Business Days of its receipt of
any Required Loan Documents, the Collateral Custodian shall review the
related Asset and Required Loan Documents to confirm that (A) such
Asset has been properly executed and has no missing or mutilated pages,
(B) UCC and other filings (required by the Required Loan Documents)
have been made, (C) an Insurance Policy exists with respect to any real
or personal property constituting the Related Property, and (D)
confirming the related Outstanding Loan Balance, Loan number and
Obligor name with respect to such Asset is referenced on the related
Loan List and is not a duplicate Asset (collectively, the "Review
Criteria"). In order to facilitate the foregoing review by the
Collateral Custodian, in connection with each delivery of Required Loan
Documents hereunder to the Collateral Custodian, the Servicer shall
provide to the Collateral Custodian an electronic file (in EXCEL or a
comparable format) that contains the related Loan List or that
otherwise contains the Loan number and the name of the Obligor with
respect to each related Asset. If, at the conclusion of such review,
the Collateral Custodian shall determine that (i) the Outstanding Loan
Balances of the Assets it has received Required Loan Documents with
respect to is less than as set forth on the electronic file, the
Collateral Custodian shall immediately notify the Administrative Agent
of such discrepancy, and (ii) any Review Criteria is not satisfied, the
Collateral Custodian shall within one (1) Business Day notify the
Servicer of such determination and provide the Servicer with a list of
the non-complying Assets and the applicable Review Criteria that they
fail to satisfy. The Servicer shall have five (5) Business Days to
correct any non-compliance with a Review Criteria. If after the
conclusion of such time period the Servicer has still not cured any
non-compliance by an Asset with a Review Criteria, the Collateral
Custodian shall promptly notify the Seller and the Administrative Agent
of such determination by providing a written report to such persons
identifying, with particularity, each Asset and each of the applicable
Review Criteria that such Asset fails to satisfy. In addition, if
requested in writing by the Servicer and approved by the Administrative
Agent within ten (10) Business Days of the Collateral Custodian's
delivery of such report, the Collateral Custodian shall return any
Asset which fails to satisfy a Review Criteria to the Seller. Other
than the foregoing, the Collateral Custodian shall not have any
responsibility for reviewing any Required Loan Documents.
(2) In taking and retaining custody of the Required Loan
Documents, the Collateral Custodian shall be deemed to be acting as the
agent of the Administrative Agent and the Secured Parties; provided,
however, that the Collateral Custodian makes no representations as to
the existence, perfection or priority of any Lien on the Required Loan
Documents or the instruments therein; and provided, further, that, the
Collateral Custodian's duties as agent shall be limited to those
expressly contemplated herein.
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(3) All Required Loan Documents shall be kept in fire
resistant vaults, rooms or cabinets at the locations specified on
Schedule III attached hereto, or at such other office as shall be
specified to the Administrative Agent by the Collateral Custodian in a
written notice delivered at least forty-five (45) days prior to such
change. All Required Loan Documents shall be placed together with an
appropriate identifying label and maintained in such a manner so as to
permit retrieval and access. All Required Loan Documents shall be
clearly segregated from any other documents or instruments maintained
by the Collateral Custodian.
(4) The Collateral Custodian shall make payments pursuant
to the terms of the Monthly Report in accordance with Section 2.7 and
Section 2.8 (the "Payment Duties").
(5) On each Reporting Date, the Collateral Custodian
shall provide a written report to the Administrative Agent and the
Servicer (in a form acceptable to the Administrative Agent) identifying
each Asset for which it holds Required Loan Documents, the
non-complying Assets and the applicable Review Criteria that any
non-complying Asset fails to satisfy.
(6) In performing its duties, the Collateral Custodian
shall use the same degree of care and attention as it employs with
respect to similar Assets that it holds as Collateral Custodian.
SECTION 8.3 MERGER OR CONSOLIDATION.
Any Person (i) into which the Collateral Custodian may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Collateral Custodian shall be a party, or (iii) that may succeed to the
properties and assets of the Collateral Custodian substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Collateral Custodian hereunder, shall be the
successor to the Collateral Custodian under this Agreement without further act
of any of the parties to this Agreement.
SECTION 8.4 COLLATERAL CUSTODIAN COMPENSATION.
As compensation for its collateral custodian activities hereunder, the
Collateral Custodian shall be entitled to a Collateral Custodian Fee (the
"Collateral Custodian Fee") from the Servicer. To the extent that such
Collateral Custodian Fee is not paid by the Servicer, the Collateral Custodian
shall be entitled to receive the unpaid balance of its Collateral Custodian Fee
to the extent of funds available therefor pursuant to the provision of Section
2.7(a)(iv) or Section 2.8(4), as applicable. The Collateral Custodian's
entitlement to receive the Collateral Custodian Fee shall cease on the earlier
to occur of: (i) its removal as Collateral Custodian pursuant to Section 8.5 or
(ii) the termination of this Agreement.
SECTION 8.5 COLLATERAL CUSTODIAN REMOVAL.
The Collateral Custodian may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Collateral Custodian (the
"Collateral Custodian Termination Notice"); provided, however, notwithstanding
its receipt of a Collateral Custodian
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Termination Notice, the Collateral Custodian shall continue to act in such
capacity until a successor Collateral Custodian has been appointed, has agreed
to act as Collateral Custodian hereunder, and has received all Required Loan
Documents held by the previous Collateral Custodian.
SECTION 8.6 LIMITATION ON LIABILITY.
(1) The Collateral Custodian may conclusively rely on and
shall be fully protected in acting upon any certificate, instrument,
opinion, notice, letter, telegram or other document delivered to it and
that in good faith it reasonably believes to be genuine and that has
been signed by the proper party or parties. The Collateral Custodian
may rely conclusively on and shall be fully protected in acting upon
(a) the written instructions of any designated officer of the
Administrative Agent or (b) the verbal instructions of the
Administrative Agent.
(2) The Collateral Custodian may consult counsel
satisfactory to it and the advice or opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(3) The Collateral Custodian shall not be liable for any
error of judgment, or for any act done or step taken or omitted by it,
in good faith, or for any mistakes of fact or law, or for anything that
it may do or refrain from doing in connection herewith except in the
case of its willful misconduct or grossly negligent performance or
omission of its duties and in the case of the negligent performance of
its Payment Duties and in the case of its negligent performance of its
duties in taking and retaining custody of the Required Loan Documents.
(4) The Collateral Custodian makes no warranty or
representation and shall have no responsibility (except as expressly
set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Assets, and will not be required to and will not
make any representations as to the validity or value (except as
expressly set forth in this Agreement) of any of the Assets. The
Collateral Custodian shall not be obligated to take any legal action
hereunder that might in its judgment involve any expense or liability
unless it has been furnished with an indemnity reasonably satisfactory
to it.
(5) The Collateral Custodian shall have no duties or
responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement and no covenants or
obligations shall be implied in this Agreement against the Collateral
Custodian.
(6) The Collateral Custodian shall not be required to
expend or risk its own funds in the performance of its duties
hereunder.
(7) It is expressly agreed and acknowledged that the
Collateral Custodian is not guaranteeing performance of or assuming any
liability for the obligations of the other parties hereto or any
parties to the Assets.
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SECTION 8.7 THE COLLATERAL CUSTODIAN NOT TO RESIGN.
The Collateral Custodian shall not resign from the obligations and
duties hereby imposed on it except upon the Collateral Custodian's determination
that (i) the performance of its duties hereunder is or becomes impermissible
under Applicable Law and (ii) there is no reasonable action that the Collateral
Custodian could take to make the performance of its duties hereunder permissible
under Applicable Law. Any such determination permitting the resignation of the
Collateral Custodian shall be evidenced as to clause (i) above by an Opinion of
Counsel to such effect delivered to the Administrative Agent and each Purchaser
Agent. No such resignation shall become effective until a successor Collateral
Custodian shall have assumed the responsibilities and obligations of the
Collateral Custodian hereunder.
SECTION 8.8 RELEASE OF DOCUMENTS.
(a) Release for Servicing. From time to time and as appropriate
for the enforcement or servicing any of the Assets, the Collateral Custodian is
hereby authorized (unless and until such authorization is revoked by the
Administrative Agent), upon written receipt from the Servicer of a request for
release of documents and receipt in the form annexed hereto as Exhibit L, to
release to the Servicer the related Required Loan Document or the documents set
forth in such request and receipt to the Servicer. All documents so released to
the Servicer shall be held by the Servicer in trust for the benefit of the
Administrative Agent in accordance with the terms of this Agreement. The
Servicer shall return to the Collateral Custodian the Required Loan Document or
other such documents (i) immediately upon the request of the Administrative
Agent, or (ii) when the Servicer's need therefor in connection with such
foreclosure or servicing no longer exists, unless the Asset shall be liquidated,
in which case, upon receipt of an additional request for release of documents
and receipt certifying such liquidation from the Servicer to the Collateral
Custodian in the form annexed hereto as Exhibit H, the Servicer's request and
receipt submitted pursuant to the first sentence of this subsection shall be
released by the Collateral Custodian to the Servicer.
(b) Limitation on Release. The foregoing provision respecting
release to the Servicer of the Required Loan Documents and documents by the
Collateral Custodian upon request by the Servicer shall be operative only to the
extent that at any time the Collateral Custodian shall not have released to the
Servicer active Required Loan Documents (including those requested) pertaining
to more than fifteen (15) Assets at the time being serviced by the Servicer
under this Agreement. Any additional Required Loan Documents or documents
requested to be released by the Servicer may be released only upon written
authorization of the Administrative Agent. The limitations of this paragraph
shall not apply to the release of Required Loan Documents to the Servicer
pursuant to the immediately succeeding subsection.
(c) Release for Payment. Upon receipt by the Collateral Custodian
of the Servicer's request for release of documents and receipt in the form
annexed hereto as Exhibit L (which certification shall include a statement to
the effect that all amounts received in connection with such payment or
repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required
Loan Document to the Servicer.
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SECTION 8.9 RETURN OF REQUIRED LOAN DOCUMENTS.
The Seller may, with the prior written consent of the Administrative
Agent (such consent not to be unreasonably withheld), require that the
Collateral Custodian return each Required Loan Document (a) delivered to the
Collateral Custodian in error, (b) for which a Substitute Loan has been
substituted in accordance with Section 2.16, (c) as to which the lien on the
Related Property has been so released pursuant to Section 9.2, (d) that has been
repaid by the Seller pursuant to Section 4.6 or (e) that is required to be
redelivered to the Seller in connection with the termination of this Agreement,
in each case by submitting to the Collateral Custodian and the Administrative
Agent a written request in the form of Exhibit H hereto (signed by both the
Seller and the Administrative Agent) specifying the Assets to be so returned and
reciting that the conditions to such release have been met (and specifying the
Section or Sections of this Agreement being relied upon for such release). The
Collateral Custodian shall upon its receipt of each such request for return
executed by the Seller and the Administrative Agent promptly, but in any event
within five (5) Business Days, return the Required Loan Documents so requested
to the Seller.
SECTION 8.10 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE ASSETS; AUDITS.
The Collateral Custodian shall provide to the Administrative Agent and
each Purchaser Agent access to the Required Loan Documents and all other
documentation regarding the Assets in the Asset Pool including in such cases
where the Administrative Agent and each Purchaser Agent is required in
connection with the enforcement of the rights or interests of the Secured
Parties, or by applicable statutes or regulations, to review such documentation,
such access being afforded without charge but only (i) upon two (2) Business
Days prior written request, (ii) during normal business hours and (iii) subject
to the Servicer's and Collateral Custodian's normal security and confidentiality
procedures. Prior to the Closing Date and periodically thereafter at the
discretion of the Administrative Agent and each Purchaser Agent, the
Administrative Agent and each Purchaser Agent may review the Servicer's
collection and administration of the Assets in order to assess compliance by the
Servicer with the Credit and Collection Policy, as well as with this Agreement
and may conduct an audit of the Assets and Required Loan Documents in
conjunction with such a review. Such review shall be reasonable in scope and
shall be completed in a reasonable period of time. Without limiting the
foregoing provisions of this Section 8.10, from time to time on request of the
Administrative Agent, the Collateral Custodian shall permit certified public
accountants or other auditors acceptable to the Administrative Agent to conduct,
at the Servicer's expense, a review of the Required Loan Documents and all other
documentation regarding the Assets.
ARTICLE IX
SECURITY INTEREST
SECTION 9.1 GRANT OF SECURITY INTEREST.
The parties to this Agreement intend that the conveyance of the Assets
in the Asset Pool by the Seller to the applicable Purchasers be treated as sales
for all purposes. If, despite such
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intention, a determination is made that such transactions not be treated as
sales, then the parties hereto intend that this Agreement constitute a security
agreement and the transactions effected hereby constitute secured loans by the
applicable Purchasers to the Seller under Applicable Law. For such purpose, the
Seller hereby transfers, conveys, assigns and grants as of the Closing Date to
the Administrative Agent, as agent for the Secured Parties, a lien and
continuing security interest in all of the Seller's right, title and interest
in, to and under (but none of the obligations under) all Assets (including any
Hedging Agreements), whether now existing or hereafter arising or acquired by
the Seller, and wherever the same may be located, to secure the prompt, complete
and indefeasible payment and performance in full when due, whether by lapse of
time, acceleration or otherwise, of the Aggregate Unpaids of the Seller arising
in connection with this Agreement and each other Transaction Document, whether
now or hereafter existing, due or to become due, direct or indirect, or absolute
or contingent, including, without limitation, all Aggregate Unpaids. The
assignment under this Section 9.1 does not constitute and is not intended to
result in a creation or an assumption by the Administrative Agent, the Purchaser
Agents, the Hedge Counterparty, the Liquidity Banks or any of the Secured
Parties of any obligation of the Seller or any other Person in connection with
any or all of the Assets or under any agreement or instrument relating thereto.
Anything herein to the contrary notwithstanding, (a) the Seller shall remain
liable under the Assets to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Administrative Agent, as agent for
the Secured Parties, of any of its rights in the Assets shall not release the
Seller from any of its duties or obligations under the Assets, and (c) none of
the Administrative Agent, the Purchaser Agents, the Hedge Counterparty, the
Liquidity Banks or any Secured Party shall have any obligations or liability
under the Assets by reason of this Agreement, nor shall the Administrative
Agent, the Purchaser Agents, the Hedge Counterparty, the Liquidity Banks or any
Secured Party be obligated to perform any of the obligations or duties of the
Seller thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 9.2 RELEASE OF LIEN ON ASSETS.
At the same time as (i) any Asset in the Asset Pool expires by its
terms and all amounts in respect thereof have been paid in full by the related
Obligor and deposited in the Collection Account, (ii) any Asset becomes a
Prepaid Loan and all amounts in respect thereof have been paid in full by the
related Obligor and deposited in the Collection Account, (iii) such Asset is
replaced in accordance with Section 2.16, or (iv) this agreement terminates in
accordance with Section 13.6, the Administrative Agent as agent for the Secured
Parties will, to the extent requested by the Servicer, release its interest in
such Asset. In connection with any sale of such Related Property, the
Administrative Agent as agent for the Secured Parties will after the deposit by
the Servicer of the Proceeds of such sale into the Collection Account, at the
sole expense of the Servicer, execute and deliver to the Servicer any
assignments, bills of sale, termination statements and any other releases and
instruments as the Servicer may reasonably request in order to effect the
release and transfer of such Related Property; provided, that, the
Administrative Agent as agent for the Secured Parties will make no
representation or warranty, express or implied, with respect to any such Related
Property in connection with such sale or transfer and assignment. Nothing in
this section shall diminish the Servicer's obligations pursuant to Section 6.6
with respect to the Proceeds of any such sale.
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SECTION 9.3 FURTHER ASSURANCES.
The provisions of Section 13.12 shall apply to the security interest
granted under Section 9.1 as well as to the Advances hereunder.
SECTION 9.4 REMEDIES.
Upon the occurrence of a Termination Event, the Administrative Agent
and Secured Parties shall have, with respect to the Assets granted pursuant to
Section 9.1, and in addition to all other rights and remedies available to the
Administrative Agent and Secured Parties under this Agreement or other
Applicable Law, all rights and remedies of a secured party upon default under
the UCC.
SECTION 9.5 WAIVER OF CERTAIN LAWS.
Each of the Seller and the Servicer agrees, to the full extent that it
may lawfully so agree, that neither it nor anyone claiming through or under it
will set up, claim or seek to take advantage of any appraisement, valuation,
stay, extension or redemption law now or hereafter in force in any locality
where any Assets may be situated in order to prevent, hinder or delay the
enforcement or foreclosure of this Agreement, or the absolute sale of any of the
Assets or any part thereof, or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and each of the
Seller and the Servicer, for itself and all who may at any time claim through or
under it, hereby waives, to the full extent that it may be lawful so to do, the
benefit of all such laws, and any and all right to have any of the properties or
assets constituting the Assets marshaled upon any such sale, and agrees that the
Administrative Agent or any court having jurisdiction to foreclose the security
interests granted in this Agreement may sell the Assets as an entirety or in
such parcels as the Administrative Agent or such court may determine.
SECTION 9.6 POWER OF ATTORNEY.
Each of the Seller and the Servicer hereby irrevocably appoints the
Administrative Agent its true and lawful attorney (with full power of
substitution) in its name, place and stead and at is expense, in connection with
the enforcement of the rights and remedies provided for in this Agreement,
including without limitation the following powers: (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to make
all necessary transfers of the Assets in connection with any such sale or other
disposition made pursuant hereto, (c) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in
connection with any such sale or other disposition, the Seller and the Servicer
hereby ratifying and confirming all that such attorney (or any substitute) shall
lawfully do hereunder and pursuant hereto, and (d) to sign any agreements,
orders or other documents in connection with or pursuant to any Transaction
Document or Hedging Agreement. Nevertheless, if so requested by the
Administrative Agent or a Purchaser Agent, the Seller shall ratify and confirm
any such sale or other disposition by executing and delivering to the
Administrative Agent or such purchaser all proper bills of sale, assignments,
releases and other instruments as may be designated in any such request.
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ARTICLE X
TERMINATION EVENTS
SECTION 10.1 TERMINATION EVENTS.
The following events shall be Termination Events ("Termination Events")
hereunder:
(a) as of any Determination Date, the Average Portfolio
Delinquency Ratio exceeds 5.0%; or
(b) as of any Determination Date, the Average Pool Charged-Off
Ratio exceeds 2.0%; or
(c) as of any Determination Date, the Average Portfolio
Charged-Off Ratio exceeds 2.5%; or
(d) the Advances Outstanding on any day exceeds the lesser of the
Facility Amount and Maximum Availability and the same continues unremedied for
two (2) Business Days; provided, however, during the period of time that such
event remains unremedied, no additional Advances will be made under this
Agreement and any payments required to be made by the Servicer on a Payment Date
shall be made under Section 2.8; or
(e) a Servicer Default occurs and is continuing; or
(f) the Facility Termination Date shall have occurred; or
(g) failure on the part of the Seller or Originator to make any
payment or deposit (including without limitation with respect to Collections)
required by the terms of any Transaction Document on the day such payment or
deposit is required to be made and the same continues unremedied for two (2)
Business Days; or
(h) the occurrence of an Insolvency Event relating to the
Originator, the Seller, the Servicer or any Affiliate of the Originator; or
(i) the Seller shall become required to register as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "40 Act") or the arrangements contemplated by the Transaction Documents
shall require registration as an "investment company" within the meaning of the
40 Act; or
(j) a regulatory, tax or accounting body has ordered that the
activities of the Seller or any Affiliate of the Seller contemplated hereby be
terminated or, as a result of any other event or circumstance, the activities of
the Seller contemplated hereby may reasonably be expected to cause the Seller or
any of its respective Affiliates to suffer materially adverse regulatory,
accounting or tax consequences; or
(k) there shall exist any event or occurrence that has caused a
Material Adverse Effect; or
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(l) there shall have occurred any event that materially adversely
impairs the ability of the Originator to originate Assets of a credit quality
which are at least of the credit quality of the Assets included in the Initial
Advance; or
(m) the Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Code with regard to any assets of the Seller or
the Originator and such lien shall not have been released within five (5)
Business Days, or the Pension Benefit Guaranty Corporation shall file notice of
a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Seller or the Originator and such lien shall not have been released within five
(5) Business Days; or
(n) any Change-in-Control shall occur; or
(o) any material adverse change in the credit quality of the
Originator, Seller or Servicer shall occur; or
(p) (1) any Transaction Document, or any lien or security
interest granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Seller, the Originator, or the
Servicer,
(2) the Seller, the Originator, the Servicer or any other
party shall, directly or indirectly, contest in any manner the
effectiveness, validity, binding nature or enforceability of any
Transaction Document or any lien or security interest thereunder, or
(3) any security interest securing any obligation under
any Transaction Document shall, in whole or in part, cease to be a
perfected first priority security interest; or
(q) on any date of determination, the aggregate Hedge Notional
Amount in effect for that day under all Hedge Transactions is less than the
product of the Hedge Percentage on such day and the Hedge Amount on that day,
and the same continues unremedied for a period of two (2) Business Days; or
(r) any failure on the part of the Seller or the Originator duly
to observe or perform in any material respect any other covenants or agreements
of the Seller or the Originator set forth in this Agreement or the other
Transaction Documents to which the Seller or the Originator is a party and the
same continues unremedied for a period of thirty (30) days after the earlier to
occur of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Seller or the Originator by the
Administrative Agent and (ii) the date on which the Seller or the Originator
becomes aware thereof; or
(s) any representation, warranty or certification made by the
Seller or the Originator in any Transaction Document or in any certificate
delivered pursuant to any Transaction Document shall prove to have been
incorrect when made, which has a Material Adverse Effect on the Secured Parties
and which continues to be unremedied for a period of thirty (30) days after the
earlier to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Seller or the
Originator by the
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Administrative Agent and (ii) the date on which the Seller or the Originator
becomes aware thereof; or
(t) any failure by the Seller to give instructions or notice to
the Administrative Agent as required by this Agreement, or to deliver any
required Monthly Report or other Required Reports hereunder on or before the
date occurring two (2) Business Days after the date such instruction, notice or
report is required to be made or given, as the case may be, under the terms of
this Agreement; or
(u) the failure of the Seller, the Servicer or the Originator to
make any payment due with respect to recourse debt or other obligations or the
occurrence of any event or condition that would permit acceleration of such
recourse debt or other obligations whether or not such event or condition has
been waived; or
(v) (1) the rendering of one or more final judgments, decrees
or orders by a court or arbitrator of competent jurisdiction for the payment of
money in excess of United States $5,000,000, individually or in the aggregate,
against the Originator, or United Sates $2,000,000 against the Seller,
individually or in the aggregate, and the Originator shall not have either (i)
discharged or provided for the discharge of any such judgment, decree or order
in accordance with its terms or (ii) perfected a timely appeal of such judgment,
decree or order and caused the execution of same to be stayed during the
pendency of the appeal or (2) the Originator or the Seller shall have made
payments of amounts in excess of United States $2,000,000 by the Originator, or
United States $1,000,000 by the Seller, in the settlement of any litigation,
claim or dispute (excluding payments made from insurance proceeds); or
(w) as of any Determination Date, the Pool Yield does not equal or
exceed the Minimum Pool Yield and the same continues unremedied by the following
Determination Date; or
(x) any deficiency exists in the Minimum Overcollateralization
Amount on any day and the same continues unremedied for two (2) Business Days;
or
(y) the Seller or Originator defaults in making any payment
required to be made under a material agreement for borrowed money to which
either is a party and such default is not cured within the applicable cure
period, if any, provided for under such agreement; or
(z) the Seller, the Originator or the Servicer agrees or consents
to, or otherwise permits to occur, any amendment, modification, change,
supplement or rescission of or to the Credit and Collection Policy in whole or
in part that could be reasonably be expected to have a material adverse effect
upon the Assets or interest of the Administrative Agent or any Secured Parties,
without the prior written consent of the Administrative Agent or the Secured
Parties.
(aa) as of any Quarterly Determination Date, the Originator's ratio
of Consolidated Funded Indebtedness to Consolidated Tangible Net Worth is more
than 4 to 1.
SECTION 10.2 REMEDIES.
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(a) Upon the occurrence of a Termination Event (other than a
Termination Event described in Section 10.1(i)), the Administrative Agent shall,
at the request of, or may, with the consent of, any of the Purchasers, by notice
to the Seller, declare the Termination Date to have occurred and the
Amortization Period to have commenced.
(b) Upon the occurrence of a Termination Event described in
Section 10.1(i), the Termination Date shall occur immediately and the
Amortization Period shall commence automatically.
(c) Upon the occurrence of any Termination Event described in
Section 10.1, no Advances will thereafter be made, and the Administrative Agent
and the Secured Parties shall have, in addition to all other rights and remedies
under this Agreement or otherwise, all other rights and remedies provided under
the UCC of each applicable jurisdiction and other Applicable Laws, which rights
shall be cumulative, and also may require the Seller and Servicer to, and the
Seller and Servicer hereby agrees that they will at the Servicer's expense and
upon request of the Administrative Agent forthwith, (i) assemble all or any part
of the Assets as directed by the Administrative Agent and make the same
available to the Administrative Agent at a place to be designated by the
Administrative Agent and (ii) without notice except as specified below, sell the
Assets or any part thereof in one or more parcels at a public or private sale,
at any of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Administrative Agent
may deem commercially reasonable. The Seller agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days' notice to the Seller
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Assets regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. All cash Proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Assets (after payment of any amounts
incurred in connection with such sale) shall be deposited into the Collection
Account and to be applied against all or any part of the Aggregate Unpaids
pursuant to Section 2.8 or otherwise in such order as the Administrative Agent
shall elect in its discretion.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 INDEMNITIES BY THE SELLER.
(a) Without limiting any other rights that any such Person may
have hereunder or under Applicable Law, the Seller hereby agrees to indemnify
the Administrative Agent, the Purchaser Agents, the Backup Servicer, the
Collateral Custodian, the Secured Parties, the Affected Parties and each of
their respective assigns and officers, directors, employees and agents thereof
(collectively, the "Indemnified Parties"), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and expenses,
including attorneys' fees and disbursements (all of the foregoing being
collectively referred to as the "Indemnified Amounts") awarded against or
incurred by such Indemnified Party and other non-
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monetary damages of any such Indemnified Party or any of them arising out of or
as a result of this Agreement or the ownership of an interest in the Assets or
in respect of any Asset, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party or (b) Indemnified Amounts that have the effect of recourse
for non-payment of the Assets in the Asset Pool due to credit problems of the
Obligors (except as otherwise specifically provided in this Agreement). If the
Seller has made any indemnity payment pursuant to this Section 11.1 and such
payment fully indemnified the recipient thereof and the recipient thereafter
collects any payments from others in respect of such Indemnified Amounts then,
the recipient shall repay to the Seller an amount equal to the amount it has
collected from others in respect of such indemnified amounts. Without limiting
the foregoing, the Seller shall indemnify each Indemnified Party for Indemnified
Amounts relating to or resulting from:
(1) any representation or warranty made or deemed made by
the Seller, the Servicer (if the Originator or one of its Affiliates is
the Servicer) or any of their respective officers under or in
connection with this Agreement or any other Transaction Document, which
shall have been false or incorrect in any material respect when made or
deemed made or delivered;
(2) the failure by the Seller or the Servicer (if the
Originator or one of its Affiliates is the Servicer) to comply with any
term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, or with any
Applicable Law, with respect to any Assets or the nonconformity of any
Assets with any such Applicable Law;
(3) the failure to vest and maintain vested in the
Administrative Agent, as agent for the Secured Parties, an undivided
ownership interest in the Assets, together with all Collections, free
and clear of any Lien (other than Permitted Liens) whether existing at
the time of any Advance or at any time thereafter;
(4) the failure to maintain, as of the close of business
on each Business Day prior to the Termination Date, an amount of
Advances Outstanding that is less than or equal to the lesser of (x)
the Facility Amount and (y) the Maximum Availability on such Business
Day;
(5) the failure to file, or any delay in filing,
financing statements, continuation statements or other similar
instruments or documents under the UCC of any applicable jurisdiction
or other Applicable Laws with respect to any Assets, whether at the
time of any Advance or at any subsequent time;
(6) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment
with respect to any Asset in the Asset Pool (including, without
limitation, a defense based on the Asset not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or services related to such Asset or the furnishing or
failure to furnish such merchandise or services;
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(7) any failure of the Seller or the Servicer (if the
Originator or one of its Affiliates is the Servicer) to perform its
duties or obligations in accordance with the provisions of this
Agreement or any of the other Transaction Documents to which it is a
party or any failure by the Originator, the Seller or any Affiliate
thereof to perform its respective duties under any Asset;
(8) the failure of any Lock-Box Bank to remit any amounts
held in a Lock-Box Account pursuant to the instructions of the Servicer
or the Administrative Agent (to the extent such Person is entitled to
give such instructions in accordance with the terms hereof and of any
applicable Lock-Box Agreement) whether by reason of the exercise of
set-off rights or otherwise;
(9) any inability to obtain any judgment in, or utilize
the court or other adjudication system of, any state in which an
Obligor may be located as a result of the failure of the Seller or the
Originator to qualify to do business or file any notice or business
activity report or any similar report;
(10) any action taken by the Seller or the Originator (in
its capacity as Servicer) in the enforcement or collection of any
Asset;
(11) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with the Related Property
or services that are the subject of any Asset;
(12) any claim, suit or action of any kind arising out of
or in connection with Environmental Laws including any vicarious
liability;
(13) the failure by Seller to pay when due any Taxes for
which the Seller is liable, including without limitation, sales, excise
or personal property taxes payable in connection with the Assets;
(14) any repayment by the Administrative Agent, the
Purchaser Agents or a Secured Party of any amount previously
distributed in reduction of Advances Outstanding or payment of Interest
or any other amount due hereunder or under any Hedging Agreement, in
each case which amount the Administrative Agent, the Purchaser Agents
or a Secured Party believes in good faith is required to be repaid;
(15) the commingling of Collections on the Assets at any
time with other funds;
(16) any investigation, litigation or proceeding related
to this Agreement or the use of proceeds of Advances or the security
interest in the Assets;
(17) any failure by the Seller to give reasonably
equivalent value to the Originator in consideration for the transfer by
the Originator to the Seller of any item of Assets or any attempt by
any Person to void or otherwise avoid any such transfer under any
statutory provision or common law or equitable action, including,
without limitation, any provision of the Bankruptcy Code;
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(18) the use of the proceeds of any Advance in a manner
other than as provided in this Agreement and the Sale Agreement;
(19) the failure of the Seller, the Originator or any of
their respective agents or representatives to remit to the Servicer or
the Administrative Agent or the Purchaser Agents, Collections on the
Assets remitted to the Seller, the Originator, the Servicer or any such
agent or representative; or
(20) the failure by the Seller to comply with any of the
covenants relating to the Hedging Agreement in accordance with the
Transaction Documents.
(b) Any amounts subject to the indemnification provisions of this
Section 11.1 shall be paid by the Seller to the Indemnified Party within five
(5) Business Days following such Person's demand therefor.
(c) If for any reason the indemnification provided above in this
Section 11.1 is unavailable to the Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Seller or the Servicer, as the case may
be, shall contribute to the amount paid or payable by such Indemnified Party as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Seller or the Servicer, as the case
may be, on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.
(d) The obligations of the Seller under this Section 11.1 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agents, the Servicer, the Backup Servicer or the Collateral Custodian and the
termination of this Agreement.
SECTION 11.2 INDEMNITIES BY THE SERVICER.
(a) Without limiting any other rights that any such Person may
have hereunder or under Applicable Law, the Servicer hereby agrees to indemnify
each Indemnified Party, forthwith on demand, from and against any and all
Indemnified Amounts awarded against or incurred by any such Indemnified Party by
reason of any acts, omissions or alleged acts or omissions of the Servicer,
including, but not limited to (i) any representation or warranty made by the
Servicer under or in connection with any Transaction Document, any Monthly
Report, Servicer's Certificate or any other information or report delivered by
or on behalf of the Servicer pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed made, (ii)
the failure by the Servicer to comply with any Applicable Law, (iii) the failure
of the Servicer to comply with its duties or obligations in accordance with the
Agreement, (iv) the failure by the Servicer to comply with any of the covenants
relating to the Hedging Agreement in accordance with the Transaction Documents,
or (v) any litigation, proceedings or investigation against the Servicer. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
(b) Any amounts subject to the indemnification provisions of this
Section 11.2 shall be paid by the Servicer to the Indemnified Party within five
(5) Business Days following such Person's demand therefor.
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(c) The Servicer shall have no liability for making
indemnification hereunder to the extent any such indemnification constitutes
recourse for uncollectible or uncollected Assets.
(d) The obligations of the Servicer under this Section 11.2 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agents, the Backup Servicer or the Collateral Custodian and the termination of
this Agreement.
(e) Any indemnification pursuant to this Section 11.2 shall not be
payable from the Assets.
SECTION 11.3 AFTER-TAX BASIS.
Indemnification under Section 11.1 and Section 11.2 shall be in an
amount necessary to make the Indemnified Party whole after taking into account
any tax consequences to the Indemnified Party of the receipt of the indemnity
provided hereunder, including the effect of such tax or refund on the amount of
tax measured by net income or profits that is or was payable by the Indemnified
Party.
ARTICLE XII
THE ADMINISTRATIVE AGENT
AND PURCHASER AGENTS
SECTION 12.1 THE ADMINISTRATIVE AGENT.
(a) Each Purchaser Agent and each Secured Party hereby appoints
and authorizes the Administrative Agent as its agent and bailee for purposes of
perfection pursuant to the applicable UCC and hereby further authorizes the
Administrative Agent to appoint additional agents and bailees to act on its
behalf and for the benefit of each of the Purchaser Agents and each Secured
Party. Each of the Purchaser Agents and each Secured Party further authorizes
the Administrative 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 Administrative Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. In furtherance,
and without limiting the generality, of the foregoing, each Secured Party hereby
appoints the Administrative Agent as its agent to execute and deliver all
further instruments and documents, and take all further action that the
Administrative Agent may deem necessary or appropriate or that a Secured Party
may reasonably request in order to perfect, protect or more fully evidence the
security interests granted by the Seller hereunder, or to enable any of them to
exercise or enforce any of their respective rights hereunder, including, without
limitation, the execution by the Administrative Agent as secured party/assignee
of such financing or continuation statements, or amendments thereto or
assignments thereof, relative to all or any of the Assets now existing or
hereafter arising, and such other instruments or notices, as may be necessary or
appropriate for the purposes stated hereinabove. The Purchaser Agents may direct
the Administrative Agent to take any such incidental action hereunder. With
respect to other actions which are incidental to the actions specifically
delegated to the Administrative Agent hereunder, the Administrative Agent shall
not be required to take any such incidental action hereunder, but shall be
required to act or
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to refrain from acting (and shall be fully protected in acting or refraining
from acting) upon the direction of the Purchaser Agents; provided, however, that
the Administrative Agent shall not be required to take any action hereunder if
the taking of such action, in the reasonable determination of the Administrative
Agent, shall be in violation of any Applicable Law or contrary to any provision
of this Agreement or shall expose the Administrative Agent to liability
hereunder or otherwise. In the event the Administrative Agent requests the
consent of a Purchaser Agent or a Purchaser pursuant to the foregoing provisions
and the Administrative Agent does not receive a consent (either positive or
negative) from such Person within ten (10) Business Days of such Person's
receipt of such request, then such Purchaser Agent or Purchaser shall be deemed
to have declined to consent to the relevant amendments.
(b) The Administrative Agent shall exercise such rights and powers
vested in it by this Agreement and the other Transaction Documents, and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(c) Administrative Agent's Reliance, Etc. Neither the
Administrative 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
Administrative Agent under or in connection with this Agreement or any of the
other Transaction Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrative Agent:
(i) may consult with legal counsel (including counsel for the Seller or the
Originator), independent 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; (ii)
makes no warranty or representation and shall not be responsible for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) 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 of the other Transaction Documents on the part of the Seller,
the Originator, or the Servicer or to inspect the property (including the books
and records) of the Seller, the Originator, or the Servicer; (iv) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any of the other
Transaction Documents or any other instrument or document furnished pursuant
hereto or thereto; and (v) shall incur no liability under or in respect of this
Agreement or any of the other Transaction Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or sent
by the proper party or parties.
(d) Credit Decision with Respect to the Administrative Agent. Each
Purchaser Agent and Secured Party acknowledges that it has, independently and
without reliance upon the Administrative Agent, or any of the Administrative
Agent's Affiliates, and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party. Each
Purchaser Agent and Secured Party also acknowledges that it will, independently
and without reliance upon the Administrative Agent, or any of the Administrative
Agent's Affiliates, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement and the other Transaction Documents to which
it is a party.
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(e) Indemnification of the Administrative Agent. Each Purchaser
Agent and Purchaser agrees to indemnify the Administrative Agent (to the extent
not reimbursed by the Seller or the Servicer), ratably in accordance with its
Pro-Rata Share 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 Administrative Agent in any way relating to or arising out
of this Agreement or any of the other Transaction Documents, or any action taken
or omitted by the Administrative Agent hereunder or thereunder; provided, that,
the Purchaser Agents shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Purchaser Agent and Purchaser agrees to reimburse the Administrative Agent,
ratably in accordance with its Pro-Rata Share promptly upon demand for any
out-of-pocket expenses (including counsel fees) incurred by the Administrative
Agent in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and the other Transaction Documents, to the extent that such expenses are
incurred in the interests of or otherwise in respect of the Purchaser Agents, or
the Purchasers hereunder and/or thereunder and to the extent that the
Administrative Agent is not reimbursed for such expenses by the Seller or the
Servicer.
(f) Successor Administrative Agent. The Administrative Agent may
resign at any time, effective upon the appointment and acceptance of a successor
Administrative Agent as provided below, by giving at least five (5) days'
written notice thereof to each Purchaser Agent and the Seller and may be removed
at any time with cause by the Purchaser Agents acting jointly. Upon any such
resignation or removal, the Purchaser Agents acting jointly shall appoint a
successor Administrative Agent. Each Purchaser Agent agrees that it shall not
unreasonably withhold or delay its approval of the appointment of a successor
Administrative Agent. If no such successor Administrative Agent shall have been
so appointed, and shall have accepted such appointment, within thirty (30) days
after the retiring Administrative Agent's giving of notice of resignation or the
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Secured Parties, appoint a successor Administrative
Agent which successor Administrative Agent shall be either (i) a commercial bank
organized under the laws of the United States or of any state thereof and have a
combined capital and surplus of at least $50,000,000 or (ii) an Affiliate of
such a bank. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article XII shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.
(g) Payments by the Administrative Agent. Unless specifically
allocated to a specific Purchaser Agent pursuant to the terms of this Agreement,
all amounts received by the Administrative Agent on behalf of the Purchaser
Agents shall be paid by the Administrative Agent to the Purchaser Agents in
accordance with their respective Pro-Rata Shares in the applicable Advances
Outstanding, or if there are no Advances Outstanding in accordance with
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the most recent applicable Commitment, on the Business Day received by the
Administrative Agent, unless such amounts are received after 12:00 noon on such
Business Day, in which case the Administrative Agent shall use its reasonable
efforts to pay such amounts to each Purchaser Agent on such Business Day, but,
in any event, shall pay such amounts to such Purchaser Agent not later than the
following Business Day.
SECTION 12.2 VFCC AGENT.
(a) Authorization and Action. VFCC hereby designates and appoints
WSI as the VFCC Agent hereunder, and authorizes the VFCC Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the VFCC Agent by the terms of this Agreement together with such powers as are
reasonably incidental thereto. The VFCC Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with VFCC, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities on the part of the VFCC Agent shall be read
into this Agreement or otherwise exist for the VFCC Agent. In performing its
functions and duties hereunder, the VFCC Agent shall act solely as agent for
VFCC and does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Seller or any of its successors
or assigns. The VFCC Agent shall not be required to take any action that exposes
the VFCC Agent to personal liability or that is contrary to this Agreement or
Applicable Law. The appointment and authority of the VFCC Agent hereunder shall
terminate at the indefeasible payment in full of the Aggregate Unpaids.
(b) Delegation of Duties. The VFCC Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The VFCC Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.
(c) Exculpatory Provisions. Neither the VFCC Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement (except for its, their or such Person's own gross negligence or
willful misconduct or, in the case of the VFCC Agent, the breach of its
obligations expressly set forth in this Agreement), or (ii) responsible in any
manner to VFCC for any recitals, statements, representations or warranties made
by the Seller contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement, for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, for any failure of the Seller to
perform its obligations hereunder, or for the satisfaction of any condition
specified in Article III. The VFCC Agent shall not be under any obligation to
VFCC to ascertain or to inquire as to the observance or performance of any of
the agreements or covenants contained in, or conditions of, this Agreement, or
to inspect the properties, books or records of the Seller. The VFCC Agent shall
not be deemed to have knowledge of any Unmatured Termination Event, Termination
Event or Servicer Default unless the VFCC Agent has received notice from the
Seller or a Secured Party.
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(d) Reliance. The VFCC Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Seller), independent accountants
and other experts selected by the VFCC Agent. The VFCC Agent shall in all cases
be fully justified in failing or refusing to take any action under this
Agreement or any other document furnished in connection herewith unless it shall
first receive such advice or concurrence of VFCC, as it deems appropriate, or it
shall first be indemnified to its satisfaction by VFCC; provided, that, unless
and until the VFCC Agent shall have received such advice, the VFCC Agent may
take or refrain from taking any action as the VFCC Agent shall deem advisable
and in the best interests of VFCC. The VFCC Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with a request
of VFCC, and such request and any action taken or failure to act pursuant
thereto shall be binding upon VFCC.
(e) Non-Reliance on the VFCC Agent and Other Purchasers. VFCC
expressly acknowledges that neither the VFCC Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the VFCC Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the VFCC Agent.
VFCC represents and warrants to the VFCC Agent that it has and will,
independently and without reliance upon the VFCC Agent, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of the Seller and made its
own decision to enter into this Agreement or Hedging Agreement, as the case may
be.
(f) The VFCC Agent in its Individual Capacity. The VFCC Agent and
any of its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Seller or any Affiliate of the Seller as
though the VFCC Agent were not the VFCC Agent hereunder. With respect to the
Advances made pursuant to this Agreement, the VFCC Agent and each of its
Affiliates shall have the same rights and powers under this Agreement as the
Purchasers and may exercise the same as though it were not the VFCC Agent and
the terms "Purchaser" and "Purchasers" shall include the VFCC Agent in its
individual capacity.
(g) Successor VFCC Agent. The VFCC Agent may, upon five (5) days'
notice to the Seller and VFCC, and the VFCC Agent will, upon the direction of
VFCC, resign as VFCC Agent. If the VFCC Agent shall resign, then VFCC, during
such five (5) day period, shall appoint a successor agent. If for any reason no
successor VFCC Agent is appointed by VFCC during such five (5) day period, then
effective upon the expiration of such five (5) day period, the Seller shall make
all payments it otherwise would have made to the VFCC Agent in respect of the
Aggregate Unpaids or under any fee letter delivered in connection herewith
directly to VFCC and for all purposes shall deal directly with VFCC. After any
retiring VFCC Agent's resignation hereunder as VFCC Agent, the provisions of
Articles XI and XII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the VFCC Agent under this Agreement.
Notwithstanding the resignation or removal of the VFCC Agent, Wachovia, as Hedge
Counterparty, shall continue to be a Secured Party hereunder.
SECTION 12.3 EIFFEL AGENT.
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(a) Authorization and Action. Eiffel hereby designates and
appoints CDCFP to act as its agent hereunder and under each other Transaction
Document, and authorizes the Eiffel Agent to take such actions as agent on its
behalf and to exercise such powers as are delegated to the Eiffel Agent by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Eiffel Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with Eiffel, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Eiffel Agent shall be read into this Agreement or
any other Transaction Document or otherwise exist for the Eiffel Agent. In
performing its functions and duties hereunder and under the other Transaction
Documents, the Eiffel Agent shall act solely as agent for Eiffel and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Seller or the Servicer or any of the Seller's or
the Servicer's successors or assigns. The Eiffel Agent shall not be required to
take any action that exposes the Eiffel Agent to personal liability or that is
contrary to this Agreement, any other Transaction Document or Applicable Law.
The appointment and authority of the Eiffel Agent hereunder shall terminate upon
the indefeasible payment in full of all Aggregate Unpaids. Eiffel hereby
authorizes the Administrative Agent to execute each of the UCC financing
statements on behalf of Eiffel (the terms of which shall be binding on Eiffel).
(b) Delegation of Duties. The Eiffel Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Eiffel Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
(c) Exculpatory Provisions. Neither the Eiffel Agent nor any of
its directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to Eiffel for any recitals, statements, representations or warranties
made by the Seller or the Servicer contained in Article IV, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement or any other Transaction Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of the Seller or the Servicer to
perform its obligations hereunder or thereunder, or for the satisfaction of any
condition specified in this Agreement, or for the perfection, priority,
condition, value or sufficiency of any collateral pledged in connection
herewith. The Eiffel Agent shall not be under any obligation to Eiffel to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
the Seller or the Servicer. The Eiffel Agent shall not be deemed to have
knowledge of any Termination Event or Unmatured Termination Event unless the
Eiffel Agent has received notice from the Seller or Eiffel.
(d) Reliance by Eiffel Agent. The Eiffel Agent shall in all cases
be entitled to rely, and shall be fully protected in relying, upon any document
or conversation believed by it to be
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genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Seller), independent accountants and other experts
selected by the Eiffel Agent. The Eiffel Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of Eiffel as it deems appropriate and it shall first be indemnified
to its satisfaction by Eiffel; provided, that, unless and until the Eiffel Agent
shall have received such advice, the Eiffel Agent may take or refrain from
taking any action, as the Eiffel Agent shall deem advisable and in the best
interests of Eiffel. The Eiffel Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Eiffel,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon Eiffel.
(e) Non-Reliance on Eiffel Agent. Eiffel expressly acknowledges
that neither the Eiffel Agent, nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Eiffel Agent hereafter taken, including,
without limitation, any review of the affairs of the Seller or the Servicer,
shall be deemed to constitute any representation or warranty by the Eiffel
Agent. Eiffel represents and warrants to the Eiffel Agent that it has and will,
independently and without reliance upon the Eiffel Agent, Eiffel and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
(f) Eiffel Agent in its Individual Capacity. The Eiffel Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Seller or any Affiliate of the Seller as though
the Eiffel Agent were not the Eiffel Agent hereunder. With respect to Advances
pursuant to this Agreement, the Eiffel Agent shall have the same rights and
powers under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Eiffel Agent, and the terms
"Purchaser," and "Purchasers," shall include the Eiffel Agent in its individual
capacity.
(g) Successor Eiffel Agent. The Eiffel Agent may, upon five (5)
days' notice to the Seller, and Eiffel, and the Eiffel Agent will, upon the
direction of Eiffel (other than the Eiffel Agent, in its individual capacity)
resign as Eiffel Agent. If the Eiffel Agent shall resign, then Eiffel during
such five (5) day period shall appoint a successor agent. If for any reason no
successor Eiffel Agent is appointed by Eiffel during such five (5) day period,
then effective upon the termination of such five (5) day period, and the Seller
shall make all payments in respect of the Aggregate Unpaids directly to Eiffel,
and for all purposes shall deal directly with Eiffel. After any retiring Eiffel
Agent's resignation hereunder as Eiffel Agent, the provisions of Articles XI and
XII shall inure to its benefit with respect to any actions taken or omitted to
be taken by it while it was the Eiffel Agent under this Agreement.
SECTION 12.4 FAIRWAY AGENT.
(a) Authorization and Action. Fairway hereby designates and
appoints BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ to act as its agent hereunder and under each other
Transaction Document, and authorizes
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the Fairway Agent to take such actions as agent on its behalf and to exercise
such powers as are delegated to the Fairway Agent by the terms of this Agreement
and the other Transaction Documents together with such powers as are reasonably
incidental thereto. The Fairway Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with Fairway, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of the Fairway Agent shall be read into this Agreement or any other
Transaction Document or otherwise exist for the Fairway Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Fairway Agent shall act solely as agent for Fairway and does not assume nor
shall be deemed to have assumed any obligation or relationship of trust or
agency with or for the Seller or the Servicer or any of the Seller's or the
Servicer's successors or assigns. The Fairway Agent shall not be required to
take any action that exposes the Fairway Agent to personal liability or that is
contrary to this Agreement, any other Transaction Document or Applicable Law.
The appointment and authority of the Fairway Agent hereunder shall terminate
upon the indefeasible payment in full of all Aggregate Unpaids. Fairway hereby
authorizes the Administrative Agent to execute each of the UCC financing
statements on behalf of Fairway (the terms of which shall be binding on
Fairway).
(b) Delegation of Duties. The Fairway Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Fairway Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
(c) Exculpatory Provisions. Neither the Fairway Agent nor any of
its directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to Fairway for any recitals, statements, representations or warranties
made by the Seller or the Servicer contained in Article IV, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement or any other Transaction Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of the Seller or the Servicer to
perform its obligations hereunder or thereunder, or for the satisfaction of any
condition specified in this Agreement, or for the perfection, priority,
condition, value or sufficiency of any collateral pledged in connection
herewith. The Fairway Agent shall not be under any obligation to Fairway to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
the Seller or the Servicer. The Fairway Agent shall not be deemed to have
knowledge of any Termination Event or Unmatured Termination Event unless the
Fairway Agent has received notice from the Seller or Fairway.
(d) Reliance by Fairway Agent. The Fairway Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, upon any
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons
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and upon advice and statements of legal counsel (including, without limitation,
counsel to the Seller), independent accountants and other experts selected by
the Fairway Agent. The Fairway Agent shall in all cases be fully justified in
failing or refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice or concurrence of
Fairway as it deems appropriate and it shall first be indemnified to its
satisfaction by Fairway; provided, that, unless and until the Fairway Agent
shall have received such advice, the Fairway Agent may take or refrain from
taking any action, as the Fairway Agent shall deem advisable and in the best
interests of Fairway. The Fairway Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Fairway,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon Fairway.
(e) Non-Reliance on Fairway Agent. Fairway expressly acknowledges
that neither the Fairway Agent, nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Fairway Agent hereafter taken,
including, without limitation, any review of the affairs of the Seller or the
Servicer, shall be deemed to constitute any representation or warranty by the
Fairway Agent. Fairway represents and warrants to the Fairway Agent that it has
and will, independently and without reliance upon the Fairway Agent, Fairway and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
(f) Fairway Agent in its Individual Capacity. The Fairway Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Seller or any Affiliate of the Seller as though
the Fairway Agent were not the Fairway Agent hereunder. With respect to Advances
pursuant to this Agreement, the Fairway Agent shall have the same rights and
powers under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Fairway Agent, and the terms
"Purchaser," and "Purchasers," shall include the Fairway Agent in its individual
capacity.
(g) Successor Fairway Agent. The Fairway Agent may, upon five (5)
days' notice to the Seller, and Fairway, and the Fairway Agent will, upon the
direction of Fairway (other than the Fairway Agent, in its individual capacity)
resign as Fairway Agent. If the Fairway Agent shall resign, then Fairway during
such five (5) day period shall appoint a successor agent. If for any reason no
successor Fairway Agent is appointed by Fairway during such five (5) day period,
then effective upon the termination of such five (5) day period, and the Seller
shall make all payments in respect of the Aggregate Unpaids directly to Fairway,
and for all purposes shall deal directly with Fairway. After any retiring
Fairway Agent's resignation hereunder as Fairway Agent, the provisions of
Articles XI and XII shall inure to its benefit with respect to any actions taken
or omitted to be taken by it while it was the Fairway Agent under this
Agreement.
SECTION 12.5 HANNOVER AGENT.
(a) Authorization and Action. Hannover hereby designates and
appoints ▇▇▇▇ ▇▇ to act as its agent hereunder and under each other Transaction
Document, and authorizes the
136
Hannover Agent to take such actions as agent on its behalf and to exercise such
powers as are delegated to the Hannover Agent by the terms of this Agreement and
the other Transaction Documents together with such powers as are reasonably
incidental thereto. The Hannover Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with Hannover, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Hannover Agent shall be read into this Agreement
or any other Transaction Document or otherwise exist for the Hannover Agent. In
performing its functions and duties hereunder and under the other Transaction
Documents, the Hannover Agent shall act solely as agent for Hannover and does
not assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Seller or the Servicer or any of the Seller's or
the Servicer's successors or assigns. The Hannover Agent shall not be required
to take any action that exposes the Hannover Agent to personal liability or that
is contrary to this Agreement, any other Transaction Document or Applicable Law.
The appointment and authority of the Hannover Agent hereunder shall terminate
upon the indefeasible payment in full of all Aggregate Unpaids. Hannover hereby
authorizes the Administrative Agent to execute each of the UCC financing
statements on behalf of Hannover (the terms of which shall be binding on
Hannover).
(b) Delegation of Duties. The Hannover Agent may execute any of
its duties under this Agreement and each other Transaction Document by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Hannover Agent shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
(c) Exculpatory Provisions. Neither the Hannover Agent nor any of
its directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to Hannover for any recitals, statements, representations or warranties
made by the Seller or the Servicer contained in Article IV, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement or any other Transaction Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of the Seller or the Servicer to
perform its obligations hereunder or thereunder, or for the satisfaction of any
condition specified in this Agreement, or for the perfection, priority,
condition, value or sufficiency of any collateral pledged in connection
herewith. The Hannover Agent shall not be under any obligation to Hannover to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
the Seller or the Servicer. The Hannover Agent shall not be deemed to have
knowledge of any Termination Event or Unmatured Termination Event unless the
Hannover Agent has received notice from the Seller or Hannover.
(d) Reliance by Hannover Agent. The Hannover Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, upon any
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons
137
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Seller), independent accountants and other experts selected by
the Hannover Agent. The Hannover Agent shall in all cases be fully justified in
failing or refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice or concurrence of
Hannover as it deems appropriate and it shall first be indemnified to its
satisfaction by Hannover; provided, that, unless and until the Hannover Agent
shall have received such advice, the Hannover Agent may take or refrain from
taking any action, as the Hannover Agent shall deem advisable and in the best
interests of Hannover. The Hannover Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request of
Hannover, and such request and any action taken or failure to act pursuant
thereto shall be binding upon Hannover.
(e) Non-Reliance on Hannover Agent. Hannover expressly
acknowledges that neither the Hannover Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Hannover Agent
hereafter taken, including, without limitation, any review of the affairs of the
Seller or the Servicer, shall be deemed to constitute any representation or
warranty by the Hannover Agent. Hannover represents and warrants to the Hannover
Agent that it has and will, independently and without reliance upon the Hannover
Agent, Hannover and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Seller and made its own decision to enter into this
Agreement, the other Transaction Documents and all other documents related
hereto or thereto.
(f) Hannover Agent in its Individual Capacity. The Hannover Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Seller or any Affiliate of the Seller as though
the Hannover Agent were not the Hannover Agent hereunder. With respect to
Advances pursuant to this Agreement, the Hannover Agent shall have the same
rights and powers under this Agreement in its individual capacity as any
Purchaser and may exercise the same as though it were not the Hannover Agent,
and the terms "Purchaser," and "Purchasers," shall include the Hannover Agent in
its individual capacity.
(g) Successor Hannover Agent. The Hannover Agent may, upon five
(5) days' notice to the Seller, and Hannover, and the Hannover Agent will, upon
the direction of Hannover (other than the Hannover Agent, in its individual
capacity) resign as Hannover Agent. If the Hannover Agent shall resign, then
Hannover during such five (5) day period shall appoint a successor agent. If for
any reason no successor Hannover Agent is appointed by Hannover during such five
(5) day period, then effective upon the termination of such five (5) day period,
and the Seller shall make all payments in respect of the Aggregate Unpaids
directly to Hannover, and for all purposes shall deal directly with Hannover.
After any retiring Hannover Agent's resignation hereunder as Hannover Agent, the
provisions of Articles XI and XII shall inure to its benefit with respect to any
actions taken or omitted to be taken by it while it was the Hannover Agent under
this Agreement.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 AMENDMENTS AND WAIVERS.
Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of (i) this Agreement (other than Appendix B)
shall be effective without the written agreement of the Seller, the Servicer,
the Backup Servicer, the Collateral Custodian, the Administrative Agent and the
Secured Parties and notice to each applicable Rating Agency, and (ii) Appendix B
of this Agreement shall be effective without the written agreement of the
Seller, the Administrative Agent, Eiffel and the Eiffel Agent and notice to each
applicable Rating Agency; provided, that, no such amendment, waiver or
modification affecting the rights or obligations of any Hedge Counterparty shall
be effective without the written agreement of such Person; provided, further,
that, (a) no such amendment, waiver or modification that is material shall be
effective unless (if and to the extent required by the commercial paper program
of any Purchaser) the Rating Agencies shall have provided Ratings Confirmations
and (b) no such amendment, waiver or modification shall be made to the
definitions of Facility Amount or Hedge Counterparty or to Section 2.13 or
Section 5.5(b) without satisfying the ▇▇▇▇▇'▇ Rating Condition. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 13.2 NOTICES, ETC.
All notices, reports and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto
(provided, however, for avoidance of doubt, Lord Securities Corp. shall not
receive notices, reports and other communications provided pursuant to Article
II, and Section 6.10, Section 6.11 and Section 6.12 hereof); in the case of (i)
S&P, to Standard and Poor's Rating Service, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance: Asset-Backed Services, Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇, (ii) Moody's, to ▇▇▇▇▇'▇ Investors Service, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention CDO Monitoring
Department, Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇, Email: ▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ and
(iii) Fitch, to Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: CDO Surveillance, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇. All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice by
mail, five (5) days after being deposited in the United States mail, first class
postage prepaid, (b) notice by telex, when telexed against receipt of answer
back, or (c) notice by facsimile copy, when verbal communication of receipt is
obtained.
In the event of an Insolvency Event with respect to the Servicer, the
Fairway Agent, the Eiffel Agent and the Hannover Agent shall each be required to
deliver prompt written notice of such Insolvency Event to each Rating Agency.
SECTION 13.3 RATABLE PAYMENTS.
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If any Secured Party, whether by setoff or otherwise, has payment made
to it with respect to any portion of the Aggregate Unpaids owing to such Secured
Party (other than payments received pursuant to Section 11.1) in a greater
proportion than that received by any other Secured Party, such Secured Party
agrees, promptly upon demand, to purchase for cash without recourse or warranty
a portion of the Aggregate Unpaids held by the other Secured Parties so that
after such purchase each Secured Party will hold its ratable proportion of the
Aggregate Unpaids; provided, however, that if all or any portion of such excess
amount is thereafter recovered from such Secured Party, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
SECTION 13.4 NO WAIVER; REMEDIES.
No failure on the part of the Administrative Agent, the Purchaser
Agents, the Collateral Custodian, the Backup Servicer or a Secured Party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any rights and remedies provided by law.
SECTION 13.5 BINDING EFFECT; BENEFIT OF AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
Seller, the Servicer, the Administrative Agent, the Purchaser Agents, the Backup
Servicer, the Collateral Custodian, the Secured Parties and their respective
successors and permitted assigns and, in addition, the provisions of Section
2.7(a)(i) and Section 2.8(1) shall inure to the benefit of each Hedge
Counterparty, whether or not that Hedge Counterparty is a Secured Party.
SECTION 13.6 TERM OF THIS AGREEMENT.
This Agreement, including, without limitation, the Seller's
representations and covenants set forth in Articles IV and V, and the Servicer's
representations, covenants and duties set forth in Articles VI, VII and VIII,
create and constitute the continuing obligation of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Collection Date; provided, however, that the rights and remedies with respect to
any breach of any representation and warranty made or deemed made by the Seller
pursuant to Articles III and IV the indemnification and payment provisions of
Article XI and the provisions of Section 13.9, Section 13.10 and Section 13.11,
shall be continuing and shall survive any termination of this Agreement.
SECTION 13.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
OBJECTION TO VENUE.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH HEDGE
COUNTERPARTY HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL
COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH
SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS,
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AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 13.8 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
AND EACH HEDGE COUNTERPARTY HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE
BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 13.9 COSTS, EXPENSES AND TAXES.
(a) In addition to the rights of indemnification granted to the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian, the Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under Article XI hereof, the Seller and
Originator agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian and the Secured Parties incurred in connection with the preparation,
execution, delivery, administration (including periodic auditing), renewal,
amendment or modification of, or any waiver or consent issued in connection
with, this Agreement and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement), including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian and the Secured Parties with respect thereto and with respect to
advising the Administrative Agent, the Purchaser Agents, the Backup Servicer,
the Collateral Custodian and the Secured Parties as to their respective rights
and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith (including any Hedging Agreement), and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Administrative Agent, the Purchaser Agents, the Backup Servicer,
the Collateral Custodian or the Secured Parties in connection with the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith (including any Hedging Agreement).
(b) The Seller and Originator shall pay on demand any and all
stamp, sales, excise and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement, the other documents to be delivered hereunder or any agreement or
other document providing liquidity support, credit enhancement or other similar
support to the Purchasers in connection with this Agreement or the funding or
maintenance of Advances hereunder.
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(c) The Seller and Originator shall pay on demand all other
reasonable costs, expenses and Taxes (excluding income taxes) incurred by the
Administrative Agent, the Purchaser Agents, the Secured Parties ("Other Costs"),
including, without limitation, all costs and expenses incurred by the
Administrative Agent and the Purchaser Agents in connection with periodic audits
of the Seller's or the Servicer's books and records.
SECTION 13.10 NO PROCEEDINGS.
(a) Each of the parties hereto (other than VFCC) and each Hedge
Counterparty (by accepting the benefits of this Agreement) hereby agrees that it
will not institute against, or join any other Person in instituting against,
VFCC, the Administrative Agent, the VFCC or any Liquidity Banks any Insolvency
Proceeding so long as any commercial paper issued by VFCC shall be outstanding
and there shall not have elapsed one (1) year and one (1) day since the last day
on which any such commercial paper shall have been outstanding.
(b) Each of the parties hereto (other than Eiffel) hereby agrees
that it will not institute against, or join any other Person in instituting
against Eiffel, the Eiffel Agent or any of its Liquidity Banks any Insolvency
Proceeding so long as any commercial paper issued by Eiffel shall be outstanding
and there shall not have elapsed one (1) year and one (1) day since the last day
on which any such commercial paper shall have been outstanding.
(c) Each of the parties hereto (other than Fairway) hereby agrees
that it will not institute against, or join any other Person in instituting
against Fairway, the Fairway Agent or any of its Liquidity Banks any Insolvency
Proceeding so long as any commercial paper issued by Fairway shall be
outstanding and there shall not have elapsed one (1) year and one (1) day since
the last day on which any such commercial paper shall have been outstanding.
(d) Each of the parties hereto (other than Hannover) hereby agrees
that it will not institute against, or join any other Person in instituting
against Hannover, the Hannover Agent or any of its Liquidity Banks any
Insolvency Proceeding so long as any commercial paper issued by Hannover shall
be outstanding and there shall not have elapsed one (1) year and one (1) day
since the last day on which any such commercial paper shall have been
outstanding.
(e) Each of the parties hereto (other than the Administrative
Agent without the consent of the Purchaser Agents) hereby agrees that it will
not institute against, or join any other Person in instituting against, the
Seller any Insolvency Proceeding so long as there shall not have elapsed one (1)
year and one (1) day since the Collection Date.
SECTION 13.11 RECOURSE AGAINST CERTAIN PARTIES.
(a) No recourse under or with respect to any obligation, covenant
or agreement (including, without limitation, the payment of any fees or any
other obligations) of the Administrative Agent, the Purchaser Agents, or any
Secured Party as contained in this Agreement or any other agreement, instrument
or document entered into by it pursuant hereto or in connection herewith shall
be had against any administrator of the Administrative Agent, the Purchaser
Agents, or any Secured Party, or any incorporator, affiliate, stockholder,
officer, employee or director of the Administrative Agent, the Purchaser Agents,
or any Secured Party, or of any such administrator, as such, by the enforcement
of any assessment or by any legal or
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equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of the Administrative Agent, the
Purchaser Agents, or any Secured Party contained in this Agreement and all of
the other agreements, instruments and documents entered into by it pursuant
hereto or in connection herewith are, in each case, solely the corporate
obligations of the Administrative Agent, the Purchaser Agents, or any Secured
Party, and that no personal liability whatsoever shall attach to or be incurred
by any administrator of the Administrative Agent, the Purchaser Agents, or any
Secured Party or any incorporator, stockholder, affiliate, officer, employee or
director of the Administrative Agent, the Purchaser Agents, or any Secured Party
or of any such administrator, as such, or any other of them, under or by reason
of any of the obligations, covenants or agreements of the Administrative Agent,
the Purchaser Agents, or any Secured Party contained in this Agreement or in any
other such instruments, documents or agreements, or that are implied therefrom,
and that any and all personal liability of every such administrator of the
Administrative Agent, the Purchaser Agents, or any Secured Party and each
incorporator, stockholder, affiliate, officer, employee or director of the
Administrative Agent, the Purchaser Agents, or any Secured Party or of any such
administrator, or any of them, for breaches by the Administrative Agent, the
Purchaser Agents, or any Secured Party of any such obligations, covenants or
agreements, which liability may arise either at common law or at equity, by
statute or constitution, or otherwise, is hereby expressly waived as a condition
of and in consideration for the execution of this Agreement. The provisions of
this Section 13.11 shall survive the termination of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
VFCC, Fairway, Eiffel and Hannover shall not have any obligation to pay any
amount required to be paid by it hereunder in excess of any amount available to
VFCC, Fairway, Eiffel or Hannover, as applicable, after paying or making
provision for the payment of its Commercial Paper Notes. All payment obligations
of VFCC, Fairway, Eiffel or Hannover, as applicable, hereunder are contingent on
the availability of funds in excess of the amounts necessary to pay its
Commercial Paper Notes; and each of the other parties hereto agrees that it will
not have a claim under Section 101(5) of the Bankruptcy Code if and to the
extent that any such payment obligation owed to it by VFCC, Fairway, Eiffel or
Hannover, as applicable, exceeds the amount available to VFCC, Fairway, Eiffel
or Hannover, as applicable, to pay such amount after paying or making provision
for the payment of its Commercial Paper Notes.
(c) Notwithstanding any contrary provision set forth herein, no
claim may be made by the Seller, the Originator or the Servicer or any other
Person against the Administrative Agent and the Secured Parties or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect to any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and the Seller, the Originator and
the Servicer each hereby waives, releases, and agrees not to ▇▇▇ upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected.
(d) No obligation or liability to any Obligor under any of the
Loans is intended to be assumed by the Administrative Agent and the Secured
Parties under or as a result of this Agreement and the transactions contemplated
hereby
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SECTION 13.12 PROTECTION OF RIGHT, TITLE AND INTEREST IN THE
ASSETS; FURTHER ACTION EVIDENCING ADVANCES.
(a) The Servicer shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the right, title and interest of the Administrative
Agent as agent for the Secured Parties and of the Secured Parties to the Assets
to be promptly recorded, registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect the right, title and interest of
the Administrative Agent as agent for the Secured Parties hereunder to all
property comprising the Assets. The Servicer shall deliver to the Administrative
Agent file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this Section
13.12(a).
(b) The Seller agrees that from time to time, at its expense, it
will promptly execute and deliver all instruments and documents, and take all
actions, that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the Advances hereunder and the security
interest granted in the Assets, or to enable the Administrative Agent or the
Secured Parties to exercise and enforce their rights and remedies hereunder or
under any Transaction Document.
(c) If the Seller or the Servicer fails to perform any of its
obligations hereunder, the Administrative Agent or any Secured Party may (but
shall not be required to) perform, or cause performance of, such obligation; and
the Administrative Agent's or such Secured Party's costs and expenses incurred
in connection therewith shall be payable by the Seller as provided in Article
XI. The Seller irrevocably authorizes the Administrative Agent and appoints the
Administrative Agent as its attorney-in-fact to act on behalf of the Seller (i)
to execute on behalf of the Seller as debtor and to file financing statements
necessary or desirable in the Administrative Agent's sole discretion to perfect
and to maintain the perfection and priority of the interest of the Secured
Parties in the Assets and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Assets as a financing statement in such offices as the Administrative Agent in
its sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Secured Parties in the Assets.
This appointment is coupled with an interest and is irrevocable.
(d) Without limiting the generality of the foregoing, Seller will,
not earlier than six (6) months and not later than three (3) months prior to the
fifth anniversary of the date of filing of the financing statement referred to
in Section 3.1 or any other financing statement filed pursuant to this Agreement
or in connection with any Advance hereunder, unless the Collection Date shall
have occurred:
(1) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
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(2) deliver or cause to be delivered to the
Administrative Agent an opinion of the counsel for Seller, in form and
substance reasonably satisfactory to the Administrative Agent,
confirming and updating the opinion delivered pursuant to Section 3.1
with respect to perfection and otherwise to the effect that the
security interest hereunder continues to be an enforceable and
perfected security interest, subject to no other Liens of record except
as provided herein or otherwise permitted hereunder, which opinion may
contain usual and customary assumptions, limitations and exceptions.
SECTION 13.13 CONFIDENTIALITY
(a) Each of the Administrative Agent, the Purchaser Agents, the
Secured Parties, the Servicer, the Collateral Custodian, the Backup Servicer and
the Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and all information with respect
to the other parties, including all information regarding the business of the
Seller and the Servicer hereto and their respective businesses obtained by it or
them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each such party and its officers
and employees may (i) disclose such information to its external accountants,
attorneys, investors, potential investors and the agents of such Persons
("Excepted Persons"); provided, however, that each Excepted Person shall, as a
condition to any such disclosure, agree for the benefit of the Administrative
Agent, the Purchaser Agents, the Secured Parties, the Servicer, the Collateral
Custodian, the Backup Servicer and the Seller that such information shall be
used solely in connection with such Excepted Person's evaluation of, or
relationship with, the Seller and its affiliates, (ii) disclose the existence of
the Agreement, but not the financial terms thereof, (iii) disclose such
information as is required by Applicable Law and (iv) disclose the Agreement and
such information in any suit, action, proceeding or investigation (whether in
law or in equity or pursuant to arbitration) involving any of the Transaction
Documents or any Hedging Agreement for the purpose of defending itself, reducing
its liability, or protecting or exercising any of its claims, rights, remedies,
or interests under or in connection with any of the Transaction Documents or any
Hedging Agreement. It is understood that the financial terms that may not be
disclosed except in compliance with this Section 13.13(a) include, without
limitation, all fees and other pricing terms, and all Termination Events,
Servicer Defaults, and priority of payment provisions.
(b) Anything herein to the contrary notwithstanding, the Seller
and the Servicer each hereby consents to the disclosure of any nonpublic
information with respect to it (i) to the Administrative Agent, the Purchaser
Agents, the Collateral Custodian, the Backup Servicer or the Secured Parties by
each other, (ii) by the Administrative Agent, the Purchaser Agents, the
Collateral Custodian, the Backup Servicer and the Secured Parties to any
prospective or actual assignee or participant of any of them provided such
Person agrees to hold such information confidential, or (iii) by the
Administrative Agent, the Purchaser Agents, and the Secured Parties to any
Rating Agency, commercial paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to VFCC, Fairway, Eiffel or Hannover , as
applicable, and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of the
confidential nature of such information. In addition, the Secured Parties, the
Administrative Agent and the Purchaser Agents, may disclose any such nonpublic
information as required pursuant to any law, rule, regulation, direction,
request or order of any
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judicial, administrative or regulatory authority or proceedings (whether or not
having the force or effect of law).
(c) Notwithstanding anything herein to the contrary, the foregoing
shall not be construed to prohibit (i) disclosure of any and all information
that is or becomes publicly known; (ii) disclosure of any and all information
(a) if required to do so by any applicable statute, law, rule or regulation, (b)
to any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Administrative Agents', the Purchaser
Agents', the Secured Parties', the Collateral Custodian's or the Backup
Servicer's business or that of their affiliates, (c) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Administrative Agent, the
Purchaser Agents, the Secured Parties, the Collateral Custodian or the Backup
Servicer or an officer, director, employer, shareholder or affiliate of any of
the foregoing is a party, (d) in any preliminary or final offering circular,
registration statement or contract or other document approved in advance by the
Seller, the Servicer or the Originator or (e) to any affiliate, independent or
internal auditor, agent, employee or attorney of the Collateral Custodian or
Backup Servicer having a need to know the same, provided that the Collateral
Custodian or Backup Servicer advises such recipient of the confidential nature
of the information being disclosed; or (iii) any other disclosure authorized by
the Seller, Servicer or Originator.
SECTION 13.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts (including by facsimile), each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement and any agreements or letters (including fee letters) executed in
connection herewith contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings
other than any fee letter delivered by the Originator to the Administrative
Agent, the Purchaser Agents, and the Secured Parties.
SECTION 13.15 WAIVER OF SETOFF.
(a) Each of the parties hereto (other than VFCC) hereby waives any
right of setoff it may have or to which it may be entitled under this Agreement
from time to time against VFCC or its assets.
(b) Each of the parties hereto (other than Eiffel) hereby waives
any right of setoff it may have or to which it may be entitled under this
Agreement from time to time against Eiffel or its assets.
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(c) Each of the parties hereto (other than Fairway) hereby waives
any right of setoff it may have or to which it may be entitled under this
Agreement from time to time against Fairway or its assets.
(d) Each of the parties hereto (other than Hannover) hereby waives
any right of setoff it may have or to which it may be entitled under this
Agreement from time to time against Hannover or its assets.
SECTION 13.16 ASSIGNMENTS.
VFCC, Fairway, Eiffel and Hannover may at any time assign, or grant a
security interest or sell a participation interest in, any Advance (or portion
thereof) to any Person; provided, that, in the case of an assignment of the VFCC
Variable Funding Certificate, Fairway Variable Funding Certificate, Eiffel
Variable Funding Certificate or Hannover Variable Funding Certificate, the
assignee (other than any assignee that is a Liquidity Bank) shall execute and
deliver to the Servicer and the Administrative Agent a Transferee Letter
substantially in the form of Exhibit K hereto. The parties to any such
assignment, grant or sale of participation interest shall execute and deliver to
the VFCC Agent, the Fairway Agent, the Eiffel Agent or the Hannover Agent, as
applicable, for its acceptance and recording in its books and records, such
agreement or document as may be satisfactory to such parties and the VFCC Agent,
the Fairway Agent, the Eiffel Agent or the Hannover Agent, as applicable. The
Seller shall not assign or delegate, or grant any interest in, or permit any
Lien to exist upon, any of the Seller's rights, obligations or duties under this
Agreement without the prior written consent of the Administrative Agent and the
Hedge Counterparty.
SECTION 13.17 HEADING AND EXHIBITS.
The headings herein are for purposes of references only and shall not
otherwise affect the meaning or interpretation of any provision hereof. The
schedules and exhibits attached hereto and referred to herein shall constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
SECTION 13.18 LOANS SUBJECT TO RETAINED INTEREST PROVISIONS.
(a) With respect to any Loan included in the Assets subject to the
Retained Interest provisions of this Agreement, the Seller will own only the
principal portion of such Loans outstanding as of the applicable Cut-Off Date.
Principal Collections received by the Seller or the Servicer on any Revolving
Loans (other than such Loans to SPE Obligors) will be allocated first to the
portion of such Revolving Loan owned by the Seller, until the principal amount
of such portion is reduced to zero, and then to the portion not owned by the
Seller; provided, however, if (i) a payment default occurs with respect to any
of the related Loans, (ii) a Liquidity Factor Reduction Event occurs and
continues, (iii) the Originator has determined in its sole discretion that an
Obligor's credit has deteriorated or the Originator has determined in its sole
discretion to reduce its commitment to an Obligor, or (iv) an Allocation
Adjustment Event occurs, then Principal Collections received on (x) the
applicable Loan (in the case of clause (i) or (iii) above or during the time
that a Liquidity Factor Reduction Event exists and continues in the case of
clause (ii) above) or (y) all the Revolving Loans (in the case of clauses (iv)
above) will be
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allocated between the portion owned by the Seller and the portion not owned by
the Seller, pro rata based upon the outstanding principal amount of each such
portion.
(b) With respect to any Revolving Loan to SPE Obligors included in
the Assets subject to the Retained Interest provisions of this Agreement,
Interest Collections received by the Servicer on those Loans will be allocated
between the portion owned by the Seller and the portion not owned by the Seller
on a pro rata basis according to the outstanding principal amount of each such
portion.
(c) With respect to any Term Loans included in the Assets subject
to the Retained Interest provisions of this Agreement, Principal Collections and
Interest Collections received by the Servicer will be allocated between the
portion owned by the Seller and to the portion not owned by the Seller (if any)
on a pro rata basis according to the outstanding principal amount of such
portion.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: CAPITALSOURCE FUNDING LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
CapitalSource Funding LLC
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE ORIGINATOR CAPITALSOURCE FINANCE LLC
AND SERVICER:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
CapitalSource Finance LLC
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
VFCC: VARIABLE FUNDING CAPITAL
CORPORATION
Commitment:
$300,000,000 By: Wachovia Securities, Inc., as
attorney-in-fact
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
________________________________
Title: Vice President
_______________________________
Variable Funding Capital Corporation
c/o Wachovia Securities, Inc.
One Wachovia Center, Mail Code: NC0610
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Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With respect to notices required pursuant to Section 13.2, a copy of notices
sent to VFCC shall be sent to:
Lord Securities Corp.
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Attention: Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE ADMINISTRATIVE AGENT AND WACHOVIA SECURITIES, INC.
THE VFCC AGENT: f/k/a First Union Securities, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Title: Director
_______________________________
Wachovia Securities, Inc.
One Wachovia Center, Mail Code: NC0610
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Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
EIFFEL: EIFFEL FUNDING, LLC
Commitment: By: Global Securitization Services, LLC,
$125,000,000 its manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________
Title: President
_________________________________
Eiffel Funding, LLC
c/o Global Securitization Services, LLC
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
EIFFEL AGENT: CDC FINANCIAL PRODUCTS INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________________
Title: Director
_________________________________
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________
Title: Director
_________________________________
CDC Financial Products Inc.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
FAIRWAY: FAIRWAY FINANCE CORPORATION
Commitment:
$150,000,000
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________
Title: Vice President
_____________________________
Fairway Finance Corporation
c/o Lord Securities Corporation
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
FAIRWAY AGENT: BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________
Title: Managing Director
_____________________________
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Title: Managing Director
_____________________________
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
HANNOVER: HANNOVER FUNDING COMPANY LLC
Commitment:
$75,000,000
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice-President
Hannover Funding Company LLC
c/o Global Securitization Services, LLC
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice-President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
HANNOVER AGENT: NORDDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Omar ▇▇▇▇ ▇▇▇▇▇
_____________________________
Omar ▇▇▇▇ ▇▇▇▇▇, Senior Vice-President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice-President
Norddeutsche Landesbank Girozentrale
1114 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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Attention: Omar ▇▇▇▇ ▇▇▇▇▇, Vice-President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
THE BACKUP SERVICER: ▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Backup
Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
___________________________
Title: Assistant Vice President
__________________________
▇▇▇▇▇ Fargo Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
MAC N9311-161
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Attention: Corporate Trust Services
Asset-Backed Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE COLLATERAL CUSTODIAN: ▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Collateral
Custodian
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
______________________________
Title: Assistant Vice President
_____________________________
▇▇▇▇▇ Fargo Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
MAC N9311-161
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Attention: Corporate Trust Services
Asset-Backed Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
Acknowledged and Agreed to
as of the date first written above.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Hedge Counterparty
By: /s/ ▇▇▇ ▇▇▇▇
________________
Name: ▇▇▇ ▇▇▇▇
______________
Title: Director
_____________
Wachovia Bank, National Association
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President,
Risk Management
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
NOMURA CREDIT & CAPITAL, INC.,
as the Participant
By: /s/ N. ▇▇▇▇▇ ▇▇▇▇▇▇▇
______________________
Name: N. ▇▇▇▇▇ ▇▇▇▇▇▇▇
______________________
Title: Authorized Agent
______________________
Nomura Credit & Capital, Inc.
2 World Financial ▇▇▇▇▇▇
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Attention: Asset Backed Finance Group
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
NOMURA HOLDING AMERICA INC.,
as the Guarantor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________
Title: Chief Financial Officer
_______________________
Nomura Holding America Inc.
2 World Financial ▇▇▇▇▇▇
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Attention: Asset Backed Finance Group
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇