EXHIBIT 99.1
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$150,000,000
LOAN FUNDING AND SERVICING AGREEMENT
Dated as of December 28, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III FUNDING CORPORATION
as the Borrower
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HEALTHCARE FINANCIAL PARTNERS, INC.
as the Guarantor
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HCFP FUNDING, INC.
as the Servicer
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HEALTHCARE ANALYSIS CORPORATION
as the Evaluator
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the INVESTORS
named herein
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VARIABLE FUNDING CAPITAL CORPORATION
as a Lender
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FIRST UNION CAPITAL MARKETS, a
division of WHEAT FIRST SECURITIES, INC.
as the Deal Agent
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FIRST UNION NATIONAL BANK
as the Liquidity Agent
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U.S. BANK TRUST NATIONAL ASSOCIATION
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as the Custodian
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and
INPUT ONE, LLC
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as Backup Servicer
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS......................................................................................... 2
SECTION 1.1 CERTAIN DEFINED TERMS............................................................................. 2
SECTION 1.2 OTHER TERMS....................................................................................... 28
SECTION 1.3 COMPUTATION OF TIME PERIODS....................................................................... 28
ARTICLE II ADVANCES........................................................................................... 29
SECTION 2.1 ADVANCES.......................................................................................... 29
SECTION 2.2 PROCEDURES FOR ADVANCES........................................................................... 29
SECTION 2.3 OPTIONAL CHANGES IN FACILITY AMOUNT; PREPAYMENTS.................................................. 30
SECTION 2.4 NOTES............................................................................................. 31
SECTION 2.5 PRINCIPAL REPAYMENTS.............................................................................. 31
SECTION 2.6 INTEREST PAYMENTS................................................................................. 31
SECTION 2.7 SETTLEMENT PROCEDURES............................................................................. 32
SECTION 2.8 PORTFOLIO REQUIREMENTS............................................................................ 33
SECTION 2.9 SECURITY INTEREST................................................................................. 34
SECTION 2.10 COLLECTIONS AND ALLOCATIONS....................................................................... 34
SECTION 2.11 PAYMENTS, COMPUTATIONS, ETC....................................................................... 35
SECTION 2.12 BREAKAGE COSTS.................................................................................... 35
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY..................................................... 35
SECTION 2.14 TAXES............................................................................................. 37
SECTION 2.15 ASSIGNMENT OF THE PURCHASE AGREEMENT.............................................................. 39
ARTICLE III CLOSING; CONDITIONS OF CLOSING AND ADVANCES....................................................... 39
SECTION 3.1 CONDITIONS TO CLOSING AND INITIAL ADVANCES........................................................ 39
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND REINVESTMENTS............................................ 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................................... 41
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER.................................................... 41
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF BORROWER RELATING TO THE AGREEMENT AND THE LOANS................ 46
ARTICLE V GENERAL COVENANTS OF THE BORROWER................................................................... 47
SECTION 5.1 COVENANTS OF BORROWER............................................................................. 47
SECTION 5.2 HEDGE AGREEMENT................................................................................... 51
SECTION 5.3 YEAR 2000 COMPATIBILITY........................................................................... 52
ARTICLE VI ADMINISTRATION AND SERVICING OF LOANS.............................................................. 52
SECTION 6.1 APPOINTMENT OF THE SERVICER....................................................................... 52
SECTION 6.3 AUTHORIZATION OF THE SERVICER..................................................................... 54
SECTION 6.4 COLLECTION OF PAYMENTS............................................................................ 55
SECTION 6.5 SERVICER ADVANCES................................................................................. 56
SECTION 6.6 REALIZATION UPON CHARGED-OFF LOANS AND CHARGED-OFF LOANS.......................................... 56
SECTION 6.7 MAINTENANCE OF INSURANCE POLICIES................................................................. 57
SECTION 6.8 REPRESENTATIONS AND WARRANTIES OF SERVICER........................................................ 57
SECTION 6.9 COVENANTS OF SERVICER............................................................................. 59
SECTION 6.10 THE CUSTODIAN..................................................................................... 60
SECTION 6.11 REPRESENTATIONS AND WARRANTIES OF CUSTODIAN....................................................... 62
SECTION 6.12 REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER................................................. 63
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SECTION 6.13 PAYMENT OF CERTAIN EXPENSES BY SERVICER........................................................... 65
SECTION 6.14 REPORTS........................................................................................... 65
SECTION 6.15 ANNUAL STATEMENT AS TO COMPLIANCE................................................................. 65
SECTION 6.16 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S SERVICING REPORTS.......................................... 66
SECTION 6.17 ADJUSTMENTS....................................................................................... 66
SECTION 6.18 CUSTODIAL COMPENSATION............................................................................ 66
SECTION 6.19 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS................................................ 66
SECTION 6.20 INDEMNIFICATION OF THE BORROWER, THE DEAL AGENT, THE LIQUIDITY AGENT AND THE SECURED PARTIES...... 67
SECTION 6.21 THE SERVICER NOT TO RESIGN........................................................................ 68
SECTION 6.22 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE LOANS............................... 68
SECTION 6.23 MERGER OR CONSOLIDATION OF THE SERVICER........................................................... 69
SECTION 6.24 IDENTIFICATION OF RECORDS......................................................................... 69
SECTION 6.25 SERVICER TERMINATION EVENTS....................................................................... 69
SECTION 6.26 APPOINTMENT OF SUCCESSOR SERVICER................................................................. 71
SECTION 6.27 NOTIFICATION...................................................................................... 72
SECTION 6.28 PROTECTION OF RIGHT, TITLE AND INTEREST TO COLLATERAL............................................. 72
SECTION 6.29 BACKUP SERVICER................................................................................... 73
SECTION 6.30 THE EVALUATOR..................................................................................... 75
SECTION 6.31 DECREMENTATION FACTOR REPORT...................................................................... 76
ARTICLE VII EARLY AMORTIZATION EVENTS......................................................................... 77
SECTION 7.1 EARLY AMORTIZATION EVENTS......................................................................... 77
ARTICLE VIII INDEMNIFICATION................................................................................... 79
SECTION 8.1 INDEMNITIES BY THE BORROWER....................................................................... 79
ARTICLE IX THE DEAL AGENT AND THE LIQUIDITY AGENT............................................................. 81
SECTION 9.1 AUTHORIZATION AND ACTION.......................................................................... 81
SECTION 9.2 DELEGATION OF DUTIES.............................................................................. 82
SECTION 9.3 EXCULPATORY PROVISIONS............................................................................ 82
SECTION 9.4 RELIANCE.......................................................................................... 83
SECTION 9.5 NON-RELIANCE ON DEAL AGENT, LIQUIDITY AGENT AND OTHER LENDERS..................................... 84
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION................................................................. 84
SECTION 9.7 DEAL AGENT AND LIQUIDITY AGENT IN THEIR INDIVIDUAL CAPACITIES..................................... 85
SECTION 9.8 SUCCESSOR DEAL AGENT OR LIQUIDITY AGENT........................................................... 85
ARTICLE X ASSIGNMENTS; PARTICIPATIONS......................................................................... 86
SECTION 10.1 ASSIGNMENTS AND PARTICIPATIONS.................................................................... 86
ARTICLE XI GUARANTY........................................................................................... 88
SECTION 11.1 UNCONDITIONAL UNDERTAKING......................................................................... 88
SECTION 11.2 OBLIGATIONS ABSOLUTE.............................................................................. 89
SECTION 11.3 PARI PASSU TREATMENT OF OBLIGATIONS OF GUARANTOR.................................................. 90
SECTION 11.4 WAIVER............................................................................................ 90
SECTION 11.5 SUBROGATION....................................................................................... 90
ARTICLE XII MISCELLANEOUS..................................................................................... 91
SECTION 12.1 AMENDMENTS AND WAIVERS............................................................................ 91
SECTION 12.2 NOTICES, ETC...................................................................................... 91
SECTION 12.3 [RESERVED]........................................................................................ 92
SECTION 12.4 NO WAIVER, RIGHTS AND REMEDIES.................................................................... 92
SECTION 12.5 BINDING EFFECT.................................................................................... 92
SECTION 12.6 TERM OF THIS AGREEMENT............................................................................ 92
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SECTION 12.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE.............................. 91
SECTION 12.8 WAIVER OF JURY TRIAL.............................................................................. 91
SECTION 12.9 COSTS, EXPENSES AND TAXES......................................................................... 92
SECTION 12.10 NO PROCEEDINGS................................................................................... 93
SECTION 12.11 RECOURSE AGAINST CERTAIN PARTIES................................................................. 93
SECTION 12.12 PROTECTION OF SECURITY INTEREST; APPOINTMENT OF DEAL AGENT AS ATTORNEY-IN-FACT................... 93
SECTION 12.13 CONFIDENTIALITY.................................................................................. 94
SECTION 12.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION............................................. 95
EXHIBITS
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EXHIBIT A Form of Borrower's Notice
EXHIBIT B Form of Notes
EXHIBIT C "Limited Purpose" Provisions
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Monthly Report
EXHIBIT F Form of Servicer's Certificate
EXHIBIT G Credit and Collection Policies
EXHIBIT H Form of Hedge Agreement (including Schedule and Confirmation)
EXHIBIT I Evaluation Policy
EXHIBIT J Form of Trust Receipt and Initial Certification
EXHIBIT K Form of Trust Receipt and Final Certification
EXHIBIT L Form of Release of Loan File
EXHIBIT M Form of Assignment of Mortgage
EXHIBIT N Form of Reinvestment Certification
SCHEDULES
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SCHEDULE I Schedule of Documents
SCHEDULE II Aggregate Insurer Concentration Limits
SCHEDULE III Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IV List of Loans
SCHEDULE V Single Insurer Concentration Limits
SCHEDULE VI Location of Loan Files
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THIS LOAN FUNDING AND SERVICING AGREEMENT (the "Agreement") is made as of
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December 28, 1998, among:
(1) WISCONSIN CIRCLE III FUNDING CORPORATION, a Delaware corporation, as
borrower (the "Borrower");
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(2) HEALTHCARE FINANCIAL PARTNERS, INC., a Delaware corporation, ("HCFP"),
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as guarantor (the "Guarantor");
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(3) HCFP FUNDING, INC., a Delaware corporation, as servicer (the
"Servicer");
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(4) HEALTHCARE ANALYSIS CORPORATION, a Delaware corporation, ("HCAC"), as
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evaluator (the "Evaluator");
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(5) the financial institutions listed on the signature pages of this
Agreement under the heading "Investors" and their respective successors and
assigns (the "Investors");
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(6) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation ("VFCC");
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(7) FIRST UNION CAPITAL MARKETS, a division of WHEAT FIRST SECURITIES,
INC. ("FCM"), as deal agent (the "Deal Agent") and as documentation agent (the
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"Documentation Agent");
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(8) FIRST UNION NATIONAL BANK ("First Union"), as liquidity agent (the
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"Liquidity Agent"); and
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(9) U.S. BANK NATIONAL ASSOCIATION ("US Bank") as custodian (the
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"Custodian");
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(10) INPUT ONE, LLC, as the backup servicer (the "Backup Servicer").
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IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
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(a) Certain capital terms used throughout this Agreement are defined above
or in this Section 1. 1.
(b) As used in this Agreement and its exhibits, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined).
Adjusted Eurodollar Rate: On any day, an interest rate per annum equal to the
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quotient, expressed as a percentage and rounded upwards (if necessary), to the
nearest 1/100 of 1%, obtained by dividing (i) the LIBOR Rate on such day by (ii)
100% minus the Eurodollar Reserve Percentage on such day.
Adjusted Insurer Receivables: On any day, for any Insurer, an amount equal to
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the product of (i) the Insurer Receivables for such Insurer on such day and (ii)
the applicable Decrementation Factor.
Administration Agreement: That certain Amended and Restated Administration
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Agreement by and between VFCC and FCM, as the same may be amended, supplemented,
or otherwise modified from time to time.
Advance: As defined in Section 2.1(a).
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Advances Outstanding: On any day, the aggregate principal amount of Advances
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outstanding on such day, after giving effect to all repayments of advances and
makings of new Advances on such day.
Adverse Claim: A lien, security interest, pledge, charge, encumbrance or other
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right or claim of any Person.
Affected Party: As defined in Section 2.13(a).
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Affiliate: With respect to a Person means any other Person controlling,
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controlled by or under common control with such Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" or "controlled" have meanings correlative
to the foregoing.
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Agent's Account: A special account (account number 01 41 96 47) in the name of
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the Deal Agent or, so long as VFCC is the sole Lender hereunder, in the name of
VFCC, at Bankers Trust Company.
Aggregate Adjusted Insurer Receivables: On any day, the sum of the Adjusted
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Insurer Receivables on such day.
Aggregate Blue Cross/Blue Shield Receivables: On any day, an amount equal to
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the product of (i) the Blue Cross/Blue Shield Receivables on such day and (ii)
the applicable Decrementation Factor.
Aggregate Insurer Concentration Limit: With respect to Aggregate Adjusted
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Insurer Receivables, each of the limitations set forth in Schedule II hereto.
Aggregate Medicaid Receivables: On any day, an amount equal to the product of
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(i) the Medicaid Receivables on such day and (ii) the applicable Decrementation
Factor.
Aggregate Medicare Receivables: On any day, an amount equal to the product of
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(i) the Medicare Receivables on such day and (ii) the applicable Decrementation
Factor.
Aggregate Outstanding Loan Balance: On any day, the sum of the Outstanding Loan
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Balances of all Eligible Loans included as part of the Collateral as of such
date.
Agreement: This Loan Funding and Servicing Agreement, dated as of December 28,
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1998, as amended, modified, supplemented or restated from time to time.
Amortization Period: The period beginning on the Termination Date and ending on
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the Collection Date.
Approval Date: As defined in Section 5.5.
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Approved Senior Manager: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
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Jr. and any other individual or individuals approved in writing by the Deal
Agent from time to time as an Approved Senior Manager.
ARL: Any line of credit arising from the extension of credit by the Originator
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or one of its subsidiaries in the ordinary course of the Originator's business
to an Obligor, secured by the accounts receivable of such Obligor, including,
without limitation, all monies due or owing and all Interest Collections,
Principal Collections and other amounts received from time to time with respect
to such loan receivable and all Proceeds thereof.
Assignment and Acceptance: An assignment and acceptance entered into by an
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Investor and an Eligible Assignee, and accepted by the Deal Agent, in
substantially the form of Exhibit D hereto.
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3
Assignment of Mortgage: As to each Loan that is an STL secured by an interest
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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 to the Borrower and to grant a perfected, first priority
lien thereon by the Borrower in favor the Deal Agent on behalf of the Secured
Parties, each such Assignment of Mortgage to be substantially in the form of
Exhibit M hereto.
Availability: On any day, the excess of (I) the amount by which (a) the lesser
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of (i) the product of (A) the Borrowing Base and (B) 80% and (ii) the Facility
Amount exceeds (b) an amount necessary to cure any Overcollateralization
Shortfall over (II) the Advances Outstanding on such day provided, however,
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during the Amortization Period, the Availability shall be zero.
Backup Servicer Fee Letter: The fee letter agreement, dated as of the date
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hereof, by and among the Guarantor and the Backup Servicer, as amended,
modified, restated or replaced.
Bankruptcy Code: The Federal Bankruptcy Code, as amended from time to time
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(Title 11 of the United States Code).
Base ARL O/C Amount: On any day, an amount equal to the greater of (i) the two
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(2) largest commitment amounts of all ARLs that are part of the Collateral on
such day and (ii) the aggregate Outstanding Loan Balances of the three (3)
largest (by principal amount outstanding on such date of determination) ARLs
that are part of the Collateral on such day.
Base O/C Amount: On any day, an amount equal to the product of (i) 0.25 and
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(ii) the Aggregate Outstanding Loan Balance of such day.
Base STL O/C Amount: On any day, an amount equal to the greater of (i) the
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three (3) largest commitment amounts of all STLs that are part of the Collateral
on such day and (ii) the aggregate Outstanding Loan Balances of the four (4)
largest (by principal amount outstanding on such date of determination) STLs
that are part of the Collateral on such day.
Base Rate: On any date, a fluctuating rate of interest per annum equal to the
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higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.0%.
Benefit Plan: Any employee benefit plan as defined in Section 3(3) of ERISA in
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respect of which the Borrower or any ERISA Affiliate of the Borrower is, or at
any time during the immediately preceding six years was, an "employer" as
defined in Section 3(5) of ERISA.
Blue Cross/Blue Shield Entity: On any day, a Person that is, or is an Affiliate
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of, a Blue Cross and/or Blue Shield Plan and/or a member of the Blue Cross and
Blue Shield Association or any successor thereto.
4
Blue Cross/Blue Shield Receivables: On any day, any amount owing to any Obligor
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in respect of any medical or healthcare services, the obligor of which is Blue
Cross/Blue Shield Entity.
Borrower: Wisconsin Circle III Funding Corporation, a Delaware corporation.
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Borrowing Base: On any date of determination, an amount equal to the sum of (a)
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the Aggregate Outstanding Loan Balance and (b) the Outstanding Loan Balance of
all Eligible Loans to become included as part of the Collateral on such date.
Borrower Notice: A written notice, in the form of Exhibit A, to be used for
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each borrowing, repayment of each Advance or termination or reduction of the
Facility Amount or Prepayments of Advances.
Breakage Costs: As defined in Section 2.12.
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Business Day: Any day of the year other than a Saturday or a Sunday on which
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(a) banks are not required or authorized to be closed in New York City,
Charlotte, North Carolina and Chicago, Illinois, and (b) if the term "Business
Day" is used in connection with the Adjusted Eurodollar Rate, means the
foregoing only if such day is also a day of year on which dealings in United
States dollar deposits are carried on in the London interbank market.
Charged-Off Loan: Any Loan (i) which is 60 days past due with respect to any
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interest or principal payment; (ii) for which an Insolvency Event has occurred
with respect to the related Obligor; or (iii) which is or otherwise should be
written off as uncollectible by the Servicer in accordance with the Credit and
Collection Policies.
Charged-Off Ratio: With respect to any Collection Period, the product of (a) 4
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and (b) the percentage equivalent of a fraction, calculated as of the
Determination Date for such Collection Period, (i) the numerator of which is
equal to the aggregate Outstanding Loan Balance of all Loans that became
Charged-Off Loans during such Collection Period and (ii) the denominator of
which is equal to the decimal equivalent of a fraction the numerator of which is
equal to the sum of (A) the Aggregate Outstanding Loan Balance as of the first
day of such Collection Period and (B) the Aggregate Outstanding Loan Balance as
of the last day of such Collection Period and the denominator of which is 2.
Closing Date: December 28, 1998.
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Code: The Internal Revenue Code of 1986, as amended.
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Collateral: All right, title and interest of the Borrower in, to and under any
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and all of the following:
(i) the Transferred Loans, and all monies due or to become due in
payment of such Loans on and after the related Transfer Date;
5
(ii) any Related Property securing such Loans including all proceeds
from any sale or other disposition of such Related Property;
(iii) the Loan Documents;
(iv) the Collection Account, all funds held in such accounts, and
all certificates and instruments, if any, from time to time representing or
evidencing the Collection Accounts or such funds;
(v) the Excess Spread Account, all funds held in such account, and
all certificates and instruments, if any, from time to time representing or
evidencing the Excess Spread Account or such funds;
(vi) all Collections and all other payments made or to be made in
the future with respect to such Loans or by the Obligor thereunder and
under any guarantee or similar credit enhancement with respect to such
Loans;
(vii) all Hedge Collateral; and
(viii) all income and Proceeds of the foregoing.
Collection Account: As defined in Section 6.4(d).
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Collection Date: The date following the Termination Date on which all Advances
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Outstanding have been reduced to zero, the Lenders have received all accrued
Interest, fees, and all other amounts owing to them under this Agreement and the
Hedge Agreement, the Hedge Counterparties have received all amounts due and
owing hereunder and under the Hedge Transactions and each of the Backup
Servicer, the Custodian, the Deal Agent and Liquidity Agent have received all
amounts due to each of them in connection with this Agreement.
Collection Period: Each calendar month, except in the case of the first
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Collection Period, the period beginning on the Closing Date to and including the
last day of the calendar month in which the Closing Date occurs.
Collection Ratio: For any Determination Date, the percentage equivalent of a
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fraction, the numerator of which is the Net Eligible Loans on the first day of
the related Collection Period and the denominator of which is equal to the
Collections received in the Collection Account during such Collection Period.
Collections: (a) All cash collections or other cash proceeds of such Loan
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received by the Servicer, Originator or Borrower from or on behalf of any
Obligor in payment of any amounts owed in respect of such Loan, including,
without limitation, any Interest Collections, any Principal Collections, Deemed
Collections, Insurance Proceeds, interest earnings in the
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Collection Accounts, and all recoveries on Charged-Off Loans, (b) any other
funds received by the Borrower or the Servicer with respect to any Contract or
related security therefor, and (c) all payments received pursuant to any Hedging
Agreement or Hedge Transaction.
Commercial Paper Notes: On any day, any short-term promissory notes issued by
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VFCC with respect to financing any Advance hereunder.
Commitment: For each Investor, the commitment of such Investor to fund any
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Advance to the Borrower in an amount not to exceed the amount set forth opposite
such Investor's name on the signature pages of this Agreement, as such amount
may be modified in accordance with the terms hereof.
Commitment Termination Date: December 27, 1999 or such later date to which the
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Commitment Termination Date may be extended (if extended) in the sole discretion
of each Investor in accordance with the terms of Section 2.2(b).
Concentration Limits: On any date of determination,
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(a) calculated on the basis of Aggregate Outstanding Loan Balance
(determined as of such date of determination):
(i) the sum of the Outstanding Loan Balances of Eligible Loans the
Obligors of which are residents of any one state shall not exceed 25% for
the first six (6) months following the Closing Date and 20% thereafter;
(ii) the sum of the Outstanding Loan Balances of the eight (8)
largest Eligible Loans will not exceed $40,000,000 until the earlier to
occur of (x) the Aggregate Outstanding Loan Balance exceeds $75,000,000 and
(y) the date that is nine (9) months following the Closing Date and
$60,000,000 thereafter;
(iii) the aggregate of the Outstanding Loan Balances of all Eligible
Loans of any one or more Obligors that are Affiliates shall not exceed the
Large Loan Limit;
(b) calculated on the basis of the aggregate of the Outstanding Loan
Balances (determined as of such date of determination) of all ARLs and of all
STLs, to the extent the primary collateral for such STLs consists of Insurer
Receivables, Medicaid Receivables and/or Medicare Receivables:
(i) the Adjusted Insurer Receivables of any single Insurer and its
Affiliates (other than Blue Cross/Blue Shield entities) shall not exceed
the applicable Single Insurer Concentration Limit;
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(ii) the Aggregate Adjusted Insurer Receivables of all Insurers and
their respective Affiliates (including Blue Cross/Blue Shield Receivables)
shall not exceed the applicable Aggregate Insurer Concentration Limit;
(iii) the Aggregate Blue Cross/Blue Shield Receivables shall not
exceed 7.5%;
(iv) the Aggregate Medicare Receivables shall not exceed 40%; and
(v) the portion of the Medicaid Receivables owed by any single
State shall not exceed 15%.
Cost of Funds Adjustment: For any specified period, the positive excess, if any
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of the CP Rate over the Adjusted Eurodollar Rate, as set forth in a written
statement delivered by the Deal Agent to the Borrower and the Servicer.
CP Rate: For any Interest Accrual Period, the per annum rate equivalent to the
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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)
in respect of the promissory notes issued by VFCC that are allocated, in whole
or in part, by the Deal Agent (on behalf of VFCC) to fund or maintain the
Advances Outstanding during such period, as determined by the Deal Agent (on
behalf of VFCC) and reported to the Borrower and the Servicer, which rates shall
reflect and give effect to (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 Deal Agent (on
behalf of VFCC) and (ii) any incremental carrying costs associated with the
issuance of such promissory notes maturing on dates other than those dates on
which funds are received by VFCC, provided, however, that if any component of
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such rate is a discount rate, in calculating the "CP Rate," the Deal Agent shall
for such component use the rate resulting from converting such discount rate to
an interest bearing equivalent rate per annum.
Credit and Collection Policy: The credit, collection, customer relation and
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service policies of the Originator and the Servicer as of the date hereof
relating to the Loans and related Loan Documents, set forth in Exhibit G, as the
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same may be amended or modified from time to time in accordance with Sections
5.1(s) and 6.9(e).
Custodian Fee Letter: The fee letter agreement, dated as of the date hereof, by
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and among the Guarantor and the Custodian, as amended, modified, restated or
replaced.
Deal Agent: FCM, as Deal Agent hereunder, together with its successors and
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assigns.
Decrementation Factor: On any day, for all Loans that are part of the
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Collateral, the decrementation factor assigned by the Servicer to such Insurer,
as set forth on the most recent the Decrementation Factor Report delivered by
the Servicer to the Deal Agent; provided, however, if no Decrementation Factor
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is set forth on the Decrementation Factor Report, the Decrementation Factor
shall be 1. The Decrementation Factor shall be equal to a fraction the
numerator of which
8
is the aggregate of the Outstanding Loan Balances (determined as of such date of
determination) of all ARLs and of all STLs, to the extent the primary collateral
for such STLs consists of Insurer Receivables, Medicaid Receivables and/or
Medicare Receivables and the denominator of which is the aggregate dollar amount
of all Insurer Receivables, Medicare Receivables and Medicaid Receivables
securing all such Loans.
Decrementation Factor Report: The report delivered by the Servicer to the Deal
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Agent from time to time pursuant to Section 6.31.
Deemed Collections: On any day, an amount equal to the unpaid balance
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(including any accrued interest thereon) of any Loan included as part of the
Collateral if on such day (a) the Deal Agent, as agent for the Secured Parties,
does not have a valid perfected security interest in such Loan and any Related
Property, or (b) a Warranty Event occurred with respect to such Loan.
Delinquency Ratio: With respect to any Collection Period, the percentage
-----------------
equivalent of a fraction, calculated as of the Determination Date for such
Collection Period, (a) the numerator of which is equal to the aggregate
Outstanding Loan Balance of all Loans (excluding Charged-Off Loans) included as
part of the Collateral as to which any payment or portion thereof is, as of the
last day such Collection Period, more than 30 days Delinquent and (b) the
denominator of which is equal to the decimal equivalent of a fraction the
numerator of which is equal to the sum of (i) the Aggregate Outstanding Loan
Balance as of the first day of such Collection Period and (ii) the Aggregate
Outstanding Loan Balance as of the last day of such Collection Period and the
denominator of which is 2.
Delinquent: With respect to any Loan and any specified time period, any
----------
payment, or portion thereof, due with respect to such Loan, has not been made by
the Obligor of such Loan for the specified time period from the due date of such
payment.
Derivatives: Any exchange-traded or over-the-counter (i) forward, future,
-----------
option, swap, cap, collar, floor, foreign exchange contract, any combination
thereof, whether for physical delivery or cash settlement, relating to any
interest rate, interest rate index, currency, currency exchange rate, currency
exchange rate index, debt instrument, debt price, debt index, depositary
instrument, depositary price, depositary index, equity instrument, equity price,
equity index, commodity, commodity price or commodity index, (ii) any similar
transaction, contract, instrument, undertaking or security, or (iii) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.
Determination Date: With respect to any Payment Date, the last day of the
------------------
immediately preceding Collection Period.
Early Amortization Event: As defined in Section 7.1.
------------------------
Eligible Assignee: (a) A Person whose short-term rating is at least A-1 from
-----------------
S&P and P-1 from ▇▇▇▇▇'▇, or whose obligations under this Agreement are
guaranteed by a Person whose short-
9
term rating is at least A-1 from S&P and P-1 from ▇▇▇▇▇'▇, or (b) such other
Person satisfactory to VFCC, the Deal Agent and each of the Rating Agencies,
subject, in each case, to the prior written consent of the Borrower (which
consent will not be unreasonably withheld).
Eligible Loan: On any date of determination, each Loan (a) for which the Loan
-------------
Documents are in the possession of the Custodian and, if such date of
determination is on or before a Funding Date, the Deal Agent has received a
trust receipt in the form of Exhibit J hereto in respect of such Loans and Loan
Documents or, if such date of determination is after a Funding Date, the Deal
Agent has received a trust receipt in the form of Exhibit K hereto in respect of
such Loans and Loan Documents, (b) which is a Transferred Loan and identified on
the List of Loans delivered by the Borrower to the Custodian as part of a
Funding Request, and (c) which satisfies each of the following requirements:
(i) the Loan is evidenced by a promissory note which has been duly
authorized and which, together with the related Loan Documents, is in full
force and effect and constitutes the legal, valid and binding obligation of
the Obligor of such Loan to pay the stated amount of the Loan and interest
thereon, and the related Loan Documents are enforceable against such
Obligor in accordance with their respective terms;
(ii) the Loan was originated in accordance with the terms of the
Credit and Collection Policy and arose in the ordinary course of the
Originator's business;
(iii) the Loan is not a Charged-Off Loan or a Loan, no payment or
portion thereof is more than 10 days Delinquent and the Obligor of such
Loan has never been more than 30 days Delinquent;
(iv) unless such Loan is an STL secured by an interest in real
property, the Loan, together with the Loan Documents related thereto, is a
"general intangible", an "instrument", an "account", or "chattel paper"
within the meaning of the UCC of all jurisdictions which govern the
perfection of the security interest granted therein;
(v) 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 of
such Loan have been duly obtained, effected or given and are in full force
and effect;
(vi) the Loan is denominated and payable only in United States
Dollars in the United States;
(vii) the Loan bears interest, which is due and payable monthly;
(viii) the Loan, together with the Loan Documents related thereto,
does not contravene any law, rule or regulation applicable thereto
(including, without limitation,
10
laws, rules and regulations relating to usury, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to the
Loan Documents related thereto is in material violation of any such law,
rule or regulation in any respect;
(ix) the Loan, together with the related Loan Documents, is fully
assignable and, if such Loan is an STL secured by an interest in real
property, an Assignment of Mortgage has been delivered to the Custodian;
(x) the Loan was documented and closed in accordance with the
Originator's policies and procedures, including the relevant opinions and
assignments, and, with respect to each Loan evidenced by a promissory note,
there is only one current original promissory note with respect to such
Loan, which promissory note has been delivered to the Custodian and duly
endorsed in blank by the Originator;
(xi) except for Permitted Liens, the Loan and the Borrower's
interest in all Related Property are free of any Liens; and all filings and
other actions required to perfect the security interest of the Deal Agent
as agent for the Secured Parties in the Collateral have been made or taken;
(xii) the Loan has an original term to maturity of no more than 36
months in the case of ARLs and no more than 120 months in the case of STLs,
and the principal amount thereof is fully amortizing in equal installments
over such term (provided that if such Loan is an STL, principal may be due
on maturity in full);
(xiii) no right of recission, set off, counterclaim, defense or other
material dispute exists or has been asserted with respect to such Loan,
other than routine adjustments (which have not been material either
individually or in the aggregate) related to the settlement of healthcare
receivables in general, which adjustments have been accounted for in the
related Liquidity Factor;
(xiv) the Loan was originated under the existing Loan Documents
related thereto, which Loan Documents have not been modified in any respect
and the maturity date of such Loan or any payment due thereunder has not
been extended;
(xv) any Related Property with respect to such Loan is insured for
in accordance with the Credit and Collection Policies;
(xvi) if such Loan is an STL, such Loan is (x) not subordinated to
any other obligation of the Obligor thereof, (y) not a "mezzanine" loan and
(z) cross-collateralized to one or more ARLs;
(xvii) the outstanding principal amount of such Loan does not exceed
the amount of the commitment of the Originator to the Obligor in respect of
such Loan and no
11
portion of the outstanding principal amount of such Loan represents an
advance made to the Obligor thereof in respect of any amount due to such
Obligor from an individual;
(xviii) the Loan was underwritten and credit approved by HCFP in
accordance with the Credit and Collection Policy and HCAC has completed to
its sole satisfaction a due diligence audit and collateral assessment; and,
(xix) the Obligor with respect to such Loan is an Eligible Obligor.
Eligible Obligor: On any day, any Obligor which satisfies each of the following
----------------
requirements a all times:
(i) such Obligor's primary business is to provide healthcare
services to individuals or to other healthcare providers;
(ii) such Obligor is a legal operating entity, duly organized and
validly existing under the laws of its jurisdiction of organization;
(iii) such Obligor is not the subject of any Insolvency Event, and,
as of the Funding Date on which the Loan became a part of the Collateral,
such Obligor is not in financial distress and has not experienced a
material adverse change in its condition, financial or otherwise;
(iv) such Obligor is not an Affiliate of any of the parties hereto;
(v) such Obligor's principal office and all Related Property are
located in the United States;
(vi) such Obligor is a Grade 4 Obligor or Better;
(vii) no other Loan of such Obligor is Delinquent for more than
thirty (30) days;
(viii) such Obligor is not a Governmental Authority; and
(ix) such Obligor is in compliance with all material terms and
conditions of its Loan Documents.
ERISA: The U.S. Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and the regulations promulgated and rulings issued
thereunder.
ERISA Affiliate: (a) Any corporation which is a member of the same controlled
---------------
group of corporations (within the meaning of Section 414(b) of the Code) as the
Borrower; (b) A trade or business (whether or not incorporated) under common
control (within the meaning of Section
12
414(c) of the Code) with the Borrower or (c) A member of the same affiliated
service group (within the meaning of Section 414(m) of the Code) as the
Borrower, any corporation described in clause (a) above or any trade or business
described in clause (b) above.
Evaluation Policy: The obligor and collateral evaluation policies of the
-----------------
Evaluator as of the date hereof, set forth in Exhibit I, as the same may be
---------
amended or modified from time to time in accordance with Section 6.30.
Evaluator: HCAC.
---------
Eurodollar Disruption Event: With respect to any Advance as to which Interest
---------------------------
accrues or is to accrue at a rate based upon the Adjusted Eurodollar Rate, any
of the following: (a) a determination by a Lender that it would be contrary to
law or to the directive of any central bank or other governmental authority
(whether or not having the force of law) to obtain United States dollars in the
London interbank market to make, fund or maintain any Advance; (b) the inability
of any Lender to obtain timely information for purposes of determining the
Adjusted Eurodollar Rate; (c) a determination by a Lender that the rate at which
deposits of United States dollars are being offered to such Lender in the London
interbank market does not accurately reflect the cost to such Lender of making,
funding or maintaining any Advance; or (d) the inability of a Lender to obtain
United States dollars in the London interbank market to make, fund or maintain
any Advance.
Eurodollar Reserve Percentage: On any day, the then applicable percentage
-----------------------------
(expressed as a decimal) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining reserve requirements
applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other
then applicable regulation of the Board of Governors (or any successor) that
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
Excess Spread Account: As defined in Section 6.4(e).
---------------------
Facility Amount: At any time, $150,000,000; provided, however, on and after the
---------------
Termination Date, the Facility Amount shall be zero.
Facility Fee: For any Collection Period, the fee payable by the Borrower to the
------------
Deal Agent, on behalf of VFCC, in an amount equal to the sum of the products,
for each day during such Collection Period, of (i) the Facility Fee Rate, (ii)
the Facility Amount on such day minus Advances Outstanding on such day and (iii)
the quotient of (a) 1 and (b) 360.
Facility Fee Rate: As defined in the Fee Letter.
-----------------
Facility Termination Date: December 28, 2001 or such later date as may be
-------------------------
agreed to in writing by each Lender.
13
Federal Funds Rate: For any period, a fluctuating interest rate per annum equal
-------------------
for each day during such period to the weighted average of the federal funds
rates as quoted by First Union and confirmed in Federal Reserve Board
Statistical Release H.15(519) or any successor or substitute publication
selected by First Union (or, if such day is not a Business Day, for the
preceding Business Day), or, if, for any reason, such rate is not available on
any day, the rate determined, in the sole opinion of First Union, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 A.M. Charlotte, North Carolina time.
Fee Letter: The letter, dated as of the Closing Date, among the Borrower, the
-----------
Servicer, the Deal Agent and First Union setting forth, among other things, the
Program Margin, and the Facility Fee Rate, as amended, modified, restated or
replaced from time to time.
First Union: First Union National Bank, in its individual capacity, and its
------------
successors or assigns.
Funding Date: Any day on which an Advance is made.
------------
Funding Request: A Borrower Notice requesting an Advance and including the
---------------
items required by 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 entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
court or arbitrator having jurisdiction over such Person.
Grade 4 Obligor or Better: As of any date of determination, an Obligor that is,
-------------------------
in accordance with the Credit and Collection Policies, classified as "Grade 4"
or better.
H.15: As defined in Section 5.3.
----
HCAC: HealthCare Analysis Corporation.
----
Hedge Breakage Costs: For any Hedge Transaction, any amount payable by the
--------------------
Borrower for the early termination of that Hedge Transaction or any portion
thereof.
Hedge Collateral: All now existing and hereafter acquired Hedging Agreements,
----------------
Hedge Transactions, and all present and future amounts payable by all Hedge
Counterparties to the Borrower under or in connection with such Hedging
Agreements and Hedge Transactions with such Hedge Counterparties.
Hedge Counterparty: Any entity which (a) on the date of entering into any Hedge
------------------
Transaction (i) is an interest rate swap dealer that is either a Lender or an
Affiliate of a Lender, or has been
14
approved in writing by the Deal 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 and not less than "A-2" by ▇▇▇▇▇'▇ ("Long-term Rating Requirement") and a
----------------------------
short-term unsecured debt rating of not less than "A-1" by S&P and not less than
"P-1" by ▇▇▇▇▇'▇ ("Short-term Rating Requirement"), and (b) in a Hedging
-----------------------------
Agreement (i) consents to the assignment of the Borrower's rights under the
Hedging Agreement to the Deal Agent pursuant to Section 5.2(b) and (ii) agrees
that in the event that ▇▇▇▇▇'▇ or S&P reduces its long-term unsecured debt
rating below the Long-term Rating Requirement, or reduces its short-term
unsecured debt rating below the Short-term Rating Requirement, it shall transfer
its rights and obligations under each Hedging Transaction to another entity that
meets the requirements of clause (a) and (b) hereof and has entered into a
Hedging Agreement with the Borrower on or prior to the date of such transfer.
Hedge Level: On any Funding Date, 75%, provided, however, if on such Funding
----------- --------
Date the Portfolio Yield does not exceed the Minimum Portfolio Yield, the Hedge
Level will be 100%.
Hedge Notional Amount: The aggregate notional amount in effect on any day under
---------------------
all Hedge Transactions entered into pursuant to Section 5.2(a) for an Advance.
Hedge Requirements: The Hedge Level and each of the requirements of Section
------------------
5.2.
Hedge Transaction: Each interest rate swap transaction between the Borrower and
-----------------
a Hedge Counterparty which is entered into pursuant to Section 5.2(a) and is
governed by a Hedging Agreement.
Hedging Agreement: Each agreement between the Borrower and a Hedge Counterparty
-----------------
which governs one or more Hedge Transactions entered into pursuant to Section
5.2, 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 H hereto or such other
form as the Deal Agent shall approve in writing, and each "Confirmation"
thereunder confirming the specific terms of each such Hedge Transaction.
Increased Costs: Any amounts required to be paid by the Borrower to an Affected
---------------
Party pursuant to Section 2.13.
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 which is
evidenced by a note, bond, debenture or similar instrument, (b) all obligations
of such Person under 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,
and (e) all indebtedness, obligations or liabilities of that Person in respect
of Derivatives.
15
Indemnified Amounts: As defined in Section 8.1.
-------------------
Indemnified Party: As defined in Section 8.1.
-----------------
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 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 payments, or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.
Insurance Policy: With respect to any Loan included in the Collateral, an
----------------
insurance policy covering physical damage to or loss to any assets or Related
Property of the Obligor securing such Loan.
Insurance Proceeds: Any amounts payable or any payments made, to the Servicer
------------------
under any Insurance Policy.
Insurer: Any Person that is a Blue Cross/Blue Shield Entity, private medical or
-------
health insurance provider or company, health maintenance organization, health
insurance plan, preferred provider organization, point of service program or
similar Person obligated to pay a portion or all of the healthcare costs or
expenses incurred by an individual, other than any such Person that is, or is
administered by, a Governmental Authority.
Insurer Receivables: On any day, with respect to any obligor of any receivable
-------------------
securing any Loan, which obligor is an Insurer, the aggregate of the amounts
owed by such obligor to all Obligors under all Loans that are part of the
Collateral on such day.
16
Interest: For each Interest Accrual Period and each Advance outstanding during
--------
such Interest Accrual Period, the product of:
IR x P x AD/360
where
IR = the Interest Rate applicable to such Advance;
P = the principal amount of such Advance on the first day of
such Interest Accrual Period, or if such Advance was first
made during such Interest Accrual Period, the principal
amount of such Advance on the day such Advance is made;
and
AD = the actual number of days comprising such Interest Accrual
Period, or if such Advance was first made during such
Interest Accrual Period, the actual number of days
beginning on the day such Advance was first made through
the end of such Interest Accrual Period.
provided, however, that (i) no provision of this Agreement shall require 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 Accrual Period: For any Payment Date, the period from and including
-----------------------
the fifth day of the calendar month preceding the month in which such Payment
Date occurs through and including the fourth day of the calendar month in which
such Payment Date occurs; or with respect to the initial Interest Accrual
Period, the period from and including the Closing Date through and including the
fourth day of the calendar month in which the first Payment Date occurs.
Interest Collection Account: The subaccount of the Collection Account into
---------------------------
which all Interest Collections are deposited by the Servicer in accordance with
Section 2.10.
Interest Collections: Any and all amounts received in respect of any interest,
--------------------
fees (including, without limitation, collateral management fees, commitment
fees, unused line fees and termination fees) or other similar charges on a Loan
from or on behalf of any Obligors that are deposited into the Collection
Account, or received by the Servicer, Originator, or Borrower in respect of
Loans, in the form of cash, checks, wire transfers, electronic transfers or any
other form of cash payment (net of any payment owed by the Borrower to, and
including any receipts from, any Hedge Counterparties) and, solely for the
purpose of calculation of the Portfolio Rate, any and all amounts accrued in
respect of any fees (but only to the extent such fees were not received during
such Collection Period) owed by any Obligor in respect of any Eligible Loan.
17
Interest Rate: On any day during any Interest Accrual Period, a rate equal to
-------------
the Adjusted Eurodollar Rate for such Interest Accrual Period plus the Cost of
----
Funds Adjustment (if any); provided, however, that the Interest Rate shall be
-------- -------
the Base Rate if the relevant Lender shall have notified the Deal Agent that a
Eurodollar Disruption Event has occurred.
Investment: With respect to any Person, any direct or indirect loan, advance or
----------
investment by such Person in any other Person, whether by means of share
purchase, capital contribution, loan or otherwise, excluding the acquisition of
assets pursuant to the Purchase Agreement and excluding commission, travel and
similar advances to officers, employees and directors made in the ordinary
course of business.
Investor Advances: On any day, all outstanding Advances made by any of the
-----------------
Investors hereunder.
Issuer: VFCC and any other Lender whose principal business consists primarily
------
of issuing commercial paper notes or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar collateral.
Jurisdiction: The States of Delaware and Maryland.
------------
Large Loan Limit: Shall mean $20,000,000.
----------------
Lenders: Collectively, VFCC, First Union, and the Investors and any other
-------
Person that agrees, pursuant to the pertinent Assignment and Acceptance, to fund
Advances pursuant to this Agreement.
LIBOR Business Day: Any day of the year other than a Saturday, Sunday or any
------------------
day on which banking institutions in New York, New York, Charlotte, North
Carolina, or in the City of London, England generally are required or authorized
to be closed.
LIBOR Rate: For any Interest Accrual Period, an interest rate per annum equal
----------
to:
(i) the posted rate for 30-day deposits in United States Dollars
appearing on Telerate page 3750 as of 11:00 a.m. (London time) on the first
day of such Interest Accrual Period or, if such day is not a LIBOR Business
Day, the posted rate that appeared on the immediately preceding LIBOR
Business Day; or
(ii) if no such rate appears on Telerate page 3750 at such time
and day, then the LIBOR Rate shall be the rate for 30-day deposits in
United States Dollars appearing on page US0001M [Index] HP on a
Bloomberg(R) terminal as of 11:00 a.m. (London time) on such day or, if
such day is not a LIBOR Business Day, the posted rate that appeared on the
immediately preceding LIBOR Business Day; or
18
(iii) if no such rate appears on page US0001M [Index] HP on a
Bloomberg(R) terminal at such time and day, then the LIBOR Rate shall be
determined by First Union 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
30-day deposits in United States Dollars are being, have been, or would be
offered or quoted by First Union to major banks in the applicable interbank
market for Eurodollar deposits at or about 11:00 a.m. (Charlotte, North
Carolina) on such day.
Lien: With respect to any Collateral, (a) any mortgage, lien, pledge, charge
----
security interest or encumbrance of any kind in respect of such Collateral or
(b) the interest of a vendor or lessor under any conditional sale agreement,
financing Loan or other title retention agreement relating to such Collateral.
Liquidity Bank: Each liquidity bank that is a party to the Liquidity Purchase
--------------
Agreement.
Liquidity Factor: For any Loan and any Obligor, the percentage determined for
----------------
such Loan and/or Obligor by the Evaluator in accordance with the Credit and
Collection Policy and set forth in the List of Loans, reflecting the Evaluator's
good faith assessment of the actual liquidity of such Obligor's receivables.
Liquidity Purchase Agreement: The Liquidity Purchase Agreement, dated as of
----------------------------
December 28, 1998, among VFCC, the Deal Agent, the Liquidity Agent, and First
Union, as an investor, and each other liquidity bank a party thereto.
List of Loans: On any day the list of Loans included in the Collateral, as set
-------------
forth in Schedule IV hereto, as the same may be changed from time to time in
accordance the provisions hereof.
Loan: An ARL or an STL.
----
Loan Advance Rate: With respect to any Loan, the advance rate applicable under
-----------------
the related Loan Documents.
Loan Documents: With respect to any Loan, the related promissory note and any
--------------
related loan agreement, security agreement, mortgage, assignment of Loans, all
guarantees and UCC financing statements and continuation statements (including
amendments or modifications thereof) executed by the Obligor thereof or by
another Person on the Obligor's behalf in respect of such Loan and related
promissory note, including, without limitation, general or limited guaranties
and, for each STL, an Assignment of Mortgage and, for all Loans with a note, an
assignment (which may be by allonge), in blank, signed by an officer of the
Originator.
Loan File: With respect to any Loan, each of the Loan Documents related
---------
thereto.
19
Medicaid Receivables: On any day, the aggregate dollar amount owed to all
--------------------
Obligors in respect of any medical or healthcare services provided under any
Medicaid program established in accordance with the provisions of Title XIX of
the Social Security Act, and the rules and regulations thereunder, to the extent
such amounts secure the related Loans made to such Obligor and provided that
such Loans are, or will become, a part of the Collateral on such day.
Medicare Receivables: On any day, the aggregate dollar amount owed to all
--------------------
Obligors in respect of any medical or healthcare services provided under any
Medicare program established in accordance with the provisions of Title XVIII of
the Social Security Act, and the rules and regulations thereunder, to the extent
such amounts secure the related Loans made to such Obligor and provided that
such Loans are, or will become, a part of the Collateral on such day.
Minimum Overcollateralization: On any day, the greatest of (a) the Base O/C
-----------------------------
Amount, (b) Base ARL O/C Amount, (c) the Base STL Amount and (d) an amount equal
to two (2) times the largest commitment under any Loan that is part of the
-----
Collateral to any Obligor (such commitment to be calculated to include all
commitments under all Loans that are part of the Collateral to Obligors that are
Affiliates of such Obligor).
Minimum Portfolio Yield: 4.5%
-----------------------
Monthly Report: As defined in Section 6.14(a).
--------------
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
-------
Multiemployer Plan: A "multiemployer plan" as defined in Section 4001(a)(3) of
------------------
ERISA which is or was at any time during the current year or the immediately
preceding five years contributed to by the Borrower or any ERISA Affiliate on
behalf of its employees.
Net Eligible Loans: On any Determination Date, the aggregate Outstanding Loan
------------------
Balance of all Eligible Loans (after applying all applicable Liquidity Factors,
Loan Advance Rates and net of all amounts in excess of all applicable
Concentration Limits) except to the extent the Servicer determines the same to
not be collectible as of the first day of the related Collection Period.
Notes: As defined in Section 2.4(a).
-----
Obligations: All loans, advances, debts, liabilities and obligations, for
-----------
monetary amounts owing by the Borrower to the Lenders, the Deal Agent, the
Liquidity Agent, or any of their assigns, as the case may be, whether due or to
become due, matured or unmatured, liquidated or unliquidated, contingent or non-
contingent, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, arising under or in respect of any of the Loan
Documents or any Hedge Agreement, as amended or supplemented from time to time,
whether or not evidenced by any separate note, agreement or other instrument.
This term includes, without limitation, all principal, interest (including
interest that accrues after the commencement against the Borrower of any action
under the Bankruptcy Code), Breakage Costs, Hedge Breakage Costs,
20
fees, including, without limitation, any and all arrangement fees, loan fees,
Facility Fees, and any and all other fees, expenses, costs or other sums
(including attorney costs) chargeable to the Borrower under any of the
Transaction Documents.
Obligor: A Person obligated to make payments pursuant to a Loan including any
-------
guarantor thereof.
Officer's Certificate: A certificate signed by any officer of the Borrower or
---------------------
the Servicer, as the case may be, and delivered to the Deal Agent.
Opinion of Counsel: With respect to any Specified Person, a written opinion of
------------------
counsel, who is reasonably acceptable to the Deal Agent.
Originator: HCFP.
----------
Outstanding Loan Balance: With respect to any Loan, the then outstanding
-------------------------
principal balance thereof, minus the portion of the outstanding principal
-----
balance that exceeds the Permitted Advance Amount.
Overcollateralization Amount: On any day, (a) the sum of (i) the Aggregate
----------------------------
Outstanding Loan Balance as of such date, (ii) the amount on deposit in the
Excess Spread Account on such day and (iii) all Principal Collections on deposit
in Principal Collection Account on such day minus (b) the Overcollateralization
-----
Calculation Amount on such day.
Overcollateralization Calculation Amount: On any day, the Outstanding Advances
----------------------------------------
on such day, plus an amount of interest thereon, calculated at the applicable
----
Interest Rate, accrued through such date and to accrue through the end of the
then current Interest Accrual Period.
Overcollateralization Excess: On any day, the positive excess, if any, of (a)
----------------------------
Overcollateralization Amount on such day over (b) the Minimum
Overcollateralization on such day.
Overcollateralization Shortfall: On any day, the positive excess, if any, of
-------------------------------
(a) Minimum Overcollateralization on such day over (b) the Overcollateralization
Amount on such day.
Payment Date: The tenth (10/th/) day of each calendar month or, if such day is
------------
not a Business Day, the next succeeding Business Day.
Permitted Advance Amount: For any Loan, an amount not to exceed the product of
------------------------
(a) 80%, (b) the related Liquidity Factor and (c) the aggregate amount of
eligible collateral securing such Loan.
21
Permitted Investments: Any one or more of the following types of investments:
---------------------
(a) marketable obligations of the United States, the full and timely
payment of which are backed by the full faith and credit of the United States
and which have a maturity of not more than 270 days from the date of
acquisition;
(b) marketable obligations, the full and timely payment of which are
directly and fully guaranteed by the full faith and credit of the United States
and which have a maturity of not more than 270 days from the date of
acquisition;
(c) bankers' acceptances and certificates of deposit and other interest-
bearing obligations (in each case having a maturity of not more than 270 days
from the date of acquisition) denominated in dollars and issued by any bank with
capital, surplus and undivided profits aggregating at least $100,000,000, the
short-term obligations of which are rated A-1 by S&P and P-1 by Moody's;
(d) repurchase obligations with a term of not more than ten days for
underlying securities of the types described in clauses (a), (b) and (c) above
entered into with any bank of the type described in clause (c) above;
(e) commercial paper rated at least A-1 by S&P and P-1 by Moody's;
(f) money market funds registered under the Investment Company Act of
1940, as amended, having a rating, at the time of such investment, of not less
than Aaa by Moody's and AAAm by S&P; and,
(g) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States or any state
thereof (or domestic branches of any foreign bank) and subject to supervision
and examination by federal or state banking or depository institution
authorities; provided, however that at the time such investment, or the
-------- -------
commitment to make such investment, is entered into, the short-term debt rating
of such depository institution or trust company shall be at least A-1 by S&P and
P-1 by Moody's.
Permitted Liens: Liens in favor of the Deal Agent as agent for the Secured
---------------
Parties created pursuant to this Agreement.
Person: An individual, partnership, corporation (including a business trust),
------
limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
Portfolio Rate: On any day, with respect to any Collection Period, the
--------------
annualized percentage equivalent of a fraction, the numerator of which is equal
to all Interest Collections deposited in
22
the Collection Account for such Collection Period, and the denominator of which
is equal to the Advances Outstanding on the last day of such Collection Period.
Portfolio Requirements: As defined in Section 2.8.
----------------------
Portfolio Yield: On any day, the excess, if any, of (a) the Portfolio Rate on
---------------
such day over (b) the Interest Rate on such day.
Prime Rate: The rate announced by First Union from time to time as its prime
----------
rate in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by First Union in connection with extensions of credit to debtors.
Principal Collection Account: The subaccount of the Collection Account into
----------------------------
which Principal Collections will be deposited in accordance with Section 2.10.
Principal Collections: Any and all amounts received in respect of any principal
---------------------
due and payable under any Loan from or on behalf of Obligors that are deposited
into the Principal Collection Account, or received by the Servicer, Originator,
or Borrower in respect of Loans, in the form of cash, checks, wire transfers,
electronic transfers or any other form of cash payment.
Proceeds: With respect to any Collateral, whatever is receivable or received
--------
when such Collateral is sold, collected, 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
Collateral.
23
Program Fee: For each Interest Accrual Period and each Advance outstanding
-----------
during such Interest Accrual Period, the product of:
PFR x P x AD/360
where
PFR = 1.20% per annum;
P = the principal amount of such Advance on the first day of
such Interest Accrual Period, or if such Advance was first
made during such Interest Accrual Period, the principal
amount of such Advance on the day such Advance is made; and
AD = the actual number of days comprising such Interest Accrual
Period, or if such Advance was first made during such
Interest Accrual Period, the actual number of days beginning
on the day such Advance was first made through the end of
such Interest Accrual Period.
Pro-Rata Share: With respect to any Investor on any day, the percentage
--------------
equivalent of a fraction the numerator of which is such Investor's Commitment
and the denominator of which is the Facility Amount.
Purchase Agreement: The Purchase and Sale Agreement dated as of the date
------------------
hereof, between the Originator and the Borrower, as amended, modified,
supplemented or restated from time to time.
Qualified Institution: As defined in Section 6.4(d).
---------------------
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 Issuer.
Records: With respect to any Loans, all documents, books, records and other
-------
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to any item of Collateral and the related Obligors,
other than the Loan Documents.
Register: As defined in Section 10.1(c).
--------
Related Property: With respect to a Loan, any property or other assets of the
----------------
Obligor thereunder securing the repayment of such Loan.
Reporting Date: The date which is two Business Days prior to any Payment Date.
--------------
24
Required Investors: At a particular time, Investors with Commitments in excess
------------------
of 66 2/3 % of the Facility Amount.
Required Notional Amount: On any Funding Date, the product of (i) the Hedge
------------------------
Level and (ii) the Outstanding Advances determined as of such Funding Date after
giving effect to all Advances to be made on such Funding Date.
Required Reports: Collectively, the Monthly Report, the Servicer's Certificate
----------------
and the quarterly financial statement of the Servicer required to be delivered
to the Deal Agent pursuant to Section 6.14 hereof.
Requirements of Law: For any Person shall mean the certificate of incorporation
-------------------
or articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act, and Regulations B, U, T, X and Z of the Board of
Governors of the Federal Reserve System).
Responsible Officer: As to any Person, any officer of such Person with direct
-------------------
responsibility for the administration of this Agreement and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Revolving Period: The period commencing on the Closing Date and ending on day
----------------
immediately preceding the Termination Date.
Rolling Three-Month Charged-Off Ratio: For any day, beginning after the end of
-------------------------------------
the third Collection Period following the Closing Date, the percentage
equivalent of a fraction the numerator of which is equal to the sum of the three
(3) most recent Charged-Off Ratios and the denominator of which is equal to
three (3). For any day from the end of the first Collection Period following
the Closing Date through the end of the second Collection Period following the
Closing Date, the Rolling Three-Month Charged-Off Ratio shall be equal to
Charged-Off Ratio calculated for the first Collection Period following the
Closing Date and for any day from the end of the second Collection Period
following the Closing Date through the end of the third Collection Period
following the Closing Date, the Rolling Three-Month Charged-Off Ratio shall be
equal to the percentage equivalent of a fraction the numerator of which is equal
to the sum of the Charged-Off Ratios for the first two Collection Periods
following the Closing Date and the denominator of which is equal to two (2).
Rolling Three-Month Delinquency Ratio: For any day after the end of the third
-------------------------------------
Collection Period following the Closing date, the percentage equivalent of a
fraction the numerator of which is equal to the sum of the three (3) most recent
Delinquency Ratios and the denominator of which is equal to three (3). For any
day from the end of the first Collection Period following the
25
Closing Date through the end of the second Collection Period following the
Closing Date, the Rolling Three-Month Delinquency Ratio shall be equal to
Delinquency Ratio calculated for the first Collection Period following the
Closing Date; and, for any day from the end of the second Collection Period
following the Closing Date through the end of the third Collection Period
following the Closing Date, the Rolling Three-Month Delinquency Ratio shall be
equal to the percentage equivalent of a fraction the numerator of which is equal
to the sum of the Delinquency Ratios for the first two Collection Periods
following the Closing Date and the denominator of which is equal to two (2).
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
---
Companies, Inc. and any successor thereto.
Scheduled Payment: On any Determination Date with respect to any Loan, each
-----------------
monthly payment (whether principal, interest or principal and interest)
scheduled to be made by the Obligor thereof after such Determination Date under
the terms of such Loan.
Secured Party: (i) Each Lender and (ii) each Hedge Counterparty that is either
-------------
a Lender or an Affiliate of a Lender if that Affiliate executes a counterpart of
this Agreement agreeing to be bound by the terms of this Agreement applicable to
a Secured Party.
Servicer: HCFP and its permitted successors and assigns.
--------
Servicer Advance: An advance of Scheduled Payments made by the Servicer
-----------------
pursuant to Section 6.5.
Servicer Termination Event: As defined in Section 6.25.
--------------------------
Servicer's Certificate: As defined in Section 6.14(b).
----------------------
Servicing Duties: As defined in Article VI.
----------------
Servicing Fee: For each Payment Date, an amount equal to the sum of the
-------------
products, for each day during the related Collection Period, of (i) the Advances
Outstanding on such day, (ii) the Servicing Fee Rate and (iii) a fraction, the
numerator of which is 1 and the denominator of which is 360.
Servicing Fee Rate: A rate equal to 1.0% per annum.
------------------
Servicing Records: All documents, books, records and other information
-----------------
(including, without limitation, computer programs, tapes, disks, data processing
software and related property rights) prepared and maintained by the Servicer
with respect to the Loans and the related Obligors.
Single Insurer Concentration Limit: With respect to all Insurer Receivables of
----------------------------------
any Insurer and its Affiliates, each of the limitations set forth in Schedule V
hereto.
26
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 owned by
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 owned by 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 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.
STL: Any closed end term loan arising from the extension of credit by the
---
Originator or one of its subsidiaries in the ordinary course of the Originator's
business to an Obligor, secured by substantially all of the assets of such
Obligor (including, without limitation, accounts receivable, inventory,
machinery, equipment and real property of such Obligor), including, without
limitation, all monies due or owing and all Interest Collections, Principal
Collections and other amounts received from time to time with respect to such
loan receivable and all Proceeds
Structuring Fee: The structuring fee agreed to between the Borrower and the
---------------
Deal Agent in the Fee Letter.
Successor Servicer: As defined in Section 6.26(a).
------------------
Tangible Net Worth: On any day, the amount (after giving effect to any
------------------
provision to purchase up to $35 million of common stock) of stockholder equity
(determined in accordance with GAAP) on a consolidated basis (less Intangible
Assets). "Intangible Assets" means, with respect to any specified Person, all
of such Person's assets that would be classified as intangible assets under GAAP
consistently applied, including, without limitation, goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), patents, trade names, copyrights, franchises, and deferred charges
(including, without limitation, unamortized debt discount and expense,
organization costs, and research and development costs).
Taxes: Any present or future taxes, levies, imposts, duties, charges,
-----
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Government Authority.
Termination Date: The earliest to occur of (a) the date of the occurrence of an
----------------
Early Amortization Event pursuant to Section 7.1, (b) the date that the
Liquidity Purchase Agreement shall cease to be in full force and effect, (c) the
Commitment Termination Date and (d) Facility Termination Date.
27
Termination Notice: As defined in Section 6.25.
------------------
Transaction: As defined in Section 3.2.
-----------
Transaction Documents: This Agreement, the Purchase Agreement, the Liquidity
---------------------
Purchase Agreement all Hedge Agreements, and any other document, certificate,
opinion, agreement or writing the execution of which is necessary or incidental
to carrying out the transactions contemplated by this Agreement or any of the
other foregoing documents.
Transfer Date: As defined in the Purchase Agreement.
-------------
Transferred Loans: Each Loan that is acquired by the Borrower under the
-----------------
Purchase Agreement.
UCC: The Uniform Commercial Code as from time to time in effect in the
---
specified jurisdiction.
United States: The United States of America.
-------------
Unreimbursed Servicer Advances: At any time, the amount of all previous
------------------------------
Servicer Advances (or portions thereof) as to which the Servicer has not been
reimbursed as of such time pursuant to Section 2.7(a)(iii) and which the
Servicer has determined in its sole discretion will not be recoverable from
Collections with respect to the related Loan.
VFCC Advances: On any day, all outstanding Advances made by VFCC hereunder.
-------------
Warranty Event: Occurs as to any Loan included as part of the Collateral if any
--------------
representation or warranty relating to such Loan is not true and correct when
made and such breach could have a material adverse effect upon the value of such
Loan or on the Secured Parties or their interests hereunder and such breach is
not cured within the relevant cure period.
SECTION 1.2 OTHER TERMS.
-----------
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.
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."
28
ARTICLE II
ADVANCES
SECTION 2.1 ADVANCES.
--------
(a) On the terms and conditions hereinafter set forth, the Borrower may,
at its option, from time to time on any Business Day during the Revolving Period
request that the Lenders make advances (each, an "Advance") to it on a Business
-------
Day, each such requested Advance to be in an amount which, at any time, shall
not exceed the Availability in effect on the related Funding Date. Following
receipt by the Deal Agent of a Funding Request, the Deal Agent shall first
decide whether the Advance will be made by VFCC or by the Investors. If the Deal
Agent decides that VFCC will make the Advance, it shall ask VFCC to make the
Advance and VFCC may, in its sole discretion, agree or decline to make the
Advance. The Deal Agent shall promptly notify the Liquidity Agent and the
Investors in writing of any declination by VFCC to make an Advance. If VFCC
declines to make an Advance, then the Investors shall fund such Advance. Under
no circumstances shall any Investor make any Advance on any Funding Date in
excess of the lesser of (i) such Investor's Pro-Rata Share of the portion of the
Advance not funded by VFCC, and (ii) the amount by which such Investor's
Commitment exceeds the aggregate outstanding principal amount of Advances made
by such Investor prior to such Funding Date.
(b) The Borrower may, within 105 days, but no later than 45 days, prior to
the then Commitment Termination Date, by written notice to the Deal Agent, make
written requests for VFCC and the Investors to extend the Commitment Termination
Date for additional periods of 364 days. The Deal Agent will give prompt notice
to VFCC and each of the Investors of its receipt of such request for extension
of the Commitment Termination Date. VFCC and each Investor shall make a
determination, in their sole discretion and after a full credit review, within
thirty (30) days following receipt of any written request to extend the
Commitment Termination Date that is delivered in accordance with this Section
2.1(b) as to whether or not they will agree to extend the Commitment Termination
Date; provided, however, that the failure of VFCC or any Investor to make a
-------- -------
timely response to the Borrower's request for extension of the Commitment
Termination Date shall be deemed to constitute a refusal by VFCC or the
Investor, as the case may be, to extend the Commitment Termination Date. The
Commitment Termination Date shall only be extended upon the consent of (i) VFCC
and (ii) 100% of the Investors.
SECTION 2.2 PROCEDURES FOR ADVANCES.
-----------------------
(a) In the case of the making of any Advance, the repayment of any
Advance, or any termination, increase or reduction of the Facility Amount and
prepayments of Advances, the Borrower shall give the Deal Agent a Borrower
Notice. Each Borrower Notice shall specify the amount (subject to Section 2.1
hereof) of Advances to be borrowed or repaid and the Funding Date or repayment
date (which, in all cases, shall be a Business Day).
29
(b) Subject to the conditions described in Section 2.1, the Borrower may
request an Advance from the Lenders by delivering to the Deal Agent at certain
times the information and documents set forth in this Section 2.2.
(c) No later than 4:00 p.m. (New York City time) two (2) Business Days
prior to the proposed Funding Date, the Borrower shall notify the Deal Agent by
delivery to the Deal Agent of a complete and accurate Funding Request, including
the proposed Funding Date, a calculation of the Borrowing Base as of the date
the Advance is requested and an updated List of Loans including each Loan that
is the subject of the proposed Advance. If a Funding Request is delivered after
10:00 a.m. (New York City time) three (3) Business Days prior to the proposed
Funding Date, such Funding Notice shall be deemed to be received prior to 10:00
a.m. (New York City time) on the next succeeding Business Day and the proposed
Funding Date shall be deemed to the third Business Day following such deemed
receipt.
(d) Each Funding Request shall specify the aggregate amount of the
requested Advance, which shall be in an amount equal to $1,000,000 or integral
multiples of $100,000 in excess thereof. Each Funding Request shall be
accompanied by a Borrower Notice prepared by the Servicer, depicting the
outstanding amount of Advances under this Agreement and representing that all
conditions precedent for a funding have been met, including a representation by
the Borrower that the requested Advance does not on the Funding Date exceed the
Availability. Any Funding Request shall be irrevocable and the Borrower shall
deliver no more than six (6) such Funding Requests in any calendar month.
SECTION 2.3 OPTIONAL CHANGES IN FACILITY AMOUNT; PREPAYMENTS.
------------------------------------------------
(a) The Borrower shall be entitled at its option, at any time prior to the
occurrence of an Early Amortization Event, to reduce the Facility Amount in
whole or in part; provided that the Borrower shall give prior written notice of
--------
such reduction to the Deal Agent as provided in paragraph (b) of this Section
2.3 and that any partial reduction of the Facility Amount shall be in an amount
equal to $5,000,000 or integral multiples of $1,000,000 in excess thereof to a
minimum of $500,000. Any request for a reduction in the Facility Amount shall
be irrevocable and the Borrower shall deliver no more than four such requests in
any twelve month period.
(b) From time to time during Revolving Period the Borrower may prepay any
portion or all of the Advances Outstanding by delivering to the Deal Agent a
Borrower Notice at least two (2) Business Days prior to the date of such
prepayment (or such later time as the Deal Agent, in its sole discretion may
agree), specifying the date and amount of the prepayment and certifying that,
following such prepayment, the Borrower will be in compliance with the
provisions of this Agreement, provided that no such reduction shall be given
effect unless the Borrower 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 the
Borrower has paid all Hedge Breakage Costs owing to the relevant Hedge
Counterparty for any such termination. Each such Borrower Notice shall be
irrevocable. If any Borrower Notice is given, the amount specified in such
Borrower Notice shall
30
be due and payable on the date specified therein, together with accrued Interest
to the payment date on the amount prepaid and all Breakage Costs related
thereto. Any partial prepayment by the Borrower of Advances hereunder, shall be
in a minimum amount of $1,000,000 with integral multiples of $100,000. Any
amount so prepaid may, subject to the terms and conditions hereof, be reborrowed
during the Revolving Period. Any Borrower Notice relating to any prepayment
shall be irrevocable.
SECTION 2.4 Notes.
-----
(a) The Advances made by the Lenders hereunder shall be evidenced by a
duly executed promissory note payable to the order of the Deal Agent as agent
for the Lenders in substantially the form of Exhibit B hereto (the "Note"). The
--------- ----
Note shall be dated the Closing Date and shall be in a principal amount equal to
the Facility Amount and shall otherwise be duly completed. The initial term of
the Note shall be a thirty-six (36) months.
(b) The Deal Agent is hereby authorized to enter on a schedule attached to
the Note notations (which may be computer generated) with respect to each
Advance made by each Lender hereunder: (i) the date and principal amount thereof
and (ii) each payment and repayment of principal thereof and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of the Deal Agent to make any such notation
on the schedule attached to the Note shall not limit or otherwise affect the
obligation of the Borrower to repay the Advances in accordance with their
respective terms as set forth herein.
SECTION 2.5 PRINCIPAL REPAYMENTS.
---------------------
(a) Unless sooner prepaid pursuant to Section 2.3(b) or reduced pursuant
to payments received pursuant to Section 2.7(b), the Advances Outstanding shall
be repaid in full on date that occurs thirty-six (36) months following the
Termination Date. In addition, Advances Outstanding shall be repaid as and when
necessary to cause (i) the Advances Outstanding not to exceed the Borrowing Base
and (ii) the Overcollateralization Amount on any day to equal or exceed the
Minimum Overcollateralization on such day, and any amount so repaid may, subject
to the terms and conditions hereof, be reborrowed hereunder during the Revolving
Period.
(b) All repayments of any Advance or any portion thereof shall be made
together with payment of (i) all Interest accrued and unpaid on the amount
repaid to (but excluding) the date of such repayment, (ii) any and all Breakage
Costs and (iii) all Hedge Breakage Costs and any other amounts payable by the
Borrower under or with respect to any Hedge Agreement.
SECTION 2.6 INTEREST PAYMENTS.
-----------------
(a) Interest shall accrue on each Advance during each Interest Accrual
Period at the applicable Interest Rate. The Borrower shall pay Interest on the
unpaid principal amount of each Advance for the period commencing on and
including the Funding Date of such Advance until but excluding the date that
such Advance shall be paid in full. Interest shall accrue during each
31
Interest Accrual Period and be payable on the Advances Outstanding on each
Payment Date, unless earlier paid pursuant to (i) a prepayment in accordance
with Section 2.3 or (ii) a repayment in accordance with Section 2.5.
(b) Anything in this Agreement or the other Transaction Documents to the
contrary notwithstanding, if at any time the rate of interest payable by any
Person under this Agreement and the Transaction Documents exceeds the highest
rate of interest permissible under applicable law (the "Maximum Lawful Rate"),
-------------------
then, so long as the Maximum Lawful Rate would be exceeded, the rate of interest
under this Agreement and the Transaction Documents shall be equal to the Maximum
Lawful Rate. If at any time thereafter the rate of interest payable under this
Agreement and the Transaction Documents is less than the Maximum Lawful Rate,
such Person shall continue to pay interest under this Agreement and the
Transaction Documents at the Maximum Lawful Rate until such time as the total
interest received from such Person is equal to the total interest that would
have been received had applicable law not limited the interest rate payable
under this Agreement and the Transaction Documents. In no event shall the total
interest received by a Lender under this Agreement and the Transaction Documents
exceed the amount which such Lender could lawfully have received, had the
interest due under this Agreement and the Transaction Documents been calculated
since the Closing Date at the Maximum Lawful Rate.
SECTION 2.7 SETTLEMENT PROCEDURES.
---------------------
(a) On each Payment Date, the Servicer shall pay to the following Persons,
from (i) the Interest Collection Account, to the extent of available funds, (ii)
Servicer Advances, and (iii) amounts received in respect of any Hedge Agreement
during such Collection Period (the sum of such amounts described in clauses (i),
(ii) and (iii) being the "Available Collections") the following amounts in the
---------------------
following order of priority:
(i) FIRST, to each Hedge Counterparty, any amounts, including any
-----
Hedge Breakage Costs, owing under the related Hedge Agreement in respect of
any Hedge Transaction, for the payment thereof;
(ii) SECOND, to the Servicer, in an amount equal to its accrued and
------
unpaid Servicing Fees to the end of the preceding Collection Period;
(iii) THIRD, to the Servicer, in an amount equal to any Unreimbursed
-----
Servicer Advances;
(iv) FOURTH, to the Back-up Servicer, in amount equal to any accrued
------
and unpaid currently due Back-up Servicing Fee, for the payment thereof;
(v) FIFTH, to the Deal Agent for the ratable payment to each Lender,
-----
in an amount equal to any accrued and unpaid Interest for such Payment
Date;
32
(vi) SIXTH, to the Deal Agent for the ratable payment to each
-----
Lender, in an amount equal to any accrued and unpaid Facility Fee and the
Program Fee for such Payment Date;
(vii) SEVENTH, to the Deal Agent, in the amount of unpaid Increased
-------
Costs and/or Taxes (if any), for payment to the Lenders in respect thereof;
and
(viii) NINTH, (A) if such Payment Date occurs during the Revolving
-----
Period, first to the Excess Spread Account, in an amount necessary to cure
-----
any Overcollateralization Shortfall on such day, and second all remaining
------
amounts of Available Collections to the Borrower; and (B) if such Payment
Date occurs during the Amortization Period, to the Deal Agent for the
ratable payment to each Lender in reduction, to zero, of the Advances
Outstanding.
(b) On each Payment Date occurring during the Revolving Period, the
Borrower shall direct the Servicer, to the extent of any Principal Collections
on deposit in the Principal Collection Account as of the last day of the related
Collection Period, to use such funds: (i) toward the funding of additional
Loans in connection with a Funding Request pursuant to Section 2.1, or (ii) to
repay all or any portion of Advances Outstanding in accordance with Sections 2.3
and 2.5 hereof. On each Business Day occurring during the Amortization Period,
all Principal Collections on deposit in the Principal Collection Account as of
such Payment Date shall be paid to the Deal Agent for the ratable payment to
each Lender in reduction, to zero, of the Advances Outstanding.
(c) Notwithstanding anything to the contrary contained in this Section
2.7 or any other provision in this Agreement, if on any Business Day the
Availability shall be a negative amount, then the Borrower shall remit to the
Deal Agent, prior to any reinvestment of funds on deposit in the Principal
Collection Account as set forth in Section 2.7(b) and in any event no later than
the close of business of the Deal Agent on the next succeeding Business Day, a
payment, in such amount as may be necessary to reduce Advances Outstanding to an
amount such that the Availability shall be zero or a positive amount.
SECTION 2.8 PORTFOLIO REQUIREMENTS.
----------------------
On each day, the Borrower represents and warrants that each of the
following requirements (the "Portfolio Requirements") is satisfied as of such
----------------------
date:
(a) if such date occurs after the date that is six (6) months following
the Closing Date, the average Outstanding Loan Balance of all Eligible Loans
shall be $2,750,000 or less;
(b) the weighted average maturity of all Eligible Loans that are STLs is
three (3) years or less;
(c) the Portfolio Yield equals or exceeds the Minimum Portfolio Yield; and
33
(d) none of the Concentration Limits is exceeded.
SECTION 2.9 SECURITY INTEREST.
-----------------
As collateral security for the prompt, complete and indefeasible payment
and performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Obligations, the Borrower hereby assigns, pledges and grants
to the Deal Agent, as agent for the Secured Parties, a lien on and security
interest in all of the Borrower's right, title and interest in, to and under
(but none of its obligations under) the Collateral, whether now existing or
owned or hereafter arising or acquired by the Borrower. The assignment under
this Section 2.9 does not constitute and is not intended to result in a creation
or an assumption by the Deal Agent, the Liquidity Agent or any of the Secured
Parties of any obligation of the Borrower or any other Person in connection with
any or all of the Collateral or under any agreement or instrument relating
thereto. Anything herein to the contrary notwithstanding, (a) the Borrower shall
remain liable under the Loans 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 Deal Agent, as agent for the
Secured Parties, of any of its rights in the Collateral shall not release the
Borrower from any of its duties or obligations under the Collateral and (c) none
of the Deal Agent, the Liquidity Agent or any Secured Party shall have any
obligations or liability under the Collateral by reason of this Agreement, nor
shall the Deal Agent, the Liquidity Agent or any Secured Party be obligated to
perform any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 2.10 COLLECTIONS AND ALLOCATIONS.
---------------------------
(a) The Servicer shall promptly (but in no event later than two Business
Days after the receipt thereof) identify any Collections received by it as being
on account of Interest Collections or Principal Collections and deposit all such
Interest Collections or Principal Collections received directly by it into the
Collection Account and the corresponding Interest Collection Account or
Principal Collection Account. The Servicer shall make such deposits or payments
on the date indicated herein by wire transfer, in immediately available funds.
(b) Investment of Funds on Deposit in Collection Account and Excess Spread
----------------------------------------------------------------------
Account. Until the occurrence of a Early Amortization Event, to the extent there
-------
are uninvested amounts deposited in the Collection Account and/or the Excess
Spread Account, all amounts shall be invested in Permitted Investments selected
by the Servicer that mature no later than the Business Day before the next
Business Day; from and after the occurrence of a Early Amortization Event, to
the extent there are uninvested amounts deposited in the Collection Account
and/or the Excess Spread Account, all amounts may be invested in Permitted
Investments selected by the Deal Agent that mature no later than the Business
Day before the next Business Day. Any earnings (and losses) thereon shall be for
the account of the Servicer.
34
SECTION 2.11 PAYMENTS, COMPUTATIONS, ETC.
---------------------------
(a) Unless otherwise expressly provided herein, all amounts to be paid or
deposited by the Borrower or the Servicer hereunder shall be paid or deposited
in accordance with the terms hereof no later than 10:00 A.M. (Charlotte, North
Carolina time) on the day when due in lawful money of the United States in
immediately available funds to the Agent's Account. The Borrower shall, to the
extent permitted by law, pay to the Lender interest on all amounts not paid or
deposited when due hereunder at 1% per annum above the Base Rate, payable on
demand; provided, however, that such interest rate shall not at any time exceed
-------- -------
the maximum rate permitted by applicable law. All computations of interest and
all computations of the Interest Rate and other fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of Interest, other interest or any fee payable hereunder,
as the case may be.
(c) All payments hereunder shall be made without set-off or counterclaim
and in such amounts as may be necessary in order that all such payments shall
not be less than the amounts otherwise specified to be paid under this
Agreement. Promptly following the Collection Date, the Deal Agent shall ▇▇▇▇ the
Notes "Paid" and return them to the Borrower.
SECTION 2.12 BREAKAGE COSTS.
--------------
The Borrower shall pay to the Deal Agent for the account of each Lender,
upon the request of the Liquidity Agent or Deal Agent, such amount or amounts as
shall compensate any Lender for any loss, cost or expense (but excluding lost
profits) incurred by such Lender (as reasonably determined by the Liquidity
Agent or Deal Agent) as a result of any prepayment of an Advance (and interest
thereon) (the "Breakage Costs"). The determination by a Lender of the amount of
--------------
any such loss or expense shall be set forth in a written notice to the Borrower
and shall be conclusive absent manifest error.
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
---------------------------------------------
(a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation or (ii) the compliance by a
Lender or any Affiliate thereof (each of which, an "Affected Party") with any
--------------
guideline or request from any central bank or other governmental agency or
authority (whether or not having the force of law), (A) shall subject an
Affected Party to any Tax (except for Taxes on the overall net income of such
Affected Party), duty or other charge with respect to an Advance hereunder, or
on any payment made hereunder or (B) shall impose, modify or deem applicable any
reserve requirement (including, without limitation, any reserve requirement
imposed by the Board of Governors of the Federal Reserve System, but
35
excluding any reserve requirement, if any, included in the determination of
Interest), special deposit or similar requirement against assets of, deposits
with or for the amount of, or credit extended by, any Affected Party or (C)
shall impose any other condition affecting an Advance or a Lender's rights
hereunder, the result of which is to increase the cost to any Affected Party or
to reduce the amount of any sum received or receivable by an Affected Party
under this Agreement, then within ten days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Borrower shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
additional or increased cost incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Borrower shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction.
(c) If as a result of any event or circumstance similar to those described
in clauses (a) or (b) of this Section 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 hereunder, then
within ten days after demand by such Affected Party, the Borrower shall pay to
such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any such amounts paid by it.
(d) In determining any amount provided for in this section, the Affected
Party may use any reasonable averaging and attribution methods. Any Affected
Party making a claim under this section shall submit to the Borrower a
certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error.
(e) If a Lender shall notify the Deal Agent that a Eurodollar Disruption
Event as described in clause (a) of the definition of "Eurodollar Disruption
Event" has occurred, the Deal Agent shall in turn so notify the Borrower,
whereupon all Advances in respect of which Interest accrues at a rate based upon
the LIBOR Rate shall immediately be converted into Advances in respect of which
Interest accrues at the Base Rate.
36
SECTION 2.14 TAXES.
-----
(a) All payments made by the Borrower in respect of any Advance and all
payments made by the Borrower under this Agreement will be made free and clear
of and without deduction or withholding for or on account of any Taxes, unless
such withholding or deduction is required by law. In such event, the Borrower
shall pay to the appropriate taxing authority any such Taxes required to be
deducted or withheld and the amount payable to each Lender or the Deal Agent (as
the case may be) will be increased (such increase, the "Additional Amount") such
-----------------
that every net payment made under this Agreement after deduction or withholding
for or on account of any Taxes (including, without limitation, any Taxes on such
increase) is not less than the amount that would have been paid had no such
deduction or withholding been deducted or withheld. The foregoing obligation to
pay Additional Amounts, however, will not apply with respect to Taxes related to
the net income or franchise taxes imposed on a Lender or the Deal Agent,
respectively, with respect to payments required to be made by the Borrower or
Servicer under this Agreement, by a taxing jurisdiction in which such Lender or
Deal Agent is organized or is paying taxes as of the Closing Date (as the case
may be). If a Lender or the Deal Agent pays any Taxes in respect of which the
Borrower is obligated to pay Additional Amounts under this Section 2.14(a), the
Borrower shall promptly reimburse such Lender or Deal Agent in full.
(b) The Borrower will indemnify each Lender and the Deal Agent for the
full amount of Taxes in respect of which the Borrower is required to pay
Additional Amounts (including, without limitation, any Taxes imposed by any
jurisdiction on such Additional Amounts) paid by such Lender or the Deal Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto; provided, however, that
-------- -------
such Lender or the Deal Agent, as appropriate, making a demand for indemnity
payment, shall provide the Borrower, at its address set forth under its name on
the signature pages hereof, with a certificate from the relevant taxing
authority or from a Responsible Officer of such Lender or the Deal Agent stating
or otherwise evidencing that such Lender or the Deal Agent has made payment of
such Taxes and will provide a copy of or extract from documentation, if
available, furnished by such taxing authority evidencing assertion or payment of
such Taxes. This indemnification shall be made within ten days from the date
the Lender or the Deal Agent (as the case may be) makes written demand therefor.
(c) Within 30 days after the date of any payment by the Borrower of any
Taxes, the Borrower will furnish to the Deal Agent, at its address set forth
under its name on the signature pages hereof, appropriate evidence of payment
thereof.
(d) If a Lender is not created or organized under the laws of the United
States or a political subdivision thereof, such Lender shall, to the extent that
it may then do so under applicable laws and regulations, deliver to the Borrower
with a copy to the Deal Agent (i) within 15 days after the date hereof, or, if
later, the date on which such Lender becomes a Lender hereof two (or such other
number as may from time to time be prescribed by applicable laws or regulations)
duly completed copies of IRS Form 4224 or Form 1001 (or any successor forms or
other certificates or statements which may be required from time to time by the
relevant United
37
States taxing authorities or applicable laws or regulations), as appropriate, to
permit the Borrower to make payments hereunder for the account of such Lender,
as the case may be, without deduction or withholding of United States federal
income or similar Taxes and (ii) upon the obsolescence of or after the
occurrence of any event requiring a change in, any form or certificate
previously delivered pursuant to this Section 2.14(d), two copies (or such other
number as may from time to time be prescribed by applicable laws or regulations)
of such additional, amended or successor forms, certificates or statements as
may be required under applicable laws or regulations to permit the Borrower to
make payments hereunder for the account of such Lender, without deduction or
withholding of United States federal income or similar Taxes.
(e) For any period with respect to which a Lender or the Deal Agent has
failed to provide the Borrower with the appropriate form, certificate or
statement described in clause (d) of this section (other than if such failure is
due to a change in law occurring after the date of this Agreement), the Deal
Agent or such Lender, as the case may be, shall not be entitled to
indemnification under clauses (a) or (b) of this section with respect to any
Taxes.
(f) Within 30 days of the written request of the Borrower therefor, the
Deal Agent and the Lender, as appropriate, shall execute and deliver to the
Borrower such certificates, forms or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Borrower in applying for refunds of Taxes remitted hereunder; provided, however,
-------- -------
that the Deal Agent and the Lender shall not be required to deliver such
certificates forms or other documents if in their respective sole discretion it
is determined that the deliverance of such certificate, form or other document
would have a material adverse affect on the Deal Agent or Lender and provided
--------
further, however, that the Borrower shall reimburse the Deal Agent or Lender for
------- -------
any reasonable expenses incurred in the delivery of such certificate, form or
other document.
(g) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the Lenders in
connection with this Agreement or the funding or maintenance of Advances
hereunder, the Lenders are required to compensate a bank or other financial
institution in respect of Taxes under circumstances similar to those described
in this section then within ten days after demand by the Lenders, the Borrower
shall pay to the Lenders such additional amount or amounts as may be necessary
to reimburse the Lenders for any amounts paid by them.
38
SECTION 2.15 ASSIGNMENT OF THE PURCHASE AGREEMENT.
------------------------------------
The Borrower hereby represents, warrants and confirms to the Deal
Agent that the Borrower has assigned to the Deal Agent, for the ratable benefit
of the Secured Parties hereunder, all of the Borrower's right and title to and
interest in the Purchase Agreement. The Borrower confirms that the Deal Agent
shall have the sole right to enforce the Borrower's rights and remedies under
the Purchase Agreement for the benefit of the Secured Parties, but without any
obligation on the part of the Deal Agent, the Secured Parties or any of their
respective Affiliates, to perform any of the obligations of the Borrower under
the Purchase Agreement. The Borrower further confirms and agrees that such
assignment to the Deal Agent shall terminate upon the Collection Date; provided,
--------
however, that the rights of the Deal Agent and the Secured Parties pursuant to
-------
such assignment with respect to rights and remedies in connection with any
indemnities and any breach of any representation, warranty or covenants made by
the Originator pursuant to the Purchase Agreement, which rights and remedies
survive the termination of the Purchase Agreement, shall be continuing and shall
survive any termination of such assignment.
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND ADVANCES
SECTION 3.1 CONDITIONS TO CLOSING AND INITIAL ADVANCES.
------------------------------------------
No Lender shall be obligated to make any Advance hereunder on the
occasion of the initial Advance, nor shall any Lender, the Deal Agent, the
Liquidity Agent, the Backup Servicer or the 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
Deal Agent:
(a) This Agreement and all other Transaction Documents or counterparts
hereof or thereof shall have been duly executed by, and delivered to, the
parties hereto and thereto and the Deal Agent shall have received such other
documents, instruments, agreements and legal opinions as the Deal Agent shall
request in connection with the transactions contemplated by this Agreement,
including all those listed in the Schedule of Documents as due on the Closing
Date, each in form and substance satisfactory to the Deal Agent.
(b) The Deal Agent shall have received (i) satisfactory evidence that
the Borrower 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
Borrower and the Servicer in form and substance satisfactory to the Deal Agent
affirming that no such consents or approvals are required.
39
(c) The Borrower and the Servicer shall each be in compliance in all
material respects with all applicable Requirements of Law.
(d) The Borrower shall have paid all fees required to be paid by it on
the Closing Date, including all fees required hereunder and under the Fee Letter
to be paid as of such date, and shall have reimbursed each Lender and the Deal
Agent for all fees, costs and expenses of closing the transactions contemplated
hereunder and under the other Transaction Documents, including the legal and
other document preparation costs incurred by any Lender and/or the Deal Agent.
[(e) The Originator shall have entered into an amendment to the Credit
Facility on terms and conditions satisfactory to the Deal Agent and the Deal
Agent shall have received written evidence satisfactory to it that each of the
conditions precedent to the effectiveness of such amendment has been satisfied
or waived in writing as provided therein.]
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND REINVESTMENTS.
------------------------------------------------------
Each Advance (including the Initial Advance) and each reinvestment of
Principal Collections made pursuant to Section 2.7(b) shall be subject to the
further conditions precedent that:
(a) On the related Funding Date or date of reinvestment, the Borrower or
the Servicer (if the Originator or an Affiliate of the Originator) as the case
may be, shall have certified in the related Borrower Notice that:
(i) The representations and warranties of such Person set forth in
Sections 4.1, 4.2 and 6.8, as the case may be, are true and correct on and
as of such date, before and after giving effect to such borrowing or
reinvestment and to the application of the proceeds therefrom, as though
made on and as of such date;
(ii) No event has occurred, or would result from such Advance or
reinvestment or from the application of the proceeds therefrom, which
constitutes an Early Amortization Event;
(iii) Such Person is in material compliance with each of its covenants
set forth herein; and
(iv) No event has occurred which constitutes a Servicer Termination
Event;
(b) (i) With respect to the initial Funding Date, the Deal Agent shall
have received all Transaction Documents listed on the Schedule of Documents as
due on the initial Funding Date, or counterparts thereof, each of which has been
duly executed by, and delivered to, the parties hereto and each shall be in form
and substance satisfactory to the Deal Agent, (ii) with respect to any Funding
Date after the initial Funding Date, the Deal Agent shall have received any
40
supplement or update to the Decrementation Report required to be delivered
pursuant to Section 6.31 and (iii) on any date on which Principal Collections
are reinvested pursuant to Section 2.7(b), the Deal Agent shall have received a
certification in the form of Exhibit N;
---------
(c) Neither the Facility Termination Date nor the Commitment Termination
Date shall have occurred;
(d) Before and after giving effect to such borrowing and to the application
of proceeds therefrom, Advances Outstanding do not exceed the Borrowing Base, as
calculated on such date;
(e) Each Loan submitted on the related Funding Date or date of reinvestment
by the Borrower for funding is an Eligible Loan;
(f) No claim has been asserted or proceeding commenced challenging
enforceability or validity of any of the Loan Documents, excluding any
instruments, certificates or other documents relating to Loans that were the
subject of prior Advances;
(g) There shall have been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations, or
properties of the Originator or the Borrower since the preceding Advance; and
(h) The Originator and Borrower shall have taken such other action,
including delivery of approvals, consents, opinions, documents, and instruments
to the Lender and the Deal Agent as each may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
----------------------------------------------
The Borrower represents and warrants as follows to the Deal Agent, each
Secured Party and the Liquidity Agent that:
(a) Organization and Good Standing. The Borrower is a corporation
------------------------------
organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation, and has full corporate power, authority and legal
right to own or lease its properties and conduct its business as such properties
are presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party.
41
(b) Due Qualification. The Borrower is duly qualified to do business and
-----------------
is in good standing as a corporation, and has obtained or will obtain all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify would have a material adverse effect on its ability to perform its
obligations hereunder and under the Loans.
(c) Due Authorization. The execution and delivery of this Agreement and
-----------------
each other Transaction Document to which it is a party and the consummation of
the transactions provided for herein and therein have been duly authorized by
the Borrower by all necessary corporate action on the part of the Borrower.
(d) No Conflict. The execution and delivery of this Agreement and each
-----------
Transaction Document to which it is a party, the performance by the Borrower of
the transactions contemplated hereby and thereby and the fulfillment of the
terms hereof and thereof will not conflict with or result in any breach of any
of the material terms and provisions of, and will not constitute (with or
without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the
Borrower is a party or by which it or any of its property is bound.
(e) No Violation. The execution and delivery of this Agreement and each
------------
Transaction Document to which it is a party, the performance of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not conflict with or violate, in any material respect, any
Requirements of Law applicable to the Borrower.
(f) No Proceedings. There are no proceedings or investigations pending or,
--------------
to the best knowledge of the Borrower, threatened against the Borrower, before
any Governmental Authority (i) asserting the invalidity of this Agreement or any
Transaction Document to which it is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any
Transaction Document to which it is a party or (iii) seeking any determination
or ruling that could reasonably be expected to be adversely determined, and if
adversely determined, would materially and adversely affect the performance by
the Borrower of its obligations under this Agreement or any Transaction Document
to which it is a party.
(g) All Consents Required. All approvals, authorizations, consents, orders
---------------------
or other actions of any Person or of any Governmental Authority required in
connection with the execution and delivery by the Borrower of this Agreement and
each Transaction Document to which it is a party, the performance by the
Borrower of the transactions contemplated by this Agreement and each Transaction
Document to which it is a party, and the fulfillment of the terms hereof and
thereof by the Borrower, have been obtained, unless the failure to obtain such
shall not materially and adversely affect the Borrower's performance of its
obligations under this Agreement and each Transaction Document to which it is a
party.
(h) Bulk Sales. The execution, delivery and performance of this Agreement
----------
do not require compliance with any "bulk sales" law by Borrower.
42
(i) Solvency. At all relevant times prior to, and immediately following
--------
the consummation of the transactions contemplated under this Agreement and each
Transaction Document to which it is a party, the Borrower was, is and will be,
Solvent.
(j) Selection Procedures. No procedures that could be adverse to the
--------------------
interests of the Secured Parties were utilized by the Borrower or the Originator
in identifying and/or selecting the Loans that are part of the Collateral.
(k) Taxes. The Borrower has filed or caused to be filed all Tax returns
-----
required to be filed by it. The Borrower has paid 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 generally
accepted accounting principles have been provided on the books of the Borrower),
and no Tax lien has been filed and no claim is being asserted with respect to
any such Tax, fee or other charge.
(l) Agreements Enforceable. This Agreement and each Transaction Document
----------------------
to which it is a party constitutes the legal, valid and binding obligation of
the Borrower enforceable against the Borrower 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).
(m) Exchange Act Compliance. No proceeds of any Advance will be used by
-----------------------
the Borrower to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(n) No Liens. The Collateral is owned by the Borrower free and clear of
--------
any Adverse Claim except for Permitted Liens as provided herein, and the Deal
Agent, as agent for the Secured Parties has a valid and perfected first priority
security interest in each item of the Collateral then existing or thereafter
arising, free and clear of any Adverse Claim. No effective financing statement
or other instrument similar in effect covering any Collateral is on file in any
recording office except such as may be filed in favor of the Deal Agent relating
to this Agreement.
(o) Reports Accurate. All Monthly Reports, information, exhibits,
----------------
financial statements, documents, books, records or reports furnished by the
Borrower to the Deal Agent or a Lender in connection with this Agreement,
whether verbal, written or electronic were and are true, accurate and complete
as of the dates so furnished.
(p) Location of Offices. The principal place of business and chief
-------------------
executive office of the Borrower and the office where the Borrower keeps all the
Records is located at the address of the Borrower referred to in Section 12.2
hereof (or at such other locations as to which the notice and other requirements
specified in Section 5.1(m) shall have been satisfied).
43
(q) Tradenames. Except as described in Schedule III, the Borrower has no
----------
trade names, fictitious names, assumed names or "doing business as" names or
other names under which it has done or is doing business.
(r) Purchase Agreement. The Purchase Agreement is the only agreement
------------------
pursuant to which the Borrower acquires Collateral (other than the Hedge
Collateral).
(s) Value Given. The Borrower gave reasonably equivalent value to the
-----------
Originator in consideration for the transfer to the Borrower of the Loans under
the Purchase Agreement, no such transfer was made for or on account of an
antecedent debt owed by the Originator to the Borrower, and no such transfer is
avoidable or subject to avoidance under any section of any Insolvency Law.
(t) Special Purpose Entity. The articles of incorporation of the Borrower
----------------------
includes substantially the provisions set forth on Exhibit C hereto, and the
---------
Originator has confirmed in writing to the Borrower that, so long as the
Borrower is not "insolvent" within the meaning of the Bankruptcy Code, the
Originator will not cause the Borrower to file a voluntary petition under the
Bankruptcy Code or any other Insolvency Laws. Each of the Borrower and the
Originator is aware that in light of the circumstances described in the
preceding sentence and other relevant facts, the filing of a voluntary petition
under the Bankruptcy Code for the purpose of making the Collateral of the
Borrower available to satisfy claims of the creditors of the Originator would
not result in making such Collateral available to satisfy such creditors under
the Bankruptcy Code.
(u) Accounting. The Borrower accounts for the transfers to it from the
----------
Originator of interests in the Loans under the Purchase Agreement as sales of
such Loans in its books, records and financial statements, in each case
consistent with GAAP.
(v) Separate Entity. The Borrower is operated as an entity with assets and
---------------
liabilities distinct from those of the Originator and any Affiliates thereof
(other than the Borrower), and the Borrower hereby acknowledges that the Secured
Parties are entering into the transactions contemplated by this Agreement in
reliance upon the Borrower's identity as a separate legal entity from the
Originator and from each such other Affiliate of the Originator.
(w) Security Interest. The Borrower has granted a security interest (as
-----------------
defined in the UCC) to the Deal Agent, as agent for the Secured Parties, in the
Collateral, which is enforceable in accordance with applicable law. The Deal
Agent, as agent for the Secured Parties, has a first priority perfected security
interest in the Collateral (except for any Permitted Liens). All filings
(including, without limitation, such UCC filings) as are necessary in any
Jurisdiction to perfect the interest of the Deal Agent as agent for the Secured
Parties, in the Collateral have been made.
(x) Investments. The Borrower does not own or hold directly or indirectly,
-----------
any capital stock or equity security of, or any equity interest in, any Person.
44
(y) Business. Since its formation, the Borrower has conducted no business
--------
other than the purchase and receipt of Loans and Related Property from the
Originator under the Purchase Agreement, the borrowing of funds under this
Agreement and such other activities as are incidental to the foregoing.
(z) ERISA. The Borrower is in compliance with ERISA and has not incurred
-----
and does not expect to incur any liabilities (except for premium payments
arising in the ordinary course of business) payable to the PBGC under ERISA.
(aa) No Broker. No broker or finder acting on behalf of the Borrower was
---------
employed or utilized in connection with this Agreement or the other Transaction
Documents or the transactions contemplated hereby or thereby and the Borrower
has no obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
(bb) Investment Company Act. The Borrower is not an "investment company"
----------------------
or a company "controlled" by an "investment company" or a "principal
underwriter" or "promoter" for an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. The making of the Advances by the
Lenders, the application of the proceeds and repayment thereof by the Borrower
and the consummation of the transactions contemplated by the Transaction
Documents to which the Borrower is a party do not violate, with respect to the
Borrower, any provision of such Act or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.
(cc) Accuracy of Representations and Warranties. Each representation or
------------------------------------------
warranty by the Borrower contained herein or in any certificate or other
document furnished by the Borrower pursuant hereto or in connection herewith is
true and correct.
(dd) Government Regulations. The Borrower is not engaged in the business
----------------------
of extending credit for the purpose of "purchasing" or "carrying" any "margin
security," as such terms are defined in Regulation U of the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") as now and from time
---------------------
to time hereafter in effect (such securities being referred to herein as "Margin
------
Stock"). The Borrower owns no Margin Stock, and no portion of the proceeds of
-----
any Advance hereunder will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any Indebtedness that was originally incurred to purchase or carry any Margin
Stock or for any other purpose that might cause any portion of such proceeds to
be considered a "purpose credit" within the meaning of Regulation T, U or X of
the Federal Reserve Board. The Borrower will not take or permit to be taken any
action that might cause any Related Document to violate any regulation of the
Federal Reserve Board.
The representations and warranties set forth in this section shall survive
the transfer of the Collateral to the Deal Agent as agent for the Secured
Parties. Upon discovery by the Borrower, the Servicer, any Secured Party, the
Liquidity Agent or the Deal Agent of a breach of any of the
45
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the others.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF BORROWER RELATING TO THE
----------------------------------------------------------
AGREEMENT AND THE LOANS.
-----------------------
The Borrower hereby represents and warrants to the Deal Agent, each Secured
Party and the Liquidity Agent that:
(a) Binding Obligation and Security Interest.
----------------------------------------
(i) This Agreement and each Transaction Document to which it is a
party constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower 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).
(ii) This Agreement constitutes a grant of a security interest in all
Collateral to the Deal Agent as agent for the Secured Parties. The Deal
Agent as agent for the Secured Parties has a first priority perfected
security interest in the Collateral, subject only to Permitted Liens.
Neither the Borrower nor any Person claiming through or under the Borrower
has any claim to or interest in the Collection Account or Excess Spread
Account, except for the interest of the Borrower in such property as a
debtor for purposes of the UCC.
(b) Eligibility of Loans. As of the Closing Date, (i) the List of Loans
--------------------
and the information contained in the Borrower Notice delivered pursuant to
Section 2.1 is a true, accurate, complete and correct listing in all material
respects of all the Loans that are part of the Collateral as of the Closing Date
and the information contained therein with respect to the identity of such Loans
and the amounts owing thereunder is true, accurate, complete and correct as of
such date, (ii) each such Loan is an Eligible Loan, (iii) the Borrower owns each
such Loan and the Related Property free and clear of any Lien of any Person
(other than Permitted Liens) and each such Loan and the related Property is in
compliance with all Requirements of Law applicable to the Borrower and/or the
Originator and (iv) with respect to each such Loan, all consents, licenses,
approvals or authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by the
Borrower in connection with the transfer of an interest in such Loan and the
Related Property to the Deal Agent, as agent for the Secured Parties, have been
duly obtained, effected or given and are in full force and effect.
On each Funding Date and each date on which any Principal Collections are
made available to the Borrower in accordance with the provision of Section
2.7(b), the Borrower shall be deemed to represent and warrant that (i) any
additional Loan referenced on the related Borrower Notice delivered pursuant to
Sections 2.1 and 2.2 is an Eligible Loan, (ii) the Borrower
46
owns each such Loan and the related Property free and clear of any Lien of any
Person (other than Permitted Liens) and each such Loan and the related Property
is in compliance with all Requirements of Law applicable to Borrower and/or the
Originator, (iii) with respect to each such Loan and the related Property, all
consents, licenses, approvals, authorizations, registrations or declarations
with any Governmental Authority required to be obtained, effected or given by
the Borrower in connection with the addition of such Loan and the Related
Property to the Collateral have been duly obtained, effected or given and are in
full force and effect and (iv) the representations and warranties set forth in
Section 4.2(a) are true and correct with respect to each Loan transferred on
such day as if made on such day.
(c) Notice of Breach. The representations and warranties set forth in this
----------------
Section 4.2 shall survive the transfer of the interest of the Borrower in each
item of Collateral to the Deal Agent as agent for the Secured Parties. Upon
discovery by the Borrower, the Servicer, any Secured Party, the Deal Agent or
the Liquidity Agent of a breach of any of the foregoing representations and
warranties that could have a material adverse effect upon the value of any Loan
or the Secured Parties or their interests hereunder, the party discovering such
breach shall give prompt written notice to the others.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
SECTION 5.1 COVENANTS OF BORROWER.
---------------------
The Borrower hereby covenants that until the date on which all Obligations
have been indefeasibly paid in full, the Borrower hereby covenants that :
(a) Requirements of Law. The Borrower will comply in all material respects
-------------------
with all Requirements of Law.
(b) Security Interests. Except as contemplated in this Agreement, the
------------------
Borrower will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Loan or on its
interest in any Related Property that is part of the Collateral, whether now
existing or hereafter transferred hereunder, and the Borrower will not sell,
pledge, assign or suffer to exist any Lien on its interest, if any, hereunder.
The Borrower will promptly notify the Deal Agent of the existence of any Lien on
any Loan or on its interest in any Related Property that is part of the
Collateral and the Borrower shall defend the right, title and interest of the
Deal Agent as agent for the Secured Parties in, to and under any Loan and on its
interest in any Related Property that is part of the Collateral, against all
claims of third parties, provided, however, that nothing in this Section 5.1(b)
-------- -------
shall prevent or be deemed to prohibit the Borrower from suffering to exist
Permitted Liens upon any Loan or any Related Property that is part of the
Collateral.
47
(c) Delivery of Collections. The Borrower agrees to pay to the Servicer
-----------------------
promptly (but in no event later than two Business Days after receipt) all
Collections (including any Deemed Collections) received by Borrower in respect
of the Loans that are part of the Collateral.
(d) Maintenance of Existence. The Borrower agrees to preserve and maintain
------------------------
its corporate existence, rights, franchises, qualifications and privileges.
(e) Activities of Borrower. The Borrower shall not engage in any business
----------------------
or activity of any kind, or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, Loan or other undertaking, which is not
incidental to the transactions contemplated and authorized by this Agreement or
the Purchase Agreement.
(f) Indebtedness; Investments. The Borrower shall not create, incur,
-------------------------
assume or suffer to exist any Indebtedness or other liability whatsoever, except
(i) obligations incurred under this Agreement, or (ii) liabilities incident to
the maintenance of its corporate existence in good standing.
(g) Guarantees. The Borrower shall not become or remain liable, directly
----------
or indirectly, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise.
(h) Investments. The Borrower shall not make or suffer to exist any loans
-----------
or advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Person except for purchases of Loans pursuant to the Purchase
Agreement, or for investments in Permitted Investments in accordance with the
terms of this Agreement.
(i) Merger; Sales. The Borrower shall not enter into any transaction of
-------------
merger or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire or be acquired by any Person, or convey,
sell, Loan or otherwise dispose of all or substantially all of its property or
business, except as provided for in this Agreement.
(j) Distributions. The Borrower may not declare or pay, directly or
-------------
indirectly, any dividend or make any other distribution (whether in cash or
other property) with respect to the profits, assets or capital of the Borrower
or any Person's interest therein (collectively, a "Distribution"), or purchase,
------------
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, provided, however, if no Early Amortization Event has occurred or
--------
will occur as a result thereof, the Borrower may make Distributions.
(k) Agreements. The Borrower shall not become a party to, or permit any of
----------
its properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, Loan or
48
other undertaking, except this Agreement, or amend or modify the provisions of
its articles of incorporation or bylaws, without the prior written consent of
the Deal Agent, or issue any power of attorney except to the Deal Agent or the
Servicer (and then, only in connection with the specific duties of the Servicer
hereunder).
(l) Separate Corporate Existence. The Borrower shall:
----------------------------
(i) Maintain its own deposit account or accounts, separate from those
of any Affiliate, with commercial banking institutions. The funds of the
Borrower will not be diverted to any other Person or for other than
corporate uses of the Borrower.
(ii) Ensure that, to the extent that it shares the same officers or
other employees as any of its stockholders or Affiliates, the salaries of
and the expenses related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, and each such
entity shall bear its fair share of the salary and benefit costs associated
with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly contracts with any of
its stockholders or Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities, and each such entity shall
bear its fair share of such costs. To the extent that the Borrower
contracts or does business with vendors or service providers when the goods
and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such
entities for whose benefit the goods and services are provided, and each
such entity shall bear its fair share of such costs. All material
transactions between Borrower and any of its Affiliates shall be only on an
arm's length basis.
(iv) Maintain a principal executive and administrative office through
which its business is conducted separate from those of its Affiliates. To
the extent that Borrower and any of its stockholders or Affiliates have
offices in the same location, there shall be a fair and appropriate
allocation of overhead costs among them, and each such entity shall bear
its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its Certificate
of Incorporation and observe all necessary, appropriate and customary
corporate formalities, including, but not limited to, holding all regular
and special stockholders, and directors' meetings appropriate to authorize
all corporate action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate books,
records and accounts, including, but not limited to, payroll and
intercompany transaction accounts.
49
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "non-substantive consolidation" opinion of the
Shearman & Sterling delivered on the Closing Date, upon which the
conclusions expressed therein are based.
(m) Location of Borrower, Records; Instruments. The Borrower (i) shall not
------------------------------------------
move the location of its principal executive office, without 30 days' prior
written notice to the Deal Agent, (ii) shall not move, or consent to the
Servicer or the Custodian moving the Loan Documents without 30 days' prior
written notice to the Deal Agent and (iii) will promptly take all actions
required of each relevant jurisdiction in order to continue the first priority
perfected security interest of the Deal Agent as agent for the Secured Parties
in all Collateral.
(n) ERISA Matters. The Borrower 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 Borrower 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.
(o) Originator Collateral. With respect to each item of Collateral
---------------------
acquired by the Borrower, the Borrower will (i) acquire such Collateral only
pursuant to and in accordance with the terms of the Purchase Agreement, (ii)
take all action necessary to perfect, protect and more fully evidence the
Borrower's ownership of such Collateral, including, without limitation, (A)
filing and maintaining (or causing to be filed and maintained), effective
financing statements (Form UCC-1) naming the Originator as seller/debtor and the
Borrower as purchaser/creditor 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, including,
without limitation, Assignments of Mortgage and (iii) take all additional
actions that the Deal Agent may reasonably request to perfect, protect and more
fully evidence the respective interests of the parties to this Agreement in the
Collateral.
(p) Transactions with Affiliates. The Borrower will not enter into, or be
----------------------------
a party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement and the Purchase
Agreement, and (ii) transactions related to the use of office space or computer
equipment or software and the sharing of officers and employees by the Borrower
from an Affiliate, provided that such transactions are: (A) in the ordinary
course of business, (B) pursuant to the reasonable requirements of the
Borrower's business, (C) upon fair and reasonable terms that are no less
favorable to the Borrower than could be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the "non-substantive
consolidation" legal opinion letter issued by Shearman & Sterling, as such
assumptions may be modified in any
50
subsequent opinion letters delivered to the Deal Agent pursuant to Section 3.2
or otherwise. It is understood that any compensation arrangement for officers
permitted under clause (ii)(A) through (C) above shall be permitted only if such
arrangement has been expressly approved by the board of directors of the
Borrower.
(q) Investments. The Borrower will not make any Investments other than
-----------
Permitted Investments.
(r) Change in the Transaction Documents. The Borrower will not amend,
-----------------------------------
modify, waive or terminate any terms or conditions of any of the Transaction
Documents to which it is a party, without the consent of Deal Agent.
(s) Credit and Collection Policies. The Borrower shall not cause or permit
------------------------------
any changes to be made to the Credit and Collection Policies in any manner that
could reasonably be expected to adversely affect the collectibility of the Loans
that are part of the Collateral without the prior written consent of the Deal
Agent.
SECTION 5.2 HEDGE AGREEMENT.
---------------
(a) On or prior to each Funding Date, the Borrower shall enter into one or
more Hedge Transactions for the Loans to be funded by the Advance made on such
Funding Date, provided that each such Hedge Transaction shall:
(i) be entered into with a Hedge Counterparty and governed by a
Hedging Agreement;
(ii) have a schedule of monthly payment periods the first of which
commences on such Funding Date and the last of which ends on the last
Scheduled Payment due to occur under the Loans to which that Advance
relates;
(iii) have an amortizing notional amount such that the Hedge Notional
Amount in effect during any monthly payment period shall be equal to
Required Notional Amount on such Funding Date; and
(iv) provide for two series of monthly payments to be netted against
each other, one such series being payments to be made by the Borrower to a
Hedge Counterparty (solely on a net basis) at a floating rate equal to "USD
Prime-H.15" (as defined in the ISDA Definitions) and the other such series
being payments to be made by the Hedge Counterparty to the Deal Agent
(solely on a net basis) at a floating rate based upon "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
of this Agreement (if payable by the Borrower);
51
(b) As additional security hereunder, the Borrower has assigned to the Deal
Agent, as agent for the Secured Parties, all right, title and interest of Seller
in the Hedge Collateral. The Borrower acknowledges that, as a result of that
assignment, the Borrower may not, without the prior written consent of the Deal
Agent, exercise any rights under any Hedging Agreement or Hedge Transaction,
except for the Borrower's right under any Hedging Agreement to enter into Hedge
Transactions in order to meet the Borrower's obligations hereunder. Nothing
herein shall have the effect of releasing the Borrower from any of its
obligations under any Hedging Agreement or any Hedge Transaction, nor be
construed as requiring the consent of the Deal Agent or any Secured Party for
the performance by the Borrower of any such obligations.
SECTION 5.3 YEAR 2000 COMPATIBILITY.
-----------------------
The Borrower shall take all action necessary to assure that, prior to
January 1, 2000, the Borrower's computer system is able to operate and
effectively process data including dates on and after January 1, 2000. At the
request of the Deal Agent, the Borrower shall provide assurance acceptable to
the Deal Agent of the Borrower's Year 2000 compatibility.
ARTICLE VI
ADMINISTRATION AND SERVICING OF LOANS
SECTION 6.1 APPOINTMENT OF THE SERVICER.
---------------------------
The Borrower hereby appoints the Servicer as its agent to service the
Transferred Loans and enforce its respective rights and interests in and under
each Transferred Loan and to serve in such capacity until the termination of its
responsibilities pursuant to Section 6.25. The Servicer hereby agrees to
perform the duties and obligations with respect thereto set forth herein. The
Servicer and the Borrower hereby acknowledge that the Deal Agent and the Secured
Parties are third party beneficiaries of the obligations undertaken by the
Servicer hereunder.
SECTION 6.2 DUTIES AND RESPONSIBILITIES OF THE SERVICER.
-------------------------------------------
(a) The Servicer shall conduct the servicing, administration and
collection of the Transferred Loans and shall take, or cause to be taken, all
such actions as may be necessary or advisable to service, administer and collect
Transferred Loans from time to time on behalf of the Borrower and as the
Borrower's agent.
(b) The duties of the Servicer, as the Borrower's agent, shall include,
without limitation:
(i) preparing and submitting of claims to, and post-billing liaison
with, Obligors on Transferred Loans;
52
(ii) maintaining all necessary Servicing Records with respect to the
Transferred Loans and providing such reports to the Liquidity Agent and the
Deal Agent in respect of the servicing of the Transferred Loans (including
information relating to its performance under this Agreement) as may be
required hereunder or as the Liquidity Agent or the Deal Agent may
reasonably request;
(iii) maintaining and implementing administrative and operating
procedures (including, without limitation, an ability to recreate Servicing
Records evidencing the Transferred Loans 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 Transferred Loans (including, without limitation, records
adequate to permit the identification of each new Transferred Loan and all
Collections of and adjustments to each existing Transferred Loan);
(iv) promptly delivering to the Deal Agent or the Custodian, from
time to time, such information and Servicing Records (including information
relating to its performance under this Agreement) as the Deal Agent or the
Custodian may from time to time reasonably request;
(v) identifying each Transferred Loan clearly and unambiguously in
its Servicing Records to reflect that such Transferred Loan is owned by the
Borrower and pledged to the Custodian;
(vi) complying in all material respects with the Credit and
Collection Policies in regard to each Transferred Loan;
(vii) complying in all material respects with all applicable laws,
rules, regulations and orders with respect to it, its business and
properties and all Transferred Loans and Collections with respect thereto;
(viii) preserving and maintaining its existence, rights, franchises
and privileges as a corporation in the jurisdiction of its organization,
and qualifying and remaining qualified in good standing as a foreign
corporation and qualifying to and remaining authorized to perform
obligations as Servicer (including enforcement of collection of Transferred
Loans on behalf of the Lenders, each Hedge Counterparty and the Custodian)
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would
materially adversely affect (A) the rights or interests of the Lenders,
each Hedge Counterparty and the Custodian in the Transferred Loans, (B) the
collectibility of any Transferred Loan, or (C) the ability of the Servicer
to perform its obligations hereunder;
53
(ix) immediately notifying the Liquidity Agent and the Deal Agent of
the occurrence of an Early Amortization Event (including, without
limitation, a material adverse change in the financial condition of the
Originator);
(x) notifying the Liquidity Agent and the Deal Agent of any material
action, suit, proceeding, dispute, offset deduction, defense or
counterclaim that is or is threatened to be (1) asserted by an Obligor with
respect to any Transferred Loan; or (2) reasonably expected to have a
material adverse effect on the Loans as a whole or on the ability of the
Servicer or the Originator to perform its obligations under the Basic
Documents or on the Servicer or the Borrower or any of their respective
property; and
(xi) notifying the Deal Agent of any proposed change in the Credit and
Collections Policies that could have an adverse effect on all or any
portion of the Collateral, on the Seller or on the interests of the Deal
Agent or any Secured Party.
(c) The Secured Parties, the Deal Agent and the Custodian shall not have
any obligation or liability with respect to any Transferred Loans, nor shall any
of them be obligated to perform any of the obligations of the Servicer
hereunder.
SECTION 6.3 AUTHORIZATION OF THE SERVICER.
-----------------------------
(a) Each of the Borrower and the Deal Agent on behalf of the Lenders 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 pledge of the Transferred
Loans to the Lender, each Hedge Counterparty, and the Custodian, in the
determination of the Servicer, to collect all amounts due under any and all
Transferred Loans, 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 Transferred Loans and, after the delinquency of any Transferred
Loan and to the extent permitted under and in compliance with applicable law and
regulations, 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 Loan. The Originator, the Borrower and the Deal Agent on behalf of the
Lenders 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 Transferred Loans. In no event shall
the Servicer be entitled to make any Lender, any Hedge Counterparty, the
Custodian or the Deal Agent a party to any litigation without such party's
express prior written consent, or to make the Borrower a party to any litigation
(other than any routine foreclosure or similar collection procedure) without the
Deal Agent's consent.
54
(b) After an Early Amortization Event has occurred and it continuing, at
the Deal Agent's direction the Servicer shall take such action as the Deal Agent
may deem necessary or advisable to enforce collection of the Transferred Loans;
provided, however, that the Deal Agent may, at any time that an Early
--------
Amortization Event has occurred and is continuing, notify any Obligor with
respect to any Transferred Loans of the assignment of such Transferred Loans, to
the Deal Agent and direct that payments of all amounts due or to become due to
the Borrower thereunder be made directly to the Deal Agent or any servicer,
collection agent or lockbox or other account designated by the Deal Agent and,
upon such notification and at the expense of the Borrower, the Deal Agent may
enforce collection of any such Transferred Loans and adjust, settle or
compromise the amount or payment thereof.
SECTION 6.4 COLLECTION OF PAYMENTS.
----------------------
(a) Collection Efforts, Modification of Loans. The Servicer will make
-----------------------------------------
reasonable efforts to collect all payments called for under the terms and
provisions of the Loans included in the Collateral as and when the same become
due, and will follow those collection procedures which it follows with respect
to all comparable Loans that it services for itself or others. The Servicer may
not waive, modify or otherwise vary any provision of a Loan that is included in
the Collateral, except as may be in accordance with the provisions of the Credit
and Collection Policy. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course of
servicing any Loan included in the Collateral.
(b) Acceleration. The Servicer shall accelerate the maturity of all or any
------------
Scheduled Payments under any Loan included in the Collateral under which a
default under the terms thereof has occurred and is continuing (after the lapse
of any applicable grace period) promptly after such Loan becomes a Charged-Off
Loan or such earlier or later time as is consistent with the Credit and
Collection Policy.
(c) Taxes and other Amounts. To the extent provided for in any Loan
-----------------------
included in the Collateral, the Servicer will use its best efforts to collect
all payments with respect to amounts due for taxes, assessments and insurance
premiums relating to such Loans or the Related Property and remit such amounts
to the appropriate Governmental Authority or insurer on or prior to the date
such payments are due.
(d) Establishment of the Collection Accounts. The Servicer shall cause to
----------------------------------------
be established, on or before the Closing Date, and maintained in the name of the
Borrower, and titled in the name of the Deal Agent as agent for the Secured
Parties, with an office or branch of a depository institution or trust company
organized under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank) a segregated corporate trust account (the "Collection Account") for the
------------------
purpose of receiving Collections from the Collateral; provided, however, that at
-------- -------
all times such depository institution or trust company shall be a depository
institution organized under the laws of the United States of America or any one
of the States thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) (A) which has either (1) a long-term unsecured debt rating
55
of A- or better by S&P and A-3 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 A-3 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 Deal Agent and (ii) whose deposits are insured by the Federal
Deposit Insurance Corporation (any such depository institution or trust company,
a "Qualified Institution").
---------------------
(e) Establishment of the Excess Spread Account. The Servicer shall cause
------------------------------------------
to be established, on or before the Closing Date, and maintained in the name of
Deal Agent, with a Qualified Institution an account (the "Excess Spread
-------------
Account") into which Collections shall be deposited pursuant to Section
-------
2.7(a)(ix) in a maximum amount such that the Overcollateralization Amount on any
day equals or exceeds the Minimum Overcollateralization on such day. To the
extent that, on any Payment Date, an Overcollateralization Excess exists and
there are funds on deposit in the Excess Spread Account, an amount equal to the
lesser of such Overcollateralization Excess and the amount on deposit in the
Excess Spread Account shall be deposited, on such Payment Date, to the Interest
Collection Account for application in accordance with Section 2.7.
SECTION 6.5 SERVICER ADVANCES.
-----------------
For each Collection Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) which was due and payable pursuant to a Loan
included in the Collateral during such Collection Period was not received prior
to the end of such Collection Period, the Servicer shall make an advance in an
amount up to the amount of such delinquent Scheduled Payment, or portion thereof
(any such advance, a "Servicer Advance"); in addition, if on any day there are
----------------
not sufficient funds on deposit in the Interest Collection Account to pay
accrued Interest on any Advance the Collection Period of which ends on such day,
the Servicer may, but shall not be obligated to, make an advance in the amount
necessary to pay such Interest. Notwithstanding the preceding sentence, (i) the
Servicer shall make a Servicer Advance with respect to any Loan included as part
of the Collateral if, and only if, the Servicer determines (such determination
to be conclusive and binding) in good faith that such Servicer Advance will
ultimately be recoverable from future collections on, or the liquidation of, the
Collateral, including any Hedge Collateral and (ii) any successor Servicer will
not be obligated to make any Servicer Advances. The Servicer will deposit any
Servicer Advances into the Collection Account on or prior to 11:00 a.m.
(Charlotte, North Carolina time) on the related Payment Date, in immediately
available funds.
SECTION 6.6 REALIZATION UPON CHARGED-OFF LOANS AND CHARGED-OFF LOANS.
--------------------------------------------------------
The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property with respect to a
Charged-Off Loan and will act as sales and processing agent for Related Property
which it repossesses. The Servicer will follow the practices and procedures set
forth in the Credit and Collection Policy in order to realize upon
56
such Related Property. Without limiting the foregoing, the Servicer may sell any
such Related Property with respect any Charged-Off Loan to the Servicer or its
Affiliates for a purchase price equal to the then fair market value thereof; any
such sale to be evidenced by a certificate of a Responsible Officer of the
Servicer delivered to the Deal Agent identifying the Charged-Off Loan and the
Related Property, setting forth 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 Interest
Collection Account the Recoveries received in connection with the sale or
disposition of Related Property with respect to a Charged-Off Loan.
SECTION 6.7 MAINTENANCE OF INSURANCE POLICIES.
---------------------------------
The Servicer will require that each Obligor with respect to a Loan included
as part of the Collateral maintains an Insurance Policy with respect to each
Loan that is an STL and the Related Property, in accordance with the Credit and
Collection Policies. In connection with its activities as Servicer, the
Servicer agrees to present, on behalf of the Deal Agent as agent for the Secured
Parties, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each related Loan.
SECTION 6.8 REPRESENTATIONS AND WARRANTIES OF SERVICER.
------------------------------------------
The Servicer represents and warrants to the Deal Agent, as agent for the
Secured Parties, each Secured party, the Liquidity Agent and each Investor that,
as of the Closing Date and on each Funding Date:
(a) Organization and Good Standing. The Servicer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted and to enter into and perform its obligations pursuant to this
Agreement.
(b) Due Qualification. The Servicer is qualified to do business as a
-----------------
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or Loan of
its property and or the conduct of its business (other than the performance of
its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Borrower or of the Lenders. The Servicer is qualified to do
business as a corporation, is in good standing, and has obtained all licenses
and approvals as required under the laws of all states in which the performance
of its obligations pursuant to this Agreement requires such qualification,
standing,
57
license or approval and where the failure to qualify or obtain such license or
approval would have material adverse effect on its ability to perform hereunder.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms. The
Servicer has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action. The execution, delivery and
performance of this Agreement does not contravene the Servicer's Certificate of
Incorporation or by-laws.
(d) No Violation. The consummation of the transactions contemplated by,
------------
and the fulfillment of the terms of, this Agreement by the Servicer (with or
without notice or lapse of time) will not (i) conflict with, result in any
breach of any of the terms or provisions of, or constitute a default under, the
articles of incorporation or by-laws of the Servicer, or any term of any
agreement, indenture, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or any of its property is bound, (ii) result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to the Servicer or any of its properties.
(e) No Consent. No consent, approval, authorization, order, registration,
----------
filing, qualification, license or permit of or with any Governmental Authority
having jurisdiction over the Servicer or any of its properties is required to be
obtained by or with respect to the Servicer in order for the Servicer to enter
into this Agreement or perform its obligations hereunder.
(f) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except as such enforceability may be limited by (i)
applicable Insolvency Laws and (ii) general principles of equity (whether
considered in a suit at law or in equity).
(g) No Proceeding. There are no proceedings or investigations pending or
-------------
threatened against the Servicer, before any Governmental Authority (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might (in the reasonable judgment of the Servicer)
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement.
(h) Reports Accurate. No Servicer Certificate, information, exhibit,
----------------
financial statement, document, book, Servicer Record or report furnished or to
be furnished by the Servicer to the Deal Agent or a Lender in connection with
this Agreement is or will be inaccurate in any material respect as of the date
it is or shall be dated or (except as otherwise disclosed to the Deal Agent or
such Lender, as the case may be, at such time) as of the date so furnished, and
no such document contains or will contain any material misstatement of fact or
omits or shall
58
omit to state a material fact or any fact necessary to make the statements
contained therein not misleading.
SECTION 6.9 COVENANTS OF SERVICER.
---------------------
The Servicer hereby covenants that:
(a) Compliance with Law. The Servicer will comply in all material respects
-------------------
with all laws and regulations of any Governmental Authority applicable to the
Servicer or the Loans included in the Collateral and Related Property and Loan
Documents or any part thereof.
(b) Obligations with Respect to Loans; Modifications. The Servicer will
------------------------------------------------
duly fulfill and comply with all obligations on the part of the Borrower to be
fulfilled or complied with under or in connection with each Loan included in the
Collateral and will do nothing to impair the rights of the Deal Agent as agent
for the Secured Parties or of the Secured Parties in, to and under the
Collateral. The Servicer will perform its obligations under the Loans included
in the Collateral and will not change or modify such Loans other than as
permitted in the Credit and Collection Policies.
(c) Preservation of Security Interest. The Servicer will execute and file
---------------------------------
such financing and continuation statements and any other documents which may be
required by any law or regulation of any Governmental Authority to preserve and
protect fully the interest of the Deal Agent as agent for the Secured Parties
in, to and under the Collateral.
(d) No Bankruptcy Petition. With respect to VFCC, prior to the date that
----------------------
is one year and one day after the payment in full of all amounts owing in
respect of all outstanding commercial paper issued by VFCC and, with respect to
the Borrower, prior to the date that is one year and one day after the
Collection Date, the Servicer will not institute against the Borrower or VFCC,
or join any other Person in instituting against the Borrower or VFCC, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceedings under the laws of the United States or any state of
the United States. This Section 6.9(d) will survive the termination of this
Agreement.
(e) Amendments to Credit and Collection Policies. The Servicer, without
--------------------------------------------
the prior written consent of VFCC, will not agree or consent to or otherwise
permit to occur any amendment, modification, change, supplement, or recession of
the Credit and Collection Policies in whole or in part or in any manner that
could have a material adverse effect upon the Loans or the interests of VFCC
therein.
(f) Year 2000 Compatibility. The Servicer shall take all action necessary
-----------------------
to assure that, prior to January 1, 2000, the Servicer's computer system is able
to operate and effectively process data including dates on and after January 1,
2000. At the request of the Deal Agent, the Servicer shall provide assurance
acceptable to the Deal Agent of the Servicer's Year 2000 compatibility.
59
SECTION 6.10 THE CUSTODIAN.
-------------
(a) Appointment; Custodial Duties. The Borrower and the Deal Agent each
-----------------------------
hereby appoints US Bank to act as Custodian hereunder, for the benefit of the
Deal Agent, as agent for the Secured Parties. US Bank hereby accepts such
appointment.
The Custodian shall take and retain custody of the Loan Files delivered by
the Borrower (or the Originator on behalf of the Borrower) 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 Deal Agent as agent for the Secured Parties. Immediately upon receipt of
any such Loan File, the Custodian shall deliver to the Deal Agent a custodial
receipt in form of Exhibit J hereto. Within five Business Days of its receipt
of any Loan File, the Custodian shall review the related Loan Documents to
verify that each Loan Document has been received, and executed and has no
missing or mutilated pages and to confirm (in reliance on the related contract
number and Obligor name) that such Loan is referenced on the related List of
Loan and shall, at the expiration of such period, deliver to the Deal Agent a
certification in the form of Exhibit K hereto. In order to facilitate the
foregoing review by the Custodian, in connection with each delivery of Loan
Files hereunder to the Custodian, the Servicer shall provide to the Custodian an
electronic file (in EXCEL or a comparable format) that contains the related List
of Loans or which otherwise contains the Loan number and the name of the Obligor
with respect to each related Loan. If, at the conclusion of such review, the
Custodian shall determine that any such Loan Document is not executed or in
proper form on its face, or that it is not referenced on such List of Loans, the
Custodian shall promptly notify the Borrower and the Deal Agent of such
determination by providing a written report to such Persons setting forth, with
particularity, the lack of execution of such Loan Document(s), that such Loan
Document(s) has missing or mutilated pages, or the fact that such Loan
Document(s) was not referenced on the related List of Loans. In addition,
unless instructed otherwise in writing by the Borrower or the Deal Agent within
10 days of the Custodian's delivery of such report, the Custodian shall return
any Loan File not referenced on such List of Loans to the Borrower. Other than
the foregoing, the Custodian shall not have any responsibility for reviewing any
Loan File.
In taking and retaining custody of the Loan Files, the Custodian shall be
deemed to be acting as the agent of the Deal Agent as agent for the Secured
Parties, provided, however, that the Custodian makes no representations as to
-------- -------
the existence, perfection or priority of any Lien on the Loan Files or the
instruments therein, and provided, further, that the Custodian's duties as agent
-------- -------
shall be limited to those expressly contemplated herein. All Loan Files shall
be kept in fireproof vaults or cabinets at the locations specified on Schedule
VI attached hereto, or at such other office as shall be specified to the Deal
Agent and the Borrower by the Custodian in a written notice delivered at least
45 days prior to such change. All Loan Files shall be placed together in a
separate file cabinet with an appropriate identifying label and maintained in
such a manner so as to permit retrieval and access. All Loan Files shall be
clearly segregated from any other documents or instruments maintained by the
Custodian. The Custodian shall clearly indicate that such Loan Files are the
sole property of Borrower, subject to the security interest of
60
the Deal Agent on behalf of the Secured Parties. In performing its duties, the
Custodian shall use the same degree of care and attention as it employs with
respect to similar Loan Files which it holds as Custodian.
(b) Concerning the Custodian.
------------------------
(i) The Custodian may conclusively rely on and shall be fully
protected in acting upon any certificate, instrument, opinion, notice,
letter, telegram or other document delivered to it and which in good faith
it reasonably believes to be genuine and which has been signed by the
proper party or parties. The Custodian may rely conclusively on and shall
be fully protected by in acting upon (A) the written instructions of any
designated officer of the Deal Agent or (B) the verbal instructions of any
designated officer of the Deal Agent.
(ii) The Custodian may consult counsel satisfactory to it and the
advice or opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(iii) The Custodian shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it, in good faith, or for any
mistakes of fact or law, or for anything which it may do or refrain from
doing in connection herewith except in the case of its willful misconduct
or grossly negligent performance or omission.
(iv) The 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 Loans or the Loan
Documents, and will not be required to and will not make any
representations as to the validity or value of any of the Loans. The
Custodian shall not be obligated to take any legal action hereunder which
might in its judgment involve any expense or liability unless it has been
furnished with an indemnity reasonably satisfactory to it.
(v) The 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 Custodian.
(vi) The Custodian shall not be required to expend or risk its own
funds in the performance of its duties hereunder.
(vii) It is expressly agreed and acknowledged that the Custodian is
not guaranteeing performance of or assuming any liability for the
obligations of the other parties hereto or any parties to the Loans.
61
(c) Release for Servicing. From time to time and as appropriate for the
---------------------
enforcement or servicing of any of the Loans, the Custodian is hereby
authorized, 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 Loan File 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 Deal Agent in accordance
with the terms of this Agreement. The Servicer shall return to the Custodian
the Loan File or other such documents when the Servicer's need therefor in
connection with such foreclosure or servicing no longer exists, unless the Loan
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 Custodian in the form annexed hereto as Exhibit L, the Servicer's request
and receipt submitted pursuant to the first sentence of this subsection shall be
released by the Custodian to the Servicer.
(d) Limitation on Release. The foregoing provision respecting release
---------------------
to the Servicer of the Loan Files and documents by the Custodian upon request by
the Servicer shall be operative only to the extent that at any time the
Custodian shall not have released to the Servicer active Loan Files or Loan
Documents (including those requested) pertaining to more than 15 Loans at the
time being serviced by the Servicer under this Agreement. Any additional Loan
Files or documents requested to be released by the Servicer may be released only
upon written authorization of the Deal Agent. The limitations of this paragraph
shall not apply to the release of Loan Files to the Servicer pursuant to the
immediately succeeding subsection.
(e) Release for Payment. Upon receipt by the 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 the payment or repurchase referenced therein
have been credited to the Collection Account as provided in this Agreement), the
Custodian shall promptly release the related Loan File to the Servicer.
(f) Replacement or Resignation of Custodian. The Custodian may be
---------------------------------------
replaced by the Deal Agent or resign at any time, provided, that no such
--------
replacement or resignation shall be effective until an replacement Custodian has
been appointed, has agreed to act as Custodian hereunder and has received all
Loan Files held by the previous Custodian.
SECTION 6.11 REPRESENTATIONS AND WARRANTIES OF CUSTODIAN.
-------------------------------------------
The Custodian represents and warrants to the Deal Agent and the Secured
Parties that:
(a) Organization and Good Standing. It is a national banking association
------------------------------
duly organized, validly existing and in good standing under the federal laws of
the United States of America with all requisite power and authority to own its
properties and to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.
62
(b) Power and Authority. It has the power and authority to execute and
-------------------
deliver this Agreement and to carry out its terms. It has duly authorized the
execution, delivery and performance of this Agreement by all requisite action.
(c) No Violation. The consummation of the transactions contemplated by,
------------
and the fulfillment of the terms of, this Agreement by it will not (i) conflict
with, result in any breach of any of the terms or provisions of, or constitute a
default under, its articles of association, or any term of any material
agreement, indenture, mortgage, deed of trust or other instrument to which it is
a party or by which it or any of its property is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to it or any of its properties that might (in its reasonable
judgment) materially and adversely affect the performance of its obligations
under, or the validity or enforceability of, this Agreement.
(d) No Consent. No consent, approval, authorization, order,
----------
registration, filing, qualification,license or permit (collectively, the
"Consents") of or with any Governmental Authority having jurisdiction over it or
--------
any of its respective properties is required to be obtained in order for it to
enter into this Agreement or perform its obligations hereunder (except with
respect to performance only, such Consents as it may need to obtain prior to the
commencement of its performance of its duties hereunder in the certain
jurisdictions outside of California, provided that in lieu of obtaining for
itself the requisite Consents, it may and shall be permitted to delegate the
performance of its duties to parties having the requisite Consents in such
jurisdictions; provided, however, in the case of such delegation of its
--------
performance shall not be relieved of its responsibility under this Agreement
with respect to such duties) .
(e) Binding Obligation. This Agreement constitutes its legal, valid and
------------------
binding obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).
(f) No Proceeding. There are no proceedings or investigations pending
-------------
or, to the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might (in its
reasonable judgment) materially and adversely affect its performance or its
obligations under, or the validity or enforceability of, this Agreement.
SECTION 6.12 REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER.
-------------------------------------------------
The Backup Servicer represents and warrants to the Deal Agent and
the Secured Parties that:
63
(a) Organization and Good Standing. It is a limited liability company duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
California with all requisite power and authority to own its properties and to
conduct its business as presently conducted and to enter into and perform its
obligations pursuant to this Agreement.
(b) Power and Authority. It has the power and authority to execute and
-------------------
deliver this Agreement and to carry out its terms. It has duly authorized the
execution, delivery and performance of this Agreement by all requisite action.
(c) No Violation. The consummation of the transactions contemplated by,
------------
and the fulfillment of the terms of, this Agreement by it will not (i) conflict
with, result in any breach of any of the terms or provisions of, or constitute a
default under, its [articles of association] or operating agreement, or any term
of any material agreement, indenture, mortgage, deed of trust or other
instrument to which it is a party or by which it or any of its property is
bound, (ii) result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, or (iii) violate any law, regulation, order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority applicable to it or any of its properties that might (in its
reasonable judgment) materially and adversely affect the performance of its
obligations under, or the validity or enforceability of, this Agreement.
(d) No Consent. No consent, approval, authorization, order, registration,
----------
filing, qualification, license or permit (collectively, the "Consents") of or
--------
with any Governmental Authority having jurisdiction over it or any of its
respective properties is required to be obtained in order for it to enter into
this Agreement or perform its obligations hereunder (except with respect to
performance only, such Consents as it may need to obtain prior to the
commencement of its performance of its duties hereunder in the certain
jurisdictions outside of California, provided that in lieu of obtaining for
itself the requisite Consents, it may and shall be permitted to delegate the
performance of its duties to parties having the requisite Consents in such
jurisdictions; provided, however, in the case of such delegation of its
--------
performance shall not be relieved of its responsibility under this Agreement
with respect to such duties).
(e) Binding Obligation. This Agreement constitutes its legal, valid and
------------------
binding obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).
(f) No Proceeding. There are no proceedings or investigations pending or,
-------------
to the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might (in its
reasonable judgment) materially and adversely affect its performance or its
obligations under, or the validity or enforceability of, this Agreement.
64
SECTION 6.13 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 legal counsel and 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 Borrower. 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 Accounts and Excess Spread
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 6.14 REPORTS.
-------
(a) Monthly Report. With respect to each Determination Date and the
--------------
related Collection Period, the Servicer will provide to the Borrower and the
Deal Agent, on the related Reporting Date, a monthly statement (a "Monthly
-------
Report"), signed by a Responsible Officer of the Servicer and substantially in
------
the form of Exhibit E.
---------
(b) Servicer's Certificate. Together with each Monthly Report, the
----------------------
Servicer shall submit to the Deal Agent a certificate (a "Servicer's
----------
Certificate"), signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit F.
---------
(c) Financial Statements. The Servicer will submit to the Deal Agent,
--------------------
within 45 days following the end of each of the Servicer's fiscal quarters
(other than the final fiscal quarter), commencing for the fiscal quarter ending
on March 31, 1999, unaudited financial statements of the Servicer (including an
analysis of delinquencies and losses for each fiscal quarter) as of the end of
each such fiscal quarter. The Servicer shall submit to the Deal Agent, within
90 days following the end of the Servicer's fiscal year, commencing with the
fiscal year ending on December 31, 1998, annual audited financial statements as
of the end of such fiscal year.
SECTION 6.15 ANNUAL STATEMENT AS TO COMPLIANCE.
---------------------------------
The Servicer will provide to the Deal Agent, within 90 days following the
end of each fiscal year of the Servicer, commencing with the fiscal year ending
on December 31, 1999, an annual report signed by a Responsible Officer of the
Servicer certifying that (a) a review of the activities of the Servicer, and the
Servicer's performance pursuant to this Agreement, for the period ending on the
last day of 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 Termination Event has occurred and is continuing (or if a Servicer
Termination Event has so occurred and is continuing, specifying each such event,
the nature and status thereof and the steps necessary to remedy such event, and,
if a Servicer Termination Event occurred during such year and no notice thereof
has
65
been given to the Deal Agent, specifying such Servicer Termination Event and the
steps taken to remedy such event).
SECTION 6.16 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S SERVICING REPORTS.
--------------------------------------------------------
The Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish to
the Deal Agent, within 90 days following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 1999, (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 Loans
included in the Collateral, 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 Deal Agent) to certain documents and records relating to the
servicing of Loans under this Agreement, 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 exceptions as shall be set forth in such statement.
SECTION 6.17 ADJUSTMENTS.
-----------
If (i) the Servicer makes a deposit into the Collection Accounts in respect
of a Collection of a Loan included in the Collateral and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (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 Accounts 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 on the date such payment was
due.
SECTION 6.18 CUSTODIAL COMPENSATION.
----------------------
As compensation for its custodial activities hereunder and reimbursement
for its expenses, the Custodian shall be entitled to receive a custodial fee
(the "Custodial Fee") as provided in the Custodian Fee Letter.
-------------
SECTION 6.19 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
--------------------------------------------------
Except as provided herein, neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under any liability to
the Deal Agent, the Lenders or
66
any other Person for any action taken or for refraining from the taking of any
action expressly provided for in this Agreement; provided, however, that this
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provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of its willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of its
willful misconduct hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its duties to service the
Loans in accordance with this Agreement that in its reasonable opinion may
involve it in any expense or liability. The Servicer may, in its sole
discretion, undertake any legal action relating to the servicing, collection or
administration of Loans and the Related Property that it may reasonably deem
necessary or appropriate for the benefit of the Secured Parties with respect to
this Agreement and the rights and duties of the parties hereto and the interests
of the Secured Parties hereunder.
SECTION 6.20 INDEMNIFICATION OF THE BORROWER, THE DEAL AGENT, THE
----------------------------------------------------
LIQUIDITY AGENT AND THE SECURED PARTIES.
---------------------------------------
The Servicer shall indemnify and hold harmless each Indemnified Party from
and against any loss, liability, expense, damage or injury suffered or sustained
by any Indemnified Party by reason of any acts, omissions or alleged acts or
omissions of the Servicer, including, but not limited to any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, but excluding allocations of overhead expenses of any such Indemnified
Party or other non-monetary damages of any such Indemnified Party.
Notwithstanding the foregoing, the Servicer shall not indemnify an Indemnified
Party if such loss, liability, expense, damage or injury results or arises (i)
as a result of fraud, gross negligence or willful misconduct by such Indemnified
Party; or (ii) under any federal, state or local income or franchise taxes or
any other Tax imposed on or measured by income (or any interest or penalties
with respect thereto or arising from a failure to comply therewith) required to
be paid by the Borrower, the Deal Agent, the Liquidity Agent or the Secured
Parties in connection herewith to any taxing authority to the extent the same
includes losses, damages or claims that would constitute credit recourse to
Servicer for the amount of any Loan or Related Property not paid by the related
Obligor. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof. If the
Servicer has made any indemnity payment pursuant to this Section 6.20 and such
payment fully indemnified the recipient thereof and the recipient thereafter
collects any payments from others in respect of such Indemnified Amounts, the
recipient shall repay to the Servicer an amount equal to the amount it has
collected from others in respect of such indemnified amounts.
If for any reason the indemnification provided above in this Section 6.20
is unavailable to the Indemnified Party or is insufficient to hold an
Indemnified Party harmless, then Servicer 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 Servicer on the
other hand but
67
also the relative fault of such Indemnified Party as well as any other relevant
equitable considerations.
The parties hereto agree that the provisions of this Section 6.20 shall not
be interpreted to provide recourse to the Servicer against loss by reason of the
bankruptcy or insolvency (or other credit condition) of, or default by, related
Obligor on, any Collateral.
Any indemnification pursuant to this Section shall not be payable from the
Collateral.
The obligations of the Servicer under this Section 6.20 shall survive the
resignation or removal of the Deal Agent and the Liquidity Agent, and the
termination of this Agreement.
SECTION 6.21 THE SERVICER NOT TO RESIGN.
--------------------------
Subject to Section 6.23, 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 which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel to
such effect delivered to the Deal Agent. No such resignation shall become
effective until a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 6.26.
SECTION 6.22 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
-------------------------------------------------------------
LOANS.
-----
The Servicer, or the Custodian, as applicable, shall provide to the Deal
Agent access to the Loan Documents and all other documentation regarding the
Loans included as part of the Collateral and the Related Property in such cases
where the Deal Agent is required in connection with the enforcement of the
rights or interests of the Lenders, or by applicable statutes or regulations, to
review such documentation, such access being afforded without charge but only
(i) upon two business days' prior written request, (ii) during normal business
hours and (iii) subject to the Servicer's normal security and confidentiality
procedures. Prior to the Closing Date and periodically thereafter at the
discretion of the Deal Agent, the Deal Agent may review the Servicer's
collection and administration of the Loans in order to assess compliance by the
Servicer with the Servicer's written policies and procedures, as well as with
this Agreement and may conduct an audit of the Loans, Loan Documents and Records
in conjunction with such a review; provided, however, that prior to the
occurrence of an Early Amortization Event, the Deal Agent shall limit such
audits to no more than four (4) per calendar year. Such review shall be
reasonable in scope and shall be completed in a reasonable period of time. The
Borrower shall bear the cost of such audits; provided, however, that prior to
the occurrence of an Early Amortization Event, the Borrower shall be responsible
for no more than $5,000 per audit.
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SECTION 6.23 MERGER OR CONSOLIDATION OF THE SERVICER.
---------------------------------------
The Servicer shall not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person and unless:
(i) the Person formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Servicer substantially as an entirety
shall be, if the Servicer is not the surviving entity, organized and
existing under the laws of the United States of America or any State or the
District of Columbia and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Deal Agent in form
satisfactory to the Deal Agent, the performance of every covenant and
obligation of the Servicer hereunder (to the extent that any right,
covenant or obligation of the Servicer, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity);
(ii) the Servicer shall have delivered to the Deal Agent an Officer's
Certificate that such consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section 6.24 and that all
conditions precedent herein provided for relating to such transaction have
been complied with and an Opinion of Counsel that such supplemental
agreement is legal, valid and binding with respect to the successor entity
and that the entity surviving such consolidation, conveyance or transfer is
organized and existing under the laws of the United States of America or
any State or the District of Columbia. The Deal Agent shall receive prompt
written notice of such merger or consolidation of the Servicer; and
(iii) after giving effect thereto, no Early Amortization Event or
Servicer Default or an event which with notice or lapse of time or both
would constitute such an Early Amortization Event or Servicer Default shall
have occurred.
SECTION 6.24 IDENTIFICATION OF RECORDS.
-------------------------
The Servicer shall clearly and unambiguously identify each Loan that is
part of the Collateral and the Related Property in its computer or other records
to reflect that the interest in such Loans and Related Property have been
transferred to and are owned by the Borrower and that the Deal Agent has the
interest therein granted by Borrower pursuant to this Agreement.
SECTION 6.25 SERVICER TERMINATION EVENTS.
---------------------------
(a) If any one of the following events (a "Servicer Termination Event")
--------------------------
shall occur and be continuing on any day:
69
(i) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Deal Agent as required by
this Agreement, or to deliver any Required Reports hereunder on or before
the date occurring two Business Days after the date such payment, transfer,
deposit, instruction of notice or report is required to be made or given,
as the case may be, under the terms of this Agreement;
(ii) 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 any other Transaction Document
which continues unremedied for a period of 30 days after the first to occur
of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Servicer by the Deal Agent and
(ii) the date on which the Servicer becomes aware thereof;
(iii) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, and which continues
to be unremedied for a period of 30 days after the first to occur of (i)
the date on which written notice of such incorrectness requiring the same
to be remedied shall have been given to the Servicer by the Deal Agent and
(ii) the date on which the Servicer becomes aware thereof;
(iv) the Servicer shall fail in any material respect to service
the Loans in accordance with the Credit and Collection Policies;
(v) an Insolvency Event shall occur with respect to the
Servicer;
(vi) the Servicer materially alters the Credit and Collection
Policy without the prior written consent of the Deal Agent;
(vii) any financial or asset information reasonably requested by
the Deal Agent or the Lender as provided herein is not provided as
requested within five (5) Business Days of the receipt by the Servicer of
such request;
(viii) the rendering against the Servicer of a final judgment,
decree or order for the payment of money in excess of U.S. $1,000,000
(individually or in the aggregate) and the continuance of such judgment,
decree or order unsatisfied and in effect for any period of 61 consecutive
days without a stay of execution;
(ix) the failure of the Servicer to make any payment due with
respect to aggregate recourse debt or other obligations with an aggregate
principal amount exceeding U.S. $1,000,000 or the occurrence of any event
or condition which would permit acceleration of such recourse debt or other
obligations if such event or condition has not been waived; or
70
(x) the Servicer is not HCFP or a direct or indirect wholly-
owned subsidiary of HCFP.
Notwithstanding anything herein to the contrary, so long as any such Servicer
Termination Events shall not have been remedied at the expiration of any
applicable cure period, the Deal Agent or the Lender, by written notice to the
Servicer (a "Termination Notice"), may, subject to the provisions of Section
------------------
6.26, terminate all of the rights and obligations of the Servicer as Servicer
under this Agreement. The Borrower shall pay all reasonable set-up and
conversion costs associated with the transfer of servicing rights to the
Successor Servicer.
SECTION 6.26 APPOINTMENT OF SUCCESSOR SERVICER.
---------------------------------
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 6.25, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Deal Agent in writing. The Deal Agent may
at the time described in the immediately preceding sentence in its sole
discretion, appoint the Backup Servicer as the Servicer hereunder, and the
Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Backup Servicer; provided, however, that the
-------- -------
Successor Servicer shall not (i) be responsible or liable for any past actions
or omissions of the outgoing Servicer or (ii) be obligated to make Servicer
Advances. In the event that the Deal Agent does not so appoint the Backup
Servicer, there is no Backup Servicer or the Backup Servicer is unwilling or
unable to assume such obligations on such date, the Deal Agent shall as promptly
as possible appoint a successor servicer (the Backup Servicer or any such other
successor, the "Successor Servicer"), and such Successor Servicer shall accept
------------------
its appointment by a written assumption in a form acceptable to the Deal Agent.
If the Deal Agent within 60 days of receipt of a Termination Notice is unable to
obtain any bids from eligible Servicers and the Servicer delivers an Officer's
Certificate to the effect that it cannot in good faith cure the Servicer Default
which gave rise to a transfer of servicing, then the Deal Agent shall offer the
Originator the right to accept retransfer of all the Assets and the Originator
may accept re-transfer of all the Assets, provided, however, that if the long-
-------- ------
term unsecured debt obligations of the Originator are not rated at the time of
such purchase at least investment grade, no such re-transfer shall occur unless
the Borrower shall deliver an Opinion of Counsel reasonably acceptable to the
Deal Agent that such re-transfer would not constitute a fraudulent conveyance of
the Borrower. If the Originator is unable to make such purchase, including,
without limitation because it is not able to satisfy requirements of the
preceding proviso clause, then the Deal Agent may arrange for the sale of the
Loans, on then-prevailing market terms, to any Person chosen by the Deal Agent.
The amount to be paid and deposited in respect of such re-transfer shall be
equal to the sum of the Advances Outstanding plus all accrued and unpaid
Interest thereon, together with all Breakage Costs and Hedge Breakage Costs. In
the event that a Successor Servicer has not been appointed and has not accepted
its appointment at the time when the Servicer ceases to act as Servicer, the
Deal Agent shall petition a court of competent Jurisdiction to appoint any
established financial institution having a net worth of not less than
71
U.S. $250,000,000 and whose regular business includes the servicing of Contracts
as the Successor Servicer hereunder.
(b) Upon its appointment as successor to the Servicer, the Backup Servicer
(subject to Section 6.26(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, shall assume all Servicing Duties hereunder and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to the
Backup Servicer or the Successor Servicer, as applicable.
(c) All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of the Servicer under
this Agreement and shall pass to and be vested in the successor Servicer and,
without limitation, the successor Servicer 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
successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing on the Collateral.
(d) Upon the Backup Servicer receiving notice that it is required to serve
as the Servicer hereunder pursuant to the foregoing provisions of this Section
6.26, the Backup Servicer will promptly begin the transition to its role as
Servicer.
(e) The Backup Servicer shall be entitled to receive its reasonable costs
incurred in transitioning to Servicer.
SECTION 6.27 NOTIFICATION.
------------
Upon the Servicer becoming aware of the occurrence of any Servicer
Termination Event, the Servicer shall promptly give written notice thereof to
the Deal Agent.
SECTION 6.28 PROTECTION OF RIGHT, TITLE AND INTEREST TO COLLATERAL.
-----------------------------------------------------
The Servicer shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the right, title and interest of the Deal Agent as agent for
the Secured Parties and of the Secured Parties to the Collateral to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, all in such manner and in such places as may be required by law fully
to preserve and protect the right, title and interest of the Deal Agent as agent
for the Secured Parties hereunder to all property comprising the Collateral.
The Servicer shall deliver to the Deal Agent file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing. The
Borrower shall cooperate fully with the Servicer in connection with the
obligations set forth
72
above and will execute any and all documents reasonably required to fulfill the
intent of this Section.
SECTION 6.29 BACKUP SERVICER.
---------------
(a) On or before the date on which the initial Advance occurs and until
the receipt by the Servicer of a Termination Notice, the Backup Servicer shall
perform, on behalf of the Deal Agent and the Secured Parties, the following
duties and obligations:
(i) On or before the Closing Date, the Backup Servicer shall accept
from the Servicer delivery of the information required to be set forth in
the Monthly Reports in hard copy and on computer tape; provided, however,
-------- -------
the computer tape is in an MS-DOS, PC readable ASCII format or format to be
agreed upon by the Backup Servicer and the Servicer on or prior to closing.
(ii) Not later than 12:00 noon New York time two Business Days prior
to each Reporting Date, the Servicer shall provide to the Backup Servicer
and the Backup Servicer shall accept delivery of tape (the "Tape") from the
----
Servicer, which shall include but not be limited to the following
information: (x) for each Loan, the name and number of the related
Obligor, the collection status, the contract status, the date of each
Scheduled Payment and the outstanding principal balance and (y) the
Aggregate Loan Balance.
(b) On or before the initial Funding Date, and until the receipt by the
Servicer of a Termination Notice, the Backup Servicer shall perform, on behalf
of the Secured Parties and the Deal Agent, the following duties and obligations:
(i) Prior to the related Payment Date, the Backup Servicer shall
review the Monthly Report to ensure that it is complete on its face and
that the following items in such Monthly Report have been accurately
calculated, if applicable, and reported: (A) the Aggregate Loan Balance,
(B) the Backup Servicing Fee, (C) the average Loan Balance, (D) the Loans
that are 30 or more days Delinquent (other than Charged-Off Loans), (E) the
Charged-Off Loans, (F) the Portfolio Yield, (G) the Delinquency Ratio for
the current Collection Period and the two immediately preceding Collection
Periods, (H) the Charged-Off Ratio for the current Collection Period and
the two immediately preceding Collection Periods, (I) the Rolling Three-
Month Delinquency Ratio and (J) the Rolling Three-Month Charged-Off Ratio.
The Backup Servicer shall notify the Deal Agent and the Servicer of any
disagreements with the Monthly Report based on such review not later than
the Business Day preceding such Payment Date to such Persons.
(ii) If the Servicer disagrees with the report provided under
paragraph (i) above by the Backup Servicer or if the Servicer or any
subservicer has not reconciled such discrepancy, the Backup Servicer agrees
to confer with the Servicer to resolve such disagreement on or prior to the
next succeeding Determination Date and shall settle such discrepancy with
the Servicer if possible, and notify the Deal Agent of the resolution
73
thereof. The Servicer hereby agrees to cooperate at its own expense, with
the Backup Servicer in reconciling any discrepancies herein. If within 20
days after the delivery of the report provided under paragraph (i) above by
the Backup Servicer, such discrepancy is not resolved, the Backup Servicer
shall promptly notify the Deal Agent of the continued existence of such
discrepancy. Following receipt of such notice by the Deal Agent, the
Servicer shall deliver to the Deal Agent, the Secured Parties, and the
Backup Servicer no later than the related Payment Date a certificate
describing the nature and amount of such discrepancies and the actions the
Servicer proposes to take with respect thereto.
With respect to the foregoing, the Backup Servicer, in the performance of
its duties and obligations hereunder, is entitled to rely conclusively, and
shall be fully protected in so relying, on the contents of each Tape, including,
but not limited to, the completeness and accuracy thereof, provided by the
Servicer.
(c) After the receipt of an effective Termination Notice by the Servicer
in accordance with this Agreement, all authority, power, rights and
responsibilities of the Servicer, under this Agreement, whether with respect to
the Loans or otherwise shall pass to and be vested in the Backup Servicer,
subject to and in accordance with the provisions of Section 6.26, as long as the
Backup Servicer is not prohibited by an applicable provision of law from
fulfilling the same, as evidenced by an Opinion of Counsel.
(d) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) which may result from any merger or consolidation to which
the Backup Servicer shall be a party, or (iii) which may succeed to the
properties and assets of the Backup Servicer substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Backup Servicer hereunder, shall be the
successor to the Backup Servicer under this Agreement without further act on the
part of any of the parties to this Agreement.
(e) As compensation for its back-up servicing obligations hereunder, the
Backup Servicer shall be entitled to receive the Backup Servicing Fee in respect
of each Collection Period (or portion thereof) until the first to occur of the
date on which the Backup Servicer becomes a Successor Servicer, resigns or is
removed as Backup Servicer or termination of this Agreement.
(f) The Backup Servicer may be removed with or without cause by the Deal
Agent by notice given in writing to the Backup Servicer. In the event of any
such removal, a replacement Backup Servicer may be appointed by (i) the
Servicer, acting with the consent of the Deal Agent or (ii) if no such
replacement is appointed within 30 days following such removal, by the Deal
Agent.
(g) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto
74
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, attorneys and custodians in
performing any of its duties and obligations under this Agreement, it being
understood by the parties hereto that the Backup Servicer will be responsible
for any misconduct or negligence on the part of such agents, attorneys or
custodians acting on the routine and ordinary day-to-day operations for and on
behalf of the Backup Servicer. Neither the Backup Servicer nor any of its
officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses which result from the gross
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.
(h) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer contained
in any computer tape, certificate or other data or document delivered to the
Backup Servicer hereunder or on which the Backup Servicer must rely in order to
perform its obligations hereunder, and the Secured Parties, the Deal Agent, the
Liquidity Agent, the Custodian and the Backup Servicer 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 carrying out any of their
respective duties under this Agreement if such failure or delay results from the
Backup Servicer acting in accordance with information prepared or supplied by a
Person other than the Backup Servicer or the failure of any such other Person to
prepare or provide such information. The Backup Servicer shall have no
responsibility, shall not be in default and shall incur no liability for (i) any
act or failure to act of any third party, including the Servicer (ii) any
inaccuracy or omission in a notice or communication received by the Backup
Servicer from any third party, (iii) the invalidity or unenforceability of any
Asset or Contract under applicable law, (iv) the breach or inaccuracy of any
representation or warranty made with respect to any Loan, or (v) the acts or
omissions of any successor Backup Servicer.
(i) As compensation for its services as Backup Servicer hereunder, the
Backup Servicer shall be entitled to receive a fee (the "Backup Servicer Fee")
-------------------
as provided in the Backup Servicer Fee Letter.
(j) The Backup Servicer shall cause to be delivered to the Deal Agent an
Opinion of Counsel in form and substance satisfactory to the Deal Agent within
ten (10) Business Days following the Closing Date.
SECTION 6.30 THE EVALUATOR.
-------------
(a) The Evaluator hereby represents and warrants to each of the Deal
Agent, the Liquidity Agent and each of the Secured Parties that, on or prior to
the Funding Date on which a Loan becomes part of the Collateral hereunder, (i)
the Evaluator has performed an audit of the
75
related Obligor, its business and its collection systems and made an assessment
of the collateral securing such Loan, (ii) such audit and assessment was
performed in accordance with the Evaluation Policy, (iii) the Evaluator has
assigned to the Obligor and the Loan a Liquidity Factor in accordance with the
Credit and Collection Policy and the Evaluation Policy and (iv) the results of
both such audit and assessment were satisfactory, as determined in accordance
with the Evaluation Policy.
(b) The Evaluator hereby agrees that (i) it will not amend, modify,
change, replace or restate any portion or all of the Evaluation Policy in any
manner that could be adverse to the Deal Agent, the Liquidity Agent or any of
the Secured Parties, (ii) perform an audit of each Obligor, its business and its
collection systems and made an assessment of the collateral securing such Loan
on or prior to the date any Loan becomes a part of the Collateral.
(c) The Evaluator shall indemnify and hold harmless each Indemnified
Party from and against any loss, liability, expense, damage or injury suffered
or sustained by any Indemnified Party by reason of any acts, omissions or
alleged acts or omissions of the Evaluator, including, but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, but excluding allocations of overhead expenses of
any such Indemnified Party or other non-monetary damages of any such Indemnified
Party. Notwithstanding the foregoing, the Servicer shall not indemnify an
Indemnified Party if such loss, liability, expense, damage or injury results or
arises (i) as a result of fraud, gross negligence or willful misconduct by such
Indemnified Party; and (ii) under any federal, state or local income or
franchise taxes or any other Tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by such Indemnified Party in connection herewith
to any taxing authority. The provisions of this indemnity shall run directly to
and be enforceable by an injured party subject to the limitations hereof. If the
Evaluator has made any indemnity payment pursuant to this Section 6.30(c) and
such payment fully indemnified the recipient thereof and the recipient
thereafter collects any payments from others in respect of such indemnified
amount, the recipient shall repay to the Evaluator an amount equal to the amount
it has collected from others in respect of such indemnified amounts. The
obligations of the Evaluator under this Section 6.30(c) shall survive the
resignation or removal of the Evaluator, and the termination of this Agreement.
(d) The Evaluator may be replaced at any time during the term of this
Agreement by delivery to the Evaluator of a written termination notice from the
Deal Agent, any such termination to be effective on the date set forth in such
written notice.
SECTION 6.31 DECREMENTATION FACTOR REPORT.
----------------------------
The Servicer shall deliver to the Deal Agent a report setting forth a
Decrementation Factor for each Insurer whose receivables secure any Loan that is
a part of the Collateral. Such Decrementation Factor Report shall be delivered
to the Deal Agent on or before the initial Funding Date and shall be
supplemented on or before each Funding Date and on each Reporting
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Date. The Servicer shall amend and update the Decrementation Factor Report as
necessary to reflect the Servicer's good faith assessment of the collectibility
of each Insurer's receivables. The Servicer represents and warrants to the Deal
Agent, the Liquidity Agent and each Secured Party that each Decrementation
Factor has been established by the Servicer in good faith and represents the
good faith judgment of the Servicer concerning the collectibility of receivables
owed by the applicable Insurer and that each Decrementation Factor Report is
true, complete and accurate as of the date of such report.
ARTICLE VII
EARLY AMORTIZATION EVENTS
SECTION 7.1 EARLY AMORTIZATION EVENTS.
-------------------------
If any of the following events (each, an "Early Amortization Event") shall
------------------------
occur and be continuing:
(a) the Borrower shall default in the payment of any amount required to
be made under the terms of this Agreement and such failure continues unremedied
for a period of two (2) Business Days after the due date set forth herein for
such payment, or if no due date is specified, such failure continues for a
period of 30 days after written request for such payment has been made; or
(b) an Overcollateralization Shortfall exists for a period of three (3)
consecutive days; or
(c) the amount of Advances Outstanding shall exceed the Borrowing Base
for more than three (3) Business Days; or
(d) (i) the Borrower shall fail to perform or observe in any material
respect any other covenant or other agreement of the Borrower set forth in this
Agreement, or (ii) the Originator shall fail to perform or observe in any
material respect any term, covenant or agreement of such Originator set forth in
the Purchase Agreement, in each case when such failure continues unremedied for
more than thirty (30) days after written notice thereof shall have been given by
the Deal Agent or the Custodian to such Person; or
(e) any representation or warranty made or deemed made hereunder shall
prove to be incorrect in any material respect as of the time when the same shall
have been made, and such incorrect representation or warranty shall not have
been eliminated or otherwise cured within a period of thirty (30) days after
written notice thereof shall have been given by the Deal Agent or the Custodian
to the Borrower; or
(f) an Insolvency Event shall occur with respect to the Borrower or the
Originator; or
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(g) a Servicer Termination Event occurs; or
(h) the earlier to occur of the date (i) on which the Originator does
not directly own 100% of the outstanding shares of stock of the Borrower and
(ii) on which the Guarantor does not directly 100% of the outstanding shares of
stock of the Originator; or
(i) the Borrower or the Originator defaults in making any payment
required to be made under any material agreement for borrowed money to which
either is a party and such default is not cured within the relevant cure period;
or
(j) the Deal Agent, as agent for the Secured Parties, shall fail for any
reason to have a valid and perfected first priority security interest in the any
of the Collateral; or
(k) (i) a final judgment for the payment of money in excess of $5,000,000
(individually or in the aggregate) shall have been rendered against the
Originator or $100,000 (individually or in the aggregate) against the Borrower
by a court of competent jurisdiction and, if such judgment relates to the
Originator, the Originator shall have failed to either: (1) discharged or
provided for the discharge of such judgment in accordance with its terms, or (2)
perfected a timely appeal of such judgment and caused the execution thereof to
be stayed (by supersedes or otherwise during the pendency of such appeal or (ii)
the Originator or the Borrower, as the case may be, shall have made payments of
amounts in excess of $2,000,000 or $100,000, respectively, in settlement of any
litigation; or
(l) the Borrower or Originator agrees or consents to, or otherwise
permits to occur, any amendment, modification, change, supplement or recession
of or to the Credit and Collection Policies in whole or in part that could have
a adverse effect upon the Loans or interest of any Secured Party, without the
prior consent of the Deal Agent; or
(m) on any Determination Date, the Portfolio Yield does not equal or
exceed Minimum Portfolio Yield and such failure continues for a period of
fifteen (15) consecutive days; or
(n) on any Determination Date, any of the Hedge Requirements is not
satisfied and not equal or exceed Minimum Portfolio Yield and such failure
continues for a period of fifteen (15) consecutive days; or
(o) the Rolling Three-Month Delinquency Ratio shall exceed 6.0%; or
(p) the Rolling Three-Month Charged-Off Ratio shall exceed 1.5%; or
(q) the Collection Ratio shall exceed 250% for any Collection Period; or
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(r) the Collection Ratios for three (3) of any four (4) consecutive
Collection Periods shall exceed 200%; or
(s) the Tangible Net Worth of the Guarantor shall not exceed $175
million; or
(t) fewer than two (2) Approved Senior Managers are employed in senior
management positions by, and are active in the daily management of the business
of, the Guarantor or, if, as a result of the deaths or disabilities of such
Approved Senior Managers, fewer than one (1) Approved Senior Manager is employed
in a senior management position by, and is active in the daily management of the
business of, the Guarantor; or
(u) the Borrower shall become an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
then, and in any such event, the Deal Agent shall, at the request, or may with
the consent, of the Required Investors, by notice to the Borrower declare the
Termination Date to have occurred, without demand, protest or future notice of
any kind, all of which are hereby expressly waived by the Borrower, and all
Advances and all other amounts owing by the Borrower under this Agreement shall
be accelerated and become immediately due and payable, provided, that in the
--------
event that the Termination Event described in subsection (f) herein has
occurred, the Termination Date shall automatically occur, without demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNITIES BY THE BORROWER.
---------------------------
Without limiting any other rights which the Deal Agent, the Liquidity
Agent, any Lender or its assignee, or any of their respective Affiliates may
have hereunder or under applicable law, the Borrower hereby agrees to indemnify
the Deal Agent, the Liquidity Agent, any Secured Party or its assignee and each
of their respective Affiliates and officers, directors, employees and agents
thereof (collectively, the "Indemnified Parties") from and against any and all
-------------------
damages, losses, claims, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or incurred
-------------------
by, any such Indemnified Party or other non-monetary damages of any such
Indemnified Party any of them arising out of or as a result of this Agreement,
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of any Indemnified Party. Without
limiting the foregoing, the Borrower shall indemnify the Indemnified Parties for
Indemnified Amounts relating to or resulting from:
79
(i) any Loan treated by the Borrower as or represented by the
Borrower to be an Eligible Loan which is not at the applicable time an
Eligible Loan;
(ii) reliance on any representation or warranty made or deemed made
by the Borrower, the Servicer (or one of its Affiliates) or any of their
respective officers under or in connection with this Agreement, which shall
have been false or incorrect in any material respect when made or deemed
made or delivered;
(iii) the failure by the Borrower or the Servicer (or one of its
Affiliates) to comply with any term, provision or covenant contained in
this Agreement or any agreement executed in connection with this Agreement,
or with any applicable law, rule or regulation with respect to any Loan
comprising a portion of the Collateral, the Related Property, or the
nonconformity of any Loan, the Related Property with any such applicable
law, rule or regulation or any failure by the Originator, the Borrower or
any Affiliate thereof to perform its respective duties under the Loans
included as a part of the Collateral;
(iv) the failure to vest and maintain vested in the Deal Agent a
first priority perfected security interest in the Collateral;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Collateral whether at the time of any Advance or at any subsequent time and
as required by the Transaction Documents;
(vi) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Loan included as part of the Collateral which is, or is purported to
be, an Eligible Loan (including, without limitation, a defense based on the
Loan not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms);
(vii) any failure of the Borrower or the Servicer (if the Originator
or one of its Affiliates) to perform its duties or obligations in
accordance with the provisions of this Agreement or any failure by the
Originator, the Borrower or any Affiliate thereof to perform its respective
duties under the Loans;
(viii) any products liability claim or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with merchandise or services which are the
subject of any Loan included as part of the Collateral or the Related
Property included as part of the Collateral;
(ix) the failure by Borrower to pay when due any Taxes for which
the Borrower is liable, including without limitation, sales, excise or
personal property taxes payable in connection with the Collateral;
80
(x) any repayment by the Deal Agent, the Liquidity Agent 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 Hedge Agreement, in each case which amount the Deal Agent, the
Liquidity Agent or a Secured Party believes in good faith is required to be
repaid;
(xi) any investigation, litigation or proceeding related to this
Agreement that is either not commenced by the Indemnified Party or if so
commenced, in which such Indemnified Party is the prevailing party or the
use of proceeds of Advances or in respect of any Loan included as part of
the Collateral or the Related Property included as part of the Collateral;
(xii) any failure by the Borrower to give reasonably equivalent
value to the Originator in consideration for the transfer by the Originator
to the Borrower of any Loan or the Related Property or any attempt by any
Person to void or otherwise avoid any such transfer under any statutory
provision or common law or equitable action, including, without limitation,
any provision of the Bankruptcy Code; or
(xiii) the failure of the Borrower, the Originator or any of their
respective agents or representatives to remit to the Servicer or the Deal
Agent, Collections on the Collateral remitted to the Borrower or any such
agent or representative in accordance with the terms hereof or the
commingling by the Borrower or any Affiliate of any Collections.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
indemnified against any damages, losses or claims (a) to the extent such losses
are or result from lost profits, or (b) to the extent such Indemnified Amounts
are or result from taxes asserted with respect to taxes on, or measured by, the
net income of the applicable Indemnified party.
Any amounts subject to the indemnification provisions of this Section 8.1
shall be paid by the Borrower solely pursuant to the provisions of Section 2.7
hereof to the Deal Agent within two Business Days following the Deal Agent's
demand therefor.
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
SECTION 9.1 AUTHORIZATION AND ACTION.
------------------------
(a) Each Secured Party hereby designates and appoints the Deal Agent as
Deal Agent hereunder, and authorizes the Deal Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Deal
Agent by the terms of this Agreement together with such powers as are reasonably
incidental thereto. The Deal Agent shall not have any duties
81
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Deal
Agent shall be read into this Agreement or otherwise exist for the Deal Agent.
In performing its functions and duties hereunder, the Deal Agent shall act
solely as agent for the Secured Parties and does not assume nor shall be deemed
to have assumed any obligation or relationship of trust or agency with or for
the Borrower or any of its successors or assigns. The Deal Agent shall not be
required to take any action which exposes the Deal Agent to personal liability
or which is contrary to this Agreement or applicable law. The appointment and
authority of the Deal Agent hereunder shall terminate at the indefeasible
payment in full of the Obligations.
(b) Each Investor hereby designates and appoints First Union as
Liquidity Agent hereunder, and authorizes the Liquidity Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the Liquidity Agent by the terms of this Agreement together with such powers as
are reasonably incidental thereto. The Liquidity Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Investor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Liquidity Agent shall be read into this Agreement or otherwise exist for the
Liquidity Agent. In performing its functions and duties hereunder, the Liquidity
Agent shall act solely as agent for the Investors and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Borrower or any of its successors or assigns. The Liquidity Agent
shall not be required to take any action which exposes the Liquidity Agent to
personal liability or which is contrary to this Agreement or applicable law. The
appointment and authority of the Liquidity Agent hereunder shall terminate at
the indefeasible payment in full of the Obligations.
SECTION 9.2 DELEGATION OF DUTIES.
--------------------
(a) The Deal Agent may execute any of its duties under this Agreement by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Deal Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
(b) The Liquidity Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Liquidity Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
SECTION 9.3 EXCULPATORY PROVISIONS.
----------------------
(a) Neither the Deal Agent nor any of its directors, officers, agents or
employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement (except for its,
their or such Person's own gross negligence or willful misconduct or, in the
case of the Deal Agent, the breach of its obligations expressly set
82
forth in this Agreement), or (ii) responsible in any manner to any of the
Secured Parties for any recitals, statements, representations or warranties made
by the Borrower contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, or for any failure of the Borrower to
perform its obligations hereunder, or for the satisfaction of any condition
specified in Article III. The Deal Agent shall not be under any obligation to
any Secured Party to ascertain or to inquire as to the observance or performance
of any of the agreements or covenants contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower. The
Deal Agent shall not be deemed to have knowledge of any Early Amortization Event
unless the Deal Agent has received notice from the Borrower or a Secured Party.
(b) Neither the Liquidity Agent nor any of its directors, officers,
agents or employees shall be (i) liable for any action lawfully taken or omitted
to be taken by it or them under or in connection with this Agreement (except for
its, their or such Person's own gross negligence or willful misconduct or, in
the case of the Liquidity Agent, the breach of its obligations expressly set
forth in this Agreement), or (ii) responsible in any manner to the Deal Agent or
any of the Lenders for any recitals, statements, representations or warranties
made by the Borrower contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, or for any failure of the Borrower to
perform its obligations hereunder, or for the satisfaction of any condition
specified in Article III. The Liquidity Agent shall not be under any obligation
to the Deal Agent or any Secured Party to ascertain or to inquire as to the
observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower. The Liquidity Agent shall not be deemed to have knowledge of any
Early Amortization Event unless the Liquidity Agent has received notice from the
Borrower, the Deal Agent or a Secured Party.
SECTION 9.4 RELIANCE.
--------
(a) The Deal Agent shall in all cases be entitled to rely, and shall be
fully protected in relying, upon any document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Deal Agent. The Deal Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other document furnished in connection herewith unless it shall first receive
such advice or concurrence of VFCC or the Required Investors or all of the
Secured Parties, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders; provided, that, unless and until
-------- ----
the Deal Agent shall have received such advice, the Deal Agent may take or
refrain from taking any action, as the Deal Agent shall deem advisable and in
the best interests of the Lenders. The Deal
83
Agent shall in all cases be fully protected in acting, or in refraining from
acting, in accordance with a request of VFCC or the Required Investors or all of
the Secured Parties, as applicable, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
(b) The Liquidity Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Liquidity Agent. The Liquidity Agent shall in all cases
be fully justified in failing or refusing to take any action under this
Agreement or any other document furnished in connection herewith unless it shall
first receive such advice or concurrence of Required Investors as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Investors, provided that unless and until the Liquidity Agent shall have
--------
received such advice, the Liquidity Agent may take or refrain from taking any
action, as the Liquidity Agent shall deem advisable and in the best interests of
the Investors. The Liquidity Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of the
Required Investors and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Investors.
SECTION 9.5 NON-RELIANCE ON DEAL AGENT, LIQUIDITY AGENT AND OTHER LENDERS.
-------------------------------------------------------------
Each Secured Party expressly acknowledges that neither the Deal Agent, the
Liquidity Agent nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Deal Agent or the Liquidity Agent
hereafter taken, including, without limitation, any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Deal Agent or the Liquidity Agent. Each Secured Party represents and warrants
to the Deal Agent and to the Liquidity Agent that it has and will, independently
and without reliance upon the Deal Agent, the Liquidity Agent or any other
Secured Party and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement.
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION.
---------------------------------
The Investors agree to reimburse and indemnify VFCC, the Deal Agent, the
Liquidity Agent and each of their respective officers, directors, employees,
representatives and agents ratably according to their pro rata shares, to the
extent not paid or reimbursed by the Borrower (i) for any amounts for which
VFCC, the Liquidity Agent, acting in its capacity as Liquidity Agent, or the
Deal Agent, acting in its capacity as Deal Agent, is entitled to reimbursement
by the Borrower hereunder and (ii) for any other expenses incurred by VFCC, the
Liquidity Agent, acting in its capacity as Liquidity Agent, or the Deal Agent,
in its capacity as Deal Agent and
84
acting on behalf of the Secured Parties, in connection with the administration
and enforcement of this Agreement.
SECTION 9.7 DEAL AGENT AND LIQUIDITY AGENT IN THEIR INDIVIDUAL CAPACITIES.
-------------------------------------------------------------
The Deal Agent, the Liquidity Agent and each of their respective Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as though the Deal
Agent or the Liquidity Agent, as the case may be, were not the Deal Agent or the
Liquidity Agent, as the case may be, hereunder. With respect to the acquisition
of Advances pursuant to this Agreement, the Deal Agent, the Liquidity Agent and
each of their respective Affiliates shall have the same rights and powers under
this Agreement as any Lender and may exercise the same as though it were not the
Deal Agent or the Liquidity Agent, as the case may be, and the terms "Investor,"
"Lender," "Investors" and "Lenders" shall include the Deal Agent or the
Liquidity Agent, as the case may be, in its individual capacity.
SECTION 9.8 SUCCESSOR DEAL AGENT OR LIQUIDITY AGENT.
---------------------------------------
(a) The Deal Agent may, upon 5 days' notice to the Borrower and the
Lenders, and the Deal Agent will, upon the direction of all of the Lenders
(other than the Deal Agent, in its individual capacity) resign as Deal Agent.
If the Deal Agent shall resign, then the Required Investors during such 5-day
period shall appoint from among the Lenders a successor agent. If for any
reason no successor Deal Agent is appointed by the Required Investors during
such 5-day period, then effective upon the expiration of such 5-day period, the
Lenders shall perform all of the duties of the Deal Agent hereunder and the
Borrower shall make all payments in respect of the Obligations or under any fee
letter delivered by the Originator to the Deal Agent and the Secured Parties
directly to the applicable Secured Parties and for all purposes shall deal
directly with the Secured Parties. After any retiring Deal Agent's resignation
hereunder as Deal Agent, the provisions of Article VIII and Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Deal Agent under this Agreement.
(b) The Liquidity Agent may, upon 5 days' notice to the Borrower, the
Deal Agent and the Investors, and the Liquidity Agent will, upon the direction
of all of the Investors (other than the Liquidity Agent, in its individual
capacity) resign as Liquidity Agent. If the Liquidity Agent shall resign, then
the Required Investors during such 5-day period shall appoint from among the
Investors a successor Liquidity Agent. If for any reason no successor Liquidity
Agent is appointed by the Required Investors during such 5-day period, then
effective upon the expiration of such 5-day period, the Investors shall perform
all of the duties of the Liquidity Agent hereunder and all payments in respect
of the Advances Outstanding. After any retiring Liquidity Agent's resignation
hereunder as Liquidity Agent, the provisions of Article VIII and Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Liquidity Agent under this Agreement.
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ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
SECTION 10.1 ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
(a) Each Investor may upon at least 30 days' notice to VFCC, the Deal
Agent and the Liquidity Agent, assign to one or more banks or other entities all
or a portion of its rights and obligations under this Agreement; provided,
--------
however, that (i) each such assignment shall be of a constant, and not a varying
-------
percentage of all of the assigning Investor's rights and obligations under this
Agreement, (ii) the amount of the Commitment of the assigning Investor being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than the lesser of (A) $15,000,000 or an integral multiple of $1,000,000 in
excess of that amount and (B) the full amount of the assigning Investor's
Commitment, (iii) each such assignment shall be to an Eligible Assignee, (iv)
the parties to each such assignment shall execute and deliver to the Deal Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of $3,500 or such lesser amount
as shall be approved by the Deal Agent, (v) the parties to each such assignment
shall have agreed to reimburse the Deal Agent, the Liquidity Agent and VFCC for
all reasonable fees, costs and expenses (including, without limit ation, the
reasonable fees and out-of-pocket expenses of counsel for each of the Deal
Agent, the Liquidity Agent and VFCC) incurred by the Deal Agent, the Liquidity
Agent and VFCC, respectively, in connection with such assignment and (vi) there
shall be no increased costs, expenses or taxes incurred by the Deal Agent, the
Liquidity Agent or VFCC upon such assignment or participation; and provided,
---------
further, that upon the effective date of such assignment the provisions of
--------
Section 3.03(f) of the Administration Agreement shall be satisfied. Upon such
execution, delivery and acceptance by the Deal Agent and the Liquidity Agent and
the recording by the Deal Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be the date of
acceptance thereof by the Deal Agent and the Liquidity Agent, unless a later
date is specified therein, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of an Investor hereunder and (ii) the Investor assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Investor's
rights and obligations under this Agreement, such Investor shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Investor assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Investor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement
86
or any other instrument or document furnished pursuant hereto; (ii) such
assigning Investor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of VFCC or the
performance or observance by VFCC of any of its obligations under this Agreement
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of such financial statements and other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Deal Agent or the Liquidity Agent, such assigning
Investor or any other Investor and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assigning Investor
and such assignee confirm that such assignee is an Eligible Assignee; (vi) such
assignee appoints and authorizes each of the Deal Agent and the Liquidity Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to such agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as an
Investor.
(c) The Deal Agent shall maintain at its address referred to herein a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Investors and the
Commitment of, and principal amount of, each Advance owned by each investor from
time to time (the "Register"). The entries in the Register shall be conclusive
--------
and binding for all purposes, absent manifest error, and VFCC, the Borrower and
the Investors may treat each Person whose name is recorded in the Register as an
Investor hereunder for all purposes of this Agreement. The Register shall be
available for inspection by VFCC, the Liquidity Agent or any Investor at any
reasonable time and from time to time upon reasonable prior notice.
(d) Subject to the provisions of Section 10.1(a), upon its receipt of an
Assignment and Acceptance executed by an assigning Investor and an assignee, the
Deal Agent and the Liquidity Agent shall each, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit D hereto, accept
---------
such Assignment and Acceptance, and the Deal Agent shall then (i) record the
information contained therein in the Register and (ii) give prompt notice
thereof to VFCC.
(e) Each Investor may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
each Advance owned by it); provided, however, that (i) such Investor's
-------- -------
obligations under this Agreement (including, without limitation, its Commitment
hereunder) shall remain unchanged, (ii) such Investor shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Deal Agent and the other Investors shall continue to deal solely
and directly with such Investor in connection with such Investor's rights and
obligations under this Agreement; and provided, further, that the Deal Agent
--------- --------
shall have confirmed that upon the effective date of such
87
participation the provisions of Section 3.03(f) of the Administration Agreement
shall be satisfied. Notwithstanding anything herein to the contrary, each
participant shall have the rights of an Investor (including any right to receive
payment) under Sections 2.13 and 2.14; provided, however, that no participant
-------- -------
shall be entitled to receive payment under either such Section in excess of the
amount that would have been payable under such Section by the Borrower to the
Investor granting its participation had such participation not been granted, and
no Investor granting a participation shall be entitled to receive payment under
either such Section in an amount which exceeds the sum of (i) the amount to
which such Investor is entitled under such Section with respect to any portion
of any Advance owned by such Investor which is not subject to any participation
plus (ii) the aggregate amount to which its participants are entitled under such
----
Sections with respect to the amounts of their respective participations. With
respect to any participation described in this Section 10.1, the participant's
rights as set forth in the agreement between such participant and the applicable
Investor to agree to or to restrict such Investor's ability to agree to any
modification, waiver or release of any of the terms of this Agreement or to
exercise or refrain from exercising any powers or rights which such Investor may
have under or in respect of this Agreement shall be limited to the right to
consent to any of the matters set forth in Section 12.1 of this Agreement.
(f) Each Investor may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.1, disclose
to the assignee or participant or proposed assignee or participant any
information relating to the Borrower or VFCC furnished to such Investor by or on
behalf of the Borrower or VFCC.
(g) Nothing herein shall prohibit any Investor from pledging or assigning
as collateral any of its rights under this Agreement to any Federal Reserve Bank
in accordance with applicable law and any such pledge or collateral assignment
may be made without compliance with Section 10.1(a) or Section 10.1(b).
ARTICLE XI
GUARANTY
SECTION 11.1 UNCONDITIONAL UNDERTAKING.
-------------------------
The Guarantor hereby unconditionally and irrevocably undertakes and agrees
with and for the benefit of the Secured Parties to cause the due and punctual
performance and observance by HCFP Funding, Inc. and its successors and assigns
("HCFP Funding") of all of the terms, covenants, conditions, agreements and
------------
undertakings on the part of HCFP Funding to be performed or observed under this
Agreement and any other Transaction Document, including the punctual payment
when due of all obligations of HCFP Funding now or hereafter existing under this
Agreement and any other Transaction Document, whether for indemnification
payments, fees, expenses or otherwise (such terms, covenants, conditions,
agreements, undertakings and other obligations being the "Guaranteed
----------
Liabilities"), and agrees to pay any and all expenses
-----------
88
(including counsel fees and expenses) incurred by the Secured Parties in
enforcing any rights under this Agreement and any other Transaction Document. In
the event that HCFP Funding shall fail in any manner whatsoever to perform or
observe any of the Guaranteed Liabilities when the same shall be required to be
performed or observed under this Agreement or any such other document, then the
Guarantor will itself duly and punctually perform or observe, or cause to be
duly and punctually performed or observed, such Obligation, and it shall not be
a condition to the accrual of the obligation of the Guarantor hereunder to
perform or observe any Obligation (or to cause the same to be performed or
observed) that the Deal Agent or any of the Secured Parties shall have first
made any request of or demand upon or given any notice (except as otherwise
required by this Agreement) to the Guarantor or to HCFP Funding, or their
respective successors or assigns, or have instituted any action or proceeding
against the Guarantor or HCFP Funding, or their respective successors or assigns
in respect thereof.
SECTION 11.2 OBLIGATIONS ABSOLUTE.
--------------------
The Guarantor undertakes that the Guaranteed Liabilities will be performed or
paid strictly in accordance with the terms of this Agreement or any other
Transaction Document, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Affected Parties and the Indemnified Parties with respect thereto.
The obligations of the Guarantor under this Article XI are independent of the
Guaranteed Liabilities, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce the provisions of this Article XI,
irrespective of whether any action is brought against HCFP Funding or whether
HCFP Funding is joined in any such action or actions. The liability of the
Guarantor under this Article XI shall be absolute and unconditional irrespective
of:
(i) any lack of validity or enforceability of any other provision of
this Agreement or any other Transaction Document as against the Originator,
the Borrower or the Servicer;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Liabilities, or any other
amendment or waiver of or any consent to departure from any other provision
of this Agreement or any Transaction Document, including, without
limitation, any increase in the Guaranteed Liabilities resulting from
additional purchases of Asset Interests or otherwise;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Guaranteed Liabilities;
(iv) any manner of application of collateral, or proceeds thereof, to all
or any of the Guaranteed Liabilities, or any manner of sale or other
disposition of any collateral for all or any of the Guaranteed Liabilities
or any other assets of HCFP Funding or any of its Subsidiaries;
89
(v) any change, restructuring or termination of the corporate structure or
existence of HCFP Funding or any of its Subsidiaries, or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, HCFP Funding.
This Article XI shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Liabilities is rescinded
or must otherwise be returned by the Affected Parties or Indemnified Parties
upon the insolvency, bankruptcy or reorganization of HCFP Funding or otherwise,
all as though payment had not been made.
SECTION 11.3 PARI PASSU TREATMENT OF OBLIGATIONS OF GUARANTOR.
-------------------------------------------------
The Guaranteed Liabilities of the Guarantor under this Article XI do rank
and will rank pari passu in priority of payment and in all other respects with
---- -----
all other unsecured debt of the Guarantor. There is no lien, security interest
or other charge or encumbrance, and no other type of preferential arrangement,
upon or with respect to any of the properties or income of the Guarantor, which
secures debt of any Person.
SECTION 11.4 WAIVER.
------
The Guarantor hereby waives promptness, diligence, notice of acceptance and
any other notice with respect to any of the Guaranteed Liabilities and this
Article XI and any requirement that the Secured Parties protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against HCFP Funding or any other person or
entity or any collateral.
SECTION 11.5 SUBROGATION.
-----------
Until payment in full in cash of all of the Guaranteed Liabilities and all other
amounts payable by HCFP Funding under this Agreement, the Guarantor hereby
waives and releases all rights of subrogation against HCFP Funding and its
property and all rights of indemnification, contribution and reimbursement from
HCFP Funding and its property, in each case in connection with this Article XI
and any payments made hereunder, and regardless of whether such rights arise by
operation of law, pursuant to contract or otherwise.
SECTION 11.6 INDEMNIFICATION OF CUSTODIAN AND BACKUP SERVICER.
------------------------------------------------
Without limiting any other rights which the Custodian or the Backup
Servicer, or any of their respective Affiliates may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify the Custodian and the
Backup Servicer and each of their respective Affiliates and officers, directors,
employees and agents thereof (collectively, the "Guarantor Indemnified Parties")
-----------------------------
from and against any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys' fees and disbursements (all
of the foregoing being
90
collectively referred to as "Guarantor Indemnified Amounts") awarded against or
-----------------------------
incurred by, any such Guarantor Indemnified Party or other non-monetary damages
of any such Guarantor Indemnified Party any of them arising out of or as a
result of this Agreement, excluding, however, Guarantor Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct on the part of
any Guarantor Indemnified Party.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 AMENDMENTS AND WAIVERS.
----------------------
Except as provided in this Section 12.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Deal Agent, VFCC and the Required
Investors; provided, however, that any amendment of this Agreement which is
-------- --------
solely for the purpose of adding a Lender or increasing the Commitment of all
Lenders may be effected with the written consent of the Deal Agent. Any waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
No amendment, waiver or other modification affecting the rights or
obligations of any Hedge Counterparty shall be effective against such Hedge
Counterparty without the written agreement of such Hedge Counterparty.
SECTION 12.2 NOTICES, ETC.
------------
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or specified in such party's Assignment and Acceptance or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States mail, first class postage prepaid, (b)
notice by telex, when telexed against receipt of answer back, or (c) notice by
facsimile copy, when verbal communication of receipt is obtained, except that
notices and communications pursuant to Article II shall not be effective until
received with respect to any notice sent by mail or telex.
91
SECTION 12.3 [RESERVED].
----------
SECTION 12.4 NO WAIVER, RIGHTS AND REMEDIES.
------------------------------
No failure on the part of the Deal Agent, the Liquidity Agent or any
Secured Party or any assignee of any 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 12.5 BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Deal Agent, the Liquidity Agent, the Secured Parties and their
respective successors and permitted assigns and, in addition, the provisions of
Section 2.7 shall inure to the benefit of each Hedge Counterparty, whether or
not that Hedge Counterparty is a Secured Party.
SECTION 12.6 TERM OF THIS AGREEMENT.
----------------------
This Agreement, including, without limitation, the Borrower's obligation to
observe its covenants set forth in Article V, and the Servicer's obligation to
observe its covenants set forth in Article VI, shall remain in full force and
effect until the Collection Date; provided, however, that the rights and
-------- -------
remedies with respect to any breach of any representation and warranty made or
deemed made by the Borrower pursuant to Articles III and IV and the
indemnification and payment provisions of Article VIII and Article IX and the
provisions of Section 12.10 and Section 12.11 shall be continuing and shall
survive any termination of this Agreement.
SECTION 12.7 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 HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
92
SECTION 12.8 WAIVER OF JURY TRIAL.
--------------------
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
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 12.9 COSTS, EXPENSES AND TAXES.
-------------------------
(a) In addition to the rights of indemnification granted to the Deal Agent,
the Liquidity Agent, the Secured Parties and its or their Affiliates and
officers, directors, employees and agents thereof under Article VIII hereof, the
Borrower agrees to pay on demand all reasonable costs and expenses of the Deal
Agent, the Liquidity Agent, and the Secured Parties incurred in connection with
the preparation, execution, delivery, administration (including periodic
auditing), amendment or modification of, or any waiver or consent issued in
connection with, this Agreement and the other documents to be delivered
hereunder or in connection herewith, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Deal Agent, the
Liquidity Agent, and Secured Parties with respect thereto and with respect to
advising the Deal Agent, the Liquidity Agent, 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, and all costs and
expenses, if any (including reasonable counsel fees and expenses), incurred by
the Deal Agent, the Liquidity Agent, and/or the Secured Parties in connection
with the enforcement of this Agreement and the other documents to be delivered
hereunder or in connection herewith; provided, however, that the Borrower shall
--------
have no obligation to pay (i) any fees (exclusive of out-of-pocket expenses) of
counsel to the Deal Agent, the Liquidity Agent, and the Secured Parties in
connection with the initial preparation, execution and delivery of this
Agreement and the other documents to be delivered hereunder or in connection
herewith in excess of the amounts specified in the Fee Letter therefor or (ii)
any other out-of-pocket expenses (exclusive of reasonable out-of-pocket expenses
of counsel to the Deal Agent, the Liquidity Agent, and the Secured Parties),
including any costs and expenses incurred in connection by the Deal Agent, the
Liquidity Agent, or any Secured Party in connection with the initial due
diligence for the transactions contemplated by this Agreement, incurred by any
of the Deal Agent, the Liquidity Agent, and the Secured Parties in excess of the
amounts specified in the Fee Letter therefor.
(b) The Borrower shall pay on demand any and all stamp, sales, excise and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the other documents
to be delivered hereunder or any agreement or other document providing liquidity
support, credit enhancement or other similar
93
support to a Lender in connection with this Agreement or the funding or
maintenance of Advances hereunder.
(c) The Borrower shall pay on demand all other costs, expenses and taxes
(excluding income taxes, overhead and salaries) ("Other Costs"), including,
-----------
without limitation, all reasonable costs and expenses incurred by the Deal Agent
in connection with periodic audits of the Borrower's or the Servicer's books and
records and the cost of rating VFCC's commercial paper by independent financial
rating agencies, which are incurred as a result of the execution of this
Agreement.
SECTION 12.10 NO PROCEEDINGS.
--------------
Each of the parties hereto (other than VFCC) hereby agrees that it will not
institute against, or join any other Person in instituting against VFCC any
Insolvency Proceeding so long as any commercial paper issued by VFCC shall be
outstanding and there shall not have elapsed one year and one day since the last
day on which any such commercial paper shall have been outstanding.
Each of the parties hereto (other than the Deal Agent and the Secured
Parties) hereby agrees that it will not institute against, or join any other
Person in instituting against the Borrower any Insolvency Proceeding so long as
there shall not have elapsed one year and one day since the Collection Date.
SECTION 12.11 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 Deal Agent, the Liquidity Agent 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 such Person or any manager or administrator of such Person or any
incorporator, affiliate, stockholder, officer, employee or director of such
Person or of the Borrower or of any such manager or administrator, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise.
(b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, VFCC shall have no obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to VFCC after paying or making provision for the payment of its
Commercial Paper Notes. All payment obligations of VFCC hereunder are
contingent upon the availability of funds in excess of the amounts necessary to
pay Commercial Paper Notes; and each of the Borrower, the Servicer, the Backup
Servicer, the Custodian, the Deal Agent, the Liquidity Agent and the Secured
Parties agrees that they shall not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation exceeds
the amount available to VFCC to pay such amounts after paying or making
provision for the payment of its Commercial Paper Notes.
94
(c) The provisions of this Section 12.11 shall survive the termination of
this Agreement.
SECTION 12.12 PROTECTION OF SECURITY INTEREST; APPOINTMENT OF DEAL AGENT
----------------------------------------------------------
AS ATTORNEY-IN-FACT.
-------------------
(a) The Borrower agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may reasonably be necessary or desirable, or that the Deal Agent
may deem necessary, to perfect, protect or more fully evidence the security
interest granted to the Deal Agent, as agent for the Secured Parties, in the
Collateral, or to enable the Deal Agent or the Secured Parties to exercise and
enforce their rights and remedies hereunder.
(b) If the Borrower or the Servicer fails to perform any of its obligations
hereunder after five Business Days' notice from the Deal Agent, the Deal Agent
or any Secured Party may (but shall not be required to) perform, or cause
performance of, such obligation; and the Deal Agent's or such Secured Party's
reasonable costs and expenses incurred in connection therewith shall be payable
by the Borrower or the Servicer (if the Servicer that fails to so perform) as
provided in Article VIII, as applicable. The Borrower and the Servicer each
irrevocably authorizes the Deal Agent and appoints the Deal Agent as its
attorney-in-fact to act on behalf of the Borrower or the Servicer, as the case
may be, (i) to execute on behalf of the Borrower as debtor and to file financing
statements necessary or desirable in the Deal Agent's sole discretion to perfect
and to maintain the perfection and priority of the interest of the Secured
Parties in the Collateral and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Collateral as a financing statement in such offices as the Deal Agent in its
sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Secured Parties in the
Collateral. This appointment is coupled with an interest and is irrevocable.
SECTION 12.13 CONFIDENTIALITY
---------------
(a) Each of the parties hereto shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of the Agreement and the
other confidential proprietary information with respect to the other parties
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 and attorneys and as
required by an applicable law or order of any judicial or administrative
proceeding, (ii) disclose the existence of this Agreement, but not the financial
terms thereof, and (iii) 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 Loan 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 Loan Documents or any Hedging Agreement.
95
(b) Anything herein to the contrary notwithstanding, the Borrower hereby
consents to the disclosure of any nonpublic information with respect to it (i)
by and among the Deal Agent, the Liquidity Agent, or the Secured Parties, (ii)
by the Liquidity Agent, the Deal Agent or a Secured Party to any prospective or
actual Eligible Assignee or participant of any of them or (iii) by the Deal
Agent, the Liquidity Agent or a Secured Party to any Rating Agency, commercial
paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to such Person 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 and agreed to be bound
hereby. In addition, the Secured Party , the Liquidity Agent and the Deal Agent
may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings.
(c) The Borrower and the Servicer each agrees that it shall not (and shall
not permit any of its Affiliates to) issue any news release or make any public
announcement pertaining to the transactions contemplated by this Agreement and
the Transaction Documents without the prior written consent of the Deal Agent
(which consent shall not be unreasonably withheld) unless such news release or
public announcement is required by law, in which case the Borrower or the
Servicer shall consult with the Deal Agent prior to the issuance of such news
release or public announcement. The Borrower and the Servicer each may,
however, disclose the general terms of the transactions contemplated by this
Agreement and the Transaction Documents to trade creditors, suppliers and other
similarly-situated Persons so long as such disclosure is not in the form of a
news release or public announcement.
SECTION 12.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
----------------------------------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than any fee letter contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
96
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
THE BORROWER: WISCONSIN CIRCLE III FUNDING
CORPORATION
By__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice President
Wisconsin Circle III Funding Corporation
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE SERVICER:: HCFP FUNDING, INC.
By__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice President
HCFP Funding, Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE GUARANTOR: HEALTHCARE FINANCIAL PARTNERS, INC.
By_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice President
HealthCare Financial Partners, Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE EVALUATOR: HEALTHCARE ANALYSIS CORPORATION
By_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Senior Vice President
HealthCare Analysis Corporation
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE INVESTORS: FIRST UNION NATIONAL BANK
By_______________________
Title:
Commitment: $150,000,000
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No: (▇▇▇) ▇▇▇-▇▇▇▇
VFCC: VARIABLE FUNDING CAPITAL
CORPORATION
By First Union Capital Markets,
a division of Wheat First Securities, Inc.,
as attorney-in-fact
By_______________________
Title:
Variable Funding Capital Corporation
c/o First Union Capital Markets
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Lord Securities Corp.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE DEAL AGENT: FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By_______________________
Title:
First Union Capital Markets
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE LIQUIDITY AGENT: FIRST UNION NATIONAL BANK
By_______________________
Title:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE CUSTODIAN: U. S. BANK NATIONAL ASSOCIATION
By_______________________
Title:
U.S. Bank Trust National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE BACKUP SERVICER: INPUT ONE, LLC
By_______________________
Title:
Input One, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
FORM OF BORROWER NOTICE
(including Borrowing Base Certificate)
WISCONSIN CIRCLE III FUNDING CORPORATION
First Union Capital Markets, a division of
Wheat First Securities, Inc., as Deal Agent
One First Union Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This Borrower Notice is delivered to you under Section 2.2(a) of that certain
Loan Funding and Servicing Agreement dated as of December 28, 1998 (the
"Agreement"), by and among Wisconsin Circle III Funding Corporation, as the
---------
borrower (the "Borrower"), HealthCare Financial Partners, Inc., as guarantor,
--------
HCFP Funding, Inc., as servicer, HealthCare Analysis Corporation, as evaluator,
Variable Funding Capital Corporation, as a lender, the Investors named therein,
Input One, LLC, as backup servicer, U.S. Bank Trust National Association, as
custodian, First Union Capital Markets, a division of Wheat First Securities,
Inc., as deal agent, and First Union National Bank, as liquidity agent. All
capitalized undefined terms used herein have the meaning assigned thereto in the
Agreement.
Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer's
name, hereby certifies as follows:
1. The Borrower hereby requests an Advance in the principal amount of
$_____________.
2. The Borrower hereby requests that such Advance be made on the following
date: _____________.
3. Attached to this Borrower Notice is a true, correct and complete
calculation of the Borrowing Base and all components thereof.
1. Attached to this Borrower Notice is a true, correct and complete
[supplement to the] List of Loans[, reflecting all Loans which will become
part of the Collateral on the date hereof,] each Loan reflected thereon
being an Eligible Loan.
C-1
4. All of the conditions applicable to the Advance requested herein as set
forth in the Funding Agreement have been satisfied as of the date hereof
and will remain satisfied to the date of such Advance, including
(i) The representations and warranties of such Person set
forth in the Agreement, as the case may be, are true and correct on
and as of such date, before and after giving effect to such borrowing
or reinvestment and to the application of the proceeds therefrom, as
though made on and as of such date;
(ii) No event has occurred, or would result from such Advance
or reinvestment or from the application of the proceeds therefrom,
which constitutes an Early Amortization Event;
(iii) Such Person is in material compliance with each of its
covenants set forth herein; and
(iv) No event has occurred which constitutes a Servicer
Termination Event.
D-2
IN WITNESS WHEREOF, the undersigned has executed the Advance Request this
______ day of _____________, ▇▇___.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III FUNDING
CORPORATION,
as Borrower
By: _____________________
Name:
Title:
HCFP FUNDING, INC.,
as Servicer
By: _____________________
Name:
Title:
[ATTACH BORROWING BASE CERTIFICATE]
D-3
EXHIBIT B
FORMS OF NOTE
FORM OF NOTE
$150,000,000 December 29, 1998
FOR VALUE RECEIVED, WISCONSIN CIRCLE III FUNDING CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to FIRST UNION CAPITAL MARKETS, a
division of WHEAT FIRST SECURITIES, INC., as the agent for the Lenders (the
"Deal Agent") the principal sum of ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000) or, if less, the unpaid principal amount of the aggregate loans
("Advances") made by the Lenders (as defined below) to the Borrower pursuant to
the Loan Funding Agreement (as defined below), as set forth on the attached
Schedule, on the dates specified in Section 2.5 of the Loan Funding Agreement,
and to pay interest on the unpaid principal amount of each Advance on each day
that such unpaid principal amount is outstanding at the Interest Rate related to
such Advance as provided in the Loan Funding Agreement on each Payment Date and
each other dates specified in the Loan Funding Agreement.
This Note is issued pursuant to the Loan Funding and Servicing Agreement,
dated as of December 28, 1998 (the "Loan Funding Agreement"), by and among the
Borrower, HealthCare Financial Partners, Inc., as guarantor, HCFP Funding, Inc.,
as servicer, HealthCare Analysis Corporation, as evaluator, Variable Funding
Capital Corporation, as a lender, the Investors named therein, Input One, LLC,
as backup servicer, U.S. Bank Trust National Association, as custodian, First
Union Capital Markets, a division of Wheat First Securities, Inc., as deal
agent, and First Union National Bank, as liquidity agent. Capitalized terms used
but not defined in this Note are used with the meanings ascribed to them in the
Loan Funding Agreement.
Notwithstanding any other provisions contained in this Note, if at any time
the rate of interest payable by the Borrower under this Note, when combined with
any and all other charges provided for in this Note, in the Loan Funding
Agreement or in any other document (to the extent such other charges would
constitute interest for the purpose of any applicable law limiting interest that
may be charged on this Note), exceeds the highest rate of interest permissible
under applicable law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be exceeded the rate of interest under this Note shall be
equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest
payable under this Note is less than the Maximum Lawful Rate, the Borrower shall
continue to pay interest under this Note at the Maximum Lawful Rate until such
time as the total interest paid by the Borrower is equal to the total interest
that
would have been paid had applicable law not limited the interest rate payable
under this Note. In no event shall the total interest received by the Lenders
under this Note exceed the amount which the Lenders could lawfully have received
had the interest due under this Note been calculated since the date of this Note
at the Maximum Lawful Rate.
Payments of the principal of, and interest on, Advances represented by this
Note shall be made by the Borrower to the holder hereof by wire transfer of
immediately available funds in the manner and at the address specified for such
purpose as provided in Article 12 of the Loan Funding Agreement, or in such
manner or at such other address as the holder of this Note shall have specified
in writing to the Borrower for such purpose, without the presentation or
surrender of this Note or the making of any notation on this Note.
If any payment under this Note falls due on a day which is not a Business
Day, then such due date shall be extended to the next succeeding Business Day
and interest shall be payable on any principal so extended at the applicable
Interest Rate.
If all or a portion of (i) the principal amount hereof or (ii) any interest
payable thereon or (iii) any other amounts payable hereunder shall not be paid
when due (whether at maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum that is equal to the Base Rate
plus 1.0%, in each case from the date of such non-payment to (but excluding)
----
the date such amount is paid in full.
Portions or all of the principal amount of the Note shall become due and
payable at the time or times set forth in the Loan Funding Agreement. Any
portion or all of the principal amount of this Note may be prepaid, together
with interest thereon (and as set forth in the Loan Funding Agreement, certain
costs and expenses of the Lenders) at the time and in the manner set forth in,
but subject to the provisions of, the Loan Funding Agreement.
Except as provided in the Loan Funding Agreement, the Borrower expressly
waives presentment, demand, diligence, protest and all notices of any kind
whatsoever with respect to this Note.
All amounts evidenced by this Note, the Lender or Lenders making such
Advance and all payments and prepayments of the principal hereof and the
respective dates and maturity dates thereof shall be endorsed by the Deal Agent
on the schedule attached hereto and made a part hereof or on a continuation
thereof which shall be attached hereto and made a part hereof, or otherwise
recorded by such Deal Agent in its internal records; provided, however, that the
-------- -------
failure of the Deal Agent to make such a notation shall not in any way limit or
otherwise affect the obligations of the Borrower under this Note as provided in
the Loan Funding Agreement.
The holder hereof may sell, assign, transfer, negotiate, grant
participations in or otherwise dispose of all or any portion of any Advances
made by such Lender and represented by this Note and the indebtedness evidenced
by this Note.
This Note is secured by the security interests granted pursuant to Section
2.9 of the Loan Funding Agreement. The holder of this Note, as agent for the
Lenders, is entitled to the benefits of the Loan Funding Agreement and may
enforce the agreements of the Borrower contained in the Loan Funding Agreement
and exercise the remedies provided for by, or otherwise available in respect of,
the Loan Funding Agreement, all in accordance with, and subject to the
restrictions contained in, the terms of the Loan Funding Agreement. If an Early
Amortization Event shall occur and be continuing, the unpaid balance of the
principal of all Advances, together with accrued interest thereon, shall be
declared, and become due and payable in the manner and with the effect provided
in the Loan Funding Agreement.
This Note is the Note referred to in the Loan Funding Agreement. This Note
shall be construed in accordance with and governed by the laws of the State of
New York.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned has executed this Note as on the date
first written above.
WISCONSIN CIRCLE III FUNDING CORPORATION
By:___________________________________
Name:
Title:
Schedule to Note
----------------
Name Date of Principal Principal Outstanding
of Advance or Amount of Amount of Principal
Lender Repayment Advance Repayment Amount
------ ---------- --------- --------- -----------
EXHIBIT C
"LIMITED PURPOSE" PROVISIONS
Article [THIRD]
Purpose
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage solely in the following activities:
(a) to acquire, own, hold, sell, service, transfer or pledge, or otherwise
dispose of, interests in and servicing responsibilities with respect to,
accounts, chattel paper, general intangibles, instruments and other financial
assets ("Receivables"), and any related contracts, collateral or agreements
-----------
("Related Property");
----------------
(b) to purchase or otherwise acquire obligations issued or guaranteed by
the United States or any agency or instrumentality thereof, certificates of
deposit issued by commercial banks, commercial paper and similar instruments and
obligations;
(c) to enter into agreements and arrangements with persons or entities, or
undertaking such activities, as may be necessary or convenient to acquire, own,
hold, sell, service, transfer or pledge, or otherwise dispose of Receivables and
Related Property; and
(d) to engage in any lawful act or activity and to exercise any powers
permitted to corporations organized under the General Corporation Law of the
State of Delaware that are incidental to and necessary or convenient for the
accomplishment of the foregoing purposes.
Article [SEVENTH]
Independent Director
The number of directors comprising the board of directors of the
Corporation (the "Board of Directors") shall be determined, from time to time,
------------------
in accordance with the terms of the by-laws of the Corporation; provided,
--------
however, the Corporation shall at all times have at lease two directors (each,
-------
an "Independent Director") who is not and, for the immediately preceding two
--------------------
year period, was not (i) a director (other than an Independent Director),
officer of employee of the Corporation; (ii) a director, officer or employee of
HCFP Funding, Inc. (the "Parent") or any of its affiliates; (iii) a supplier,
------
independent contractor or any other person who derives more than
C-1
15% of its gross revenues from its activities with the Corporation, the Parent
and/or any affiliate of the foregoing; (iv) a holder (directly or indirectly) of
more than 5% of any voting securities of the Corporation, the Parent or any
affiliate of the foregoing; (v) a person controlling any such director, officer,
employee, supplier, independent contractor, holder or any other person meeting
the criteria set forth in clauses (i), (ii), (iii) or (iv) of this Seventh
Article or (vi) a member of the immediate family of any person meeting the
criteria set fourth in clauses (i), (ii), (iii), (iv) or (v) of this Seventh
Article.
Article [TENTH]
Unanimous Consent of Directors
Notwithstanding any other provision of this Certificate of Incorporation,
without the affirmative vote of all of the members of the Board of Directors
(which must include the affirmative votes of all of the Independent Directors),
the Corporation shall not (i) dissolve or liquidate, in whole or in part, or
institute proceedings to be adjudicated bankrupt or insolvent, (ii) consent to
the institution of bankruptcy or insolvency proceedings against it, (iii) file a
petition seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (iv) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Corporation or a substantial part of its property, (v) make a
general assignment for the benefit of creditors, (vi) admit in writing ins
inability to pay its debts generally as they become due, (vii) take any
corporate action in furtherance of the actions set forth in clauses (i) through
(vi) of this paragraph, provided, however, that no director may be required by
-------- -------
any stockholder of the Corporation to consent to the institution of bankruptcy
or insolvency proceedings against the Corporation so long as it is solvent.
In connection with any vote by the Board of Directors with respect to any
of the actions described in the immediately preceding paragraph, the Board of
Directors shall owe a duty to the secured creditors of the Corporation, as well
as to the stockholders of the Corporation.
Article [ELEVENTH]
Requirements
The Corporation shall:
(i) pay, out of its own funds, fees for its directors and salaries
of its officers and employees, and shall promptly reimburse any affiliate
of the Corporation for any service provided to the Corporation by such
affiliate. Liabilities of the Corporation shall be separately managed from
those of any affiliate of the Corporation, and the Corporation shall pay
its own liabilities, including all administrative expenses, from its own
separate assets.
C-2
(ii) at all times hold itself out to the public (including any
creditors of any of its affiliates) under the Corporation's own name and as
a separate and distinct corporate entity. All customary formalities
regarding the corporate existence of the Corporation, including holding
regular meetings of its board of directors and its stockholders and
maintenance of current minute books, shall be observed;
(iii) maintain its financial statements, accounting records and other
corporate documents separate from those of, and shall not commingle its
assets with those of, any affiliate of the Corporation or any other entity.
The Corporation shall prepare unaudited quarterly and annual financial
statements, and the Corporation's financial statements shall comply with
generally accepted accounting principles, consistently applied. The
Corporation shall retain as its auditors independent certified accountants,
provided that such accountants may also serve as auditors of any of its
affiliates; and
(iv) act solely in its own corporate name and through its own
authorized officers and agents. Investments shall be made directly by the
Corporation or by brokers engaged and paid by the Corporation or its
agents. Assets of the Corporation shall be separately identified and
segregated. All of the Corporation's assets shall at all times be held by
or on behalf of the Corporation and, if held on behalf of the Corporation
by another entity, shall at all times be kept identifiable (in accordance
with customary usages) as assets owned by the Corporation. In no event
shall any of the Corporation's assets be held on its behalf by any
affiliate of the Corporation.
All business transactions entered into by the Corporation with any of its
affiliates shall be on terms and conditions that are not more or less favorable
to the Corporation than terms and conditions available at the time to the
Corporation for comparable transactions with non-affiliated persons and must be
approved by the Board of Directors. The Corporation shall not make any loans to,
or guarantee or assume any liabilities or obligations of, any of its affiliates.
C-3
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Dated __________, 19__
Reference is made to the Loan and Servicing Agreement dated as of December
__, 1998 (the "Agreement") among Wisconsin Circle III Funding Corporation, as
---------
the borrower, HCFP Funding, Inc., as servicer, HealthCare Financial Partners,
Inc., as the guarantor, HealthCare Analysis Corporation, Variable Funding
Capital Corporation, the Investors (as defined in the Agreement), First Union
Capital Markets, a division of Wheat First Securities, Inc., as Deal Agent,
First Union National Bank, as Liquidity Agent, U.S. Bank Trust National
Association, as the custodian and Input One, LLC, as backup servicer. Terms
defined in the Agreement are used herein with the same meaning.
__________________ (the "Assignor") and ___________________ (the
--------
"Assignee") agree as follows:
--------
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
all of the Assignor's rights and obligations under the Agreement as of the date
hereof which represents the percentage interest specified in Section 1 of
Schedule 1 of all outstanding rights and obligations of the Assignor under the
Agreement, including, without limitation, such interest in the Assignor's
Commitment and the Advances made by the Assignor. After giving effect to such
sale and assignment, the Assignee's Commitment and the amount of Advances made
by the Assignee will be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement or any other instrument or document furnished pursuant thereto;
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of VFCC or the performance or observance by
VFCC of any of its obligations under the Agreement or any other instrument or
document furnished pursuant thereto; and (iv) confirms that the Assignee is an
Eligible Assignee.
D-1
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Deal Agent, the
Liquidity Agent, the Assignor or any other Investor and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement; (iii)
confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Deal
Agent and the Liquidity Agent each to take such action as agent on its behalf
and to exercise such powers under the Agreement as are delegated to the Deal
Agent and the Liquidity Agent, respectively, by the terms thereof, together with
such powers as are reasonably incidental thereto; and (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Agreement are required to be performed by it as an Investor.
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to each of the Deal Agent and
the Liquidity Agent for acceptance and recording by the Deal Agent. The
effective date of this Assignment and Acceptance (the "Transfer Date") shall be
-------------
the date of acceptance thereof by the Deal Agent and the Liquidity Agent, unless
a later date is specified in Section 3 of Schedule 1.
5. Upon such acceptance by the Deal Agent and the Liquidity Agent
and upon such recording by the Deal Agent, as of the Transfer Date, (i) the
Assignee shall be a party to the Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of an Investor
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Agreement.
6. Upon such acceptance by the Documentation Agent and the Liquidity
Agent and upon such recording by the Deal Agent, from and after the Transfer
Date, the Deal Agent and the Liquidity Agent shall make, or cause to be made,
all payments under the Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and Facility
Fee with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Agreement for periods prior to
the Transfer Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
[Remainder of Page Intentionally Left Blank]
D-2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
[ASSIGNOR]
By:_________________________
Name:
Title:
Address for notices
-------------------
[Address]
[ASSIGNEE]
By:________________________
Name:
Title:
Address for notices
-------------------
[Address]
Acknowledged and accepted
this ___ day of ___________, ____
FIRST UNION NATIONAL BANK
as Liquidity Agent
By:___________________________
Name:
Title:
Acknowledged and accepted
this ___ day of ___________, ____
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.,
as Deal Agent
By:___________________________
Name:
Title:
D-3
Schedule 1
to
Assignment and Acceptance
Dated _________, 19__
Section 1.
---------
Percentage Interest: ________%
Section 2.
---------
Assignee's Commitment: $____________
Aggregate Outstanding
Advances Owing to
the Assignee: $_____________
Section 3.
---------
Transfer Date: _________________, 19__
1
EXHIBIT E
FORM OF MONTHLY REPORT
[to be provided by the Deal Agent]
EXHIBIT F
FORM OF SERVICER'S CERTIFICATE
SERVICER'S CERTIFICATE
This Servicer's Certificate is delivered pursuant to the provisions of Section
6.13(b) of the Loan Funding and Servicing Agreement dated as of December 28,
1998, by and among Wisconsin Circle III Funding Corporation, HealthCare
Financial Partners, Inc., as guarantor, HCFP Funding, Inc., as servicer,
HealthCare Analysis Corporation, as evaluator, Variable Funding Capital
Corporation, as a lender, the Investors named therein, Input One, LLC, as backup
servicer, U.S. Bank Trust National Association, as custodian, First Union
Capital Markets, a division of Wheat First Securities, Inc., as deal agent, and
First Union National Bank, as liquidity agent (hereinafter as such agreement may
have been, or may from time to time be amended, supplemented or otherwise
modified (the "Agreement"). This Servicer's Certificate relates to applicable
Collection Period and relating to applicable Payment Date, and the Monthly
Report for such Monthly Period, which Monthly Report is set forth on attached
Schedule A.
A. Capitalized terms used and not otherwise defined herein have the
meanings assigned them in the Agreement. References herein to certain
subsections are referenced to the respective subsections of the
Agreement.
B. The Servicer is the Servicer under the Agreement.
C. The undersigned hereby certifies to the Deal Agent and the Secured
Parties that all of the foregoing information and all of the
information set forth on attached Schedule A is true and accurate in
all material respects of the date hereof.
IN WITNESS WHEREOF, the undersigned has caused this Servicer's Certificate to be
duly executed this ____ day of ____________, _____.
HCFP FUNDING, INC.
as Servicer
By:__________________________________
EXHIBIT G
CREDIT AND COLLECTION POLICY
[to be provided by Originator]
EXHIBIT H
FORM OF HEDGE AGREEMENT
[to be provided]
EXHIBIT I
EVALUATION POLICY
[see attached]
EXHIBIT J
[FORM OF]
TRUST RECEIPT AND INITIAL CERTIFICATION
[Delivery Date]
BY FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Conduit Administration
RE: Loan Funding and Servicing Agreement dated as of December 28, 1998
(the "Agreement"), by and among Wisconsin Circle III Funding
---------
Corporation, HCFP Funding, Inc., as servicer, Healthcare Financial
Partners, Inc., as guarantor, HealthCare Analysis Corporation, as
evaluator, Variable Funding Capital Corporation, as a lender, the
Investors named therein, Input One, LLC, as backup servicer, U.S. Bank
Trust National Association, as custodian, First Union Capital Markets,
a division of Wheat First Securities, Inc., as deal agent, and First
Union National Bank, as liquidity agent.
Ladies and Gentlemen:
In accordance with the provisions of Section 6.10 of the above-referenced
Agreement, the undersigned, as the Custodian, hereby certifies as to each Loan
in the List of Loans that it has received all related Loan Documents with
respect to each Loan identified on the List of Loans attached hereto as Exhibit
I. The Custodian makes no representations as to (i) the validity, legality,
enforceability, sufficiency, due authorization or genuineness of any of the
documents contained in each Loan File or of any of the Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Loan.
The Custodian hereby confirms that it is holding each such Loan Document as
agent and bailee of, and custodian for the exclusive use and benefit, and
subject to the sole direction, of the Deal Agent pursuant to the terms and
conditions of the Agreement.
The Custodian will accept and act on instructions with respect to the Loans
subject hereto upon surrender of this Trust Receipt and Initial Certification at
its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Capitalized terms used herein shall have the meaning ascribed to them in the
Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Custodian
By:___________________________
Name:
Title:
EXHIBIT K
[FORM OF]
TRUST RECEIPT AND FINAL CERTIFICATION
Trust Receipt #__________
[Delivery Date]
BY FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Conduit Administration
RE: Loan Funding and Servicing Agreement dated as of December 28, 1998
(the "Agreement"), by and among Wisconsin Circle III Funding
---------
Corporation, HCFP Funding, Inc., as servicer, HealthCare Financial
Partners, Inc., as guarantor, HealthCare Analysis Corporation, as
evaluator, Variable Funding Capital Corporation, as a lender, the
Investors named therein, Input One, LLC, as backup servicer, U.S. Bank
Trust National Association, as custodian, First Union Capital Markets,
a division of Wheat First Securities, Inc., as deal agent, and First
Union National Bank, as liquidity agent.
Ladies and Gentlemen:
In accordance with the provisions of Section 6.10 of the above-referenced
Agreement, the undersigned, as the Custodian, hereby certifies that as to each
Loan listed on the List of Loans it has reviewed the Loan Files and has
determined (other than any Loan paid in full or any Loan listed on the
attachment hereto) that (i) all Loan Documents required to be delivered to it
pursuant to Agreement are in its possession; (ii) such documents have been
reviewed by it and appear regular on their face and related to such Loan; (iii)
as to each Loan that is an STL, all assignments of mortgage (or deed of trust or
other security instrument) or intervening assignments of mortgage (or deed of
trust or other security instrument), as applicable, have been, or, within
fifteen (15) Business Days, will be, submitted for recording in the
jurisdictions in which recording is necessary; and (iv) as to each Loan that is
an STL, each mortgage note has been endorsed in blank. The Custodian makes no
representations as to (i) the validity, legality, enforceability, sufficiency,
due authorization or genuineness of any of the documents contained in each Loan
File or of any of the Loans or (ii) the collectability, insurability,
effectiveness or suitability of any such Loan.
The Custodian hereby confirms that it is holding each such Loan File as agent
and bailee of, and custodian for the exclusive use and benefit, and subject to
the sole direction, of the Deal Agent pursuant to the terms and conditions of
the Agreement.
The Custodian will accept and act on instructions with respect to the Loans
subject hereto upon surrender of this Trust Receipt and Final Certification at
its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Capitalized terms used herein shall have the meaning ascribed to them in the
Agreement.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Custodian
By:___________________________
Name:
Title:
EXHIBIT L
[FORM OF]
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
[Delivery Date]
BY FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
-----------------------------
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Conduit Administration
RE: Loan Funding and Servicing Agreement dated as of December 28, 1998
(the "Agreement"), by and among Wisconsin Circle III Funding
---------
Corporation, HCFP Funding, Inc., as servicer, HealthCare Financial
Partners, Inc., as guarantor, HealthCare Analysis Corporation, as
evaluator, Variable Funding Capital Corporation, as a lender, the
Investors named therein, Input One, LLC, as backup servicer, U.S. Bank
Trust National Association, as custodian, First Union Capital Markets,
a division of Wheat First Securities, Inc., as deal agent, and First
Union National Bank, as liquidity agent.
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as the Custodian
on behalf of the Deal Agent under the Agreement, we request the release, and
acknowledge receipt, of the (Loan File/[specify documents]) for the Loan
described below, for the reason indicated.
Obligor's Name Address & Zip Code:
---------------------------------
Loan Number:
-----------
Reason for Requesting Documents (check one)
-------------------------------
____ 1. Loan Paid in Full. (The Servicer hereby certifies that all amounts
received in connection therewith have been credited to the account of the Deal
Agent.)
____ 2. Loan Liquidated By ____________________________ (The Servicer hereby
certifies that all proceeds of foreclosure, insurance, condemnation or other
liquidation have been finally received and credited to the account of the Deal
Agent.)
____ 3. Loan in Foreclosure.
____ 4. Other (explain) ______________________________.
If box 1 or 2 above is checked, and if all or part of the Loan File was
previously released to us, please release to us our previous request and receipt
on file with you, as well as any additional documents in your possession
relating to the specified Loan.
If box 3 or 4 above is checked, upon our return of all of the above documents to
you as the Custodian, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
[servicer name]
By:__________________________
Name:
Title:
Date:____________________
Acknowledgment of Documents returned to the Custodian:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Custodian
By:___________________________
Name:
Title:
EXHIBIT M
FORM OF ASSIGNMENT OF MORTGAGE
THIS ASSIGNMENT OF [MORTGAGE/DEED OF TRUST] AND SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS AND ANCILLARY DOCUMENTS (this "Assignment"), made
----------
and entered into as of the ___ day of ___________, 199__, is by HCFC FUNDING,
INC., having an office at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Assignor"), in favor of WISCONSIN CIRCLE III
--------
FUNDING CORPORATION, a Delaware corporation, having an office at ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Assignee").
--------
W I T N E S S E T H
-------------------
WHEREAS, Assignor is the present legal and equitable owner and holder of a
note, dated as of _________________, executed by ___________________________, a
_________________________________ ("Borrower"), and made payable to the order
--------
of Assignor in the stated principal amount of ___________ ______________________
AND NO/100 DOLLARS ($_________.00) (the "Note") in connection with the
----
financing of certain real property situated in the City of ___________, County
of ________ and State of _____________ as more particularly described on
Exhibit A annexed hereto and made a part hereof (the "Premises"); and
--------
WHEREAS, the Note is secured by the [Mortgage/Deed of Trust], as
hereinafter defined; and
WHEREAS, the Note is also secured by, among other things, the Financing
Statements, the Guaranty and the Indemnity, each as hereinafter defined, and by
other documents and instruments (the Financing Statements, the Guaranty, the
Indemnity and any and all other documents and instruments securing or otherwise
relating to the Premises and the loan evidenced by the Note (the "Loan") being
----
collectively referred to herein as the "Ancillary Security Documents"); and
----------------------------
WHEREAS, the parties hereto desire that Assignor assign to Assignee, its
successors and assigns, all of Assignor's right, title and interest in and to
the Note and the Ancillary Security Documents; and
WHEREAS, the parties hereto desire that Assignor assign to Assignee, its
successors and assigns, all of Assignor's right, title and interest in and to
the [Mortgage/Deed of Trust].
NOW, THEREFORE, in consideration of the premises above set forth and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and agreed, Assignor and Assignee hereby covenant and agree
as follows:
1. Assignment. Assignor does hereby transfer, assign, grant, and
----------
convey to Assignee, its successors and assigns, all of the right, title and
interest of Assignor in and to the following documents and does hereby grant and
delegate to Assignee, its successors and assigns, any and all of the duties and
obligations of Assignor under the following documents from and after the date
hereof:
a. That certain [Mortgage/Deed of Trust] and Security Agreement,
dated as of _________________ from Borrower to [_______________________________,
as trustee for the benefit of] Assignor in the stated principal amount of
_________________________________________ and 00/100 ($_________) (the
"Security Instrument"), encumbering the Premises, together with the notes and
-------------------
bonds secured thereby and intended to be recorded in the ________ County Clerk's
office immediately prior hereto;
b. That certain Loan Agreement dated as of _________________ between
Borrower and Assignor (the "Loan Agreement");
--------------
c. The Note;
[d. That certain Security Agreement dated as of _________, 19__
executed by ______________ for the benefit of Assignor (the "Security
--------
Agreement");]
e. Those certain Financing Statements perfecting Assignor's security
interest in personal property granted by the [Security Instrument] [Security
Agreement];
[f. That certain Guaranty and Indemnity Agreement dated as of
_________, 19__ executed by ______________ for the benefit of Assignor (the
"Guaranty");] and
--------
g.. All other documents and instruments relating to Premises and the
Loan, including, without limitation, all certificates and receipts executed by
Borrower, all appraisal, environmental, engineering and other reports relating
to the operation or condition of the Premises, and all casualty insurance
policies, liability insurance policies, title insurance policies and opinions of
counsel.
2. Representations and Warranties of Assignor. This Assignment is an
------------------------------------------
absolute assignment. This Assignment is made without recourse, representation or
warranty, express or implied.
3. Governing Law. This Assignment shall be governed by and construed in
-------------
accordance with the laws of the State of _____________.
4. Successors and Assigns. This Assignment shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
2
5. Headings. The headings of the paragraphs of this Assignment have been
--------
included only for convenience, and shall not be deemed in any manner to modify
or limit any of the provisions of this Assignment or be used in any manner in
the interpretation of this Assignment.
6. Interpretation. Whenever the context so requires in this Assignment,
--------------
all words used in the singular shall be construed to have been used in the
plural (and vice versa), each gender shall be construed to include any other
genders, and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.
7. Partial Invalidity. Each provision of this Assignment shall be
------------------
valid and enforceable to the fullest extent permitted by law. If any provision
of this Assignment or the application of such provision to any person or
circumstances shall, to any extent, be invalid or unenforceable, then the
remainder of this Assignment, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected by such invalidity or unenforceability.
8. Further Agreements. Assignor agrees to execute and deliver to
------------------
Assignee such additional documents, instruments or agreements as may be
necessary or appropriate to effectuate the purposes of this Assignment.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
date above first written.
ASSIGNOR:
HCFC FUNDING, INC.
By:
By: _________________________
Name:
Title:
STATE OF MARYLAND )
) SS.:
COUNTY OF ______________ )
On this the ___ day of _______, 199__, before me, _________________, the
undersigned officer, personally appeared ___________________, as
________________ of HCFC Funding, Inc., a Delaware corporation, who executed the
foregoing instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
_________________________
Notary Public
[SEAL]
My commission expires:
EXHIBIT A
---------
PROPERTY DESCRIPTION
EXHIBIT N
---------
[FORM OF]
REINVESTMENT CERTIFICATION
WISCONSIN CIRCLE III FUNDING CORPORATION
First Union Capital Markets, a division of
Wheat First Securities, Inc., as Deal Agent
One First Union Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This certification is delivered to you under Section 3.2 of that certain Loan
Funding and Servicing Agreement dated as of December 28, 1998 (the "Agreement"),
by and among Wisconsin Circle III Funding Corporation, as the borrower (the
"Borrower"), HealthCare Financial Partners, Inc., as guarantor, HCFP Funding,
Inc., as servicer, HealthCare Analysis Corporation, as evaluator, Variable
Funding Capital Corporation, as a lender, the Investors named therein, Input
One, LLC, as backup servicer, U.S. Bank Trust National Association, as
custodian, First Union Capital Markets, a division of Wheat First Securities,
Inc., as deal agent, and First Union National Bank, as liquidity agent. All
capitalized undefined terms used herein have the meaning assigned thereto in the
Agreement.
Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer's
name, hereby certifies as follows:
1. The Borrower hereby notifies you that on the date first written above it
will use Principal Collections in amount of $_____________ to acquire
additional Loans.
2. Attached to this certification is a true, correct and complete calculation
of the Borrowing Base and all components thereof.
2. Attached to this Borrower Notice is a true, correct and complete
[supplement to the] List of Loans[, reflecting all Loans which will become
part of the Collateral on the date hereof,] each Loan reflected thereon
being an Eligible Loan.
3. All of the conditions applicable to the Advance requested herein as set
forth in the Funding Agreement have been satisfied as of the date hereof
and will remain satisfied to the date of such Advance, including
(i) The representations and warranties of such Person set
forth in the Agreement, as the case may be, are true and correct on
and as of such date, before and after giving effect to such borrowing
or reinvestment and to the application of the proceeds therefrom, as
though made on and as of such date;
(ii) No event has occurred, or would result from such Advance
or reinvestment or from the application of the proceeds therefrom,
which constitutes an Early Amortization Event;
(iii) Such Person is in material compliance with each of its
covenants set forth herein; and
(iv) No event has occurred which constitutes a Servicer
Termination Event.
IN WITNESS WHEREOF, the undersigned has executed the Advance Request this
______ day of _____________, ▇▇___.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III FUNDING
CORPORATION,
as Borrower
By:__________________________
Name:
Title:
HCFP FUNDING, INC.,
as Servicer
By:__________________________
Name:
Title:
SCHEDULE I
SCHEDULE OF DOCUMENTS
In addition to, and not in limitation of, the conditions specified in
Section 3.1 of the Agreement described below, the following documents must be
-----------
received by the Deal Agent in form and substance satisfactory to the Deal Agent
on or prior to the Closing Date:
SPC Wisconsin Circle III Funding Corporation
HCFP HealthCare Financial Partners, Inc.
Funding HCFP Funding, Inc.
HCAC HealthCare Analysis Corporation
VFCC Variable Funding Capital Corporation
FCM First Union Capital Markets, a division of Wheat First Securities, Inc.
First Union First Union National Bank
KS ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to VFCC and First Union
S&S Shearman & Sterling, Counsel to HCFP, Funding HCAC and SPC
INPUT Input One, LLC
Custodian U.S. Bank Trust National Association
[TBD] [counsel to Input to be determined]
I. CLOSING DATE DELIVERIES
---------------------------
TRANSACTION DOCUMENTS
---------------------
Loan Funding and Servicing Agreement
(e) Exhibit A (Form of Borrower Notice)
(f) Exhibit B (Form of Note)
(g) Exhibit C ("Limited Purpose" Provision of Seller's
Certificate of Incorporation)
(h) Exhibit D (Form of Assignment and Acceptance)
(i) Exhibit E (Form of Monthly Report)
(j) Exhibit F (Form of Servicer's Certificate)
(k) Exhibit G (Credit and Collection Policies)
(l) Exhibit H (Form of Hedging Agreement)
(m) Exhibit I (Evaluation Policy)
(n) Exhibit J (Form of Initial Certification of Custodian)
(o) Exhibit K (Form of Final Certification of Custodian)
(p) Exhibit L (Form of Loan File Release)
(q) Schedule I (Schedule of Documents)
(r) Schedule II (Aggregate Insurer Concentration Limits)
(s) Schedule III (Tradenames, Fictitious Names and "Doing
Business As" Names)
I-1
(t) Schedule IV (List of Loans)
(u) Schedule V (Single Insurer Concentration Limits)
(v) Schedule V (Location of Contract Files)
Purchase and Sale Agreement
HCFP to SPC
(a) Exhibit A (Form of Assignment)
(b) Exhibit B (Notice of Sale)
(c) Schedule I (List of Loans)
(d) Schedule II (Tradenames, Fictitious Names, and
"Doing Business As" Names)
Liquidity Purchase Agreement
Between VFCC and First Union
(a) Exhibit A (Form of Assignment and Acceptance)
(b) Exhibit B (Form of Purchase Confirmation)
(c) Schedule 1 (Pro-Rata Shares of each Investor)
(d) Schedule 4.1 (Conditions Precedent)
Hedge Agreement
(a) Schedule to Master Agreement
(i) Exhibit A (SWAP Transaction Confirmation)
(ii) Exhibit B (Legal Opinion of counsel to SPC)
CORPORATE DOCUMENTS
-------------------
Authority documents relating to SPC
(a) Certified Copy of Articles of Incorporation
(b) Bylaws
(c) Good Standing Certificates
Secretary's Certificate of SPC
(Certificate of Incorporation, Bylaws, Resolutions, and Incumbency)
Authority documents relating to Funding
(a) Certified Copy of Organizational Documents
(b) Bylaws
(c) Good Standing Certificates
Secretary's Certificate of Funding
(Certificate of Incorporation, Bylaws, Resolutions, and Incumbency)
I-2
Authority documents relating to HCFP
(a) Certified Copy of Organizational Documents
(b) Bylaws
(c) Good Standing Certificates
Secretary's Certificate of HCFP
(Certificate of Incorporation, Bylaws, Resolutions, and Incumbency)
Authority documents relating to HCAC
(a) Certified Copy of Organizational Documents
(b) Bylaws
(c) Good Standing Certificates
Secretary's Certificate of HCAC
(Certificate of Incorporation, Bylaws, Resolutions, and Incumbency)
Officer's Certificate of SPC
(Bringdown of Representations and Warranties in Purchase and Sale Agreement
and Loan Funding Agreement)
Officer's Certificate of Funding
(Bringdown of Representations and Warranties in Purchase and Sale Agreement
and Loan Funding Agreement)
Officer's Certificate of HCFP
(Bringdown of Representations and Warranties in Loan Funding Agreement)
Officer's Certificate of HCAC
(Bringdown of Representations and Warranties in Loan Funding Agreement)
Officer's Certificate of SPC
(Solvency)
Officer's Certificate of Funding
(Solvency)
Power of Attorney of Funding to FCM
Power of Attorney of SPC to FCM
I-3
UCC FINANCING STATEMENTS
------------------------
Funding to SPC
(a)
(b)
(c)
(d)
SPC to FCM, as Deal Agent
(a)
(b)
(c)
(d)
Pre-Closing UCC, tax lien and judgment search reports
(a) as to SPC
(i) [states]
(ii) [local]
(b) as to Funding
(i) [states]
(ii) [local]
Post-Closing UCC, tax lien and judgment search reports
(a) as to SPC
(i) [states]
(ii) [local]
(b) as to Funding
(i) [states]
(ii) [local]
LEGAL OPINIONS
--------------
Opinion of SPC Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
Opinion of Funding Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
Opinion of HCFP Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
Opinion of HCAC Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
I-4
Opinion of Funding Counsel (perfection)
Opinion of Funding Counsel (true sale)
Opinion of Funding Counsel (non-consolidation)
Opinion of SPC Counsel (Hedge Agreement)
Opinion of Input Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
Opinion of Custodian Counsel, (Incorporation, Authorization, Execution,
and Enforceability)
MISCELLANEOUS
-------------
Lockbox Agreement[s]
Fee Letter Agreement
Backup Servicer Fee Letter
Collateral Custodian Fee Letter
Payment of Structuring Fee
Payment of Legal Fees
[Amendment to credit agreement]
Such other consents, opinions, documents or instruments as the Deal Agent may
request.
II. INITIAL FUNDING DATE DELIVERIES
------------------------------------
Notice of Sale
Assignment from HCFP to SPC
List of Loans
Borrower Notice for Initial Advance
I-5
Trust Receipt and Initial Certification
Officer's Certificate of SPC
(Bringdown of Representations and Warranties in Purchase and Sale Agreement
and Loan Funding Agreement)
Officer's Certificate of Funding
(Bringdown of Representations and Warranties in Purchase and Sale Agreement
and Loan Funding Agreement)
Officer's Certificate of HCFP
(Bringdown of Representations and Warranties in Purchase and Sale Agreement
and Loan Funding Agreement)
Officer's Certificate of HCAC
(Bringdown of Representations and Warranties in Loan Funding Agreement)
Officer's Certificate of SPC
(Solvency)
Officer's Certificate of Funding
(Solvency)
Servicer's Certificate
Such other consents, opinions, documents or instruments as the Deal Agent may
request.
I-6
SCHEDULE II
AGGREGATE INSURER CONCENTRATION LIMITS
On any day, the portion of the Aggregate Adjusted Insurer Receivables owed by
all Insurers with the following ratings may not exceed any of the following
applicable limitations, measured on the basis of the specified percentage of the
Aggregate Outstanding Loan Balance:
===========================================================================================================
DESCRIPTION CONCENTRATION LIMIT
===========================================================================================================
Insurers Rated by A.M. Best:
Higher than B++ none
B++ 10%
B+ 5%
less than B+, or not rated by A.M. Best 15%
-----------------------------------------------------------------------------------------------------------
II-1
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
NONE
III-1
SCHEDULE IV
LIST OF LOANS
[to be provided by the Originator]
IV-1
SCHEDULE V
SINGLE INSURER CONCENTRATION LIMITS
The Adjusted Insurer Receivables owed by any Insurer on any day may not exceed
any of the following applicable limitations, measured on the basis of the
specified percentage of the Aggregate Outstanding Loan Balance:
============================================================================================================
DESCRIPTION CONCENTRATION LIMIT
============================================================================================================
Insurer Rating by A.M. Best of:
A+ or higher 2.5%
less than A+ and higher than B 2%
less than B, or not rated by A.M. Best 1%
------------------------------------------------------------------------------------------------------------
V-1
SCHEDULE VI
LOCATIONS OF LOAN FILES
U.S. BANK TRUST NATIONAL ASSOCIATION
Document Collateral Services
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
VI-1