Exhibit 10(bl)
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PREMIUM RECEIVABLE SERVICING AGREEMENT
by and among
FPF, INC.,
and
Hallmark Finance Corporation
Dated as of November 18, 1999
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PREMIUM RECEIVABLE SERVICING AGREEMENT
This PREMIUM RECEIVABLE SERVICING AGREEMENT ("Servicing
Agreement") is made as of November 18, 1999 by and among FPF, INC., a
Colorado corporation ("FPF"), and Hallmark Finance Corporation, a Texas
corporation, as servicer (the "Servicer").
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Sale and Assignment Agreement (the "Sale
Agreement") dated of even date herewith by and between FPF and Hallmark
Finance Corporation, FPF will acquire certain Premium Receivables
originated by the Seller, as seller, and FPF, as purchaser; and
WHEREAS, the parties hereto desire to enter into this Servicing
Agreement to provide for, among other things, the management,
administration, servicing and collections with respect to the Premium
Receivables for the benefit of FPF and its assignees and designees and
to perform certain duties as described herein.
NOW, THEREFORE, in consideration of the covenants and conditions
contained in this Servicing Agreement, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Defined Terms. Capitalized terms used and not otherwise defined
in this Servicing Agreement shall have the meaning set forth in the
Sale Agreement. As used in this Servicing Agreement, the following
terms, unless the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and
plural forms of the terms defined):
"Allowable Coverage Change" means, with respect to a Premium
Receivable, a modification thereof approved by the Servicer in the
ordinary course of its business and in accordance with the standard of
care set forth in Section 2.16 of this Servicing Agreement, which
modification does not (a) provide that the principal and interest on
the Premium Receivable can be paid over an aggregate period extending
beyond the Term, (b) decrease the annual percentage rate of interest
payable on the Premium Receivable or (c) reduce the principal amount of
the Premium Receivable or release the Realization Provisions with
respect to such Premium Receivable.
"Approved Expenses" means, with respect to a Person, all
reasonable and documented direct out-of-pocket expenses incurred by
such Person including, without limitation, professional services (such
as attorneys, consultants and accountants), postage, courier services,
insurance, stationery, telephone, facsimile transmission and travel,
any of which are incurred specifically in the performance of its duties
under this Servicing Agreement, other than required reporting duties
thereunder and general office overhead.
"Cancellation Standard" means, as of any date, the timely
cancellation by the Servicer of the underlying insurance policies
relating to at least ninety-seven percent (97%) of the Premium
Receivables on which payments are overdue by thirty (30) days or more.
"Change of Control" shall have the meaning set forth in Section
2.11(c) of this Servicing Agreement.
"Collections Account" means the lock box account or other accounts
established by Servicer in the name of FPF or its designee into which
the Collections are to be deposited pursuant to Section 3.01 of this
Servicing Agreement.
"Collections Depository Account" shall mean the financial
institution specified in Section 3.03 of this Servicing Agreement.
"Daily Servicer Report" means a report in the form of Exhibit A-1
to this Servicing Agreement pursuant to Section 2.10(a) hereof.
"Event of Servicing Default" shall have the meaning set forth in
Section 5.01 of this Servicing Agreement.
"Loan Documents" means the original signed Premium Finance
Agreement (or a facsimile thereof in the event an original is not
received by Seller), the signed power of attorney of the insured (if a
power of attorney signed by the insured is not included in the Premium
Finance Agreement), and all other documents necessary for the legal
origination of the Premium Finance Agreement.
"Monthly Servicer Report" means a report in the form of Exhibit A-
2 to this Servicing Agreement pursuant to Section 2.10(a) hereof.
"Reporting Period" shall mean the period beginning on the first
day of the calendar month and ending on the last day of such calendar
month; provided, that the initial Reporting Period begins on the
Effective Date.
"Scheduled Payment" shall mean the monthly payment relating to a
Premium Receivable required to be made by the Obligor thereunder in
order to fully amortize the principal balance of the Premium Receivable
under the method, term and rate stated in the Premium Finance Agreement
or similar agreement evidencing such Premium Receivable.
"Servicing Documents" shall have the meaning specified in Section
2.14 of this Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section 2.08
of this Servicing Agreement.
"Successor Servicer" means that Person succeeding the Servicer
under and pursuant to Section 5.02 of this Servicing Agreement as may
be designated by FPF.
ARTICLE II
ADMINISTRATION AND SERVICING OF PREMIUM RECEIVABLES
Section 2.01. Appointment and Duties of Servicer.
(a) FPF hereby appoints the Seller, as the Servicer, and the
Seller shall remain as Servicer until the earlier to occur of
(i) the payment in full of all amounts due to FPF under a
termination of the Sale Agreement, (ii) written notice from FPF or
its designees to the Servicer of termination of the Servicer
hereunder due to the occurrence of a Default under the Sale
Agreement, or (iii) written notice from FPF or its designees to
the Servicer of termination of the Servicer hereunder due to the
occurrence of an Event of Servicing Default. The Servicer shall
perform the services required of it pursuant to the terms of this
Servicing Agreement. In performing its duties hereunder, the
Servicer shall have full power and authority to do or cause to be
done any and all things in connection with such servicing and
administration which it may deem necessary or desirable in
accordance with the standard of care specified herein.
(b) The Servicer, in making collections of Premium
Receivable payments pursuant to Section 2.02 hereof, shall be
deemed to be holding such funds in trust on behalf of, and as
agent for, FPF and its designees.
(c) FPF shall take all such lawful action in its discretion
to compel or secure the performance and observance by the Servicer
of its obligations to FPF under or in connection with this
Servicing Agreement, in accordance with the terms hereof, and
shall exercise any and all rights, remedies, powers and privileges
lawfully available to FPF under or in connection with this
Servicing Agreement.
(d) The Servicer may not delegate any or all of its duties
or obligations hereunder, and the Servicer shall not otherwise
permit any other Person to engage in any servicing, auditing,
administrating, managing, collecting or other activities with
respect to the Premium Receivables, unless approved in writing by
FPF or its designees in each such Person's absolute discretion.
(e) The Servicer, upon execution of this Servicing
Agreement, shall execute and deliver a power of attorney to FPF
and its assigns in substantially the form of Exhibit C attached
hereto.
Section 2.02. Collection of Premium Receivable Payments. All
servicing of the Premium Receivables will be performed on a "private
label" basis using the name of Seller on a premium finance software
system approved by FPF in writing. The Servicer shall be responsible
for collection of payments called for under the terms and provisions of
the Premium Receivables as and when the same shall become due. In
addition, the Servicer shall be responsible for the collection of late
payments and enforcing the Realization Provisions with respect thereto,
and shall follow such collection procedures as are consistent with the
standard of care set forth in Section 2.16 hereof. In accordance with
the foregoing, the Servicer may grant extensions, rebates or
adjustments on a Premium Receivable, but shall not modify the original
due dates, interest rate or Scheduled Payments on the Premium
Receivables except as would constitute an Allowable Coverage Change.
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 a
Premium Receivable.
Section 2.03. Past-Due Premium Receivables; Cancelled Premium
Receivables.
(a) In the event an Obligor has not made a payment with
regard to a Premium Receivable, the Servicer shall promptly, but
in no event later than 10 days after such due date, (i) notify the
defaulting Obligor that the Servicer shall request the Issuing
Insurance Company to cancel the insurance coverage pertaining to
the Premium Receivable if payment is not received within 10 days
of such Obligor's receipt of such notice (the "Ten Day Notice"),
(ii) upon failure to receive the payment due from Obligor
following the period stated in the Ten Day Notice (plus such grace
period, if any, as determined by the Servicer but in no event
longer than the date 25 days from the original due date, except as
may be required under applicable state law or regulation), request
cancellation of the policy from the Issuing Insurance Company
(such date stated in the cancellation request being the
"Cancellation Date") and (iii) enforce on behalf of FPF and its
designees, any and all Realization Provisions and other rights
relating to the Premium Receivable.
(b) The Servicer may, but is not obligated to, submit a
written request to the applicable Issuing Insurance Company
(whereupon the Servicer shall retain a copy of such request and
any response thereto) to reinstate the insurance policy underlying
a Canceled Premium Receivable; provided, that, prior to such
request for reinstatement, all past due payments have been
received by, or credited to, the Servicer in the form of a money
order, certified check, wire transfer or other means of
immediately available funds. In the event the underlying
insurance policy is reinstated by the Issuing Insurance Company,
the Servicer shall make appropriate adjustments in its records and
reports, and such Premium Receivable shall no longer be considered
a Cancelled Premium Receivable.
(c) The Servicer shall, upon receipt of unearned premiums,
unearned commissions, state guaranty funds, broker guarantee funds
or funds from a cash collateral account with respect to the
related Canceled Premium Receivable, remit such funds to the
Collections Account pursuant to Section 3.02 hereof.
Section 2.04. Defaulted Premium Receivables. With respect to
each Defaulted Premium Receivable, the Servicer shall promptly provide
in its Monthly Servicer Report notice of such Defaulted Premium
Receivable together with the outstanding principal amount of such
Defaulted Premium Receivable and the number of days such Defaulted
Premium Receivable is delinquent. The Servicer shall use its best
efforts, consistent with the standard of care set forth in Section 2.16
hereof, to collect funds on a Defaulted Premium Receivable from the
Issuing Insurance Company, insured or otherwise (any such collections
from whatever source being a "Defaulted Premium Receivable Recovery").
All Defaulted Premium Receivable Recoveries shall be deposited by the
Servicer into the Collections Account by the close of business on the
Business Day following receipt thereof.
Section 2.05. Maintenance of Interests in Premium Receivables.
The Servicer shall take, or cause to be taken, such steps as are
necessary or reasonably required by FPF or its assignees and designees
to maintain perfection of the respective interests of FPF and its
assignees and designees in the Premium Receivables and the other
related Conveyed Property.
Section 2.06. Covenants of Servicer.
(a) The Servicer shall (i) not release any Realization
Provisions granted by an Obligor in whole or in part except in the
event of payment in full by the Obligor thereunder or upon
reacquisition of the related Premium Receivable by the Seller,
(ii) not impair the rights of FPF or its assignees in the Premium
Receivables, (iii) not modify the Scheduled Payments due under a
Premium Receivable except as expressly provided by Section 2.02
hereof, (iv) not Sell or pledge to any other Person, or grant,
create, incur, assume, or suffer to exist any Lien on any Premium
Receivable granted to FPF or any interest therein, (v) immediately
notify FPF of the existence of any Lien on any Premium Receivable
which was Sold pursuant to the Sale Agreement, (vi) defend the
perfected ownership interest of FPF, its designees and assigns in,
to, and under the Premium Receivables Sold to FPF under the Sale
Agreement against all claims of third parties claiming through or
under the Servicer, (vii) deposit into the Collections Account all
payments received by the Servicer with respect to the Premium
Receivables in accordance with Article III hereof, (viii) comply
in all respects with the terms and conditions of the Sale
Agreement and not amend, modify, or waive any provision of the
Sale Agreement, (ix) promptly notify FPF of the occurrence of any
Event of Servicing Default hereunder and (x) make at the sole cost
and expense of the Servicer any filings, reports, notices or
applications and seek any consents or authorizations from any and
all government agencies, tribunals or authorities in accordance
with the UCC and any state license or registration authority on
behalf of FPF as may be necessary or advisable to create, maintain
and protect a first-priority, perfected ownership interest of FPF
in, to, and on the Premium Receivables Sold to it or as may be
required by such government agencies, tribunals or authorities.
(b) The Servicer shall promptly make available to FPF or its
designee all information relating to each Premium Receivable being
serviced hereunder in form and manner consistent with the data
processing system maintained by FPF or its designee and the
Servicer shall respond to reasonable directions or requests for
information that FPF or its designees might have with respect to
the Premium Receivables.
Section 2.07. Reacquisition of Premium Receivables Upon Breach
of Representations or Warranties. The Servicer shall inform FPF
promptly, in writing, upon the discovery of any breach by the Seller of
any of the representations, warranties or covenants contained in
Section 11 of the Sale Agreement. Unless the breach shall have been
cured within five Business Days after such discovery, the Servicer, if
directed by FPF in accordance with Section 6 of the Sale Agreement,
shall use its best efforts to cause the Seller, within five days
following such cure period, to acquire any Premium Receivable that FPF
has deemed as not being an Eligible Premium Receivable in accordance
with the terms of Section 6 of the Sale Agreement. The Servicer shall
remit all Repurchase Price funds received with respect to the
Repurchase Property to the Collections Account within one Business Day
of receipt thereof.
Section 2.08. Premium Receivable Servicing Fees.
(a) For so long as the Servicer is acting as Servicer
pursuant to this Servicing Agreement, FPF shall pay or cause to be
paid to the Servicer the following monthly Servicing Fee (the
"Servicing Fee") for each Reporting Period payable during the
following Reporting Period on the date specified in the Sale
Agreement:
(i) an amount calculated at a rate of 3.50% per annum
of the average daily FPF Principal Balance during the
reporting.
(b) In the event the initial Servicer is replaced by a
Successor Servicer (which may be FPF, Flatiron Credit Company,
Inc. or any successor designated by FPF) pursuant to this
Servicing Agreement, FPF shall pay or cause to be paid to any
Successor Servicer a monthly servicing fee (the "Successor
Servicing Fee"), which Successor Servicing Fee shall be, with
respect to each Reporting Period, an amount equal to the sum of
(i) the Servicing Fee plus (ii) all Approved Expenses. The
Successor Servicing Fee with respect to a Reporting Period shall
be paid to the Successor Servicer during the month immediately
following such Reporting Period on the date as provided in the
Sale Agreement.
Section 2.09. Servicer's Certificate as to Compliance. Upon
the written request of FPF, the Servicer shall deliver to FPF, from
time to time, an officers' certificate, signed by an officer of
Servicer (including the President, any Vice President, and Assistant
Vice President, the Secretary, the Treasurer or any other officer
customarily performing functions similar to those performed by any of
such designated officers (a "Responsible Officer")) and dated effective
as of the last day of the preceding month, stating, as to each signer
thereof, that (a) a review of the activities of the Servicer during the
preceding six-month period and of performance under this Servicing
Agreement has been made under each such Responsible Officer's
supervision, and (b) to the best of each such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations
under this Servicing Agreement throughout such six-month period, or, if
there has been a default in the fulfillment of any such obligation,
specifying each such default known to each such Responsible Officer and
the nature and status thereof and remedies therefor being pursued.
Section 2.10. Reporting Obligations; Inspection and Audit Rights.
(a) The Servicer shall make available to FPF or its designee
information sufficient to allow FPF or its designee to generate
the Daily Servicer Reports and the Monthly Servicer Reports
regarding payments received from or on behalf of Obligors and
deposited to the Collections Account representing Collections and
other amounts with respect to Premium Receivables, including,
without limitation, Defaulted Premium Receivable Recoveries and
Endorsement Refunds. Such information shall be delivered (i) with
respect to the Daily Servicer Report, on the Business Day
following the date of such report, and (ii) with respect to the
Monthly Servicer Report, on the second Business Day following the
end of the immediately preceding Reporting Period.
(b) The Servicer shall promptly provide to FPF or its
designees such reports, information and documentation as any such
Person may reasonably request with respect to the Servicer, the
Servicer's operations, the Premium Receivables and any other
matters to which this Servicing Agreement relates, which reports,
information or documentation shall be provided to each such Person
by facsimile copy, hard copy, electronic certified copy or any
combination thereof as such Person may reasonably specify. In
addition, the Servicer grants to FPF and any of its designees and
hereby authorizes each of them the right to contact insurers
relating to the Premium Receivables, the Obligors and insurance
agents in order to verify, substantiate or reconcile reports,
information and documentation provided by the Servicer to FPF or
its designees pursuant to this Servicing Agreement.
(c) At all times during the term hereof, the Servicer shall
afford FPF and its assignees, authorized agents and designees
reasonable access during normal business hours to all of the
Servicer's books of account, reports, records and computer files
relating to the Premium Receivables and shall cause its personnel
to assist in any examination of such records by any such Person,
to make copies and extracts therefrom, and to discuss the
Servicer's affairs, finances and accounts relating to the Premium
Receivables with officers, employees and independent certified
public accountants of each such Person, all at such reasonable
times and as often as may be reasonably requested.
(d) Any such report, information and documentation provided
by the Servicer to FPF or its designees pursuant to this Section
2.10 shall be, to the knowledge of the Servicer, true and correct
as of the time of transmittal and such transmittal (whether by
facsimile, hard copy, electronic transmission or otherwise) shall
constitute certification to such effect.
Section 2.11. Financial Statements and Other Reports.
(a) Reporting Requirements. The Servicer shall deliver to
FPF and its designees:
(i) within 45 days after the end of each calendar
quarter of the Servicer (commencing with the quarter ending
March 31, 2000, an unaudited balance sheet and income
statement (prepared in accordance with GAAP without
accompanying notes) for the Servicer and its subsidiaries
covering the preceding quarter, in each case certified by a
principal financial officer of the Servicer to be true,
accurate and complete copies of such financial statements;
(ii) within 90 days after the end of each fiscal year of
Servicer, an audited balance sheet and income statement
(prepared in accordance with GAAP) for the Servicer and its
subsidiaries covering such preceding fiscal year; and
(iii) such other information respecting the
condition or operations, financial or otherwise, of the
Servicer or any of its subsidiaries as FPF or its designees
may from time to time reasonably request.
(b) Report on Proceedings. Promptly upon (but in no event
more than three Business days following) the Servicer becoming
aware of:
(i) any proposed or pending investigation of the
Servicer, any of its Affiliates or any of their respective
employees by any governmental authority or agency;
(ii) any court or administrative proceeding which
involves or may involve the possibility of materially and
adversely affecting the properties, business, prospects,
profits, management, financial position, results of operation
or general condition of the Servicer or any of its
Affiliates;
(iii) an event or development (including, without
limitation, a change in any relevant law or regulation) which
could have a material adverse impact on the properties,
business, prospects, profits, management, financial position,
results of operations or general condition of the Servicer or
any of its Affiliates; or
(iv) any Event of Servicing Default hereunder or any
event which could likely become an Event of Servicing Default
hereunder;
such information shall be provided by the Servicer to FPF and its
designees, as applicable.
(c) Change of Control. The Servicer shall provide prompt
written notice to FPF and its designees, as applicable, upon the
occurrence of any of the following events (each a "Change of
Control"): (i) the Servicer ceases to be managed and controlled by
the Person or Persons who manage and control the Servicer as of
the Effective Date, (ii) any such Person which is a corporation,
partnership, trust or other entity is dissolved or liquidated or
merged with or into any other Person or for any period of more
than 10 days ceases to exist in its present form and (where
applicable) in good standing and duly qualified under the laws of
the jurisdiction of its incorporation or formation and any
jurisdiction in which such standing or qualification is necessary
or advisable in connection with the conduct of business or (iii)
the Servicer consummates a Sale of all or substantially all of its
assets, except, if the Seller is then acting as Servicer
hereunder, for the Sale of the Conveyed Property by the Seller to
FPF under the Sale Agreement.
Section 2.12. Costs and Expenses. All Approved Expenses
incurred by any Successor Servicer and all direct extraordinary
out-of-pocket expenses incurred by FPF or its designees and assignees,
as the case may be, in carrying out their respective duties hereunder,
including payments of all fees and expenses incurred in connection with
the enforcement of Premium Receivables (including enforcement of
Defaulted Premium Receivables), and realization under the Realization
Provisions, shall be reimbursed to such Successor Servicer (in addition
to the compensation and expenses, as applicable, to be paid to such
Successor Servicer pursuant to Section 2.08) and paid according to the
provisions of the Sale Agreement.
Section 2.13. Responsibility for Ownership Interests. The
Servicer shall ensure that FPF has a valid, perfected first priority
ownership interest in, to and under each Eligible Premium Receivable by
taking all necessary action under applicable law and by assuring, among
other things, that UCC-1 financing statements and appropriate
continuation statements are filed in each jurisdiction in which filing
is necessary for such perfection which financing statements and
continuation statements (a) contain a general description of the
Premium Finance Agreements, amounts payable thereunder, and
after-acquired collateral, and (b) direct subsequent creditors to
sources containing more detailed information, such as the Premium
Finance Agreements themselves.
Section 2.14. Documents Held by FPF; Documents Held by the
Servicer; Indication of FPF Ownership.
(a) FPF or its designees shall be entitled to maintain
physical possession of the Loan Documents in its files with
respect to each Premium Receivable.
(b) The Servicer shall maintain the following documents in
its files on behalf of FPF and its designees or have the following
immediately accessible on computer screen with respect to each
Premium Receivable:
(i) Copies of the Loan Documents;
(ii) Copies of all correspondence to the Obligor or the
Issuing Insurance Company, including any notification to the
Obligor and the Issuing Insurance Company of the Sale of the
Premium Receivable and delivery of possession of the related
Premium Finance Agreement to FPF or its designees, to the
extent required by applicable law to perfect an ownership
interest in the Premium Receivable and the related Conveyed
Property;
(iii) Copies of all late notices to the Obligor;
(iv) Copies of cancellation requests to the Issuing
Insurance Company and, if applicable, the Obligor;
(v) Copies of reinstatement notices and related
correspondence;
(vi) Payment history and status of each Premium
Receivable; and
(vii) Such other documents as the Servicer may
customarily retain in connection with its normal servicing
activities under this Servicing Agreement in order to satisfy
its standard of care under Section 2.16.
(c) The Servicer shall keep satisfactory books and records
pertaining to each Premium Receivable and shall make periodic
reports in accordance with this Servicing Agreement. Such records
may not be destroyed or otherwise disposed of, except as provided
herein and as allowed by applicable laws, regulations or decrees.
(d) The Servicer shall maintain physical possession of the
instruments and documents listed in Section 2.14(b) hereof, such
other instruments or documents that modify or supplement the terms
or conditions of any of the foregoing, and all other instruments
and documents generated by or coming into the possession of the
Servicer (including, without limitation, insurance premium
receipts, ledger sheets, payment records, correspondence and
current and historical computerized data files) that are required
to document or service any Premium Receivable. Collectively, all
of the documents described in paragraphs (b), (c) and (d) of this
Section 2.14 with respect to a Premium Receivable are referred to
as "Servicer Documents." All Servicer Documents shall remain the
property of FPF and shall be held in trust by the Servicer for the
benefit of FPF and its assignees and designees, to the extent of
their interests therein.
Section 2.15. Maintenance of Computer Systems. The Servicer
shall provide computer backup in a format acceptable to FPF not less
than weekly or such other period as FPF may request. Such computer
backup shall contain the data necessary to enable FPF or its assignee
or designees to service the Premium Receivables in the event any such
assignee or designee becomes the Successor Servicer. The Servicer
shall (a) provide FPF and its designee or assignees, as applicable,
with a copy of its computer software used with respect to the servicing
of the Premium Receivables including any licenses needed or required
with respect thereto, and (b) not substitute or materially alter its
computer software or systems or vendor or document forms, without the
prior written consent of FPF.
Section 2.16. Standard of Care. In performing its duties and
obligations hereunder and in administering and enforcing the servicing
relating to the Premium Receivables pursuant to this Servicing
Agreement, the Servicer shall exercise that degree of skill and care
consistent with the degree of skill and care that the Servicer
exercises with respect to similar loans owned and/or serviced by it,
and, shall apply in performing such duties and obligations, those
standards, policies and procedures consistent with the standards,
policies and procedures the Servicer applies with respect to similar
loans owned or serviced by it, and to the extent more exacting than the
foregoing, shall act prudently and in accordance with customary and
usual servicing procedures for other servicers of insurance premium
finance receivables; provided, however, that notwithstanding the
foregoing, the Servicer shall not, except pursuant to a judicial order
from a court of competent jurisdiction, or as otherwise required by
applicable law or regulation, release or waive the right to collect the
unpaid balance on any Premium Receivable. In performing its duties and
obligations hereunder and in administering and enforcing the servicing
relating to the Premium Receivables pursuant to this Servicing
Agreement, the Servicer shall comply with all applicable federal and
state laws and regulations, shall maintain all state and federal
licenses and franchises necessary for it to perform its servicing
responsibilities hereunder, shall not impair the rights of FPF, its
designees or assignees in the Conveyed Property, and shall act with
respect to the Premium Receivables as will, in the reasonable judgment
of the Servicer, maximize the amount to be received with respect
thereto.
Section 2.17. Enforcement.
(a) The Servicer is hereby authorized and empowered to ▇▇▇
to enforce or collect upon the Premium Receivables, in its own
name, if possible, or as attorney-in-fact and agent for FPF or its
designees. If the Servicer elects to commence a legal proceeding
to enforce a Premium Receivable, the act of commencement shall be
deemed to be an automatic assignment of the Premium Receivable by
FPF to the Servicer solely for purposes of, and to the extent
necessary for, collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not
enforce a Premium Receivable on the grounds that it is not a real
party in interest or a holder entitled to enforce the Premium
Receivable, FPF shall, at the Servicer's request and expense, take
such steps as FPF deems necessary or appropriate to enforce the
Premium Receivable, including bringing suit in its name or the
name of FPF.
(b) The Servicer shall exercise any rights of recourse
against third Persons that exist with respect to any Premium
Receivable in accordance with the standard of care required by
Section 2.16 hereof.
Section 2.18. Fidelity Bond or Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond or an errors and omissions insurance policy, in form and content
acceptable to FPF, in an amount not less than $400,000 and naming FPF
as an additional loss payee or beneficiary of each such insurance
policy and fidelity bond. The Servicer shall be deemed to have
complied with this provision if one of its respective Affiliates has
such fidelity bond and errors and omissions policy coverage and, by the
terms of such fidelity bond and errors and omission policy, the
coverage afforded thereunder extends to the Servicer. Any such
fidelity bond or insurance policy shall not be cancelled or modified
without ten days' prior written notice to FPF. Evidence of each such
insurance policy and fidelity bond shall be delivered to FPF by the
Servicer in conjunction with the Responsible Officers' certificate
required to be delivered pursuant to Section 2.09 hereof.
ARTICLE III
ACCOUNTS; COLLECTIONS
Section 3.01. Accounts. The Servicer shall establish in the
name of FPF or its designee the Collections Account with a Collections
Account Depository referred to in Section 3.03 hereof. All Obligors,
Issuing Insurance Companies and Seller shall be directed to cause all
Collections to be remitted to the Collections Account so established.
All Collections effectuated by pre-authorized debits of Obligor
accounts shall be deposited directly into the Collections Account. The
Servicer shall not alter the instructions to the Obligors, Seller, the
Issuing Insurance Company or any other party regarding payments to be
made to the Collections Account without the prior written approval of
FPF or its designee. All amounts in the Collections Account shall be
retrieved on each Business Day by FPF or its designee.
Section 3.02. Collections. The Servicer shall segregate all
Collections on the Premium Receivables from its general funds, shall
not use such funds for its benefit and shall hold such funds in trust
for the benefit of FPF and its designee. The Servicer shall remit to
the Collections Account and to no other account, on a daily basis, but
in no event later than the close of business on the Business Day
following the day of receipt thereof, all payments received on or in
connection with the Conveyed Property by the Servicer by or on behalf
of the Obligors, the Issuing Insurance Companies or any other party,
including, without limitation, Collections, Endorsement Refunds, broker
guarantee funds or funds from a cash collateral account or Defaulted
Premium Receivable Recoveries, all as collected, in respect of a
Premium Receivable being serviced by the Servicer. The Servicer shall
also deposit in the Collections Account the aggregate Repurchase Price
with respect to any Repurchase Property. All such deposits shall be
separately shown in the Daily Servicer Reports.
Section 3.03. Collections Account Depository. FPF has
appointed Bank of America as the initial Collections Account Depository
(the "Collections Account Depository") hereunder. The Collections
Account Depository shall transfer funds from the Collections Account as
instructed by the FPF or its designee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to FPF that as
of the date of this Servicing Agreement and, for so long as the
Servicer shall continue to act as Servicer hereunder, that the
representations, warranties and covenants contained in Sections 1 and 2
of Exhibit B hereto are true and correct and shall remain true and
correct.
Section 4.02. Representations and Warranties of FPF. As of the
date of the Servicing Agreement FPF represents, warrants and covenants
to Servicer each of the matters referred to in Section 2 of Exhibit B
hereto.
ARTICLE V
DEFAULT, REMEDIES AND INDEMNITY
Section 5.01. Events of Servicing Default. Any of the
following acts or occurrences shall constitute an Event of Servicing
Default under this Servicing Agreement:
(a) any failure by the Servicer to make any payment,
transfer or deposit to the Collections Account within one Business
Day after receipt;
(b) any failure by the Servicer to provide any notices to
FPF pursuant to this Servicing Agreement relating to the transfer
or calculation of funds which has not been cured within two
Business Days after the date of receipt of notice of such failure;
(c) any failure by the Servicer to request cancellation of
the policy from the Issuing Insurance Company pursuant to Section
2.03, unless otherwise approved by FPF or its designee in writing.
(d) failure on the part of the Servicer to either duly
observe or perform any covenants or agreements of the Servicer set
forth in this Servicing Agreement other than as set forth in this
Article 5, and which has not been cured within ten (10) business
days after the date of receipt of notice of such failure; or the
Servicer shall attempt to assign any of its duties hereunder;
(e) any representation, warranty or certification made by
the Servicer (or any officer of the Servicer) in this Servicing
Agreement, or any certificate delivered pursuant to this Servicing
Agreement, shall prove to have been incorrect when made, which
could have a material adverse effect on FPF and which continues to
be incorrect in any material respect;
(f) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer, or the
Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition or commence an
action to take advantage of any applicable insolvency or
reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
(g) any Change in Control unless the same is approved in
writing by FPF, in its absolute discretion;
(h) following 30 days written notice to Servicer, an event
or development shall occur which is expected by FPF (in its sole
discretion) to have a material adverse impact on the ability of
the Servicer to perform its obligations under this Servicing
Agreement;
(i) the Servicer shall not be in compliance with the
Cancellation Standard.
Section 5.02. Remedies.
(a) If an Event of Servicing Default shall have occurred and
then be continuing, then by notice given in writing to the
Servicer (the "Terminated Party") (together with any termination
notice described in Section 2.01(a) hereof, a "Termination
Notice"), all of the rights and obligations of the Terminated
Party, shall be terminated upon the later of (i) the date, if any,
specified in the Termination Notice or (ii) upon receipt of the
Termination Notice.
(b) After receipt by the Terminated Party of a Termination
Notice, all authority and power of the Terminated Party under this
Servicing Agreement shall pass to and be vested in a Successor
Servicer; and, without limitation, FPF or its designees are hereby
authorized and empowered to execute and deliver, on behalf of the
Terminated Party, as attorney-in-fact, authorized agent or
otherwise, all documents and other instruments upon the failure of
the Terminated Party to execute or deliver such documents or
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 hereby agrees to cooperate with
FPF, its designees and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Terminated
Party to conduct servicing under this Servicing Agreement,
including, without limitation, the transfer to such Successor
Servicer of all authority of the Terminated Party to service the
Premium Receivables provided for under this Servicing Agreement,
including, without limitation, the right to receive all
collections, all authority over all collections which shall on the
date of transfer be held by the Terminated Party for deposit or
which have been deposited by the Terminated Party in the
Collections Account or which shall thereafter be received with
respect to the Premium Receivables, and in assisting the Successor
Servicer in enforcing all rights to Realization Provisions. The
Terminated Party shall immediately transfer its electronic records
relating to the Premium Receivables to the Successor Servicer in
such electronic form as the Successor Servicer may request. The
Terminated Party shall immediately relinquish all rights in, to
and under the Loan Documents and the Servicing Documents and shall
immediately transfer to the Successor Servicer all Loan Documents
and Servicing Documents with respect to the Premium Receivables in
the manner and at such times as the Successor Servicer shall
request. Immediately upon receipt of a Termination Notice, the
Terminated Party shall not amend, alter or modify any of the Loan
Documents or Servicing Documents without FPF's prior written
consent. The Terminated Party shall give notices of the transfer
of servicing to the Obligors, Issuing Insurance Companies and
state guaranty funds, all in the manner and at such times as the
Successor Servicer shall request.
(c) On and after the receipt by the Terminated Party of a
Termination Notice pursuant to this Section 5.02, the Terminated
Party shall continue to perform all servicing functions under this
Servicing Agreement until the date specified in the Termination
Notice or otherwise specified by FPF in writing.
(d) Upon its appointment, the Successor Servicer shall be
the successor in all respects to the Terminated Party, with
respect to servicing functions under this Servicing Agreement.
(e) In connection with such appointment and assumption, FPF
may make such arrangements for the compensation of itself and the
Successor Servicer out of collections of Premium Receivable
payments, as it and such Successor Servicer shall agree.
(f) All authority and power granted to the Servicer or the
Successor Servicer under this Servicing Agreement shall
automatically cease and terminate upon payment in full of all
Obligations and termination of the Sale Agreement, and shall pass
to and be vested in FPF or its designee.
Section 5.03. Indemnity by the Servicer. The Servicer shall
indemnify and hold FPF, its Affiliates, its designees and assigns and
each of their respective officers, directors, employees and agents and
any Person holding an interest in the Conveyed Property or acting as a
trustee therefor (collectively, the "Indemnified Parties") harmless
against any liability, loss, damage, penalty, fine, forfeiture, legal
or accounting fees, court reporting expenses, expert witness fees, and
all other fees or costs of any kind, judgments or expenses, resulting
from or arising out of a breach of this Servicing Agreement by the
Servicer; provided, however, the Servicer shall not be liable to the
Indemnified Parties by reason of any act, contract or transaction
performed in good faith by the Servicer pursuant to this Servicing
Agreement in accordance with the standard of care under Section 2.16
nor shall it be liable for any loss resulting therefrom, so long as
such act, contract or transaction shall, at the time at which it was
performed or entered into, have been reasonable and prudent under the
circumstances and shall have conformed to the express provisions of
this Servicing Agreement. The rights of the Indemnified Parties to
indemnity, reimbursement or limitation on its liability pursuant to
this Section 5.03 shall survive any Event of Servicing Default or
termination of the Servicer pursuant to the provisions hereof and the
transfer of the rights, duties and obligations of the Servicer to a
Successor Servicer.
Section 5.04. Waiver of Events of Servicing Default. FPF may
waive any Event of Servicing Default by the Servicer in the performance
of its obligations hereunder and its consequences. Upon any such
waiver of an event of Servicing Default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been
remedied for every purpose of this Servicing Agreement. No such waiver
shall extent to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section 5.05. Survival. The agreements in this Article V shall
survive the termination of this Servicing Agreement and the payment in
full of all sums and obligations owed to FPF under the Sale Agreement.
ARTICLE VI
TERMINATION OF SERVICING AGREEMENT
Section 6.01. Term. Unless terminated in accordance with the
provisions of Section 2.01(a), this Servicing Agreement shall remain in
effect until all obligations due to FPF pursuant to the Sale Agreement
have been paid in full.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. No Offset. Prior to the termination of this
Servicing Agreement, the obligations of the Servicer under this
Servicing Agreement shall not be subject to any defense, counterclaim
or right of offset which the Servicer may have against FPF or its
assignees or designees, whether in respect of this Servicing Agreement
or the Sale Agreement, any Premium Receivable or otherwise.
Section 7.02. Powers of Attorney. FPF shall, from time to
time, provide the employees of the Servicer with limited, revocable
powers of attorney or other such written authorizations as may be
appropriate to enable the Servicer to perform its obligations under
this Servicing Agreement; provided, however, that FPF shall not be
required to provide such powers with respect to any matter for which
FPF does not have authority to perform itself.
Section 7.03. Assignments; Third Party Beneficiaries. This
Servicing Agreement may be assigned by FPF and shall inure to the
benefit of FPF's assignees and designees (all of whom shall be deemed
third party beneficiaries hereunder). Without limiting the generality
of the foregoing, all representations, covenants and agreements in this
Servicing Agreement which expressly confer rights upon FPF shall be for
the benefit of and run directly to each assignee and designee, and each
such assignee and designee shall be entitled to rely on and enforce
such representations, covenants and agreements to the same extent as if
it were a party hereto. The Servicer shall not assign its rights or
obligations under this Servicing Agreement without the written approval
and consent of FPF. With such written approval and consent of FPF
contemplated hereby, this Servicing Agreement shall be binding upon the
parties hereto, and their respective successors, legal representatives
and assigns; no other Person shall have or be construed to have any
equitable right, remedy or claim under or in respect of or by virtue of
this Servicing Agreement or any provision contained herein. There
shall be no third party beneficiaries of Servicer without the written
approval and consent of FPF.
Section 7.04. Amendment. This Servicing Agreement may be
amended from time to time by a written amendment duly executed and
delivered by each of the parties hereto and no waiver of any of the
terms hereof shall be effective unless it is in writing and signed by
the party or parties whose rights are being waived.
Section 7.05. Waivers. No failure or delay on the part of FPF
or any of its assignees or designees in exercising any power, right or
remedy under this Servicing Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy. No such waiver shall
extend to any subsequent or other default or impair any rights
consequent thereon, except to the extent expressly so waived. Each of
the rights, powers and remedies described in this Servicing Agreement
is cumulative and not exclusive of, and shall not prejudice, any other
right, power or remedy provided in this Servicing Agreement, the Sale
Agreement or by law. Each such right, power and remedy may be
exercised from time to time as deemed necessary by FPF or any of its
assignees or designees, as applicable, and in such order and manner as
such applicable party may determine. The parties hereto hereby
acknowledge and agree that with respect to a violation or breach by the
Servicer of any representation, warranty, covenant or other term or
provision of this Servicing Agreement, it shall be the Servicer's
obligation to prepare and obtain a written waiver for such breaches or
violations from FPF or its designee, as applicable. FPF or its
designee, as applicable, may grant or deny any such requested waiver in
its sole and absolute discretion. At no time may the parties hereto
infer a course of dealing among the parties that would negate the
requirement to obtain a written waiver from FPF or its designee, as
applicable.
Section 7.06. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
delivered personally or mailed by first-class registered or certified
mail, postage prepaid, or by telephonic facsimile transmission,
electronic mail and overnight delivery service, postage prepaid, to the
parties to this Servicing Agreement; provided, that notices shall be
effective upon receipt, and in any case addressed to the Servicer as
provided in the introductory paragraph of this Servicing Agreement and
to FPF at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
Section 7.07. Governing Law. THIS SERVICING AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF COLORADO WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS.
Section 7.08. Jurisdiction. THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF COLORADO AND THE UNITED STATES DISTRICT COURT OF COLORADO
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
SERVICING AGREEMENT AND THE PARTIES HEREBY IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING AND
IRREVOCABLY CONSENT TO THE SERVICE OF ANY SUMMONS AND COMPLAINT AND ANY
OTHER PROCESS BY THE MAILING OF COPIES OF SUCH PROCESS TO THEM AT THEIR
RESPECTIVE ADDRESSES AS SPECIFIED IN SECTION 7.06. THE PARTIES HEREBY
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
SECTION 7.08 SHALL AFFECT THE RIGHT OF FPF TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR PRECLUDE THE ENFORCEMENT OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS SERVICING AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE
FORUM OR JURISDICTION.
Section 7.09. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SERVICING
AGREEMENT.
Section 7.10. Severability of Provisions. Any part, provision,
agreement, representation, warranty or covenant of this Servicing
Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties
waive any provision of law which prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part,
provision, agreement, representation, warranty or covenant of this
Servicing Agreement shall deprive any party of the economic benefit
intended to be conferred by this Servicing Agreement, the parties shall
negotiate in good faith to develop a structure the economic effect of
which is as nearly as possible the same as the economic effect of the
transactions contemplated hereunder without regard to such invalidity.
Section 7.11. Counterparts. For the purpose of facilitating
the execution of this Servicing Agreement and for other purposes, this
Servicing Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, and
together shall constitute and be one and the same instrument.
Section 7.12. Captions. The article, paragraph and other
headings contained in this Servicing Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Servicing Agreement.
Section 7.13. Legal Holidays. In the case where the date on
which any action required to be taken, document required to be
delivered or payment required to be made is not a Business Day in New
York, New York or Denver, Colorado, such action, delivery or payment
need not be made on that date, but may be made on the next succeeding
Business Day.
Section 7.14. Advice from Independent Counsel. The parties
understand that this Servicing Agreement is a legally binding agreement
that may affect such party's rights. Each party represents to the
others that it has received legal advice from counsel of its choice
regarding the meaning and legal significance of this Servicing
Agreement and that it is satisfied with its legal counsel and the
advice received from it.
Section 7.15. Judicial Interpretation. Should any provision of
this Servicing Agreement require judicial interpretation, it is agreed
that a court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed
against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself
or through its agent prepared the same, it being agreed that each party
has participated in the preparation of this Servicing Agreement.
(SIGNATURE PAGE FOLLOWS)
IN WITNESS WHEREOF, the parties hereto have caused this Servicing
Agreement to be duly executed by their respective authorized officers
as of the date first written above.
FPF, INC.
By
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Hallmark Finance Corporation, as Servicer
By
Name
Title
EXHIBIT A-1
DAILY SERVICER REPORT
Date of Report
Date of Deposit
GROSS NSF OTHER NETTING NET
1. DEPOSITS DELETIONS INTEREST DEPOSIT
-------- --------- -------- -------
Specify Other Netting Items:
The undersigned [Name of Servicer] (the "Servicer") hereby
certifies that this report complies with the requirements of, and is
being delivered pursuant to, Section 2.10(a) of the Premium Receivable
Servicing Agreement (the "Servicing Agreement") dated as of
________________, 199__ by and among FPF and the Servicer. Capitalized
terms used and not otherwise defined herein shall have the meaning
ascribed to such terms in the Servicing Agreement.
Dated: [NAME OF SERVICER]
By
Name
Title
EXHIBIT A-2
MONTHLY SERVICER REPORT
[To Be Provided]
The undersigned [Name of Servicer] (the "Servicer") hereby
certifies that this report complies with the requirements of, and is
being delivered pursuant to, Section 2.10(a) of the Premium Receivable
Servicing Agreement (the "Servicing Agreement") dated as of
________________, 199__ by and among FPF and the Servicer. Capitalized
terms used and not otherwise defined herein shall have the meaning
ascribed to such terms in the Servicing Agreement.
Dated: [NAME OF SERVICER]
By
Name
Title
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
Section 1. Representations and Warranties of the Servicer
with Respect to Section 4.01 of the Premium Receivable Servicing
Agreement.
(a) Power and Authority. The Servicer has the power and
authority to execute and deliver the Premium Receivable Servicing
Agreement and to carry out the terms thereof; there are no
injunctions, writs, restraining orders or any other order of any
nature which adversely affects the Servicer's performance of the
Premium Receivable Servicing Agreement or any transactions
contemplated thereby; and no consent, approval or authorization
which has not been obtained is required for the consummation by
the Servicer of the transactions contemplated by the Premium
Receivable Servicing Agreement.
(b) No Violation. The consummation of the transactions
contemplated by the Premium Receivable Servicing Agreement and the
fulfillment of the terms thereof do not conflict with, result in
any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of the Servicer, or any
indenture, agreement or other instrument to which the Servicer is
a party or by which it or its properties is bound; nor result in
the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument; nor violate any applicable laws, rules, regulations or
orders regarding the conduct of the Servicer's business or the
ownership of its properties; nor violate any law or any order,
rule or regulation applicable to the Servicer of any court or of
any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the
Seller or its properties except, in each case, for such
violations, conflicts, breaches, Liens and defaults which could
not, in the reasonable judgment of the Servicer, have an adverse
effect on the condition (financial or otherwise) of the Servicer,
any Premium Receivable or the Servicer's obligations under the
Premium Receivable Servicing Agreement.
(c) Ability to Perform. There has been no impairment in the
ability of Servicer to perform its obligations under the Premium
Receivable Servicing Agreement.
(d) Financial Statements. The Servicer's financial
statements dated as of December 31, 1998, as delivered to FPF and
the financial statements of the Servicer to be delivered pursuant
to Section 2.11 of this Servicing Agreement, present or will
present fairly, in all material respects, the information
presented therein, and no material adverse change has occurred in
the Servicer's financial status since the date thereof.
(e) No Material Liabilities. The Servicer does not have
material liabilities or obligations other than those disclosed in
the financial statements referred to in subparagraph (d) above or
for which adequate reserves are reflected in such financials.
(f) No Material Misstatements or Omissions. No information,
certificate of an officer, statement furnished in writing or
report delivered to FPF by the Servicer contains any untrue
statement of a material fact or omits a material fact necessary to
make such information, certificate, statement or report not
misleading; provided, that the Servicer makes no representation or
warranty with respect to any information incorporated into or
forming the basis of any officer's certificate, information,
statement or report provided by the Servicer that is provided to
the Servicer by any other Person.
(g) Capability to Perform. The Servicer has the knowledge,
the experience and the systems, financial and operational capacity
available to timely perform each of its obligations under the
Premium Receivable Servicing Agreement.
(h) Other Agreements. The Servicer is not a party to any
indenture, loan or credit agreement, lease or other instrument or
agreement which is likely to have a material adverse effect on the
business, properties, assets, operations or operation, financial
or otherwise, of the Servicer or the ability of the Servicer to
perform its obligations under this Servicing Agreement.
(i) No Material Adverse Change. No material adverse change
has occurred in the business, properties, operating results,
prospects, assets, operations or condition, financial or
otherwise, of the Servicer since the date of the financial
statements referred to in subparagraph (d) above.
Section 2. Representations and Warranties with Regard to
Section 4.01 and 4.02 of the Premium Receivable Servicing Agreement.
(References in this Section 2 to "such Person" refer to the Person
making the representation and warranty pursuant to the Premium
Receivable Servicing Agreement.)
(a) Organization, Etc. Such Person is duly organized and is
validly existing as a corporation or limited liability company, as
the case may be, in good standing under the laws of the state of
its organization with full power and authority to execute and
deliver the Premium Receivable Servicing Agreement and to perform
the terms and provisions thereof.
(b) Due Qualification. Such Person is duly qualified to do
business as a foreign business entity in good standing, and has
obtained all required licenses and approvals, if any, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualifications except those
jurisdictions in which failure to be so qualified would not have
an adverse effect on the business or operations of such Person or
any Premium Receivable.
(c) Due Authorization. The execution, delivery and
performance by such Person of the Premium Receivable Servicing
Agreement have been duly authorized by all necessary action of
such Person, do not require any approval or consent of any
governmental agency or authority, do not and will not conflict
with any provision of its constituent documents, and do not and
will not conflict with or result in a breach which would
constitute (with or without notice or lapse of time) a default
under any agreement binding upon or applicable to it or its
property, or any law or governmental regulation or court decree
applicable to it or its property.
(d) No Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body
is presently pending, or threatened, against such Person or its
properties, which, if adversely determined could, in the
reasonable opinion of such Person, have an adverse effect on the
transactions contemplated by the Premium Receivable Servicing
Agreement or on such Person's ability to perform any of its
obligations thereunder.
(e) Enforceability. The Premium Receivable Servicing
Agreement constitutes the valid, legal and binding obligation of
such Person, enforceable against such Person in accordance with
the terms thereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the
enforcement of creditor's rights generally and to general
principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
Section 3. Survival of Representations and Warranties. The
representations and warranties set forth in this Exhibit B shall
survive the date of the Premium Receivable Servicing Agreement. Upon
discovery of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written
notice to the other party thereto; provided, however, that failure to
give such notice shall not affect the rights of such other parties with
respect to such breach.
EXHIBIT C
POWER OF ATTORNEY
Hallmark Finance Corporation, a corporation organized and existing
under the laws of the State of Texas (the "Servicer"), hereby grants to
FPF, INC. ("FPF") pursuant to that certain Premium Receivable Servicing
Agreement, dated as of _____________ ___, 199_, among the Servicer and
FPF, Inc., as the same may be amended or otherwise modified from time
to time (the "Servicing Agreement"), an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take any
and all actions at the option of FPF or its assigns at any time after
the occurrence and during the continuance of any Event of Servicing
Default, in the name of the Servicer or its assigns, to execute such
documents or instruments and to do and accomplish all other acts or
things necessary or appropriate to effect the transfer of servicing
rights under the Servicing Agreement.
Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed to such terms in the Servicing Agreement.
IN WITNESS WHEREOF, the undersigned a duly authorized officer of
[Name of Servicer] hereunto sets his hand this _______ day of
__________, 199_.
Hallmark Finance Corporation
By
Name
Title
STATE OF ___________ )
) ss:
COUNTY OF __________ )
BE IT REMEMBERED, that on this ___ day of ____________, 199_,
before me the undersigned, a Notary Public in and for the County and
State aforesaid, came ______________, a _________________ of Hallmark
Finance Corporation, a corporation duly organized, incorporated and
existing under and by virtue of the laws of Texas, who is personally
known to me to be such officer, and who is personally known to me to be
the same person who executed, as such officer, the within instrument on
behalf of said corporation, and such person duly acknowledged the
execution of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Notary Public
My commission expires:
EXHIBIT A-1 FORM OF SERVICER'S DAILY REPORT
EXHIBIT A-2 FORM OF SERVICER'S MONTHLY REPORT
EXHIBIT B REPRESENTATIONS AND WARRANTIES
EXHIBIT C POWER OF ATTORNEY
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS 1
ARTICLE II
ADMINISTRATION AND SERVICING OF PREMIUM RECEIVABLES
Section 2.01...Appointment and Duties of Servicer 3
Section 2.02...Collection of Premium Receivable Payments 3
Section 2.03...Past-Due Premium Receivables; Cancelled Premium
Receivables 4
Section 2.04...Defaulted Premium Receivables 4
Section 2.05...Maintenance of Interests in Premium Receivables 5
Section 2.06...Covenants of Servicer 5
Section 2.07...Reacquisition of Premium Receivables Upon Breach of
Representations or Warranties 5
Section 2.08...Premium Receivable Servicing Fees 6
Section 2.09...Servicer's Certificate as to Compliance 6
Section 2.10...Reporting Obligations; Inspection and Audit Rights 7
Section 2.11...Financial Statements and Other Reports 7
Section 2.12...Costs and Expenses 9
Section 2.13...Responsibility for Ownership Interests 9
Section 2.14...Documents Held by FPF; Documents Held by the
Servicer; Indication of FPF Ownership 9
Section 2.15...Maintenance of Computer Systems 10
Section 2.16...Standard of Care 10
Section 2.17...Enforcement 11
Section 2.18...Fidelity Bond or Errors and Omissions Insurance 11
ARTICLE III
ACCOUNTS; COLLECTIONS
Section 3.01...Accounts 11
Section 3.02...Collections 12
Section 3.03...Collections Account Depository 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01...Representations and Warranties of the Servicer 12
Section 4.02...Representations and Warranties of FPF 12
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ARTICLE V
DEFAULT, REMEDIES AND INDEMNITY
Section 5.01...Events of Servicing Default 12
Section 5.02...Remedies 13
Section 5.03...Indemnity by the Servicer 14
Section 5.04...Waiver of Events of Servicing Default 15
Section 5.05...Survival 15
ARTICLE VI
TERMINATION OF SERVICING AGREEMENT
Section 6.01...Term 15
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01...No Offset 15
Section 7.02...Powers of Attorney 15
Section 7.03...Assignments; Third Party Beneficiaries 16
Section 7.04...Amendment 16
Section 7.05...Waivers 16
Section 7.06...Notices 16
Section 7.07...Governing Law 17
Section 7.08...Jurisdiction 17
Section 7.09...Waiver of Jury Trial 17
Section 7.10...Severability of Provisions 17
Section 7.11...Counterparts 18
Section 7.12...Captions 18
Section 7.13...Legal Holidays 18
Section 7.14...Advice from Independent Counsel 18
Section 7.15...Judicial Interpretation 18
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EXHIBIT A-1 FORM OF SERVICER'S DAILY REPORT
EXHIBIT A-2 FORM OF SERVICER'S MONTHLY REPORT
EXHIBIT B REPRESENTATIONS AND WARRANTIES
EXHIBIT C POWER OF ATTORNEY