Execution Copy
U.S. $50,000,000
RECEIVABLES LOAN AND SECURITY AGREEMENT
Dated as of May 25, 1995
Among
BFICP CORPORATION
as the Borrower
and
▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
as the Servicer
and
HOLLAND LIMITED SECURITIZATION, INC.
as a Lender
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL MARKETS, INC.
as the Agent
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I.
DEFINITIONS............................... 1
SECTION 1.01. Certain Defined Terms........................................ 1
SECTION 1.02. Other Terms.................................................. 25
SECTION 1.03. Computation of Time Periods.................................. 25
ARTICLE II.
THE RECEIVABLES FACILITY....................... 25
SECTION 2.01. Borrowings................................................... 25
SECTION 2.02. The Initial Borrowing and Subsequent Borrowings.............. 25
SECTION 2.03. Termination or Reduction of the Borrowing Limit.............. 26
SECTION 2.04. Selection of Fixed Periods................................... 26
SECTION 2.05. Settlement Procedures........................................ 27
SECTION 2.06. Spread Account............................................... 30
SECTION 2.07. Special Settlement Procedures................................ 31
SECTION 2.08. Payments and Computations, Etc............................... 31
SECTION 2.09. Fees......................................................... 32
SECTION 2.10. Increased Costs; Capital Adequacy; Illegality................ 33
SECTION 2.11. Taxes........................................................ 34
SECTION 2.12. Assignment of the Originator Sale Agreement.................. 36
SECTION 2.13. Payment of Support Obligations............................... 37
SECTION 2.14. Grant of a Security Interests................................ 38
SECTION 2.15. Evidence of Debt............................................. 39
ARTICLE III.
CONDITIONS OF LOANS.......................... 39
SECTION 3.01. Conditions Precedent to Initial Borrowing.................... 39
SECTION 3.02. Conditions Precedent to All Borrowings and Remittances
of Collections.............................................. 39
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES.................... 40
SECTION 4.01. Representations and Warranties of the Borrower............... 40
SECTION 4.02. Representations and Warranties of the Lender................. 45
ARTICLE V.
GENERAL COVENANTS OF THE BORROWER.................... 46
SECTION 5.01. General Covenants............................................ 46
SECTION 5.02. Financial Covenants.......................................... 51
ii
Section Page
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ARTICLE VI.
ADMINISTRATION, COLLECTION AND
MONITORING OF RECEIVABLES....................... 52
SECTION 6.01. Appointment and Designation of the Servicer.................. 52
SECTION 6.02. Collection of Receivables by the Servicer; Extensions
and Amendments of Receivables............................... 53
SECTION 6.03. Distribution and Application of Collections.................. 53
SECTION 6.04. Segregation of Collections................................... 54
SECTION 6.05. Other Rights of the Agent.................................... 54
SECTION 6.06. Records; Audits.............................................. 54
SECTION 6.07. Periodic Settlement Reporting................................ 55
SECTION 6.08. Collections and Lock-Boxes................................... 56
SECTION 6.09. UCC Matters; Protection and Perfection of Pledged Assets..... 56
SECTION 6.10. Obligations of the Borrower With Respect to Receivables...... 57
SECTION 6.11. Rights of obligors and Release of Contract Files............. 58
SECTION 6.12. Recordation of Assignments................................... 59
SECTION 6.13. Costs and Expenses........................................... 59
SECTION 6.14. Servicer Representations and Warranties...................... 59
SECTION 6.15. Additional Covenants of the Servicer......................... 61
SECTION 6.16. Standby Servicer............................................. 63
SECTION 6.17. The Servicer not to Resign................................... 63
SECTION 6.18. Releases..................................................... 63
ARTICLE VII.
EVENTS OF DEFAULT........................... 65
SECTION 7.01. Events of Default............................................ 65
ARTICLE VIII.
SERVICER DEFAULTS........................... 69
SECTION 8.01. Servicer Defaults............................................ 69
SECTION 8.02. Appointment of Successor..................................... 71
SECTION 8.03. Certain Matters Affecting the Successor Servicer............. 72
ARTICLE IX.
INDEMNIFICATION............................ 73
SECTION 9.01. Indemnities by the Borrower.................................. 73
SECTION 9.02. Indemnities by the Servicer.................................. 75
ARTICLE X.
MISCELLANEOUS.............................. 77
SECTION 10.01. Amendments and Waivers....................................... 77
SECTION 10.02. Notices, Etc................................................. 78
SECTION 10.03. No Waiver; Remedies.......................................... 78
iii
Section Page
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SECTION 10.04. Binding Effect; Assignability................................ 78
SECTION 10.05. Term of this Agreement....................................... 79
SECTION 10.06. Governing Law; Jury Waiver................................... 79
SECTION 10.07. Costs, Expenses and Taxes.................................... 79
SECTION 10.08. No Proceedings............................................... 80
SECTION 10.09. Recourse Against Certain Parties............................. 80
SECTION 10.10. Execution in Counterparts; Severability; Integration......... 81
iv
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Approved Developments
SCHEDULE II Contract Schedule
SCHEDULE III Description of Credit and Collection Policy
SCHEDULE IV Developments
SCHEDULE V VOI Regimes
SCHEDULE VI Condition Precedent Documents
SCHEDULE VII Lock-Box Banks
SCHEDULE VIII Tradenames, Fictitious Names and "Doing Business
As" Names
SCHEDULE IX Environmental Issues
EXHIBITS
EXHIBIT A Form of Commercial Paper Settlement Report
EXHIBIT B Form of Contract Assignment
EXHIBIT C Form of Assignment of Mortgage
EXHIBIT D Form of Developer Sale Agreement
EXHIBIT E Form of Monthly Settlement Report
EXHIBIT F Form of Borrowing Date/Spread Account Surplus
Settlement Report
EXHIBIT G "Limited Purpose" Provisions of Borrower's
Certificate of Incorporation
EXHIBIT H Form of Officer's Release Certificate
v
THIS RECEIVABLES LOAN AND SECURITY AGREEMENT (the "Agreement") is
made as of May 25, 1995, among:
(1) BFICP CORPORATION, a Delaware corporation (the "Borrower");
(2) ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD., a Delaware corporation
(sometimes referred to herein as the "Originator"), as the
"Servicer" (as defined herein);
(3) HOLLAND LIMITED SECURITIZATION, INC., a Delaware corporation
("HLS"); and
(4) INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL MARKETS, INC. ("ING
Capital"), as agent (the "Agent").
IT IS AGREED as follows;
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized terms
used throughout this Agreement are defined above or in this Section 1.01.
(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).
"Adverse Claim" means a lien, security interest, charge, encumbrance
or other right or claim of any Person (other than, with respect to the
Pledged Assets, any lien, security interest, charge, encumbrance or other
right or claim in favor of the Lender (or the Agent on behalf of the
Lender)).
"Affected Party" has the meaning assigned to that term in Section
2.10.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person.
"Agent's Account" means a subaccount within a special account
(account number 550-023569 at Chemical Bank, Newark, New Jersey) in the name of
the Lender, the Agent or the Collateral Trustee, as from time to time designated
by the Agent by notice to the Borrower and the Servicer.
"Agent's Bank" means Chemical Bank.
"Agent's Fee" has the meaning assigned to that term in Section
2.09(a).
"Agreement" means this Receivables Loan and Security Agreement, as
the same may be amended, restated, supplemented or otherwise modified from time
to time hereafter.
"Aggregate Concentration Limit" means at any time, (a) for the
obligors of any one Approved Development, (i) on and after the date hereof but
before the first anniversary hereof, an amount equal to 10t of the Gross
Eligible Receivables Balance at such time, (ii) an and after the first
anniversary hereof but before the second anniversary hereof, an amount equal to
7.5% of the Gross Eligible Receivables Balance at such time, and (iii) Oil and
after the second anniversary hereof, an amount equal to 10% of the Gross
Eligible Receivables Balance at such time and (b) for the obligors of any other
Development, an amount equal to 3% of the Gross Eligible Receivables Balance at
such time.
"Aggregate Large Receivables Limit" means at any time an amount
equal to 5% of the Gross Eligible Receivables Balance at such time.
"Alternative Rate" means, with respect to any Fixed Period for all
Loans allocated to such Fixed Period, an interest rate per annum equal to sum of
the Base Rate plus 2.0%.
"Approved Development" means any Development that is designated as
an Approved Development on Schedule I and any other Development that (a) was
developed by a Developer that satisfies the Originator's Developer underwriting
standards (a copy of which is attached as an annex to Schedule I), (b) has been
inspected by the Agent or a representative of the Agent and (c) the Agent has
designated (in a writing delivered to the Borrower from time to time) as an
Approved Development; provided, however, that any designation by the Agent of a
Development as an "Approved Development" may be withdrawn by the Agent in its
sole discretion in a writing delivered to the Borrower at any time that the
Development Default Ratio for such Development shall have exceeded 2.O% for
three consecutive months ad any such withdrawal shall be effective commencing on
the first day of the month immediately succeeding the month in which such notice
is delivered to the Borrower.
"Assignment and Acceptance" means an assignment and acceptance
entered into by the Lender and an assignee pursuant to Section 10.04.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the arithmetic average of the rates of interest publicly
announced by The Chase Manhattan Bank, N.A., Citibank, N.A. and ▇▇▇▇▇▇ Guaranty
Trust Company of New York (or their respective successors) as their respective
prime commercial lending rates (or, as to any such bank that does not announce
such a rate, such bank's "base,, or other rate determined by the Lender to be
the equivalent rate announced by such bank), except that, if any such bank
shall, for any period, cease to announce publicly its prime commercial lending
(or equivalent) rate, the Agent shall, during such period, determine the "Base
Rate", based upon the prime commercial lending (or equivalent) rates announced
publicly by the other such banks or, if each such bank ceases to announce
publicly its prime commercial lending (or equivalent) rate, based upon the prime
commercial lending (or
2
equivalent) rates announced publicly by other banks reasonably acceptable to the
Borrower. The prime commercial lending (or equivalent) rates used in computing
the Base Rate are not intended to be the lowest rates of interest charged by
such banks in connection with extensions of credit to debtors. The Base Rate
shall change as and when such banks, prime commercial lending (or equivalent)
rates change.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in 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.
"Borrowing" means a borrowing of Loans under this Agreement.
"Borrowing Base Deficiency" means at any time that the Required
overcollateralization Percentage exceeds the overcollateralization Percentage,
an amount equal to the remainder of (a) the product of (i) the sum of loot plus
the Required Overcollateralization Percentage multiplied by (ii) the Facility
Amount minus (b) the sum of (i) the Pledged Receivables Balance plus (ii)
amounts on deposit in the Spread Account plus (iii) the amount of Collections on
deposit in the Agent's Account to be applied in accordance with Section 2.05 on
the next Settlement Date.
"Borrowing Base Surplus" means at any time that the
Overcollateralization Percentage exceeds the Required Overcollateralization
Percentage, an amount equal to the remainder of (a) the sum of (i) the Pledged
Receivables Balance plus (ii) amounts on deposit in the Spread Account plus
(iii) the amount of Collections on deposit in the Agent's Account to be applied
in accordance with Section 2.05 on the next Settlement Date minus (b) the
product of (i) the sum of 100% plus the Required Overcollateralization
Percentage multiplied by (ii) the Facility Amount.
"Borrowing Date" means, with respect to any Borrowing, the date on
which such Borrowing is funded, which date, other than in the case of the
initial Borrowing, shall be a Subsequent Borrowing Date.
"Borrowing Date/Spread Account Surplus Settlement Report" means a
report, in substantially the form of Exhibit F, furnished by the Servicer to the
Agent for the Lender pursuant to Section 6.07(c).
"Borrowing Limit" means, at any time, $50,000,000 as such amount may
be adjusted from time to time pursuant to Section 2.03 (the "Maximum Borrowing
Limit"), less the aggregate Capital outstanding under the Receivables Purchase
Agreement; provided, however, that at all times, on or after the Termination
Date, the "Borrowing Limit" shall mean the aggregate outstanding Loans and
provided, further, that the Maximum Borrowing Limit shall in no event exceed the
aggregate commitments of the lenders providing credit enhancement and liquidity
support to the Lender in connection with the transactions contemplated by this
Agreement.
"Business Day" means a day of the year other than a Saturday or a
Sunday on which banks are not authorized or required to close in New York City.
3
"Capital" has the meaning assigned to such term in the Receivables
Purchase Agreement.
"Capital Limit" means, at any time, an amount equal to the quotient
of (a) the sum of (i) the Pledged Receivables Balance at such time, plus (ii)
the aggregate amount at the time an deposit in the Spread Account, plus (iii)
the amount of Collections on deposit in the Agent's Account to be applied in
accordance with Section 2.05 on the next Settlement Date divided by (b) 100%
plus the Minimum Overcollateralization Percentage at such time.
"Carrying Cost Reserve Amount" means, with respect to a Business Day
that is not a Settlement Date, the sum of (a) the Borrowing Base Deficiency as
of such Business Day (or as of the date of the related Borrowing Date/Spread
Account Surplus Settlement Report) Plus (b) aggregate accrued and unpaid (i)
Yield, (ii) Liquidation Fees, (iii) Facility Fee, (iv) Servicer Fee and (v)
obligations of the Borrower to the Lender hereunder other than the amounts
described in the foregoing clauses (i) (iv) (collectively, the fees and amounts
described in the foregoing clauses (i)-(v), the "Carrying Costs"), each as of
such Business Day (or as of the date of the related Borrowing Date/Spread
Account Surplus Settlement Report) plus (c) the aggregate Carrying Costs that
will accrue from such Business Day (or, if used as the basis for the
calculations in the preceding clause (b), from the date of the related Borrowing
Date/Spread Account Surplus Settlement Report) and be payable pursuant to
Section 2.05 on the next Settlement Date after such Business Day (after giving
effect to any Borrowing to be made on such Business Day); provided, that, for
purposes of the foregoing, Yield that will accrue from such date shall be
calculated assuming that all Loans allocated to a Fixed Period commencing on or
after such day will bear interest at the Alternative Rate minus the per annum
rate at which the usage fee payable to the Lender (either directly or through
the Agent) is calculated pursuant to the terms of the fee letter executed by the
Borrower and the Lender.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Trustee" means BankAmerica National Trust Company and
any successor collateral agent and trustee with respect to the commercial paper
and the liquidity and credit support providers of the Lender.
"Collection Date" means the date following the Termination Date on
which (a) the aggregate outstanding Loans have been paid in full and all Yield
and all other obligations have been paid in full and (b) the outstanding
"Capital" under the Receivables Purchase Agreement has been reduced to zero and
Lender and the Agent have received all of the other amounts payable to them
under the Receivables Purchase Agreement or any other agreement, excluding,
however, this Agreement, executed pursuant thereto or in connection therewith.
"Collections" means, (a) with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and any Collection of such Receivable deemed to have been received
pursuant to Section 2.07, (b) any amounts paid to the Borrower (or the Agent or
any
4
Lender or assignees thereof) pursuant to the terms of the Originator Sale
Agreement with respect to any Pledged Receivables, (c) any amounts paid to the
Borrower (or the Agent or any Lender or assignees thereof) pursuant to the terms
of any Developer Sale Agreements with respect to any Pledged Receivables and (d)
any amounts paid to the Lender under any Purchased Rate Cap that are ratably
allocable to this Agreement (as opposed to the Receivables Purchase Agreement)
based on outstanding Capital and principal amount of Loans.
"Commercial Paper Settlement Report" means a report, in
substantially the form of Exhibit A, furnished by the Servicer to the Agent for
the Lender pursuant to Section 6.07(d).
"Concentration Limit" means at any time, for the Obligors of any one
Development, the portion of the Aggregate Concentration Limit for such Obligors
that is specified by the Borrower on the latest Monthly Settlement Report as
being allocated to this Agreement (as opposed to the Receivables Purchase
Agreement); the sum of the Concentration Limits for the Obligors of any one
Development under this Agreement and the Receivables Purchase Agreement shall
equal the Aggregate Concentration Limit for such Obligors. If the Borrower fails
to provide the Servicer with an appropriate allocation of an Aggregate
Concentration Limit for the Obligors of a Development, the Concentration Limit
under this Agreement for such Obligors will equal zero and the "Concentration
Limit" under the Receivables Purchase Agreement for such Obligors shall equal
the Aggregate Concentration Limit for such Obligors.
"Contract" means an interval ownership or lot contract agreement and
installment note relating to the sale of one or more VOI's or Lots to an
Obligor, together with any separate obligor's installment note for the payment
of the balance of the purchase price thereof.
"Contract Conveyance Documents" means, with respect to each Pledged
Contract, the following documents:
(a) an original assignment or assignments, in recordable form, of
such Contract and certain related property from the Originator to the
Borrower and subsequent assignment of such Contract and related property
from the Borrower to HLS, and the subsequent collateral assignment to the
Collateral Trustee, in one of the forms attached to this Agreement as
Exhibit B;
(b) if the related VOI or Lot has been deeded to the Obligor, an
original Assignment or Assignments of mortgage, in recordable form,
assigning any Contract Mortgage related to such Contract from the
Originator to the Borrower and subsequently collaterally assigning such
Contract Mortgage from the Borrower to HLS, and subsequently collaterally
assigning such Contract Mortgage from HLS to the Collateral Trustee, in
one of the forms attached to this Agreement as Exhibit C;
(c) if the Contract financed the purchase by the obligor of Credit
Life Insurance, an original acknowledgment signed by the issuer of any
Credit Life insurance of the assignment of the Borrower's rights therein
pursuant to this Agreement in the form delivered to the Collateral Trustee
on the initial Borrowing Date; and
5
(d) in the case of any Subsequent Borrowing Date, any such other
documents, instruments or agreements as may be required by the Agent in
order to more fully effect the transfer of the Pledged Receivables and any
related Pledged Assets.
"Contract Documents" means the Contract and all papers and documents
related to a Contract, including all applicable promissory notes endorsed in
blank, the original of any related recorded or unrecorded Contract Mortgage and
a copy of any recorded or unrecorded warranty deed transferring legal title to
the related VOI or Lot to the Obligor, tax receipts, insurance policies,
insurance premium receipts, ledger sheets, payment records, insurance claim
files and correspondence, repossession files and correspondence, the original of
any related assignment, modification or assumption agreement or, if such
original is unavailable, a copy thereof, current and historical computerized
data files, and all other papers and records of whatever kind or description,
whether developed or originated by the Originator, the Borrower or another
Person, required to document, service or enforce a Contract.
"Contract File" means the Contract Documents pertaining to a
particular Pledged Contract and any additional amendments, supplements,
extensions, modifications or waiver agreements required to be added to the
Contract File pursuant to this Agreement or Credit and Collection Policy.
"Contract Mortgage" means any mortgage, deed of trust, purchase
money deed of trust or deed to secure debt granted by an obligor to the
originator of the Contract encumbering the related VOI or Lot to secure Payments
or other obligations under such Contract
"Contract Rate" means, with respect to a Pledged Contract, the
annual fixed rate at which interest accrues on such Pledged Contract.
"Contract Schedule" means the Pledged Contract list, attached hereto
as Schedule II, as amended from time to time to add new Pledged Contracts and to
remove certain Pledged Contracts, in each case in accordance with this
Agreement, which list shall set forth the following information with respect to
each contract therein as of the applicable date:
(a) the Contract number;
(b) the obligor's name;
(c) the Development in which the related VOI or Lot is located;
(d) the current Contract Rate;
(e) whether the Obligor is covered by a policy of Credit Life
Insurance and the amount of any insurance premium for such policy financed
pursuant to the Contract;
(f) the original term of the Contract;
6
(g) the original and current Outstanding Balance (as of the
applicable Cut-Off Date);
(h) the amount of the Payments on the Contract;
(i) the original purchase price of such Contract paid or to be paid
by the Originator under the applicable Developer sale Agreement; and
(j) whether the related VOI or Lot has been deeded to the obligor.
"CP Rate" means, with respect to any Fixed Period for all Loans
allocated to such Fixed Period, the rate equivalent to the rate (or if more than
one rate, the weighted average of the rates) at which commercial paper notes of
the Lender having a term equal to such Fixed Period and to be issued to fund the
applicable Loans by the Lender may be sold by any placement agent or commercial
paper dealer selected by the Lender, as agreed between each such agent or dealer
and the Lender and notified by the Lender to the Agent and the Servicer;
provided, however, if the rate (or rates) as agreed between any such agent or
dealer and the Lender with regard to any Fixed Period for the applicable Loans
is a discount rate (or rates), the "CP Rate" for such Fixed Period shall be the
rate (or if more than one rate, the weighted average of the rates) resulting
from converting such discount rate (or rates) to an interest-bearing equivalent
rate per annum.
"Credit and Collection Policy" means those credit and collection
policies and practices of the Servicer and the originator relating to
Developers, Contracts and Receivables described in Schedule III, as modified in
compliance with this Agreement.
"Credit Life Insurance" means any policy of insurance acquired by
the obligor providing for payment of the principal amount outstanding under a
Contract upon the Obligor's death.
"Credit Life Insurance Proceeds" means Proceeds of, or any unearned
premium recovered in respect of, any Credit Life Insurance, which shall
constitute Collections.
"Cut-Off Date" means (a) with respect to the initial Borrowing, May
1, 1995, or (b) with respect to each Subsequent Borrowing Date, such date as the
Agent and the Borrower shall mutually agree.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (e) obligations secured by an Adverse Claim
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations and (f) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise
7
to assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred-to in clauses (a) through (e) above.
"Default Ratio" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month by dividing (a) the aggregate
Outstanding Balance of all Pledged Receivables and Pledged Receivables that
became Defaulted Receivables at any time during the month then ending plus
(without duplication) the amount of all Receivables which were written off the
books of the Borrower during such month, by (b) the average aggregate Gross
Eligible Receivables Balance excluding all Defaulted Receivables) during such
month.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, exclusive of any advances made by the Servicer or any
Person other than the Obligor, remains unpaid for more than 90 days from the
original due date for such payment, (b) as to which the obligor thereof has
taken any action, or suffered any event to occur, of the type described in
Section 7.01(f), or (c) which, consistent with the Credit and Collection Policy,
has been or should be written off the Borrower's books as uncollectible.
"Defective Contract" has the meaning assigned to such term in
Section 6.18 of this Agreement.
"Defective Contract Release Date" has the meaning assigned to such
term in Section 6.18 of this Agreement.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (a) the sum of
the aggregate Outstanding Balance of all Pledged Receivables that were
Delinquent Receivables as of such date, by (b) the aggregate Outstanding Balance
of all Pledged Receivables as of the last day of such month.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and (a) as to which any payment or part thereof, exclusive of any
advances made by the Servicer or any Person other than the obligor, remains
unpaid for more than 30 days from the original due date for such payment or (b)
which, consistent with the Credit and Collection Policy, has been or should be
classified as delinquent by the Servicer.
"Depository Institution" means a depository institution or trust
company, incorporated under the laws of the United States or any State thereof,
that is subject to supervision and examination by federal and/or state banking
authorities.
"Developer" means a Person from which the Originator purchased
Receivables and related assets pursuant to a "Contract of Sale of Time Share
Receivables with Recourse" substantially in the form of Exhibit D or in such
other form as may be acceptable to the Agent (each a "Developer Sale
Agreement").
"Developer Mortgage" means any mortgage or deed of trust or deed to
secure debt granted by a Developer to the Originator to secure the Developer's
obligations under a Developer
8
Sale Agreement between the Originator and such Developer encumbering the related
Development.
"Developer Sale Agreement" has the meaning assigned to that term in
the definition of "Developer."
"Development Default Ratio" means at any time, for the Pledged
Receivables and Purchased Receivables related to a Development, the ratio
(expressed as a percentage) computed as of the last day of each calendar month
by dividing (a) the aggregate Outstanding Balance of all such Pledged
Receivables and Purchased Receivables that became Defaulted Receivables at any
time during the month then ending plus (without duplication) the amount of all
Receivables related to such Development which were written off the books of the
Borrower during such month, by (b) the average aggregate Outstanding Balance of
all Pledged Receivables and Purchased Receivables (excluding all Defaulted
Receivables) during such month, in each case related to such Development.
"Developments" means each resort or development listed on Schedule
IV to this Agreement, as subsequently amended from time to time with the written
consent of the Agent.
"Discount Amount" means at any time an amount equal to:
▇▇ - ▇▇
----
1.05
where:
BL = the Borrowing Limit in effect on the date of determination.
"Eligible Assignee" means each of ING Capital, any receivables
investment vehicle sponsored by ING Capital or any of its Affiliates, any
financial institution providing credit enhancement or liquidity support to the
Lender in connection with the transactions contemplated by this Agreement and
any Affiliate of any of the foregoing; provided, that, no such financial
institution providing credit enhancement or liquidity support to the Lender that
is not an Affiliate of ING Capital shall be an Eligible Assignee without the
prior written consent of the Borrower, which consent shall not be unreasonably
withheld.
"Eligible Contract" means, except as otherwise approved by the
Agent, a Contract:
(a) (i) where the related VOI or Lot is located in a Development,
(ii) where the unit for a related VOI is complete and ready for occupancy
and is not in need of maintenance or repair, except for ordinary, routine
maintenance and repairs which are not substantial in nature or cost and
where such unit contains no structural defects materially affecting its
value and is in good tenantable condition, (iii) where the related VOI
Regime is contiguous to a dedicated, physically-open, all-weather street,
and is adequately serviced by public (or private if complying with all
material and applicable local laws, regulations and ordinances) water and
sewer systems and utilities, (iv) where the related VOI Regime is not in
need of maintenance or repair, except for ordinary, routine maintenance
and repairs which are not
9
substantial in nature or cost and where such VOI Regime contains no
structural defects materially affecting its value, and (v) where there is
no legal, judicial or administrative proceeding pending or threatened for
the total or partial condemnation of any VOI Regime which would have a
material adverse effect on the value of the related VOI Regime or unit;
(b) where the rights of the Obligor thereunder are subject to
declarations, covenants and restrictions of record affecting the related
VOI Regime;
(c) as to which the Borrower has a valid ownership interest in the
related VOI or Lot subject only to (i) the interest therein of the
Obligor, (ii) the lien of unbilled and unpaid assessments, (iii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, such exceptions appearing of record being
consistent with the normal business practices of the Originator or
specifically disclosed in the applicable land sales registrations filed
with the applicable regulatory agencies, and (iv) other matters to which
properties of the same type as those underlying the Contracts are commonly
subject which do not materially interfere with the benefits of the
security intended to be provided by such Contract;
(d) where (i) if the related VOI or Lot has been deeded to the
Obligor of the related Contract, on the date on which the Receivables
arising under such Contract were Pledged hereunder, the Borrower had a
valid and enforceable first lien Contract Mortgage on such VOI or Lot,
which Contract mortgage has been assigned to the Collateral Trustee for
the benefit of itself, the Agent and the Lender pursuant to the Contract
Conveyance Documents, (ii) if the related VOI or Lot has not been deeded
to the Obligor of the related Contracts, on the date on which the
Receivables arising under such Contract were Pledged hereunder, the
Developer had legal title to such VOI or Lot and the Borrower had an
equitable interest in such VOI or Lot underlying the related Contract,
which equitable interest has been assigned to the Collateral Trustee
pursuant to the Contract Conveyance Documents, and (iii) if any Contract
Mortgage is a deed of trust, a trustee, duly qualified under applicable
law to serve as such, had been properly designated in accordance with
applicable law and currently so serves;
(e) that has a Contract Rate that is equal to or greater than the
sum of (i) the thirty day commercial paper index rate set forth in the
most recent weekly statistical release designated H.15(519) published by
the Board of Governors of the Federal Reserve System (or any successor
publication) as of the applicable Cut-off Date with respect to the
Receivables arising under such Contract plus (ii) 3.45% (accruing on an
actuarial (pre-computed) basis);
(f) that provides for equal monthly Payments of principal or
principal and interest (except for the final monthly Payment which is no
greater than 110% of each preceding monthly Payment) which fully amortize
the related loan over its term;
(g) that requires the Obligor to pay the unpaid principal balance on
or before April 30, 2008 over an original term of not greater than 120
months and over a remaining
10
term (at the time of pledge to the Lender) of not greater than 84 months;
(h) where at least two Payments with respect to such Contract have
been received by the originator;
(i) which is not a Defective Contract;
(j) as to which, if the Contract financed the purchase by the
Obligor of Credit Life Insurance, (i) such policy is in full force and
effect and has been validly and effectively assigned by way of security,
pursuant to all applicable laws, rules and regulations, to the Collateral
Trustee, (ii) the full premium therefor has been paid, and (iii) the
insurance company issuing such policy is rated at least "All by A.M. Best
Company, Inc.;
(k) the underlying ownership interest which is the subject of such
Contract consists of (i) a fixed week, (ii) an undivided interest in fee
simple in a lodging unit or group of lodging units at a Development Agent
or (iii) such other interest or right with respect to a lodging unit or
group of lodging units at a Development that has been approved of by the
Agent in writing (including a right to use a lodging unit or group of
lodging units at a Development if approved of by the Agent in writing);
(l) which was originated and has been consistently serviced in
accordance with the Credit and Collection Policies;
(m) which has not been reserved against by the Originator or the
Borrower (except for purchase price amounts held back by the Originator
pursuant to the terms of a Developer Sale Agreement and for reserves
established by the Originator with respect to all Receivables);
(n) as to which the payment obligation of the Obligor is not subject
to any material dispute between the Obligor and any of the Developer, the
Borrower, the Servicer and/or the Originator;
(o) which arises from transactions in a jurisdiction where the
Originator is duly qualified to do business in such jurisdiction, if the
Originator is required to be qualified to do business in such
jurisdiction;
(p) which have not been canceled or terminated (regardless of
whether the Obligor thereof is legally entitled to do so) or declared
ineligible by any of the Borrower, the Servicer or the Originator, and
constitute legal, valid, binding and enforceable obligations of the
Obligors thereof fee from any dispute, offset, counterclaim or defense
whatsoever;
(q) where such Contract had a minimum equity of 10% at origination
(calculated using the Sales Price for such Contract and including in such
total equity any cash down payments and Payments made on any other
Contract which has been "traded in" in connection with the origination of
such Contract).
11
(r) the performance of which has been completed by the Borrower, the
related Developer and by all other parties other than the Obligor and
there are no executory obligations to be performed thereunder except by
the Obligor;
(s) as to which there is no default, breach, violation or event
permitting acceleration existing under the Contract and no event which,
with the giving of notice or the expiration of any grace or cure period or
both, would constitute such a default, breach, violation or event
permitting acceleration under such Contract and neither the Borrower nor
the originator has waived any such default, breach, violation or event
permitting acceleration without obtaining the prior written consent of the
Agent;
(t) where, if such Contract also financed a policy of Credit Life
Insurance: (i) the Borrower is the sole assignee of the sole beneficiary
of such policy; (ii) the Borrower has the power and authority to pledge
its interest as the assignee of the beneficiary of such policy, and it has
so pledged its interest to the Collateral Trustee pursuant to an effective
assignment; (iii) the Borrower has the sole power and authority to cancel
such policy in the event of nonpayment of such Contract and the sole right
to receive any unearned premium in the event of cancellation of such
policy; and (iv) the Borrower has the power and authority to assign its
right to receive any unearned premium with respect to such policy, and it
has so pledged its right to the Collateral Trustee pursuant to an
effective assignment; and
(u) where no payment or any part thereof due from the related
Developer to the Borrower, the Originator or any Affiliate of the
originator (whether pursuant to the related Developer Sale Agreement or
otherwise) remains unpaid past the original due date for such payment.
"Eligible Depository Institution" means a Depository Institution,
the short term unsecured senior indebtedness of which is rated at least A-1 by
S&P and F-1 by Fitch, if rated by Fitch.
"Eligible Developer Sale Agreement" means, except as otherwise
approved by the Agent, a Developer Sale Agreement:
(a) entered into with a Developer which is a United States resident
(unless otherwise approved of by the Agent in writing and each of S&P and
Fitch is notified in writing of such approval), is not an Affiliate of any
of the parties hereto, and is not a government or a governmental
subdivision or agency;
(b) payment obligations under which are denominated and payable only
in United States dollars in the United States;
(c) the assignment of which (including, without limitation, the sale
of an undivided percentage interest therein and the assignment of any
Related Security) does not contravene or conflict with any applicable
laws, rules or regulations or any contractual or
12
other restriction, limitation or encumbrance;
(d) which does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to 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
thereto is in violation of any such law, rule or regulation in any
material respect; and
(e) which satisfies all applicable requirements of the Credit and
Collection Policy.
"Eligible Receivable" means, at any time, a Receivable:
(a) the obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or a
governmental subdivision or agency;
(b) which is not a Defaulted Receivable or a Delinquent Receivable
and the obligor of which is not the Obligor of any Defaulted Receivables;
(c) unless pledged to secure the initial Borrowing, as to which no
payment or any part thereof has remained unpaid for more than 30 days from
the original due date for such payment on two or more separate occasions
and as to which no payment or any part thereof has remained unpaid for
more than 60 days from the original due date for such payment on one or
more occasions;
(d) which arises under an Eligible Contract and which was purchased
from a Developer under an Eligible Developer Sale Contract;
(e) (i) is denominated and payable only in United States dollars in
the United States and (ii) no portion of which is payable on account of
sales taxes;
(f) which arises in the ordinary course of the originator's
business;
(g) the assignment of which (including, without limitation, the sale
of an undivided percentage interest therein and the assignment of any
Related Security) does not contravene or conflict with any applicable
laws, rules or regulations or any contractual or other restriction,
limitation or encumbrance;
(h) which has not been compromised, adjusted or modified (including
by extension of time or payment or the granting of any discounts,
allowances or credits);
(i) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to 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 Contract related
thereto is in violation of any such law, rule
13
or regulation in any material respect;
(j) which satisfies all applicable requirements of the Credit and
Collection Policy;
(k) which, if originated prior to June 30, 1994, is insured by the
Generali Commercial Lines Policy dated June 13, 1993 (or a comparable
policy acceptable to the Agent) for a term not less than five years;
(l) which has been transferred by the Originator to the Borrower
pursuant to the Originator Sale Agreement; and
(m) which has an Outstanding Balance which is not greater than
$30,000.
"ERISA" means 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" means (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 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.
"Event of Default" has the meaning assigned to that term in Section
7.01.
"Facility Amount" means at any time the sum of (a) the face amount
of outstanding commercial paper notes of the Lender issued to fund Loans
hereunder plus (b) the amount of Loans allocated to Fixed Periods bearing
interest at the Alternative Rate plus (c) to the extent not already included in
the face amount of the outstanding commercial paper described in clause (a)
above, the accrued and unpaid Yield on the foregoing amounts described in
clauses (a) and (b) above, in each case at such time.
"Facility Fee" has the meaning assigned to that term in Section
2.09.
"Fitch" means Fitch Investors Service, L.P. (or its predecessor or
successors in interest) if and so long as it has rated and is continuing to rate
commercial paper notes of the Lender, and otherwise means such other nationally
recognized statistical rating organization as may be designated by the Agent.
"Fixed Period" for any outstanding Loans means (a) if Yield in
respect of all or any part thereof is computed by reference to the CP Rate, a
period of I to and including 90 days and (b) if Yield in respect thereof is
computed at the Alternative Rate, a period of 1 to and including 30 days, in
each case, as determined pursuant to Section 2.04.
"GAAP" means generally accepted accounting principles as in effect
from time to
14
time in the United States.
"Gross Eligible Receivables Balance" means, at any time, the
aggregate Outstanding Balance of Eligible Receivables which constitute Pledged
Receivables or that constitute Purchased Receivables under the Receivables
Purchase Agreement.
"Indemnified Amounts" has the meaning assigned to that term in
Section 9.01.
"Investment" means, 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 Receivables and other Pledged Assets pursuant to the
Originator Sale Agreement and excluding commission, travel and similar advances
to officers, employees and directors made in the ordinary course of business.
"Issuer" means HLS and any other Lender whose principal business
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
"Large Receivable" means a Receivable that has an Outstanding
Balance greater than $20,000.
"Large Receivables Limit" means at any time, the portion of the
Aggregate Large Receivables Limit that is specified by the Borrower on the
latest Monthly Settlement Report as being allocated to this Agreement (as
opposed to the Receivables Purchase Agreement); the sum of the Large Receivables
Limit under this Agreement and the "Large Receivables Limit" under the
Receivables Purchase Agreement shall equal the Aggregate Large Receivables
Limit. If the Borrower fails to provide the Servicer with an allocation of the
Aggregate Large Receivables Limit, the Large Receivables Limit under this
Agreement will equal zero and the "Large Receivables Limit" under the
Receivables Purchase Agreement shall equal the Aggregate Large Receivables Limit
for such Obligors.
"Lender" means HLS or any other Person that agrees, pursuant to the
pertinent Assignment and Acceptance, to make Loans secured by Pledged Assets
pursuant to Article II of this Agreement.
"Liquidation Fee" means, for the Loans allocated to each Fixed
Period (computed without regard to any shortened duration of such Fixed Period
as a result of the occurrence of the Termination Date) during which such Loans
are repaid (in whole or in part) or the applicable Yield Rate for such Loans is
for any reason changed, the amount, if any, by which (a) the Yield (calculated
without taking into account any Liquidation Fee) which would have accrued on the
amount of the payment of such Loans during such Fixed Period (as so computed) if
such payment had not been made or if the applicable Yield Rate had remained
unchanged, as the case may be, exceeds (b) the sum of (i) Yield actually
received by the Lender in respect of such Loans for such Fixed Period and (ii)
if applicable, the income, if any, received by the Lender from the Lender's
investing the proceeds of such payments on such Loans.
15
"Loan" means a loan made by the Lender to the Borrower pursuant to
Article II.
"Lock Box" means a post office box to which Collections are remitted
for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a
Lock-Box Account.
"Lock-Box Account" means an account maintained by the Agent at a
bank or other financial institution for the purpose of receiving Collections
from the related Lock Box.
"Lock-Box Bank" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"Lot" means any Development lot related to a Pledged Contract. .,
maximum Borrowing Limit" has the meaning assigned to that term in the definition
of Borrowing Limit.
"Minimum Overcollateralization Percentage" means thirty percent
(30%).
"Monthly Settlement Report" means a report, in substantially the
form of Exhibit E, furnished by the Servicer to the Agent for the Lender
pursuant to Section 6.07(b).
"Multiemployer Plan" means 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.
"Obligations" means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due) of the
Borrower to the Lender, the Agent, the Servicer, and/or any other Person,
arising under or in connection with this Agreement and the other documents or
the transactions contemplated thereby (excluding the Receivables Purchase
Agreement) and shall include, without limitation, all liability for principal of
and interest on the Loans, closing fees, unused line fees, audit fees, expense
reimbursements, indemnifications, and other amounts due or to become due under
this Agreement, including, without limitation, interest, fees and other
obligations that accrue after the commencement of an insolvency proceeding (in
each case whether or not allowed as a claim in such insolvency proceeding).
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Originator" means ▇▇▇▇▇▇▇ Funding International, Ltd. a Delaware
corporation, formerly known as The Processing Center, Inc.
"Originator Sale Agreement" means the Receivables Purchase and Sale
Agreement of even date herewith among the Originator, the Borrower and the
Servicer, together with all instruments, documents and agreements executed by
the Originator in connection therewith, in each case as the same may from time
to time be amended, supplemented or otherwise modified in accordance with the
terms hereof.
16
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Overeollateralization Percentage" means at any time the remainder
of (a) a fraction, expressed as a percentage, the numerator of which is (i) the
sum of (A) the Pledged Receivables Balance plus (B) amounts on deposit in the
Spread Account plus (C) the amount of Collections on deposit in the Agent's
Account to be applied in accordance with Section 2.05 on the next Settlement
Date and the denominator of which is (ii) the Facility Amount minus (b) 100%.
"Payment" means the scheduled monthly payment of principal and
interest on a Contract.
"Permitted Investments" means (a) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of no more than 90 days from the date
of acquisition; (b) time deposits and certificates of deposit having maturities
of no more than 90 days from the date of acquisition, maintained with or issued
by any commercial bank having capital and surplus in excess of $500,000,000 and
having a short-term rating not less than A-1 or the equivalent thereof from S&P
and, if rated by Fitch, not less than F-1 or the equivalent thereof from Fitch;
(c) repurchase obligations for underlying securities of the types described in
clauses (a) or (b) above with a term of not more than ten days and maturing no
later than go days after the date of acquisition; and (d) commercial paper
maturing within 90 days after the date of acquisition and having a rating of not
less than A-1 or the equivalent thereof from S&P and if rated by Fitch, not less
than F-1 or the equivalent thereof from Fitch.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.
"Pledge" means the pledge of any Receivable pursuant to Article II
and or the substitution of any Receivable pursuant to Section 6.18 for any
existing Pledged Receivable.
"Pledged Assets" has the meaning assigned to that term in Section
2.14(a).
"Pledged Contract" means a Contract under which a Pledged Receivable
arises.
"Pledged Receivable" means any Receivable pledged by the Borrower
pursuant to Article II and any Receivable substituted pursuant to Section 6.18
for any existing Pledged Receivable.
"Pledged Receivables Balance" means, at any time, the remainder of
(a) aggregate outstanding Balance of Eligible Receivables which constitute
Pledged Receivables minus (b) the aggregate amounts by which the aggregate
Outstanding Balance of any such Eligible Receivables related to each Development
exceeds the Concentration Limit with respect to such Development minus (c) the
aggregate amounts by which the aggregate Outstanding Balance of any such
Eligible
17
Receivables that are Large Receivables exceeds the Large Receivables Limit minus
(d), if positive, the product of RB x (1 - APP/OBPR), where RB = the aggregate
Outstanding Balance of Eligible Receivables which constitute Pledged Receivables
at the time, APP = the aggregate purchase price paid or to be paid by the
originator pursuant to the Developer Sale Agreements for the Eligible
Receivables which constitute Pledged Receivables at such time and OBPR = the
aggregate Outstanding Balance of such Pledged Receivables at the time the
originator purchased such Pledged Receivables pursuant to the Developer Sale
Agreements.
"Purchased Assets" has the meaning assigned to such term in the
Receivables Purchase Agreement.
"Purchased Rate Cap" has the meaning assigned to such term in
certain Sinking Fund Account Agreement dated as of the date hereof among the
Originator, the Lender, the Agent, the Collateral Trustee and ING Capital, as
calculation agent.
"Purchased Receivables" has the meaning assigned to such term in the
Receivables Purchase Agreement.
"Receivable" means the indebtedness of any Obligor under a Contract
whether constituting an account, chattel paper, instrument or general
intangible, (a) which arises from a sale of a VOI or Lot by a Developer and (b)
in which the Borrower has acquired an interest pursuant to the Originator Sale
Agreement. Each Receivable shall include each Payment and every right to payment
of any interest or finance charges and other obligations of such Obligor with
respect thereto.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement of even date herewith among the Lender, the Agent, the Borrower and
the Servicer, as the same may from time to time be amended, supplemented or
otherwise modified in accordance with the terms hereof.
"Records" means all Contracts and other documents, books, records
and other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the related Obligors which the
Borrower has itself generated, in which the Borrower has acquired an interest
pursuant to the Originator Sale Agreement or in which the Borrower has otherwise
obtained an interest.
"Related Security" means with respect to any Receivable:
(a) the Contract under which such Receivable arose;
(b the VOIs and Lots relating to such Receivable;
(c) any Contract Mortgages relating to the Pledged contracts and all
other security interests or liens and property subject thereto from time
to time purporting to secure
18
payment of such Receivable, whether pursuant to the Contract related to
such Receivable or otherwise;
(d) all guarantees, indemnities, warranties, letters of credit,
insurance policies (including Credit Life Insurance and credit default
insurance) and proceeds and premium refunds thereof and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract
related to such Receivable or otherwise; provided, however, if any such
guarantee, indemnity, warranty, letter of credit, insurance policy,
agreement, or arrangement supporting or securing payment of such
Receivables support or secure payment of any Receivable which is not a
Pledged Receivable, only the portion supporting or securing the Pledged
Receivables shall be Related Security;
(e) the Contract Files and other Records relating to such
Receivables;
(f) the Contract Conveyance Documents and any Developer Mortgages
relating to such Receivable;
(g) all of the Borrower's right and title to, and interest in, the
Originator Sale Agreement, the Developer Sale Agreements and the
assignment to the Agent of all UCC financing statements filed by the
Borrower against the Originator under or in connection with the Originator
Sale Agreement; and
(h) all proceeds of the foregoing.
"Release Price" means, with respect to a Pledged Contract to be
released hereunder, an amount equal to the remaining Outstanding Balance on such
Pledged Contract as of the opening of business on the Settlement Date on which
the release is to be effected hereunder, together with accrued and unpaid
interest thereon at the Contract Rate from the last due date as to which the
Obligor paid interest under such Contract.
"Required Overcollateralization Percentage" means thirty-three
percent (33%).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill (or its predecessor or successors in interest) if and so long as it has
rated and is continuing to rate commercial paper notes of the Lender, and
otherwise means such other nationally recognized statistical rating organization
as may be designated by the Agent.
"Sales Price" means, with respect to any Pledged Receivable, the
total purchase price of the related VOI or Lot, including any premium paid in
respect of a policy of Credit Life Insurance.
"Servicer" means at any time the Person then authorized pursuant to
Section 6.01 to service, administer and collect Receivables.
19
"Servicer Default" means the defaults specified in Section 8.01 of
this Agreement.
"Servicer Fee" has the meaning assigned to that term in Section
2.09.
"Servicing Fee Rate" means 1.00% per annum, so long as the
originator or any of its Affiliates is the Servicer, and otherwise means the
percentage set forth in the Standby Servicer Fee Letter or such other percentage
per annum which the Servicer and the Agent may agree upon in writing from time
to time.
"Settlement Date" means July 15, 1995 and thereafter the 15th day of
each month; provided that if such day is not a Business Day, the "Settlement
Date,, for such month shall he the first Business Day to occur after such 15th
day.
"Spread Account" has the meaning assigned thereto in Section 2.06 of
this Agreement.
"Spread Account Bank" means the bank maintaining the Spread Account.
"Spread Account surplus Date" has the meaning assigned to that term
in Section 2.06(b).
"Standby Servicer" means The Chase Manhattan Bank N.A. and any
substitute Standby Servicer appointed by the Agent pursuant to Section 6.17.
"Standby Servicer Fee" has the meaning assigned to that term in
Section 2.09(a).
"Standby Servicer Fee Letter" means the letter agreement dated as of
May 25, 1995, between the Standby Servicer and the Agent, as amended or
otherwise modified from time to time.
"Subsequent Borrowing Date" means each Business Day occurring after
the initial Borrowing Date on which the Borrower determines, in the exercise of
its sole discretion, to request an .additional Borrowing from the Lender and to
pledge additional Eligible Receivables to the Lender in respect thereof.
"Successor Servicer" has the meaning assigned to that term in
Section 8.02(a).
"Termination Date" means the earliest of (a) May 24, 2000, (b) the
date of termination of the Borrowing Limit pursuant to Section 2.03, (c) the
date of the declaration or automatic occurrence of the Termination Date pursuant
to Section 7.01 and (d) the date on which (i) all of the lenders providing
liquidity to the Lender with respect to this Agreement, (ii) all of the
commitments of all of the lenders under any agreement evidencing any such
liquidity support facility, (iii) any lender providing enhancement support to
the Lender with respect to this Agreement or (iv) any commitment of a lender
under any agreement evidencing any such enhancement support facility, is/are
terminated for any reason and replacement lenders and/or commitments, as the
case may be, are not obtained by the Lender prior to such termination.
20
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"United States" means the United States of America,
"VOI" means the underlying ownership interest which is the subject
of a Pledged Contract, which ownership interest shall consist of either a fixed
week or undivided interest in fee simple in a lodging unit or group of lodging
units at a Development or such other interest or right with respect to a lodging
unit or group of lodging units at a Development that has been approved of by the
Agent in writing.
"VOI Regime" means any of the various interval ownership regimes
listed on Schedule V hereto, each of which is an arrangement, established under
applicable state law, whereby a designated portion of a Development is made
subject to a declaration permitting the transfer of VOIs therein.
"Yield" means, for all Loans allocated to any Fixed Period during
any such Fixed Period, the product of
YRT x C x ED
---
360
where:
C = the Loans allocated to such Fixed Period,
ED = the actual number of days elapsed during such Fixed Period, and
YRT = the Yield Rate for such Fixed Period;
provided, however that (a) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (b) Yield shall not be considered paid by any distribution if
at any time such distribution is rescinded or otherwise returned by the Lender
to the Borrower or any other Person for any reason.
"Yield Rate" means, for any Fixed Period for all Loans allocated to
such Fixed Period:
(i) to the extent the Lender will be funding the applicable
Loan on the first day of such Fixed Period through the issuance of
commercial paper, a rate equal to the CP Rate for such Fixed Period,
and
(ii) to the extent the Lender will not be funding the
applicable Loan on the first day of such Fixed period through the
issuance of commercial paper, a rate equal
21
to the Alternative Rate for such Fixed Period or such other rate as
the Agent and the Borrower shall agree to in writing.
SECTION 1.02. 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 1.03. Computation of Time Periods. Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
ARTICLE II.
THE RECEIVABLES FACILITY.
SECTION 2.01. Borrowings. On the terms and conditions hereinafter
set forth, the Lender shall make loans ("Loans") to the Borrower secured by
Pledged Assets from time to time during the period from the date hereof until
the Termination Date. Under no circumstances shall the Lender make Loans if,
after giving effect to such Borrowing of Loans, either (a) the
overcollateralization Percentage would be less than Required
Overcollateralization Percentage or (b) the aggregate Loans outstanding
hereunder would exceed the lesser of (i) the Borrowing Limit minus the Discount
Amount or (ii) the Capital Limit as determined by reference to the most recent
Monthly Settlement Report or Borrowing Date/Spread Account Surplus Settlement
Report delivered by the Servicer to the Lender in accordance with Section 6.07
hereof.
SECTION 2.02. The Initial Borrowing and Subsequent Borrowings.
(a) Until the occurrence of the Termination Date, the Lender will
make Loans on any Business Day at the request of the Borrower, subject to
and in accordance with the terms and conditions of Section 2.01 and 2.02.
After the Collection Date has occurred, the Lender and the Agent, in
accordance with their respective interests, shall assign and transfer to
the Borrower their respective remaining interest in the Pledged Assets to
the Borrower free and clear of any Adverse Claim resulting solely from an
act or omission by the Lender or the Agent, but without any other
representation or warranty, express or implied.
(b) The initial Borrowing and each Subsequent Borrowing shall
be made on at least three Business Days' notice from the Borrower to the
Agent. Each such notice shall specify (i) the aggregate amount of such
Borrowing, which shall be in an amount equal to or greater than $500,000,
(ii) the date of such Borrowing, (iii) the requested Fixed Period(s) and
requested applicable Yield Rate (i.e. CP Rate or Alternative Rate) for
such Borrowing, and the allocations of Loans to each such requested Fixed
Period and (iv) the Contracts under which the Receivables to be pledged in
connection with such Borrowing arose together with an amendment to the
Contract Schedule with respect to such contracts (and upon such Borrowing,
such Receivables shall be "Pledged Receivables" hereunder). The Agent
shall notify the Borrower whether the duration of the initial Fixed
Periods and the
22
applicable Yield Rate described in such notice is acceptable or, if not
applicable, the Agent shall advise the Borrower of such Fixed Periods and
applicable Yield Rate as may be acceptable. On the date of such Borrowing,
the Lender shall, upon satisfaction of the applicable conditions set forth
in Article III, make available to the Borrower in same day funds, the
amount of such Borrowing (net of amounts payable to or for the benefit of
the Lender to repay Loans on such Borrowing Date pursuant to Section 2.05,
as the case may be, by payment to the account which the Borrower has
designated in writing with the consent of the Agent.
(c) It is expressly acknowledged that each Borrowing hereunder shall
be made without recourse to the Borrower; provided, however, that the
Borrower shall be liable to the Agent and the Lender (i) for all
representations, warranties, covenants and indemnifications made by such
Borrower pursuant to the terms of this Agreement to the extent described
in Section 9.01, (ii) for all obligations to remit any deemed Collections
of Pledged Receivables pursuant to Section 2.07, and (iii) for all fees,
costs, expenses, taxes and other indemnifications owed under this
Agreement.
(d) The Loans mature on May 24, 2008. All Obligations shall be
immediately due and payable on such date.
SECTION 2.03. Termination or Reduction of the Borrowing Limit. The
Borrower may, upon at least five Business Days' notice to the Agent, terminate
in whole or reduce in part the portion of the Borrowing Limit that exceeds the
greater of the outstanding Loans and the sum of the aggregate Loans plus the
Discount Amount; provided, however, that each partial reduction of the Borrowing
Limit shall be in an aggregate amount equal to $5,000,000 or an integral
multiple thereof.
SECTION 2.04. Selection of Fixed Periods. At all times hereafter
until the Termination Date, the Borrower shall, subject to the Agent's and the
Lender's approval and the limitations described below, select (a) Fixed Periods
and allocate a portion of the outstanding Loans to each selected Fixed Period,
so that the outstanding Loans are at all times allocated to one or more Fixed
Periods and (b) Yield Rates to apply to such Loans for such Fixed Periods. The
initial Fixed Period(s) and Yield Rate(s) applicable to the Loans arising as a
result of the initial Borrowing shall be specified in the notice relating to the
Borrowing described in Section 2.02(b). Each subsequent Fixed Period shall
commence on the last day of the immediately preceding Fixed Period, and the
duration of and Yield Rate applicable to such subsequent Fixed Period shall be
such as the Borrower shall select and the Agent shall approve on notice from the
Borrower received by the Agent (including notice by telephone, confirmed in
writing) not later than 12:30 P.M. (New York City time) on such last day, except
that if the Agent shall not have received such notice before 12:30 P.M. or the
Agent and the Borrower shall not have so mutually agreed before 2:00 P.M. (New
York City time) on such last day, such Fixed Period shall be one day and the
applicable Yield Rate shall be the Alternative Rate, until the Agent receives
notice from the Borrower requesting a Fixed Period and applicable Yield Rate,
which, if accepted by the Agent, shall be the Fixed Period and the applicable
Yield Rate; provided, that, notwithstanding the foregoing, on and after the
occurrence of any Event of Default (unless waived in accordance with the terms
and conditions hereof), the Lender
23
shall cease to issue commercial paper notes to fund and maintain Loans hereunder
and the applicable Yield Rate shall be the Alternative Rate. Any Fixed Period
which would otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day. Any Fixed Period which commences before the
Termination Date and would otherwise end on a date occurring after the
Termination Date shall end on the Termination Date. On or after the Termination
Date, the Agent shall have the right to allocate outstanding Loans to Fixed
Periods of such duration as shall be selected by the Agent. The Lender shall, on
the first day of each Fixed Period, notify the Agent of the Yield Rate for the
Loans allocated to such Fixed Period.
SECTION 2.05. Settlement Procedures. The Servicer, as agent for the
Agent and the Lender, will instruct the Agent's Bank, and the Agent may instruct
the Agent's Bank, to apply funds on deposit in the Agent's Account and the
Spread Account as described in this Section 2.05, subject to the provisions of
Section 2.13(b) of the Receivables Purchase Agreement.
(a) Yield and Liquidation Fees. The Servicer shall, and the Agent
may, on each Business Day (including any Settlement Date), direct the
Agent's Bank to set aside in the Agent's Account for transfer at the
further direction of the Lender or the Agent or any other duly authorized
agent of the Lender (whether on such day or on a subsequent day) an amount
equal to the Yield through such day on the Loans allocable to the Lender
and not so previously set aside and the amount of any unpaid Liquidation
Fees owed to the Lender on such day. On the last day of each Fixed Period,
the Agent shall notify the Servicer of, and direct the Agent's Bank to
pay, such funds to be paid to the Lender in respect of full payment of
accrued Yield for such Fixed Period. on any Business Day on which an
amount is set aside in respect of Liquidation Fees pursuant to this
Section 2.05(a), the Agent shall direct the Agent's Bank to pay such funds
to the Lender in payment of such Liquidation Fees.
(b) Fixed Period Loan Repayment. The Servicer shall, and the Agent
may, on the last day of each Fixed Period that is not a Settlement Date,
direct the Agent's Bank to transfer monies held by the Agent's Bank in the
Agent's Account in excess of the aggregate amounts that would, if such
last day was a Settlement Date, be set aside on such Settlement Date to
pay amounts pursuant to Section 2.05(a) and 2.05(c)(i)-(vii), to pay the
Agent for the account of the Lender in prepayment of the Loans, an amount
equal to the aggregate Loans allocated to such Fixed Period or, prior to
the Termination Date, if lower, an amount equal to the excess, if any, of
aggregate Loans immediately prior to such distribution over the Capital
Limit on such date (without giving effect to amounts on deposit in the
Agent's Account on such date that would otherwise be included in the
calculation of the Capital Limit but after giving effect to any Borrowing
made on such date and any other distributions of amounts on deposit in the
Agent's Account or the Spread Account made on such date).
(c) Settlement Date Transfers from Agent's Account. The Servicer
shall, and the Agent may, on each Settlement Date direct the Agent's Bank
to transfer monies held by the Agent's Bank in the Agent's Account in
excess of the aggregate amounts set aside on such Settlement Date pursuant
to Section 2.05(a), in the following amounts and priority:
(i) to the Borrower, any monies held in the Agent's Account
that are not
24
Collections and that are to be remitted to the Borrower pursuant to
Section 6.03;
(ii) to the Agent for the account of the Lender in an amount
equal to (and for payment of) the Facility Fee which has accrued and
is unpaid as of the last day of the preceding month;
(iii) if neither the Borrower nor the originator, nor any
Affiliate of either of them, is the Servicer, to the Agent for the
account of the Servicer in an amount equal to the Servicer Fee which
is accrued and unpaid as of the last day of the preceding month;
(iv) to the Spread Account in an amount equal to the Borrowing
Base Deficiency (if any) as of such Settlement Date;
(v) so long as no Borrowing Base Deficiency shall exist or
would be created by such transfer, to the Agent for the account of
the Servicer (if the Servicer is the Borrower, the Originator or any
Affiliate of either of them) in an amount equal to the Servicer Fee
which is accrued and unpaid as the last day of the preceding month;
(vi) so long as no Borrowing Base Deficiency shall exist or
would be created by such transfer, to the Agent for the account of
the Lender in an amount equal to the aggregate amount of all other
obligations of the Borrower to the Lender hereunder other than
Yield, Liquidation Fees and the amounts described in clauses (i)
through (iv) above;
(vii) prior to the Termination Date if such Settlement Date is
a Borrowing Date, to the Borrower in an amount equal to the Loan to
be made hereunder on such date (which amount shall constitute a Loan
hereunder to the same extent as if such amount had been advanced
directly by the Lender to the Borrower on such date);
(viii) to the Agent for the account of the Lender in repayment
of Loans (A) prior to the Termination Date, in an amount equal to
the Borrowing Base Surplus on such date, if any, immediately prior
to such distribution (without giving effect to amounts on deposit in
the Agent's Account on such date that would otherwise be included in
the calculation of the Borrowing Base Surplus but after giving
effect to any Borrowing made on such date and any other
distributions of amounts on deposit in the Agent's Account or the
Spread Account made on such date) and (B) on and after the
Termination Date, in an amount necessary to repay the Loans in full;
and
(ix) on and after the Termination Date, to the Agent for the
account of the Lender in an amount necessary to reduce outstanding
Capital and other amounts due under the Receivables Purchase
Agreement to zero;
(x) to the Borrower, any remaining amounts.
25
Upon its receipt of funds pursuant to clause (ii) above in respect of the
Facility Fee, the Agent shall retain a portion thereof in the amount of the
accrued and unpaid Agent's Fee, and a portion thereof in the amount of the
accrued and unpaid Standby Servicer Fee (each as of the last day of the
preceding month) and shall apply the balance of funds as directed by the Lender.
Upon its receipt of funds pursuant to clause (iii) or (v) above, the Agent shall
distribute such funds to the Servicer in payment of any accrued and unpaid
Servicer Fee. Upon its receipt of funds pursuant to clause (vi) above, the Agent
shall apply such funds as directed by the Lender or as otherwise provided in
this Agreement.
(d) Borrowing Date Transfers. The Servicer shall, and the Agent may,
on each Borrowing Date that is not a Settlement Date direct the Agent's
Bank to transfer monies held by the Agent's Bank in the Agent's Account in
excess of the Carrying Cost Reserve Amount as of such Borrowing Date, to
the Borrower (which amount shall constitute a Loan hereunder to the same
extent as if such amount had been advanced directly by the Lender to the
Borrower on such date).
(e) Application of Spread Account Monies. To the extent that there
are insufficient available funds on deposit in the Agent's Account for the
payment of the amounts payable pursuant to Section 2.05(a),
2.05(c)(ii)-(iii) and 2.05(c!)(vi), funds shall be withdrawn by the
Collateral Trustee from the Spread Account to the extent of such
insufficiency, solely upon the direction of the Agent, to be used solely
for the purposes and in the order of priority set forth at Section 2.05(a)
and 2.05(c)(ii)-(iii) and 2.05(c)(vi) hereof, giving effect to the terms
thereof as if each reference therein to the "Agent's Account" was,
instead, a reference to the Spread Account and on and after the
Termination Date, funds may be withdrawn from the Spread Account by the
Collateral Trustee and deposited into the Agent's Account to be applied in
accordance with Section 2.05(a)-(c).
(f) Borrower Deficiency Payments. Notwithstanding anything to the
contrary contained in this Section 2.05 or in any other provision in this
Agreement, if, on any Business Day the outstanding amount of Loans shall
exceed the lesser of (i) the Borrowing Limit minus the Discount Amount or
(ii) the Capital Limit, then, the Borrower shall remit to the Agent, prior
to any Borrowing and in any event no later than the close of business of
the Agent on the next succeeding Business Day, a payment (to be applied by
the Agent in its sole discretion either to fund the Spread Account or to
repay Loans allocated to Fixed Periods selected by the Agent, in its sole
discretion) in such amount as may be necessary to reduce outstanding Loans
to an amount less than or equal to the lesser of (i) the Borrowing Limit
minus the Discount Amount and (ii) the Capital Limit.
SECTION 2.06. Spread Account.
(a) On or prior to the initial Borrowing Date, the Agent shall
establish and maintain, or cause to be established and maintained, for the
sole and exclusive benefit of the Collateral Trustee for the benefit of
the Agent and the Lender and their respective assigns, a cash collateral
account (the "Spread Account"). The Spread Account shall be a subaccount
within a special account maintained with a Depository Institution which is
an Eligible
26
Depository Institution (provided, however, that the Depository Institution
at which such Spread Account is established and maintained need not be an
Eligible Depository Institution in the event that the Spread Account is
maintained as a fully segregated trust account with the trust department
of such Depository Institution) but shall be under the sole dominion and
control of, and in the name of, the Collateral Trustee.
(b) Prior to the occurrence of the Termination Date, on at least
three Business Days' notice from the Borrower to the Agent, the Borrower
may, on any Business Day that is not a Settlement Date (each such day a
"Spread Account Surplus Date") (provided that a Spread Account Surplus
Date shall occur no more frequently than once a week), instruct the
Servicer to instruct the Spread Account Bank to transfer from the Spread
Account to the Borrower, an amount of funds held in the Spread Account
which shall in no event be greater than (i) the Borrowing Base surplus (if
any) on such Spread Account Surplus Date, if such Spread Account Surplus
Date is the Business Day next succeeding a Settlement Date or (ii) the
excess of the Borrowing Base Surplus (if any) over the Carrying Cost
Reserve Amount on such Spread Account Surplus Date, if such Spread Account
Surplus Date is not on such a Business Day (any such amount of funds, the
"Spread Account Excess"). The Borrower, in making any such instructions
for the transfer of funds from the Spread Account, shall simultaneously
provide each of the Agent and the Spread Account Bank with a copy of a
Borrowing Date/Spread Account Surplus Settlement Report together with a
certificate of an officer of the Borrower as to the existence and size of
any Spread Account Excess.
(c) Any funds remaining in the Spread Account after the Collection
Date has occurred shall be remitted to the Borrower or as otherwise
required by law.
SECTION 2.07. Special Settlement Procedures. If on any day the
Outstanding Balance of any Pledged Receivable is reduced or canceled as a result
of a setoff in respect of any claim by the obligor thereof against the
Originator, the Borrower, the related Developer or any other Person (whether
such claim arises out of the same or a related transaction or an unrelated
transaction), the Borrower shall be deemed to have received on such day a
Collection of such Pledged Receivable in the amount of such reduction,
cancellation or adjustment. If on any day any of the representations or
warranties in Section 4.01(h) is no longer true with respect to a Pledged
Receivable, the Borrower shall be deemed to have received on such day a
Collection of such Pledged Receivable in full.
SECTION 2.08. Payments and Computations, Etc.
(a) 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 11:00 A.M. (New York City 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 Agent interest on all amounts not paid or deposited within one
Business Day after the date such amounts are due hereunder (whether owing
by the Borrower individually or as Servicer) at 2%- per annum above the
Alternative Rate, payable on demand; provided, however, that such interest
rate shall not at any time exceed the
27
maximum rate permitted by applicable law. Such interest shall be retained
by the Agent except to the extent that such failure to make a timely
payment or deposit has continued beyond the date for distribution by the
Agent of such overdue amount to the Lender, in which case such interest
accruing after such date shall be for the account of, and distributed by
the Agent to the Lender. Any Obligation hereunder shall not be reduced by
any distribution of any portion of Collections if at any time such
distribution is rescinded or returned by the Lender to the Borrower or any
other Person for any reason. All computations of interest and all
computations of Yield, Liquidation Yield, Liquidation Fee 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 Yield, interest or any fee
payable hereunder, as the case may be.
(c) If any Borrowing requested by the Borrower and approved by the
Lender and the Agent pursuant to Section 2.02 or any selection of a
subsequent Fixed Period and applicable Yield Rate for any Loans allocated
to such Fixed Period requested by the Borrower and approved by the Agent
pursuant to Section 2.04 is not for any reason whatsoever made or
effectuated (other than through the sole fault of the Lender and/or
Agent), as the case may be, on the date specified therefor, the Borrower
shall indemnify the Lender against any loss, cost or expense incurred by
the Lender, including, without limitation, any loss (including loss of
anticipated profits, net of anticipated profits in the reemployment of
such funds in the manner determined by the Lender), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by the Lender to fund or maintain such Loans during such
Fixed Period.
SECTION 2.09. Fees. (a) The Borrower shall pay the Lender (either
directly or through the Agent) certain fees (the "Facility Fee") in the amounts
and on the dates set forth in a fee letter executed between the Borrower and the
Lender. The Lender shall pay to the Agent, for its own account, certain fees
(the "Agent's Fee") in the amounts and on the dates set-forth in a fee letter
executed between the Lender and the Agent. The Lender shall pay to the Standby
Servicer out of the Facility Fee, a collection fee (the "Standby Servicer Feel,)
in the amounts and on the dates set forth in the Standby Servicer Fee Letter.
(b) The Lender shall pay to the Servicer a collection fee (the
"Servicer Fee") equal to the Servicing Fee Rate on the daily average
aggregate Outstanding Balance of Pledged Receivables other than Defaulted
Receivables, from the date hereof until the later of the Termination Date
or the Collection Date, payable on each Settlement Date.
(c) All of the fees payable pursuant to this Section 2.09 shall be
payable only from Collections pursuant to, and subject to the priority of
payment set forth in, Section 2.05.
28
SECTION 2.10. 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 the 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 the Pledged Assets, the obligation to make Loans 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 excluding any reserve requirement, if any, included in
the determination of Yield), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Affected Party or (C) shall impose any other condition affecting
the Pledged Assets or the 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 to
the extent such additional or increased costs or reduction are incurred or
suffered in connection with the Pledged Assets, any obligation to make
Loans hereunder, any of the Lender's rights hereunder, or any payment made
hereunder. The Lender agrees that it will use its best efforts to reduce
or eliminate any claim for compensation pursuant to this Section 2.10(a),
provided that nothing contained herein shall obligate the Lender to take
any action which, in the opinion of the Lender, is unlawful or otherwise
disadvantageous to the Lender.
(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
29
Section 2.10(a) or 2.10(b), 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 Loans 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 amounts paid by it.
(d) In determining any amount provided for in this Section 2.10, the
Affected Party may use any reasonable averaging and attribution methods.
Any Affected Party making a claim under this Section 2.10 shall submit to
the Borrower a certificate as to such additional or increased cost or
reduction, which certificate shall be conclusive absent demonstrable
error. As of the date hereof, the Lender certifies that to the best of its
knowledge, there is no event or circumstance that would lead the Lender to
make a claim under this Section 2.10.
SECTION 2.11. Taxes.
(a) Any and all payments by the Borrower or the Servicer hereunder
shall be made, in accordance with Section 2.08, free and clear of and
without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of the Lender and the Agent, net
income taxes that are imposed by the United States and franchise taxes and
net income taxes that are imposed on the Lender or the Agent by the state
or foreign jurisdiction under the laws of which the Lender or the Agent
(as the case may be) is organized or conducts business or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower or the Servicer shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder
to the Lender or the Agent, (i) the Borrower shall make an additional
payment to the Lender or the Agent, as the case may be, in an amount
sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.11),
the Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower or the Servicer, as the case may be, shall make such deductions
and (iii) the Borrower or the Servicer, as the case may be, shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) The Borrower will indemnify the Lender and the Agent for the
full amount of Taxes (including, without limitation, any Taxes imposed by
any jurisdiction on amounts payable under this Section 2.11) paid by the
Lender or the Agent (as the case may be) in connection with the Pledged
Assets, any obligation to make Loans hereunder, or any other payment made
to the Lender and/or the Agent hereunder and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto; provided that the Lender or the Agent, as appropriate, making a
demand for indemnity payment shall provide the Borrower, at its address
referred to in Section 10.02, with a certificate from the relevant taxing
authority or from a responsible officer of the Lender or the Agent stating
or otherwise
30
evidencing that the Lender or the 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 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 Agent, at its address referred
to in Section 10.02, appropriate evidence of payment thereof.
(d) If the Lender is not created or organized under the laws of the
United States or a political subdivision thereof, the Lender shall, to the
extent that it may then do so under applicable laws and regulations,
deliver to the Borrower (with, in the case of the Lender, a copy to the
Agent) (i) within 15 days after the date hereof, or, if later, the date on
which the Lender becomes a Lender pursuant to Section 10.04 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 States taxing
authorities or applicable laws or regulations), as appropriate, to permit
the Borrower to make payments hereunder for the account of the Agent or
the 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 2.11(d), copies
(in such numbers as may from time to time be prescribed by applicable laws
or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under applicable laws or
regulations to permit the Borrower to make payments hereunder for the
account of the Agent or the Lender, as the case may be, without deduction
or withholding of United States federal income or similar taxes.
(e) For any period with respect to which the Lender or the Agent has
failed to provide the Borrower with the appropriate form, certificate or
statement described in Section 2.11(d) (other than if such failure is due
to a change in law occurring after the date of this Agreement), the Agent
or the Lender, as the case may be, shall not be entitled to
indemnification under Section 2.11(a) or 2.11(b) with respect to any
Taxes.
(f) Within 30 days of the written request of the Borrower therefor,
the 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.
(g) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the
Lender in connection with this Agreement or the funding or maintenance of
Loans hereunder, the Lender is required to compensate a bank or other
financial institution in respect of taxes under circumstances
31
similar to those described in this Section 2.11 or under Section 10.07(b)
then within ten days after demand by the Lender, the Borrower shall pay to
the Lender such additional amount or amounts as may be necessary to
reimburse the Lender for any amounts paid by it.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the parties
contained in this Section 2.11 shall survive the termination of this
Agreement.
SECTION 2.12. Assignment of the Originator Sale Agreement. The
Borrower hereby assigns to the Agent, for the benefit of the Lender hereunder,
all of the Borrower's right and title to and interest in the Originator Sale
Agreement with respect to the Pledged Receivables and Pledged Assets. The
Borrower confirms and agrees that the Agent shall have, following an Event of
Default, the sole right to enforce the Borrower's rights and remedies under the
Originator Sale Agreement with respect to the Pledged Receivables and the
Pledged Assets for the benefit of the Lender (including, without limitation the
Borrower's right to enforce the Originator's rights and remedies under the
Developer Sale Agreements), but without any obligation on the part of the Agent,
the Lender or any of their respective Affiliates, to perform any of the
obligations of the Borrower under the Originator Sale Agreement. In addition,
the Borrower confirms and agrees that the Borrower will send to the originator
any notice requested by the Agent of any "Event of Termination" under the
Originator Sale Agreement or any event or occurrence that would, upon notice to
the originator or upon the passage of time or both, would be such an "Event of
Termination." The Borrower further confirms and agrees that such assignment to
the Agent shall terminate upon the Collection Date; provided, however, that the
rights of the Agent and the Lender 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
Originator Sale Agreement, which rights and remedies survive the termination of
the Originator Sale Agreement, shall be continuing and shall survive any
termination of such assignment.
SECTION 2.13. Payment of Support Obligations. (a) As used in this
Section 2.13, the following terms shall have the following meanings:
"Secured Parties" means the Agent and the Lender and their
respective successor and assigns.
"Support Obligations" has the meaning assigned to that term in
Section 2.13(b).
"Supporting Collateral" has the meaning assigned to that term in
Section 2.14(b).
"Supporting Receivables" means, at any time after the Trigger Date
under the Receivables Purchase Agreement, all outstanding Purchased Receivables
at such time.
"Trigger Date" means, the date following the Termination Date under
the Receivables Purchase Agreement and this Agreement on which (i) the
outstanding Loans have been reduced to lot or less of the principal amount of
the Loans that were outstanding hereunder on the Termination Date or (ii) the
outstanding Capital under the Receivables Purchase Agreement has
32
been reduced to lot or less of the principal amount of the Capital that was
outstanding under the Receivables Purchase Agreement on the Termination Date.
"Unused Collections" means, with respect to the Receivables Purchase
Agreement, an amount equal to the aggregate amount of "Collections" with respect
to Purchased Assets under the Receivables Purchase Agreement, which were
received after the Termination Date under the Receivables Purchase Agreement but
on or prior to the Trigger Date and which were not applied against Capital and
the other amounts payable under the Receivables Purchase Agreement.
(b) To support the prompt recovery in full of all the Obligations
hereunder, the Borrower hereby unconditionally and irrevocably agrees to
pay to the Agent, for the benefit of the Secured Parties, (and the
Servicer, as agent for the Agent and the Purchaser, will instruct the
Agent's Bank, and the Agent, in the absence of the Servicer's instruction,
may instruct the Agent's Bank, to apply funds on deposit in the "Agent's
Account" under the Receivables Purchase Agreement to pay) the amounts
described in the following sentences of this Section 2.13(b) at the times
therein specified for payment of such amounts. In the event that there
shall be outstanding and to the extent of any Obligations, the Borrower
shall pay or cause to be paid to deposited into the Agent's Account (such
payment obligations, the "Support Obligations") (and the Servicer, as
agent for the Agent and the Borrower, will instruct the Agent's Bank, and
the Agent, in the absence of the Servicer's instruction, may instruct the
Agent's Bank, to apply funds on deposit in the "Agent's Account" under the
Receivables Purchase Agreement to pay such Support obligations), (a) on
the Trigger Date, all Unused Collections and (b) thereafter, on each day
an amount equal to the product of (i) all Collections of Supporting
Receivables not previously remitted to the Agent's Account multiplied by
(ii) the ratio of (A) outstanding Loans on such day to (B) the sum of
outstanding Capital and outstanding Loans on such day. All amounts
remitted to the Agent's Account pursuant to this Section 2.13 shall be
applied to such Obligations as provided in Section 2.05(a)-(c). The
Borrower's payment obligations under this Section 2.13 shall terminate on
the Collection Date.
(c) Each of the Borrower and the Servicer hereby acknowledges and
agrees that its representations, warranties, covenants, agreements,
undertakings and obligations set forth in the Receivables Purchase
Agreement with respect to the Supporting Collateral shall remain binding
and in full force and effect for purposes hereof until the Collection Date
under the Receivables Purchase Agreement.
SECTION 2.14. Grant of a Security Interests.
(a) To secure the prompt and complete payment when due of the
obligations and the performance by the Borrower of all of the covenants
and obligations to be performed by it pursuant to this Agreement, the
Borrower hereby assigns and pledges to the Agent and grants to the Agent,
on behalf of the Lender and the Agent (and their respective successors and
assigns), a security interest in all of the Borrower's right, title and
interest in and to all of the following property and interests in property
(collectively, the "Pledged Assets"), whether tangible or intangible and
whether now owned or existing or hereafter arising or acquired
33
and wheresoever located;
(i) all Pledged Receivables, together with all Related
Security, Contracts, Records and other Pledged Assets related
thereto, including, without limitation, all Collections and other
monies due and to become due to the Borrower in respect of any
Receivable and any security therefor received on or after the
applicable Cut-Off Date;
(ii) all right, title and interest of the Borrower in, to and
under the Originator Sale Agreement, including, without limitation,
all monies due and to become due to the Borrower under or in
connection therewith;
(iii) all right, title and interest of the Borrower in, to and
under all Purchased Rate Caps;
(iv) the Agent's Account, lock boxes, Lock-Box Accounts, and
all other bank and similar accounts relating to the collection of
Pledged Receivables and all funds held therein or in such other
accounts, and all income from the investment of funds in the Agent's
Account and such other accounts; and
(v) all proceeds of the foregoing property described in
clauses (i) through (iv) above, including interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
or on account of the sale or other disposition of any or all of the
then existing Pledged Assets.
(b) To secure payment and performance of the Support Obligations,
Borrower hereby grants to the Agent, for its benefit and the benefit of
the other Secured Parties, a security interest in all of the Borrower's
right, title and interest in and to all now owned or existing and from
time to time hereafter arising or acquired Purchased Assets under the
Receivables Purchase Agreement (the "Supporting collateral").
SECTION 2.15. Evidence of Debt. The Lender shall maintain an account
or accounts evidencing the indebtedness of the Borrower to the Lender resulting
from each Loan owing to the Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder. The entries made in such account(s) of the Lender shall be conclusive
and binding for all purposes, absent manifest error.
ARTICLE III.
CONDITIONS OF LOANS.
SECTION 3.01. Conditions Precedent to Initial Borrowing. The initial
Borrowing hereunder is subject to the condition precedent that the Agent shall
have received on or before the date of such Borrowing the items listed in
Schedule VI, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Agent and the Lender.
34
SECTION 3.02. Conditions Precedent to Al Borrowings and Remittances
of Collections. Each Borrowing (including the initial Borrowing) from the
Borrower by the Lender shall be subject to the further conditions precedent that
(a) with respect to any such Borrowing (other than the initial Borrowing) on or
prior to the date of such Borrowing, the Servicer shall have delivered to the
Agent, in form and substance satisfactory to the Agent, a completed Monthly
Settlement Report or Borrowing Date/Spread Account Surplus Settlement Report
containing information accurate as of a date no more than three Business Days
prior to the date of such Borrowing and containing such additional information
as may be reasonably requested by the Agent; (b) on the date of such Borrowing,
the following statements shall be true, and the Borrower by accepting the amount
of such Borrowing shall be deemed to have certified that:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of
such date (including, without limitation, that the Receivables to be
Pledged on such date are Eligible Receivables),
(ii) No event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Event of Default or an
Event of Termination under the Receivables Purchase Agreement,
(iii) On and as of such day, after giving effect to such
Borrowing, the (A) Overcollateralization Percentage equals or
exceeds the Required Overcollateralization Percentage and (B)
aggregate outstanding Loans do not exceed the lesser of (x) the
Borrowing Limit minus the Discount Amount, or (y) the Capital Limit,
and
(iv) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or
governmental body, agency or instrumentality shall prohibit or
enjoin, the making of such Loans by the Lender in accordance with
the provisions hereof,
(c) Agent's receipt of a notice from the Collateral Trustee
confirming that the Collateral Trustee has received; (i) all Contracts,
promissory notes and any deed of titles contained in the Contract Files
required to be delivered to it pursuant to Section 5.01(h), (ii) a timely
copy of the notice of Borrowing delivered to the Agent pursuant to Section
2.02, appropriately filled-out and executed by the Borrower and (iii) an
amendment to the Contract Schedule required pursuant to Section 2.02 (any
such notice to be sent by the Collateral Trustee to the Agent only after
the Collateral Trustee's receipt of such items).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES.
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
35
(a) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction named at
the beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Originator Sale Agreement and all other documents to be
delivered by it hereunder or thereunder, including the Borrower's use of
the proceeds of Loans, are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, do not contravene
(i) the Borrower's charter or by-laws, (ii) any law, rule or regulation
applicable to the Borrower, (iii) any contractual restriction binding on
ox affecting the Borrower or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting the Borrower
or its property, and do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to
any of its properties (other than in favor of the Lender or the Agent for
the benefit of the Lender with respect to the Pledged Receivables and
related Pledged Assets); and no transaction contemplated hereby or by the
Originator Sale Agreement requires compliance with any bulk sales act or
similar law. This Agreement and the Originator Sale Agreement have each
been duly executed and delivered by the Borrower.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower
of this Agreement, the Originator Sale Agreement or any other document or
instrument to be delivered hereunder or thereunder, except for the filing
of the UCC financing statements described in Schedule VI, all of which
financing statements have been duly filed and are in full force and
effect.
(d) This Agreement, the Originator Sale Agreement and each other
document or instrument to be delivered by the Borrower hereunder or
thereunder constitute the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
moratorium, or other similar laws affecting the rights of creditors.
(e) To the knowledge of the Borrower, the consolidated balance
sheets of the Originator and its consolidated subsidiaries as at December
31, 1994 and March 31, 1995, and the related statements of income,
shareholders, equity and cash flows for the fiscal year and fiscal quarter
then ended, copies of which have been furnished to the Agent, fairly
present, in all material respects, the consolidated financial condition of
the Originator and its consolidated subsidiaries as at such date and the
consolidated results of the operations of the Originator and its
consolidated subsidiaries for the period ended on such date, all in
accordance with GAAP consistently applied, and since December 31, 1994
there has been no material adverse change in any such condition or
operations.
(f) There is no pending or to the knowledge of the Borrower,
threatened, action
36
or proceeding affecting the Borrower or to the knowledge of the Borrower,
the Originator or any other subsidiaries of the Originator before any
court, governmental agency or arbitrator that may materially adversely
affect the financial condition of the Originator, the Borrower or any
other subsidiaries of the Originator or the ability of the Originator to
perform its obligations under the originator sale Agreement or the ability
of the Borrower to perform its obligations under this Agreement. None of
the Borrower, and, to the knowledge of the Borrower, the Originator or any
subsidiary of the originator is in default with respect to any order of
any court, arbitrator or governmental body except for defaults with
respect to orders of governmental agencies which defaults are not material
to the business or operations of the originator, the Borrower or any other
subsidiary of the Originator.
(g) No proceeds of any Loans 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, at; amended.
(h) Each Receivable, together with the Contract related thereto,
shall, at-all times, be owned by the Borrower free and clear of any
Adverse Claim except as provided herein or in the Receivables Purchase
Agreement, and upon each Borrowing, the Lender shall acquire a valid and
perfected first priority security interest in each Pledged Receivable then
existing or thereafter arising and in the Related Security and Collections
with respect thereto, free and clear of any Adverse Claim except as
provided hereunder or under the Receivables Purchase Agreement. No
effective financing statement or other instrument similar in effect
covering any Receivable or the Related Security or Collections with
respect thereto shall at any time be on file in any recording office
except such as may be filed in favor of the Agent relating to this
Agreement or the Receivables Purchase Agreement.
(i) As of the close of business on each Business Day prior to the
Termination Date, the aggregate amount of Loans outstanding shall not
exceed the lesser of (x) the Borrowing Limit minus the Discount Amount on
such Business Day or (y) the Capital Limit on such Business Day.
(j) No Monthly Settlement Report, Borrowing Date/Spread Account
Surplus Settlement Report, Commercial Paper Settlement Report (each if
prepared by the Borrower, or to the extent that information contained
therein is supplied by the Borrower), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished
by the Borrower to the Agent or the 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 Agent or
the 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 omit to state a material fact or any fact necessary
to make the statements contained therein not misleading.
(k) The principal place of business and chief executive office of
the Borrower and the office where the Borrower keeps all the Records are
located at the address of the Borrower referred to in Section 10.02 hereof
(or at such other locations as to which the
37
notice and other requirements specified in Section 6.09 shall have been
satisfied).
(l) The names and addresses of all the Lock-Box Banks, together with
the account numbers of all Lock-Box Accounts of the Borrower at such
Lock-Box Banks, the address of each Lock-Box, and the names, addresses and
account numbers of all accounts to which collections of the Receivables
outstanding before the initial Borrowing hereunder have been sent, are
specified in Schedule VII (which shall be deemed to be amended in respect
of terminating or adding any Lock-Box Account or Lock-Box Bank upon
satisfaction of the notice and other requirements specified in respect
thereof).
(m) Except as described in Schedule VIII, 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.
(n) The Originator Sale Agreement is the only agreement pursuant to
which the Borrower purchases Receivables; the Borrower has furnished to
the Agent true, correct and complete copies of the Originator Sale
Agreement; and the Originator Sale Agreement is in full force and effect
and no event or circumstance has occurred that would constitute an Event
of Default pursuant to Section 7.01(i).
(o) The Borrower shall have given reasonably equivalent value to the
Originator in consideration for the transfer to the Borrower of the
Receivables and Related Security under the Originator Sale Agreement, no
such transfer shall have been made for or on account of an antecedent debt
owed by the Originator to the Borrower, and no such transfer is or may be
voidable or subject to avoidance under any section of the Bankruptcy Code.
(p) The Certificate of Incorporation of the Borrower includes
substantially the provisions set forth on Exhibit G 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 bankruptcy or insolvency laws. Each of
the Borrower and the Originator has been advised in writing by its counsel
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 assets of the Borrower
available to satisfy claims of the creditors of the Originator would not
result in making such assets available to satisfy such creditors under the
Bankruptcy Code.
(q) The Borrower is solvent; at the time of (and immediately after)
each transfer by the Originator to the Borrower under the Originator Sale
Agreement, the Borrower shall have been solvent; and at the time of (and
immediately after) each Borrowing hereunder, the Borrower shall have been
solvent.
(r) The Borrower accounts for the transfers to it from the
Originator of interests in Receivables, Related Security and collections
under the Originator Sale Agreement as sales of such Receivables, Related
Security and Collections in its books, records and financial
38
statements, in each case consistent with GAAP and with the requirements
set forth herein.
(s) The sole and exclusive business of the Borrower is the purchase
of Receivables and Related Security pursuant to the Originator Sale
Agreement for its own account and for resale to the Lender pursuant to the
terms of the Receivables Purchase Agreement.
(t) 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 Agent and the Lender 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.
(u) To the best knowledge of the Borrower, each VOI Regime related
to a Pledged Contract is now, and at all times during originator's (or any
Affiliate of Originator's) ownership thereof has been, free of
contamination from any substance, material or waste identified as toxic or
hazardous according to any federal, state or local law, rule, regulation
or order governing or regulating in any way the discharge, generation,
removal, transportation, storage or handling of toxic or hazardous
substances, materials or waste (hereinafter referred to as "Environmental
Laws"), including, without limitation, any PCB, radioactive substance,
methane, volatile hydrocarbons, industrial solvents or any other material
or substance which now or hereafter may cause or constitute a health,
safety or other environmental hazard to any person or property (any such
substance together with any substance, material or waste identified as
toxic or hazardous under any Environmental Law now in effect or
hereinafter enacted shall be referred to herein as "Hazardous Waste"). To
the knowledge of the Borrower, neither the Originator nor any Affiliate of
the Originator has caused or suffered to occur any discharge, spill,
uncontrolled loss or seepage of any petroleum or chemical product or any
Hazardous Waste onto any property adjoining any of the VOI Regimes, and,
to the best knowledge of the Borrower, neither the Originator nor any
Affiliate of the Originator nor any Obligor or occupant of all or part of
any of the VOI Regimes, is now or has been involved in operations at any
VOI Regime which could lead to liability for the Originator, the Borrower,
any other Affiliate of the Originator or any other owner of any VOI Regime
or the imposition of a lien on such VOI Regime under any Environmental
Law.
To the best knowledge of the Borrower, except as set forth on Schedule IX, each
Development related to a Pledged Contract is now, and at all times has been free
of contamination from any substance, material or waste identified as toxic or
hazardous according to the Environmental Laws, including, without limitation,
Hazardous Waste. To the knowledge of the Borrower, except as set forth on
Schedule IX, neither the Originator nor any Affiliate of the Originator has
caused or suffered to occur any discharge, spill, uncontrolled loss or seepage
of any petroleum or chemical product or any Hazardous Waste onto any property
adjoining any of the Developments, and to the best knowledge of the Borrower
neither the Originator nor any Affiliate of the Originator nor any Obligor or
occupant of all or part of any of any Development is now or has been involved in
operations at any Development which could lead to liability for the Originator,
the Borrower, any
39
other Affiliate of the Originator or any other owner of any Development or the
imposition of a lien on such Development under any Environmental Law. None of
the matters set forth on Schedule IX will have a material adverse effect on the
value of the Pledged Assets or the interest of the Agent and the Lender therein
or an adverse effect on the Lender or the Agent.
(v) The Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940.
SECTION 4.02. Representations and Warranties of the Lender. The
Lender represents and warrants as follows:
(a) The Lender is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction named at the
beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by the Lender of this
Agreement and all other documents to be delivered by it hereunder or
thereunder, are within the Lender's corporate powers, have been duly
authorized by all necessary corporate action, do not contravene (i) the
Lender's charter or by-laws, (ii) any law, rule or regulation applicable
to the Lender, (iii) any contractual restriction binding on or affecting
the Lender or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Lender or its property.
This Agreement has been duly executed and delivered by the Lender.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Lender of
this Agreement or any other document or instrument to be delivered
hereunder.
(d) This Agreement and each other document or instrument to be
delivered by the Lender hereunder constitute the legal, valid and binding
obligation of the Lender enforceable against the Lender in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
moratorium, or other similar laws affecting the rights of creditors.
ARTICLE V.
GENERAL COVENANTS OF THE BORROWER.
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate Existence. The
Borrower will comply in all material respects with all applicable laws,
rules, regulations and orders and preserve and maintain its corporate
existence, and will preserve and maintain its rights,
40
franchises, qualifications and privileges in all material respects.
(b) Sales, Liens, Etc. Except as otherwise provided herein or in the
Receivables Purchase Agreement, the Borrower will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse claim upon or with respect to, any Receivable
or the related Contract, Collections or Related Security, or upon or with
respect to any Lock-Box Account or any other account to which any
Collections of any Receivable are sent, or assign any right to receive
income in respect thereof or (ii) create or suffer to exist any Adverse
Claim upon or with respect to any of the Borrower's assets.
(c) General Reporting Requirements. The Borrower will provide to the
Agent (with a copy for the Lender) (and to S&P and Fitch, with respect to
items described in clause (vii)) the following:
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of
the Borrower, a balance sheet of the Borrower and the related
statements of income, shareholders' equity and cash flows each for
the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, prepared in accordance with
GAAP consistently applied and certified by the chief financial
officer of the Borrower;
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the
balance sheet of the Borrower and the related statements of income,
shareholders' equity and cash flows for such year, each prepared in
accordance with GAAP consistently applied and reported on by
nationally recognized independent public accountants acceptable to
the Agent;
(iii) as soon as received from the Originator and in any event
within 45 days after the end of each of the first three quarters of
each fiscal year of the Originator, to the extent received from the
Originator, consolidated balance sheets of the Originator and its
consolidated subsidiaries and the related statements of income,
shareholders, equity and cash flows each for the period commencing
at the end of the previous fiscal year and ending with the end of
such quarter, prepared in accordance with GAAP consistently applied
and certified by a senior financial officer of the Originator;
(iv) as soon as received from the Originator and in any event
within 120 days after the end of each fiscal year of the Originator,
to the extent received from the Originator, a copy of the
consolidated balance sheets of the Originator and its consolidated
subsidiaries and the related statements of income, shareholders,
equity and cash flows for such year, each prepared in accordance
with GAAP consistently applied and reported on by nationally
recognized independent public accountants acceptable to the Agent;
(v) promptly after the receipt thereof, copies of all reports
which the
41
Originator sends to any of its securityholders and copies of all
reports and registration statements which the Originator files with
the Securities and Exchange Commission or any national securities
exchange other than registration statements relating to employee
benefit plans and to registrations of securities for selling
securityholders;
(vi) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined
in Article IV of ERISA which the Borrower or any ERISA Affiliate
files under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or
which the Borrower or any ERISA Affiliate receives from such
Corporation;
(vii) as soon as possible and in any event within five days
after the occurrence of each Event of Default or each event which,
with the giving of notice or lapse of time or both, would constitute
an Event of Default, a statement of the chief financial officer of
the Borrower setting forth details of such Event of Default or event
and the action which the Borrower has taken and proposes to take
with respect thereto;
(viii) promptly following receipt thereof, copies of all
financial statements, settlement statements, portfolio and other
reports, notices, disclosures, certificates, budgets and other
written material delivered or made available to the Borrower by the
originator pursuant to the terms of the originator Sale Agreement;
and
(ix) promptly following the Agent's request therefor, such
other information respecting the Receivables or the conditions or
operations, financial or otherwise of the Borrower as the Agent may
from time to time request in order to protect the interests of the
Agent or the Lender in connection with this Agreement.
(d) Merger, Etc. The Borrower will not merge or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of
its assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any Person, other than, with respect to asset dispositions, in
connection herewith.
(e) Accounting of Originator Sale Agreement Purchases. The Borrower
will not account for or treat (whether in financial statements or
otherwise) the transactions contemplated by the Originator Sale Agreement
in any manner other than the sale of Receivables and Related Security by
the Originator to the Borrower.
(f) Nature of Business. The Borrower will engage in no business
other than the purchase of Receivables and Related Security from the
originator, the resale of such Receivables and Related Security to the
Lender and the other transactions permitted or contemplated by this
Agreement and the Receivables Purchase Agreement.
42
(g) Originator Receivables. With respect to each Receivable acquired
by the Borrower from the originator, the Borrower will (i) acquire such
Receivable pursuant to and in accordance with the terms of the Originator
Sale Agreement, (ii) take all action necessary to perfect, protect and
more fully evidence the Borrower's ownership of such Receivable,
including, without limitation, (A) filing and maintaining effective
financing statements (Form UCC-1) against the originator in all necessary
or appropriate filing offices, and filing continuation statements,
amendments or assignments with respect thereto in such filing offices and
(B) executing or causing to be executed such other instruments or notices
as may be necessary or appropriate and (iii) take all additional action
that the Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in the
Receivables and other Pledged Assets related thereto.
(h) Possession. On or immediately prior to the initial Borrowing
Date and each Subsequent Borrowing Date (if any), the Borrower shall
deliver to the collateral Trustee each original Pledged Contract and each
promissory note and other instrument in the related Contract File, and
▇▇▇▇, and cause the originator to ▇▇▇▇ the portions of the computer files
relating to the Pledged Receivables pledged on such date to the Lender to
clearly and unambiguously indicate that such Pledged Receivables
constitute part of the Pledged Assets in which a security interest has
been granted by the Borrower in accordance with the terms of this
Agreement.
(i) Maintenance of Separate Existence. The Borrower will do all
things necessary to maintain its corporate existence separate and apart
from the Originator and all other Affiliates of the Borrower, including,
without limitation, (i) practicing and adhering to corporate formalities,
such as maintaining appropriate corporate books and records; (ii)
maintaining at least one corporate director and one corporate officer who
is not an officer, director or employee of any of its Affiliates; (iii)
owning or leasing pursuant to written leases all office furniture and
equipment necessary to operate its business; (iv) refraining from (A)
guaranteeing or otherwise becoming liable for any obligations of any of
its Affiliates, (E) having obligations guaranteed by its Affiliates, (C)
holding itself out as responsible for debts of any of its Affiliates or
for decisions or actions with respect to the affairs of any of its
Affiliates, and (D) being directly or indirectly named as a direct or
contingent beneficiary or loss payee on any insurance policy of any
Affiliate; (v) maintaining all of its deposit and other bank accounts and
all of its assets separate from those of any other Person; (vi)
maintaining all of its financial records separate and apart from those of
any other Person and ensuring that any of the Originator's consolidated
financial statements or other public information for the Borrower and its
Affiliates on a consolidated basis contain appropriate disclosures
concerning the Borrower's separate existence; (vii) compensating all its
employees, officers, consultants and agents for services provided to it by
such Persons, or reimbursing any of its Affiliates in respect of services
provided to it by employees, officers, consultants and agents of such
Affiliate, out of its own funds; (viii) maintaining office space separate
and apart from that of any of its Affiliates (even if such office space is
subleased from or is on or near premises occupied by any of its
Affiliates) and a separate telephone number which will be answered only in
its name; (ix) accounting for and managing all of its liabilities
separately from those of any of its Affiliates, including, without
limitation, payment
43
directly by the Borrower of all payroll, accounting and other
administrative expenses and taxes; (x) allocating, on an arm's-length
basis, all shared corporate operating services, leases and expenses,
including, without limitation, those associated with the services of
shared consultants and agents and shared computer equipment and software;
(xi) refraining from paying dividends or making distributions, loans or
other advances to any of its Affiliates more frequently-than once during
any fiscal quarter and, in each case, as duly authorized by its board of
directors and in accordance with applicable corporation law; (xii)
refraining from filing or otherwise initiating or supporting the filing of
a motion in any bankruptcy or other insolvency proceeding involving the
Borrower, the Originator or any other Affiliate of the Borrower to
substantively consolidate the assets and liabilities of the Borrower with
the assets and liabilities of any such Person or any other Affiliate of
the Borrower; (xiii) maintaining adequate capitalization in light of its
business and purpose; (xiv) conducting all of its business (whether
written or oral) solely in its own name; and (xv) taking all other actions
necessary to maintain the accuracy of the factual assumptions set forth in
the legal opinion of Dechert Price & ▇▇▇▇▇▇ special counsel to the
Originator and the Borrower, issued in connection with the Originator Sale
Agreement and relating to the issues of substantive consolidation and true
sale of the Receivables and related assets.
(j) Supplemental Opinions. (i) The Borrower will cause to be
delivered to the Agent within six months (but not later than the 30th day)
prior to the end of each five year period after the initial Borrowing
hereunder, a supplemental opinion of counsel to the Borrower and the
Originator in form and substance reasonably satisfactory to the Agent,
reaffirming the opinions set forth in the opinion letter of Dechert Price
& ▇▇▇▇▇▇ delivered to the Agent in connection with the initial Borrowing
hereunder pursuant to Section 3.01 with respect to the continued validity
of the security interest of the Lender in the Pledged Assets hereunder,
and (ii) the Borrower will cause to be delivered to the Agent within 30
days following the Agent's request therefor, a supplemental opinion of
counsel to the Borrower and the Originator in form and substance
reasonably satisfactory to the Agent, reaffirming the opinions set forth
in the opinion letter of Dechert Price & ▇▇▇▇▇▇ delivered to the Agent in
connection with the initial Borrowing hereunder pursuant to Section 3.01.
(k) 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, the
Receivables Purchase Agreement and the Originator Sale Agreement, and (ii)
other transactions (including, without limitation, the lease of office
space or computer equipment or software by the Borrower to or from an
Affiliate) (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 opinion letter issued by Dechert Price &
▇▇▇▇▇▇ delivered to the Agent pursuant to Section 3.01, as such
assumptions may be modified in any subsequent opinion letter delivered
pursuant to Section 5.01(j). It is understood that any compensation
arrangement for officers shall be permitted under clause (ii)(A) through
(C) above if such arrangement has been expressly approved by the board of
directors of the Borrower.
44
(l) Debt; Investments. The Borrower will not incur any Debt other
than (i) Debt arising hereunder, under the Receivables Purchase Agreement
or under the originator Sale Agreement and (ii) Debt owing to the
Originator evidenced by promissory notes in form and substance
satisfactory to the Agent and not inconsistent with the factual
assumptions set forth in the opinion letter issued by Dechert Price &
▇▇▇▇▇▇ delivered to the Agent pursuant to Section 3.01, as such
assumptions may be modified in any subsequent opinion letter delivered
pursuant to Section 5.01(j). The Borrower will not make any Investments
other than Permitted Investments.
(m) Change in the Originator Sale Agreement. The Borrower will not
amend, modify, waive or terminate any terms or conditions of the
Originator Sale Agreement without the written consent of the Agent, and
shall perform its obligations thereunder.
(n) Amendment to Certificate of Incorporation. The Borrower will not
amend, modify or otherwise make any change to its Certificate of
Incorporation to delete or otherwise nullify or circumvent the provisions
set forth in Exhibit G hereto.
(o) Terminate or Reject Contracts. The Borrower will not, without
the written consent of the Agent, terminate or reject any Pledged Contract
prior to the end of the term of such Contract, whether such rejection or
early termination is made pursuant to an equitable cause, statute,
regulation, judicial proceeding or other applicable law (including,
without limitation, Section 365 of the Bankruptcy Code), unless prior to
such termination or rejection, such Pledged Contract and any related
Pledged Assets have been released pursuant to Section 6.18 in
consideration of the payment of an appropriate Release Price therefor.
SECTION 5.02. Financial Covenants.
(a) Dividends, etc. The Borrower will not declare or pay, directly
or indirectly, any dividend or make any other distribution (by reduction
of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for
value any shares of any class of its capital stock or set aside any amount
for any such purpose if, after giving effect to such dividend,
distribution, redemption, purchase, retirement or acquisition, the
Borrower's tangible net worth in accordance with GAAP would be less than
the amount set forth in Section 5.02(b).
(b) Net Worth. The Borrower shall maintain a tangible net worth
(determined in accordance with GAAP and including subordinated debt) of at
least the difference between (i) the aggregate Outstanding Balance of
Eligible Receivables which constitute Pledged Receivables at the time
minus (ii) the amount referred to in clause (i) divided by 1.03, but in no
event less than $250,000.
45
ARTICLE VI.
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES.
SECTION 6.01. Appointment and Designation of the Servicer. The
Borrower, the Lender and the Agent hereby appoint the Person (the "Servicer")
designated by the Agent from time to time (with the approval of the Lender)
pursuant to this Section 6.01, as their agent to service, administer and collect
the Receivables and otherwise to enforce their respective rights and interests
in and under the Receivables, the Related Security and the Contracts. The
Servicer's authorization under this Agreement shall terminate on the Collection
Date. Until the Agent gives notice to the Borrower of a designation of a new
Servicer, or consents to the appointment by the Borrower of a new "Servicer"
under and pursuant to the Originator Sale Agreement, the Originator is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. Upon and after the occurrence of any
Servicer Default, the Agent may at any time (with the approval of the Lender),
designate as Servicer any Person to succeed the Originator or any successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the
terms hereof. Each of the Borrower and the Originator hereby grants to any
successor Servicer an irrevocable power of attorney to take any and all steps in
the Borrower's or the Servicer's name, as applicable, and on behalf of the
Borrower necessary or desirable, in the determination of the successor Servicer,
to collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Borrower's name on checks and other instruments
representing Collections and enforcing such Receivables and the related
Contracts. The Servicer may, with the prior consent of the Agent, subcontract
with any other Person for servicing, administering or collecting the
Receivables, provided that the Servicer shall remain liable for the performance
of the duties and obligations of the Servicer pursuant to the terms hereof.
Subject to the proviso of the preceding sentence, the Agent consents to the
Servicer subcontracting for such services with The Processing Center; provided,
that such consent shall be automatically revoked if The Processing Center ceases
to be an Affiliate of the Originator. Notwithstanding anything to the contrary
contained in this Agreement, the Servicer, if not the Borrower or the
Originator, shall have no obligation to collect, enforce or take any other
action described in this Article VI with respect to any Receivable that is not a
Pledged Receivable other than to deliver to the Borrower the Collections and
documents with respect to any such Receivable that is not a Pledged Receivable
as described in Sections 6.03 and 6.06(b).
SECTION 6.02. Collection of Receivables by the Servicer; Extensions
and Amendments of Receivables. The Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to collect each Receivable from
time to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy; provided, however, that, (a) following an Event of Default,
the Agent shall have the absolute and unlimited right to direct the Servicer
(whether the Servicer is the Borrower, the originator or otherwise) to commence
or settle any legal action, to enforce collection of any Pledged Receivable or
to foreclose upon or repossess any Related Security and (b) the Servicer shall
not make the Agent or the Lender a party to any litigation without the express
written consent of the Agent or the Lender, as the case may be. Neither the
Originator nor the Borrower will extend, amend or otherwise modify the terms of
any Pledged Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
46
SECTION 6.03. Distribution and Application of Collections. The
Servicer shall set aside for the account of the Borrower and the Lender
Collections of Receivables in accordance with Section 2.05 and 6.08. The
Servicer shall as soon as practicable following receipt turn over to the
Borrower the collections of any Receivable which is not a Pledged Receivable
less, in the event neither the Borrower nor the originator is the Servicer, all
reasonable and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering such Receivables to the extent not
covered by the Servicer Fee received by it and the Servicer shall as soon as
practicable following receipt turn over to the Borrower amounts received by the
Servicer or deposited into the Agent's Account with respect to taxes and/or
maintenance fees remitted by Obligors that are not Collections. Any payment by
an Obligor in respect of any indebtedness owed by it to the Borrower shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law or by instruction of the Agent, be applied as a Collection of any Pledged
Receivable of such Obligor (in the order of the age of such Receivables,
starting with the oldest such Pledged Receivable) to the extent of any amounts
then due and payable thereunder before being applied to any other Receivable or
other indebtedness of such Obligor.
SECTION 6.04. Segregation of Collections. The Servicer shall not
commingle funds constituting Collections with any other funds of the Servicer or
the Originator for more than two Business Days.
SECTION 6.05. Other Rights of the Agent. At any time following the
occurrence of an Event of Default or the designation of a Servicer other than
the Originator, the Borrower or any Affiliate thereof pursuant to Section 6.01:
(a) The Agent may or, at the request of the Agent, the Borrower
shall (in either case, at the Borrower's expense) direct the Obligors of
Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Agent or its designee; and
(b) The Borrower shall, at the Agent's request and at the Borrower's
expense, (i) assemble all Records and make the same available to the Agent
or its designee at a place selected by the Agent or its designee, and (ii)
segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to
the Agent and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
SECTION 6.06. Records; Audits.
(a) The Borrower will maintain and implement, or cause the
Originator to maintain and implement, administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing the Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records
and other information reasonably necessary or advisable for the collection
of all Receivables (including, without limitation, records adequate to
permit the daily identification of each new
47
Pledged Receivable and all Collections of and adjustments to each existing
Pledged Receivable).
(b) The Servicer, whether or not the Borrower, shall hold all
Records (other than those delivered to the Collateral Trustee in
accordance with this Agreement) in trust for the Borrower and the Lender
in accordance with their respective interests. Subject to the receipt of
contrary instructions from the Agent, the Borrower will deliver all
Records to such Servicer; provided, however, that the Servicer, if other
than the Borrower, shall as soon as practicable upon demand deliver to the
Borrower all Records in its possession relating to Receivables of the
Borrower other than Pledged Receivables, and copies of Records in its
possession relating to Pledged Receivables.
(c) The Borrower will, from time to time during regular business
hours as requested by the Agent, permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of the Borrower for
the purpose of examining such Records and to discuss matters relating to
the Receivables or the Borrower's performance hereunder with any of the
officers or employees of the Borrower having knowledge of such matters.
(d) The Servicer shall permit the Agent to cause reviews of the
Pledged Receivables to be conducted as of the close of each calendar
quarter and year by a firm of nationally recognized certified public
accountants selected by the Agent, which reviews, among other things, may
(based on a statistically significant sample of Pledged Receivables which
were Pledged in the relevant period)(i) confirm the conformity of the
Pledged Receivables with the related identifications thereof supplied to
the Agent or the Lender hereunder, (ii) recalculate and verify the
accuracy of data included in the reports delivered pursuant to Section
6.07 (including without limitation the absence of the occurrence of any
Events of Default), and (iii) confirm the conformity of the Pledged
Receivables with the Credit and Collection Policy.
SECTION 6.07. Periodic Settlement Reporting.
(a) The Borrower will deliver to the Agent (i) prior to each
Settlement Date, a report identifying the Pledged Receivables (and the
aged balance thereof) as of the last day of the immediately preceding
month, (ii) on the Termination Date, a report identifying the Pledged
Receivables (and the aged balance thereof) on the day immediately
preceding the Termination Date and (iii) upon the Agent's request, on each
day, a report identifying the Pledged Receivables (and the aged balance
thereof) on such day.
(b) Prior to each Settlement Date, the Servicer shall prepare and
forward to the Agent for the Lender (and to S&P and Fitch), a Monthly
Settlement Report relating to all Pledged Receivables, as of the close of
business of the Servicer on the last day of the immediately preceding
month.
(c) On the Business Day immediately preceding each Borrowing Date
that is not
48
a Settlement Date and on the Business Day immediately preceding each
Spread Account Surplus Date, the Servicer shall prepare and forward to the
Agent for the Lender, a Borrowing Date/Spread Account Surplus Settlement
Report, as of a date no more than three Business Days prior to such
Borrowing Date or Spread Account Surplus Date, as applicable.
(d) On the Business Day immediately preceding the last day of each
Fixed Period that is not a Settlement Date, the Servicer shall prepare and
forward to the Agent for the Lender, a Commercial Paper Settlement Report,
as of the close of business of the Servicer on the second Business Day
immediately preceding such last day.
SECTION 6.08. Collections and Lock-Boxes. The Borrower or the
Servicer on its behalf will instruct all Obligors to cause all Collections to be
either (a) remitted to a Lock-Box and will cause each Lock-Box Bank to retrieve
such Collections promptly and deposit the same to the respective Lock-Box
Accounts or (b) deposited directly into a Lock-Box Account and will cause any
Collections effectuated by pre-authorized debits of Obligor accounts to be
deposited directly into a Lock-Box Account or the Agent's Account. Each Lock-Box
Bank will remit Collections deposited into the respective Lock-box Accounts to
the Agent's Account on a daily basis in accordance with Section 2.05. If the
Borrower receives any Collections, the Borrower will remit such Collections
(including, without limitation, any Collections deemed to have been received
pursuant to Section 2.07) to a Lock-Box Account or the Agent's Account within
one Business Day following the Borrower's receipt thereof. The Borrower will not
add or terminate any bank as a Lock-Box Bank to or from those listed in Schedule
VII or make any change in its instructions to obligors regarding payments to be
made to the Borrower or payments to be made to any Lock Box or any Lock-Box
Bank, unless the Agent shall have given its written consent to such addition,
termination or change and all actions reasonably requested by the Agent to
protect and perfect the interest of the Agent and the Lender in the Collections
of Pledged Receivables have been taken and completed. The Agent shall have the
exclusive ownership and control of the Lock-Box Accounts.
SECTION 6.09. UCC Matters; Protection and Perfection of Pledged
Assets.
(a) The Borrower will keep its principal place of business and chief
executive office, and the office where it keeps the Records, at the
address of the Borrower referred to in Section 4.01(k) or, upon 30 days'
prior written notice to the Agent, at such other locations within the
United States where all actions reasonably requested by the Agent to
protect and perfect the interest of the Agent and the Lender in the
Pledged Receivables have been taken and completed. The Borrower will not
make any change to its corporate name or use any tradenames, fictitious
names, assumed names, "doing business as" names or other names other than
those described in Schedule VIII, unless prior to the effective date of
any such name change or use, the Borrower delivers to the Agent such
executed financing statements as the Agent may request to reflect such
name change or use, together with such other documents and -instruments as
the Agent may request in connection therewith. The Borrower agrees that
from time to time, at its expense, it will promptly execute and deliver
all further instruments and documents, and take all further action that
the Agent may reasonably request in order to perfect, protect or more
fully evidence the Lender's interest in the Pledged Assets acquired
hereunder, or to enable the Lender or the Agent to exercise or
49
enforce any of their respective rights hereunder. Without limiting the
generality of the foregoing, the Borrower will upon the request of the
Agent: (a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate or as the Agent may request,
and (b) ▇▇▇▇ its master data processing records evidencing such Pledged
Receivables with a legend acceptable to the Agent, evidencing that the
Lender has acquired an interest therein as provided in this Agreement and
(c) notify Generali Underwriters, Inc. of the assignment of the Generali
Commercial Lines Policy with respect to the Pledged Receivables that it
insures. The Borrower hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Pledged Receivables and
the Related Security now existing or hereafter arising without the
signature of the Borrower where permitted by law. A carbon, photographic
or other reproduction of this Agreement or any financing statement
covering the Pledged Receivables, or any part thereof shall be sufficient
as a financing statement. The Borrower shall, upon the request of the
Agent at any time and at the Borrower's expense, notify the obligors of
Pledged Receivables, or any of them, of the ownership of Pledged Assets by
the Lender. If the Borrower fails to perform any of its agreements or
obligations under this Section 6.09, the Agent may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Borrower upon the Agent's demand therefor. For
purposes of enabling the Agent to exercise its rights described in the
preceding sentence and elsewhere in this Article VI, the Borrower and the
Lender hereby authorize the Agent and its successors and assigns to take
any and all steps in the Borrower's name and on behalf of the Borrower and
the Lender necessary or desirable, in the determination of the Agent, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Borrower's name on checks and other instruments
representing Collections and enforcing such Receivables and the related
contracts.
(b) In the event that the Borrower receives any other instrument or
any writing which, in either event, evidences a Pledged Receivable, a
Pledged Contract or other Pledged Assets, the Borrower shall deliver such
instrument or writing to the Collateral Trustee within one Business Day
after the Borrower's receipt thereof, in suitable form for transfer by
delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent
and the Collateral Trustee.
SECTION 6.10. Obligations of the Borrower With Respect to
Receivables. The Borrower will (a) at its expense, regardless of any exercise by
the Agent or the Lender of its rights hereunder, timely and fully perform and
comply with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables to the same extent
as if Pledged Assets had not been pledged hereunder and (b) pay when due any
taxes, including without limitation, sales and excise taxes, payable in
connection with the Pledged Receivables. In no event shall the Agent or the
Lender have any obligation or liability with respect to any Pledged Receivables
or related Contracts, nor shall any of them be obligated to perform any of the
obligations of the Borrower or the Originator or any of their Affiliates
thereunder. The Borrower will timely and fully comply in all material respects
with the Credit and Collection Policy
50
in regard to each Pledged Receivable and the related Contract. The Borrower will
not make any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, impair the collectibility
of any Pledged Receivable.
SECTION 6.11. Rights of Obligors and Release of Contract Files.
(a) Notwithstanding any other provision contained in this Agreement,
including the Lender's remedies pursuant hereto, the rights of any obligor
to any Lot or VOI subject to a Pledged Contract shall, so long as such
Obligor is not in default thereunder, be superior to those of the Lender
hereunder, and the Lender shall not, so long as such Obligor is not in
default thereunder, interfere with such Obligor's use and enjoyment of the
Lot or VOI subject thereto.
(b) If, pursuant to the terms of this Agreement, the Lender shall
acquire through foreclosure any portion of the Lot or VOI subject to a
Pledged Contract, the Lender hereby specifically agrees to release or
cause to be released any Lot or VOI from any lien of the Lender upon the
request of the Obligor (including such Obligor's heirs, successors and
assigns) to the Pledged Contract, upon completion of all payments and the
performance of all the terms and conditions required to be made and
performed by such Obligor under such Pledged Contract.
(c) At such time as an obligor has paid in full the purchase price
or the requisite percentage of the purchase price for deeding pursuant to
a Pledged Contract and has otherwise fully discharged all of such
obligor's obligations and responsibilities required to be discharged as a
condition to deeding, the Servicer shall notify the Agent by a certificate
substantially in the form attached hereto as Exhibit H (which certificate
shall include a statement to the effect that all amounts received in
connection with such payment have been deposited in the Agent's Account)
of an officer of the Servicer and shall request delivery to it (i) of the
Contract Files (or the portion thereof in the Collateral Trustee's
possession) related to a Pledged Contract pursuant to which the Obligor
has paid the purchase price in full or (ii) of the deeds of title, and any
documents and records maintained in connection therewith related to a
Pledged Contract pursuant to which the Obligor has paid the requisite
percentage of the purchase price for deeding. Upon receipt of such
certificate and request or at such earlier time as is required by
applicable law, the Agent (a) shall promptly direct the Collateral Trustee
to release the Contract Files (or the portion thereof in the Collateral
Trustee's possession) to the Servicer or (b) shall approve the release by
the Collateral Trustee of the related deed of title, and any documents and
records maintained in connection therewith, as applicable, to the Obligor,
provided that title to the VOI or Lot has not already been deeded to the
Obligor.
SECTION 6.12. Recordation of Assignments. The Servicer shall,
promptly following the initial Borrowing Date and each Subsequent Borrowing Date
(if any), cause to be filed for recordation in the proper offices (a) all
Assignments of Mortgages constituting Contract Conveyance Documents relating to
Receivables Pledged by the Lender on such date and (b) an assignment of each
Developer Mortgage related to Receivables Pledged by the Lender on such date,
51
except to the extent that the related VOIs or Lots are located in Developments
in any State with respect to which an opinion of counsel (in a form acceptable
to the Agent) has been delivered to the Agent stating that recordation is not
necessary or advisable to perfect or protect the interest of the Lender in such
Contract Mortgages or Developer Mortgages, as applicable in such State.
SECTION 6.13. Costs and Expenses.
(a) The costs and expenses incurred by the Servicer in carrying out
its duties hereunder, including without limitation the fees and expenses
incurred in connection with the enforcement of Pledged Receivables and
Pledged Contracts, shall be paid by the Servicer and the Servicer shall
not be entitled to reimbursement hereunder.
(b) The Servicer agrees to pay all reasonable costs and
disbursements in connection with the perfection and maintenance of
perfection, as against all third parties, of all of the right, title and
interest of each of the Agent and the Lender to the extent that such
payments and disbursements are not made by the Borrower in accordance with
Section 10.07.
SECTION 6.14. Servicer Representations and Warranties. The
Originator, as initial Servicer, hereby makes, and each Successor Servicer by
acceptance of its appointment hereunder shall make, the following
representations and warranties as of each Borrowing Date and, (1) in the case of
the initial Servicer, as of the date hereof, and (2) in the case of any
Successor Servicer, the date of such appointment, to each of the Lender and the
Agent:
(a) Due Incorporation and Good Standing. The Servicer is a
corporation, state banking corporation or national banking association
duly organized, validly existing and in good standing under the applicable
laws of its jurisdiction of organization or incorporation and has, in all
material respects, full corporate power and authority and legal right to
own its properties and conduct its business (including the servicing of
Contracts) as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its. obligations
under this Agreement and each other document to be delivered by it
hereunder. The Servicer is duly qualified to do business and is in good
standing as a foreign corporation, and has obtained all necessary licenses
and approvals in each jurisdiction in which the servicing of the Pledged
Receivables in accordance with the terms of this Agreement requires such
qualification, except where failure to qualify or to obtain such licenses
and approvals would not (i) have an adverse effect on the value or
collectibility of any Pledged Receivable or related Pledged Assets or the
ability of the Servicer to perform its obligations hereunder and under the
other documents delivered by it hereunder or (ii) have a material adverse
effect on the business, properties, operations, prospects. profits or
condition (financial or otherwise) of the Servicer.
(b) Due Authorization and No Conflict. The execution, delivery and
performance by the Servicer of this Agreement, the originator Sale
Agreement and each other document to be delivered by it hereunder and
thereunder, and the consummation of each of the transactions contemplated
hereby and thereby, have in all cases been duly
52
authorized by the Servicer by all necessary corporate action, and do not
contravene (i) the Servicer's charter or by-laws, (ii) any law, rule or
regulation applicable to the Servicer, (iii) any contractual restriction
contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other agreement or instrument binding
on or affecting the Servicer or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting the Servicer
or its property. This Agreement, the Originator Sale Agreement, and each
other document delivered by it hereunder or thereunder have been duly
executed and delivered on behalf of the Servicer.
(c) Governmental and Other Consents. All approvals, authorizations,
consents, orders or other actions of, and all registration, qualification,
designation, declaration, notice to or filing with, any Person or of any
governmental body or official required in connection with the execution
and delivery by the Servicer of this Agreement, the Originator Sale
Agreement and each other document delivered by it hereunder and
thereunder, the consummation of the transactions contemplated hereby or
thereby, the performance of and the compliance with the terms hereof or
thereof, have been obtained, except where the failure so to do would not
have a material adverse effect on the value of the Pledged Assets or the
interests of the Lender or therein.
(d) Enforceability. This Agreement, the Originator Sale Agreement
and each other document to which the Servicer is a party, have been duly
and validly executed and delivered by the Servicer and constitute the
legal, valid and binding obligation of the Servicer enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting the rights of
creditors.
(e) No Litigation. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, the Originator Sale Agreement or any of the
other documents delivered by it hereunder or thereunder, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or any of the other related documents, (iii) seeking any
determination or ruling that would adversely affect the performance by the
Servicer of its obligations under this Agreement, the originator Sale
Agreement or any other document delivered by it hereunder or thereunder,
(iv) seeking any determination or ruling that would adversely affect the
validity or enforceability of this Agreement, the Originator Sale
Agreement or any of the other documents delivered by it hereunder or
thereunder, or (v) seeking any determination or ruling that would have a
material adverse effect on the business, operations, condition (financial
or otherwise), properties, assets or prospects of the Servicer.
(f) Settlement Reports and Certificates. Each Monthly Settlement
Report, Borrowing Date/Spread Account Surplus Settlement Report and
Commercial Paper Settlement Report and any other report or certificate
delivered by the Servicer pursuant to this Agreement shall be true and
correct in all material respects as of the date such report or certificate
is delivered.
53
(g) Servicer Default. No Servicer Default has occurred and is
continuing.
The representations and warranties set forth in this Section 6.14
shall survive the making of Loans by the Lender. Upon a discovery by the
Borrower, the Servicer or the Agent of a material breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other such parties.
SECTION 6.15. Additional Covenants of the Servicer. From the date
hereof until the later of the Termination Date or the Collection Date, the
Servicer shall, unless the Agent shall .otherwise consent in writing:
(a) Change in Payment Instructions to Obligors. Not add or terminate
any bank as a Lock-Box Bank from those listed in Schedule VII or make any
change in its instructions to obligors regarding payments to be made to
any Lock-Box Bank, unless the Agent shall have received (i) 30 Business
Days, prior notice of such addition, termination or change and (ii) prior
to the effective date of such addition, termination or change, copies of
all agreements and documents signed by either the Borrower or the
respective Lock-Box Bank with respect to any new Lock-Box Account.
(b) Collections. If the Servicer shall receive any Collections, the
Servicer shall hold such Collections in trust for the benefit of the
Lender and deposit such Collections into a Lock-Box Account or the Agent's
Account within one Business Day following Servicer's receipt thereof, and
(ii) if either of the originator or the Borrower receives any Collections,
the Servicer shall cause the Originator or the Borrower, as the case may
be, to hold such Collections in trust for the benefit of the Lender and
deposit such Collections into a Lock-Box Account or the Agent's Account
within one Business Day following such Person's receipt thereof.
(c) Compliance with Requirements of Law. The Servicer shall maintain
in effect all qualifications required under all relevant laws, rules,
regulations and orders in order to service each Pledged Contract, except
where failure to qualify would not have an adverse effect on the ability
of the Servicer to perform its obligations hereunder and under the other
documents delivered by it hereunder and the Servicer shall comply in all
material respects with all applicable laws, rules, regulations and orders
with respect to it, its business and properties, and the servicing of the
Pledged Contracts.
(d) Protection of Rights. The Servicer shall take no action which
would impair in any material respect the rights of any of the Agent or the
Lender in the Pledged Assets.
(e) Credit Standards and Collection Policies. The Servicer shall
comply in all material respects with the Credit and Collection Policies in
regard to each Pledged Receivable and related Pledged Contract.
(f) Examination of Records. The Servicer will, from time to time
during regular
54
business hours as requested by the Agent, permit the Agent, or its agents
or representatives, (i) to examine and make copies of and abstracts from
all Records and (ii) to visit the offices and properties of the Servicer
for the purpose of examining such Records and to discuss matters relating
to the Receivables or the Servicer's performance hereunder with any of the
officers or employees of the Servicer having knowledge of such matters.
(g) Financial Statements. The Servicer will furnish to the Agent the
financial statements, reports, financial and other information and notices
described in Section 5.02 of the Originator Sale Agreement, when required
to be furnished by the Originator thereunder and, promptly, such other
information as the Agent may from time to time reasonably request.
SECTION 6.16. Standby Servicer. The Standby Servicer shall perform
the obligations from time to time applicable to it under this Agreement,
including without limitation, under Section 6.01 and to become the Successor
Servicer hereunder if so appointed by the Agent. In order to permit the Standby
Servicer to be prepared to perform its obligations hereunder in the event that a
Servicer Default, the Servicer and the Standby Servicer agree to undertake the
procedures and perform the other obligations described in the Standby Servicing
Agreement.
Subject to the terms of any agreement between the Standby Servicer
and the Lender or the Agent, the Standby Servicer may resign at any time by not
less than 60 days' notice to the Agent and the Servicer. In addition, the
Standby Servicer may be removed at any time without cause by the Lender or the
Agent by not less than 60 days' notice then given in writing to the Standby
Servicer, the Servicer and the Borrower. In the event of any such resignation or
removal, the Standby Servicer may be replaced by the Agent by notice given in
writing to the Servicer and the Borrower.
SECTION 6.17. The Servicer not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it hereunder except
upon determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
can be taken to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer pursuant to clause (i) hereof shall be evidenced by an opinion of
Counsel to such effect delivered to the Agent. Unless otherwise required by
applicable law, no such resignation shall be effective until a Successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 8.02 hereof.
SECTION 6.18. Releases; Right of First Refusal.
(a) Subject to Section 6.18(c), the Borrower shall on the next
Settlement Date or Borrowing Date occurring after the Borrower has become
aware, or has received written notice from the Agent, of any uncured
breach of a representation or warranty of the Borrower in Section 4.01
with respect to any Pledged Receivable effectuate a release of the
security interest granted hereunder in such Pledged Receivable (each
related Pledged Contract, a "Defective Contract" and each such date, a
"Defective Contract Release Date") by either (i) prepaying a portion of
the Loans by depositing in the Agent's Account the
55
Release Price for such Pledged Receivables or (ii) prior to the
Termination Date, conveying a new substitute Receivable(s) to the Lender
that (A) on the applicable Defective Contract Release Date is an Eligible
Receivable (and the Borrower shall be deemed to have represented and
warranted as such), (B) has an outstanding Balance at least equal to the
Outstanding Balance of the Pledged Receivable for which it is being
substituted, (C) has a remaining term that is no longer than the remaining
term of the Pledged Receivable for which it is being substituted and (D)
after giving effect to the substitution of which would not cause either
(1) the Overcollateralization Percentage to be less than Required
overcollateralization Percentage or (2) the aggregate Loans outstanding
hereunder to exceed the lesser of a) the Borrowing Limit minus the
Discount Amount or b) the Capital Limit as determined by reference to the
most recent Monthly Settlement Report or Borrowing Date/Spread Account
Surplus Settlement Report delivered by the Servicer to the Lender in
accordance with Section 6.07 hereof. On the date of any such substitution
in accordance with the preceding sentence, such new Eligible Receivable
shall become a Pledged Receivable and the Receivable so replaced shall
cease to be a Pledged Lease Receivable.
(b) The Borrower may, at its election, obtain the release of any
Pledged Receivable at any time after the date hereof by either (i)
depositing into the Agent's Account the Release Price therefor or (ii)
prior to the Termination Date, conveying a new substitute Receivable(s) to
the Lender if such substitute Receivable(s) satisfy all of the criteria of
Section 6.18(a)(ii)(A)-(D), in each case on any Settlement Date; provided,
that in the event that after giving effect to such release the aggregate
Outstanding Balance of Pledged Receivables would be less than an amount
equal to ten percent (10k) of the Outstanding Balance of Pledged
Receivables as of the initial Borrowing Date, the Borrower may only obtain
such release by, in addition to depositing the aggregate Release Price for
the Pledged Receivables to be released, paying on such Settlement Date,
all Obligations then outstanding hereunder (including, without limitation,
all Loans), or otherwise payable as a result of any such payment.
(c) The Borrower shall notify the Agent of any Release Price to be
paid or any Receivables to be substituted pursuant to Section 6.18(a) or
(b) at least one Business Day prior to the Settlement Date or Borrowing
Date on which such Release Price shall be paid and/or Receivables
substituted, as applicable, specifying the Contract and the Release Price
and/or Receivables to be substituted therefor. Prior to 11:00 A.M. New
York City time on the relevant Settlement Date or Borrowing Date, the
Borrower shall deposit in the Agent's Account the applicable Release Price
or, with respect to Receivables to be substituted, shall have satisfied
all of the requirements of Section 3.02 with respect to any new
Receivables to be substituted as if such new Receivables were to be
Pledged on such date. Promptly thereafter, the Servicer shall delete such
Contract from the Contract Schedule and shall notify the Agent to do the
same with respect to the records and any computer file maintained by it;
provided that it shall be a condition precedent to the effectiveness of
the release of any relevant Contract pursuant to Section 6.18(a) or (b)
that the Borrower shall have delivered to the Agent evidence of deposit in
the Agent's Account of the relevant Release Price or of the satisfaction
of the conditions for substitution of new Receivable(s) in respect of such
Contract.
56
(d) In connection with each release pursuant to Section 6.18(a) or
(b), and upon the satisfaction of the conditions precedent set forth in
Section 6.18(b) or (c), as the case may be, the Agent shall automatically
and without further action be deemed to transfer, assign, set over and
otherwise convey to the Borrower, without recourse, representation or
warranty, all the right, title and interest of Agent in and to any such
Defective Contract, Contract or any other Pledged Assets in respect of
which the Release Price has been paid or in respect of which new
Receivables have been substituted, as the case may be, and all monies
thereafter due or to become due with respect thereto, and all proceeds
thereof. In connection with each release pursuant to this Section 6.18
upon the satisfaction of the applicable conditions precedent set forth in
this Section 6.18, the Agent shall promptly direct the Collateral Trustee
to release the Contract Files (or the portion thereof in the Collateral
Trustee's possession) to the Servicer (or to the Borrower if the Borrower
so directs). The Agent shall execute such documents and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by the Borrower to effect the release of such Pledged Assets
pursuant to this subsection.
ARTICLE VII.
EVENTS OF DEFAULT.
SECTION 7.01. Events of Default. If any of the following events
("Events of Default") shall occur:
(a) (i) The Servicer (if other than the Agent) shall fail to perform
or observe any term, covenant or agreement hereunder (other than as
referred to in clause (ii) of this Section 7.01(a)) and such failure shall
remain unremedied for three Business Days or (ii) either the Servicer (if
other than the Agent) or the Borrower shall fail to make any payment or
deposit to be made by it hereunder when due; or
(b) (i) Any representation or warranty made or deemed to be made by
the Borrower (or any of its officers) under or in connection with this
Agreement or any Monthly Settlement Report, Borrowing Date/Spread Account
Surplus Settlement Report, Commercial Paper Settlement Report or other
information or report delivered pursuant hereto shall prove to have been
false or incorrect in any material respect when made and (ii) any
representation or warranty made or deemed to be made by the originator or
the Servicer (or any of their respective officers or agents) under or in
connection with the Originator Sale Agreement shall prove to have been
false or incorrect when made; provided, however, that if any such
representation or warranty relates solely to a Pledged Receivable which is
released by the Lender in accordance with Section 6.18, the breach of such
representation or warranty shall not give rise to an Event of Default
pursuant to this subsection (b); or
(c) Either the Borrower or the originator shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement
or in the Originator Sale Agreement (or, with respect to the Borrower, in
any other material agreement) on its part to
57
be performed or observed and any such failure shall remain unremedied for
three Business Days after written notice thereof shall have been given by
the Agent to the Borrower; or
(d) The Borrower or the Originator shall fail to pay any principal
of or premium or interest on any Debt in an amount in excess of $10,000
(with respect to the Borrower) or $250,000 (with respect to the
Originator), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other default under any agreement or instrument relating to any Debt in an
amount in excess of $10,000 (with respect to the Borrower) or $750,000
(with respect to the Originator) or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt;
or any such Debt shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof; or
(e) The Lender shall cease to have a valid and perfected first
priority security interest in each Pledged Receivable and the Related
Security and Collections with respect thereto or (ii) any purchase by the
Borrower of a Receivable from the Originator shall, for any reason, cease
to create in favor of the Borrower a valid and perfected first priority
security interest in each Pledged Receivable and the Related Security and
Collections with respect thereto; provided, however, that if any such
cessation of perfection relates solely to a Pledged Receivable which is
released by the Lender in accordance with Section 6.18, such cessation
shall not give rise to an Event of Default pursuant to this subsection
(e); or
(f) (i) The Borrower or the Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Borrower or the Originator seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property; or (ii) the Borrower or the
Originator shall take any corporate action to authorize any of the actions
set forth in clause (i) above in this Section 7.01(f); or
(g) The Default Ratio for three consecutive months shall exceed
1.20%; or
(h) There shall have been any material adverse change in the
financial condition or operations of the originator since December 31,
1994 until the date hereof, or there shall have occurred any event which
materially adversely affects the collectibility of the Receivables or
there shall have occurred any other event which materially adversely
affects the ability of the Borrower or the originator to collect
Receivables or to perform their respective obligations hereunder and under
the Originator Sale Agreement; or
58
(i) (i) There shall have occurred an "Event of Termination" under
the Originator Sale Agreement, or (ii) the Originator Sale Agreement shall
have ceased to be valid, binding and enforceable as against any of the
parties thereto without any amendment, modification, waiver or termination
of any terms or conditions thereof, other than as agreed to in writing by
the Agent, or (iii) the Originator shall have terminated the Originator
Sale Agreement for any reason, or (iv) the assignment to the Agent of all
of the Borrower's right and title to and interest in the Originator Sale
Agreement shall have ceased, for any reason, to be fully effective and
enforceable by the Agent as against any of the parties of the Originator
Sale Agreement; or
(j) The Originator shall cease to own (whether directly or
indirectly) 100% of the issued and outstanding stock of the Borrower; or
(k) A regulatory, tax or accounting body has ordered that the
activities of the Lender, or any Affiliate of the Lender, contemplated
hereby be terminated or, as a result of any other event or circumstance,
the activities of the Lender contemplated hereby may reasonably be
expected to cause the Lender, the Person then acting as the administrator
or the manager for the Lender, or any of their respective Affiliates to
suffer materially adverse regulatory, accounting or tax consequences; or
(l) The Borrower shall fail to make payment as specified in Section
2.05(f) and such failure shall remain unremedied for more than one
Business Day after written notice thereof shall have been given by the
Agent to the Borrower; or
(m) The Overcollateralization Percentage shall be less than the
Minimum Overcollateralization Percentage at any time; or
(n) The commercial paper dealer of the Lender is unable to retire
maturing commercial paper issued to fund or maintain Loans hereunder
through the issuance of new commercial paper for 90 consecutive days; or
(o) The Originator has a tangible net worth (as defined in GAAP
plus, if not otherwise included, non-redeemable subordinated debt) of less
than $5,000,000; or
(p) The ▇▇▇▇▇▇▇ Funding Group, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ or their Affiliates, singularly or in combination, shall cease to
own at least 51%, of the voting stock of the Originator; or
(q) The Borrower or any ERISA Affiliate of the Borrower shall have
(i) engaged in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States
Department of Labor; (ii) permitted 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; (iii) failed to make any payments to any
Multiemployer Plan that the
59
Borrower or any ERISA Affiliate may be required to make under the
agreement relating to such Multi-employer Plan or any law pertaining
thereto; (iv) terminated any Benefit Plan so as to result in a liability;
or (v) permitted to exist any occurrence of any reportable event described
in Title IV of ERISA which represents a material risk of a liability of
the Borrower or any ERISA Affiliate under ERISA or the Code, if such
prohibited transactions, accumulated funding deficiencies, payments,
terminations and reportable events occurring within any fiscal year of the
Borrower, in the aggregate, involve a payment of money or an incurrence of
liability by the Borrower or any ERISA Affiliate in an amount in excess of
$25,000; or
(r) A Servicer Default shall have occurred; or
(s) There shall have occurred an "Event of Termination" under the
Receivables Purchase Agreement, then, and in any such event, the Agent
may, by notice to the Borrower, declare the Termination Date to have
occurred, except that, in the case of any event described in Section
7.01(j) or clause (i) of Section 7.01(f) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such
event. Upon any such declaration or automatic occurrence, the Agent and
the Lender shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided under
the UCC of the applicable jurisdiction and other applicable laws, which
rights shall be cumulative.
ARTICLE VIII
SERVICER DEFAULTS.
SECTION 8.01. Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Agent any Monthly
Settlement Report, Borrowing Date/Spread Account Surplus Settlement Report
or Commercial Paper Settlement Report pursuant to Section 6.07 on or
before the date such delivery is due under the terms of this Agreement; or
(b) any failure by the Servicer to deliver any other information to
the Agent required pursuant to Section 6.01 on or before the date such
information, payment, transfer, deposit, instruction or notice is required
to be made or given under the terms of this Agreement, which continues
unremedied for a period of three Business Days after such information is
due under the terms of this Agreement; or
(c) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement or any of the other related documents to which it is a
party which continues unremedied for a period of ten Business Days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Agent, or to the
Servicer and the
60
Agent by the Lender; or the Servicer shall assign its duties under this
Agreement or under any of the other related documents to which it is a
party, except as permitted in accordance with the terms of Sections 8.02
and 10.04; or
(d) any representation, warranty or certification made by the
Servicer in this Agreement or any other related document to which it is a
party or in any certificate delivered pursuant to this Agreement or any
other Transaction Document to which it is a party shall prove to have been
incorrect in any material respect when made; or
(e) The Borrower or the originator shall fail to pay any principal
of or premium or interest on any Debt in an amount in excess of $10,000
(with respect to the Borrower) or $250,000 (with respect to the
Originator), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other default under any agreement or instrument relating to any Debt in an
amount in excess of $10,000 (with respect to the Borrower) or $750,000
(with respect to the Originator) or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt;
or any such Debt shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof; or
(f) a final judgment is rendered against the Servicer while acting
as Servicer in an amount greater than $1,000,000 and, within 45 days after
entry thereof, such judgment is not discharged or execution thereof stayed
pending appeal, or within 45 days after the expiration of any such stay,
such judgment is not discharged; or
(g) either the Agent or the Lender (i) shall receive notice from the
Servicer that the Servicer is no longer able to discharge its duties under
this Agreement or (ii) shall determine, in their respective reasonable
judgment and based upon published reports (including wire services), which
they reasonably believe in good faith to be reliable, that the Servicer:
(A) has experienced a material adverse change in its business, assets,
liabilities, operations, or financial condition, (B) has defaulted on any
of its material obligations (other than those included in this Agreement),
or (C) has ceased to conduct its business in the ordinary course, then, so
long as such Servicer Default shall not have been remedied, the Agent by
notice given in writing to the Servicer (a "Servicer Termination Notice"),
may terminate all of the rights and obligations of the Servicer as
Servicer under this Agreement (such termination being herein called a
"Servicer Transfer"). After receipt by the Servicer of such Servicer
Termination Notice, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Standby Servicer or another
Successor Servicer appointed pursuant to Section 8.02; and, without
limitation, the Agent is hereby authorized and empowered (upon the failure
of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to
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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 Agent and such Successor
Servicer in effecting the termination of the responsibilities and rights
of the Servicer to conduct servicing hereunder, including, without
limitation, the transfer to such Successor Servicer of all authority of
the Servicer to service the Pledged Receivables and related Pledged Assets
provided for under this Agreement, including, without limitation, all
authority over any Collections which shall on the date of transfer be held
by the Servicer for deposit or withdrawal in a Lock-box Account or the
Agent's Account or which shall thereafter be received by the Servicer with
respect to the Pledged Receivables, and in assisting the Successor
Servicer in enforcing all rights under this Agreement including, without
limitation, allowing the Successor Servicer's personnel access to the
Servicer's premises for the purpose of collecting payments on the Pledged
Assets made at such premises. The Servicer shall promptly transfer its
electronic records relating to the Pledged Assets to the Successor
Servicer in such electronic form as the Successor Servicer may reasonably
request and shall promptly transfer to the Successor Servicer all other
records, correspondence and documents necessary for the continued
servicing of the Pledged Assets in the manner and at such times as the
Successor Servicer shall reasonably request. The Servicer shall allow the
Successor Servicer access to the Servicer's officers and employees.
SECTION 8.02. Appointment of Successor.
(a) Appointment. On and after the receipt by the Servicer of a
Servicer Termination Notice pursuant to Section 8.01, or any permitted
resignation of the Servicer pursuant to Section 6.17, the Servicer shall
continue to perform all servicing functions under this Agreement until the
date specified in the Servicer Termination Notice or otherwise specified
by the Agent in writing or, if no such date is specified in such Servicer
Termination Notice, or otherwise specified by the Agent, until a date
mutually agreed upon by the Servicer and the Agent. The Agent shall as
promptly as possible after the giving of a Termination Notice appoint the
Standby Servicer or another successor Servicer (in any case, the
"Successor Servicer") and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Agent.
Notwithstanding the foregoing, the Agent shall, if it is unwilling or
legally unable so to act, petition a court of competent jurisdiction to
appoint any established financial institution having a net worth of not
less than $100,000,000 and whose regular business includes the servicing
of receivables similar to the Pledged Contracts or .if no such institution
is available, other consumer finance receivables, as the Successor
Servicer hereunder.
(b) Duties and Obligations of Successor Servicer. Upon its
appointment, the Successor Servicer shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement
and shall be subject to all the responsibilities and duties 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 Successor Servicer.
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(c) Compensation of Successor Servicer. In connection with such
appointment and assumption, the Agent may make such arrangements for the
compensation of the successor Servicer out of Collections as it and such
Successor Servicer shall agree.
(d) Termination of Servicer's Authority. All authority and power
granted to any Successor Servicer under this Agreement shall automatically
cease and terminate upon termination of this Agreement pursuant to Section
10.05, and shall pass to and be vested in the Borrower and, without
limitation, the Borrower is hereby authorized and empowered to execute and
deliver, on behalf of the Successor 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 upon termination of this Agreement.
The Successor Servicer shall cooperate with the Borrower in effecting the
termination of the responsibilities and rights of the Successor Servicer
to conduct servicing on the Pledged Contracts The Successor Servicer shall
transfer its electronic records relating to the Pledged Contracts to the
Borrower in such electronic form as the Borrower may reasonably request
and shall transfer all other records, correspondence and documents
relating to the Pledged Contracts to the Borrower in the manner and at
such times as the Borrower shall reasonably request. To the extent that
compliance with this Section 8.02 shall require the Successor Servicer to
disclose the information of any kind which the Successor Servicer deems to
be confidential, the Borrower shall be required to enter into such
customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests and as shall be
reasonably satisfactory in form and substance to the Borrower.
SECTION 8.03. Certain Matters Affecting the Successor Servicer. The
Successor Servicer hereunder shall be entitled to the following rights,
remedies, and protections in carrying out its duties as Servicer hereunder; (i)
the successor Servicer shall not be liable for any act or omission in carrying
out its duties, in the absence of its gross negligence, bad faith or willful
misconduct; (ii) the Successor Servicer may rely on and be fully protected in
acting or refraining from acting in accordance with any resolution, certificate,
letter, statement, instrument, opinion, report, notice, request, consent order,
appraisal, bond, or other document received by it which it has reason to believe
is genuine and signed or presented to it by a proper party; (iii) the Successor
Servicer may consult with counsel, and any opinion from such counsel (so long as
such counsel is not an employee of the Successor Servicer or an Affiliate of the
Successor Servicer) shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by the Successor Servicer in
good faith in accordance with such opinion; and (iv) the Successor Servicer
shall not be required to expend or risk its own funds for extraordinary expenses
or otherwise incur extraordinary financial liability in the performance of its
duties hereunder if it reasonably believes that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it (which assurance shall be deemed to have been given by an unsecured indemnity
agreement from an institutional investor having a long term unsecured
indebtedness rating of at least A or its equivalent from either of S&P or
Fitch). The reference to extraordinary expenses and liabilities in clause (iv)
of the preceding sentence refers to the out-of-pocket costs and expenses,
including any attorneys, fees and expenses, incurred in connection with suits
against Obligors for the
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enforcement of Pledged Contracts pursuant hereto, together with the risk of any
liabilities or counterclaims which could be incurred in connection therewith.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.01. Indemnities by the Borrower. Without limiting any
other rights which the Agent, the Lender or any of their respective Affiliates
may have hereunder or under applicable law, the Borrower hereby agrees to
indemnify the Agent, the Lender, and each of their respective Affiliates 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 of them arising out of or as a result of this
Agreement or the ownership of Pledged Assets or in respect of any Receivable or
any contract, excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of the Agent,
the Lender or such Affiliate or (b) recourse (except as otherwise specifically
provided in this Agreement) for uncollectible Pledged Receivables; provided,
however, that the liability for Indemnified Amounts partially attributable to
other Persons from whom the Lender purchases receivables or to whom the Lender
makes loans shall be reasonably allocated between the Borrower and such other
Persons by the Lender. Without limiting the foregoing, the Borrower shall
indemnify the Agent, the Lender and each of their respective Affiliates for
Indemnified Amounts relating to or resulting from;
(i) any Pledged Receivable treated as or represented by the
Borrower to be an Eligible Receivable which is not at the applicable
time an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Borrower, the Servicer (if the Originator 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 (if the
Originator 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 Receivable, the related
Contract or the Related Security, or the nonconformity of any
Receivable, the related Contract or the Related Security with any
such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the Lender or
to transfer to the Lender, a first priority security interest in the
Receivables which are, or are purported to be, Pledged Receivables,
together with all Collections and Related Security, free and clear
of any Adverse Claim (except as otherwise provided herein or in the
Receivables Purchase Agreement) whether existing at the time of the
related Borrowing or at any time thereafter;
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(v) the failure to maintain, as of the close of business on
each Business Day prior to the Termination Date, an aggregate amount
of Loans outstanding which is less than or equal to the lesser of
(x) the Borrowing Limit minus the Discount Amount on such Business
Day, or (y) the Capital Limit on such Business Day;
(vi) 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 Receivables which are, or are purported to be, Pledged
Receivables, whether at the time of any Borrowing or at any
subsequent time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the obligor) of the obligor to the
payment of any Receivable which is, or is purported to be, a Pledged
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
sale VOIs or Lots related to such Receivable or the furnishing or
failure to furnish such VOIs or Lots;
(viii) 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 Contracts;
(ix) any breach of contract or personal injury or property
damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with the VOIs or the Lots which
are the subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in
connection with the Pledged Receivables;
(xi) any repayment by the Agent or the Lender of any amount
previously distributed in payment of Loans or payment of Yield or
any other amount due hereunder, in each case which amount the Agent
or the Lender believes in good faith is required to be repaid;
(xii) the commingling of Collections of Pledged Receivables at
any time with other funds;
(xiii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Loans or the Pledged Assets
or in respect of any Receivable, Related Security or Contract;
(xiv) any failure by the Borrower to give reasonably
equivalent value to the
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originator in consideration for the transfer by the originator to
the Borrower of any Receivables or Related Security, 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
(xv) any failure of the Borrower, the Originator or any of
their respective agents or representatives (including, without
limitation, agents, representatives and employees of the Originator
acting pursuant to authority granted under Section 6.01) to remit to
the Servicer or the Agent, Collections of Pledged Receivables
remitted to the Borrower or any such agent or representative.
Any amounts subject to the indemnification provisions of this Section 9.01 shall
be paid by the Borrower to the Agent within two Business Days following the
Agent's written demand therefor.
SECTION 9.02. Indemnities by the Servicer. Without limiting any
other rights which the Agent, the Lender or any of their respective Affiliates
may have hereunder or under applicable law, the Servicer hereby agrees to
indemnify the Agent, the Lender, and each of their respective Affiliates from
and against any and all Indemnified Amounts awarded against or incurred by any
of them arising out of or as a result of this Agreement or the ownership of
Pledged Assets or in respect of any Receivable or any Contract, excluding,
however, (a) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of the Agent, the Lender or such Affiliate or
(b) recourse (except as otherwise specifically provided in this Agreement) for
uncollectible Pledged Receivables; provided, however, that the liability for
Indemnified Amounts partially attributable to other Persons acting as servicers
for receivables purchased by the Lender or collateral pledged to the Lender
shall be reasonably allocated between the Servicer and such other Persons by the
Lender. Without limiting the foregoing, the Servicer shall indemnify the Agent,
the Lender and each of their respective Affiliates for Indemnified Amounts
relating to or resulting from:
(i) reliance on any representation or warranty made or deemed
made by the Servicer (if the Originator 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;
(ii) the failure by the Servicer (if the Originator 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 Receivable, the related Contract or the Related
Security, or the nonconformity of any Receivable, the related
Contract or the Related Security with any such applicable law, rule
or regulation;
(iii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable which is, or is purported to be, a Pledged
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any
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other claim resulting from the sale VOIs or Lots related to such
Receivable or the furnishing or failure to furnish such VOIs or
Lots;
(iv) any failure of 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 Contracts;
(v) any breach of contract or personal injury or property
damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with the VOls or the Lots which
are the subject of any Receivable or Contract;
(vi) any repayment by the Agent or the Lender of any amount
previously distributed in payment of Loans or payment of Yield or
any other amount due hereunder, in each case which amount the Agent
or the Lender believes in good faith is required to be repaid;
(vii) the commingling by the Servicer of Collections of
Pledged Receivables at any time with other funds;
(viii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Loans, Pledged Assets or in
respect of any Receivable, Related Security or contract; or
(ix) any failure of the Borrower, the Originator or any of
their respective agents or representatives (including, without
limitation, agents, representatives and employees of the Originator
acting pursuant to authority granted under Section 6.01) to remit to
the Servicer or the Agent, Collections of Pledged Receivables
remitted to the Borrower or any such agent or representative.
Any amounts subject to the indemnification provisions of this Section 9.02 shall
be paid by the Servicer to the Agent within two Business Days following the
Agent's written demand therefor.
The applicable Affected Party shall deliver to the indemnifying
party under Section 9.01 and Section 9.02, within a reasonable time after the
Affected Party's receipt thereof, copies of all notices and documents (including
court papers) received by the Affected Party relating to the claim giving rise
to the Indemnified Amounts. Each Affected Party will cooperate with the Borrower
and the Servicer in connection with any claim giving rise to the Indemnified
Amounts to minimize the liability of such indemnifying parties, provided that
nothing contained herein shall obligate any Affected Party to take any action
which, in the opinion of the applicable Affected Party, is unlawful or otherwise
disadvantageous to such Affected Party.
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ARTICLE X.
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers.
(a) Except as provided in Section 10.01(b), no amendment or
modification of any provision of this Agreement shall be effective without
the written agreement of the Borrower, the Servicer, the Agent and the
Lender, and no termination or waiver of any provision of this Agreement or
consent to any departure therefrom by the Borrower or the Servicer shall
be effective without the written concurrence of the Agent and the Lender.
Any waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
(b) Notwithstanding the provisions of Section 10.01(a), in the event
that there is more than one Lender, the written consent of each Lender
shall be required for any amendment, modification or waiver (i) reducing
any outstanding Loans, or the Yield thereon, for any Fixed Period, (ii)
postponing any date for any payment of any Loan, or the Yield thereon, for
any Fixed Period, or (iii) modifying the provisions of this Section 10.01
and (iv) increasing the Capital Limit or the Borrowing Limit or (v)
reducing the Required overcollateralization Percentage and the Minimum
overcollateralization Percentage.
SECTION 10.02. 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 mails, first class
postage prepaid, (b) notice by telex, when telexed against receipt of
answerback, 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.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
Agent or the Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.04. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Agent, the Lender
and their respective successors and permitted assigns. This Agreement and the
Lender's rights and obligations hereunder and interest herein shall be
assignable in whole or in part (including by way of the sale of participation
interests therein) by the Lender and its successors and assigns. Neither the
Borrower nor the Servicer may assign any of its rights and obligations hereunder
or any interest herein without the prior written consent of the Lender and the
Agent. The parties to each assignment or participation
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made pursuant to this Section 10.04 shall execute and deliver to the Agent for
its acceptance and recording in its books and records, an Assignment and
Acceptance or a participation agreement or other transfer instrument reasonably
satisfactory in form and substance to the Agent and the Borrower. Each such
assignment or participation shall be effective as of the date specified in the
applicable Assignment and Acceptance or other agreement or instrument only after
the execution, delivery, acceptance and recording as described in the preceding
sentence. The Agent shall notify the Borrower of any assignment or participation
thereof made pursuant to this Section 10.04. The Lender may, in connection with
any assignment or participation or any proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Borrower and
the Pledged Assets furnished to the Lender by or on behalf of the Borrower or
the Servicer.
SECTION 10.05. Term of this Agreement. This Agreement, including,
without limitation, the Borrower's obligation to observe its covenants set forth
in Articles V and VI, 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
IX and Article X and the provisions of Section 10.08 and Section 10.09 shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.06. Governing Law; Jury Waiver. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF
THE LENDER IN THE PLEDGED RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT
THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN-RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.
SECTION 10.07. Costs, Expenses and Taxes.
(a) In addition to the rights of indemnification granted to the
Agent, the Lender and its Affiliates under Article VIII hereof, the
Borrower agrees to pay on demand all costs and expenses of the Lender and
the Agent incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), or any waiver or
consent issued in connection with, this Agreement and the other documents
to be delivered hereunder or in connection herewith or incurred in
connection with any amendment or modification of this Agreement and other
documents to be delivered hereunder or in connection herewith that is
necessary or requested by any of the Borrower, the Originator, Fitch or
S&P or made necessary or desirable as a result of the actions of any
regulatory, tax or accounting body affecting the Lender and its
Affiliates, including, without limitation, the reasonable fees and
69
out-of-pocket expenses of counsel for the Agent and the Lender with
respect thereto and with respect to advising the Agent and the Lender 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 Agent or the Lender in connection with the
enforcement of this Agreement and the other documents to be delivered
hereunder or in connection herewith.
(b) The Borrower shall pay on demand any and all commissions of
placement agents and dealers in respect of commercial paper notes issued
to fund the Loans and any and all stamp, sales, excise and other taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the other documents to
be delivered hereunder or any agreement or other document providing
liquidity support, credit enhancement or other similar support to the
Lender in connection with this Agreement or the funding or maintenance of
Loans hereunder.
(c) The Borrower shall pay on demand all other costs, expenses and
taxes (excluding income taxes) incurred by any Issuer or any general or
limited partner or shareholder of such Issuer ("Other Costs"), including,
without limitation, the cost of auditing such Issuer's books by certified
public accountants, the cost of rating such Issuer's commercial paper by
independent financial rating agencies, the taxes (excluding income taxes)
resulting from such Issuer's operations, and the reasonable fees and
out-of-pocket expenses of counsel for the Issuer or any counsel for any
general or limited partner or shareholder of the Issuer with respect to
(i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in
connection herewith, (ii) the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith and (iii)
advising such Person as to the issuance of the Issuer's commercial paper
notes to fund Loans and action in connection with such issuance.
SECTION 10.08. No Proceedings. Each of the Borrower, the Agent, the
Servicer and the Lender each hereby agrees that it will not institute against,
or join any other Person in instituting against, any Issuer any proceedings of
the type referred to in clause (i) of Section 7.01(f) so long as any commercial
paper issued by such Issuer shall be outstanding or there shall not have elapsed
one year and one day since the last day on which any such commercial paper shall
have been outstanding.
SECTION 10.09. Recourse Against Certain Parties. 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 Lender as
contained in this Agreement or any other agreement, instrument or document
entered into by it pursuant hereto or in connection herewith shall be had
against any administrator of the Lender or any incorporator, affiliate,
stockholder, officer, employee or director of the Lender or of any such
administrator, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of the Lender contained in this
Agreement and all of the other agreements, instruments and documents entered
into by it pursuant hereto or in
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connection herewith are, in each case, solely the corporate obligations of the
Lender, and that no personal liability whatsoever shall attach to or be incurred
by any administrator of the Lender or any incorporator, stockholder, affiliate,
officer, employee or director of the Lender or of any such administrator, as
such, or any other them, under or by reason of any of the obligations, covenants
or agreements of the Lender contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that
any and all personal liability of every such administrator of the Lender and
each incorporator, stockholder, affiliate, officer, employee or director of the
Lender or of any such administrator, or any of them, for breaches by the Lender
of any such obligations, covenants or agreements, which liability may arise
either at common law or at equity, by statute or constitution, or otherwise, is
hereby expressly waived as a condition of and in consideration for the execution
of this Agreement. The provisions of this Section 10.09 shall survive the
termination of this Agreement.
SECTION 10.10. 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 the fee letters
described in Section 2.09.
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: BFICP CORPORATION
By
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Title:
BFICP Corporation
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Attention:
Facsimile No.:
Telephone No.:
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THE SERVICER: ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
By
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Title:
▇▇▇▇▇▇▇ Funding International, Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:
THE AGENT: INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL MARKETS, INC.
By
------------------------------------
Title:
Internationale Nederlanden (U.S.)
Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.; ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
72
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: BFICP CORPORATION
By
------------------------------------
Title:
BFICP Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile No.:
Telephone No.:
THE SERVICER: ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
By
------------------------------------
Title:
▇▇▇▇▇▇▇ Funding International, Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:
THE AGENT: INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL MARKETS, INC.
By
------------------------------------
Title:
Internationale Nederlanden (U.S.)
Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.; ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
73
THE LENDER: HOLLAND LIMITED SECURITIZATION, INC.
By Internationale Nederlanden
(U.S.) Capital Markets, Inc.,
as attorney-in-fact
By
------------------------------------
Title:
Holland Limited Securitization,
Inc.
▇/▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(▇.▇.) Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
c/o Lord Securities Corporation
▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
74
Execution Copy
U.S. $50,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 25, 1995
Among
CORPORATION
as the Seller
and
▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
as the Servicer
and
HOLLAND LIMITED SECURITIZATION, INC.
as a Purchaser
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL MARKETS, INC.
as the Agent
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I.
DEFINITIONS................................ 1
SECTION 1.01. Certain Defined Terms....................................... 1
SECTION 1.02. Other Terms................................................. 25
SECTION 1.03. Computation of Time Periods................................. 25
ARTICLE II.
THE RECEIVABLES FACILITY......................... 25
SECTION 2.01. Purchases of Purchased Assets............................... 25
SECTION 2.02. The Initial Purchase and Subsequent Purchases............... 25
SECTION 2.03. Termination or Reduction of the Purchase Limit.............. 26
SECTION 2.04. Selection of Fixed Periods.................................. 26
SECTION 2.05. Settlement Procedures....................................... 27
SECTION 2.06. Spread Account.............................................. 30
SECTION 2.07. Special Settlement Procedures............................... 31
SECTION 2.08. Payments and Computations, Etc.............................. 31
SECTION 2.09. Fees........................................................ 32
SECTION 2.10. Increased Costs; Capital Adequacy; Illegality............... 33
SECTION 2.11. Taxes....................................................... 34
SECTION 2.12. Assignment of the originator Sale Agreement................. 36
SECTION 2.13. Payment of Covered Obligations; Grant of Security Interest.. 37
ARTICLE III.
CONDITIONS OF PURCHASES......................... 39
SECTION 3.01. Conditions Precedent to Initial Purchase.................... 39
SECTION 3.02. Conditions Precedent to All Purchases and Remittances
of Collections............................................ 39
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES...................... 40
SECTION 4.01. Representations and Warranties of the Seller................ 40
SECTION 4.02. Representations and Warranties of the Purchaser............. 44
ARTICLE V.
GENERAL COVENANTS OF THE SELLER..................... 45
SECTION 5.01. General Covenants........................................... 45
SECTION 5.02. Financial Covenants......................................... 51
ii
ARTICLE VI.
ADMINISTRATION, COLLECTION AND
MONITORING OF RECEIVABLES........................ 51
SECTION 6.01. Appointment and Designation of the Servicer................. 51
SECTION 6.02. Collection of Receivables by the Servicer; Extensions
and Amendments of Receivables.............................. 52
SECTION 6.03. Distribution and Application of Collections................. 52
SECTION 6.04. Segregation of Collections.................................. 53
SECTION 6.05. Other Rights of the Agent................................... 53
SECTION 6.06. Records; Audits............................................. 53
SECTION 6.07. Periodic Settlement Reporting............................... 54
SECTION 6.08. Collections and Lock-Boxes.................................. 55
SECTION 6.09. UCC Matters; Protection and Perfection of Purchased Assets.. 55
SECTION 6.10. Obligations of the Seller With Respect to Receivables....... 57
SECTION 6.11. Rights of Obligors and Release of Contract Files............ 57
SECTION 6.12. Recordation of Assignments.................................. 58
SECTION 6.13. Costs and Expenses.......................................... 58
SECTION 6.14. Servicer Representations and Warranties..................... 58
SECTION 6.15. Additional Covenants of the Servicer........................ 61
SECTION 6.16. Standby Servicer............................................ 62
SECTION 6.17. The Servicer not to Resign.................................. 63
SECTION 6.18. Repurchases; Clean-up....................................... 63
ARTICLE VII.
EVENTS OF TERMINATION.......................... 66
SECTION 7.01. Events of Termination....................................... 66
ARTICLE VIII
SERVICER DEFAULTS............................ 70
SECTION 8.01. Servicer Defaults........................................... 70
SECTION 8.02. Appointment of Successor.................................... 72
SECTION 8.03. Certain Matters Affecting the Successor Servicer............ 73
ARTICLE IX.
INDEMNIFICATION............................. 74
SECTION 9.01. Indemnities by the Seller................................... 74
SECTION 9.02. Indemnities by the Servicer................................. 76
ARTICLE X.
MISCELLANEOUS.............................. 78
SECTION 10.01. Amendments and Waivers..................................... 78
SECTION 10.02. Notices, Etc............................................... 79
SECTION 10.03. No Waiver; Remedies........................................ 79
SECTION 10.04. Binding Effect; Assignability.............................. 79
SECTION 10.05. Term of this Agreement..................................... 80
iii
SECTION 10.06. Governing Law; Jury Waiver................................. 80
SECTION 10.07. Costs, Expenses and Taxes.................................. 80
SECTION 10.08. No Proceedings............................................. 81
SECTION 10.09. Recourse Against Certain Parties........................... 81
SECTION 10.10. Execution in Counterparts; Severability; Integration....... 82
iv
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Approved Developments
SCHEDULE II Contract schedule
SCHEDULE III Description of Credit and Collection Policy
SCHEDULE IV Developments
SCHEDULE V VOI Regimes
SCHEDULE VI Condition Precedent Documents
SCHEDULE VII Lock-Box Banks
SCHEDULE VIII Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IX Environmental Issues
EXHIBITS
EXHIBIT A Form of Commercial Paper Settlement Report
EXHIBIT B Form of Contract Assignment
EXHIBIT C Form of Assignment of Mortgage
EXHIBIT D Form of Developer Sale Agreement
EXHIBIT E Form of Monthly Settlement Report
EXHIBIT F Form of Purchase Date/Spread Account Surplus
Settlement Report
EXHIBIT G "Limited Purpose,, Provisions of Seller's
Certificate of Incorporation
EXHIBIT H Form of officer's Release Certificate
v
THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement") is made as of
May 25, 1995, among:
(1) BFICP CORPORATION, a Delaware corporation (the "Seller");
(2) ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD., a Delaware corporation
(sometimes referred to herein as the "Originator"), as the
"Servicer" (as defined herein)
(3) HOLLAND LIMITED SECURITIZATION, INC., a Delaware corporation
("HLS"); and
(4) INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL MARKETS, INC. ("ING"
Capital"), as agent (the "Agent").
IT IS AGREED as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized terms
used throughout this Agreement are defined above or in this Section 1.01.
(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).
"Adverse Claim" means a lien, security interest, charge, encumbrance
or other right or claim of any Person (other than, with respect to the Purchased
Assets, any lien, security interest, charge, encumbrance or other right or claim
in favor of the Purchaser (or the Agent on behalf of the Purchaser)).
"Affected Party" has the meaning assigned to that term in Section
2.10.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person.
"Agent's Account" means a subaccount within a special account
(account number 550-023569 at Chemical Bank, Syracuse, New York in the name of
the Purchaser, the Agent or the Collateral Trustee, as from time to time
designated by the Agent by notice to the Seller and the Servicer.
"Agent's Bank" means Chemical Bank.
1
"Agent's Fee" has the meaning assigned to that term in Section
2.09(a).
"Agreement" means this Receivables Purchase Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time
hereafter.
"Aggregate Concentration Limit" means at any time, (a) for the
Obligors of any one Approved Development, (i) on and after the date hereof but
before the first anniversary hereof, an amount equal to 10% of the Gross
Eligible Receivables Balance at such time, (ii) on and after the first
anniversary hereof but before the second anniversary hereof, an amount equal to
7.5% of the Gross Eligible Receivables Balance at such time, and (iii) on and
after the second anniversary hereof, an amount equal to 5.0% of the Gross
Eligible Receivables Balance at such time and (b) for the Obligors of any other
Development, an amount equal to 3% of the Gross Eligible Receivables Balance at
such time.
"Aggregate Large Receivables Limit" means at any time an amount
equal to 5% of the Gross Eligible Receivables Balance at such time.
"Alternative Rate" means, with respect to any Fixed Period for all
Capital allocated to such Fixed Period, an interest rate per annum equal to sum
of the Base Rate plus 2.0%.
"Approved Development" means any Development that is designated as
an Approved Development on Schedule I and any other Development that (a) was
developed by a Developer that satisfies the Originator's Developer underwriting
standards (a copy of which is attached as an annex to Schedule 1), (b) has been
inspected by the Agent or a representative of the Agent and (c) the Agent has
designated (in a writing delivered to the Seller from time to time) as an
Approved Development; provided, however, that any designation by the Agent of a
Development as an "Approved Development" may be withdrawn by the Agent in its
sole discretion in a writing delivered to the Seller at any time that the
Development Default Ratio for such Development shall have exceeded 2.0% for
three consecutive months and any such withdrawal shall be effective commencing
on the first day of the month immediately succeeding the month in which such
notice is delivered to the Seller.
"Assignment and Acceptance" means an assignment and acceptance
entered into by the Purchaser and an assignee pursuant to Section 10.04.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the arithmetic average of the rates of interest publicly
announced by The Chase Manhattan Bank, N.A., Citibank, N.A. and ▇▇▇▇▇▇ Guaranty
Trust Company of New York (or their respective successors) as their respective
prime commercial lending rates (or, as to any such bank that does not announce
such a rate, such bank's "base" or other rate determined by the Purchaser to be
the equivalent rate announced by such bank), except that, if any such bank
shall, for any period, cease to announce publicly its prime commercial lending
(or equivalent) rate, the Agent shall, during such period, determine the "Base
Rate" based upon the prime commercial lending (or equivalent) rates announced
publicly by the other such banks or, if each such bank ceases to announce
publicly its prime commercial lending (or equivalent) rate, based upon the prime
commercial lending (or
2
equivalent) rates announced publicly by other banks reasonably acceptable to the
Seller. The prime commercial lending (or equivalent) rates used in computing the
Base Rate are not intended to be the lowest rates of interest charged by such
banks in connection with extensions of credit to debtors. The Base Rate shall
change as and when such banks, prime commercial lending (or equivalent) rates
change.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Seller or any ERISA Affiliate of the
Seller is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday or a
Sunday on which banks are not authorized or required to close in New York City.
"Capital" means the sum of the amounts paid to the Seller for the
initial Purchase and in connection with each Subsequent Purchase pursuant to
Section 2.02, reduced from time to time by Collections received and distributed
to the Purchaser on account of such Capital pursuant to Section 2.05; provided,
however, that such capital shall not be reduced by any distribution of any
portion of Collections if at any time such distribution is rescinded or returned
by the Purchaser to the Seller or any other Person for any reason.
"Capital Base Deficiency" means at any time that the Required
Overcollateralization Percentage exceeds the Overcollateralization Percentage,
an amount equal to the remainder of (a) the product of (i) the sum of 1001 plus
the Required Overcollateralization Percentage multiplied by (ii) the Facility
Amount minus (b) the sum of (i) the Purchased Receivables Balance plus (ii)
amounts on deposit in the Spread Account plus (iii) the amount of Collections on
deposit in the Agent's Account to be applied in accordance with Section 2.05 on
the next Settlement Date.
"Capital Base Surplus" means at any time that the
Overcollateralization Percentage exceeds the Required Overcollateralization
Percentage, an amount equal to the remainder of (a) the sum of (i) the Purchased
Receivables Balance plus (ii) amounts on deposit in the Spread Account plus
(iii) the amount of Collections on deposit in the Agent's Account to be applied
in accordance with Section 2.05 on the next Settlement Date minus (b) the
product of (i) the sum of 100% plus the Required overcollateralization
Percentage multiplied by (ii) the Facility Amount.
"Capital Limit" means, at any time, an amount equal ro the quotient
of (a) the sum of (i) the Purchased Receivables Balance at such time, plus (ii)
the aggregate amount at the time on deposit in the Spread Account, plus (iii)
the amount of Collections on deposit in the Agent's Account to be applied in
accordance with Section 20 on the next Settlement Date divided by (b) 100% plus
the Minimum overcollateralization Percentage at such time.
"Carrying Cost Reserve Amount" means, with respect to a Business Day
that is not a Settlement Date, the sum of (a) the Capital Base Deficiency as of
such Business Day (or as of the date of the related Purchase Date/Spread Account
Surplus Settlement Report) plus (b) aggregate accrued and unpaid (i) Yield, (ii)
Liquidation Fees, (iii) Facility Fee, (iv) Servicer Fee and (v) obligations of
the Seller to the Purchaser hereunder other than the amounts described in the
foregoing clauses (i)-(iv) (collectively, the fees and amounts described in the
3
foregoing clauses (i)-(v), the "Carrying Costs"), each as of such Business Day
(or as of the date of the related Purchase Date/Spread Account surplus
Settlement Report) plus (c) the aggregate Carrying Costs that will accrue from
such Business Day (or, if used as the basis for the calculations in the
preceding clause (b), from the date of the related Purchase Date/Spread Account
Surplus Settlement Report) and be payable pursuant to Section 2.05 on the next
Settlement Date after such Business Day (after giving effect to any Purchase to
be made on such Business Day); provided, that, for purposes of the foregoing,
Yield that will accrue from such date shall be calculated assuming that all
Capital allocated to a Fixed Period commencing on or after such day will bear
interest at the Alternative Rate minus the per annum rate at which the usage fee
payable to the Purchaser (either directly or through the Agent) is calculated
pursuant to the terms of the fee letter executed by the Seller and the
Purchaser.
"Code", means the Internal Revenue Code of 1986, as amended.
"Collateral Trustee" means BankAmerica National Trust company and
any successor collateral agent and trustee with respect to the commercial paper
and the liquidity and credit support providers of the Purchaser.
"Collection Date" means the date following the Termination Date on
which (a) the aggregate outstanding Capital has been reduced to zero, the
Purchaser has received all Yield and other amounts due to the Purchaser in
connection with this Agreement and the Agent has received all amounts due to it
in connection with this Agreement and (b) the outstanding loans under the
Receivables Loan Agreement has been reduced to 'zero' and Purchaser and the
Agent have received all of the other obligations payable to them under the
Receivables Loan Agreement or any other agreement, excluding, however, this
Agreement, executed pursuant thereto or in connection therewith.
"Collections" means, (a) with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and any Collection of such Receivable deemed to have been received
pursuant to Section 2.07, (b) any amounts paid to the Seller (or the Agent or
any Purchaser or assignees thereof) pursuant to the terms of the Originator Sale
Agreement with respect to any Purchased Receivables, (c) any amounts paid to the
Seller (or the Agent or any Purchaser or assignees thereof) pursuant to the
terms of any Developer Sale Agreements with respect to any Purchased Receivables
and (d) any amounts paid to the Purchaser under any Purchased Rate Cap that are
ratably allocable to this Agreement (as opposed to the Receivables Loan
Agreement) based on outstanding Capital and the principal amount of Loans under
the Receivables Loan Agreement.
"Commercial Paper Settlement Report" means a report, in
substantially the form of Exhibit A, furnished by the Servicer to the Agent for
the Purchaser pursuant to Section 6.07(d).
"Concentration Limit" means at any time, for the Obligors of any one
Development, the portion of the Aggregate Concentration Limit for such Obligors
that is specified by the Seller on the latest Monthly Settlement Report as being
allocated to this Agreement (as opposed to the
4
Receivables Loan Agreement); the sum of the Concentration Limits for the
Obligors of any one Development under this Agreement and the Receivables Loan
Agreement shall equal the Aggregate Concentration Limit for such Obligors. If
the Seller fails to provide the Servicer with an appropriate allocation of an
Aggregate Concentration Limit for the Obligors of a Development, the
Concentration Limit under this Agreement for such Obligors will equal the
Aggregate Concentration Limit for such Obligors and the "Concentration Limit"
under the Receivables Loan Agreement for such Obligors shall equal zero.
"Contract" means an interval ownership or lot contract agreement and
installment note relating to the sale of one or more VOI's or Lots to an
obligor, together with any separate obligor's installment note for the payment
of the balance of the purchase price thereof.
"Contract Conveyance Documents" means, with respect to each
Purchased Contract, the following documents:
(a) an original assignment or assignments, in recordable form, of
such Contract and certain related property from the Originator to the
Seller and subsequent assignment of such Contract and related property
from the Seller to HLS, and the subsequent collateral assignment to the
collateral Trustee, in one of the forms attached to this Agreement as
Exhibit B;
(b) if the related VOI or Lot has been deeded to the obligor, an
original Assignment or Assignments of Mortgage, in recordable form,
assigning any Contract Mortgage related to such Contract from the
originator to the Seller and subsequently assigning such Contract Mortgage
from the Seller to HLS, and subsequently collaterally assigning such
Contract Mortgage from HLS to the Collateral Trustee, in one of the forms
attached to this Agreement as Exhibit C;
(c) if the Contract financed the purchase by the obligor of Credit
Life Insurance, an original acknowledgment signed by the issuer of any
credit Life Insurance of the assignment of the Seller's rights therein
pursuant to this Agreement in the form delivered to the Collateral Trustee
on the initial Purchase Date; and
(d) in the case of any Subsequent Purchase Date, any such other
documents, instruments or agreements as may be required by the Agent in
order to more fully effect the transfer of the Purchased Receivables and
any related Purchased Assets.
"Contract Documents" means the Contract and all papers and documents
related to a Contract, including all applicable promissory notes endorsed in
blank, the original of any related recorded or unrecorded Contract mortgage and
a copy of any recorded or unrecorded warranty deed transferring legal title to
the related VOI or Lot to the Obligor, tax receipts, insurance policies,
insurance premium receipts, ledger sheets, payment records, insurance claim
files and correspondence, repossession files and correspondence, the original of
any related assignment, modification or assumption agreement or, if such
original is unavailable, a copy thereof, current and historical computerized
data files, and all other papers and records of whatever kind or description,
5
whether developed or originated by the Originator, the Seller or another Person,
required to document, service or enforce a Contract.
"Contract File" means the Contract Documents pertaining to a
particular Purchased Contract and any additional amendments. supplements,
extensions, modifications or waiver agreements required to be added to the
Contract File pursuant to this Agreement or Credit and Collection Policy.
"Contract Mortgage" means any mortgage, deed of trust, purchase
money deed of trust or deed to secure debt granted by an obligor to the
originator of the Contract encumbering the related VOI or Lot to secure Payments
or other obligations under such Contract.
"Contract Rate" means, with respect to a Purchased Contract, the
annual fixed rate at which interest accrues on such Purchased Contract.
"Contract Schedule" means the Purchased Contract list, attached
hereto as Schedule II, as amended from time to time to add new Purchased
Contracts and to remove certain Purchased Contracts, in each case in accordance
with this Agreement, which list shall set forth the following information with
respect to each contract therein as of the applicable date:
(a) the Contract number;
(b) the obligor's name;
(c) the Development in which the related VOI or Lot is located;
(d) the current Contract Rate;
(e) whether the Obligor is covered by a policy of Credit Life
Insurance and the amount of any insurance premium for such
policy financed pursuant to the Contract;
(f) the original term of the Contract;
(g) the original and current Outstanding Balance (as of the
applicable Cut-Off Date);
(h) the amount of the Payments on the Contract;
(i) the original purchase price of such contract paid or to be
paid by the originator under the applicable Developer Sale
Agreement; and
(j) whether the related VOI or Lot has been deeded to the Obligor.
"CP Rate" means, with respect to any Fixed Period for all Capital
allocated to such
6
Fixed Period, the rate equivalent to the rate (or if more than one rate, the
weighted average of the rates) at which commercial paper notes of the Purchaser
having a term equal to such Fixed Period and to be issued to fund the applicable
Purchase by the Purchaser may be sold by any placement agent or commercial paper
dealer selected by the Purchaser, as agreed between each such agent or dealer
and the Purchaser and notified by the Purchaser to the Agent and the Servicer;
Provided, however, if the rate (or rates) as agreed between any such agent or
dealer and the Purchaser with regard to any Fixed Period for the applicable
Purchase is a discount rate (or rates), the "CP Rate" for such Fixed Period
shall be the rate (or if more than one rate, the weighted average of the rates)
resulting from converting such discount rate (or rates) to an interest-bearing
equivalent rate per annum.
"Credit and Collection Policy" means those credit and collection
policies and practices of the Servicer and the Originator relating to
Developers, Contracts and Receivables described in Schedule III, as modified in
compliance with this Agreement.
"Credit Life Insurance" means any policy of insurance acquired by
the Obligor providing for payment of the principal amount outstanding under a
Contract upon the Obligor's death.
"Credit Life Insurance Proceeds" means proceeds of, or any unearned
premium recovered in respect of, any Credit Life Insurance, which shall
constitute Collections.
"Cut-Off Date" means (a) with respect to the initial Purchase, May
1, 1995, or (b) with respect to each Subsequent Purchase Date, such date as the
Agent and the Seller shall mutually agree.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (e) obligations secured by an Adverse Claim
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations and (f) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above.
"Default Ratio" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month by dividing (a) the aggregate
Outstanding Balance of all Purchased Receivables and Pledged Receivables that
became Defaulted Receivables at any time during the month then ending plus
(without duplication) the amount of all Receivables which were written off the
books of the Seller during such month, by (b) the average aggregate Gross
Eligible Receivables Balance (excluding all Defaulted Receivables) during such
month.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part
7
thereof, exclusive of any advances made by the Servicer or any Person other than
the Obligor, remains unpaid for more than 90 days from the original due date for
such payment, (b) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01(f), or (c)
which, consistent with the Credit and Collection Policy, has been or should be
written off the Seller's books as uncollectible.
"Defaulted Receivable Release Date" has the meaning assigned to such
term in Section 6.18 of this Agreement.
"Defective Contract" has the meaning assigned to such term in
Section 6.18 of this Agreement.
"Defective Contract Release Date" has the meaning assigned to such
term in Section 6.18 of this Agreement.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (a) the sum of
the aggregate Outstanding Balance of all Purchased Receivables that were
Delinquent Receivables as of such date, by (b) the aggregate Outstanding Balance
of all Purchased Receivables as of the last day of such month.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and (a) as to which any payment or part thereof, exclusive of any
advances made by the Servicer or any Person other than the obligor, remains
unpaid for more than 30 days from the original due date for such payment or (b)
which, consistent with the Credit and Collection Policy, has been or should be
classified as delinquent by the Servicer.
"Depository Institution" means a depository institution or trust
company, incorporated under the laws of the United States or any State thereof,
that is subject to supervision and examination by federal and/or state banking
authorities.
"Developer" means a Person from which the originator purchased
Receivables and related assets pursuant to a "Contract of Sale of Time Share
Receivables with Recourse" substantially in the form of Exhibit D or in such
other form as may be acceptable to the Agent (each a "Developer Sale
Agreement").
"Developer Mortgage" means any mortgage or deed of trust or deed to
secure debt granted by a Developer to the Originator to secure the Developer's
obligations under a Developer Sale Agreement between the originator and such
Developer encumbering the related Development.
"Developer Sale Agreement" has the meaning assigned to that term in
the definition of "Developer."
"Development Default Ratio" means at any time, for the Purchased
Receivables and Pledged Receivables related to a Development, the ratio
(expressed as a percentage) computed as of the last day of each calendar month
by dividing (a) the aggregate outstanding Balance of all such
8
Purchased Receivables and Pledged Receivables that became Defaulted Receivables
at any time during the month then ending plus (without duplication) the amount
of all Receivables related to such Development which were written off the books
of the Seller during such month, by (b) the average aggregate Outstanding
Balance of all Purchased Receivables and Pledged Receivables (excluding all
Defaulted Receivables) during such month, in each case related to such
Development.
"Developments" means each resort or development listed on Schedule
IV to this Agreement, as subsequently amended from time to time with the written
consent of the Agent.
"Discount Amount" means at any time an amount equal to:
PL - PL
----
1.05
where:
PL = the Purchase Limit in effect on the date of determination.
"Eligible Assignee" means each of ING Capital, any receivables
investment vehicle sponsored by ING Capital or any of its Affiliates, any
financial institution providing credit enhancement or liquidity support to the
Purchaser in connection with the transactions contemplated by this Agreement and
any Affiliate of any of the foregoing; provided, that, no such financial
institution providing credit enhancement or liquidity support to the Purchaser
that is not an Affiliate of ING Capital shall be an Eligible Assignee without
the prior written consent of the Seller, which consent shall not be unreasonably
withheld.
"Eligible Contract" means, except as otherwise approved by the
Agent, a Contract:
(a) (i) where the related VOI or Lot is located in a Development,
(ii) where the unit for a related VOI is complete and ready for occupancy
and is not in need of maintenance or repair, except for ordinary, routine
maintenance and repairs which are not substantial in nature or cost and
where such unit contains no structural defects materially affecting its
value and is in good tenantable condition, (iii) where the related VOI
Regime is contiguous to a dedicated, physically-open, all-weather street,
and is adequately serviced by public (or private if complying with all
material and applicable local laws, regulations and ordinances) water and
sewer systems and utilities, (iv) where the related VOI Regime is not in
need of maintenance or repair, except for ordinary, routine maintenance
and repairs which are not substantial in nature or cost and where such VOI
Regime contains no structural defects materially affecting its value, and
(v) where there is no legal, judicial or administrative proceeding pending
or threatened for the total or partial condemnation of any VOI Regime
which would have a material adverse effect on the value of the related VOI
Regime or unit;
(b) where the rights-of the obligor thereunder are subject to
declarations, covenants and restrictions of record affecting the related
VOI Regime;
9
(c) as to which the Seller has a valid ownership interest in the
related VOI or Lot subject only to (i) the interest therein of the
Obligor, (ii) the lien of unbilled and unpaid assessments, (iii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, such exceptions appearing of record being
consistent with the normal business practices of the Originator or
specifically disclosed in the applicable land sales registrations filed
with the applicable regulatory agencies, and (iv) other matters to which
properties of the same type as those underlying the Contracts are commonly
subject which do not materially interfere with the benefits of the
security intended to be provided by such Contract;
(d) where (i) if the related VOI or Lot has been deeded to the
Obligor of the related Contract, on the date on which the Receivables
arising under such Contract were Purchased hereunder, the Seller had a
valid and enforceable first lien Contract Mortgage on such VOI or Lot,
which Contract Mortgage has been assigned to the collateral Trustee for
the benefit of itself, the Agent and the Purchaser pursuant to the
Contract Conveyance Documents, (ii) if the related VOI or Lot has not been
deeded to the Obligor of the related Contracts, on the date on which the
Receivables arising under such Contract were Purchased hereunder, the
Developer had legal title to such VOI or Lot and the Seller had an
equitable interest in such VOI or Lot underlying the related Contract,
which equitable interest has been assigned to the collateral Trustee
pursuant to the Contract Conveyance Documents, and (iii) if any Contract
Mortgage is a deed of trust, a trustee, duly qualified under applicable
law to serve as such, had been properly designated in accordance with
applicable law and currently so serves;
(e) that has a Contract Rate that is equal to or greater than the
sum of (i) the thirty day commercial paper index rate set forth in the
most recent weekly statistical release designated H.15(519) published by
the Board of Governors of the Federal Reserve System (or any successor
publication) as of the applicable Cut-Off Date with respect to the
Receivables arising under such Contract plus (ii) 3.45%; (accruing on an
actuarial (pre-computed) basis);
(f) that provides for equal monthly Payments of principal or
principal and interest (except for the final monthly Payment which is no
greater than 110% of each preceding monthly Payment) which fully amortize
the related loan over its term;
(g) that requires the Obligor to pay the unpaid principal balance on
or before April 30, 2008 over an original term of not greater than 120
months and over a remaining term (at the time of sale to the Purchaser) of
not greater than 84 months;
(h) where at least two Payments with respect to such Contract have
been received by the originator;
(i) which is not a Defective Contract;
(j) as to which, if the Contract financed the purchase by the
Obligor of Credit
10
Life Insurance, (i) such policy is in full force and effect and has been
validly and effectively assigned by way of security, pursuant to all
applicable laws, rules and regulations, to the Collateral Trustee, (ii)
the full premium therefor has been paid, and (iii) the insurance company
issuing such policy is rated at least "All by A.M. Best Company, Inc.;
(k) the underlying ownership interest which is the subject of such
Contract consists of (i) a fixed week, (ii) an undivided interest in fee
simple in a lodging unit or group of lodging units at a Development Agent
or (iii) such other interest or right with respect to a lodging unit or
group of lodging units at a Development that has been approved of by the
Agent in writing (including a right to use a lodging unit or group of
lodging units at a Development if approved of by the Agent in writing);
(1) which was originated and has been consistently serviced in
accordance with the Credit and Collection Policies; which has not been
reserved against by the Originator or the Seller (except for purchase
price amounts held back by the Originator pursuant to the terms of a
Developer Sale Agreement and for reserves established by the Originator
with respect to all Receivables);
(n) as to which the payment obligation of the Obligor is not subject
to any material dispute between the Obligor and any of the Developer, the
Seller, the Servicer and/or the Originator;
(o) which arises from transactions in a jurisdiction where the
Originator is duly qualified to do business in such jurisdiction, if the
Originator is required to be qualified to do business in such
jurisdiction;
(p) which have not been canceled or terminated (regardless of
whether the Obligor thereof is legally entitled to do so) or declared
ineligible by any of the Seller, the Servicer or the Originator, and
constitute legal, valid, binding and enforceable obligations of the
obligors thereof fee from any dispute, offset, counterclaim or defense
whatsoever;
(q) where such Contract had a minimum equity of 10% at origination
(calculated using the Sales Price for such Contract and including in such
total equity any cash down payments and Payments made on any other
Contract which has been "traded in" in connection with the origination of
such Contract);
(r) the performance of which has been completed by the Seller, the
related Developer and by all other parties other than the Obligor and
there are no executory obligations to be performed thereunder except by
the Obligor;
(s) as to which there is no default, breach, violation or event
permitting acceleration existing under the Contract and no event which,
with the giving of notice or the expiration of any grace or cure period or
both, would constitute such a default, breach, violation or event
permitting acceleration under such Contract and neither the Seller nor the
Originator has waived any such default, breach, violation or event
permitting acceleration
11
without obtaining the prior written consent of the Agent;
(t) where, if such contract also financed a policy of Credit Life
Insurance: (i) the Seller is the sole assignee of the sole beneficiary of
such policy;
(ii) the Seller has the power and authority to pledge its
interest as the assignee of the beneficiary of such policy, and it has so
pledged its interest to the Collateral Trustee pursuant to an effective
assignment; (iii) the Seller has the sole power and authority to cancel
such policy in the event of nonpayment of such Contract and the sole right
to receive any unearned premium in the event of cancellation of such
policy; and (iv) the Seller has the power and authority to assign its
right to receive any unearned premium with respect to such policy, and it
has so pledged its right to the Collateral Trustee pursuant to an
effective assignment; and
(u) where no payment or any part thereof due from the related
Developer to the Seller, the Originator or any Affiliate of the Originator
(whether pursuant to the related Developer Sale Agreement or otherwise)
remains unpaid past the original due date for such payment.
"Eligible Depository Institution" means a Depository Institution,
the short term unsecured senior indebtedness of which is rated at least A-1 by
S&P and F-1 by Fitch, if rated by Fitch.
"Eligible Developer Sale Agreement" means, except as otherwise
approved by the Agent, a Developer Sale Agreement:
(a) entered into with a Developer which is a United States resident
(unless otherwise approved of by the Agent in writing and each of S&P and
Fitch is notified in writing of such approval), is not an Affiliate of any
of the parties hereto, and is not a government or a governmental
subdivision or agency; payment obligations under which are denominated and
payable only in United States dollars in the United States;
(b) payment obligations under which are denominated and payable only
in United States dollars in the United States;
(c) the assignment of which (including, without limitation, the sale
of an undivided percentage interest therein and the assignment of any
Related Security) does not contravene or conflict with any applicable
laws, rules or regulations or any contractual or other restriction,
limitation or encumbrance;
(d) which does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to 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
thereto is in violation of any such law, rule or regulation in any
material respect; and
12
(e) which satisfies all applicable requirements of the Credit and
Collection Policy.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or a
governmental subdivision or agency;
(b) which is not a Defaulted Receivable or a Delinquent Receivable
and the Obligor of which is not the Obligor of any Defaulted Receivables;
(c) unless included in the initial Purchase, as to which no payment
or any part thereof has remained unpaid for more than 30 days from the
original due date for such payment on two or more separate occasions and
as to which no payment or any part thereof has remained unpaid for more
than 60 days from the original due date for such payment on one or more
occasions;
(d) which arises under an Eligible Contract and which was purchased
from a Developer under an Eligible Developer Sale Contract;
(e) (i) is denominated and payable only in United States dollars in
the United States and (ii) no portion of which is payable on account of
sales taxes;
(f) which arises in the ordinary course of the originators business;
(g) the assignment of which (including, without limitation, the sale
of an undivided percentage interest therein and the assignment of any
Related Security) does not contravene or conflict with any applicable
laws, rules or regulations or any contractual or other restriction,
limitation or encumbrance;
(h) which has not been compromised, adjusted or modified (including
by extension of time or payment or the granting of any discounts,
allowances or credits);
(i) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to 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 Contract related
thereto is in violation of any such law, rule or regulation in any
material respect;
(j) which satisfies all applicable requirements of the Credit and
Collection Policy;
(k) which, if originated prior to June 30, 1994, is insured by the
General Commercial Lines Policy dated June 13, 1993 (or a comparable
policy acceptable to the Agent) for a term not less than five years;
13
(l) which has been transferred by the originator to the Seller
pursuant to the Originator Sale Agreement; and
(m) which has an Outstanding Balance which is not greater than
$30,000.
"ERISA" means 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", means (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 Seller; (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section 414(c) of the
Code) with the Seller or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as the Seller, any
corporation described in clause (a) above or any trade or business described in
clause (b) above.
"Event of Termination" has the meaning assigned to that term in
Section 7.01.
"Facility Amount" means at any time the sum of (a) the face amount
of outstanding commercial paper notes of the Purchaser issued to fund Purchases
hereunder plus (b) the amount of Capital allocated to Fixed Periods bearing
interest at the Alternative Rate plus (c) to the extent not already included in
the face amount of the outstanding commercial paper described in clause (a)
above, the accrued and unpaid Yield on the foregoing amounts described in
clauses (a) and (b) above, in each case at such time.
"Facility Fee" has the meaning assigned to that term in Section
2.09.
"Fitch" means Fitch Investors Service, L.P. (or its predecessor or
successors in interest) if and so long as it has rated and is continuing to rate
commercial paper notes of the Purchaser, and otherwise means such other
nationally recognized statistical rating organization as may be designated by
the Agent.
"Fixed Period" for any outstanding Capital means (a) if Yield in
respect of all or any part thereof is computed by reference to the CP Rate, a
period of 1 to and including 90 days and (b) if Yield in respect thereof is
computed at the Alternative Rate, a period of 1 to and including 30 days, in
each case, as determined pursuant to Section 2.04.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"Gross Eligible Receivables Balance" means, at any time, the
aggregate Outstanding Balance of Eligible Receivables which constitute Purchased
Receivables or that constitute Pledged Receivables under the Receivables Loan
Agreement.
14
"Indemnified Amounts" has the meaning assigned to that term in
Section 9.01.
"Investment" means, 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 Receivables and other Purchased Assets pursuant to the
Originator Sale Agreement and excluding commission, travel and similar advances
to officers, employees and directors made in the ordinary course of business.
"Issuer" means HLS and any other Purchaser whose principal business
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
"Large Receivable" means a Receivable that has an Outstanding
Balance greater than $20,000.
"Large Receivables Limit" means at any time, the portion of the
Aggregate Large Receivables Limit that is specified by the Seller on the latest
monthly Settlement Report as being allocated to this Agreement (as opposed to
the Receivables Loan Agreement); the sum of the Large Receivables Limit under
this Agreement and the "Large Receivables Limit" under the Receivables Loan
Agreement shall equal the Aggregate Large Receivables Limit. If the Seller fails
to provide the Servicer with an allocation of the Aggregate Large Receivables
Limit, the Large Receivables Limit under this Agreement will equal the Aggregate
Large Receivables Limit for such Obligors and the "Large Receivables Limit"
under the Receivables Loan Agreement shall equal zero.
"Liquidation Fee" means, for the Capital allocated to each Fixed
Period (computed without regard to any shortened duration of such Fixed Period
as a result of the occurrence of the Termination Date) during which such Capital
is reduced or the applicable Yield Rate for such Capital is for any reason
changed, the amount, if any, by which (a) the Yield (calculated without taking
into account any Liquidation Fee) which would have accrued on the amount of the
reduction of Capital during such Fixed Period (as so computed) if such reduction
had not been made or if the applicable Yield Rate had remained unchanged, as the
case may be, exceeds (b) the sum of (i) Yield actually received by the Purchaser
in respect of such Capital for such Fixed Period and (ii) if applicable, the
income, if any, received by the Purchaser from the Purchaser's investing the
proceeds of reductions of Capital.
"Lock Box" means a post office box to which Collections are remitted
for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a
Lock-Box Account.
"Lock-Box Account" means an account maintained by the Agent at a
bank or other financial institution for the purpose of receiving Collections
from the related Lock Box.
"Lock-Box Bank" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"Lot" means any Development lot related to a Purchased Contract.
15
"Minimum Overcollateralization Percentage" means thirty percent
(30%).
"Monthly Settlement Report" means a report, in substantially the
form of Exhibit E, furnished by the Servicer to the Agent for the Purchaser
pursuant to Section 6.07(b).
"Multiemployer Plan" means 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 Seller or any
ERISA Affiliate on behalf of its employees.
"Obligations" has the meaning assigned to such term in the
Receivables Loan Agreement.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Originator" means ▇▇▇▇▇▇▇ Funding International, Ltd. a Delaware
corporation, formerly known as The Processing Center, Inc.
"Originator Sale Agreement" means the Receivables Purchase and Sale
Agreement of even date herewith among the Originator, the Seller and the
Servicer, together with all instruments, documents and agreements executed by
the originator in connection therewith, in each case as the same may from time
to time be amended, supplemented or otherwise modified in accordance with the
terms hereof.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Overcollateralization Percentage" means at any time the remainder
of (a) a fraction, expressed as a percentage, the numerator of which is (i) the
sum of (A) the Purchased Receivables Balance plus (B) amounts on deposit in the
Spread Account plus (C) the amount of Collections on deposit in the Agent's
Account to be applied in accordance with Section 2.05 on the next Settlement
Date and the denominator of which is (ii) the Facility Amount minus (b) 100%.
"Payment" means the scheduled monthly payment of principal and
interest on a Contract.
"Permitted Investments" means (a) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of no more than 90 days from the date
of acquisition; (b) time deposits and certificates of deposit having maturities
of no more than 90 days from the date of acquisition, maintained with or issued
by any commercial bank having capital and surplus in excess of $500,000,000 and
having a short-term rating not less than A-1 or the equivalent thereof from S&P
and, if rated by Fitch, not less than F-1 or the equivalent thereof from Fitch;
(c) repurchase obligations for underlying securities of the types described in
clauses (a) or (b) above with a term of not more than ten days and maturing no
later than 90 days after the date of acquisition; and (d) commercial paper
maturing
16
within 90 days after the date of acquisition and having a rating of not less
than A-1 or the equivalent thereof from S&P and if rated by Fitch, not less than
F-1 or the equivalent thereof from Fitch.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.
"Pledged Assets" has the meaning assigned to such term in the
Receivables Loan Agreement.
"Pledged Receivables" has the meaning assigned to such term in the
Receivables Loan Agreement.
"Purchase" means a purchase by the Purchaser of Purchased Assets
from the Seller pursuant to Article II.
"Purchase Date" means, with respect to any Purchase, the date on
which such Purchase is funded, which date, other than in the case of the initial
Purchase, shall be a Subsequent Purchase Date.
"Purchase Date/Spread Account Surplus Settlement Report" means a
report, in substantially the form of Exhibit F, furnished by the Servicer to the
Agent for the Purchaser pursuant to Section 6.07(c).
"Purchase Limit" means, at any time, $50,000,000 as such amount may
be adjusted from time to time pursuant to Section 2.03 (the "Maximum Purchase
Limit"), less the aggregate principal amount of the "Loans" outstanding under
the Receivables Loan Agreement; provided, however, that at all times, on or
after the Termination Date, the "Purchase Limit" shall mean the aggregate
outstanding Capital and provided, further, that the Maximum Purchase Limit shall
in no event exceed the aggregate commitments of the lenders providing credit
enhancement and liquidity support to the Purchaser in connection with the
transactions contemplated by this Agreement.
"Purchased Assets" means (i) all then outstanding Purchased
Receivables, (ii) all Related Security relating to such Purchased Receivables
and (iii) all Collections with respect to, and other proceeds of, such Purchased
Receivables received on or after the applicable Cut-Off Date.
"Purchased Contract" means a Contract under which a Purchased
Receivable arises.
"Purchased Rate Cap" has the meaning assigned to such term in
certain Sinking Fund Account Agreement dated as of the date hereof among the
Originator, the Purchaser, the Agent, the Collateral Trustee and ING Capital, as
calculation agent.
"Purchased Receivable" means any Receivable purchased from the
Seller pursuant to Article II and any Receivable substituted pursuant to Section
6.18 for any existing Purchased Receivable.
17
"Purchased Receivables Balance" means, at any time, the remainder of
(a) aggregate Outstanding Balance of Eligible Receivables which constitute
Purchased Receivables minus (b) the aggregate amounts by which the aggregate
Outstanding Balance of any such Eligible Receivables related to each Development
exceeds the Concentration Limit with respect to such Development minus (c) the
aggregate amounts by which the aggregate Outstanding Balance of any such
Eligible Receivables that are Large Receivables exceeds the Large Receivables
Limit minus (d), if positive, the product of RB x (1 - APP/OBPR), where RB = the
aggregate Outstanding Balance of Eligible Receivables which constitute Purchased
Receivables at the time, APP = the aggregate purchase price paid or to be paid
by the originator pursuant to the Developer Sale Agreements for the Eligible
Receivables which constitute Purchased Receivables at such time and OBPR = the
aggregate Outstanding Balance of such Purchased Receivables at the time the
Originator purchased such Purchased Receivables pursuant to the Developer Sale
Agreements.
"Purchaser" means HLS or any other Person that agrees, pursuant to
the pertinent Assignment and Acceptance, to purchase Purchased Assets pursuant
to Article II of this Agreement.
"Receivable" means the indebtedness of any Obligor under a Contract
whether constituting an account, chattel paper, instrument or general
intangible, (a) which arises from a sale of a VOI or Lot by a Developer and (b)
in which the Seller has acquired an interest pursuant to the Originator Sale
Agreement. Each Receivable shall include each Payment and every right to payment
of any interest or finance charges and other obligations of such Obligor with
respect thereto.
"Receivables Loan Agreement" means the Receivables Loan and Security
Agreement of even date herewith among the Purchaser, the Agent, the Seller and
the Servicer, as the same may from time to time be amended, supplemented or
otherwise modified in accordance with the terms hereof.
"Records" means all Contracts and other documents, books, records
and other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the related obligors which the Seller
has itself generated, in which the Seller has acquired an interest pursuant to
the Originator Sale Agreement or in which the Seller has otherwise obtained an
interest.
"Related Security" means with respect to any Receivable:
(a) the Contract under which such Receivable arose;
(b) the VOIs and Lots relating to such Receivable;
(c) any Contract Mortgages relating to the Purchased Contracts and
all other security interests or liens and property subject thereto from
time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise;
18
(d) all guarantees, indemnities, warranties, letters of credit,
insurance policies (including Credit Life Insurance and credit default
insurance) and proceeds and premium refunds thereof and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract
related to such Receivable or otherwise; provided, however, if any such
guarantee, indemnity, warranty, letter of credit, insurance policy,
agreement, or arrangement supporting or securing payment of such
Receivables support or secure payment of any Receivable which is not a
Purchased Receivable, only the portion supporting or securing the
Purchased Receivables shall be Related Security;
(e) the Contract Files and other Records relating to such
Receivables;
(f) the Contract Conveyance Documents and any Developer Mortgages
relating to such Receivable;
(g) all of the Seller's right and title to, and interest in, the
originator Sale Agreement, the Developer Sale Agreements and the
assignment to the Agent of all UCC financing statements filed by the
Seller against the Originator under or in connection with the originator
Sale Agreement; and
(h) all proceeds of the foregoing.
"Repurchase Price" means, with respect to a Purchased Contract to be
repurchased hereunder, an amount equal to the remaining Outstanding Balance on
such Purchased Contract as of the opening of business on the Settlement Date on
which the repurchase is to be effected hereunder, together with accrued and
unpaid interest thereon at the Contract Rate from the last due date as to which
the Obligor paid interest under such Contract.
"Required Overcollateralization Percentage" means thirty-three
percent (33%).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill (or its predecessor or successors in interest) if and so long as it has
rated and is continuing to rate commercial paper notes of the Purchaser, and
otherwise means such other nationally recognized statistical rating organization
as may be designated by the Agent.
"Sales Price" means, with respect to any Purchased Receivable, the
total purchase price of the related VOI or Lot, including any premium paid in
respect of a policy of Credit Life Insurance.
"Servicer" means at any time the Person then authorized pursuant to
Section 6.01 to service, administer and collect Receivables.
"Servicer Default" means the defaults specified in Section 8.01 of
this Agreement.
"Servicer Fee" has the meaning assigned to that term in Section
2.09.
19
"Servicing Fee Rate" means 1.00% per annum, so long as the
originator or any of its Affiliates is Servicer, and otherwise means the
percentage set forth in the Standby Servicer Fee Letter or such other percentage
per annum which the Servicer and the Agent may agree upon in writing from time
to time.
"Settlement Date" means July 15, 1995 and thereafter the 15th day of
each month; provided that if such day is not a Business Day, the "Settlement
Date" for such month shall be the first Business Day to occur after such 15th
day.
"Spread Account" has the meaning assigned thereto in Section 2.06 of
this Agreement.
"Spread Account Bank" means the bank maintaining the Spread Account.
"Spread Account Surplus Date" has the meaning assigned to that term
in Section 2.06(b).
"Standby Servicer" means The Chase Manhattan Bank N.A. and any
substitute Standby Servicer appointed by the Agent pursuant to Section 6.17.
"Standby Servicer Fee" has the meaning assigned to that term in
Section 2.09(a).
"Standby Servicer Fee Letter" means the letter agreement dated as of
May 25, 1995, between the Standby Servicer and the Agent, as amended or
otherwise modified from time to time.
"Subsequent Purchase Date" means each Business Day occurring after
initial Purchase Date on which the Seller determines, in the exercise of its
sole discretion, to sell additional Eligible Receivables to the Purchaser and to
request an additional Purchase from the Purchaser in respect thereof.
"Successor Servicer" has the meaning assigned to that term in
Section 8.02(a).
"Termination Date" means the earliest of (a) May 24, 2000, (b) the
date of termination of the Purchase Limit pursuant to Section 2.03, (c) the date
of the declaration or automatic occurrence of the Termination Date pursuant to
Section 7.01 and (d) the date on which (i) all of the lenders providing
liquidity to the Purchaser with respect to this Agreement, (ii) all of the
commitments of all of the lenders under any agreement evidencing any such
liquidity support facility, (iii) any lender providing enhancement to the
Purchaser with respect to this Agreement or (iv) any commitment of a lender
under any agreement evidencing any such enhancement support facility, is/are
terminated for any reason and replacement lenders and/or commitments, as the
case may be, are not obtained by the Purchaser prior to such termination.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
20
"United States" means the United States of America.
"VOI" means the underlying ownership interest which is the subject
of a Purchased Contract, which ownership interest shall consist of either a
fixed week or undivided interest in fee simple in a lodging unit or group of
lodging units at a Development or such other interest or right with respect to a
lodging unit or group of lodging units at a Development that has been approved
of by the Agent in writing.
"VOI Regime" means any of the various interval ownership regimes
listed on Schedule V hereto, each of which is an arrangement, established under
applicable state law, whereby a designated portion of a Development is made
subject to a declaration permitting the transfer of VOIs therein.
"Yield" means, for all Capital allocated to any Fixed Period during
any such Fixed Period, the product of
YRT x C x ED
--
360
where:
C = the Capital allocated to such Fixed Period,
ED = the actual number of days elapsed during such Fixed Period, and
YRT = the Yield Rate for such Fixed Period;
provided, however that (a) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (b) Yield shall not be considered paid by any distribution if
at any time such distribution is rescinded or otherwise returned by the
Purchaser to the Seller or any other Person for any reason.
"Yield Rate" means, for any Fixed Period for all Capital allocated
to such Fixed Period:
(i) to the extent the Purchaser will be funding the applicable
Purchase on the first day of such Fixed Period through the issuance of
commercial paper, a rate equal to the CP Rate for such Fixed Period, and
(ii) to the extent the Purchaser will not be funding the applicable
Purchase on the first day of such Fixed period through the issuance of
commercial paper, a rate equal to the Alternative Rate for such Fixed
Period or such other rate as the Agent and the Seller shall agree to in
writing.
SECTION 1.02. 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.
21
SECTION 1.03. Computation of Time Periods. Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
ARTICLE II.
THE RECEIVABLES FACILITY
SECTION 2.01. Purchases of Purchased Assets. On the terms and
conditions hereinafter set forth, the Purchaser shall purchase Purchased Assets
from the seller from time to time during the period from the date hereof until
the Termination Date. Under no circumstances shall the Purchaser make the
initial Purchase or any Subsequent Purchase if, after giving effect to such
Purchase, either (a) the Overcollateralization Percentage would be less than
Required Overcollateralization Percentage or (b) the aggregate Capital
outstanding hereunder would exceed the lesser of (i) the Purchase Limit minus
the Discount Amount or (ii) the Capital Limit as determined by reference to the
most recent Monthly Settlement Report or Purchase Date/Spread Account Surplus
Settlement Report delivered by the Servicer to the Purchaser in accordance with
Section 6.07 hereof.
SECTION 2.02. The Initial Purchase and Subsequent Purchases. (a)
Until the occurrence of the Termination Date, the Purchaser will make Purchases
on any Business Day at the request of the Seller, subject to and in accordance
with the terms and conditions of Section 2.01 and 2.02. After the Collection
Date has occurred, the Purchaser and the Agent, in accordance with their
respective interests, shall assign and transfer to the Seller their respective
remaining interest in the Purchased Assets to the Seller free and clear of any
Adverse Claim resulting solely from an act or omission by the Purchaser or the
Agent, but without any other representation or warranty, express or implied.
(b) The initial Purchase and each Subsequent Purchase shall be made
on at least three Business Days' notice from the Seller to the Agent. Each
such notice shall specify (i) the aggregate amount of such Purchase, which
shall be in an amount equal to or greater than $500,000, (ii) the date of
such Purchase or Subsequent Purchase, (iii) the requested Fixed Period(s)
and requested applicable Yield Rate (i.e. CP Rate or Alternative Rate) for
the Capital arising as a result of such Purchase, and the allocations of
Capital to each such requested Fixed Period and (iv) the Contracts under
which the Receivables to be included in such Purchase arose together with
an amendment to the Contract Schedule with respect to such Contracts. The
Agent shall notify the Seller whether the duration of the initial Fixed
Periods and the applicable Yield Rate described in such notice is
acceptable or, if not applicable, the Agent shall advise the Seller of
such Fixed Periods and applicable Yield Rate as may be acceptable. On the
date of such Purchase, the Purchaser shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the
Seller in same day funds, the amount of such Purchase (net of amounts
payable to or for the benefit of the Purchaser to reduce Capital on such
Purchase Date pursuant to Section 2.05), as the case
22
may be, by payment to the account which the Seller has designated in
writing with the consent of the Agent.
(c) It is expressly acknowledged that each Purchase hereunder shall
be made without recourse to the Seller; provided, however, that the Seller
shall be liable to the Agent and the Purchaser (i) for all
representations, warranties, covenants and indemnifications made by such
Seller pursuant to the terms of this Agreement to the extent described in
Section 9.01, (ii) for all obligations to remit any deemed Collections of
Purchased Receivables pursuant to Section 2.07, and (iii) for all fees,
costs, expenses, taxes and other indemnifications owed under this
Agreement.
SECTION 2.03. Termination or Reduction of the Purchase Limit. The
Seller may, upon at least five Business Days, notice to the Agent, terminate in
whole or reduce in part the portion of the Purchase Limit that exceeds the
greater of the outstanding capital and the sum of the aggregate Capital plus the
Discount Amount; provided, however, that each partial reduction of the Purchase
Limit shall be in an aggregate amount equal to $5,000,000 or an integral
multiple thereof.
SECTION 2.04. Selection of Fixed Periods. At all times hereafter
until the Termination Date, the Seller shall, subject to the Agent's and the
Purchaser's approval and the limitations described below, select (a) Fixed
Periods and allocate a portion of the outstanding Capital to each selected Fixed
Period, so that the outstanding Capital is at all times allocated to one or more
Fixed Periods and (b) Yield Rates to apply to such Capital for such Fixed
Periods. The initial Fixed Period(s) and Yield Rate(s) applicable to the Capital
arising as a result of the initial Purchase shall be specified in the notice
relating to the Purchase described in Section 2.02(b). Each subsequent Fixed
Period shall commence on the last day of the immediately preceding Fixed Period,
and the duration of and Yield Rate applicable to such subsequent Fixed Period
shall be such as the Seller shall select and the Agent shall approve on notice
from the Seller received by the Agent (including notice by telephone, confirmed
in writing) not later than 12:30 P.M. (New York City time) on such last day,
except that if the Agent shall not have received such notice before 12:30 P.M.
or the Agent and the Seller shall not have so mutually agreed before 2:00 P.M.
(New York City time) on such last day, such Fixed Period shall be one day and
the applicable Yield Rate shall be the Alternative Rate, until the Agent
receives notice from the Seller requesting a Fixed Period and applicable Yield
Rate, which, if accepted by the Agent, shall be the Fixed Period and the
applicable Yield Rate; provided, that, notwithstanding the foregoing, on and
after the occurrence of any Event of Termination (unless waived in accordance
with the terms and conditions hereof), the Purchaser shall cease to issue
commercial paper notes to fund and maintain Purchases hereunder and the
applicable Yield Rate shall be the Alternative Rate. Any Fixed Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day. Any Fixed Period which commences before the
Termination Date and would otherwise end on a date occurring after the
Termination Date shall end on the Termination Date. On or after the Termination
Date, the Agent shall have the right to allocate outstanding Capital to Fixed
Periods of such duration as shall be selected by the Agent. The Purchaser shall,
on the first day of each Fixed Period, notify the Agent of the Yield Rate for
the Capital allocated to such Fixed Period.
SECTION 2.05. Settlement Procedures. The Servicer, as agent for the
Agent and
23
the Purchaser, will instruct the Agent's Bank, and the Agent may instruct the
Agent's Bank, to apply funds on deposit in the Agent's Account and the Spread
Account as described in this Section 2.05, subject to the provisions of Section
2.13(b) of the Receivables Loan Agreement.
(a) Yield and Liquidation Fees. The Servicer shall, and the Agent
may, on each Business Day (including any Settlement Date), direct the
Agent's Bank to set aside in the Agent's Account for transfer at the
further direction of the Purchaser or the Agent or any other duly
authorized agent of the Purchaser (whether on such day or on a subsequent
day) an amount equal to the Yield through such day on the Capital
allocable to the Purchaser and not so previously set aside and the amount
of any unpaid Liquidation Fees owed to the Purchaser on such day. On the
last day of each Fixed Period, the Agent shall notify the Servicer of, and
direct the Agent's Bank to pay, such funds to be paid to the Purchaser in
respect of full payment of accrued Yield for such Fixed Period. on any
Business Day on which an amount is set aside in respect of Liquidation
Fees pursuant to this Section 2.05(a), the Agent shall direct the Agent's
Bank to pay such funds to the Purchaser in payment of such Liquidation
Fees.
(b) Fixed Period Capital Reductions. The Servicer shall, and the
Agent may, on the last day of each Fixed Period that is not a Settlement
Date, direct the Agent's Bank to transfer monies held by the Agent's Bank
in the Agent's Account in excess of the aggregate amounts that would, if
such last day was a Settlement Date, be set aside on such Settlement Date
to pay amounts pursuant to Section 2.05(a) and 2.O5(c)(i)-(vii), to pay
the Agent for the account of the Purchaser in reduction of Capital in an
amount equal to the aggregate Capital allocated to such Fixed Period or,
prior to the Termination Date, if lower, an amount equal to the excess, if
any, of Capital immediately prior to such distribution over the Capital
Limit on such date (without giving effect to amounts on deposit in the
Agent's Account on such date that would otherwise be included in the
calculation of the Capital Limit but after giving effect to any Purchase
of Receivables made on such date and any other distributions of amounts on
deposit in the Agent's Account or the Spread Account made on such date).
(c) Settlement Date Transfers from Agent's Account. The Servicer
shall, and the Agent may, on each Settlement Date direct the Agent's Bank
to transfer monies held by the Agent's Bank in the Agent's Account in
excess of the aggregate amounts set aside on such Settlement Date pursuant
to Section 2.05(a), in the following amounts and priority:
(i) to the Seller, any monies held in the Agent's Account that
are not Collections and that are to be remitted to the Seller pursuant to
Section 6.03;
(ii) to the Agent for the account of the Purchaser in an
amount equal to (and for payment of) the Facility Fee which has accrued
and is unpaid as of the last day of the preceding month;
(iii) if neither the Seller nor the originator, nor any
Affiliate of either of them, is the Servicer, to the Agent for the account
of the Servicer in an amount equal to the Servicer Fee which is accrued
and unpaid as of the last day of the preceding month;
24
(iv) to the Spread Account in an amount equal to the Capital
Base Deficiency (if any) as of such Settlement Date;
(v) so long as no Capital Base Deficiency shall exist or would
be created by such transfer, to the Agent for the account of the Servicer
(if the Servicer is the Seller, the Originator or any Affiliate of either
of them) in an amount equal to the Servicer Fee which is accrued and
unpaid as the last day of the preceding month;
(vi) So long as no Capital Base Deficiency shall exist or
would be created by such transfer, to the Agent for the account of the
Purchaser in an amount equal to the aggregate amount of all other
obligations of the Seller to the Purchaser hereunder other than Yield,
Liquidation Fees and the amounts described in clauses (i) through (iv)
above;
(vii) prior to the Termination Date, to the Seller to pay the
amount equal to the purchase price of any Receivables being Purchased
hereunder on such date;
(viii) to the Agent for the account of the Purchaser in
reduction of Capital (A) prior to the Termination Date, in an amount equal
to the Capital Base Surplus on such date, if any, immediately prior to
such distribution (without giving effect to amounts on deposit in the
Agent's Account on such date that would otherwise he included in the
calculation of the Capital Base Surplus but after giving effect to any
Purchase of Receivables made on such date and any other distributions of
amounts on deposit in the Agent's Account or the Spread Account made on
such date) and (B) on and after the Termination Date, in an amount
necessary to reduce Capital to zero; and
(ix) on and after the Termination Date, to the Agent for the
account of the Purchaser in an amount necessary to reduce outstanding
obligations under the Receivables Loan Agreement to zero;
(x) to the Seller, any remaining amounts.
Upon its receipt of funds pursuant to clause (ii) above in respect of the
Facility Fee, the Agent shall retain a portion thereof in the amount of the
accrued and unpaid Agent's Fee, and a portion thereof in the amount of the
accrued and unpaid standby Servicer Fee (each as of the last day of the
preceding month) and shall apply the balance of funds as directed by the
Purchaser. Upon its receipt of funds pursuant to clause (iii) or (v) above, the
Agent shall distribute such funds to the Servicer in payment of any accrued and
unpaid Servicer Fee. Upon its receipt of funds pursuant to clause (vi) above,
the Agent shall apply such funds as directed by the Purchaser or as otherwise
provided in this Agreement.
(d) Purchase Date Transfers. The Servicer shall, and the Agent may,
on each Purchase Date that is not a Settlement Date direct the Agent's Bank to
transfer monies held by the Agent's Bank in the Agent's Account in excess of the
Carrying Cost Reserve Amount as of such Purchase Date, to the Seller to pay the
purchase price of any Receivables being Purchased
25
hereunder-on such date.
(e) Application of Spread Account Monies. To the extent that there
are insufficient available funds on deposit in the Agent's Account for the
payment of the amounts payable pursuant to Section 2.05(a), 2.05(c)(ii)-(iii)
and 2.05(c)(vi), funds shall be withdrawn by the Collateral Trustee from the
Spread Account to the extent of such insufficiency, solely upon the direction of
the Agent, to be used solely for the purposes and in the order of priority set
forth at Section 2.05(a) and 2.05(c)(ii)-(iii) and 2.05(c)(vi) hereof, giving
effect to the terms thereof as if each reference therein to the "Agent's
Account" was, instead, a reference to the Spread Account and on and after the
Termination Date, funds may be withdrawn from the Spread Account by the
Collateral Trustee and deposited into the Agent's Account to be applied in
accordance with Section 2.05(a)-(c).
(f) Seller Deficiency Payments. Notwithstanding anything to the
contrary contained in this Section 2.05 or in any other provision in this
Agreement, if, on any Business Day the outstanding amount of Capital shall
exceed the lesser of (i) the Purchase Limit minus the Discount Amount or (ii)
the Capital Limit, then, the Seller shall remit to the Agent, prior to any
Purchase and in any event no later than the close of business of the Agent on
the next succeeding Business Day, a payment (to be applied by the Agent in its
sole discretion either to fund the Spread Account or to reduce outstanding
Capital allocated to Fixed Periods selected by the Agent, in its sole
discretion) in such amount as may be necessary to reduce outstanding Capital to
an amount less than or equal to the lesser of (i) the Purchase Limit minus the
Discount Amount and (ii) the Capital Limit.
SECTION 2.06. Spread Account. (a) On or prior to the initial
Purchase Date, the Agent shall establish and maintain, or cause to be
established and maintained, for the sole and exclusive benefit of the Collateral
Trustee for the benefit of the Agent and the Purchaser and their respective
assigns, a cash collateral account (the "Spread Account"). The Spread Account
shall be a subaccount within a special account maintained with a Depository
Institution which is an Eligible Depository Institution (provided, however, that
the Depository Institution at which such Spread Account is established and
maintained need not be an Eligible Depository Institution in the event that the
Spread Account is maintained as a fully segregated trust account with the trust
department of such Depository Institution) but shall be under the sole dominion
and control of, and in the name of, the Collateral Trustee.
(b) Prior to the occurrence of the Termination Date, on at least
three Business Days, notice from the Seller to the Agent, the Seller may,
on any Business Day that is not a Settlement Date (each such day a "Spread
Account Surplus Date") (provided that a Spread Account Surplus Date shall
occur no more frequently than once a week), instruct the Servicer to
instruct the Spread Account Bank to transfer from the Spread Account to
the Seller, an amount of funds held in the Spread Account which shall in
no event be greater than (i) the Capital Base Surplus (if any) on such
Spread Account Surplus Date, if such Spread Account Surplus Date is the
Business Day next succeeding a Settlement Date or (ii) the excess Capital
Base Surplus (if any) over the Carrying Cost Reserve Amount on such Spread
Account Surplus Date, if such Spread Account Surplus Date is not on such a
26
Business Day (any such amount of funds, the "Spread Account Excess"). The
Seller, in making any such instructions for the transfer of funds from the
Spread Account, shall simultaneously provide each of the Agent and the
Spread Account Bank with a copy of a Purchase Date/Spread Account Surplus
Settlement Report together with a certificate of an officer of the Seller
as to the existence and size of any Spread Account Excess.
(c) Any funds remaining in the Spread Account after the Collection
Date has occurred shall be remitted to the Seller or as otherwise required
by law.
SECTION 2.07 Special Settlement Procedures. If on any day the
Outstanding Balance of any Purchased Receivable is reduced or canceled as a
result of a setoff in respect of any claim by the Obligor thereof against the
Originator, the Seller, the related Developer or any other Person (whether such
claim arises out of the same or a related transaction or an unrelated
transaction), the Seller shall be deemed to have received on such day a
Collection of such Purchased Receivable in the amount of such reduction,
cancellation or adjustment. If on any day any of the representations or
warranties in Section 4.01(h) is no longer true with respect to a Purchased
Receivable, the Seller shall be deemed to have received on such day a Collection
of such Purchased Receivable in full.
SECTION 2.08. Payments and Computations, Etc. (a) All amounts to be
paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M. (New York
City time) on the day when due in lawful money of the United States in
immediately available funds to the Agent's Account. The Seller shall, to the
extent permitted by law, pay to the Agent interest on all amounts not paid or
deposited within one Business Day after the date such amounts are due hereunder
(whether owing by the Seller individually or as Servicer) at 2% per annum above
the Alternative Rate, payable on demand; provided, however, that such interest
rate shall not at any time exceed the maximum rate permitted by applicable law.
Such interest shall be retained by the Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date for
distribution by the Agent of such overdue amount to the Purchaser, in which case
such interest accruing after such date shall be for the account of, and
distributed by the Agent to the Purchaser. All computations of interest and all
computations of Yield, Liquidation Yield, Liquidation Fee 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 Yield, interest or any fee
payable hereunder, as the case may be.
(c) If any Purchase requested by the Seller and approved by the
Purchaser and the Agent pursuant to Section 2.02 or any selection of a
subsequent Fixed Period and applicable Yield Rate for any Capital
allocated to such Fixed Period requested by the Seller and approved by the
Agent pursuant to Section 2.04 is not for any reason whatsoever made or
effectuated (other than through the sole fault of the Purchaser and/or
Agent), as the case
27
may be, on the date specified therefor, the Seller shall indemnify the
Purchaser against any loss, cost or expense incurred by the Purchaser,
including, without limitation, any loss (including loss of anticipated
profits, net of anticipated profits in the reemployment of such funds in
the manner determined by the Purchaser), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by the Purchaser to fund or maintain such Purchase during such
Fixed Period.
SECTION 2.09. Fees. (a) The Seller shall pay the Purchaser (either
directly or through the Agent) certain fees (the "Facility Fee") in the amounts
and on the dates set forth in a fee letter executed between the Seller and the
Purchaser. The Purchaser shall pay to the Agent, for its own account, certain
fees (the "Agent's Feel') in the amounts and on the dates set forth in a fee
letter executed between the Purchaser and the Agent. The Purchaser shall pay to
the Standby Servicer out of the Facility Fee, a collection fee (the "Standby
Servicer Fee") in the amounts and on the dates set forth in the Standby Servicer
Fee Letter.
(b) The Purchaser shall pay to the Servicer a collection fee (the
"Servicer Fee") equal to the Servicing Fee Rate on the daily average aggregate
Outstanding Balance of Purchased Receivables other than Defaulted Receivables,
from the date hereof until the later of the Termination Date or the Collection
Date, payable on each Settlement Date.
(c) All of the fees payable pursuant to this Section 2.09 shall be
payable only from Collections pursuant to, and subject to the priority of
payment set forth in, Section 2.05.
SECTION 2.10. 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 the Purchaser
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 the Purchased Assets, or any right to make
Purchases 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 excluding any reserve requirement, if any, included
in the determination of Yield), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Affected Party or (C) shall impose any other condition affecting the Purchased
Assets or the Purchaser'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 seller shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost incurred or such reduction
suffered to the extent such additional or increased costs or reduction are
incurred or suffered in connection with the Purchased Assets, any right to make
Purchases hereunder, any of the Purchaser's rights hereunder, or any payment
made hereunder. The Purchaser agrees that it will use its best efforts to reduce
or eliminate any claim for compensation
28
pursuant to this Section 2.10(a), provided that nothing contained herein shall
obligate the Purchaser to take any action which, in the opinion of the
Purchaser, is unlawful or otherwise disadvantageous to the Purchaser.
(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 Seller 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 Section 2.10(a) or 2.10(b), 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
Purchases hereunder, then within ten days after demand by such Affected
Party, the Seller shall pay to such Affected Party such additional amount
or amounts as may be necessary to reimburse such Affected Party for any
amounts paid by it.
(d) In determining any amount provided for in this Section 2.10, the
Affected Party may use any reasonable averaging and attribution methods.
Any Affected Party making a claim under this Section 2.10 shall submit to
the Seller a certificate as to such additional or increased cost or
reduction, which certificate shall be conclusive absent demonstrable
error. As of the date hereof, the Purchaser certifies that to the best of
its knowledge, there is no event or circumstance that would lead the
Purchaser to make a claim under this Section 2.10.
SECTION 2.11. Taxes. (a) Any and all payments by the Seller or the
Servicer hereunder shall be made, in accordance with Section 2.08, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Purchaser and the Agent, net income taxes
that are imposed by the United States and franchise taxes and net income taxes
that are imposed on the Purchaser or the Agent by the state or foreign
jurisdiction under the laws of which the Purchaser or the Agent (as the case may
be) is organized or conducts business or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Seller or the
Servicer shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Purchaser or the
29
Agent, (i) the Seller shall make an additional payment to the Purchaser or the
Agent, as the case may be, in an amount sufficient so that, after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.11), the Purchaser or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Seller or the Servicer, as the case may be, shall
make such deductions and (iii) the Seller or the Servicer, as the case may be,
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) The Seller will indemnify the Purchaser and the Agent for the
full amount of Taxes (including, without limitation, any Taxes imposed by
any jurisdiction on amounts payable under this Section 2.11) paid by the
Purchaser or the Agent (as the case may be) in connection with the
Purchased Assets, any right to make Purchases hereunder, or any other
payment made to the Purchaser and/or the Agent hereunder and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto; provided that the Purchaser or the Agent, as appropriate,
making a demand for indemnity payment shall provide the Seller, at its
address referred to in Section 10.02, with a certificate from the relevant
taxing authority or from a responsible officer of the Purchaser or the
Agent stating or otherwise evidencing that the Purchaser or the 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 Purchaser or the Agent (as the case may
be) makes written demand therefor.
(c) Within 30 days after the date of any payment by the Seller of
any Taxes, the Seller will furnish to the Agent, at its address referred
to in Section 10.02, appropriate evidence of payment thereof.
(d) If the Purchaser is not created or organized under the laws of
the United States or a political subdivision thereof, the Purchaser shall,
to the extent that it may then do so under applicable laws and
regulations, deliver to the Seller (with, in the case of the Purchaser, a
copy to the Agent) (i) within 15 days after the date hereof, or, if later,
the date on which the Purchaser becomes a Purchaser pursuant to Section
10.04 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
States taxing authorities or applicable laws or regulations), as
appropriate, to permit the Seller to make payments hereunder for the
account of the Agent or the Purchaser, 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 2.11(d), copies (in such numbers as may from time
to time be prescribed by applicable laws or regulations) of such
additional, amended or successor forms, certificates or statements as may
be required under applicable laws or regulations to permit the Seller to
make payments hereunder for the account of the Agent or the Purchaser, as
the case may be, without deduction or withholding of United States federal
income or similar taxes.
30
(e) For any period with respect to which the Purchaser or the Agent
has failed to provide the Seller with the appropriate form, certificate or
statement described in Section 2.11(d) (other than if such failure is due
to a change in law occurring after the date of this Agreement), the Agent
or the Purchaser, as the case may be, shall not be entitled to
indemnification under Section 2.11(a) or 2.11(b) with respect to any
Taxes.
(f) Within 30 days of the written request of the Seller therefor,
the Agent and the Purchaser, as appropriate, shall execute and deliver to
the Seller such certificates, forms or other documents which can be
furnished consistent with the facts and which are reasonably necessary to
assist the Seller in applying for refunds of taxes remitted hereunder.
(g) If, in connection with an agreement or other document-providing
liquidity support, credit enhancement or other similar support to the
Purchaser in connection with this Agreement or the funding or maintenance
of Purchases hereunder, the Purchaser is required to compensate a bank or
other financial institution in respect of taxes under circumstances
similar to those described in this Section 2.11 or under Section 10.07(b)
then within ten days after demand by the Purchaser, the Seller shall pay
to the Purchaser such additional amount or amounts as may be necessary to
reimburse the Purchaser for any amounts paid by it.
(h) Without prejudice to the survival of any other agreement of the
Seller hereunder, the agreements and obligations of the parties contained
in this Section 2.11 shall survive the termination of this Agreement.
SECTION 2.12. Assignment of the Originator Sale Agreement. The
Seller hereby assigns to the Agent, for the benefit of the Purchaser hereunder,
all of the Seller's right and title to and interest in the Originator Sale
Agreement with respect to the Purchased Receivables and Purchased Assets. The
Seller confirms and agrees that the Agent shall have, following an Event of
Termination, the sole right to enforce the Seller's rights and remedies under
the Originator Sale Agreement with respect to the Purchased Receivables and the
Purchased Assets for the benefit of the Purchaser (including, without limitation
the Seller's right to enforce the originator's rights and remedies under the
Developer Sale Agreements), but without any obligation on the part of the Agent,
the Purchaser or any of their respective Affiliates, to perform any of the
obligations of the Seller under the Originator Sale Agreement. In addition, the
Seller confirms and agrees that the Seller will send to the Originator any
notice requested by the Agent of any "Event of Termination" under the Originator
Sale Agreement or any event or occurrence that would, upon notice to the
Originator or upon the passage of time or both, would be such an "Event of
Termination."' The Seller further confirms and agrees that such assignment to
the Agent shall terminate upon the Collection Date; provided, however, that the
rights of the Agent and the Purchaser 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
Originator Sale Agreement, which rights and remedies survive the termination of
the Originator Sale Agreement, shall be continuing and shall survive any
termination of such assignment.
SECTION 2.13. Payment of Covered Obligations; Grant of Security
Interest.
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(a) As used in this Section 2.13, the following terms shall have the
following meanings:
This has been added to ensure that the Purchaser will be able to trigger an
Event of Termination when the Originator breaches obligations under the
Originator Sale Agreement.
"Covered Obligations" has the meaning assigned to that term in
Section 2.13(b).
"Secured Parties" means the Agent and the Purchaser and their
respective successor and assigns.
"Support Obligations" has the meaning assigned to that term in
Section 2.13(b).
"Supporting Collateral" has the meaning assigned to that term in
Section 2.13(c).
"Supporting Receivables" means, at any time after the Trigger Date
under the Receivables Loan Agreement, all outstanding Pledged Receivables at
such time.
"Trigger Date" means, the date following the Termination Date under
the Receivables Loan Agreement and this Agreement on which (i) the outstanding
loans under the Receivables Loan Agreement have been reduced to 10% or less of
the original principal amount of the loans that were outstanding under the
Receivables Loan Agreement on the Termination Date or (ii) the outstanding
Capital under this Agreement has been reduced to 10% or less of the original
principal amount of the Capital that was outstanding under this Agreement on the
Termination Date.
"Unused Collections" means, with respect to the Receivables Loan
Agreement, an amount equal to the aggregate amount of "Collections" with respect
to Pledged Assets under the Receivables Loan Agreement, which were received
after the Termination Date under the Receivables Loan Agreement but on or prior
to the Trigger Date and which were not applied against the loans and the other
Obligations payable under the Receivables Loan Agreement.
(b) To support the prompt recovery in full of all capital and all
other amounts owing to the Secured Parties hereunder (such Capital and
other amounts are hereinafter referred to collectively as the "Covered
Obligations"), the Seller hereby unconditionally and irrevocably agrees to
pay to the Agent, for the benefit of the Secured Parties, (and the
Servicer, as agent for the Agent and the Purchaser, will instruct the
Agent's Bank, and the Agent, in the absence of the Servicer's instruction,
may instruct the Agent's Bank, to apply funds on deposit in the "Agent's
Account" under the Receivables Loan Agreement to pay) the amounts
described in the following sentences of this Section 2.13(b) at the times
therein specified for payment of such amounts. In the event that there
shall be outstanding and to the extent of any Covered Obligations, the
Seller shall pay or cause to be paid to deposited into the Agent's Account
(such payment obligations, the "Support Obligations") (and the Servicer,
as agent for the Agent and the Purchaser, will instruct the Agent's Bank,
and the
32
Agent may, in the absence of the Servicer's instruction, instruct the
Agent's Bank, to apply funds on deposit in the "Agent's Account" under the
Receivables Loan Agreement to pay such Support Obligations), (a) on the
Trigger Date, all Unused Collections and (b) thereafter, on each day an
amount equal to the product of (i) all Collections of Supporting
Receivables not previously remitted to the Agent's Account multiplied by
(ii) the ratio of (A) outstanding Capital on such day to (B) the sum of
outstanding Capital and outstanding Loans under the Receivables Loan
Agreement on such day. All amounts remitted to the Agent's Account
pursuant to this Section 2.13 shall be applied to such Covered Obligations
as provided in Section 2,05(a)-(c). The Seller's payment obligations under
this Section 2.13 shall terminate on the Collection Date.
(c) To secure payment and performance of the Support obligations and
Seller's other obligations under this Agreement, Seller hereby grants to the
Agent, for its benefit and the benefit of the other Secured Parties, a security
interest in all of the Seller's right, title and interest in and to all now
owned or existing and from time to time hereafter arising or acquired Pledged
Assets under the Receivables Loan Agreement (the "Supporting Collateral").
(d) Each of the Seller and the Servicer hereby acknowledges and
agrees that its representations, warranties, covenants, agreements, undertakings
and obligations set forth in the Receivables Loan Agreement with respect to the
Supporting Collateral shall remain binding and in full force and effect for
purposes hereof until the Collection Date under the Receivables Loan Agreement.
ARTICLE III.
CONDITIONS OF PURCHASES.
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Agent shall
have received on or before the date of such purchase the items listed in
Schedule VI, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Agent and the Purchaser.
SECTION 3.02. Conditions Precedent to All Purchases and Remittances
of Collections. Each Purchase (including the initial Purchase) from the Seller
by the Purchaser shall be subject to the further conditions precedent that (a)
with respect to any such Purchase (other than the initial Purchase) on or prior
to the date of such Purchase, the Servicer shall have delivered to the Agent, in
form and substance satisfactory to the Agent, a completed Monthly Settlement
Report or Purchase Date/Spread Account Surplus Settlement Report containing
information accurate as of a date no more than three Business Days prior to the
date of such Purchase and containing such additional information as may be
reasonably requested by the Agent; (b) on the date of such Purchase, the
following statements shall be true, and the Seller by accepting the amount of
such Purchase shall be deemed to have certified that:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of such
date (including, without limitation, that the Receivables to be Purchased
on such date are Eligible Receivables),
33
(ii) No event has occurred and is continuing, or would result
from such purchase or reinvestment, which constitutes an Event of
Termination or an Event of Default under the Receivables Loan Agreement,
(iii) On and as of such day, after giving effect to such
Purchase, the (A) Overcollateralization Percentage equals or exceeds the
Required overcollateralization Percentage and (S) outstanding Capital does
not exceed the lesser of (x) the Purchase Limit minus the Discount Amount,
or (y) the Capital Limit, and
(iv) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Purchase by the Purchaser in accordance with the provisions hereof,
(c) Agent's receipt of a notice from the Collateral Trustee
confirming that the Collateral Trustee has received: (i) all Contracts,
promissory notes and any deed of titles contained in the contract Files required
to be delivered to it pursuant to Section 5.01(h), (ii) a timely copy of the
notice of Purchase delivered to the Agent pursuant to Section 2.02,
appropriately filled-out and executed by the Seller and (iii) an amendment to
the Contract Schedule required pursuant to Section 2.02 (any such notice to be
sent by the Collateral Trustee to the Agent only after the Collateral Trustee's
receipt of such items).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES.
SECTION 4.01. Representations and Warranties of the Seller. The
Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction named at the
beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so Qualified.
(b) The execution, delivery and performance by the Seller of this
Agreement, the originator Sale Agreement and all other documents to be
delivered by it hereunder or thereunder, including the Seller's use of the
proceeds of Purchases, are within the Seller's corporate powers, have been
duly authorized by all necessary corporate action, do not contravene (i)
the Seller's charter or by-laws, (ii) any law, rule or regulation
applicable to the Seller, (iii) any contractual restriction binding on or
affecting the Seller or its property or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting the Seller or its
property, and do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to
any of its properties (other than in favor of the Purchaser or the Agent
for the benefit of the Purchaser with respect to the Purchased Receivables
and related Purchased Assets); and no transaction contemplated hereby or
by the
34
Originator sale Agreement requires compliance with any bulk sales act or
similar law. This Agreement and the Originator Sale Agreement have each
been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of
this Agreement, the Originator Sale Agreement or any other document or
instrument to be delivered hereunder or thereunder, except for the filing
of the UCC financing statements described in Schedule VI, all of which
financing statements have been duly filed and are in full force and
effect.
(d) This Agreement, the Originator Sale Agreement and each other
document or instrument to be delivered by the Seller hereunder or
thereunder constitute the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, or other
similar laws affecting the rights of creditors.
(e) To the knowledge of the Seller, the consolidated balance sheets
of the Originator and its consolidated subsidiaries as at December 31,
1994 and March 31, 1995, and the related statements of income,
shareholders' equity and cash flows for the fiscal year and fiscal quarter
then ended, copies of which have been furnished to the Agent, fairly
present, in all material respects, the consolidated financial condition of
the Originator and its consolidated subsidiaries as at such date and the
consolidated results of the operations of the Originator and its
consolidated subsidiaries for the period ended on such date, all in
accordance with GAAP consistently applied, and since December 31, 1994
there has been no material adverse change in any such condition or
operations.
(f) There is no pending or to the knowledge of the Seller,
threatened, action or proceeding affecting the Seller or to the knowledge
of the Seller, the Originator or any other subsidiaries of the Originator
before any court, governmental agency or arbitrator that may materially
adversely affect the financial condition of the Originator, the Seller or
any other subsidiaries of the Originator or the ability of the Originator
to perform its obligations under the Originator Sale Agreement or the
ability of the Seller to perform its obligations under this Agreement.
None of the Seller, and, to the knowledge of the Seller, the Originator or
any subsidiary of the Originator is in default with respect to any order
of any court, arbitrator or governmental body except for defaults with
respect to orders of governmental agencies which defaults are not material
to the business or operations of the Originator, the Seller or any other
subsidiary of the Originator.
(g) No proceeds of any Purchase will be used by the Seller to
acquire any security in any transaction which is subject to Section 13 or
14 of the Securities Exchange Act of 1934, as amended.
(h) Each Receivable, together with the Contract related thereto,
shall, at all times, be owned by the Seller free and clear of any Adverse
Claim except as provided herein
35
or in the Receivables Loan Agreement, and upon each Purchase, the
Purchaser shall acquire a valid and perfected first priority look
ownership or security interest in each Purchased Receivable then existing
or thereafter arising and in the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim except as provided
hereunder or under the Receivables Loan Agreement. No effective financing
statement or other instrument similar in effect covering any Receivable or
the Related Security or Collections with respect thereto shall at any time
be on file in any recording office except such as may be filed in favor of
the Agent relating to this Agreement or the Receivables Loan Agreement.
(i) As of the close of business on each Business Day prior to the
Termination Date, the amount of Capital outstanding shall not exceed the
lesser of (x) the Purchase Limit minus the Discount Amount on such
Business Day or (y) the capital Limit on such Business Day.
(j) No Monthly Settlement Report, Purchase Date/Spread Account
surplus Settlement Report, Commercial Paper Settlement Report (each if
prepared by the Seller, or to the extent that information contained
therein is supplied by the Seller), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished
by the Seller to the Agent or the Purchaser 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 Agent or
the Purchaser, 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 omit to state a material fact or
any fact necessary to make the statements contained therein not
misleading.
(k) The principal place of business and chief executive office of
the Seller and the office where the Seller keeps all the Records are
located at the address of the Seller referred to in Section 10.02 hereof
(or at such other locations as to which the notice and other requirements
specified in Section 6.09 shall have been satisfied).
(1) The names and addresses of all the Lock-Box Banks, together with
the account numbers of all Lock-Box Accounts of the Seller at such
Lock-Box Banks, the address of each Lock-Box, and the names, addresses and
account numbers of all accounts to which Collections of the Receivables
outstanding before the initial Purchase hereunder have been sent, are
specified in Schedule VII (which shall be deemed to be amended in respect
of terminating or adding any Lock-Box Account or Lock-Box Bank upon
satisfaction of the notice and other requirements specified in respect
thereof).
(m) Except as described in Schedule VIII, the Seller has no trade
names, fictitious names, assumed names or "doing business as" names or
other names under which it has done or is doing business.
(n) The Originator Sale Agreement is the only agreement pursuant to
which the Seller purchases Receivables; the Seller has furnished to the
Agent true, correct and complete copies of the Originator Sale Agreement;
and the Originator Sale Agreement is in
36
full force and effect and no event or circumstance has occurred that would
constitute an Event of Termination pursuant to Section 7.01(i).
(o) The Seller shall have given reasonably equivalent value to the
Originator in consideration for the transfer to the Seller of the
Receivables and Related Security under the Originator Sale Agreement, no
such transfer shall have been made for or on account of an antecedent debt
owed by the Originator to the Seller, and no such transfer is or may be
voidable or subject to avoidance under any section of the Bankruptcy Code.
(p) The Certificate of Incorporation of the Seller includes
substantially the provisions set forth on Exhibit G hereto, and the
Originator has confirmed in writing to the Seller that, so long as the
Seller is not "insolvent" within the meaning of the Bankruptcy Code, the
Originator will not cause the Seller to file a voluntary petition under
the Bankruptcy Code or any other bankruptcy or insolvency laws. Each of
the Seller and the Originator has been advised in writing by its counsel
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 assets of the Seller
available to satisfy claims of the creditors of the Originator would not
result in making such assets available to satisfy such creditors under the
Bankruptcy Code.
(q) The Seller is solvent; at the time of (and immediately after)
each transfer by the Originator to the Seller under the Originator Sale
Agreement, the Seller shall have been solvent; and at the time of (and
immediately after) each Purchase hereunder, the Seller shall have been
solvent.
(r) The Seller accounts for the transfers to it from the Originator
of interests in Receivables, Related Security and Collections under the
Originator Sale Agreement as sales of such Receivables, Related Security
and Collections in its books, records and financial statements, in each
case consistent with GAAP and with the requirements set forth herein.
(s) The sole and exclusive business of the Seller is the purchase of
Receivables and Related Security pursuant to the Originator Sale Agreement
for its own account and for resale to the Purchaser pursuant to the terms
of this Agreement.
(t) The Seller is operated as an entity with assets and liabilities
distinct from those of the Originator and any Affiliates thereof (other
than the Seller), and the Seller hereby acknowledges that the Agent and
the Purchaser are entering into the transactions contemplated by this
Agreement in reliance upon the Seller's identity as a separate legal
entity from the Originator and from each such other Affiliate of the
Originator.
(u) To the best knowledge of the Seller, each VOI Regime related to
a Purchased Contract is now, and at all times during Originator's (or any
Affiliate of Originator's) ownership thereof has been, free of
contamination from any substance, material or waste identified as toxic or
hazardous according to any federal, state or local law, rule, regulation
or order governing or regulating in any way the discharge, generation,
removal,
37
transportation, storage or handling of toxic or hazardous substances,
materials or waste (hereinafter referred to as "Environmental Laws"),
including, without limitation, any PCB, radioactive substance, methane,
volatile hydrocarbons, industrial solvents or any other material or
substance which now or hereafter may cause or constitute a health, safety
or other environmental hazard to any person or property (any such
substance together with any substance, material or waste identified as
toxic or hazardous under any Environmental Law now in effect or
hereinafter enacted shall be referred to herein as "Hazardous Waste"). To
the knowledge of the Seller, neither the Originator nor any Affiliate of
the Originator has caused or suffered to occur any discharge, spill,
uncontrolled loss or seepage of any petroleum or chemical product or any
Hazardous Waste onto any property adjoining any of the VOI Regimes, and,
to the best knowledge of the Seller, neither the Originator nor any
Affiliate of the Originator nor any Obligor or occupant of all or part of
any of the VOI Regimes, is now or has been involved in operations at any
VOI Regime which could lead to liability for the Originator, the Seller,
any other Affiliate of the Originator or any other owner of any VOI Regime
or the imposition of a lien on such VOI Regime under any Environmental
Law.
To the best knowledge of the Seller, except as set forth on Schedule
IX, each Development related to a Purchased Contract is now, and at all
times has been free of contamination from any substance, material or waste
identified as toxic or hazardous according to the Environmental Laws,
including, without limitation, Hazardous Waste. To the knowledge of the
Seller, except as set forth on Schedule IX, neither the Originator nor any
Affiliate of the Originator has caused or suffered to occur any discharge,
spill, uncontrolled loss or seepage of any petroleum or chemical product
or any Hazardous Waste onto any property adjoining any of the
Developments, and to the best knowledge of the Seller neither the
Originator nor any Affiliate of the Originator nor any obligor or occupant
of all or part of any of any Development is now or has been involved in
operations at any Development which could lead to liability for the
Originator, the Seller, any other Affiliate of the Originator or any other
owner of any Development or the imposition of a lien on such Development
under any Environmental Law. None of the matters set forth on Schedule IX
will have a material adverse effect on the value of the Purchased Assets
or the interest of the Agent and the Purchaser therein or an adverse
effect on the Purchaser or the Agent.
(v) The Seller is not an "investment company" within the meaning of
the Investment Company Act of 1940.
SECTION 4.02. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants as follows:
(a) The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction named at
the beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by the Purchaser of this
Agreement
38
and all other documents to be delivered by it hereunder or thereunder, are
within the Purchaser's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Purchaser's charter
or by-laws, (ii) any law, rule or regulation applicable to the Purchaser,
(iii) any contractual restriction binding on or affecting the Purchaser or
its property or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Purchaser or its property. This
Agreement has been duly executed and delivered by the Purchaser.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Purchaser
of this Agreement or any other document or instrument to be delivered
hereunder.
(d) This Agreement and each other document or instrument to be
delivered by the Purchaser hereunder constitute the legal, valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting the rights of
creditors.
ARTICLE V.
GENERAL COVENANTS OF THE SELLER.
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate Existence. The
Seller will comply in all material respects with all applicable laws,
rules, regulations and orders and preserve and maintain its corporate
existence, and will preserve and maintain its rights, franchises,
qualifications and privileges in all material respects.
(b) Sales, Liens, Etc. Except as otherwise provided herein or in the
Receivables Loan Agreement, the Seller will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any Receivable
or the related Contract, Collections or Related Security, or upon or with
respect to any Lock-Box Account or any other account to which any
Collections of any Receivable are sent, or assign any right to receive
income in respect thereof or (ii) create or suffer to exist any Adverse
Claim upon or with respect to any of the Seller's assets.
(c) General Reporting Requirements. The Seller will provide to the
Agent (with a copy for the Purchaser) (and to S&P and Fitch, with respect
to items described in clause (vii)) the following:
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Seller, a balance sheet of the Seller and the related statements of
income, shareholders, equity and cash flows each for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter,
39
prepared in accordance with GAAP consistently applied and certified by the
chief financial officer of the Seller;
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Seller, a copy of the balance
sheet of the Seller and the related statements of income, shareholders,
equity and cash flows for such year, each prepared in accordance with GAAP
consistently applied and reported on by nationally recognized independent
public accountants acceptable to the Agent;
(iii) as soon as received from the originator and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Originator, to the extent received from the originator,
consolidated balance sheets of the Originator and its consolidated
subsidiaries and the related statements of income, shareholders, equity
and cash flows each for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, prepared in
accordance with GAAP consistently applied and certified by a senior
financial officer of the Originator;
(iv) as soon as received from the Originator and in any event
within 120 days after the end of each fiscal year of the Originator, to
the extent received from the originator, a copy of the consolidated
balance sheets of the originator and its consolidated subsidiaries and the
related statements of income, shareholders' equity and cash flows for such
year, each prepared in accordance with GAAP consistently applied and
reported on by nationally recognized independent public accountants
acceptable to the Agent;
(v) promptly after the receipt thereof, copies of all reports
which the Originator sends to any of its securityholders and copies of all
reports and registration statements which the Originator files with the
Securities and Exchange Commission or any national securities exchange
other than registration statements relating to employee benefit plans and
to registrations of securities for selling securityholders;
(vi) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Seller or any ERISA Affiliate files under
ERISA with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the Seller or any
ERISA Affiliate receives from such Corporation;
(vii) as soon as possible and in any event within five days
after the occurrence of each Event of Termination or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Termination, a statement of the chief financial officer of the
Seller setting forth details of such Event of Termination or event and the
action which the Seller has taken and proposes to take with respect
thereto;
(viii) promptly following receipt thereof, copies of all
financial statements, settlement statements, portfolio and other reports,
notices, disclosures, certificates, budgets and other written material
delivered or made available to the Seller by the Originator
40
pursuant to the terms of the Originator Sale Agreement; and
(ix) promptly following the Agent's request therefor, such
other information respecting the Receivables or the conditions or
operations, financial or otherwise, of the Seller as the Agent may from
time to time request in order to protect the interests of the Agent or the
Purchaser in connection with this Agreement.
(d) Merger, Etc. The Seller will not merge or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of
its assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any Person, other than, with respect to asset dispositions, in
connection herewith.
(e) Accounting of Purchases. The Seller will not account for or
treat (whether in financial statements or otherwise) the transactions
contemplated hereby or by the Originator Sale Agreement in any manner
other than the sale of Receivables and Related Security by the Seller to
the Purchaser or the sale of the Receivables and Related Security by the
Originator to the Seller, as the case may be.
(f) Nature of Business. The Seller will engage in no business other
than the purchase of Receivables and Related Security from the Originator,
the resale of such Receivables and Related Security to the Purchaser and
the other transactions permitted or contemplated by this Agreement and the
Receivables Loan Agreement.
(g) Originator Receivables. With respect to each Receivable acquired
by the Seller from the Originator, the Seller will (i) acquire such
Receivable pursuant to and in accordance with the terms of the Originator
Sale Agreement, (ii) take all action necessary to perfect, protect and
more fully evidence the Seller's ownership of such Receivable, including,
without limitation, (A) filing and maintaining effective financing
statements (Form UCC-1) against the Originator in all necessary or
appropriate filing offices, and filing continuation statements, amendments
or assignments with respect thereto in such filing offices and (B)
executing or causing to be executed such other instruments or notices as
may be necessary or appropriate and (iii) take all additional action that
the Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in the
Receivables and other Purchased Assets related thereto.
(h) Possession. On or immediately prior to the initial Purchase Date
and each Subsequent Purchase Date (if any), the Seller shall deliver to
the Collateral Trustee each original Purchased Contract and each Contract,
promissory note and deed of title in the related Contract File, and ▇▇▇▇,
and cause the originator to ▇▇▇▇ the portions of the computer files
relating to the Purchased Receivables sold on such date to the Purchaser
to clearly and unambiguously indicate that such Purchased Receivables
constitute part of the Purchased Assets purchased by the Seller in
accordance with the terms of this Agreement.
(i) Maintenance of Separate Existence. The Seller will do all things
necessary to
41
maintain its corporate existence separate and apart from the Originator
and all other Affiliates of the Seller, including, without limitation, (i)
practicing and adhering to corporate formalities, such as maintaining
appropriate corporate books and records; (ii) maintaining at least one
corporate director and one corporate officer who is not an officer,
director or employee of any of its Affiliates; (iii) owning or leasing
pursuant to written leases all office furniture and equipment necessary to
operate its business; (iv) retraining from (A) guaranteeing or otherwise
becoming liable for any obligations of any of its Affiliates, (B) having
obligations guaranteed by its Affiliates, (C) holding itself out as
responsible for debts of any of its Affiliates or for decisions or actions
with respect to the affairs of any of its Affiliates, and (D) being
directly or indirectly named as a direct or contingent beneficiary or loss
payee on any insurance policy of any Affiliate; (v) maintaining all of its
deposit and other bank accounts and all of its assets separate from those
of any other Person; (vi) maintaining all of its financial records
separate and apart from those of any other Person and ensuring that any of
.the Originator's consolidated financial statements or other public
information for the Seller and its Affiliates on a consolidated basis
contain appropriate disclosures concerning the Seller's separate
existence; (vii) compensating all its employees, officers, consultants and
agents for services provided to it by such Persons, or reimbursing any of
its Affiliates in respect of services provided to it by employees,
officers, consultants and agents of such Affiliate, out of its own funds;
(viii) maintaining office space separate and apart from that of any of its
Affiliates (even if such office space is subleased from or is on or near
premises occupied by any of its Affiliates) and a separate telephone
number which will be answered only in its name; (ix) accounting for and
managing all of its liabilities separately from those of any of its
Affiliates, including, without limitation, payment directly by the Seller
of all payroll, accounting and other administrative expenses and taxes;
(x) allocating, on an arm's-length basis, all shared corporate operating
services, leases and expenses, including, without limitation, those
associated with the services of shared consultants and agents and shared
computer equipment and software; (xi) refraining from paying dividends or
making distributions, loans or other advances to any of its Affiliates
more frequently than once during any fiscal quarter and, in each case, as
duly authorized by its board of directors and in accordance with
applicable corporation law; (xii) refraining from filing or otherwise
initiating or supporting the filing of a motion in any bankruptcy or other
insolvency proceeding involving the Seller, the originator or any other
Affiliate of the Seller to substantively consolidate the assets and
liabilities of the Seller with the assets and liabilities of any such
Person or any other Affiliate of the Seller; (xiii) maintaining adequate
capitalization in light of its business and purpose; (xiv) conducting all
of its business (whether written or oral) solely in its own name; and (xv)
taking all other actions necessary to maintain the accuracy of the factual
assumptions set forth in the legal opinion of Dechert Price & ▇▇▇▇▇▇
special counsel to the originator and the Seller, issued in connection
with the originator Sale Agreement and relating to the issues of
substantive consolidation and true sale of the Receivables and related
assets.
(j) Supplemental Opinions. (i) The Seller will cause to be delivered
to the Agent within six months (but not later than the 30th day) prior to
the end of each five year period after the initial Purchase hereunder, a
supplemental opinion of counsel to the Seller and the Originator in form
and substance reasonably satisfactory to the Agent, reaffirming the
42
opinions set forth in the opinion letter of Dechert Price & ▇▇▇▇▇▇
delivered to the Agent in connection with the initial Purchase hereunder
pursuant to Section 3.01 with respect to the continued validity of the
ownership or security interest of the Purchaser in the Purchased Assets
hereunder, and (ii) the Seller will cause to be delivered to the Agent
within 30 days following the Agent's request therefor, a supplemental
opinion of counsel to the Seller and the Originator in form and substance
reasonably satisfactory to the Agent, reaffirming the opinions set forth
in the opinion letter of Dechert Price & ▇▇▇▇▇▇ delivered to the Agent in
connection with the initial Purchase hereunder pursuant to Section 3.01.
(k) Transactions with Affiliates. The Seller 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, the Receivables
Loan Agreement and the Originator Sale Agreement, and (ii) other
transactions (including, without limitation, the lease of office space or
computer equipment or software by the Seller to or from an Affiliate) (A)
in the ordinary course of business, (B) pursuant to the reasonable
requirements of the Seller's business, (C) upon fair and reasonable terms
that are no less favorable to the Seller than could be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Seller, and (D) not inconsistent with the factual assumptions set forth in
the opinion letter issued by Dechert Price & ▇▇▇▇▇▇ delivered to the Agent
pursuant to Section 3.01, as such assumptions may be modified in any
subsequent opinion letter delivered pursuant to Section 5.01(i). It is
understood that any compensation arrangement for officers shall be
permitted under clause (ii)(A) through (C) above if such arrangement has
been expressly approved by the board of directors of the Seller.
(l) Debt; Investments. The Seller will not incur any Debt other than
(i) Debt arising hereunder, under the Receivables Loan Agreement or under
the originator Sale Agreement and (ii) Debt owing to the Originator
evidenced by promissory notes in form and substance satisfactory to the
Agent and not inconsistent with the factual assumptions set forth in the
opinion letter issued by Dechert Price & ▇▇▇▇▇▇ delivered to the Agent
pursuant to Section 3.01, as such assumptions may be modified in any
subsequent opinion letter delivered pursuant to Section 5.01(i). The
Seller will not make any Investments other than Permitted Investments.
(m) Change in the Originator Sale Agreement. The Seller will not
amend, modify, waive or terminate any terms or conditions of the
Originator Sale Agreement without the written consent of the Agent, and
shall perform its obligations thereunder.
(n) Amendment to Certificate of Incorporation. The Seller will not
amend, modify or otherwise make any change to its Certificate of
Incorporation to delete or otherwise nullify or circumvent the provisions
set forth in Exhibit G hereto.
(o) Terminate or Reject Contracts. The Seller will not, without the
written consent of the Agent, terminate or reject any Purchased Contract
prior to the end of the term of such Contract, whether such rejection or
early termination is made pursuant to an equitable cause, statute,
regulation, judicial proceeding or other applicable law (including,
43
without limitation, section 365 of the Bankruptcy Code), unless prior to
such termination or rejection, such Purchased Contract and any related
Purchased Assets have been repurchased pursuant to Section 6.18 in
consideration of the payment of an appropriate Repurchase Price therefor.
SECTION 5.02. Financial Covenants.
(a) Dividends, etc. The Seller will not declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for
value any shares of any class of its capital stock or set aside any amount
for any such purpose if, after giving effect to such dividend,
distribution, redemption, purchase, retirement or acquisition, the
Seller's tangible net worth in accordance with GAAP would be less than the
amount set forth in Section 5.02(b).
(b) Net Worth. The Seller shall maintain a tangible net worth
(determined in accordance with GAAP and including subordinated debt) of at
least the difference between (i) the aggregate Outstanding Balance of
Eligible Receivables which constitute Purchased Receivables at the time
minus (ii) the amount referred to in clause (i) divided by 1.03, but in no
event less than $250,000.
ARTICLE VI.
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES.
SECTION 6.01. Appointment and Designation of the Servicer. The
Seller, the Purchaser and the Agent hereby appoint the Person (the "Servicer")
designated by the Agent from time to time (with the approval of the Purchaser)
pursuant to this Section 6.01, as their agent to service, administer and collect
the Receivables and otherwise to enforce their respective rights and interests
in and under the Receivables, the Related Security and the Contracts. The
Servicer's authorization under this Agreement shall terminate on the Collection
Date. Until the Agent gives notice to the Seller of a designation of a new
Servicer, or consents to the appointment by the Seller of a new "Servicer" under
and pursuant to the Originator Sale Agreement, the Originator is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. Upon and after the occurrence of any
Servicer Default, the Agent may at any time (with the approval of the Purchaser)
designate as Servicer any Person to succeed the Originator or any successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the
terms hereof. Each of the Seller and the Originator hereby grants to any
successor Servicer an irrevocable power of attorney to take any and all steps in
the Seller's or the Servicer's name, as applicable, and on behalf of the Seller
necessary or desirable, in the determination of the successor Servicer, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections and enforcing such Receivables and the related
Contracts. The Servicer may, with the prior consent of the Agent, subcontract
with any
44
other Person for servicing, administering or collecting the Receivables,
provided that the Servicer shall remain liable for the performance of the duties
and obligations of the Servicer pursuant to the terms hereof. Subject to the
provison of the preceding sentence, the Agent consents to the Servicer
subcontracting for such services with The Processing Center; provided, that,
such consent shall be automatically revoked if The Processing Center ceases to
be an Affiliate of the Originator. Notwithstanding anything to the contrary
contained in this Agreement, the Servicer, if not the Seller or the originator,
shall have no obligation to collect, enforce or take any other action described
in this Article VI with respect to any Receivable that is not a Purchased
Receivable other than to deliver to the Seller the Collections and documents
with respect to any such Receivable that is not a Purchased Receivable as
described in Sections 6.03 and 6.06(b).
SECTION 6.02. Collection of Receivables by the Servicer; Extensions
and Amendments of Receivables. The Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to collect each Receivable from
time to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy; provided, however, that, (a) following an Event of
Termination, the Agent shall have the absolute and unlimited right to direct the
Servicer (whether the Servicer is the Seller, the Originator or otherwise) to
commence or settle any legal action, to enforce collection of any Purchased
Receivable or to foreclose upon or repossess any Related Security and (b) the
Servicer shall not make the Agent or the Purchaser a party to any litigation
without the express written consent of the Agent or the Purchaser, as the case
may be. Neither the Originator nor the Seller will extend, amend or otherwise
modify the terms of any Purchased Receivable, or amend, modify or waive any term
or condition of any Contract related thereto.
SECTION 6.03. Distribution and Application of Collections. The
Servicer shall set aside for the account of the Seller and the Purchaser
Collections of Receivables in accordance with Section 2.05 and 6.08. The
Servicer shall as soon as practicable following receipt turn over to the Seller
the collections of any Receivable which is not a Purchased Receivable less, in
the event neither the Seller nor the Originator is the Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering such Receivables to the extent not covered by the
Servicer Fee received by it and the Servicer shall as soon as practicable
following receipt turn over to the Seller amounts received by the Servicer or
deposited into the Agent's Account with respect to taxes and/or maintenance fees
remitted by obligors that are not Collections. Any payment by an Obligor in
respect of any indebtedness owed by it to the Seller shall, except as otherwise
specified by such Obligor or otherwise required by contract or law or by
instruction of the Agent, be applied as a Collection of any Purchased Receivable
of such Obligor (in the order of the age of such Receivables, starting with the
oldest such Purchased Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other Receivable or other
indebtedness of such Obligor.
SECTION 6.04. Segregation of Collections. The Servicer shall not
commingle funds constituting Collections with any other funds of the Servicer or
the originator for more than two Business Days.
SECTION 6.05. Other Rights of the Agent. At any time following the
occurrence
45
of an Event of Termination or the designation of a Servicer other than the
Originator, the Seller or any Affiliate thereof pursuant to Section 6.01:
(a) The Agent may or, at the request of the Agent, the Seller shall
(in either case, at the seller's expense) direct the Obligors of
Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Agent or its designee; and
(b) The Seller shall, at the Agent's request and at the Seller's
expense, (i) assemble all Records and make the same available to the Agent
or its designee at a place selected by the Agent or its designee, and (ii)
segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to
the Agent and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
SECTION 6.06. Records; Audits.
(a) The Seller will maintain and implement, or cause the Originator
to maintain and implement, administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
the Receivables in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of each new Purchased Receivable and all Collections of and
adjustments to each existing Purchased Receivable).
(b) The Servicer, whether or not the Seller, shall hold all Records
(other than those delivered to the Collateral Trustee in accordance with
this Agreement) in trust for the Seller and the Purchaser in accordance
with their respective interests. Subject to the receipt of contrary
instructions from the Agent, the Seller will deliver all Records to such
servicer; provided, however, that the Servicer, if other than the Seller,
shall as soon as practicable upon demand deliver to the Seller all Records
in its possession relating to Receivables of the Seller other than
Purchased Receivables, and copies of Records in its possession relating to
Purchased Receivables.
(c) The Seller will, from time to time during regular business hours
as requested by the Agent, permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of the Seller for the
purpose of examining such Records and to discuss matters relating to the
Receivables or the Seller's performance hereunder with any of the officers
or employees of the Seller having knowledge of such matters.
(d) The Servicer shall permit the Agent to cause reviews of the
Purchased Receivables to be conducted as of the close of each calendar
quarter and year by a firm of nationally recognized certified public
accountants selected by the Agent, which reviews, among other things, may
(based on a statistically significant sample of Purchased Receivables
46
which were Purchased in the relevant period)(i) confirm the conformity of
the Purchased Receivables with the related identifications thereof
supplied to the Agent or the Purchaser hereunder, (ii) recalculate and
verify the accuracy of data included in the reports delivered pursuant to
Section 6.07 (including without limitation the absence of the occurrence
of any Events of Termination), and (iii) confirm the conformity of the
Purchased Receivables with the Credit and Collection Policy.
SECTION 6.07. Periodic Settlement Reporting.
(a) The Seller will deliver to the Agent (i) prior to each
Settlement Date, a report identifying the Purchased Receivables (and the
aged balance thereof) as of the last day of the immediately preceding
month, (ii) on the Termination Date, a report identifying the Purchased
Receivables (and the aged balance thereof) on the day immediately
preceding the Termination Date and (iii) upon the Agent's request, on each
day, a report identifying the Purchased Receivables (and the aged balance
thereof) on such day.
(b) Prior to each Settlement Date, the Servicer shall prepare and
forward to the Agent for the Purchaser (and to S&P and Fitch), a Monthly
Settlement Report relating to all Purchased Receivables, as of the close
of business of the Servicer on the last day of the immediately preceding
month.
(c) On the Business Day immediately preceding each Purchase Date
that is not a Settlement Date and on the Business Day immediately
preceding each Spread Account Surplus Date, the Servicer shall prepare and
forward to the Agent for the Purchaser, a Purchase Date/Spread Account
Surplus Settlement Report, as of a date no more than three Business Days
prior to such Purchase Date or Spread Account Surplus Date, as applicable.
(d) On the Business Day immediately preceding the last day of each
Fixed Period that is not a Settlement Date, the Servicer shall prepare and
forward to the Agent for the Purchaser, a Commercial Paper Settlement
Report, as of the close of business of the Servicer on the second Business
Day immediately preceding such last day.
SECTION 6.08. Collections and Lock-Boxes. The Seller or the Servicer
on its behalf will instruct all obligors to cause all Collections to be either
(a) remitted to a Lock-Box and will cause each Lock-Box Bank to retrieve such
Collections promptly and deposit the same to the respective Lock-Box Accounts or
(b) deposited directly into a Lock-Box Account and will cause any Collections
effectuated by pre-authorized debits of Obligor accounts to be deposited
directly into a Lock-Box Account or the Agent's Account. Each Lock-Box Bank will
remit Collections deposited into the respective Lock-Box Accounts to the Agent's
Account on a daily basis in accordance with Section 2.05. If the Seller receives
any Collections, the Seller will remit such Collections (including, without
limitation, any Collections deemed to have been received pursuant to Section
2.07) to a Lock-Box Account or the Agent's Account within one Business Day
following the Seller's receipt thereof. The Seller will not add or terminate any
bank as a Lock-Box Bank to or from those listed in Schedule VII or make any
change in its instructions to Obligors regarding payments to be made to the
Seller or payments to be made to any Lock Box or any ▇▇▇▇-▇▇▇ ▇▇▇▇,
▇▇
unless the Agent shall have given its written consent to such addition,
termination or change and all actions reasonably requested by the Agent to
protect and perfect the interest of the Agent and the Purchaser in the
Collections of Purchased Receivables have been taken and completed. The Agent
shall have the exclusive ownership and control of the Lock-Box Accounts.
SECTION 6.09. UCC Matters; Protection and Perfection of Purchased
Assets.
(a) The Seller will keep its principal place of business and chief
executive office, and the office where it keeps the Records, at the
address of the Seller referred to in Section 4.01(k) or, upon 30 days,
prior written notice to the Agent, at such other locations within the
United States where all actions reasonably requested by the Agent to
protect and perfect the interest of the Agent and the Purchaser in the
Purchased Receivables have been taken and completed. The Seller will not
make any change to its corporate name or use any tradenames, fictitious
names, assumed names, "doing business as" names or other names other than
those described in Schedule VIII, unless prior to the effective date of
any such name change or use, the Seller delivers to the Agent such
executed financing statements as the Agent may request to reflect such
name change or use, together with such other documents and instruments as
the Agent may request in connection therewith. The Seller agrees that from
time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the
Agent may reasonably request in order to perfect, protect or more fully
evidence the Purchaser's interest in the Purchased Assets acquired
hereunder, or to enable the Purchaser or the Agent to exercise or enforce
any of their respective rights hereunder. Without limiting the generality
of the foregoing, the Seller will upon the request of the Agent: (a)
execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as
may be necessary or appropriate or as the Agent may request, and (b) ▇▇▇▇
its master data processing records evidencing such Purchased Receivables
with a legend acceptable to the Agent, evidencing that the Purchaser has
acquired an interest therein as provided in this Agreement and (c) notify
Generali Underwriters, Inc. of the assignment of the Generali Commercial
Lines Policy with respect to the Purchased Receivables that it insures.
The Seller hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Purchased Receivables and the Related
Security now existing or hereafter arising without the signature of the
Seller where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Purchased Receivables, or any part thereof shall be sufficient as a
financing statement. The Seller shall, upon the request of the Agent at
any time and at the Seller's expense, notify the Obligors of Purchased
Receivables, or any of them, of the ownership of Purchased Assets by the
Purchaser. if the Seller fails to perform any of its agreements or
obligations under this Section 6.09, the Agent may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Seller upon the Agent's demand therefor. For
purposes of enabling the Agent to exercise its rights described in the
preceding sentence and elsewhere in this Article VI, the Seller and the
Purchaser hereby authorize the Agent and its successors and assigns to
take any and all steps in the Seller's name-and on behalf of the
48
Seller and the Purchaser necessary or desirable, in the determination of
the Agent, to collect all amounts due under any and all Receivables,
including, without limitation, endorsing the Seller's name on checks and
other instruments representing Collections and enforcing such Receivables
and the related Contracts.
(b) In the event that the Seller receives any other instrument or
any writing which, in either event, evidences a Purchased Receivable, a
Purchased Contract or other Purchased Assets, the Seller shall deliver
such instrument or writing to the Collateral Trustee within one Business
Day after the Seller's receipt thereof, in suitable form for transfer by
delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent
and the Collateral Trustee.
SECTION 6.10. Obligations of the Seller With Respect to Receivables.
The Seller will (a) at its expense, regardless of any exercise by the Agent or
the Purchaser of its rights hereunder, timely and fully perform and comply with
all material provisions, covenants and other promises required to be observed by
it under the Contracts related to the Receivables to the same extent as if
Purchased Assets had not been sold hereunder and (b) pay when due any taxes,
including without limitation, sales and excise taxes, payable in connection with
the Purchased Receivables. In no event shall the Agent or the Purchaser have any
obligation or liability with respect to any Purchased Receivables or related
Contracts, nor shall any of them be obligated to perform any of the obligations
of the Seller or the originator or any of their Affiliates thereunder. The
Seller will timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Purchased Receivable and the related
Contract. The Seller will not make any change in the character of its business
or in the Credit and Collection Policy, which change would, in either case,
impair the collectibility of any Purchased Receivable.
SECTION 6.11. Rights of Obligors and Release of Contract Files.
(a) Notwithstanding any other provision contained in this Agreement,
including the Purchaser's remedies pursuant hereto, the rights of any
obligor to any Lot or VOI subject to a Purchased Contract shall, so long
as such Obligor is not in default thereunder, be superior to those of the
Purchaser hereunder, and the Purchaser shall not, so long as such obligor
is not in default thereunder, interfere with such Obligor's use and
enjoyment of the Lot or VOI subject thereto.
(b) If, pursuant to the terms of this Agreement, the Purchaser shall
acquire through foreclosure any portion of the Lot or VOI subject to a
Purchased Contract, the Purchaser hereby specifically agrees to release or
cause to be released any Lot or VOI from any lien of the Purchaser upon
the request of the Obligor (including such obligor's heirs, successors and
assigns) to the Purchased Contract, upon completion of all payments and
the performance of all the terms and conditions required to be made and
performed by such Obligor under such Purchased Contract.
(c) At such time as an Obligor has paid in full the purchase price
or the requisite percentage of the purchase price for deeding pursuant to
a Purchased Contract and has
49
otherwise fully discharged all of such obligor's obligations and
responsibilities required to be discharged as a condition to deeding, the
Servicer shall notify the Agent by a certificate substantially in the form
attached hereto as Exhibit H (which certificate shall include a statement
to the effect that all amounts received in connection with such payment
have been deposited in the Agent's Account) of an officer of the Servicer
and shall request delivery to it (i) of the Contract File (or the portion
thereof in the Collateral Trustee's possession) related to a Purchased
Contract pursuant to which the Obligor has paid the purchase price in full
or, (ii) of the deeds of title, and any documents and records maintained
in connection therewith, related to a Purchased Contract pursuant to which
the obligor has paid the requisite percentage of the purchase price for
deeding. Upon receipt of such certificate and request or at such earlier
time as is required by applicable law, the Agent (a) shall promptly direct
the Collateral Trustee to release the Contract Files (or the portion
thereof in the Collateral Trustee's possession) to the Servicer or (b)
shall approve the release by the Collateral Trustee of the related deed of
title, and any documents and records maintained in connection therewith,
as applicable, to the obligor, provided that title to the VOI or Lot has
not already been deeded to the Obligor.
SECTION 6.12. Recordation of Assignments. The Servicer shall,
promptly following the initial Purchase Date and each Subsequent Purchase Date
(if any), cause to be filed for recordation in the proper offices (a) all
Assignments of Mortgages constituting Contract Conveyance Documents relating to
Receivables Purchased by the Purchaser on such date and (b) an assignment of
each Developer Mortgage related to Receivables Purchased by the Purchaser on
such date, except to the extent that the related VOIs or Lots are located in
Developments in any state with respect to which an opinion of counsel (in a form
acceptable to the Agent) has been delivered to the Agent stating that
recordation is not necessary or advisable to perfect or protect the interest of
the Purchaser in such Contract Mortgages or Developer Mortgages, as applicable
in such State.
SECTION 6.13. Costs and Expenses.
(a) The costs and expenses incurred by the Servicer in carrying out
its duties hereunder, including without limitation the fees and expenses
incurred in connection with the enforcement of Purchased Receivables and
Purchased Contracts, shall be paid by the Servicer and the Servicer shall
not be entitled to reimbursement hereunder.
(b) The Servicer agrees to pay all reasonable costs and
disbursements in connection with the perfection and maintenance of
perfection, as against all third parties, of all of the right, title and
interest of each of the Agent and the Purchaser to the extent that such
payments and disbursements are not made by the seller in accordance with
Section 10.07.
SECTION 6.14. Servicer Representations and Warranties. The
originator, as initial Servicer, hereby makes, and each Successor Servicer by
acceptance of its appointment hereunder shall make, the following
representations and warranties as of each Purchase Date and, (1) in the case of
the initial Servicer, as of the date hereof, and (2) in the case of any
Successor Servicer, the date of such appointment. to each of the Purchaser and
the Agent:
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(a) Due Incorporation and Good Standing. The Servicer is a
corporation, state banking corporation or national banking association
duly organized, validly existing and in good standing under the applicable
laws of its jurisdiction of organization or incorporation and has, in all
material respects, full corporate power and authority and legal right to
own its properties and conduct its business (including the servicing of
Contracts) as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations
under this Agreement and each other document to be delivered by it
hereunder. The Servicer is duly qualified to do business and is in good
standing as a foreign corporation, and has obtained all necessary licenses
and approvals in each jurisdiction in which the servicing of the Purchased
Receivables in accordance with the terms of this Agreement requires such
qualification, except where failure to qualify or to obtain such licenses
and approvals would not (i) have an adverse effect on the value or
collectibility of any Purchased Receivable or related Purchased Assets or
the ability of the Servicer to perform its obligations hereunder and under
the other documents delivered by it hereunder or (ii) have a material
adverse effect on the business, properties, operations, prospects, profits
or condition (financial or otherwise) of the Servicer.
(b) Due Authorization and No Conflict. The execution, delivery and
performance by the Servicer of this Agreement, the Originator Sale
Agreement and each other document to be delivered by it hereunder and
thereunder, and the consummation of each of the transactions contemplated
hereby and thereby, have in all cases been duly authorized by the Servicer
by all necessary corporate action, and do not contravene (i) the
servicer's charter or by-laws, (ii) any law, rule or regulation applicable
to the Servicer, (iii) any contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note, or other agreement or instrument binding on or affecting the
Servicer or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Servicer or its property.
This Agreement, the Originator Sale Agreement, and each other document
delivered by it hereunder or thereunder have been duly executed and
delivered on behalf of the Servicer.
(c) Governmental and other Consents. All approvals, authorizations,
consents, orders or other actions of, and all registration, qualification,
designation, declaration, notice to or filing with, any Person or of any
governmental body or official required in connection with the execution
and delivery by the Servicer of this Agreement, the Originator Sale
Agreement and each other document delivered by it hereunder and
thereunder, the consummation of the transactions contemplated hereby or
thereby, the performance of and the compliance with the terms hereof or
thereof, have been obtained, except where the failure so to do would not
have a material adverse effect on the value of the Purchased Assets or the
interests of the Purchaser or therein.
(d) Enforceability. This Agreement, the Originator Sale Agreement
and each other document to which the Servicer is a party, have been duly
and validly executed and delivered by the Servicer and constitute the
legal, valid and binding obligation of the Servicer enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
51
insolvency, moratorium, or other similar laws affecting the rights of
creditors.
(e) No Litigation. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, the originator Sale Agreement or any of the
other documents delivered by it hereunder or thereunder, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or any of the other related documents, (iii) seeking any
determination or ruling that would adversely affect the performance by the
Servicer of its obligations under this Agreement, the Originator sale
Agreement or any other document delivered by it hereunder or thereunder,
(iv) seeking any determination or ruling that would adversely affect the
validity or enforceability of this Agreement, the Originator Sale
Agreement or any of the other documents delivered by it hereunder or
thereunder, or (v) seeking any determination or ruling that would have a
material adverse effect on the business, operations, condition (financial
or otherwise), properties, assets or prospects of the Servicer.
(f) Settlement Reports and Certificates. Each Monthly Settlement
Report, Purchase Date/Spread Account Surplus Settlement Report and
Commercial Paper Settlement Report and any other report or certificate
delivered by the Servicer pursuant to this Agreement shall be true and
correct in all material respects as of the date such report or certificate
is delivered.
(g) Servicer Default. No Servicer Default has occurred and is
continuing.
The representations and warranties set forth in this Section 6.14
shall survive the Purchase of Receivables by the Purchaser. Upon a discovery by
the Seller, the Servicer or the Agent of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other such parties.
SECTION 6.15. Additional Covenants of the Servicer. From the date
hereof until the later of the Termination Date or the Collection Date, the
Servicer shall, unless the Agent shall otherwise consent in writing:
(a) Change in Payment Instructions to Obligors. Not add or terminate
any bank as a Lock-Box Bank from those listed in Schedule VII or make any
change in its instructions to Obligors regarding payments to be made to
any Lock-Box Bank, unless the Agent shall have received (i) 30 Business
Days' prior notice of such addition, termination or change and (ii) prior
to the effective date of such addition, termination or change, copies of
all agreements and documents signed by either the Seller or the respective
Lock-Box Bank with respect to any new Lock-Box Account.
(b) Collections. If the Servicer shall receive any Collections, the
Servicer shall hold such Collections in trust for the benefit of the
Purchaser and deposit such Collections into a Lock-Box Account or the
Agent's Account within one Business Day following
52
Servicer's receipt thereof, and (ii) if either of the Originator or the
Seller receives any Collections, the servicer shall cause the Originator
or the Seller, as the case may be, to hold such Collections in trust for
the benefit of the Purchaser and deposit such Collections into a Lock-Box
Account or the Agent's Account within one Business Day following such
Person's receipt thereof.
(c) Compliance with Requirements of Law. The Servicer shall maintain
in effect all qualifications required under all relevant laws, rules,
regulations and orders in order to service each Purchased Contract, except
where failure to qualify would not have an adverse effect on the ability
of the servicer to perform its obligations hereunder and under the other
documents delivered by it hereunder and the Servicer shall comply in all
material respects with all applicable laws, rules, regulations and orders
with respect to it, its business and properties, and the servicing of the
Purchased Contracts.
(d) Protection of Rights. The Servicer shall take no action which
would impair in any material respect the rights of any of the Agent or the
Purchaser in the Purchased Assets.
(e) Credit Standards and Collection Policies. The servicer shall
comply in all material respects with the Credit and Collection Policies in
regard to each Purchased Receivable and related Purchased Contract.
(f) Examination of Records. The Servicer will, from time to time
during regular business hours as requested by the Agent, permit the Agent,
or its agents or representatives, (i) to examine and make copies of and
abstracts from all Records and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such Records and to discuss
matters relating to the Receivables or the Servicer's performance
hereunder with any of the officers or employees of the Servicer having
knowledge of such matters.
(g) Financial Statements. The Servicer will furnish to the Agent the
financial statements, reports, financial and other information and notices
described in Section 5.02 of the Originator Sale Agreement, when required
to be furnished by the Originator thereunder and, promptly, such other
information as the Agent may from time to time reasonably request.
SECTION 6.16. Standby Servicer. The Standby Servicer shall perform
the obligations from time to time applicable to it under this Agreement,
including without limitation, under Section 6.01 and to become the Successor
Servicer hereunder if so appointed by the Agent. In order to permit the Standby
Servicer to be prepared to perform its obligations hereunder in the event that a
Servicer Default, the Servicer and the Standby Servicer agree to undertake the
procedures and perform the other obligations described in the Standby Servicing
Agreement.
Subject to the terms of any agreement between the standby Servicer
and the Purchaser or the Agent, the Standby Servicer may resign at any time by
not less than 60 days' notice to the Agent and the Servicer. In addition, the
Standby Servicer may be removed at any time without cause by the Purchaser or
the Agent by not less than 60 days' notice then given in writing to
53
the Standby Servicer, the Servicer and the Seller. In the event of any such
resignation or removal, the Standby Servicer may be replaced by the Agent by
notice given in writing to the Servicer and the Seller.
SECTION 6.17. The Servicer not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it hereunder except
upon determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
can be taken to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer pursuant to clause (i) hereof shall be evidenced by an opinion of
Counsel to such effect delivered to the Agent. Unless otherwise required by
applicable law, no such resignation shall be effective until a Successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 8.02 hereof.
SECTION 6.18. Repurchases; Clean-up; Right of First Refusal.
(a) Subject to Section 6.18(c), the Seller shall repurchase any
Purchased Receivable (together with the related Purchased Assets) on the
next Settlement Date or Purchase Date occurring after the Seller has
become aware, or has received written notice from the Agent, of any
uncured breach of a representation or warranty of the Seller in Section
4.01 with respect to such Purchased Receivable (each related Purchased
Contract, a "Defective Contract" and each such date, a "Defective contract
Release Date") by either (i) depositing in the Agent's Account the
Repurchase Price therefor or (ii) prior to the Termination Date, conveying
a new substitute Receivable(s) to the Purchaser that (A) on the applicable
Defective Contract Release Date is an Eligible Receivable (and the Seller
shall be deemed to have represented and warranted as such), (B) has an
Outstanding Balance at least equal to the Outstanding Balance of the
Purchased Receivable for which it is being substituted, (C) has a
remaining term that is no longer than the remaining term of the Purchased
Receivable for which it is being substituted and (D) after giving effect
to the substitution of which would not cause either (1) the
Overcollateralization Percentage to be less than Required
overcollateralization Percentage or (2) the aggregate Capital outstanding
hereunder to exceed the lesser of a) the Purchase Limit minus the Discount
Amount or b) the Capital Limit as determined by reference to the most
recent Monthly Settlement Report or Purchase Date/Spread Account Surplus
Settlement Report delivered by the Servicer to the Purchaser in accordance
with Section 6.07 hereof. On the date of any such substitution in
accordance with the preceding sentence, such new Eligible Receivable shall
become a Purchased Receivable and the Receivable so replaced shall cease
to be a Purchased Lease Receivable.
(b) In the event that any Purchased Receivable becomes a Defaulted
Receivable at any time after the date hereof, the Seller may, at its
election, repurchase such Defaulted Receivable by depositing into the
Agent's Account the Repurchase Price therefor on any Settlement Date (a
"Defaulted Receivable Release Date").
(c) The Seller shall notify the Agent of any Repurchase Price to be
paid or any
54
Receivables to be substituted pursuant to Section 6.18(a) or (b) at least
one Business Day prior to the Settlement Date or Purchase Date on which
such Repurchase Price shall be paid and/or Receivables substituted, as
applicable, specifying the Defective Contract or Defaulted Contract and
the Repurchase Price and/or Receivables to be substituted therefor. Prior
to 11:00 A.M. New York City time on the relevant Settlement Date or
Purchase Date, the Seller shall deposit in the Agent's Account the
applicable Repurchase Price or, with respect to Receivables to be
substituted, shall have satisfied all of the requirements of Section 3.02
with respect to any new Receivables to be substituted as if such new
Receivables were to be Purchased on such date. Promptly thereafter, the
Servicer shall delete such Defective Contract or Defaulted Contract from
the Contract Schedule and shall notify the Agent to do the same with
respect to the records and any computer file maintained by it; provided
that it shall be a condition precedent to the effectiveness of the
repurchase of any relevant Defective Contract or Defaulted Contract
pursuant to Section 6.18(a) or (b) that the Seller shall have delivered to
the Agent evidence of deposit in the Agent's Account of the relevant
Repurchase Price or of the satisfaction of the conditions for substitution
of new Receivable(s) in respect of such Defective Contract or Defaulted
Contract.
(d) In the event that any time the aggregate Outstanding Balance of
Purchased Receivables is less than an amount equal to ten percent (10%) of
the Outstanding Balance of Purchased Receivables as of the initial
Purchase Date, the Seller may, at its election, repurchase all of the
outstanding Purchased Receivables at such time, together with all other
Purchased Assets, by paying, on any Settlement Date (a "Clean-Up
Repurchase Date"), the aggregate Repurchase Price for all such Purchased
Receivables, to the Agent's Account, and by paying all other obligations
owing the Agent and the Purchaser then outstanding hereunder (including,
without limitation, all Capital), or otherwise payable as a result of any
such payment (collectively, the "Clean-Up Amount").
(e) The Seller shall notify the Agent of the Clean-Up Amount to be
paid pursuant to Section 6.18(d) at least three Business Days prior to the
Clean-Up Repurchase Date. Upon obtaining the confirmation of the Agent as
to the calculation of the Clean-Up Amount, prior to 11:00 A.M. New York
City time on the relevant Settlement Date, the Seller shall pay the
Clean-Up Amount to a deposit account designated by the Agent, for the
benefit of the Agent and the Purchaser; provided that it shall be a
condition precedent to the effectiveness of the repurchase of any of the
Purchased Assets that the Seller shall have delivered to the Agent
evidence of deposit into such deposit account of the Clean-Up Amount.
(f) If the Purchaser or any Eligible Assignee (the "Transferring
Owner"), desires to exercise its right to assign all or a portion of the
Purchased Receivables (and related Purchased Assets) or any interest
therein (the "Offered Assets"), and the proposed assignee is any Person
other than an Eligible Assignee, the Transferring Owner shall first give
written notice (the "Transferor's Notice") to the Seller stating that the
Transferring owner's desire to make such transfer and the price which the
Transferring owner proposes to be paid for the offered Assets (the
"Offered Price"). Upon receipt of the Transferor's Notice, the Seller
shall have the irrevocable and exclusive option to purchase all of the
Offered Assets at the offered
55
Price. The Seller's option under this Section 6,18(f) shall be exercisable
by a written notice to the Transferring Owner (which notice shall be
irrevocable and binding on the Seller), given no later than fifteen (15)
days from the date of the Transferor's Notice. If the Seller does not
exercise its option to purchase the Offered Assets at the offered Price
and deposit such Offered Price in available funds into the Agent's Account
within such fifteen day period, the Transferring owner shall be free to
sell the offered Assets to any Person at the same price as the offered
Price and on substantially similar terms.
(g) In connection with each repurchase pursuant to Section 6.18(a)
or (b), Section 6.18(d) or Section 6.18(f), and upon the satisfaction of
the conditions precedent set forth in Section 6.18(b),(c), (e) or (f), as
the case may be, the Agent shall automatically and without further action
be deemed to transfer, assign, set over and otherwise convey to the
Seller, without recourse, representation or warranty, all the right, title
and interest of Agent in and to any such Defective Contract, Defaulted
Contract or any other Purchased Assets in respect of which the Repurchase
Price, the Clean-Up Amount, or Offered Price has been paid or in respect
of which new Receivables have been substituted, as the case may be, and
all monies thereafter due or to become due with respect thereto, and all
proceeds thereof. In connection with each repurchase pursuant to this
Section 6.18 upon the satisfaction of the applicable conditions precedent
set forth in this Section 6.18, the Agent shall promptly direct the
Collateral Trustee to release the contract Files (or the portion thereof
in the Collateral Trustee's possession) to the Servicer (or to the Seller
if the Seller so directs). The Agent shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the Seller to effect the conveyance of such
repurchased Purchased Assets pursuant to this subsection.
ARTICLE VII.
EVENTS OF TERMINATION.
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur:
(a) (i) The Servicer (if other than the Agent) shall fail to perform
or observe any term, covenant or agreement hereunder (other than as
referred to in clause (ii) of this Section 7.01(a)) and such failure shall
remain unremedied for three Business Days or (ii) either the Servicer (if
other than the Agent) or the Seller shall fail to make any payment or
deposit to be made by it hereunder when due; or
(b) (i) Any representation or warranty made or deemed to be made by
the Seller (or any of its officers) under or in connection with this
Agreement or any monthly Settlement Report, Purchase Date/Spread Account
Surplus Settlement Report, Commercial Paper Settlement Report or other
information or report delivered pursuant hereto shall prove to have been
false or incorrect in any material respect when made and (ii) any
representation or warranty made or deemed to be made by the Originator or
the Servicer (or any of their respective officers or agents) under or in
connection with the Originator Sale Agreement
56
shall prove to have been false or incorrect when made; provided, however,
that if any such representation or warranty relates solely to a Purchased
Receivable which is repurchased by the Seller in accordance with Section
6.18, the breach of such representation or warranty shall not give rise to
an Event of Termination pursuant to this subsection (b); or
(c) Either the Seller or the Originator shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement
or in the Originator Sale Agreement (or, with respect to the Seller, in
any other material agreement) on its part to be performed or observed and
any such failure shall remain unremedied for three Business Days after
written notice thereof shall have been given by the Agent to the Seller;
or
(d) The Seller or the Originator shall fail to pay any principal of
or premium or interest on any Debt in an amount in excess of $10,000 (with
respect to the Seller) or $250,000 (with respect to the Originator), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any Debt in an amount in excess of
$10,000 (with respect to the Seller) or $750,000 (with respect to the
Originator) or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity
thereof; or
(e) Either (i) any Purchase shall for any reason, except to the
extent permitted by the terms hereof, cease to create a valid and
perfected first priority 100% ownership or security interest in each
Purchased Receivable and the Related Security and Collections with respect
thereto or (ii) any purchase by the Seller of a Receivable from the
Originator shall, for any reason, cease to create in favor of the Seller a
valid and perfected first priority ownership or security interest in each
Purchased Receivable and the Related Security and Collections with respect
thereto; provided, however, that if any such cessation of ownership or
perfection relates solely to a Purchased Receivable which is repurchased
by the Seller in accordance with Section 6.18, such cessation shall not
give rise to an Event of Termination pursuant to this subsection (e); or
(f) (i) The Seller or the Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Seller or the Originator seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property; or (ii) the Seller or the
Originator shall take any corporate action to authorize
57
any of the actions set forth in clause (i) above in this Section 7.01(f);
or
(g) The Default Ratio for three consecutive months shall exceed
1.20%; or
(h) There shall have been any material adverse change in the
financial condition or operations of the Originator since December 31,
1994 until the date hereof, or there shall have occurred any event which
materially adversely affects the collectibility of the Receivables or
there shall have occurred any other event which materially adversely
affects the ability of the Seller or the Originator to collect Receivables
or to perform their respective obligations hereunder and under the
Originator Sale Agreement; or
(i) (i) There shall have occurred an "Event of Termination" under
the Originator Sale Agreement, or (ii) the Originator Sale Agreement shall
have ceased to be valid, binding and enforceable as against any of the
parties thereto without any amendment, modification, waiver or termination
of any terms or conditions thereof, other than as agreed to in writing by
the Agent, or (iii) the Originator shall have terminated the Originator
Sale Agreement for any reason, or (iv) the assignment to the Agent of all
of the seller's right and title to and interest in the Originator Sale
Agreement shall have ceased, for any reason, to be fully effective and
enforceable by the Agent as against any of the parties of the Originator
Sale Agreement; or
(j) The Originator shall cease to own (whether directly or
indirectly) 100% of the issued and outstanding stock of the Seller; or
(k) A regulatory, tax or accounting body has ordered that the
activities of the Purchaser, or any Affiliate of the Purchaser,
contemplated hereby be terminated or, as a result of any other event or
circumstance, the activities of the Purchaser contemplated hereby may
reasonably be expected to cause the Purchaser, the Person then acting as
the administrator or the manager for the Purchaser, or any of their
respective Affiliates to suffer materially adverse regulatory, accounting
or tax consequences; or
(l) The Seller shall fail to make payment as specified in Section
2,05(f) and such failure shall remain unremedied for more than one
Business Day after written notice thereof shall have been given by the
Agent to the Seller; or
(m) The Overcollateralization Percentage shall be less than the
Minimum Overcollateralization Percentage at any time; or
(n) The commercial paper dealer of the Purchaser is unable to retire
maturing commercial paper issued to fund or maintain Purchases hereunder
through the issuance of new commercial paper for 90 consecutive days; or
(o) The Originator has a tangible net worth (as defined in GAAP
plus, if not otherwise included, non-redeemable subordinated debt) of less
than $5,000;000; or
58
(p) The ▇▇▇▇▇▇▇ Funding Group, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ or their Affiliates, singularly or in combination, shall cease to
own at least 51% of the voting stock of the originator; or
(q) The Seller or any ERISA Affiliate of the Seller shall have (i)
engaged in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States
Department of Labor; (ii) permitted 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; (iii) failed to make any payments to any
Multiemployer Plan that the Seller or any ERISA Affiliate may be required
to make under the agreement relating to such Multi-employer Plan or any
law pertaining thereto; (iv) terminated any Benefit Plan so as to result
in a liability; or (v) permitted to exist any occurrence of any reportable
event described in Title IV of ERISA which represents a material risk of a
liability of the Seller or any ERISA Affiliate under ERISA or the Code, if
such prohibited transactions, accumulated funding deficiencies, payments,
terminations and reportable events occurring within any fiscal year of the
Seller, in the aggregate, involve a payment of money or an incurrence of
liability by the Seller or any ERISA Affiliate in an amount in excess of
$25,000; or
(r) A Servicer Default shall have occurred; or
(s) There shall have occurred an "Event of Default" under the
Receivables Loan Agreement, then, and in any such event, the Agent may, by
notice to the Seller, declare the Termination Date to have occurred,
except that, in the case of any event described in Section 7.01(l) or
clause (i) of Section 7.01(f) above, the Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event. Upon any
such declaration or automatic occurrence, .the Agent and the Purchaser
shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the
UCC of the applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
ARTICLE VIII
SERVICER DEFAULTS.
SECTION 8.01. Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Agent any Monthly
Settlement Report, Purchase Date/Spread Account Surplus Settlement Report
or Commercial Paper Settlement Report pursuant to Section 6.07 on or
before the date such delivery is due under the terms of this Agreement; or
(b) any failure by the Servicer to deliver any other information to
the Agent required pursuant to Section 6.01 on or before the date such
information, payment, transfer,
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deposit, instruction or notice is required to be made or given under the
terms of this Agreement, which continues unremedied for a period of three
Business Days after such information is due under the terms of this
Agreement; or
(c) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement or any of the other related documents to which it is a
party which continues unremedied for a period of ten Business Days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the servicer by the Agent, or to the
Servicer and the Agent by the Purchaser; or the Servicer shall assign its
duties under this Agreement or under any of the other related documents to
which it is a party, except as permitted in accordance with the terms of
Sections 8.02 and 10.04; or
(d) any representation, warranty or certification made by the
Servicer in this Agreement or any other related document to which it is a
party or in any certificate delivered pursuant to this Agreement or any
other Transaction Document to which it is a party shall prove to have been
incorrect in any material respect when made; or
(e) The Seller or the Originator shall fail to pay any principal of
or premium or interest on any Debt in an amount in excess of $10,000 (with
respect to the Seller) or $250,000 (with respect to the Originator), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any Debt in an amount in excess of
$10,000 (with respect to the Seller) or $750,000 (with respect to the
Originator) or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity
thereof; or
(f) a final judgment is rendered against the Servicer while acting
as Servicer in an amount greater than $1,000,000 and, within 45 days after
entry thereof, such judgment is not discharged or execution thereof stayed
pending appeal, or within 45 days after the expiration of any such stay,
such judgment is not discharged; or
(g) either the Agent or the Purchaser (i) shall receive notice from
the Servicer that the Servicer is no longer able to discharge its duties
under this Agreement or (ii) shall determine, in their respective
reasonable judgment and based upon published reports (including wire
services), which they reasonably believe in good faith to be reliable,
that the Servicer: (A) has experienced a material adverse change in its
business, assets, liabilities, operations, or financial condition, (B) has
defaulted on any of its material obligations (other than those included in
this Agreement), or (c) has ceased to conduct its business in the ordinary
course, then, so long as such Servicer Default shall not have been
remedied, the
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Agent by notice given in writing to the Servicer (a "Servicer Termination
Notice"), may terminate all of the rights and obligations of the Servicer
as Servicer under this Agreement (such termination being herein called a
"Servicer Transfer"). After receipt by the Servicer of such Servicer
Termination Notice, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Standby Servicer or another
Successor Servicer appointed pursuant to Section 8.02; and, without
limitation, the Agent is hereby authorized and empowered (upon the failure
of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of the Servicer 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 agrees to cooperate with the Agent and such Successor
Servicer in effecting the termination of the responsibilities and rights
of the Servicer to conduct servicing hereunder, including, without
limitation, the transfer to such Successor Servicer of all authority of
the Servicer to service the Purchased Receivables and related Purchased
Assets provided for under this Agreement, including, without limitation,
all authority over any Collections which shall on the date of transfer be
held by the Servicer for deposit or withdrawal in a Lock-box Account or
the Agent's Account or which shall thereafter be received by the Servicer
with respect to the Purchased Receivables, and in assisting the successor
servicer in enforcing all rights under this Agreement including, without
limitation, allowing the Successor Servicer's personnel access to the
Servicer's premises for the purpose of collecting payments on the
Purchased Assets made at such premises. The Servicer shall promptly
transfer its electronic records relating to the Purchased Assets to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer
all other records, correspondence and documents necessary for the
continued servicing of the Purchased Assets in the manner and at such
times as the Successor Servicer shall reasonably request. The Servicer
shall allow the Successor Servicer access to the Servicer's officers and
employees.
SECTION 8.02. Appointment of Successor.
(a) Appointment. On and after the receipt by the Servicer of a
Servicer Termination Notice pursuant to Section 8.01, or any permitted
resignation of the Servicer pursuant to Section 6.17, the Servicer shall
continue to perform all servicing functions under this Agreement until the
date specified in the Servicer Termination Notice or otherwise specified
by the Agent in writing or, if no such date is specified in such Servicer
Termination Notice, or otherwise specified by the Agent, until a date
mutually agreed upon by the Servicer and the Agent. The Agent shall as
promptly as possible after the giving of a Termination Notice appoint the
Standby servicer or another successor servicer (in any case, the
"Successor Servicer") and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Agent.
Notwithstanding the foregoing, the Agent shall, if it is unwilling or
legally unable so to act, petition a court of competent jurisdiction to
appoint any established financial institution having a net worth of not
less than $100,000,000 and whose regular business includes the servicing
of receivables similar to the
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Purchased Contracts or if no such institution is available, other consumer
finance receivables, as the Successor Servicer hereunder.
(b) Duties and Obligations of Successor Servicer. Upon its
appointment, the Successor Servicer shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement
and shall be subject to all the responsibilities and duties 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 Successor Servicer.
(c) Compensation of Successor Servicer. In connection with such
appointment and assumption, the Agent may make such arrangements for the
compensation of the Successor Servicer out of Collections as it and such
Successor Servicer shall agree.
(d) Termination of Servicer's Authority. All authority and power
granted to any Successor Servicer under this Agreement shall automatically
cease and terminate upon termination of this Agreement pursuant to Section
10.05, and shall pass to and be vested in the Seller and, without
limitation, the Seller is hereby authorized and empowered to execute and
deliver, on behalf of the Successor 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 upon termination of this Agreement.
The Successor Servicer shall cooperate with the Seller in effecting the
termination of the responsibilities and rights of the Successor Servicer
to conduct servicing on the Purchased Contracts. The Successor Servicer
shall transfer its electronic records relating to the Purchased Contracts
to the Seller in such electronic form as the Seller may reasonably request
and shall transfer all other records, correspondence and documents
relating to the Purchased Contracts to the Seller in the manner and at
such times as the Seller shall reasonably request. To the extent that
compliance with this Section 8.02 shall require the Successor Servicer to
disclose the information of any kind which the Successor Servicer deems to
be confidential, the Seller shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall
deem necessary to protect its interests and as shall be reasonably
satisfactory in form and substance to the Seller.
SECTION 8.03. Certain Matters Affecting the Successor Servicer. The
Successor Servicer hereunder shall be entitled to the following rights,
remedies, and protections in carrying out its duties as Servicer hereunder: (i)
the Successor Servicer shall not be liable for any act or omission in carrying
out its duties, in the absence of its gross negligence, bad faith or willful
misconduct; (ii) the successor Servicer may rely on and be fully protected in
acting or refraining from acting in accordance with any resolution, certificate,
letter, statement, instrument, opinion, report, notice, request, consent order,
appraisal, bond, or other document received by it which it has reason to believe
is genuine and signed or presented to it by a proper party; (iii) the Successor
Servicer may consult with counsel, and any opinion from such counsel (so long as
such counsel is not an employee of the Successor Servicer or an Affiliate of the
Successor Servicer) shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by the
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Successor servicer in good faith in accordance with such opinion; and (iv) the
Successor Servicer shall not be required to expend or risk its own funds for
extraordinary expenses or otherwise incur extraordinary financial liability in
the performance of its duties hereunder if it reasonably believes that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it (which assurance shall be deemed to have been given
by an unsecured indemnity agreement from an institutional investor having a long
term unsecured indebtedness rating of at least A or its equivalent from either
of S&P or Fitch). The reference to extraordinary expenses and liabilities in
clause (iv) of the preceding sentence refers to the out-of-pocket costs and
expenses, including any attorneys' fees and expenses, incurred in connection
with suits against Obligors for the enforcement of Purchased Contracts pursuant
hereto, together with the risk of any liabilities or counterclaims which could
be incurred in connection therewith.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.01. Indemnities by the Seller. Without limiting any other
rights which the Agent, the Purchaser or any of their respective Affiliates may
have hereunder or under applicable law, the Seller hereby agrees to indemnify
the Agent, the Purchaser, and each of their respective Affiliates 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 of them arising out of or as a result of this
Agreement or the ownership of Purchased Assets or in respect of any Receivable
or any Contract, excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of the Agent,
the Purchaser or such Affiliate or (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Purchased
Receivables; provided, however, that the liability for Indemnified Amounts
partially attributable to other Persons from whom the Purchaser purchases
receivables or to whom the Purchaser makes loans shall be reasonably allocated
between the Seller and such other Persons by the Purchaser. Without limiting the
foregoing, the Seller shall indemnify the Agent, the Purchaser and each of their
respective Affiliates for Indemnified Amounts relating to or resulting from:
(i) any Purchased Receivable treated as or represented by the
Seller to be an Eligible Receivable which is not at the applicable time an
Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Seller, the servicer (if the originator 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 Seller or the Servicer (if the
Originator 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 Receivable, the related Contract or the
Related Security, or
63
the nonconformity of any Receivable, the related Contract or the Related
Security with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the Purchaser
or to transfer to the Purchaser, legal and equitable title to and
ownership of, a 100% ownership or security interest in the Receivables
which are, or are purported to be, Purchased Receivables, together with
all Collections and Related Security, free and clear of any Adverse Claim
(except as otherwise provided herein or in the Receivables Loan Agreement)
whether existing at the time of the Purchase of such Receivable or at any
time thereafter;
(v) the failure to maintain, as of the close of business on
each Business Day prior to the Termination Date, an amount of capital
outstanding which is less than or equal to the lesser of (x) the Purchase
Limit minus the Discount Amount on such Business Day, or (y) the Capital
Limit on such Business Day;
(vi) 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
Receivables which are, or are purported to be, Purchased Receivables,
whether at the time of any Purchase or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the obligor) of the obligor to the payment of
any Receivable which is, or is purported to be, a Purchased Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale VOIs or Lots related to such Receivable or
the furnishing or failure to furnish such VOIs or Lots;
(viii) any failure of the Seller 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 Seller or any Affiliate thereof to perform its respective
duties under the Contracts;
(ix) any breach of contract or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with the VOls or the Lots which are the
subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection
with the Purchased Receivables;
(xi) any repayment by the Agent or the Purchaser of any amount
previously distributed in reduction of Capital or payment of Yield or any
other amount due hereunder, in each case which amount the Agent or the
Purchaser believes in good faith is required to be repaid;
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(xii) the commingling of Collections of Purchased Receivables
at any time with other funds;
(xiii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership of
Purchased Assets or in respect of any Receivable, Related Security or
Contract;
(xiv) any failure by the Seller to give reasonably equivalent
value to the Originator in consideration for the transfer by the
Originator to the Seller of any Receivables or Related Security, 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
(xv) any failure of the Seller, the Originator or any of their
respective agents or representatives (including, without limitation,
agents, representatives and employees of the Originator acting pursuant to
authority granted under Section 6.01) to remit to the Servicer or the
Agent, Collections of Purchased Receivables remitted to the Seller or any
such agent or representative.
Any amounts subject to the indemnification provisions of this Section 9.01 shall
be paid by the Seller to the Agent within two Business Days following the
Agent's written demand therefor.
SECTION 9.02. Indemnities by the Servicer. Without limiting any
other rights which the Agent, the Purchaser or any of their respective
Affiliates may have hereunder or under applicable law, the Servicer hereby
agrees to indemnify the Agent, the Purchaser, and each of their respective
Affiliates from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or as a result of this Agreement or the
ownership of Purchased Assets or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of the Agent, the Purchaser or such
Affiliate or (b) recourse (except as otherwise specifically provided in this
Agreement) for uncollectible Purchased Receivables; provided, however, that the
liability for Indemnified Amounts partially attributable to other Persons acting
as servicers for receivables purchased by the Purchaser Or collateral pledged to
the Purchaser shall be reasonably allocated between the Servicer and such other
Persons by the Purchaser. without limiting the foregoing, the Servicer shall
indemnify the Agent, the Purchaser and each of their respective Affiliates for
Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty made or deemed
made by the Servicer (if the originator 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;
(ii) the failure by the Servicer (if the Originator 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
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with respect to any Receivable, the related Contract or the Related
Security, or the nonconformity of any Receivable, the related Contract or
the Related Security with any such applicable law, rule or regulation;
(iii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable which is, or is purported to be, a Purchased Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale VOIs or Lots related to such Receivable or
the furnishing or failure to furnish such VOIs or Lots;
(iv) any failure of 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
Seller or any Affiliate thereof to perform its respective duties under the
Contracts;
(v) any breach of contract or personal injury or property
damage suit or other similar or related claim or action of whatever sort
arising out of or in connection with the VOIs or the Lots which are the
subject of any Receivable or Contract;
(vi) any repayment by the Agent or the Purchaser of any amount
previously distributed in reduction of capital or payment of Yield or any
other amount due hereunder, in each case which amount the Agent or the
Purchaser believes in good faith is required to be repaid;
(vii) the commingling by the Servicer of Collections of
Purchased Receivables at any time with other funds;
(viii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or reinvestments or the
ownership of Purchased Assets or in respect of any Receivable, Related
Security or Contract; or
(ix) any failure of the Seller, the originator or any of their
respective agents or representatives (including, without limitation,
agents, representatives and employees of the Originator acting pursuant to
authority granted under Section 6.01) to remit to the Servicer or the
Agent, Collections of Purchased Receivables remitted to the seller or any
such agent or representative.
Any amounts subject to the indemnification provisions of this Section 9.02 shall
be paid by the Servicer to the Agent within two Business Days following the
Agent's written demand therefor.
The applicable Affected Party shall deliver to the indemnifying party under
Section 9.01 and Section 9.02, within a reasonable time after the Affected
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the Affected Party relating to the claim giving rise
66
to the Indemnified Amounts. Each Affected Party will cooperate with the Seller
and the Servicer in connection with any claim giving rise to the Indemnified
Amounts to minimize the liability of such indemnifying parties, provided that
nothing contained herein shall obligate any Affected Party to take any action
which, in the opinion of the applicable Affected Party, is unlawful or otherwise
disadvantageous to such Affected Party.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers.
(a) Except as provided in Section 10.01(b), no amendment or
modification of any provision of this Agreement shall be effective without
the written agreement of the Seller, the Servicer, the Agent and the
Purchaser, and no termination or waiver of any provision of this Agreement
or consent to any departure therefrom by the Seller or the Servicer shall
be effective without the written concurrence of the Agent and the
Purchaser. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) Notwithstanding the provisions of Section 10.01(a), in the event
that there is more than one Purchaser, the written consent of each
Purchaser shall be required for any amendment, modification or waiver (i)
reducing any Capital, or the Yield thereon, for any Fixed Period, (ii)
postponing any date for any payment of any Capital, or the Yield thereon,
for any Fixed Period, or (iii) modifying the provisions of this Section
10.01 and (iv) increasing the Capital Limit or the Purchase Limit or (v)
reducing the Required overcollateralization Percentage and the Minimum
Overcollateralization Percentage.
SECTION 10.02. 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 mails, first class
postage prepaid, (b) notice by telex, when telexed against receipt of
answerback, 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.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
Agent or the Purchaser to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
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SECTION 10.04. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of the Seller, the Agent, the Purchaser
and their respective successors .and permitted assigns. This Agreement and the
Purchaser's rights and obligations hereunder and interest herein shall be
assignable in whole or in part (including by way of the sale of participation
interests therein) by the Purchaser and its successors and assigns. Neither the
Seller nor the Servicer may assign any of its rights and obligations hereunder
or any interest herein without the prior written consent of the Purchaser and
the Agent. The parties to each assignment or participation made pursuant to this
Section 10.04 shall execute and deliver to the Agent for its acceptance and
recording in its books and records, an Assignment and Acceptance or a
participation agreement or other transfer instrument reasonably satisfactory in
form and substance to the Agent and the Seller. Each such assignment or
participation shall be effective as of the date-specified in the applicable
Assignment and Acceptance or other agreement or instrument only after the
execution, delivery, acceptance and recording as described in the preceding
sentence. The Agent shall notify the Seller of any assignment or participation
thereof made pursuant to this Section 10.04. The Purchaser may, in connection
with any assignment or participation or any proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Seller and the
Purchased Assets furnished to the Purchaser by or on behalf of the Seller or the
Servicer.
SECTION 10.05. Term of this Agreement. This Agreement, including,
without limitation, the Seller's obligation to observe its covenants set forth
in Articles V and VI, and the Servicer's obligation to observe its covenants Bet
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 Seller pursuant to
Articles III and IV and the indemnification and payment provisions of Article IX
and-Article X and the provisions of Section 10.08 and Section 10.09 shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.06. Governing Law; Jury Waiver. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF
THE PURCHASER IN THE PURCHASED RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT
THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK. RACE OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.
SECTION 10.07. Costs. Expenses and Taxes. (a) in addition to the
rights of indemnification granted to the Agent, the Purchaser and its Affiliates
under Article VIII hereof, the Seller agrees to pay on demand all costs and
expenses of the Purchaser and the Agent incurred in connection with the
preparation, execution, delivery, administration (including periodic auditing),
or any waiver or consent issued in connection with, this Agreement and the other
documents to be
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delivered hereunder or in connection herewith or incurred in connection with any
amendment or modification of this Agreement and other documents to be delivered
hereunder or in connection herewith that is necessary or requested by any of the
Seller, the originator, Fitch or S&P or made necessary or desirable as a result
of the actions of any regulatory, tax or accounting body affecting the Purchaser
and its Affiliates, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and the Purchaser with respect
thereto and with respect to advising the Agent and the Purchaser 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 Agent or
the Purchaser in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith.
(b) The Seller shall pay on demand any and all commissions of
placement agents and dealers in respect of commercial paper notes issued
to fund the Purchase of any Purchased Assets and any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Agreement, the other documents to be delivered hereunder or any agreement
or other document providing liquidity support, credit enhancement or other
similar support to the Purchaser in connection with this Agreement or the
funding or maintenance of Purchases hereunder.
(c) The Seller shall pay on demand all other costs, expenses and
taxes (excluding income taxes) incurred by any Issuer or any general or
limited partner or shareholder of such Issuer ("Other Costs"), including,
without limitation, the cost of auditing such Issuer's books by certified
public accountants, the cost of rating such Issuer's commercial paper by
independent financial rating agencies, the taxes (excluding income taxes)
resulting from such Issuer's operations, and the reasonable fees and
out-of-pocket expenses of counsel for the Issuer or any counsel for any
general or limited partner or shareholder of the Issuer with respect to
(i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in
connection herewith, (ii) the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith and (iii)
advising such Person as to the issuance of the Issuer's commercial paper
notes to fund the Purchase of any Purchased Assets and action in
connection with such issuance.
SECTION 10.08. No Proceedings. Each of the Seller, the Agent, the
Servicer and the Purchaser each hereby agrees that it will not institute
against, or join any other Person in instituting against, any Issuer any
proceedings of the type referred to in clause (i) of Section 7.01(f) so long as
any commercial paper issued by such Issuer shall be outstanding or there shall
not have elapsed one year and one day since the last day on which any such
commercial paper shall have been outstanding.
SECTION 10.09. Recourse Against Certain Parties. 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 Purchaser
as contained in this Agreement or any other agreement, instrument or document
entered into by it pursuant hereto or in connection herewith
69
shall be had against any administrator of the Purchaser or any incorporator,
affiliate, stockholder, officer, employee or director of the Purchaser or of any
such administrator, as such, by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that the agreements of the Purchaser contained
in this Agreement and all of the other agreements, instruments and documents
entered into by it pursuant hereto or in connection herewith are, in each case,
solely the corporate obligations of the Purchaser, and that no personal
liability whatsoever shall attach to or be incurred by any administrator of the
Purchaser or any incorporator, stockholder, affiliate, officer, employee or
director of the Purchaser or of any such administrator, as such, or any other
them, under or by reason of any of the obligations, covenants or agreements of
the Purchaser contained in this Agreement or in any other such instruments,
documents or agreements, or which are implied therefrom, and that any and all
personal liability of every such administrator of the Purchaser and each
incorporator, stockholder, affiliate, officer, employee or director of the
Purchaser or of any such administrator, or any of them, for breaches by the
Purchaser of any such obligations, covenants or agreements, which liability may
arise either at common law or at equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement. The provisions of this Section 10.09 shall
survive the termination of this Agreement.
SECTION 10.10. 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 the fee letters
described in Section 2.09.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: BFICP CORPORATION
By:______________________________________
Title:
BFICP Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile No.:
70
Telephone No.:
THE SERVICER: ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
By:______________________________________
Title:
▇▇▇▇▇▇▇ Funding International, Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:
THE AGENT: INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL MARKETS, INC.
By:______________________________________
Title:
Internationale Nederlanden (U.S.)
Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: BFICP CORPORATION
By:______________________________________
Title:
BFICP Corporation
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▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
71
Facsimile No.:
Telephone No.:
THE SERVICER: ▇▇▇▇▇▇▇ FUNDING INTERNATIONAL, LTD.
By:______________________________________
Title:
▇▇▇▇▇▇▇ Funding International, Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:
THE AGENT: INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL MARKETS, INC.
By:______________________________________
Title:
Internationale Nederlanden (U.S.)
Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
72
THE PURCHASER: HOLLAND LIMITED SECURITIZATION, INC.
By: Internationale Nederlanden
(U.S.) Capital Markets, Inc.,
as attorney-in-fact
By:______________________________________
Title:
Holland Limited Securitization, Inc.
▇/▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(▇.▇.) Capital Markets, Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
c/o Lord Securities Corporation
▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇