Exhibit 10.100(b)
EXECUTION COPY
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SALE AND SERVICING
AGREEMENT
among
FIRST INVESTORS RESIDUAL FUNDING LP,
Issuer
FIRST INVESTORS FINANCIAL SERVICES INC.,
as Servicer and Transferor
and
FIRST UNION SECURITIES, INC.,
as Deal Agent and Collateral Agent
Dated as of December 6, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1
SECTION 1.1 DEFINITIONS...................................................... 1
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.................................... 10
SECTION 1.3 COMPUTATION OF TIME PERIODS...................................... 10
SECTION 1.4 INTERPRETATION................................................... 10
ARTICLE II CONVEYANCE OF TRANSFERRED ASSETS AND ASSIGNMENT OF RIGHTS 11
SECTION 2.1 CONVEYANCE OF TRANSFERRED ASSETS................................. 11
SECTION 2.2 PAYMENT FOR COLLATERAL........................................... 11
SECTION 2.3 ADDITIONAL TRANSFERS............................................. 11
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS 12
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR ................ 12
SECTION 3.2 REPRESENTATIONS AND WARRANTIES RELATING TO THE COLLATERAL ....... 16
SECTION 3.3 PURCHASE OF TRANSFERRED ASSETS UPON BREACH ...................... 16
SECTION 3.4 FUTURE SECURITIZATIONS .......................................... 17
SECTION 3.5 COVENANTS OF THE TRANSFEROR ..................................... 17
SECTION 3.6 NEGATIVE COVENANTS OF THE TRANSFEROR ............................ 18
SECTION 3.7 FINANCIAL COVENANTS OF THE TRANSFEROR ........................... 24
SECTION 3.8 SEPARATE EXISTENCE OF TRANSFEROR ................................ 25
ARTICLE IV ADMINISTRATION AND SERVICING OF COLLATERAL 25
SECTION 4.1 DUTIES OF THE SERVICER .......................................... 25
SECTION 4.2 COVENANTS OF SERVICER ........................................... 26
SECTION 4.3 ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION
EVENT........................................................................ 26
SECTION 4.4 ANNUAL ACCOUNTANTS' REPORT ...................................... 27
SECTION 4.5 SUBSERVICERS .................................................... 27
ARTICLE V [RESERVED] 27
ARTICLE VI THE SERVICER 27
SECTION 6.1 REPRESENTATIONS OF SERVICER ..................................... 27
SECTION 6.2 LIABILITY OF SERVICER, INDEMNITIES .............................. 29
SECTION 6.3 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE OBLIGATIONS OF
THE SERVICER 30
SECTION 6.4 LIMITATION ON LIABILITY OF SERVICER AND OTHERS .................. 30
SECTION 6.5 DELEGATION OF DUTIES ............................................ 31
SECTION 6.6 SERVICER NOT TO RESIGN .......................................... 31
ARTICLE VII DEFAULT 31
SECTION 7.1 SERVICER EVENT OF DEFAULT ....................................... 31
SECTION 7.2 APPOINTMENT OF SUCCESSOR ........................................ 31
ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER 32
SECTION 8.1 ADMINISTRATIVE DUTIES ........................................... 32
SECTION 8.2 RECORDS ......................................................... 33
SECTION 8.3 REPORTING ....................................................... 33
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SECTION 8.4 ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER ........... 34
ARTICLE IX MISCELLANEOUS PROVISIONS 34
SECTION 9.1 AMENDMENT...................................................... 34
SECTION 9.2 PROTECTION OF RIGHT, TITLE AND INTEREST IN COLLATERAL.......... 34
SECTION 9.3 NOTICES........................................................ 35
SECTION 9.4 ASSIGNMENT; THIRD PARTY BENEFICIARIES.......................... 35
SECTION 9.5 INDEMNITIES BY TRANSFEROR...................................... 35
SECTION 9.6 SEVERABILITY................................................... 36
SECTION 9.7 EXECUTION IN COUNTERPARTS...................................... 36
SECTION 9.8 HEADINGS....................................................... 36
SECTION 9.9 GOVERNING LAW.................................................. 36
SECTION 9.10 NONPETITION COVENANTS.......................................... 36
SECTION 9.11 LIMITATION OF LIABILITY........................................ 37
SECTION 9.12 ENTIRE AGREEMENT............................................... 37
SECTION 9.13 CONSENT TO SERVICE............................................. 37
SECTION 9.14 RECOURSE AGAINST CERTAIN PARTIES............................... 37
SECTION 9.15 SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY............ 38
SECTION 9.16 CERTAIN FEES, COSTS AND EXPENSES............................... 38
SECTION 9.17 CONFIDENTIALITY................................................ 39
EXHIBITS
Exhibit A Form of Transfer Certificate
Exhibit B Servicing and Collection Policy
SCHEDULES
Schedule 3.1(o) Name, Jurisdiction of Formation, Addresses and Trade Names
or Other Names of the Transferors
Schedule 3.1(q) Debt of Transferor
Schedule 3.1(s) ERISA Plans Exceeding Fair Market Value
Schedule 3.1(u) Subsidiaries; Capitalization
Schedule 3.1(v) Other Agreements
Schedule 3.6(a) Permitted Debt
Schedule 3.6(b) Permitted Liens
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SALE AND SERVICING AGREEMENT (this "AGREEMENT") dated as of December 6,
2001, among FIRST INVESTORS RESIDUAL FUNDING LP, a Delaware limited partnership
(the "ISSUER"), FIRST INVESTORS FINANCIAL SERVICES, INC., a Texas corporation,
(in its capacity as Servicer together with any of its Affiliates acting as
servicer, the "SERVICER", in its capacity as Transferor, the "TRANSFEROR" or
"FIFS"), and First Union Securities, Inc., a Delaware corporation (in its
capacity as deal agent, the "DEAL AGENT" or in its capacity as collateral agent,
the "COLLATERAL AGENT").
RECITALS
WHEREAS, the Transferor has acquired certain residual interests under
various Securitizations pursuant to the Asset Purchase Agreement, dated as of
the date hereof among the Transferor, as purchaser and the Sellers named therein
(the "ASSET PURCHASE AGREEMENT");
WHEREAS, the Issuer desires to acquire the Transferor's residual interests
in the Securitizations;
WHEREAS, the Servicer is willing to service all such assets;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
ACCOUNTANTS' REPORT: The report of a firm of nationally recognized independent
accountants described in SECTION 4.4.
ADJUSTED NET INCOME: For any period and any Person, such Person's consolidated
net income (or loss) determined in accordance with GAAP, but excluding: (a) the
income of any other Person (other than its Subsidiaries) in which such Person or
any of its Subsidiaries has an ownership interest, unless received by such
Person or its Subsidiary in a cash distribution; (b) any after-tax gains or
losses attributable to an asset disposition other than in the ordinary course of
business; and (c) to the extent not included in CLAUSE (a) and CLAUSE (b) above,
any after-tax extraordinary, non-cash or nonrecurring gains or losses.
AFFILIATE: As defined in the Security Agreement.
AGREEMENT: As defined in the PREAMBLE.
BANKRUPTCY CODE: The United States Bankruptcy Reform Act of 1978 (11
U.S.C.Section. 101, ET SEQ.), as amended from time to time.
CAPITAL LEASE OBLIGATIONS: As to any Person, the obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal property, which obligations are required to
be classified and accounted for as a capital lease on a balance sheet of such
Person according to GAAP. For purposes of this Agreement, the amount of such
Capital Lease Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
CAPITAL STOCK: Corporate stock and any and all shares, partnership interests,
membership interests, equity interests, rights, securities, or other equivalent
evidences of ownership, or any options, warrants, voting trust certificates, or
other instruments evidencing an ownership interest or a right to acquire an
ownership interest in a Person (however designated) issued by any entity
(whether a corporation, partnership, limited liability company, limited
partnership, or other type of entity).
CHARGED-OFF RECEIVABLES: With respect to Receivables of the Transferor, any
Seller or any Subsidiary which the Transferor, such Seller or any Subsidiary has
determined, in accordance with its charge-off policies consistently applied with
past practices, that all or a portion of the outstanding principal balance is
uncollectable, the aggregate principal balance of all such Receivables as of the
date immediately prior to the date any such determination of Charged-Off
Receivables is made.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: FUSI.
CONTINGENT OBLIGATIONS: With respect to any Person, any obligation or
arrangement of such Person to guarantee or intended to guarantee any Debt,
leases, dividends or other payment obligations ("PRIMARY OBLIGATIONS") of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (b) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement or (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary
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obligation in respect of which such Contingent Obligation is made (or, if less,
the maximum amount of such primary obligation for which such Person may be
liable pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.
DEAL AGENT: FUSI.
DEBT: As to any Person at any time (without duplication): (a) all obligations of
such Person for borrowed money; (b) all obligations of such Person evidenced by
bonds, notes, debentures, or other similar instruments; (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable of such Person arising in the ordinary course of business
that are not past due by more than ninety (90) days or that are being contested
in good faith by appropriate proceedings diligently pursued and for which
adequate reserves have been established to the satisfaction of the Deal Agent;
(d) all Capital Lease Obligations of such Person; (e) all Contingent Obligations
of such Person; (f) all obligations secured by a Lien existing on property owned
by such Person, whether or not the obligations secured thereby have been assumed
by such Person or are non-recourse to the credit of such Person; PROVIDED,
HOWEVER, that the amount of such Debt of any Person described in this CLAUSE (f)
shall, for purposes of this Agreement, be deemed to be equal to the lesser of
(i) the aggregate unpaid amount of such Debt or (ii) the fair market value of
the property or asset encumbered, as determined by the Deal Agent in its
reasonable discretion; (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds, and similar instruments; (h) all liabilities of such
Person in respect of unfunded vested benefits under any Plan (excluding
obligations to deliver stock in respect of stock options or stock ownership
plans); and (i) all vested obligations of such Person for the payment of money
under any noncompete, consulting, or similar arrangements providing for the
deferred payment of the purchase price for an acquisition consummated prior to
the date hereof to the extent that any such obligations are, according to GAAP,
reflected as a capitalized liability on a balance sheet of such Person.
DELINQUENT RECEIVABLES: The aggregate principal balance of all Receivables of
the Transferor or any Subsidiary as to which more than ten (10) dollars of any
scheduled payments remains unpaid for more than thirty (30) days from the date
at which it is contractually due and payable.
DIVIDEND ASSETS: All present and future rights of the Transferor to receive
dividends from FIACC, FIRC, FAFC, FIAIC, FIARC and any other Seller or any other
distributions of any character, including upon any liquidation, winding up or
similar action.
EBITDA: For any period and any Person, the total of the following calculated
without duplication for such Person on a consolidated basis for such period: (a)
Adjusted Net Income; PLUS (b) any provision for (or less any benefit from)
income or franchise taxes deducted in determining Adjusted Net Income; PLUS (c)
Interest Expense deducted in determining Adjusted Net Income; PLUS (d)
amortization and depreciation expense deducted in determining Adjusted Net
Income; PLUS (e) other noncash charges deducted in determining Adjusted Net
Income and not already deducted in accordance with CLAUSE (d) above or CLAUSE
(b) and CLAUSE (c) of the definition of Adjusted Net Income; MINUS (f) noncash
credits included in determining
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consolidated Adjusted Net Income and not already excluded in accordance with the
definition of Adjusted Net Income.
ENVIRONMENTAL LAWS: Any and all federal, state, and local laws, regulations, and
requirements regulating health, safety, or the environment, as such laws,
regulations, and requirements may be amended or supplemented from time to time.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations issued thereunder.
ERISA AFFILIATE: Any corporation or trade or business which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Transferor or any of its Subsidiaries or is under common
control (within the meaning of Section 414(c) of the Code) with the Transferor
or any of its Subsidiaries.
EXCEPTED PERSONS: As defined in SECTION 9.17.
FIACC: First Investors Auto Capital Corporation, a Delaware corporation.
FIARC AGREEMENT: That certain Security Agreement, dated as of October 22, 1996,
as amended, by and among FIARC, Enterprise Funding Corporation, ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., MBIA Insurance Corporation, Bank of America N.A. and the
Transferor, as the same may hereafter be amended, restated, modified, renewed or
extended from time to time.
FIARC PURCHASE AGREEMENT: That certain Purchase Agreement, dated as of October
22, 1996, as amended, between the Transferor and FIARC, as the same may
hereafter be amended, restated, modified, renewed or extended from time to time.
FIFS: As defined in the PREAMBLE.
FIFSG: First Investors Financial Services Group, Inc., a Texas corporation.
FIRC AGREEMENT: That certain Second Amended and Restated Credit Agreement, dated
as of November 15, 2000, as amended, among FIRC, the financial institutions
party thereto and Bank of America, as agent, as the same may be further amended,
restated, modified, renewed or extended from time to time.
FIRC COLLATERAL AGENT: ▇▇▇▇▇ Fargo Bank Minnesota, National Association and any
successor thereto appointed pursuant to Section 19 of the FIRC Security
Agreement.
FIRC PURCHASE AGREEMENT: The Amended and Restated Purchase Agreement, dated as
of October 30, 1996, between the Transferor and FIRC, as the same has been and
may hereafter be amended, restated, modified, renewed or extended from time to
time.
FIRC SECURITY AGREEMENT: That certain Third Amended and Restated Collateral
Security Agreement, dated as of November 15, 2000, among FIRC, the FIRC
Collateral Agent, and the
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agent and the banks party to the FIRC Agreement, as the same may be amended,
restated, modified, renewed or extended from time to time.
FIRST UNION: First Union National Bank.
FIVH: First Investors (Vermont) Holdings, Inc., a Vermont corporation.
FUSI: First Union Securities, Inc., a Delaware corporation.
GAAP: Generally accepted accounting principles, applied on a "consistent basis"
(as such phrase is interpreted in accordance with SECTION 1.4 hereof), as set
forth in Opinions of the Accounting Principles Board of the American Institute
of Certified Public Accountants and/or in statements of the Financial Accounting
Standards Board and/or their respective successors and which are applicable in
the circumstances as of the date in question.
GOVERNMENTAL AUTHORITY: Any nation or government, any state or other political
subdivision thereof, any central bank (or other similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
INTEREST EXPENSE: For any period and for any Person, the sum of (a) interest
expense of such Person calculated without duplication on a consolidated basis
for such period in accordance with GAAP, PLUS (b) expenses paid under Hedging
Agreements during such period, MINUS (c) payments received under Hedging
Agreements during such period.
INVENTORY: All inventory now owned or hereafter acquired by the Transferor or
any Subsidiary of the Transferor wherever located and whether or not in transit,
which is or may at any time be held for sale or lease, or furnished under any
contract (exclusive of leases of real Property) for service or held or used as
raw materials, work in process, or supplies or materials used or consumed in the
business of the Transferor or any Subsidiary of the Transferor.
INVESTMENTS: As defined in SECTION 3.6(e).
ISSUER: As defined in the preamble.
LIEN: Any lien, mortgage, security interest, pledge, hypothecation, charge,
equity, encumbrance or right of any kind whatsoever.
MANAGED ASSETS: "Receivables Held for Investment" as determined historically for
inclusion under such item in the consolidated balance sheet of FIFSG provided
that such term shall: (i) not include any Receivables of ALAC Receivables
Corporation, ALAC Automobile Receivables Trust 1998-1 or ALAC LLC; (ii) not be
adjusted for any changes in GAAP; and (iii) include Receivables of the
Transferor and its Subsidiaries (other than those noted in clause (i) above)
that have been included in an off-balance sheet Securitization program created
by the Transferor or such Subsidiaries after the Closing Date.
MATERIAL ADVERSE EFFECT: With respect to any Person, any material adverse
effect, or the occurrence of any event or the existence of any condition that
could reasonably be expected to
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have a material adverse effect, on (a) the prospects, business or financial
condition, or performance of such Person or of such Person and its Subsidiaries,
taken as a whole, (b) the ability of such Person to pay and perform the
obligations for which such Person is responsible when due, (c) with respect to
the Transferor and its Subsidiaries and any Seller, the validity or
enforceability of (i) any of the Transaction Documents, (ii) any Lien created or
purported to be created by any of the Transaction Documents or the required
priority of any such Lien, or (iii) the rights and remedies of the Deal Agent or
the Note Investors under any of the Transaction Documents or (d) a default or
other event shall occur under any securitization program that results in
accelerated amortization of the related Securities where such accelerated
amortization is not, in the sole judgment of the Deal Agent, subject to reversal
by action readily available to the Transferor.
MONTHLY REPORT: As defined in SECTION 8.3(a).
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc.
MULTIEMPLOYER PLAN: A multiemployer plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Transferor, its Subsidiaries
or any ERISA Affiliate at any time within the six (6) year period preceding the
date hereof or hereafter and which is covered by Title IV of ERISA.
NET PROCEEDS: (i) In connection with any disposition of assets of the Transferor
or any Seller (or the assets of any direct or indirect Subsidiary of the
Transferor or any Seller), the cash proceeds received by such Transferor or
Seller from such disposition (including, without limitation, payments under
notes or other debt Securities received in connection with any such disposition,
but only as and when received) net of (a) the costs of such disposition
(including reasonable, out-of-pocket professional fees and expenses, investment
banking fees, financial advisory fees, taxes, notarial fees, survey costs, title
insurance premiums, required escrow deposits, and purchase price adjustments and
other customary fees and expenses, in each case attributable to and actually
paid in connection with such disposition), and (b) amounts applied to repayment
of Debt secured by a lien, security interest, claim or encumbrance on the asset
or property disposed and (ii) in connection with issuance of any equity
Securities, the cash proceeds received from such issuance, net of all costs of
such issuance (including, without limitation, reasonable, out-of-pocket
professional fees and expenses, notarial fees, underwriting discounts and
commissions, and other customary fees and expenses) actually paid.
NOTE: As defined in the Note Purchase Agreement.
NOTE INVESTOR: As defined in the Security Agreement.
NOTE PURCHASE AGREEMENT: The Note Purchase Agreement, dated as of December 6,
2001, among the Issuer, the Deal Agent, VFCC, First Union and the Liquidity
Banks named therein.
OPINION OF COUNSEL: A written opinion of counsel which opinion is acceptable in
form and substance and is rendered by counsel satisfactory to the Deal Agent.
PBGC: The Pension Benefit Guaranty Corporation or any entity succeeding to all
or any of its functions under ▇▇▇▇▇.
▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇: As defined in SECTION 3.6(b).
PERSON: Any individual, corporation, estate, partnership, limited liability
company, limited liability partnership, limited partnership, joint venture
association, joint stock company, trust (including any beneficiary thereof)
unincorporated organization or government or any agency or political subdivision
thereof.
PLAN: Any employee benefit plan established or maintained by the Transferor or
any of its Subsidiaries or any ERISA Affiliate and which is subject to TITLE IV
of ERISA.
PROHIBITED TRANSACTION: Any transaction described in Section 406 or 407 of ERISA
or Section 4975(c)(1) of the Code for which no statutory or administrative
exemption applies.
PROJECT BRAVE PURCHASE AGREEMENTS: That certain Amended and Restated Contract
Purchase Agreement, dated as of August 8, 2000, by and between First Investors
Servicing Corporation and FIFS Acquisition Funding Company, L.L.C. and that
certain Amended and Restated NIM Collateral Purchase Agreement, dated as of
August 8, 2000, by and between First Investors Servicing Corporation, ALAC
Receivables Corp. and FIFS Acquisition Funding Company, L.L.C., as amended by
that certain First Amendment to Amended and Restated NIM Collateral Purchase
Agreement, dated as of September 15, 2000, as such documents may be amended from
time to time after the Closing Date.
PROPERTY: For any Person, property or assets of all kinds, real, personal or
mixed, tangible or intangible (including, without limitation, all rights
relating thereto), whether owned or acquired on or after the Closing Date.
PURCHASE PRICE: With respect to each of the Transferred Assets sold by the
Transferor hereunder, the fair market value, as determined in good faith by the
Transferor and the Issuer as of the date such Transferred Asset is sold to the
Issuer.
RECEIVABLES: At any date of determination thereof, each and every "account" as
such term is defined in article or chapter 9 of the UCC (or any successor
statute) and includes, without limitation, all of the present and future rights
to payment under any retail installment sales contract or installment note and
related security agreement, arising from the sale of a motor vehicle or the
refinancing thereof.
RENTAL EXPENSE: For any period and for any Person, the rental or lease expense
of such Person under operating leases calculated without duplication on a
consolidated basis for such period as determined in accordance with GAAP.
REPORTABLE EVENT: Any of the events set forth in Section 4043 of ERISA for which
the 30-day notice requirement has not been waived by the PBGC.
RESIDUAL ASSETS: As defined in the Asset Purchase Agreement.
S&P: Standard & Poor's Ratings Services.
SECURED PARTIES: As defined in the Security Agreement.
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SECURITIES: Any stock, shares, options, warrants, voting trust certificates, or
other instruments evidencing an ownership interest or a right to acquire an
ownership interest in a Person or any bonds, debentures, notes, or other
evidences of indebtedness for borrowed money, secured or unsecured.
SECURITIZATION: The Receivables warehouse line provided by the FIRC Agreement,
the commercial paper facility provided by Enterprise Funding Corporation to
FIARC, and any securitization occurring after the Closing Date of the
Transferor's or any of its Affiliates' Receivables through the issuance of
asset-backed Securities (including the Project Brave LLP program and the First
Investors Auto Owner Trust 2000-A).
SECURITIZATION FACILITY DOCUMENTS: Any agreement, document, and instrument now
or hereafter executed and/or delivered in connection with the FIAIC Assets,
FIARC Assets, FIRC Assets, the Project Brave Assets and any other Securitization
including, without limitation, the FIARC Agreement, the FIARC Purchase
Agreement, the FIRC Agreement, the FIRC Purchase Agreement, the FIRC Security
Agreement, the Project Brave Purchase Agreements and any and all amendments,
modifications, supplements, renewals, extensions, or restatements thereof.
SECURITIZATION FACILITY SERVICER REPORT: As defined in SECTION 8.3(c).
SECURITIZATION SERVICER: Any Person acting as a servicer under the
Securitization Facility Documents.
SECURITY AGREEMENT: The Security Agreement, dated as of December 6, 2001, among
the Issuer as the debtor, FUSI, as the deal agent and the collateral agent and
the Transferor, as the seller.
SERVICER: As defined in the PREAMBLE.
SERVICER'S CERTIFICATE: As defined in SECTION 4.3(a).
SERVICER EVENT OF DEFAULT: An event specified in SECTION 7.1.
SERVICER TERMINATION NOTICE: As defined in SECTION 7.1(b).
SERVICING AND COLLECTION POLICY: The written servicing and collection policies
of FIFS and its Affiliates in effect on the date hereof and attached hereto as
EXHIBIT B, as amended from time to time in accordance with SECTION 4.2(c).
SOLVENT: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (i) the fair value of the property of such
Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (ii) the present fair salable value of the property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (iii) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(iv) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability
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to pay as such debts and liabilities mature; and (v) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
SUBSIDIARY: (a) When used to determine the relationship of a Person to another
Person, a Person of which an aggregate of more than 50% or more of the Capital
Stock is owned of record or beneficially by such other Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or more
Subsidiaries of such Person, (i) if the holders of such Capital Stock (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of Capital Stock
which is not issued by a corporation, if such ownership interests constitute a
majority voting interest, and (b) when used with respect to a Plan, ERISA, or a
provision of the Code pertaining to employee benefit plans, means, with respect
to a Person, any corporation, trade, or business (whether or not incorporated)
which is under common control with such Person and is treated as a single
employer with such Person under Section 414(b) or (c) of the Code and the
regulations thereunder.
SUCCESSOR SERVICER: As defined in SECTION 7.2(a).
TANGIBLE NET WORTH: With respect to any Person, at any time, the consolidated
stockholders' equity of such Person and its Subsidiaries, as determined on a
consolidated basis in accordance with GAAP, MINUS intangible assets of such
Person and its consolidated Subsidiaries (including, without limitation,
capitalized fees and unrealized gains or losses reported as other comprehensive
income/expense relating to hedging activities), PLUS any subordinated debt of
such Person and its Subsidiaries approved, in writing, by the Deal Agent.
TOTAL LIABILITIES: At the time of determination and without duplication, all
amounts which, in conformity with GAAP, would be included in total liabilities
on a consolidated balance sheet of the Transferor and its Subsidiaries.
TRANSFER CERTIFICATE: A transfer certificate executed in connection with any
sale, transfer and assignment of any additional Residual Asset on any day other
than the Closing Date in accordance with SECTION 2.3, each in form and substance
identical to EXHIBIT A hereto.
TRANSFER DATE: As defined in SECTION 2.3.
TRANSFERRED ASSET: As defined in SECTION 2.1, together with all Residual Assets
from time to time transferred after the Closing Date in accordance with SECTION
2.3.
VFCC: Variable Funding Capital Corporation, a Delaware corporation.
VOTING STOCK: Capital Stock of a Person having by the terms thereof ordinary
voting power to elect a majority of the board of directors (or similar governing
body) of such Person (irrespective
9
of whether or not at the time Capital Stock of any other class or classes of
such Person shall have or might have voting power by reason of the happening of
any contingency).
WHOLLY-OWNED SUBSIDIARY: Any Subsidiary that is owned 100% by the Transferor
and/or a Subsidiary of the Transferor.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Security Agreement.
(b) All accounting terms used but not specifically defined herein shall be
construed in accordance with GAAP.
SECTION 1.3 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement in the computation of a period of
time from a specified date to a later specific date, the word "from" means "from
and including" and the words "to" and "until" each mean "to but excluding".
SECTION 1.4 INTERPRETATION.
In each Transaction Document, unless a contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by the
Transaction Documents;
(c) reference to any gender includes each other gender;
(d) reference to any agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Transaction Documents,
and reference to any promissory note includes any promissory note that is an
extension or renewal thereof or a substitute or replacement therefor; and
(e) reference to any Applicable Law means such Applicable Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision.
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ARTICLE II
CONVEYANCE OF TRANSFERRED ASSETS AND ASSIGNMENT OF RIGHTS
SECTION 2.1 CONVEYANCE OF TRANSFERRED ASSETS.
As of the Closing Date, in consideration for the payment of the Purchase
Price therefor, the Transferor does hereby sell, transfer, assign, set over,
contribute and otherwise convey to the Issuer, without recourse (subject to the
obligations set forth herein), all right, title and interest of the Transferor
in and to the following, whether now owned or hereafter acquired (collectively,
with all Residual Assets transferred on any Transfer Date, the "TRANSFERRED
ASSETS");
(a) the Residual Assets;
(b) all rights, but none of the duties or obligations, of the Transferor
under the Asset Purchase Agreement;
(c) the Dividend Assets; and
(d) all present and future claims, demands, causes and chooses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing items in this SECTION 2.1.
It is the intention of the Transferor that the sale and assignment
contemplated by this Agreement shall constitute a sale, contribution and
absolute assignment of the Collateral from the Transferor to the Issuer and that
no interest, beneficial or otherwise, in the Collateral shall be retained by the
Transferor or be part of the Transferor's estate in the event of a bankruptcy,
insolvency or similar proceeding with respect to the Transferor. In the event
that, notwithstanding the intent of any of the Transferor, the sale,
contribution and assignment contemplated hereby is held not to be a sale, this
Agreement shall constitute a grant of a security interest in all of the property
referred to in this SECTION 2.1 to the Collateral Agent for the benefit of the
Secured Parties.
SECTION 2.2 PAYMENT FOR COLLATERAL.
The Issuer shall purchase and pay for each Transferred Asset, whether
transferred on the Closing Date or on any subsequent Transfer Date, by causing
the Purchase Price thereof to be paid to the Transferor in cash or by accepting
a contribution to its capital or a combination of the above.
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SECTION 2.3 ADDITIONAL TRANSFERS.
From time to time on any Business Day hereafter (each such day a "TRANSFER
DATE") the Transferor or any other Affiliate of FIFS will sell, transfer and
assign to the Issuer additional Residual Assets. Each such sale, transfer and
assignment shall be made pursuant to, and subject to the terms and conditions
of, a Transfer Certificate.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR.
As of the Closing Date and as of each Transfer Date, the Transferor hereby
represents and warrants, to the Issuer, Deal Agent and each Secured Party as
follows:
(a) ORGANIZATION. It and each of its Subsidiaries is a corporation, duly
organized and validly existing in good standing under the laws of the state of
its incorporation with all requisite corporate power and authority to own or
lease its properties and to conduct its business as such business is presently
conducted, and had at all relevant time, and now has all necessary power,
authority and legal right to acquire, own and sell the Collateral.
(b) DUE QUALIFICATION. It is duly qualified to do business as a foreign
corporation, and is in good standing, and has obtained all necessary licenses
and approvals in all states in which the ownership or lease of property or the
conduct of its business requires the qualification.
(c) POWER AND AUTHORITY; DUE AUTHORIZATION. It (i) has all necessary power,
authority and legal right to (A) execute and deliver this Agreement and each
other Transaction Document to which it is a party, (B) carry out the terms of
this Agreement and each other Transaction Document to which it is a party and
(ii) has been duly authorized by all necessary corporate action for the due
execution, delivery and performance of this Agreement and each other Transaction
Document to which it is a party and for the transfer, sale and assignment of
each of the Transferred Assets
(d) SOLVENCY. The transactions under this Agreement and any other
Transaction Document to which it is a party do not and will not render it not
Solvent.
(e) TRUE SALES; ABSOLUTE ASSIGNMENTS. The transfer of each of the
Transferred Assets by it to the Issuer is a sale and not a loan secured by a
pledge of the Transferred Assets or a contribution or absolute assignment of all
of its right, title and interest in and to such Transferred Assets.
(f) FINANCIAL STATEMENTS; FINANCIAL CONDITION. All financial statements or
certificates of it or any of its officers furnished to the Deal Agent fairly
present the financial condition and results of operations of it at the dates.
All the financial statements have been prepared in accordance with GAAP,
consistently applied. None of FIFSG, the Transferor nor any Subsidiary of the
Transferor has any material contingent liabilities, including liabilities for
taxes, unusual forward or long-term commitments, or unrealized or anticipated
losses from any unfavorable commitments except as referred to or reflected in
such financial statements. There has been no material adverse change with
respect to the condition (financial or otherwise), results of
12
operations, business, capitalization, assets, liabilities (actual or contingent)
or prospects of FIFSG, FIVH, the Transferor and its Subsidiaries since April 30,
2001.
(g) ENFORCEABILITY. Each of the Transaction Documents to which it is a
party constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its respective terms, except as limited by
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and
other similar laws and equitable principles affecting creditors' rights and
remedies.
(h) NO CONFLICTS. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice, lapse of time or both) a default under, the articles of
incorporation or by-laws of the Transferor, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which it is a party or
by which it is bound, (ii) result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of the indenture, agreement,
mortgage, deed of trust or other instrument, other than the Transaction
Documents, or (iii) violate any Applicable Law.
(i) LEGAL PROCEEDINGS. There is no proceeding or investigation pending or,
to the best of its knowledge, threatened against it, before any Governmental
Authority (i) asserting the invalidity of this Agreement or any other
Transaction Document to which it is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document to which it is a party, or (iii) seeking any
determination or ruling that would materially and adversely affect the
performance by it of its obligations under, or the validity or enforceability
of, this Agreement or any other Transaction Document to which it is a party.
(j) CONSENTS AND APPROVALS. All approvals, authorizations, consents, orders
or other actions of any Person or of any Governmental Authority (if any)
required for the due execution, delivery and performance by it of this Agreement
and any other Transaction Document to which it is a party have been obtained.
(k) INVESTMENT COMPANY ACT OF 1940. It is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended.
(l) TITLE TO TRANSFERRED ASSETS. It has good and marketable title (or its
equivalent under applicable law) to each Residual Asset and the proceeds thereof
free and clear of any Liens and the claims of any third party. No effective
financing statement or other instrument similar in effect covering any
Collateral shall at any time be on file in any recording office except as
contemplated hereby and by the Transaction Documents.
(m) PERFECTION. The sale, transfer and assignment by it of the Transferred
Assets has been duly perfected under all applicable laws. The interest of the
Issuer is a first priority perfected ownership interest in the Transferred
Assets. All filings (including, without limitation, the UCC filings) as are
necessary in any jurisdiction to perfect the interests of the Issuer and of
13
the Collateral Agent for the benefit of the Secured Parties, in the Transferred
Assets have been (or prior to the Closing Date will be) made.
(n) TAX STATUS. It has filed or caused to be filed all tax returns that are
required to be filed by it. It has paid or made adequate provisions for the
payment of all Taxes and all assessments made against it or any of its property
(other than any amount of Taxes the validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in accordance with GAAP have been provided on the books of the
Transferor), and no tax lien has been filed and, to the best of its knowledge,
no claim is being asserted, with respect to any such Taxes, fees or other
charge. The tax returns are complete and accurate in all respects.
(o) NAME, JURISDICTION OF FORMATION AND ADDRESSES. Except as disclosed on
SCHEDULE 3.1(o), during the four (4) months prior to the Closing Date, it has
not been located at any addresses other than its current address. During the
five (5) years immediately preceding the Closing Date it has operated under its
own and only those tradenames or other names as set forth on SCHEDULE 3.1(o).
It's jurisdiction of formation is as set forth on SCHEDULE 3.1(o) and it has not
changed its jurisdiction of formation within the four (4) months immediately
preceding the Closing Date. It is a "registered organization" within the meaning
of Article 9 of the UCC as adopted in each relevant jurisdiction.
(p) NO DEFAULT. There has been no default, breach, violation or event
permitting acceleration under the terms of this Agreement or any other
Transaction Document, and no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
this Agreement or any other Transaction Document, and there has been no waiver
of any of the foregoing.
(q) DEBT. Except as set forth in SCHEDULE 3.1(q), it has no funded Debt.
(r) MARGIN SECURITIES. It is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T, U, or
X of the Board of Governors of the Federal Reserve System), and no part of the
Purchase Price of any Transferred Asset will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock.
(s) ERISA. With respect to each Plan, it is in substantial compliance with
all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan. No notice
of intent to terminate a Plan has been filed, nor has any Plan been terminated.
No circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither it nor any ERISA Affiliate has
completely or partially withdrawn from a Multiemployer Plan. It and each of its
ERISA Affiliates have met their minimum funding requirements under ERISA with
respect to each Plan. Except as set forth in SCHEDULE 3.1(s), the present value
of all vested benefits under each Plan do not exceed the fair market value of
all Plan assets allocable to such benefits, as determined on the
14
most recent valuation date of the Plan and in accordance with ERISA. Neither it
nor any ERISA Affiliate has any outstanding liability to the PBGC under ERISA
(other than liability for the payment of PBGC premiums in the ordinary course of
business).
(t) DISCLOSURE. All factual information furnished by or on behalf of it in
writing to the Deal Agent for purposes of or in connection with this Agreement,
the other Transaction Documents, or any transaction contemplated herein or
therein is, and all other such factual information hereafter furnished by or on
behalf of it to the Deal Agent, are and will be true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information not misleading in any material respect at such time in light of the
circumstances under which such information was provided.
(u) SUBSIDIARIES; CAPITALIZATION. SCHEDULE 3.1(u) sets forth the
jurisdiction of incorporation or organization of the Transferor and its
Subsidiaries, its or another Subsidiary's (as applicable) percentage of
ownership of the outstanding Voting Stock of each of its Subsidiaries, and the
authorized, issued, and outstanding Capital Stock of the Transferor and each its
Subsidiaries. All of the outstanding Capital Stock of the Transferor and its
Subsidiaries has been validly issued, is fully paid, is nonassessable, and has
not been issued in violation of any preemptive or similar rights. Except as
disclosed in SCHEDULE 3.1(u), there are (a) no outstanding subscriptions,
options, warrants, calls, or rights (including, without limitation, preemptive
rights) to acquire, and no outstanding securities or instruments convertible
into, Capital Stock of the Transferor or any of its Subsidiaries, and (b) no
shareholder agreements, voting trusts, or similar agreements in effect and
binding on any shareholder of the Transferor or any of its Subsidiaries or the
Capital Stock of the Transferor or any of its Subsidiaries. All shares of
Capital Stock of the Transferor and its Subsidiaries were issued in compliance
with all applicable state and federal securities laws.
(v) AGREEMENTS. Except as set forth in SCHEDULE 3.1(v), the Transferor is
not a party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate
restriction that could have a Material Adverse Effect. The Transferor is not in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument to which it is a party where such default could reasonably be
expected to cause a Material Adverse Effect. No event has occurred and is
continuing which constitutes a default or an event of default under any
Securitization, or any other financing arrangement maintained by any of the
Transferor or any of its Affiliates.
(w) COMPLIANCE WITH LAWS. It is not in violation of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator except
for unintentional violations which could not reasonably be expected to have a
Material Adverse Effect.
(x) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation or
warranty by it contained herein or in any other document furnished by it
pursuant this Agreement or in connection with any other document furnished by it
is true and correct in all material respects.
15
(y) REPRESENTATIONS AND WARRANTIES IN ASSET PURCHASE AGREEMENT. The
representations and warranties made by the Transferor in the Asset Purchase
Agreement are hereby remade by the Transferor on each date to which they speak
in the Asset Purchase Agreement as if such representations and warranties were
set forth herein as made by the Transferor MUTATIS MUTANDIS.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES RELATING TO THE COLLATERAL.
As of the Closing Date and as of each Transfer Date, the Transferor hereby
represents and warrants to the Issuer, the Deal Agent and each Secured Party as
follows:
(a) MARKING OF RECORDS. It has caused the portions of its records relating
to the Collateral to be clearly and unambiguously identified to show that the
Transferred Assets have each been sold, transferred and assigned by the
Transferor to the Issuer in accordance with the terms of this Agreement.
(b) GOOD TITLE. No Transferred Asset has been sold, transferred, assigned
or pledged by it to any Person other than the Issuer, except as may be permitted
by the Transaction Documents. Immediately prior to the conveyance of the
Transferred Assets to the Issuer pursuant to this Agreement, the Transferor was
the sole owner thereof and had good and indefeasible title thereto, free of any
Lien and, upon the sale thereof by the Transferor pursuant to this Agreement,
the Issuer shall have good and indefeasible title to and will be the sole owner
of the Transferred Assets, free of any Lien.
(c) ALL FILINGS MADE. All filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to perfect the first priority
ownership interest of the Issuer in, to and under, and to give the Collateral
Agent for the benefit of the Secured Parties a first priority perfected lien on,
the Transferred Assets and the proceeds thereof have been made, taken or
performed.
(d) NO IMPAIRMENT. It has done nothing to convey any right to any Person
that would result in such Person having a right to payments due under any
portion or all of the Transferred Assets or otherwise to impair the rights of
the Issuer, the Collateral Agent or any Secured Party in any portion or all of
the Transferred Assets or the proceeds thereof.
(e) NO DEFENSES. No portion of the Transferred Assets is subject to any
right of recession, setoff, counterclaim or defense and no such right has been
asserted or threatened with respect to any portion or all of the Transferred
Assets.
SECTION 3.3 PURCHASE OF TRANSFERRED ASSETS UPON BREACH.
Upon discovery by the Deal Agent, the Servicer, the Issuer or the
Transferor of a breach of any of any of the representations and warranties
relating to the Transferred Assets or any breach of any of the servicing
obligations with respect thereto, the party discovering such breach shall give
prompt written notice to the others. Within thirty (30) days of such notice
being given, the Servicer or the Transferor, as appropriate, shall repurchase or
purchase, as the case may be, such affected Transferred Assets from the Issuer
at a price equal to the Purchase Price paid with respect to such Transferred
Asset, or if such asset was contributed by the Transferor to the Issuer,
16
at a price equal to the fair market value of such Transferred Asset, determined
as of the date such Transferred Asset was contributed to the Issuer.
SECTION 3.4 FUTURE SECURITIZATIONS.
If the Transferor or any Affiliate of the Transferor enters into or becomes
a party to any Securitization on or after the Closing Date, the Transferor shall
or shall cause such Affiliate to become a Seller under the Asset Purchase
Agreement and sell, transfer and assign all of its rights in, to and under such
Securitization. The Transferor agrees that simultaneously with the closing of
such Securitization, it will sell, assign, set over, contribute and otherwise
convey to the Issuer, any additional Residual Asset, Dividend Asset and any
other related right that the Transferor acquires pursuant to the terms of the
Asset Purchase Agreement. Each such transfer shall be evidenced by the execution
and delivery of an Accession Agreement and a Transfer Certificate.
SECTION 3.5 COVENANTS OF THE TRANSFEROR.
(a) MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. Except as permitted by
SECTION 3.6(c), the Transferor will, and will cause each of its Subsidiaries to,
preserve and maintain its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary in
the ordinary conduct of its business. The Transferor will, and will cause each
of its Subsidiaries to, conduct its business in an orderly and efficient manner
in accordance with good business practices.
(b) TAXES AND CLAIMS. The Transferor will, and will cause each of its
Subsidiaries to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all lawful claims
for labor, material, and supplies, which, if unpaid, might become a Lien upon
any of its property; PROVIDED, HOWEVER, that neither the Transferor or any of
its Subsidiaries shall be required to pay or discharge any tax, levy,
assessment, or governmental charge or charge for labor, material, and supplies
(i) which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves in accordance with GAAP have been
established and (ii) if the failure to pay the same would not result in a Lien
on the property of the Transferor or any of its Subsidiaries.
(c) INSPECTION RIGHTS. The Transferor will, and will cause each of its
Subsidiaries to, permit representatives and agents of the Deal Agent and each
Note Investor, during normal business hours and upon reasonable notice to either
FIFSG or the Transferor (as appropriate), to examine, copy, and make extracts
from FIFSG's or the Transferor's books and records, to visit and inspect the
Transferor's Properties and to discuss FIFSG's or the Transferor's business,
operations, and financial condition with their respective officers and
independent certified public accountants. FIFSG and the Transferor will
authorize their respective accountants in writing (with a copy to the Deal
Agent) to comply with this SECTION 3.5(c). The Deal Agent or its representatives
may, at any time and from time to time at the Transferor's expense, conduct
field exams for such purposes as the Deal Agent may reasonably request.
(d) KEEPING BOOKS AND RECORDS. The Transferor will, and will cause each of
its Subsidiaries to, maintain proper books of record and account in which full,
true, and correct
17
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities.
(e) COMPLIANCE WITH LAWS. The Transferor will, and will cause each of its
Subsidiaries to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws), rules, regulations,
orders, and decrees of a material nature of any Governmental Authority or
arbitrator other than any such laws, rules, regulations, orders, and decrees
contested by appropriate actions or proceedings diligently pursued, if adequate
reserves in conformity with GAAP and satisfactory to the Deal Agent are
established with respect thereto and except for unintentional violations which
could not reasonably be expected to have a Material Adverse Effect with respect
to any such Person.
(f) COMPLIANCE WITH AGREEMENTS. The Transferor will, and will cause each
Seller to, comply with all agreements, contracts, and instruments binding on it
or affecting its properties or business other than such noncompliance which
could not reasonably be expected to have a Material Adverse Effect. The
Transferor will, and will cause each Seller to, comply with any and all
provisions of the Securitization Facility Documents.
(g) APPROVED SUB NOTE. The Transferor will transfer or otherwise contribute
to the Collateral Agent (on behalf of the Secured Parties), all of the
Transferor's right, title and interest in the Approved Sub Note, as soon as
possible, but in any event, within six (6) month from the Closing Date.
SECTION 3.6 NEGATIVE COVENANTS OF THE TRANSFEROR.
The Transferor covenants and agrees for the benefit of the Issuer and the
Secured Parties as follows:
(a) DEBT. The Transferor will not, and will not permit any Seller to,
incur, create, assume, or permit to exist any Debt, except:
(i) Debt described on SCHEDULE 3.6(a), and any extensions, renewals,
or refinancings of such existing Debt so long as (i) the principal amount
of such Debt after such renewal, extension, or refinancing shall not exceed
the principal amount of such Debt which was outstanding immediately prior
to such renewal, extension, or refinancing and (ii) such Debt shall not be
secured by any assets other than assets securing such Debt, if any, prior
to such renewal, extension, or refinancing;
(ii) Debt of a Subsidiary of the Transferor, other than any such Debt
incurred in the ordinary course of business, owed to the Transferor or
another Subsidiary of the Transferor provided that such Debt is on terms
satisfactory to the Deal Agent in its sole discretion;
(iii) Guaranties and other Debt incurred in the ordinary course of
business with respect to Receivables purchase commitments, reinsurance
obligations, surety and appeal bonds and performance and return-of-money
bonds;
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(iv) Debt of the Transferor or any Subsidiary of the Transferor
constituting purchase money Debt (including, without limitation, Capital
Lease Obligations) incurred after the Closing Date not to exceed $500,000
in the aggregate at any time outstanding secured by purchase money Liens
constituting Permitted Liens;
(v) Debt constituting obligations to reimburse worker's compensation
insurance companies for claims paid by such companies on the Transferor's
or any of its Subsidiaries' behalf in accordance with the policies issued
to the Transferor or such Subsidiary of the Transferor;
(vi) Debt secured by the Permitted Liens;
(vii) Debt arising under, created by and consisting of Hedging
Agreements, PROVIDED, (i) such Hedging Agreements shall have been entered
into for the purpose of hedging actual risk and not for speculative
purposes and (ii) that each counterparty to such Hedging Agreement shall be
First Union or shall be rated in one of the two highest rating categories
of S&P or ▇▇▇▇▇'▇;
(viii) Intercompany obligations among Transferor, FIFSG and their
respective Subsidiaries for reasonable net rent allocation, reasonable
management fees, dividends declared, equity investments and intercompany
debt service, including, but not limited to, that certain unsecured loan by
FIVH to the Transferor pursuant to which the Transferor may borrow, repay
and reborrow an amount not to exceed $25,000,000, as evidenced by that
certain promissory note, dated April 23, 1997, issued by the Transferor and
payable to the order of FIVH, as such note may be amended, modified,
extended or increased from time to time;
(ix) Debt arising under a Securitization; and
(x) Debt arising in conjunction with certain interest rate hedging
obligations between the Transferor and Bank of America, N.A. arising under
that certain ISDA Master Agreement dated October 21, 1996 and further
described in SCHEDULE 3.1(v).
(b) LIMITATION ON LIENS AND RESTRICTIONS ON TRANSFEROR. The Transferor will
not, and will not permit any Seller or any of its Subsidiaries to, incur,
create, assume, or permit to exist any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except the following
("PERMITTED LIENS"):
(i) Liens described on SCHEDULE 3.6(b) hereto, and any extensions,
renewals, or refinancings of the Debt secured by such Liens as permitted
under clause (ii) hereof, PROVIDED that (i) no such Lien is expanded to
cover any additional Property (other than after acquired title in or on
such Property and proceeds of the existing collateral) after the Closing
Date and (ii) no such Lien is spread to secure any additional Debt after
the Closing Date other than Debt permitted by clause (ii) hereof;
(ii) Liens in favor of the Issuer and assigned to the Deal Agent, for
the benefit of the Secured Parties;
19
(iii) Encumbrances consisting of easements, zoning restrictions, or
other restrictions on the use of real Property that do not (individually or
in the aggregate) materially detract from the value of the real Property
encumbered thereby or materially impair the ability of the Transferor;
(iv) Liens for taxes, assessments, or other governmental charges (but
excluding Environmental Liens or Liens under ERISA) that are not delinquent
or which are being contested in good faith and for which adequate reserves
have been established in accordance with GAAP;
(v) Liens of mechanics, materialmen, warehousemen, carriers,
landlords, or other similar statutory Liens securing obligations that are
not overdue or are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves have been established in
accordance with GAAP and are incurred in the ordinary course of business;
(vi) Liens resulting from deposits to secure payments of worker's
compensation, unemployment insurance or other social security programs or
to secure the performance of tenders, statutory obligations, leases,
insurance contracts, surety and appeal bonds, bids, and other contracts
incurred in the ordinary course of business (other than for payment of
Debt);
(vii) Liens for purchase money obligations and Liens securing Capital
Lease Obligations; PROVIDED that: (i) the Debt secured by any such Lien is
permitted under SECTION 3.6(a) hereof; and (ii) any such Lien encumbers
only the Property so purchased or leased;
(viii) Any interest or title of a licensor, lessor, or sublessor under
any license or lease entered into in the ordinary course of business;
(ix) Liens against equipment arising from precautionary UCC financing
statement filings regarding operating leases entered into by the Transferor
in the ordinary course of business;
(x) Nonconsensual Liens in favor of banking institutions arising as
a matter of law and encumbering the deposits (including the right of
set-off) held by such banking institutions in the ordinary course of
business; and
(xi) The Lien on that certain trust account described in the
Facultative Reinsurance Agreement, dated as of April 15, 1994, as amended,
modified or extended from time to time, between FIIC and National Union
Fire Insurance Company of Pittsburgh, PA, which Lien secures the
obligations of FIIC thereunder;
(xii) Liens arising in conjunction with a Securitization; and
(xiii) The Lien arising in conjunction with certain interest rate
hedging obligations between the Transferor and Bank of America, N.A.
arising under that certain
20
ISDA Master Agreement dated October 21, 1996 and further described in
Schedule 3.1(v).
Notwithstanding the foregoing Permitted Liens or any other provision in
this Agreement or any other Transaction Document to the contrary, none of FIFSG,
FIVH or the Transferor will enter into, and the Transferor will not permit any
of the Sellers to enter into, any agreement that (i) prohibits the creation or
assumption of any Lien upon, or the pledge, hypothecation or encumbrance of, any
Property of FIFSG, the Transferor or such Seller in favor of any Person,
including, without limitation the Issuer and the Secured Parties, or (ii)
requires any obligation of FIFSG, the Transferor or such Seller to be secured in
favor of another Person if any Debt of the Transferor is so secured.
(c) MERGERS, ETC. The Transferor will not, and will not permit any Seller
to, become a party to a merger or consolidation, or purchase or otherwise
acquire all or a substantial part of the business or Property of any Person or
all or a substantial part of the business or Property of a division or branch of
a Person or a majority interest in the Capital Stock of any Person, or wind-up,
dissolve, or liquidate itself; PROVIDED that as long as no Termination Event
exists or would result therefrom and provided the Transferor gives the Deal
Agent prior written notice:
(i) A Subsidiary of the Transferor may wind-up, dissolve, or
liquidate if its Property is transferred to the Transferor or a
Wholly-Owned Subsidiary of the Transferor; and
(ii) Any Subsidiary of the Transferor may merge or consolidate with
the Transferor (provided the Transferor is the surviving entity) or with
any Wholly-Owned Subsidiary of the Transferor (provided the Wholly-Owned
Subsidiary is the surviving entity).
(d) RESTRICTED JUNIOR PAYMENTS. The Transferor will not, and will not
permit any Seller to, directly or indirectly declare, order, pay, make, or set
apart any sum for (a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of Capital Stock of such Person now or
hereafter outstanding; (b) any redemption, conversion, exchange, retirement,
sinking fund, or similar payment, purchase, or other acquisition for value,
direct or indirect, of any shares of any class of Capital Stock of Person now or
hereafter outstanding; or (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options, or other rights to acquire
shares of any class of Capital Stock of such Person now or hereafter outstanding
except:
(i) Subsidiaries of the Transferor may make, declare, and pay
dividends and make other distributions with respect to their Capital Stock
to the Transferor;
(ii) the Transferor may declare and pay dividends on any class of its
Capital Stock payable solely in shares of Capital Stock of the Transferor;
and
(iii) the Transferor may acquire or redeem Capital Stock of the
Transferor held by any former officer, director, or employee of the
Transferor or beneficiaries of any such Person's estate or trusts created
by or for the benefit of any such Person or their beneficiaries.
21
(e) INVESTMENTS. The Transferor will not, and will not permit any Seller
to, make or permit to remain outstanding any advance, loan, extension of credit,
or capital contribution to or investment in any Person, or purchase or own any
stocks, bonds, notes, debentures, or other Securities of any Person, or be or
become a joint venturer with or partner of any Person (all the foregoing, herein
"INVESTMENTS"), except:
(i) the Transferor and its Subsidiaries may make equity investments
in and may make loans to Subsidiaries of the Transferor (in the case of
loans, as permitted by SECTION 3.6(a)) and may acquire new Subsidiaries
(subject to the requirements of this subsection (e);
(ii) readily marketable direct obligations of the U.S. or any agency
thereof with maturities of one year or less from the date of acquisition;
(iii) fully insured certificates of deposit with maturities of one
year or less from the date of acquisition issued by any commercial bank
operating in the U.S. having capital and surplus in excess of One Hundred
Million Dollars ($100,000,000);
(iv) commercial paper of a domestic issuer and equity or debt
Securities of a domestic issuer if at the time of purchase such paper or
debt Securities of such issuer is rated in one of the two highest rating
categories of S&P or ▇▇▇▇▇'▇, or any successor thereto and shares of any
mutual fund company substantially all the assets of which consist of cash
and the Investments of the type described in CLAUSE (ii), CLAUSE (iii), and
this CLAUSE (iv);
(v) advances to officers, directors, and employees for business
expenses incurred in the ordinary course of business;
(vi) if no Termination Event exists, the Transferor and its
Subsidiaries may make capital contributions to or investments in, or
purchase any Capital Stock of the Transferor authorized under SECTION
3.6(f), of the Transferor, a Wholly-Owned Subsidiary of the Transferor, or
a newly created Person organized by the Transferor or any Subsidiary of the
Transferor;
(vii) the Transferor and its Subsidiaries may acquire and own any
Investments of any Person received in connection with the bankruptcy or
reorganization of suppliers and customers and in connection with the
settlement of delinquent obligations of, and disputes with, customers and
suppliers arising in the ordinary course of business;
(viii) extensions of trade credit in the ordinary course of business;
(ix) Investments other than those described in CLAUSES (i)-(viii) of
this SECTION 3.6(e) if the aggregate amount thereof never exceeds Two
Hundred Fifty Thousand Dollars ($250,000) at any time (determined based on
the cost or outstanding principal amount thereof, as applicable, without
regard to any write up or write down thereof, MINUS all payments received
in respect of such Investment, whether constituting principal, interest,
dividends, distributions, or otherwise).
22
(f) LIMITATION ON ISSUANCE OF CAPITAL STOCK. The Transferor will not, and
will not permit any Subsidiary to, at any time issue, sell, assign, or otherwise
dispose of, except to the Transferor, a Subsidiary of the Transferor, or a newly
created Wholly-Owned Subsidiary of the Transferor, or pursuant to a public
offering of the Capital Stock of the Transferor, (a) any of its Capital Stock,
(b) any securities exchangeable for or convertible into or carrying any rights
to acquire any of its Capital Stock, or (c) any option, warrant, or other right
to acquire any of its Capital Stock.
(g) TRANSACTIONS WITH AFFILIATES. Except as provided under the Transaction
Documents, the Transferor will not, and will not permit any Seller to, enter
into any transaction, including, without limitation, the purchase, sale, or
exchange of property or the rendering of any service, with any Affiliate of the
Transferor or such Seller, except in the ordinary course of and pursuant to the
reasonable requirements of the Transferor's or such Seller's business and upon
fair and reasonable terms no less favorable to the Transferor or such Seller
than would be obtained in a comparable arms-length transaction with a Person not
an Affiliate of the Transferor or such Seller.
(h) DISPOSITION OF ASSETS. The Transferor will not, and will not permit any
Seller to, sell, lease, assign, transfer, or otherwise voluntarily dispose of:
(a) any of its Receivables other than the transfer and assignment of Receivables
(i) to FIRC pursuant to the FIRC Purchase Agreement, (ii) to FIARC pursuant to
the FIARC Purchase Agreement, and (iii) to any Wholly-Owned Subsidiary for
inclusion in a Securitization program pursuant to which such Wholly-Owned
Subsidiary transfers directly or indirectly all of its subordinated and residual
interests in such Securitization to the Issuer; (b) any substantial portion of
the consolidated assets of the Transferor or such Seller; or (c) any other
Property other than dispositions of Inventory and Equipment in the ordinary
course of business and sales of charged off deficiency balances in the ordinary
course of business generating aggregate Net Proceeds not in excess of $500,000
in any calendar year.
(i) LINES OF BUSINESS. The Transferor and its Subsidiaries will not engage
in any line or lines of business activity other than the businesses in which
they are engaged on the date hereof or a business reasonably related thereto.
The Transferor will not permit any of its Subsidiaries to engage in any line or
lines of business activity other than the businesses in which the Transferor and
its Subsidiaries are engaged on the date hereof or a business reasonably related
thereto.
(j) LIMITATIONS ON RESTRICTIONS AFFECTING SUBSIDIARIES. The Transferor
shall not, and will not permit any Seller to, enter into or assume any material
agreement (other than the Transaction Documents) prohibiting the creation or
assumption of any Lien upon its material properties or assets, whether now owned
or hereafter acquired. Except as provided herein, the Transferor will not, and
will not permit any of its Subsidiaries to, directly or indirectly create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of the Transferor or any
of its Subsidiaries to: (a) pay dividends or make any other distribution on any
of such Seller's Capital Stock owned by the Transferor or any of its Affiliates;
(b) pay any Debt owed to any Person; (c) make loans or advances to any Person;
or (d) transfer any of its Property to any Person, except pursuant to
non-assignment provisions of licenses and leases entered into in the ordinary
course of business.
23
(k) NO PREPAYMENT OF DEBT. The Transferor will not, and will not permit any
of its Subsidiaries or any of the Sellers to, directly or indirectly, make any
optional prepayment or distribution on account of, or voluntarily purchase,
acquire, redeem or retire, any Debt (except for Debt relating to any hedging
instrument) prior to thirty (30) days before its originally stated maturity or,
in the case of interest, its stated due date; PROVIDED, however, the Transferor
may permit a cleanup call or similar action pursuant to the terms and conditions
set forth in Section 5.1(u) of the Security Agreement.
(l) NO MATERIAL CHANGE IN UNDERWRITING STANDARDS. The Transferor will not,
and will not permit any of its Subsidiaries or any Seller to, make material
changes to its written underwriting standards or to its business practices with
respect to such policies.
(m) NO EXTENSION OR AMENDMENT OF CERTAIN DOCUMENTS. Except with the prior
written consent of the Deal Agent (other than with respect to extensions of the
credit insurance referred to in CLAUSE (a) below), the Transferor will not
consent to any request to, will not take any action in furtherance of any
request to, and will not permit or cause any Seller to, extend, amend or
otherwise modify the terms of (a) the credit insurance or (b) any Securitization
Facility Document, if such extension, amendment or modification could have an
adverse effect on the transactions contemplated by this Agreement and the
Transaction Documents.
(n) LIMITATION ON TRANSFER OF CAPITAL STOCK. The Transferor will not
transfer, sell, assign, grant a security interest in, or transfer any other
interest into or under any Capital Stock owned by it or in any rights
represented by such Capital Stock.
SECTION 3.7 FINANCIAL COVENANTS OF THE TRANSFEROR.
The Transferor covenants and agrees for the benefit of the Issuer and the
Secured Parties that:
(a) MINIMUM TANGIBLE NET WORTH. As of the end of each calendar month, the
Transferor will not permit the Tangible Net Worth of the FIFSG and its
consolidated Subsidiaries to be less than (a) the greater of $28,400,000 or 90%
of Tangible Net Worth of FIFSG and its consolidated Subsidiaries as of April 30,
2001, PLUS (b) the Net Proceeds of any sale after the Closing Date of Capital
Stock by FIFSG or any Subsidiary of FIFSG, PLUS (c) 90% of FIFSG's cumulative
positive net income (determined according to GAAP) for each fiscal quarter
beginning with the fiscal quarter ending January 31, 2001.
(b) MAXIMUM NET CHARGE-OFF RATIO. As of the end of each calendar month, the
Transferor shall not permit the average ratio (expressed as a percentage) for
each of the most recent three month ends of (a) Charged-Off Receivables to (b)
Managed Assets to exceed 4.00%.
(c) MAXIMUM DELINQUENCY RATIO. The Transferor shall not permit the average
ratio (expressed as a percentage) for each of the most recent three month ends
of (a) Delinquent Receivables to (b) Managed Assets to exceed 4.75%; PROVIDED,
however that for the first calendar month following the Closing Date, the
Delinquency Ratio shall be calculated as of the end of such month; and for the
second calendar month following the Closing Date, the
24
Delinquency Ratio shall be the average of the Delinquency Ratio calculated as of
the end of such two months.
(d) MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO. As of the end of each
calendar month, the Transferor shall not permit the ratio of (a) EBITDA plus
Rental Expense of the Transferor and its consolidated Subsidiaries for the
twelve month period then ending to (b) the sum of (i) Interest Expense, plus
(ii) Rental Expense, to be less than 1.30 to 1.00.
(e) [Reserved].
(f) MAXIMUM TOTAL LIABILITIES PLUS CONTINGENT OBLIGATIONS TO TANGIBLE NET
WORTH RATIO. As of the end of each calendar month, the Transferor shall not
permit the ratio of (a) Total Liabilities plus Contingent Obligations to (b)
Tangible Net Worth, to exceed 9.75 to 1.00.
SECTION 3.8 SEPARATE EXISTENCE OF TRANSFEROR.
The Transferor shall at all times be operated in such a manner that the
separate corporate existence of the Transferor, on the one hand, and Seller, on
the other hand, will not be disregarded and, without limiting the generality of
the foregoing:
(a) The funds and the assets of the Transferor will not be commingled with
those of any individual, corporation, estate, joint venture, association, joint
stock company, trust, unincorporated organization, or government or any agency
or political subdivision thereof;
(b) The Transferor will not guarantee loans or other debt to third parties
and the Transferor will not hold itself out as being liable for the debts of any
Seller or any other party;
(c) The Transferor will act solely in its own name in the conduct of its
business, and will conduct its business so as to not mislead others as to the
identity of the entity with which they are concerned;
(d) The Transferor will maintain its own records and books of account and
will not commingle its records and books of account with the records and books
of account of any other entity; and
(e) The annual financial statements of the Transferor, the Sellers and the
Issuer will reflect that all right, title and interest in the Transferred Assets
have been transferred pursuant to the Transaction Documents and any consolidated
financial statements of the Transferor and the Issuer will contain appropriate
footnotes and disclosures regarding the pledge of Transferred Assets.
ARTICLE IV
ADMINISTRATION AND SERVICING OF COLLATERAL
SECTION 4.1 DUTIES OF THE SERVICER.
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(a) The Servicer, as agent for the Issuer, shall manage, service and
administer the Transferred Assets pursuant to and in accordance with the terms
and conditions set forth herein with reasonable care, using that degree of skill
and attention that a prudent person would use. The Servicer shall follow the
Servicing and Collection Policy and shall have full power and authority, acting
alone, to do any and all things in connection with such managing, servicing,
administration and collection that it may deem necessary or desirable in
accordance with the above described servicing standard.
(b) The Servicer shall cause each Securitization Servicer to manage,
service and administer and make collections on and with respect to the
Transferred Assets pursuant to and in accordance with the terms and conditions
set forth in the Securitization Facility Documents with reasonable care, using
that degree of skill and attention that a prudent person would use.
SECTION 4.2 COVENANTS OF SERVICER.
The Servicer hereby covenants for the benefit of Issuer and the Secured
Parties as follows:
(a) SERVICING. It shall perform all of its duties pursuant to and in
accordance with the terms and conditions set forth herein and in the Transaction
Documents. It shall cause each Securitization Servicer to perform its duties
pursuant to and in accordance with the terms and conditions set forth in the
Securitization Facility Documents.
(b) NO IMPAIRMENT. The Servicer shall not do anything to impair the rights
of the Secured Parties in the Collateral.
(c) SERVICING AND COLLECTION POLICY. The Servicer will (or will cause any
of its Affiliates acting as servicer) to (i) comply in all material respects
with the Servicing and Collection Policy and (ii) furnish to the Deal Agent,
prior to its effective day, prompt notice of any material changes in any
Servicing and Collection Policy. The Servicer will not agree to or otherwise
permit to occur any material change in any Servicing and Collection Policy,
without the prior written consent of the Deal Agent.
(d) COMPLIANCE WITH LAWS. The Servicer shall comply with the laws of each
state in which Collateral is located, including, without limitation, all federal
and state laws regarding the collection and enforcement of consumer debt.
(e) NOTICE OF DEFAULT. As soon as possible and in any event within two (2)
Business Days after the chief executive officer, president, chief financial
officer, any vice president, secretary, assistant secretary, treasurer, or any
assistant treasurer of the Transferor (i) has knowledge of the occurrence of a
Servicer Event of Default hereunder or (ii) has knowledge of a default or an
event of default under any Securitization or any Debt in excess of $500,000 of
the Servicer or any of its Subsidiaries, a written notice setting forth the
details of such default and the action that the Servicer has taken and proposes
to take with respect thereto.
SECTION 4.3 ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER
TERMINATION EVENT.
26
(a) The Servicer will provide to the Issuer, the Deal Agent and the
Collateral Agent, within ninety (90) days following the end of each fiscal year
of the Servicer, commencing with the fiscal year ending on April 30, 2002, an
annual report signed by a Responsible Officer of the Servicer (a "SERVICER'S
CERTIFICATE") certifying that (i) a review of the activities of the Servicer,
and the Servicer's performance pursuant to this Agreement and each of the
related Securitization Facility Documents, for the period ending on the last day
of such fiscal year has been made under such Person's supervision and (ii) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement and each of the related
Securitization Facility Documents throughout such year and no Servicer Event of
Default has occurred and is continuing (or if a Servicer Event of Default has so
occurred and is continuing, specifying each such event, the nature and status
thereof and the steps necessary to remedy such event, and, if a Servicer Event
of Default occurred during such year and no notice thereof has been given to the
Deal Agent, the Issuer and the Collateral Agent, specifying such Servicer Event
of Default and the steps taken to remedy such event).
(b) The Servicer shall deliver to the Deal Agent, the Collateral Agent and
the Issuer promptly after having obtained knowledge thereof, but in no event
later than two (2) Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Event of Default under SECTION 7.1.
SECTION 4.4 ANNUAL ACCOUNTANTS' REPORT.
The Servicer shall cause each Securitization Servicer to furnish to the
Deal Agent, the Issuer and the Collateral Agent the annual accountants' report
that each Securitization Servicer provides pursuant to the Securitization
Facility Documents.
SECTION 4.5 SUBSERVICERS.
Subject to SECTION 6.5, the initial Servicer shall be permitted to appoint
any of its Affiliates as a subservicer under this Agreement; provided that the
Servicer shall remain ultimately liable for all servicing obligations.
ARTICLE V
[RESERVED]
ARTICLE VI
THE SERVICER
SECTION 6.1 REPRESENTATIONS OF SERVICER.
The Servicer represents and warrants to the Issuer, the Deal Agent and the
Secured Parties as follows:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly, organized
and is validly existing and in good standing under the laws of Texas, with all
requisite corporate power and authority to own or lease its properties and to
conduct its business as such business is
27
currently conducted, and had at all relevant times, and now has, power and
authority to enter into and perform its obligations pursuant to this Agreement;
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary
qualifications, licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires or shall
require such qualifications, licenses or approvals;
(c) POWER AND AUTHORITY. The Servicer (i) has all necessary power,
authority and legal right to (A) execute and deliver this Agreement and the
other Transaction Documents to which it is a party, (B) carry out the terms of
this Agreement and the other Transaction Documents to which the Servicer is a
party and (ii) has been duly authorized by all necessary corporate action
required for the execution, delivery and performance of this Agreement and the
other Tra nsaction Documents to which it is a party;
(d) BINDING OBLIGATION. This Agreement and the Transaction Documents to
which the Servicer is a party, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Servicer enforceable
against the Servicer in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the equity, regardless of whether such
enforceability is considered in a proceeding in equity or law;
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which the Servicer is a
party, and the fulfillment of the terms of this Agreement and the Transaction
Documents to which the Servicer is a party, will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of incorporation
or bylaws of the Servicer, or on any other contractual obligation of the
Servicer, (ii) result in the creation or imposition of any Lien upon any of the
Servicer's properties pursuant to the terms of any contractual obligation, other
than this Agreement, or (iii) violate any Applicable Law;
(f) NO PROCEEDINGS. There is no litigation, proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer, before
any Governmental Authority (i) asserting the invalidity of this Agreement or any
of the Transaction Documents, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or any of the Transaction
Documents, or (iii) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of this Agreement or
any of the Transaction Documents;
(g) APPROVALS. All approvals, authorizations, consents, order or other
actions of any Person, or of any Governmental Authority (if any) required for
the due, the execution, delivery and performance by the Servicer of this
Agreement and any other Transaction Document to which the Servicer is a party
shall have been obtained;
(h) REPORTS ACCURATE. All Servicer certificates and other written and
electronic information, exhibits, financial statements, documents, books,
records or reports furnished by the
28
Servicer to the Deal Agent in connection with this Agreement or in connection
with any other Transaction Document are accurate, true and correct.
(i) REPRESENTATIONS AND WARRANTIES IN SECURITIZATION FACILITY DOCUMENTS.
The representations and warranties made by the Securitization Servicer in the
Securitization Facility Documents are hereby remade by the Servicer on behalf of
each Securitization Servicer, on each date to which they speak in the
Securitization Facility Documents as if such representations and warranties were
set forth herein as made by the Servicer MUTATIS MUTANDIS.
SECTION 6.2 LIABILITY OF SERVICER, INDEMNITIES.
(a) The Servicer (in its capacity as such) shall be liable hereunder only
to the extent of the obligations in this Agreement specifically undertaken by
the Servicer and the representations made by the Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer, the
Collateral Agent, the Deal Agent, the Transferor, their respective officers,
directors, agents and employees and the Noteholders from and against any taxes
that may at any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including, without limitation, any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any taxes asserted with respect to the issuance
and original sale of the Notes) and costs and expenses in defending against the
same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer, the
Collateral Agent, the Deal Agent, the Transferor, their respective officers,
directors, agents and employees and the Noteholders from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or was
imposed upon the Issuer, the Collateral Agent, the Deal Agent, the Transferor,
or the Noteholders by reason of the breach of this Agreement by the Servicer,
the negligence, willful misfeasance, or bad faith of the Servicer in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement or any of the
Transaction Documents.
(d) The Servicer shall indemnify, defend and hold harmless the Collateral
Agent, and its respective officers, directors, agents and employees, from and
against all loss, liability or expense incurred without willful misfeasance,
negligence, or bad faith on its part arising out of or in connection with the
acceptance or administration of the Collateral, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise of any of its powers or duties under the Transaction Documents.
(e) Indemnification under this SECTION 6.2 shall survive the termination of
this Agreement and shall survive the early resignation or removal of any of the
parties hereto and shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer has made any
indemnity payments pursuant to this SECTION 6.2 and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts collected to the Servicer, without interest. Notwithstanding any
other provision of this Agreement, FIFS's obligations as Servicer under this
SECTION 6.2 shall not terminate or be
29
deemed released upon the resignation or termination of FIFS as the Servicer and
shall survive any termination of this Agreement.
SECTION 6.3 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE OBLIGATIONS OF
THE SERVICER.
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to the Servicer's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of the Servicer contained in this Agreement. Any corporation (i) into
which the Servicer may be merged or consolidated, (ii) resulting from any merger
or consolidation to which the Servicer shall be a party, (iii) which acquires by
conveyance, transfer, or lease substantially all of the assets of the Servicer,
or (iv) succeeding to the business of the Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Servicer under this Agreement and, whether or not such assumption agreement
is executed, shall be the successor to the Servicer under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall be
deemed to release the Servicer from any obligation. The Servicer shall provide
notice of any merger, consolidation or succession pursuant to this SECTION
6.3(a) to the Collateral Agent, the Noteholders, and the Deal Agent.
Notwithstanding the foregoing, the Servicer shall not merge or consolidate with
any other Person or permit any other Person to become a successor to the
Servicer's business, unless (A) immediately after giving effect to such
transaction, no representation, warranty or covenant made pursuant to SECTION
4.2 or SECTION 6.1 shall have been breached (for purposes hereof, such
covenants, representations and warranties shall speak as of the date of the
consummation of such transaction), (B) the Servicer shall have delivered to the
Collateral Agent and the Deal Agent a certificate signed by a Responsible
Officer and an Opinion of Counsel each stating that such consolidation, merger
or succession and such agreement of assumption comply with this SECTION 6.3(a)
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (C) the Servicer shall
have delivered to the Collateral Agent and the Deal Agent an Opinion of Counsel,
stating that, in the opinion of such counsel, either (1) all financing
statements and continuation statements and amendments thereto have been
authorized and filed that are necessary to preserve and protect the interest of
the Collateral Agent for the benefit of the Secured Parties in the Collateral
and reciting the details of the filings or (2) no such action shall be necessary
to preserve and protect such interest.
SECTION 6.4 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither FIFS (in its individual capacity and as Servicer), nor any of the
directors or officers or employees or agents of FIFS shall be under any
liability to the Issuer, Deal Agent or the Noteholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; PROVIDED, HOWEVER, that this provision shall
not protect FIFS or any such person against any liability that would otherwise
be imposed by reason of a breach of this Agreement or willful misfeasance, bad
faith or negligence (excluding errors in judgment) in the performance of duties,
by reason of reckless disregard of
30
obligations and duties under this Agreement or any violation of law by the
Servicer or such person, as the case may be.
SECTION 6.5 DELEGATION OF DUTIES.
The Servicer may delegate duties under this Agreement to an Affiliate of
FIFS, with the prior written consent of the Deal Agent. The Servicer may perform
other specific duties through such subcontractors in accordance with the
Servicer's customary servicing policies and procedures, with the prior consent
of the Deal Agent; PROVIDED, HOWEVER, that no such delegation or subcontracting
of duties by the Servicer shall relieve the Servicer of its primary
responsibility with respect to such duties.
SECTION 6.6 SERVICER NOT TO RESIGN.
Subject to the provisions of SECTION 6.3, the Servicer shall not resign
from the obligations and duties imposed on it by this Agreement as Servicer,
except upon a determination by such party that (a) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (b) there is no
reasonable action that the Servicer could take to make the performance of its
duties hereunder permissible under Applicable Law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered and acceptable to the Deal Agent. No
resignation of the Servicer shall become effective until an entity acceptable to
the Deal Agent shall have assumed the responsibilities and obligations of the
Servicer.
ARTICLE VII
DEFAULT
SECTION 7.1 SERVICER EVENT OF DEFAULT.
(a) The (i) breach by the Servicer of any representation, warranty or
covenant made by it hereunder or (ii) occurrence of a "Servicer Event of
Default" or "Servicer Termination Event" or a similar occurrence resulting in,
or constituting a default by any Securitization Servicer under any
Securitization, shall, in any such case, constitute a Servicer Event of Default
hereunder.
(b) Upon the occurrence of a Servicer Event of Default, the Deal Agent may
and upon instruction from the Noteholders shall (i) collect and receive all
further payments made on the Collateral, (ii) control deposits to and
disbursements from the Collection Account, (iii) require any payments received
by the Servicer or the Issuer to be paid promptly over to an account specified
by the Deal Agent or (iv) terminate the rights of the Servicer, by written
notice to the Servicer (a "SERVICER TERMINATION NOTICE").
SECTION 7.2 APPOINTMENT OF SUCCESSOR.
(a) On and after (i) the time the Servicer receives a notice of termination
pursuant to SECTION 7.1(b) or (ii) upon the resignation of the Servicer pursuant
to SECTION 6.6, the Servicer shall continue to perform all servicing functions
under this Agreement until the date specified in
31
the Servicer Termination Notice or if no such date is specified, until a date
mutually agreed upon by the Servicer and the Deal Agent. At the time described
in the immediately preceding sentence, the Deal Agent shall as promptly as
possible appoint a successor servicer (the "SUCCESSOR SERVICER"), and the
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Deal Agent. In the event that a Successor Servicer has
not accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Deal Agent shall petition a court of competent jurisdiction to
appoint any established financial institution whose regular business includes
the servicing of collateral similar to the Collateral serviced by the Servicer
hereunder.
(b) 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, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer.
(c) The Servicer agrees to cooperate with the Issuer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing on the Collateral and to transfer such responsibilities and rights to
the Successor Servicer.
ARTICLE VIII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 8.1 ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE SECURITY AGREEMENT. The Servicer shall
perform all its duties and the duties of the Issuer under the Security Agreement
and the other Transaction Documents. In addition, the Servicer shall consult
with the Collateral Agent as the Servicer deems appropriate regarding the duties
of the Issuer under the Security Agreement. The Servicer shall monitor the
performance of the Issuer and shall advise when action is necessary to comply
with the Issuer's duties under the Security Agreement. The Servicer shall
prepare for execution by the Issuer or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Security Agreement. In furtherance of the foregoing,
the Servicer shall take all necessary action that is the duty of the Issuer to
take pursuant to the Security Agreement.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Transaction Documents, the Servicer shall perform
such calculations and shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the
duty of the Issuer to prepare, file or deliver pursuant to this Agreement
or any of the Transaction Documents or under state and federal tax and
securities laws. In accordance with the directions of the Issuer, the
Servicer shall administer, perform or
32
supervise the performance of such other activities in connection with the
Collateral (including the Transaction Documents) as are not covered by any
of the foregoing provisions and as are expressly requested by the Issuer
and are reasonably within the capability of the Servicer.
(ii) Without imposing upon the Servicer any obligation in respect of
the determination of the applicability of withholding tax on payments to
Noteholders, or the amount of any such withholding tax, the Servicer shall
notify the Deal Agent in the event that the Servicer determines that a
withholding tax has been imposed upon payments by the Issuer to
Noteholders.
(iii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions
with or otherwise deal with any of its Affiliates; PROVIDED, HOWEVER, that
the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Servicer's
opinion, no less favorable to the Issuer in any material respect.
(c) EXCEPTIONS. Notwithstanding anything to the contrary in this Agreement,
except as expressly provided herein or in the other Transaction Documents, the
Servicer, in its capacity as such hereunder shall not be obligated to, and shall
not, (i) make any payments to the Noteholders under the Transaction Documents,
(ii) sell any of the Collateral, (iii) take any other action that the Issuer
directs the Servicer not to take on its behalf or (iv) in connection with its
duties hereunder assume any indemnification obligation of any other Person.
(d) Any Successor Servicer shall not be responsible for any obligations or
duties of the Servicer under this SECTION 8.1.
SECTION 8.2 RECORDS.
The Servicer shall maintain appropriate books of account and records
relating to services performed under this Agreement, which books of account and
records shall be accessible for inspection by the Issuer at any time during
normal business hours.
SECTION 8.3 REPORTING.
(a) MONTHLY REPORT. On each Reporting Date, the Servicer will provide to
the Issuer, the Deal Agent and the Collateral Agent a monthly statement, (a
"MONTHLY REPORT") identifying, (i) the Collateral and the Collections received
during the related Collection Period, (ii) a calculation of the Borrowing Base
and the Maximum Net Investment and (iii) such other information as the Issuer,
the Deal Agent or the Collateral Agent may request.
(b) SERVICER'S CERTIFICATE. The Servicer shall submit to the Issuer, the
Deal Agent and the Collateral Agent, the Servicer's Certificate and notice of
any Servicer Event of Default at such times as required pursuant to SECTION 4.3.
(c) SERVICER REPORTS UNDER SECURITIZATIONS. The Servicer shall provide the
Issuer, the Deal Agent and the Collateral Agent copies of each monthly servicer
report (or other similar report) delivered by the Securitization Servicer under
the Securitizations ("SECURITIZATION FACILITY
33
SERVICER REPORTS") at the same time that the Securitization Servicer provides
such Securitization Facility Servicer Reports under the related Securitization.
(d) FINANCIAL STATEMENTS. The Servicer will submit or cause to be submitted
to the Deal Agent and the Collateral Agent, within forty five (45) days of the
end of each of the Servicer's and Issuer's respective fiscal quarters,
commencing December 16, 2001, unaudited financial statements of the Issuer and
the Servicer as of the end of each such fiscal quarter. The Servicer will submit
or cause to be submitted to the Deal Agent and the Collateral Agent, within 90
days of the end of each of the Servicer's and Issuer's respective fiscal years,
commencing April 30, 2002 audited financial statements of the Issuer and the
Servicer as of the end of each such fiscal year. To the extent that the
financial statements of the Issuer or the Servicer shall be consolidated in the
financial statements of First Investors Financial Services Group, Inc. in
accordance with GAAP, the Servicer may provide the financial statements of First
Investors Financial Services Group, Inc. in satisfaction of its reporting
requirements in this SECTION 8.3(d).
SECTION 8.4 ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Servicer shall furnish to the Issuer, the Deal Agent and the Collateral
Agent from time to time such additional information regarding the Collateral as
the Issuer shall reasonably request.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 AMENDMENT.
(a) This Agreement may be amended from time to time by the parties hereto,
with the consent of the Collateral Agent (which consent may be withheld in its
sole discretion).
(b) Prior to the execution of any amendment or modification to this
Agreement, the Collateral Agent shall be entitled to an Opinion of Counsel,
stating that: (i) such amendment is authorized pursuant to this Agreement, and
complies therewith and is enforceable; and (ii) all conditions precedent to the
execution, delivery and performance of such amendment shall have been satisfied.
SECTION 9.2 PROTECTION OF RIGHT, TITLE AND INTEREST IN COLLATERAL.
(a) The Transferor shall authorize and file such financing statements and
cause to be authorized and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer and the interests of the Collateral Agent
for the benefit of the Secured Parties in the Collateral and in the proceeds
thereof. The Transferor shall deliver (or cause to be delivered) to the
Collateral Agent and the Deal Agent for the benefit of the Secured Parties
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Transferor nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or
34
continuation statement filed in accordance with PARAGRAPH (a) above seriously
misleading within the meaning of Section. 9-503 of the UCC, or change its
jurisdiction of formation unless it shall have given the Collateral Agent and
the Deal Agent for the benefit of the Secured Parties at least thirty (30) days'
prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements. Promptly upon such filing, the Transferor or the Servicer, as the
case may be, shall deliver an Opinion of Counsel in form and substance
reasonably satisfactory to the Deal Agent, stating either that (i) all financing
statements and continuation statements have been authorized and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Collateral Agent for the benefit of the Secured Parties in the Collateral, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be necessary to
preserve and protect such interest.
(c) The Transferor and the Servicer shall have an obligation to give the
Issuer, the Collateral Agent and the Deal Agent at least thirty (30) days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Contracts, and its principal executive office, within the United
States of America.
SECTION 9.3 NOTICES.
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 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 (5) days after being deposited in the United States mail, first class
postage prepaid, (b) notice by telex, when telexed against receipt of answer
back, or (c) notice by facsimile copy, when verbal communication of receipt is
obtained.
SECTION 9.4 ASSIGNMENT; THIRD PARTY BENEFICIARIES.
The rights of the Issuer under this Agreement may be assigned to any Person
without the consent of the Transferor. This Agreement shall inure to the benefit
of and be binding on the respective successors and assigns of the parties
hereto. This Agreement and/or any rights or obligations hereunder may not be
assigned by the Transferor, the Servicer or the Issuer without the prior written
consent of the Deal Agent (which consent shall be granted in the Deal Agent's
sole discretion). The Secured Parties are intended to be third party
beneficiaries of this Agreement and all of the representations, warranties and
covenants hereof.
SECTION 9.5 INDEMNITIES BY TRANSFEROR.
Without limiting any other rights that the Issuer may have hereunder and
under applicable law, the Transferor hereby agrees to indemnify (and pay upon
demand to) the Issuer
35
and its assigns, officers, directors, agents and employees from and against any
and all damages, losses, claims, taxes, liabilities, costs, expenses and for all
other amounts payable, including reasonable attorneys' fees actually incurred
and disbursements awarded against or incurred by any of them arising out of or
as a result of this Agreement or the acquisition, either directly or indirectly,
by the Issuer of the Collateral from the Transferor.
SECTION 9.6 SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9.7 EXECUTION IN COUNTERPARTS.
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. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be as effective as
delivery of a manually executed counterpart of this Agreement. This Agreement
contains the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, superseding all prior oral or written understandings other than any fee
letter delivered by any party hereto to the Deal Agent and the Noteholders.
SECTION 9.8 HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 9.9 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.10 NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, each of the
parties hereto (other than the Deal Agent) agrees that it shall not, prior to
the date which is one year and one day after the payment in full in cash of the
all amounts owed to the Noteholders, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee,
36
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, each of the
parties hereto (other than the Deal Agent) agrees that it shall not, prior to
the date that is one year and one day after the termination of this Agreement
with respect to the Transferor, acquiesee to, petition or otherwise invoke or
cause the Transferor to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Transferor under
any federal or state bankruptcy, insolvency or similar law, appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator, or other
similar official of the Transferor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 9.11 LIMITATION OF LIABILITY.
The Issuer shall be responsible for and to all of the parties hereto (other
than the Servicer for actions it takes) and the Deal Agent and each secured
party is hereby released from any claim or liability in connection with (a)
safekeeping any Collateral; (b) any loss or damage to any Collateral; or (c) any
diminution in value of the Collateral.
SECTION 9.12 ENTIRE AGREEMENT.
This Agreement and the Transaction Documents contain the entire agreement
of the parties hereto with respect to the subject matter hereof, and supersede
all prior and contemporaneous agreements between them, oral or written, of any
nature whatsoever with respect to the subject matter hereof.
SECTION 9.13 CONSENT TO SERVICE.
Each party irrevocably consents to the service of process by registered or
certified mail, postage prepaid, to it at its address given pursuant to SECTION
9.3.
SECTION 9.14 RECOURSE AGAINST CERTAIN PARTIES.
(a) No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of any Secured Party as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any manager or administrator of such
Secured Party or any incorporator, affiliate, stockholder, officer, employee or
director of such Secured Party or of any such manager or administrator, as such,
by the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise; IT BEING EXPRESSLY AGREED AND UNDERSTOOD
that the agreements of such Secured Party contained in this Agreement and all of
the other agreements, instruments and documents entered into by it pursuant
hereto or in connection herewith are, in each case, solely the corporate
obligations of such Secured Party, and that no personal liability whatsoever
shall attach to or be incurred by any manager or administrator of such Secured
Party or any incorporator, stockholder, affiliate, officer, employee or director
of such Secured Party or of any such manager or administrator, as such, or any
other of them, under or by reason of any of the obligations,
37
covenants or agreements of such Secured Party 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 manager or
administrator of such Secured Party and each incorporator, stockholder,
affiliate, officer, employee or director of such Secured Party or of any such
administrator, or any of them, for breaches by such Secured Party of any such
obligations, covenants or agreements, which liability may arise either at common
law or at equity, by statute or constitution, or otherwise, is hereby expressly
waived as a condition of and in consideration for the execution of this
Agreement.
(b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, VFCC shall have an obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to VFCC after paying or making provision for the payment of its
Commercial Paper Notes. All payment obligations of VFCC hereunder are contingent
upon the availability of funds in excess of the amounts necessary to pay
Commercial Paper Notes; and each of the parties hereto agrees that it shall not
have a claim against VFCC under Section 101(5) of the Bankruptcy Code if and to
the extent that any such payment obligation exceeds the amount available to VFCC
to pay such amounts after paying or making provision for the payment of its
Commercial Paper Notes.
(c) The provisions of this SECTION 9.14 shall survive the termination of
this Agreement.
SECTION 9.15 SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY.
With respect to any claim arising out of this Agreement, to the fullest
extent permitted by law:
(a) each party irrevocably submits to the non-exclusive jurisdiction of the
state courts of, and the federal courts located within, the State of
New York,
New York County, and
(b) each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such court, irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party.
(c) EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER ARISING HEREUNDER.
SECTION 9.16 CERTAIN FEES, COSTS AND EXPENSES.
In addition to costs and expenses described elsewhere in this Agreement,
Issuer agrees to pay on demand all reasonable costs and expenses of the Deal
Agent and each Secured Party, including without limitation:
38
(a) all costs and expenses in connection with the preparation, review,
negotiation, execution and delivery of any waiver, amendment, restatement,
replacement or modification of the Transaction Documents, and the other
documents to be delivered in connection therewith (excluding any Hedging
Agreement), or any amendments, extensions and increases to any of the foregoing
(including, without limitation, with respect to the preparation, review,
negotiation, execution and delivery of any waiver, amendment, restatement,
replacement or modification of the Transaction Documents, reasonable attorneys'
fees and reasonable out-of-pocket expenses), PROVIDED, however, that the Deal
Agent shall be responsible for all of the costs and expenses incurred by it and
VFCC in connection with the preparation, review, negotiation, execution and
delivery of the Transaction Documents;
(b) all losses, costs and expenses in connection with the enforcement,
protection and preservation of the rights or remedies of the Secured Parties
under the Transaction Documents and any Hedging Agreement, or any other
agreement relating thereto, or in connection with legal advice relating to the
rights or responsibilities of the Secured Parties (including without limitation
court costs, reasonable attorneys' fees and expenses of accountants and
appraisers); and
(c) any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of the Transaction Documents, and
all liabilities to which the Deal Agent may become subject as the result of
delay in paying or omission to pay such taxes.
In the event Issuer shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or Liens (except as expressly permitted
herein), or fails to maintain the Collateral as required hereby, the Deal Agent
in its discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorneys' fees and expenses, filing fees and
other charges) shall be payable by Issuer on demand and shall constitute part of
the Indebtedness owing hereunder.
Issuer shall promptly pay all amounts required to be paid under this
SECTION 9.16. The Issuer's obligations under this SECTION 9.16 shall survive
termination of this Agreement.
SECTION 9.17 CONFIDENTIALITY.
(a) Each of the Deal Agent, the Secured Parties, the Servicer, the
Collateral Agent and the Transferor shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of the Agreement and all
information with respect to the other parties, including all information
regarding the business of the Transferor and the Servicer hereto and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
each such party and its officers and employees may (i) disclose such information
to its external accountants, attorneys, investors, potential investors and the
agents of such Persons ("EXCEPTED PERSONS"), PROVIDED, HOWEVER, that each
Excepted Person shall, as a condition to any such disclosure, agree for the
benefit of the Deal Agent, the Secured Parties, the Servicer, the Collateral
Agent and the Transferor that such information shall be used solely in
connection with such Excepted Person's evaluation of, or relationship with, the
Transferors and its respective affiliates, (ii) except as
39
permitted under the following CLAUSES (iii) and (iv), disclose the existence of
the Agreement, but not the financial terms thereof, (iii) disclose such
information as is required by Applicable Law and (iv) disclose the Agreement and
such information in any suit, action, proceeding or investigation (whether in
law or in equity or pursuant to arbitration) involving any of the Transaction
Documents or any Hedging Agreement for the purpose of defending itself, reducing
its liability, or protecting or exercising any of its claims, rights, remedies,
or interests under or in connection with any of the Transaction Documents or any
Hedging Agreement. It is understood that the financial terms that may not be
disclosed except in compliance with this SECTION 9.17 including, without
limitation, all fees and other pricing terms, and all Termination Events,
Servicer Events of Default, and priority of payment provisions.
(b) Anything herein to the contrary notwithstanding, the Transferor and the
Servicer each hereby consent to the disclosure of any nonpublic information with
respect to it (i) to the Deal Agent, the Collateral Agent or the Secured Parties
by each other, (ii) by the Deal Agent or the Issuer to any prospective or actual
assignee or participant of any of them or (iii) by the Deal Agent or the Issuer
to any Rating Agency, commercial paper dealer or provider of a surety, guaranty
or credit or liquidity enhancement to the Issuer and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided
each such Person is informed of the confidential nature of such information. In
addition, the Secured Parties and the Deal Agent may disclose any such nonpublic
information as required pursuant to any law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceedings (whether or not having the force or effect of law).
(c) Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known, (ii) disclosure of any and all information (A) if
required to do so by any applicable statute, law, rule or regulation, (B) in any
preliminary or final offering circular, registration statement or contract or
other document pertaining to the transactions contemplated herein approved in
advance by the Transferor or the Servicer, or (iii) any other disclosure
authorized by the Transferor or the Servicer.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Sale and Servicing
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
FIRST INVESTORS RESIDUAL FUNDING LIMITED
PARTNERSHIP, as Issuer
By: FIALAC Holdings, Inc.,
its sole general partner
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. Duck
Title: Vice President and Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FIRST INVESTORS FINANCIAL SERVICES INC.,
as Servicer and as Transferor
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. Duck
Title: Vice President and Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FIRST UNION SECURITIES, INC.,
as Deal Agent and as Collateral Agent
By:
----------------------------------
Name:
Title:
First Union Securities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Conduit Administration
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Exhibit A
Form of Transfer Certificate
TRANSFER CERTIFICATE (the "CERTIFICATE"), dated as of [______], by and
between [NAME OF NEW TRANSFEROR] (the "TRANSFEROR"), a [JURISDICTION OF
ORGANIZATION] [TYPE OF ENTITY] and First Investors Residual Funding LP, a
Delaware limited Partnership (the "ISSUER"). Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed thereto in the
Sale
and Servicing Agreement (hereinafter defined).
RECITALS
WHEREAS, the
Sale and Servicing Agreement, dated as of December 6, 2001, by
and between the Issuer, as issuer, First Investors Financial Services Inc., as
transferor, and First Union Securities, Inc., as deal agent (in such capacity,
the "DEAL AGENT") and collateral Agent (in such capacity, the "COLLATERAL
AGENT") (as amended, restated, supplemented or otherwise modified from time to
time, the "
SALE AND SERVICING AGREEMENT"), provides that [NAME OF NEW
TRANSFEROR], although not originally a Transferor thereunder, may sell, transfer
and assign to the Issuer additional Residual Assets.
WHEREAS, [NAME OF NEW TRANSFEROR] was not a Transferor under the
Sale and
Servicing Agreement but now desires to become a Transferor thereunder.
NOW, THEREFORE, the undersigned hereby states and agrees as follows:
SECTION 1.1 ADDITION AS TRANSFEROR.
(a) The undersigned agrees to be bound by all of the provisions of the
Sale
and Servicing Agreement applicable to a Transferor thereunder and agrees that it
shall, on the date this Certificate is executed by the parties hereto, become a
Transferor for all purposes of the
Sale and Servicing Agreement to the same
extent as if originally a party thereto.
(b) The undersigned states that no condition or event exists which
constitutes a Termination Event or Unmatured Termination Event.
(c) The undersigned hereby states that each of the representations and
warranties set forth in Section 3.1 of the
Sale and Servicing Agreement are true
and correct as of the date hereof.
SECTION 1.2 CONDITIONS PRECEDENT.
The effectiveness of this Certificate is subject to the satisfaction of the
conditions precedent attached hereto as SCHEDULE A.
SECTION 1.3 MISCELLANEOUS.
(a) This agreement may be executed in two or more counterparts and by
different parties on separate counterparts, each of which shall be an original,
but all of which together shall constitute one and the same instrument. Delivery
of an executed counterpart to a signature page of this Certificate by facsimile
shall be effective as delivery of a manually executed counterpart of this
Certificate.
(b) This Certificate may be amended from time to time by a written
instrument duly executed and delivered by [NAME OF NEW TRANSFEROR] and the
Issuer; PROVIDED, HOWEVER, that no such amendment shall be effective without the
prior written consent of the Collateral Agent.
(c) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned has caused this Transfer Certificate to
be executed and delivered by a duly authorized officer on the date first above
written.
[NAME OF NEW TRANSFEROR]
By:
-------------------------------
Name:
Title:
ACCEPTED AS OF THE DATE FIRST
ABOVE WRITTEN:
FIRST INVESTORS RESIDUAL FUNDING
LIMITED PARTNERSHIP
By:
---------------------------
Name:
Title:
ACKNOWLEDGED AS OF THE DATE FIRST
ABOVE WRITTEN:
FIRST UNION SECURITIES, INC.,
as Collateral Agent
By:
---------------------------
Name:
Title:
Schedule A
Conditions Precedent
This effectiveness of this Certificate is subject to the following conditions
precedent:
(a) DOCUMENTS TO BE DELIVERED BY TRANSFEROR.
(i) EVIDENCE OF UCC FILING. Transferor shall have recorded and filed, at
its own expense, a UCC-1 financing statement in each jurisdiction in which
filing is required by applicable law, authorized by Transferor and naming the
Issuer as purchaser of the Transferred Assets transferred by Transferor , and
the Collateral Agent, as assignee, describing the Transferred Assets transferred
by Transferor and the other property conveyed hereunder, meeting the
requirements of the laws of each jurisdiction and in such manner as is necessary
to perfect the sale, transfer, assignment and conveyance of such Transferred
Assets to the Issuer. Transferor shall deliver to the Issuer, Collateral Agent
and Deal Agent a file-stamped copy, or other evidence satisfactory to the Issuer
and Deal Agent of such filing.
(ii) OTHER DOCUMENTS. All other documents in the possession of Transferor
relating to the Transferred Assets and any other document requested by the Deal
Agent to be delivered shall have been delivered by Transferor .
(b) OPINIONS. the Issuer and the Deal Agent shall have received opinions, dated
as of the date hereof, of [NAME OF COUNSEL], as to:
(i) "true sale" of the Transferred Assets transferred hereunder from
Transferor to the Issuer and substantive nonconsolidation issues under the
Bankruptcy Code (each such opinion referred to herein as a "BANKRUPTCY
OPINION");
(ii) corporate, enforceability and security interest, to the effect that:
(A) Transferor is an entity duly organized, existing and in good
standing under the laws of the State of its incorporation or formation as
applicable, with corporate power and authority to own its properties and
conduct its business as currently conducted;
(B) Transferor has or had at all relevant times full power,
authority and legal right to exercise, deliver and perform its obligations
under this Certificate and each other document to which it is a party; and
has or had at all relevant times full power, authority and legal right to
acquire, own and transfer the Transferred Assets pursuant to the terms
hereof;
(C) This Certificate has been duly authorized, executed and
delivered by Transferor and is a valid and binding agreement, enforceable
against Transferor in accordance with its terms, except to the extent that
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors rights
generally and (2) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law);
(D) The transfer of the Transferred Assets by Transferor to the
Issuer pursuant to this Certificate, the compliance by Transferor with all
of the provisions of the Sale and Servicing Agreement and the consummation
of the transactions therein or herein contemplated will not (1) conflict
with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument known to such counsel
to which Transferor is a party or by which Transferor is bound or to which
any of the property or assets of Transferor is subject, (2) result in any
violation of the provisions of any order known to such counsel of any court
or governmental agency or body having jurisdiction over Transferor or any
of its properties or (3) result in any violation of the provisions of the
articles of incorporation, by-laws, certificate of formation, operating
agreement or partnership agreement as applicable, of Transferor or any
statute or any Applicable Law;
(E) No authorization, approval, consent or order of, or filing with,
any court or governmental authority or agency is required by Transferor in
connection with the consummation of the transactions contemplated in this
Certificate, except such as have been obtained;
(F) To the best of such counsel's knowledge and information, there
are no actions, proceedings or investigations pending before any court or
governmental authority against Transferor (1) asserting the invalidity of
this Certificate, (2) seeking to prevent the consummation by Transferor of
any of the transactions contemplated in this Certificate or (3) which might
materially and adversely affect the performance by Transferor of its
obligations under this Certificate; and
(G) The provisions of this Certificate are effective to create a
valid security interest in the Transferred Assets transferred by Transferor
in favor of the Issuer and such security interest is perfected and prior to
all other creditors of and purchasers of Transferor
(c) Each party shall have performed and complied with all agreements and
conditions contained herein which are required to be performed or complied with
by such party on or before the date hereof.
(d) This Certificate shall have been duly authorized, executed and delivered by
the respective parties hereto, shall be in full force and effect on the date
hereof and shall be in a form and substance satisfactory to the Deal Agent.
(e) The Deal Agent shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the resolutions of Transferor, certified by the
[SECRETARY] of Transferor, duly authorizing the execution, delivery and
performance by Transferor of this Certificate and any other documents
executed by or on behalf of Transferor in connection with the transactions
contemplated hereby; and an incumbency certificate of Transferor as to the
person or persons executing or delivering each such document;
(ii) certified completed copies of requests for information or copies
(or a similar search report certified by a party acceptable to the Deal
Agent), dated not more than thirty (30) days prior to the effective date of
this Certificate, listing all effective financing statements that name
Transferor as debtor and that are filed in the jurisdictions in which the
financing statements described in CLAUSE (a)(i) of this SCHEDULE A were
filed, together with copies of such financing statements, and similar
search reports with respect to federal tax liens in all appropriate
jurisdictions (none of which, other than the financing statements in CLAUSE
(a)(i), shall cover any of the Transferred Assets);
(iii) a copy of an officially certified document dated not more than
thirty (30) days prior to the effective date of this Certificate evidencing
good standing of Transferor issued by the Secretary of State of
Transferor's state of formation and each jurisdiction where Transferor ha
material operations;
(iv) such other documents and evidence with respect to Transferor as
the Deal Agent may request.
(f) No fact or condition shall exist as of the date hereof under Applicable
Law which in the Deal Agent's reasonable opinion would make it unlawful for any
of the parties hereto to perform their respective obligations under this
Certificate.
(g) On or prior to the effective date of this Certificate, the Transferor
shall have filed any financing statements, termination statements or amendments
thereto, wherever necessary or advisable, in order to perfect the transfers and
assignments of the Transferred Assets to the Issuer and the grant of the
security interest therein to the Issuer and shall have delivered file-stamped
copies of such financing statements or other evidence of the filing thereof to
the Deal Agent.
(h) All taxes and fees due in connection with the filing of the financing
statements referred to in CLAUSE (a)(i) of this SCHEDULE A shall have been paid
in full or duly provided for.
(i) Transferor shall certify to the Deal Agent that no Servicer Termination
Event, Insurer Default or Insurance Agreement Event of Default shall have
occurred on or prior to the effective date of this Certificate as such terms are
defined under the documents for the related Securitization.
(j) As of the effective date of this Certificate, no action or proceeding
shall have been instituted nor shall any governmental action be threatened
before any court or governmental agency nor shall any order, judgment or decree
have been issued or proposed to be issued by any court or governmental agency to
set aside, restrain, enjoin or prevent the performance of this Certificate or
any of the other agreements or the transactions contemplated hereby.
(k) The Deal Agent shall, as of the date hereof, have been furnished with
such other documents and opinions (including executed copies, addressed to it or
otherwise expressly allowing it to rely thereon of such documents or opinions)
delivered to any other person in connection with this Certificate and the
transactions contemplated hereby as it may reasonably require;
(l) Transferor shall certify to the Deal Agent that there has been no
material adverse change in the condition (financial or otherwise), business
operations, results of operations or properties of Transferor since [_________].
Exhibit B
Servicing and Collection Policy
[to come]
Schedule 3.1(o)
Name, Jurisdiction of Formation, Address and
Trade Names or Other Names of Transferor
-----------------------------------------------------------------------------------------------------
Name Trade Business Address Jurisdictions
Name
-----------------------------------------------------------------------------------------------------
First Investors Auto N/A ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ Corporation ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Texas
-----------------------------------------------------------------------------------------------------
First Investors Auto Investment Corp. N/A ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Texas
-----------------------------------------------------------------------------------------------------
FIFS Acquisition Funding Company LLC N/A ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Texas
-----------------------------------------------------------------------------------------------------
First Investors Financial Services Inc. [N/A] [675 Bering Drive, Suite 710 [Delaware,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇] Texas]
-----------------------------------------------------------------------------------------------------
Schedule 3.1(q)
Debt of Transferor
1. Obligations of the Transferor under that certain equipment lease agreement
dated May 14, 1998 between the Transferor and BSI Capital Funding Corporation
under which Schedules 1 and 2 are accounted for as operating leases by the
Transferor and Schedules 3,4,5 and 6 are accounted for as Capital Leases by the
Transferor.
Schedule 3.1(s)
ERISA Plans Exceeding Fair Market Value
None
Schedule 3.1(u)
Subsidiaries; Capitalization
JURISDICTION
OF STOCKHOLDERS AND AUTHORIZED ISSUED AND OUTSTANDING
ENTITY INCORPORATION PERCENTAGE OWNERSHIP SHARES SHARES
First Investors Financial Texas First Investors (Vermont) 1,222,223 1,222,223 shares par
Services, Inc. Holdings, Inc. - 100% value 0.001
F.I.R.C., Inc. Delaware First Investors Financial 1,000 shares $1,000 shares, par value
Services, Inc. - 100% $1.00 per share
First Investors Auto Delaware First Investors Financial 1,000 shares 1,000 shares, par value
Receivables Corp. Services, Inc. - 100% $1.00 per share
First Investors Auto Capital Delaware First Investors Financial 1,000 shares 1,000 shares, par value
Corporation Services, Inc. - 100% $1.00 per share
Farragut Financial Delaware First Investors Financial 1,000 shares 1,000 shares, par
Corporation Services, Inc. - 100% value $1.00 per share
First Investors Auto Delaware First Investors Financial 1,000 shares 1,000 shares, par
Investment Corporation Services, Inc. - 100% value $1.00 per share
First Investors Insurance Vermont First Investors Financial 1 million 100.00 shares, par
Company Services, Inc. - 100% value $1.00
First Investors Servicing Delaware First Investors Financial 10,000 shares 100 shares, par value
Corporation Services, Inc. - 100% - Common $1.00
Stock 10,000
shares -
preferred stock
FIALAC Holdings, Inc. Delaware First Investors Financial 1,000 shares 1,000 shares, par value
Services, Inc. - 100% $1.00 per share
FIFS Acquisition Funding Delaware FIALAC Holdings - 1% 1,000 in initial 1,000 in initial capital
Corporation LLC First Investors Financial capital
Services, Inc. - 99%
Project Brave Limited Delaware FIFS Acquisition Funding N/A N/A
Partnership Corporation LLC - 70%
First Union Securities -
30%
ALAC Receivables Corp. Delaware First Investors Servicing 1,000 shares 1,000 shares par value
Corporation - 100% $1.00
ALAC LLC Delaware First Investors Servicing $1,000 in $1,000 in initial capital
Corporation - 99% ALAC initial capital
Receivables Corp. - 1%
Schedule 3.1(v)
Other Agreements
(i) ISDA Master Agreement dated October 21, 1996 between First Investors
Financial Services, Inc. and Bank of America, N.A., as successor to
NationsBank of Texas, N.A. under which the following interest rate hedging
agreements were issued and outstanding of the Effective Date:
---------------------------------------------------------------------------------------------
TRANSACTION DERIVATIVE PURCHASED/
DATE TYPE SOLD NOTIONAL AMOUNT EXPIRATION
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
9/27/00 Swap Purchased $ 50,000,000 4/15/04
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
5/31/01 Swap Purchased $ 50,000,000 4/15/04
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
4/7/00 Cap Sold $ 14,200,000 3/31/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
7/7/00 Cap Sold $ 14,900,000 6/30/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
8/11/00 Cap Sold $ 11,225,000 7/31/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
9/11/00 Cap Sold $ 30,050,000 7/31/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
11/14/00 Cap Sold $ 7,900,000 10/31/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
12/8/00 Cap Sold $ 16,910,000 3/31/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
1/19/01 Cap Sold $ 8,600,000 12/31/05
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
3/9/01 Cap Sold $ 8,800,000 2/28/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
4/19/01 Cap Sold $ 8,970,000 4/30/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
6/20/01 Cap Sold $ 9,010,000 3/31/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
8/20/01 Cap Sold $ 9,404,790.58 7/31/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
10/05/01 Cap Sold $ 9,402,480.99 9/30/06
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Schedule 3.6(a)
Permitted Debt
None
Schedule 3.6(b)
Permitted Liens
None