Exhibit 10.27
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U.S. $75,000,000
RECEIVABLES LOAN AND SECURITY AGREEMENT
Dated as of February 11, 2003
Among
FCC ACCEPTANCE CORP.,
as the Borrower
and
FIRST CONSUMER CREDIT, INC.,
as the Servicer
and
AUTOBAHN FUNDING COMPANY LLC,
as a Lender
and
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK,
FRANKFURT AM MAIN
as the Agent
and
U.S. BANK NATIONAL ASSOCIATION,
as the Custodian and the Agent's Bank
and
COMPU-LINK CORPORATION,
as the Back-Up Servicer
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS......................................................................................1
SECTION 1.01 Certain Defined Terms.............................................................1
SECTION 1.02 Other Terms......................................................................27
SECTION 1.03 Computation of Time Periods......................................................27
ARTICLE II. THE RECEIVABLES FACILITY........................................................................27
SECTION 2.01 Borrowings.......................................................................27
SECTION 2.02 The Initial Borrowing and Subsequent Borrowings..................................28
SECTION 2.03 Facility Maturity Date...........................................................29
SECTION 2.04 Selection of Fixed Periods.......................................................29
SECTION 2.05 Remittance Procedures............................................................30
(a) Yield and Liquidation Fees.......................................................30
(b) Fixed Period Loan Principal Repayment............................................30
(c) Remittance Date Transfers From Collection Account................................31
(d) Borrower Deficiency Payments.....................................................32
(e) Instructions to the Agent's Bank.................................................33
SECTION 2.06 [Intentionally Omitted.].........................................................33
SECTION 2.07 Substitution of Pledged Receivables..............................................33
SECTION 2.08 [Intentionally Omitted.].........................................................34
SECTION 2.09 [Intentionally Omitted.].........................................................34
SECTION 2.10 [Intentionally Omitted.].........................................................34
SECTION 2.11 Payments and Computations, Etc...................................................34
SECTION 2.12 Fees.............................................................................35
SECTION 2.13 Increased Costs; Capital Adequacy................................................35
SECTION 2.14 Collateral Assignment of Agreements..............................................36
SECTION 2.15 Grant of a Security Interest.....................................................37
SECTION 2.16 Evidence of Debt.................................................................38
SECTION 2.17 Survival of Representations and Warranties; Repayment
Obligations......................................................................38
SECTION 2.18 Release of Pledged Receivables...................................................38
SECTION 2.19 Treatment of Amounts Paid by the Borrower........................................39
SECTION 2.20 Prepayment; Termination..........................................................39
ARTICLE III. CONDITIONS OF LOANS.............................................................................40
SECTION 3.01 Conditions Precedent to Initial Borrowing........................................40
SECTION 3.02 Conditions Precedent to All Borrowings...........................................40
SECTION 3.03 Advances Do Not Constitute a Waiver..............................................42
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..................................................................42
SECTION 4.01 Representations and Warranties of the Borrower...................................42
SECTION 4.02 Representations and Warranties of the Servicer...................................46
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SECTION 4.03 Resale of Receivables Upon Breach of Covenant or Representation and Warranty
by Borrower.....................................................................................48
ARTICLE V. GENERAL COVENANTS OF THE BORROWER AND THE SERVICER..............................................49
SECTION 5.01 General Covenants................................................................49
ARTICLE VI. ADMINISTRATION AND SERVICING; CERTAIN COVENANTS.................................................52
SECTION 6.01 Appointment and Designation of the Servicer......................................52
SECTION 6.02 Collection of Receivable Payments; Modification and Amendment of Receivables....54
SECTION 6.03 Realization Upon Receivables.....................................................55
SECTION 6.04 [Intentionally Omitted.].........................................................55
SECTION 6.05 Maintenance of Security Interests in Underlying Collateral.......................55
SECTION 6.06 Pledged Receivable Receipts......................................................56
SECTION 6.07 [Intentionally Omitted.].........................................................56
SECTION 6.08 Unidentified Payments; Lender's Right of Presumption.............................56
SECTION 6.09 No Rights of Withdrawal..........................................................56
SECTION 6.10 Permitted Investments............................................................56
SECTION 6.11 Servicing Compensation...........................................................57
SECTION 6.12 Reports to the Agent; Account Statements; Servicing Information..................57
SECTION 6.13 Statements as to Compliance; Financial Statements................................58
SECTION 6.14 Access to Certain Documentation; Obligors........................................62
SECTION 6.15 Back-Up Servicer.................................................................63
SECTION 6.16 Additional Remedies of Agent Upon Event of Default...............................65
SECTION 6.17 Waiver of Defaults...............................................................66
SECTION 6.18 Maintenance of Certain Insurance.................................................66
SECTION 6.19 Segregation of Collections.......................................................66
SECTION 6.20 UCC Matters; Protection and Perfection of Pledged Assets.........................66
SECTION 6.21 Servicer Advances................................................................67
SECTION 6.22 Repurchase of Receivables Upon Breach of Covenant or Representation and
Warranty by Servicer............................................................................68
SECTION 6.23 Compliance with Applicable Law...................................................68
ARTICLE VII. EVENTS OF DEFAULT...............................................................................69
SECTION 7.01 Events of Default................................................................69
SECTION 7.02 Additional Remedies of the Agent.................................................71
ARTICLE VIII. INDEMNIFICATION.................................................................................72
SECTION 8.01 Indemnities by the Borrower......................................................72
SECTION 8.02 Indemnities by Servicer..........................................................74
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ARTICLE IX. MISCELLANEOUS..................................................................................76
SECTION 9.01 Amendments and Waivers..........................................................76
SECTION 9.02 Notices, Etc....................................................................77
SECTION 9.03 No Waiver; Remedies.............................................................77
SECTION 9.04 Binding Effect; Assignability; Multiple Lenders.................................77
SECTION 9.05 Term of This Agreement..........................................................78
SECTION 9.06 GOVERNING LAW; JURY WAIVER; JURISDICTION........................................78
SECTION 9.07 Costs, Expenses and Taxes.......................................................79
SECTION 9.08 No Proceedings..................................................................80
SECTION 9.09 Recourse Against Certain Parties................................................80
SECTION 9.10 Execution in Counterparts; Severability; Integration............................81
SECTION 9.11 Tax Characterization............................................................81
SECTION 9.12 Exclusivity.....................................................................81
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
SCHEDULE I Condition Precedent Documents
SCHEDULE II Prior Names, Tradenames, Fictitious Names and "Doing Business As"
Names
SCHEDULE III Representations and Warranties with Respect to Eligible
Receivables
SCHEDULE IV Credit and Collection Policy
SCHEDULE V Eligible Third-Party Contractors
EXHIBITS:
EXHIBIT A Form of Borrowing Base Certificate
EXHIBIT B Form of Commercial Paper Remittance Report
EXHIBIT C Form of Monthly Remittance Report
EXHIBIT D-1 Form of Non-Mortgage Contract
EXHIBIT D-2 Form of Non-Mortgage Contract
EXHIBIT E Form of Mortgage Contract
EXHIBIT F Agent's Bank Fee
EXHIBIT G Custodian's Fees
EXHIBIT H Form of Completion Certificate
EXHIBIT I Form of Contractor Sale Agreement
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This RECEIVABLES LOAN AND SECURITY AGREEMENT is made as of February 11,
2003, among:
(1) FCC ACCEPTANCE CORP., a Delaware corporation (the "Borrower");
(2) FIRST CONSUMER CREDIT, INC., a Texas corporation ("FCC"), as the
Servicer (as defined herein);
(3) AUTOBAHN FUNDING COMPANY LLC ("Autobahn"), as a Lender (as defined
herein);
(4) DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN
("DZ BANK"), as agent for the Lender (the "Agent");
(5) U.S. BANK NATIONAL ASSOCIATION, as the Custodian and the Agent's Bank
(as each such term is defined herein); and
(6) COMPU-LINK CORPORATION (doing business as "Celink"), a Michigan
corporation, as the Back-Up Servicer (as defined herein).
IT IS AGREED as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Certain Defined Terms. (a) Certain capitalized terms used
throughout this Agreement are defined above or in this Section 1.01.
(b) As used in this Agreement and the exhibits and schedules thereto
(each of which is hereby incorporated herein and made a part hereof), the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accountants' Report" has the meaning assigned to that term in Section
6.13(b).
"Active Back-Up Servicer's Fee" means, for any Remittance Period or
portion thereof after the occurrence of a Servicer Default and the appointment
of the Back-Up Servicer as Servicer hereunder, an amount, payable out of
Collections on the Pledged Receivables and amounts applied to the payment of, or
treated as payments on, the Pledged Receivables, equal to the Active Back-Up
Servicing Fee Rate multiplied by the Eligible Receivables Balance as of the
first day of such Remittance Period.
"Active Back-Up Servicing Fee Rate" means the per annum rate of 1.00%.
"Additional Deposit" has the meaning assigned thereto in the Sinking
Fund Account Agreement.
"Adjusted Eurodollar Rate" means, with respect to any Fixed Period for
any Loan allocated to such Fixed Period, an interest rate per annum equal to the
sum of (i) the Adjusted Eurodollar Rate Margin and (ii) an interest rate per
annum equal to the average of the interest rates per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) reported during such Fixed Period on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London Interbank Offered Rate for United States dollar deposits having a
term of thirty (30) days and in a principal amount of $1,000,000 or more (or, if
such page shall cease to be publicly available or, if the information contained
on such page, in the Lender's sole judgment, shall cease to accurately reflect
such London Interbank Offered Rate, such rate as reported by any publicly
available recognized source of similar market data selected by the Lender that,
in the Lender's reasonable judgment, accurately reflects such London Interbank
Offered Rate).
"Adjusted Eurodollar Rate Margin" has the meaning ascribed thereto in
the Fee Letter.
"Advance Percentage" means at any time, the decimal expressed as a
percentage equal to:
FA - CA
-------
▇▇▇
where: FA = the Facility Amount at such time;
CA = the amount of Collections on deposit in the Collection
Account at such time to be applied in accordance with Sec
tion 2.05 on the next Remittance Date, minus the portion of
such Collections which are required to be set aside for the
payment of accrued Yield pursuant to Section 2.05(a) hereof;
and
▇▇▇ = the Eligible Receivables Balance at such time.
"Adverse Claim" means a lien, security interest, charge, encumbrance
or other right or claim of any Person other than, with respect to the Pledged
Assets, (i) any lien, security interest, charge, encumbrance or other right or
claim in favor of the Lender (or the Agent on behalf of the Lender), or (ii)
Permitted Lien.
"Affected Party" has the meaning assigned to that term in Section
2.13.
"Affiliate" when used with respect to a Person, means any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control," when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of
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voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" has the meaning assigned to that term in the preamble hereto.
"Agent's Bank" means U.S. Bank National Association and its successors
and assigns that are Eligible Depository Institutions.
"Agent's Bank Fee" means, for any Remittance Period, an amount,
payable out of Collections on the Pledged Receivables and amounts applied to the
payment of, or treated as payments on, the Pledged Receivables, equal to the
aggregate fees listed in Exhibit F hereto which relate to such Remittance
Period.
"Agreement" means this Receivables Loan and Security Agreement, as the
same may be amended, restated, supplemented and/or otherwise modified from time
to time hereafter.
"Annualized Default Rate" means, as of any date of determination, an
amount (expressed as a percentage) equal to (i) the product of (A) the aggregate
Outstanding Balances of all Pledged Receivables which became Defaulted
Receivables during the immediately preceding three Remittance Periods and (B) 4
divided by (ii) the average Outstanding Balances of all Eligible Receivables as
of the last Business Day of the immediately preceding three Remittance Periods.
"Assigned Documents" has the meaning assigned to that term in Section
2.14.
"Assignment" has the meaning set forth in the Purchase and
Contribution Agreement.
"Assignment and Acceptance" has the meaning assigned to that term in
Section 9.04.
"Autobahn" has the meaning assigned to that term in the preamble
hereto.
"Back-Up Servicer" means Celink or any successor Back-Up Servicer
appointed by the Agent pursuant to Section 6.15.
"Back-Up Servicer Delivery Date" has the meaning assigned to that term
in Section 6.12(e).
"Bankruptcy Code" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, 11 U.S.C.(S)(S)
101 et seq., as amended.
"Bankruptcy Event" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of
3
a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like
for such Person or all or substantially all of its assets, or any similar action
with respect to such Person under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and such case
or proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy laws or
other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for such Person or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail to, or admit in writing its
inability to, pay its debts generally as they become due, or, if a corporation
or similar entity, its board of directors or members shall vote to implement any
of the foregoing.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the arithmetic average of the rates of interest publicly
announced by JPMorgan Chase Bank and Citibank, N.A. (or their respective
successors) as their respective prime commercial lending rates (or, as to any
such bank that does not announce such a rate, such bank's "base" or other rate
determined by the Lender to be the equivalent rate announced by such bank),
except that, if any such bank shall, for any period, cease to announce publicly
its prime commercial lending (or equivalent) rate, the Agent shall, during such
period, determine the Base Rate based upon the prime commercial lending (or
equivalent) rates announced publicly by the other such banks or, if each such
bank ceases to announce publicly its prime commercial lending (or equivalent)
rate, based upon the prime commercial lending (or equivalent) rate or rates
announced publicly by one or more other banks reasonably acceptable to the
Borrower. The prime commercial lending (or equivalent) rates used in computing
the Base Rate are not intended to be the lowest rates of interest charged by
such banks in connection with extensions of credit to debtors. The Base Rate
shall change as and when such banks' prime commercial lending (or equivalent)
rates change.
"Borrower" has the meaning assigned to that term in the preamble
hereto.
"Borrowing" means the Borrower receiving a Loan under this Agreement.
"Borrowing Base Certificate" means a report, in substantially the form
of Exhibit A, prepared by the Servicer for the benefit of Lender pursuant to
Section 6.12(c).
"Borrowing Base Deficiency" means, at any time that the Capital Limit
is less than the Facility Amount, an amount equal to the amount of such
deficiency.
"Borrowing Date" means, with respect to any Borrowing, the date on
which such Borrowing is funded, which date, other than in the case of the
initial Borrowing, shall be a Subsequent Borrowing Date.
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"Borrowing Limit" means initially $75,000,000; provided, however, that
at all times, on or after the Early Amortization Commencement Date, the
Borrowing Limit shall mean the aggregate outstanding principal balance of the
Loans.
"Business Day" means a day of the year other than a Saturday or a
Sunday or any other day on which banks are authorized or required to close in
New York City and the state of the Corporate Trust Office is located; provided,
that, if any determination of a Business Day shall relate to a Loan bearing
interest at the Adjusted Eurodollar Rate, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.
"Capital Limit" means, at any time, an amount equal to:
(▇▇▇ (X) Maximum Advance Percentage) + CA
where: ▇▇▇ = the Eligible Receivables Balance at such time; and
CA = the amount of Collections on deposit in the Collection
Account at such time to be applied in accordance with
Section 2.05 on the next Remittance Date.
"Celink" has the meaning assigned to that term in the preamble hereto.
"Change of Control" means that at any time (i) FCC shall fail to own
directly 100% of all of the outstanding Capital Stock of the Borrower or shall
cease to have the right or ability by voting power, contract or otherwise, to
elect or designate for election a majority of the Board of Directors of the
Borrower, (ii) US Home shall fail to own, directly or indirectly, at least 51%
of all of the outstanding Capital Stock of the Servicer or shall cease to have
the right or ability by voting power, contract or otherwise, to elect or
designate for election a majority of the Board of Directors of the Servicer,
(iii) the Servicer, US Home or the Borrower merges or consolidates with any
other Person, (iv) there are not at least two of the following individuals,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who are employed in
senior management positions at FCC, involved in the day-to-day operations of FCC
and able to perform substantially all of the material business decisions of FCC
as employees of FCC or (v) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
shall become or obtain rights (whether by means of warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of more than 50% of the outstanding Capital Stock of US Home. For
purposes of this definition, the following terms have the following meaning:
"Board of Directors" means, with respect to any Person, such Person's
Board of Directors or any committee thereof duly authorized to act on
behalf of such Board of Directors.
5
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, contingent share issuances,
participations or other equivalents of or interest in equity (however
designated) of such Person.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Receipt" has the meaning assigned to that term in the
Custodial Agreement.
"Collection Account" means a special trust account (account number
▇▇▇▇▇▇▇▇ at the Agent's Bank) in the name of and under the sole dominion and
control of the Agent for the benefit of DZ BANK and Autobahn; provided, that the
funds deposited therein (including any interest and earnings thereon) from time
to time shall constitute the property and assets of the Borrower and the
Borrower shall be solely liable for any taxes payable with respect to the
Collection Account.
"Collection Date" means the date on which the aggregate outstanding
principal amount of the Loans have been repaid in full and all Yield and Fees
and all other Obligations have been paid in full, and the Lender shall have no
further obligation to make any additional Loans.
"Collections" means, without duplication, with respect to any
Receivable that is Pledged hereunder, all Scheduled Payments, all prepayments,
all overdue payments, all Guaranty Amounts, all Insurance Proceeds, all
Servicing Charges, all Recoveries, all amounts paid to the Borrower pursuant to
the terms of the Purchase and Contribution Agreement, all amounts paid by the
Servicer in connection with its obligations under Section 6.22 hereof, and all
other payments received with respect to the Contract related to such Receivable,
all cash receipts and proceeds in respect of the Other Conveyed Property or
Related Security (including, without limitation, the Underlying Collateral)
related to such Receivable and collections thereof, (including, without
limitation, collections constituting an account or general intangible or
evidenced by a note, instrument, security, contract, security agreement, chattel
paper or other evidence of indebtedness or security, whatever is received upon
the sale, exchange, collection or other disposition of, or any indemnity,
warranty or guaranty payable in respect of, the foregoing and all "proceeds," as
defined in Section 9-102 of the UCC as in effect in the state of New York, of
the foregoing), any amounts paid to the Borrower under or in any Servicer
Advances, any amounts paid to the Borrower under or in connection with any
hedging arrangements contemplated hereunder.
"Commercial Paper Remittance Report" means a report, in substantially
the form of Exhibit B, furnished by the Servicer to the Agent for the Lender
pursuant to Section 6.12(d).
"Commitment Percentage" has the meaning assigned to that term in
Section 9.04(b).
"Completion Certificate" means a certificate, executed in accordance
with the Credit and Collection Policy, substantially in the form attached hereto
as Exhibit H, with respect to which the Obligor and the Contractor related to
such Receivable certify, among other items, that the related home improvement
has been fully completed to such Obligor's satisfaction.
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"Computer Tape or Listing" means the computer tape or listing (whether
in electronic form or otherwise) generated by the Servicer on behalf of the
Borrower, which provides information relating to the Receivables included in the
Eligible Receivables Balance (and any other Pledged Receivables).
"Contract" means a Mortgage Contract, an Non-Mortgage Contract or a
Promotional Contract.
"Contractor" means the business entity that enters into a Contract
with an Obligor to provide the home improvement services specified therein.
"Contractor Sale Agreement"means the "Continuous Buy-Sell Agreement"
in substantially the form attached hereto as Exhibit I whereby FCC agrees to
purchase, in its sole discretion, Contracts from an Eligible Contractor pursuant
to the terms and conditions contained therein together with all schedules,
supplements and amendments thereto and each other document and instrument
related thereto.
"Corporate Trust Office" means the principal office of the Agent's
Bank at which at any particular time its corporate trust business shall be
administered, which office is initially located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Structured Finance/First Consumer Credit.
"Cost to Value" means, with respect to any Contract, the percentage
obtained by dividing (i) the Original Cost of such Contract by (ii) by the
market value of the related Property after the completion of the related home
improvement, as determined in accordance with the Credit and Collection Policy.
"Coupon Rate" means, with respect to any Receivable, the interest rate
set forth in the Contract related to such Receivable.
"CP Disruption Event" means, at any time, the inability of the Issuer
to raise (whether as a result of a prohibition or any other event or
circumstance whatsoever) funds through the issuance of commercial paper notes in
the United States commercial paper market, including, without limitation, by
virtue of (i) any disruption in the commercial paper market, (ii) insufficient
availability under the liquidity or enhancement facility entered into by the
Issuer with respect to this Agreement or (iii) a downgrade of the rating of one
or more financial institutions extending credit to or for the account of the
Issuer or having a commitment to extend credit to the Lender under a liquidity
or enhancement facility which relates to this Agreement to a level lower than
that required by the Rating Agencies.
"CP Margin" has the meaning ascribed thereto in the Fee Letter.
"CP Rate" means, with respect to any Fixed Period for all Loans
allocated to such Fixed Period, (A) the per annum rate equivalent to the per
annum rate (or if more than one rate, the weighted average of the rates) at
which commercial paper notes of the Issuer having a term equal to such Fixed
Period and to be issued to fund, in whole or in part, the applicable Loans (and,
at the
7
election of the Issuer, other loans by the Issuer) by the Issuer may be sold by
any placement agent or commercial paper dealer selected by the Issuer, as agreed
between each such agent or dealer and the Issuer and notified by the Issuer to
the Agent and the Servicer; provided, however, if the rate (or rates) as agreed
between any such agent or dealer and the Issuer with respect to any Fixed Period
for the applicable Loans is a discount rate (or rates), the CP Rate for such
Fixed Period shall be the rate (or, if more than one rate, the weighted average
of the rates) resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum; provided, further, however, that
such rate (or rates) shall reflect and give effect to borrowings to fund small
or odd dollar amounts that are not easily accommodated in the commercial paper
market to the extent that such amounts are reasonably allocated, in whole or in
part, to such Loans, plus (B) the CP Margin.
"CP Rollover Fixed Period" means any Fixed Period other than any Fixed
Period (i) applicable to the Loan arising as a result of the Borrowing on the
initial Borrowing Date which shall have been requested in the Notice of
Borrowing delivered in connection with such Borrowing, (ii) applicable to any
new Loan arising as a result of a Borrowing on a Subsequent Borrowing Date which
shall have been requested in the Notice of Borrowing delivered in connection
with such Borrowing or (iii) applicable to any Loan accruing Yield at the Non-CP
Rate.
"Credit and Collection Policy" means the "Standard Collection
Practices" and "Underwriting Guidelines" of FCC, as annexed hereto as Schedule
IV, as such policy may hereafter be amended, modified or supplemented from time
to time with the prior written consent of the Agent.
"Cumulative LTV" means, with respect to any Contract, as of any date
of determination, the percentage obtained by dividing (i) the sum of (A) the
Outstanding Balance, as of such date, with respect to such Contract plus (B) the
outstanding balances, as of such date, of the any other loans advanced by any
Person which are secured by a lien on the related Property (other than such a
loan that is subordinate to the lien on such Property, if any, that secures such
Contract) by (ii) by the market value of the related Property after the
completion of the related home improvement, as determined in accordance with the
Credit and Collection Policy.
"Custodial Agreement" means that certain Custodial and Collateral
Agency Agreement dated as of the date hereof among the Servicer, the Borrower,
the Agent and the Custodian, together with all instruments, documents and
agreements executed in connection therewith, as such Custodial Agreement may
from time to time be amended, restated, supplemented and/or otherwise modified
in accordance with the terms thereof.
"Custodian" means U.S. Bank National Association or any substitute
Custodian appointed by the Agent pursuant to the Custodial Agreement.
"Custodian's Fee" means, for any Remittance Period, an amount, payable
out of Collections on the Pledged Receivables and amounts applied to the payment
of, or treated as payments on, the Pledged Receivables, equal to the aggregate
fees listed in Exhibit G hereto which relate to such Remittance Period.
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"Debt" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments related to transactions that are classified
as financings under GAAP, (iii) obligations of such Person to pay the deferred
purchase price of property or services, (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations secured by an Adverse Claim upon
property or assets owned (under GAAP) by such Person, even though such Person
has not assumed or become liable for the payment of such obligations and (vi)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor, against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (v) above.
"Default Funding Rate" means an interest rate per annum equal to two
and one-half percent (2.5%) plus the Base Rate.
"Defaulted Receivable" means, as of any time of determination, any
Pledged Receivable:
(i) with respect to which 10% or more of any Scheduled Payment (or any
other amount payable under the terms of the related Contract) remains
unpaid for more than one- hundred and eighty (180) days after the due date
therefor set forth in such Contract;
(ii) with respect to which any payment terms, including, without
limitation, reductions of the monthly payment amounts and extensions of the
maturity date related thereto, of the related Contract have been modified
due to credit related reasons after such Contract was Pledged hereunder;
provided, however, with respect to a Contract as to which a Bankruptcy
Event has occurred as to the related Obligor (i) the maturity date with
respect to such Contract may be extended up to six (6) months from the
original maturity date set forth in the Contract or (ii) the monthly
payment amount may be increased with respect to such Contract.
(iii) which has been charged-off or should otherwise be deemed
uncollectible by the Servicer in accordance with the Credit and Collection
Policy;
(iv) with respect to which the related Obligor has been in a dispute
with the related Contractor for a period in excess of one-hundred and
eighty (180) days; or
(v) which has been or should be specifically reserved against in the
books and ledgers of the Servicer or any Affiliate thereof in accordance
with the Credit and Collection Policy, GAAP or the accounting policies or
other policies of Servicer or any Affiliate thereof.
"Delinquency Rate" means, as of any date of determination, an amount
(expressed as a percentage) equal to (i) the aggregate Outstanding Balances of
all Delinquent Receivables as of the last day of the immediately preceding
Remittance Period divided by (ii) the Eligible Receivables Balance as of such
day.
9
"Delinquent Receivable" means, as of any time of determination, any
Pledged Receivable with respect to which 10% or more of any Scheduled Payment
(or any other amount payable under the terms of the related Contract) remains
unpaid for more than thirty (30) days but not more than one-hundred and eighty
(180) days after the due date therefor set forth in such Contract.
"Depository Institution" means a depository institution or trust
company, incorporated under the laws of the United States or any state thereof,
that is subject to supervision and examination by federal and/or state banking
authorities.
"DZ BANK" has the meaning assigned to that term in the preamble
hereto.
"Early Amortization Commencement Date" means the earliest of (i) the
date of occurrence of any event described in Section 7.01(a) hereof, (ii) the
date of the declaration of the Early Amortization Commencement Date pursuant to
any other subsection of Section 7.01 or (iii) the date of the declaration of the
Early Amortization Commencement Date by, and at the option of, the Lender upon
the occurrence of an Early Amortization Event.
"Early Amortization Event" means the occurrence of any of the
following events:
(i) a regulatory, tax or accounting body has ordered that the
activities of the Lender or any Affiliate of the Lender contemplated hereby
be terminated or, as a result of any other event or circumstance, the
activities of the Lender contemplated hereby may reasonably be expected to
cause the Lender, the Person, if any, then acting as the administrator or
the manager for the Lender, or any of their respective Affiliates to suffer
materially adverse regulatory, accounting or tax consequences;
(ii) an Event of Default has occurred and is continuing;
(iii) the Facility Maturity Date shall have occurred;
(iv) the rolling average of the Annualized Default Rates in respect of
any three consecutive Remittance Periods exceeds 3%;
(v) the rolling average of the Delinquency Rates in respect of any
three consecutive Remittance Periods exceeds 12%;
(vi) the Weighted Average APR of all Eligible Receivables as of any
date of determination is less than 12%; or
(vii) the Excess Spread as of any date of determination is less than
5%.
"Eligible Contractor" means any Contractor which (a) (i) is a wholly
owned subsidiary of US Home, (ii) is fully-licensed by all applicable
authorities to perform the services contemplated under any Contract, and is
otherwise in good standing with such authorities, (iii) is insured to the full
extent as is customary among similar contractors in the region where such
Contractor performs its services or, if the requirements are more stringent, to
the full extent
10
required by all applicable laws or regulations, and, in any case, to the full
extent required by the Credit and Collection Policy and all other policies of
the Servicer and/or the Borrower, (iv) complies in all respects with any and all
requirements set forth in the Credit and Collection Policy and any other
policies of the Servicer and/or the Borrower or (b) is an Eligible Third-Party
Contractor.
"Eligible Depository Institution" means a Depository Institution the
short term unsecured senior indebtedness of which is rated at least Prime-1 by
Moody's and F1 by Fitch, if rated by Fitch.
"Eligible Receivable" means, at any time, a Pledged Receivable with
respect to which each of the representations and warranties with respect to the
Contract related to such Pledged Receivable contained in Schedule III hereto is
true and correct at such time.
"Eligible Receivables Balance" means, at any time (i) the aggregate
Outstanding Balances of all Eligible Receivables which are Pledged hereunder to
secure Loans at such time, minus (ii) the Overconcentration Amount at such time.
"Eligible Third-Party Contractor" means a Contractor which (i) is not
wholly owned by US Home, (ii) is licensed by all applicable state authorities to
perform the services contemplated under any Contract, and is otherwise in good
standing with such authorities, (iii) complies in all respects with any and all
requirements set forth in the Credit and Collection Policy and any other
policies of the Servicer and/or the Borrower and (iv) is listed on Schedule V
attached hereto (as it shall be revised by Servicer and/or Borrower) as an
Eligible Third Party Contractor and (v) is included on a monthly report,
delivered to Agent by Servicer and/or Borrower on the first day of each month
listing all such Contractors.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Eurodollar Disruption Event" means any of the following: (i) a
determination by the Lender that it would be contrary to law or to the directive
of any central bank or other governmental authority (whether or not having the
force of law) to obtain United States dollars in the London interbank market to
make, fund or maintain any Loan, (ii) a determination by the Lender that the
rate at which deposits of United States dollars are being offered in the London
interbank market does not accurately reflect the cost to the Lender of making,
funding or maintaining any Loan or (iii) the inability of the Lender to obtain
United States dollars in the London interbank market to make, fund or maintain
any Loan.
"Eurodollar Index" means an index based upon an interest rate reported
on Telerate Access Service Page 3750 (British Bankers Association Settlement
Rate) as the London Interbank Offered Rate for United States dollar deposits.
"Event of Default" has the meaning assigned to that term in Section
7.01.
11
"Excess Spread" means, as of any determination date, an amount
(expressed as a percentage), as determined by the Agent, equal to (i) the
Weighted Average APR of all Eligible Receivables as of the last day of the
immediately preceding Remittance Period minus (ii) the Facility Funding Rate
with respect to the immediately preceding Remittance Period, minus (iii) at any
time prior to the appointment of the Back-up Servicer as Servicer hereunder, the
Servicing Fee Rate, minus (iv) at any time prior to the appointment of the
Back-up Servicer as Servicer hereunder, the Standby Back-up Servicing Fee
(expressed as a percentage of the Eligible Receivables Balance as of such
determination date), minus (v) at any time after the occurrence of a Servicer
Default and the appointment of the Back-up Servicer as Servicer hereunder, the
Active Back-up Servicing Fee Rate, minus (vi) the Custodian's Fee with respect
to the immediately preceding Remittance Period (expressed as a percentage of the
Eligible Receivables Balance as of such determination date) minus (vii) the
Agent's Bank Fee with respect to the immediately preceding Remittance Period
(expressed as a percentage of the Eligible Receivables Balance as of such
determination date), minus (viii) any fees or expenses under any hedging
arrangements purchased pursuant to the terms of the Sinking Fund Account
Agreement (expressed as a percentage of the Eligible Receivables Balance as of
such determination date).
"Facility Amount" means, at any time, the sum of (i) the face amount
of outstanding commercial paper notes (net of the amount of all interest
scheduled to accrue thereon through their respective stated maturity if such
commercial paper notes are issued on a discount basis) of the Lender issued to
fund Loans hereunder, plus (ii) the aggregate Loans Outstanding hereunder
bearing interest at the Non-CP Rate, plus (iii) accrued Yield and Fees with
respect to the amounts described in the foregoing clauses (i) and (ii).
"Facility Funding Rate" means, with respect to any Remittance Period,
the rate per annum most recently determined by the Agent, which shall be equal
to a fraction (expressed as a percentage), the numerator of which shall be equal
to the sum of the amounts of Yield with respect to each outstanding Loan accrued
during such Remittance Period multiplied by 12 and the denominator of which
shall be equal to the average Facility Amount during such Remittance Period (net
of Yield).
"Facility Maturity Date" means the fifth anniversary of the date of
this Agreement.
"FCC" has the meaning assigned to that term in the preamble hereto.
"Fee Letter" has the meaning assigned to that term in Section 2.12(a).
"Fees" has the meaning assigned to that term in Section 2.12(a).
"FICO Score" means the statistical credit score obtained by FCC for
purposes of determining the credit worthiness of an Obligor which must be either
(i) the "BEACON FICO Score" received by the Servicer from Equifax, (ii) the
"Fair ▇▇▇▇▇ Score" received by the Servicer from Experian or (iii) the
"TransUnion Personal Credit Score" received by the Servicer from TransUnion.
"Fitch" means Fitch, Inc. (or its successors in interest).
12
"Fixed Period" means, for any outstanding Loans, (i) if Yield in
respect of all or any part thereof is computed by reference to the CP Rate, a
period of up to and including two hundred and seventy (270) days as determined
pursuant to Section 2.04 or (ii) if Yield in respect of all or any part thereof
is computed by reference to the Non-CP Rate, the applicable Remittance Period.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States.
"Government Entity" means the United States, any state, any political
subdivision of a state and any agency or instrumentality of the United States or
any state or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty Amounts" means any and all amounts paid by any guarantor
with respect to the applicable Contract.
"Indemnified Amounts" has the meaning assigned to that term in Section
8.01.
"Independent Accountants" has the meaning assigned to that term in
Section 6.13(b).
"Individual Receivable File" means with respect to each Receivable, a
file containing each of the following items:
(a) if such Receivable is related to a Non-Mortgage Contract
(including, without limitation, a Promotional Contract):
(i) the sole original, executed copy of the related Non-Mortgage Contract
(including any amendments, extensions, modifications or waivers with
respect thereto) with original assignments of such Contract showing a
complete chain of assignments from the applicable Contractor to FCC, from
FCC to the Borrower and from the Borrower to the Agent;
(ii) an executed copy of the Completion Certificate related to such
Non-Mortgage Contract;
(iii) a copy of the original credit application of the Obligor related to
such Contract; and
(iv) true and complete copies of all other agreements, documents, any
insurance policies and instruments evidencing, securing or guarantying, or
required by applicable law with respect to, such Non-Mortgage Contract, as
determined from time to time by the Agent, upon prior written notice to the
Custodian and the Borrower.
(b) if such Receivable is related to a Mortgage Contract:
(i) the sole original, executed copy of the related Mortgage Contract
(including any amendments, extensions, modifications or waivers with
respect thereto) with original assignments of such Contract showing a
complete chain of assignments from the
13
applicable Contractor to FCC, from FCC to the Borrower and from the
Borrower to the Agent;
(ii) a copy of the Mortgage related to such Mortgage Contract (together
with evidence of transmittal of such Mortgage to the appropriate recording
office, evidence that all related mortgage taxes have been paid and,
promptly after receipt thereof by the Servicer and, in any case, within 365
days of the date of such Mortgage Contract, evidence, in form satisfactory
to the Agent, of recordation of such Mortgage at the appropriate recording
office) and original assignments of such Mortgage showing a complete chain
of assignments of such Mortgage from origination to the Agent (in each
case, together with evidence of transmittal of such assignments of mortgage
to the appropriate recording office, evidence that all related mortgage tax
has been paid and, promptly after receipt thereof by the Servicer and, in
any case, within 365 days of the Pledge of such Mortgage Contract
hereunder, evidence, in form satisfactory to the Agent, of recordation of
such assignments of mortgage at the appropriate recording office);
(iii) a copy of the title report related to the Underlying Collateral
related to such Mortgage Contract;
(iv) a copy of the original credit application of the Obligor related to
such Contract; and
(v) true and complete copies of all other agreements, documents, any
insurance policies and instruments evidencing, securing or guarantying, or
required by applicable law with respect to, such Mortgage Contract, as
determined from time to time by the Agent, upon prior written notice to the
Custodian and the Borrower.
"Insurance Proceeds" means, the proceeds of any insurance policies
related to any Receivables (to the extent not expended by the Servicer for the
restoration or repair of the related Property).
"Issuer" means, collectively, Autobahn and any presently existing or
future Person administered by DZ BANK or, with the consent of the Borrower
(which such consent shall not be unreasonably withheld) at any time prior to the
occurrence of an Early Amortization Event (and without the consent of the
Borrower at any time after the occurrence of an Early Amortization Event), any
presently existing or future Person not administered by DZ BANK, in either case,
whose principal business consists of issuing commercial paper or other
securities to (i) fund or maintain loans secured by receivables, accounts,
instruments, chattel paper, general intangibles and other similar assets or (ii)
fund its acquisition and maintenance of receivables, accounts, instruments,
chattel paper, general intangibles and other similar assets.
"Lender" means, collectively, Autobahn and/or any other Person that is
an Affiliate of DZ BANK and/or, with the consent of the Borrower (which such
consent shall not be unreasonably withheld) at any time prior to the occurrence
of an Early Amortization Event (and without the consent of the Borrower at any
time after the occurrence of an Early Amortization Event) any other Person that
is not an Affiliate of DZ BANK, in each case, that agrees, pursuant to
14
the pertinent Assignment and Acceptance, to make Loans secured by Pledged Assets
pursuant to Article II of this Agreement.
"Liquidation Fee" means, for Loans allocated to any Fixed Period
during which such Loans are repaid (in whole or in part) prior to the end of
such Fixed Period, the breakage costs, if any, related to such repayment plus
the amount, if any, by which (i) Yield (calculated without taking into account
any Liquidation Fee), which would have accrued on the amount of the payment of
such Loans during such Fixed Period (as so computed) if such payment had not
been made, as the case may be, exceeds (ii) the sum of (A) Yield actually
received by the Lender in respect of such Loans for such Fixed Period and, if
applicable, (B) the income, if any, received by the Lender from the Lender's
investing the proceeds of such payments on such Loans.
"Liquidation Proceeds" means, with respect to a Receivable with
respect to which the related Underlying Collateral has been foreclosed upon by
the Servicer, all amounts realized with respect to such Receivable (including
insurance proceeds) net of (i) reasonable expenses of the Servicer incurred in
connection with the collection, repossession, foreclosure and/or disposition of
the related Underlying Collateral and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; provided, however, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero.
"Liquidity/Credit Enhancement Facility" means one or more Liquidity
Purchase Agreements or similar agreements, to be entered into on the date hereof
among the Issuer, the financial institutions party thereto (including, if
applicable and at any time, financial institutions which are not Affiliates of
DZ BANK) and the Agent and/or a letter of credit or similar instrument or
agreement by the financial institutions party thereto (including, if applicable
and at any time, financial institutions which are not Affiliates of DZ BANK) in
favor of the Issuer, together with any related agreements, in each case, to be
entered into on the date hereof.
"Loan" means each loan advanced by the Lender to the Borrower on a
Borrowing Date pursuant to Article II.
"Loans Outstanding" means the sum of the principal amounts of Loans
made to the Borrower for the initial and any subsequent borrowings pursuant to
Sections 2.01 and 2.02, reduced from time to time by Collections received and
distributed as repayment of principal amounts of Loans outstanding pursuant to
Section 2.05 and any other amounts received by the Lender to repay the principal
amounts of Loans outstanding pursuant to Section 2.20 or otherwise; provided,
however, that the principal amounts of Loans outstanding shall not be reduced by
any Collections or other amounts if at any time such Collections or other
amounts are rescinded or must be returned for any reason.
"Lockbox" means a post office box (P.O. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
78265- 9454]) to which Collections are remitted for retrieval by the Lockbox
Bank and for deposit by the Lockbox Bank into the Lockbox Account.
"Lockbox Account" means the deposit account (account number 980011886
at the Lockbox Bank) in the name of and under the sole dominion and control of
the Agent for the benefit
15
of DZ BANK and Autobahn; provided, that the funds deposited in such account
(including any interest and earnings thereon) from time to time shall constitute
the property and assets of the Borrower and the Borrower shall be solely liable
for any taxes payable with respect to the Lockbox Account.
"Lockbox Agreement" means the Lockbox Account Agreement, dated the
date hereof, among the Lockbox Bank, the Borrower and the Agent, as such
agreement may from time to time be amended, supplemented or otherwise modified
in accordance with the terms thereof.
"Lockbox Bank" means Frost Bank and its successors in interest.
"Master Receivables File" means with respect to all Receivables, a
file containing each of the following items:
(a) a copy of each Contractor Sale Agreement related to such
Receivables; and
(b) true and complete copies of all other agreements, documents and
instruments evidencing, securing or guarantying, or required by applicable
law with respect to any Contractor Sale Agreement related to such
Receivables, as determined from time to time by the Agent, upon prior
written notice to the Custodian and the Borrower,
"Maximum Advance Percentage" means 90%.
"Monthly Remittance Report" means a report, in substantially the form
of Exhibit C, furnished by the Servicer to the Agent for the Lender pursuant to
Section 6.12(b).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. (or its successors in
interest).
"Mortgage" means any mortgage, deed of trust or other instrument
creating a first, second or other lien on a fee simple estate in the Mortgaged
Property securing a Mortgage Contract.
"Mortgaged Property" means the Property which is subject to a Mortgage
(including, without limitation, all buildings, improvements and fixtures thereon
and all additions, alterations and replacements made at any time with respect to
the foregoing) securing a Mortgage Contract.
"Mortgage Contract" means a retail installment contract substantially
in the form attached hereto as Exhibit E between a Contractor and an Obligor
which (i) evidences the obligations of an Obligor to pay for the home
improvements sold and/or installed by a Contractor and (ii) is secured by a
Mortgage on the related Mortgaged Property, together with all schedules,
supplements and amendments thereto and each other document and instrument
related thereto.
"Non-CP Rate" means, with respect to any Fixed Period for any Loan
allocated to such Fixed Period, an interest rate per annum equal to the Adjusted
Eurodollar Rate; provided, however, that if the Lender shall have notified the
Agent and the Borrower that a Eurodollar Disruption Event has occurred, the
Non-CP Rate shall be equal to the Base Rate (until the Lender
16
shall have notified the Agent that such Eurodollar Disruption Event has ceased,
at which time the Non-CP Rate shall again be equal to the Adjusted Eurodollar
Rate).
"Non-Mortgage Contract" means a retail installment contract
substantially in one of the forms attached hereto as Exhibit D-1 or D-2 between
a Contractor and an Obligor which is not secured by a Mortgage and evidences the
obligations of such Obligor to pay for the home improvements sold and/or
installed by a Contractor together with all schedules, supplements and
amendments thereto and each other document and instrument related thereto.
"Notice of Borrowing" has the meaning assigned to that term in Section
2.02(b) hereof.
"Notice of Pledge" has the meaning assigned to that term in the
Custodial Agreement.
"NY Purchase Agreement" means that certain Retail Installment Contract
Origination and Indemnification Agreement dated October 2, 2001, among First
Savings Bank, FSB, a federal savings bank located in Arlington, Texas and FCC
and each other document and instrument related to the foregoing and the
transactions contemplated thereby.
"Obligations" means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due) of the
Borrower to the Lender or the Agent arising under this Agreement and/or any
other Transaction Document and shall include, without limitation, all liability
for principal of and interest on the Loans, indemnifications and other amounts
due or to become due by the Borrower to the Lender or the Agent under this
Agreement and/or any other Transaction Document, including, without limitation,
interest, fees and other obligations that accrue after the commencement of an
insolvency proceeding (in each case whether or not allowed as a claim in such
insolvency proceeding).
"Obligor" means, collectively, each Person obligated to make payments
under a Contract.
"Officer's Certificate" means a certificate signed by the president,
the secretary, the chief financial officer or any vice president of any Person.
"Opinion of Counsel" means a written opinion of independent counsel
reasonably acceptable to the Agent, which opinion, if such opinion or a copy
thereof is required by the provisions of this Agreement or any other Transaction
Document to be delivered to the Borrower or the Agent, is acceptable in form and
substance to the Agent.
"Original Balance" means, with respect to any Receivable, the
Outstanding Balance related thereto on date that the Contract related to such
Receivable became effective.
17
"Original Cost" means, with respect to a Non-Mortgage Contract, the
"Cash Price" of the related home improvement as specified in the related
Contract and, with respect to a Mortgage Contract, the "Cash Price" of the
related home improvement plus the aggregate amount of "Other Charges" related to
such home improvement, each as specified in the related Contract.
"Other Conveyed Property" means, with respect to any Receivable, all
of the Borrower's right, title and interest in, to and under (i) all monies at
any time received or receivable with respect to such Receivable after the
applicable Cut-Off Date (as defined in the Purchase and Contribution Agreement),
(ii) any and all agreements, documents, certificates and instruments evidencing
the Borrower's security interest or other interest in and to the related
Underlying Collateral, including, without limitation, the related Contractor
Sale Agreement and, if applicable, Mortgage, (iii) the security interest in the
Underlying Collateral related to such Receivable granted by the related Obligor
to the Contractor under the related Contract and assigned by the Contractor to
FCC and assigned by FCC to the Borrower under the Purchase and Contribution
Agreement, (iv) all insurance policies and title insurance policies (and any
proceeds therefrom) relating to such Receivable, including rebates of premiums
not otherwise due to an Obligor, (v) the related Contract and all other items
required to be contained in the related Receivable File and any and all other
documents or electronic records that the Borrower keeps on file in accordance
with its customary procedures relating to such Receivable, the related
Underlying Collateral or the related Obligor, (vi) all property (including the
right to receive future Liquidation Proceeds) that secures such Receivable and
that has been acquired by or on behalf of the Borrower pursuant to the
liquidation of such Receivable, and (vii) all present and future rights, 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 and investments of any kind and
nature in respect of any of the foregoing.
"Outstanding Balance" means, with respect to any Receivable and the
related Contract, as of any date of determination, the "Amount Financed" set
forth in such Contract minus all payments made by the Obligor under such
Contract which have been applied as principal payments to reduce such "Amount
Financed".
"Overconcentration Amount" means, at any time, without duplication,
the sum of:
(i) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to any one Eligible Third-Party Contractor
(together with any Affiliate thereof) at such time exceeds 20% of the sum
of the Outstanding Balances of all Eligible Receivables at such time;
(ii) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Substituted Receivables exceeds 15% of the
Outstanding Balances of all Eligible Receivables at any such time;
(iii) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Non-Mortgage Contracts in the aggregate
exceeds 40% of the sum of the Outstanding Balances of all Eligible
Receivables at such time;
18
(iv) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables owed by Obligors with FICO Scores of less than 600
exceeds 20% of the sum of the Outstanding Balances of all Eligible
Receivables at such time;
(v) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Promotional Contracts at such time exceeds
5% of the sum of the Outstanding Balances of all Eligible Receivables at
such time;
(vi) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Promotional Contracts originated by any one
Contractor exceeds 10% of the sum of the Outstanding Balances of all
Eligible Receivables originated by such Contractor at such time;
(vii) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Contracts with an original maturity of
greater than 15 years exceeds 20% of the sum of the Outstanding Balances of
all Eligible Receivables originated by such Contractor at such time; and
(viii) the amount by which the sum of the Outstanding Balances of all
Eligible Receivables related to Contracts as to which a Bankruptcy Event
has occurred with respect to the related Obligor and as to which, by order
of the bankruptcy court, one or more delinquent payments has been
rescheduled for payment on or before the maturity date set forth in such
Contracts exceeds $5,000,000.
"Overdue Payment" means, with respect to a Remittance Period, all
payments due in a prior Remittance Period that the Servicer receives from or on
behalf of an Obligor during such Remittance Period, including any Servicing
Charges.
"Permitted Investments" means any one or more of the following:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is held by a
third party or the Trustee), with respect to any security described in
clause (i) above, provided that the long-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by
▇▇▇▇▇'▇ and S&P in one of their two highest long-term rating categories and
if rated by Fitch, in one of its two highest long-term rating categories;
(iii) certificates of deposit, time deposits, demand deposits and
bankers' acceptances of any bank or trust company incorporated under the
laws of the United States or any state thereof or the District of Columbia,
provided that the short-term commercial paper of such bank or trust company
(or, in the case of the principal depository institution in a depository
institution holding company, the long-term unsecured debt obligations of
the depository institution holding company) at the date of acquisition
thereof has been rated by
19
▇▇▇▇▇'▇ and S&P in their highest short-term rating category, and if rated
by Fitch, in its highest short-term rating category;
(iv) commercial paper (having original maturities of not more than 270
days) of any corporation incorporated under the laws of the United States
or any state thereof or the District of Columbia, having a rating, on the
date of acquisition thereof, of no less than P-1 by ▇▇▇▇▇'▇, A-1 by S&P and
F1 if rated by Fitch; and
(v) money market mutual funds registered under the Investment Company
Act of 1940, as amended, having a rating, at the time of such investment,
of no less than Aaa by ▇▇▇▇▇'▇, AAA by S&P and AAA if rated by Fitch;
provided, that no such instrument shall be a Permitted Investment if such
instrument evidences the right to receive either (a) interest only payments with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument, where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation. Each Permitted Investment may be purchased by the Agent's Bank or
through an Affiliate of the Agent's Bank.
"Permitted Liens" means (i) liens in favor of the Agent, for the
benefit of the Lender, granted pursuant to the Transaction Documents and (ii)
with respect to the Property securing any Contract, a first, second, third or
fourth priority lien (as appropriate) on such Property granted by the related
Obligor to a Person other than the Servicer prior to the date of the Contract
related to such Obligor.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Pledge" means the pledge of any Receivable pursuant to Article II.
"Pledged Assets" has the meaning assigned to that term in Section
2.15.
"Pledged Receivables" has the meaning assigned to that term in Section
2.15(a).
"Promotional Contract" means a Non-Mortgage Contract, in form and
substance satisfactory to the Agent, which has a first Scheduled Payment which
is due more than 30 days but less than 210 days from the date of the completion
of the related home improvement as set forth in the related Completion
Certificate; provided, however, that the definition of "Promotional Contracts"
shall not include Contracts whereby the first Scheduled Payment thereunder is
deferred for ninety (90) days from the date of the completion of the related
home improvement as set forth in the related Completion Certificate.
"Property" means the underlying real property related to a Contract.
20
"Purchase and Contribution Agreement" means that certain Purchase and
Contribution Agreement, dated as of the date hereof, between FCC, as seller, and
the Borrower, as purchaser, together with all instruments, documents and
agreements executed in connection therewith, as such Purchase and Contribution
Agreement may from time to time be amended, supplemented or otherwise modified
in accordance with the terms hereof.
"Purchase Date" has the meaning set forth in the Purchase and
Contribution Agreement.
"Purchased Rate Cap" has the meaning assigned thereto in the Sinking
Fund Account Agreement.
"Rating Agencies" means ▇▇▇▇▇'▇ and Fitch, if and so long as they have
rated and are continuing to rate commercial paper notes of the Lender, or such
other nationally recognized statistical rating organizations as may be
designated by the Agent.
"Receivable" means the rights to all payments from an Obligor under,
or related to, a Contract including, without limitation, any right to the
payment with respect to (i) Scheduled Payments, (ii) any prepayments or overdue
payments made with respect to such Scheduled Payments, (iii) any Guaranty
Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any
Recoveries.
"Receivable File" means an Individual Receivable File or a Master
Receivables File.
"Receivables Schedule" has the meaning assigned to that term in the
Custodial Agreement.
"Records" means all documents, books, records and other information
(including, without limitation, tapes, disks, punch cards and related property
and rights) maintained with respect to Receivables and the related Obligors
which the Borrower has itself generated, in which the Borrower has acquired an
interest pursuant to the Purchase and Contribution Agreement or in which the
Borrower has otherwise obtained an interest.
"Recoveries" means, for any Remittance Period during which, or any
Remittance Period after the date on which, any Receivable becomes a Defaulted
Receivable and with respect to such Defaulted Receivable, all payments that the
Servicer receives from or on behalf of the related Obligor (or any related
guarantor) during such Remittance Period in respect of such Defaulted
Receivable, including but not limited to Scheduled Payments, Overdue Payments,
Guaranty Amounts and Insurance Proceeds.
"Related Security" means with respect to any Receivable:
(i) any and all security interests or liens and property subject
thereto from time to time securing or purporting to secure payment of such
Receivable;
21
(ii) all guarantees, indemnities, warranties, insurance policies and
proceeds and premium refunds thereof and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable; and
(iii) all proceeds of the foregoing.
"Release Price" means, with respect to a Pledged Receivable to be
released hereunder, an amount equal to the Outstanding Balance of such Pledged
Receivable at the time of such release plus all interest accrued thereon
pursuant to the related Contract.
"Remittance Date" means the fifteenth day of each month, or, if such
date is not a Business Day, the next succeeding Business Day; provided, that the
final Remittance Date shall occur on the Collection Date.
"Remittance Period" means, (i) as to the initial Remittance Date, the
period beginning on, and including, the date of this Agreement and ending on,
and including, the last day of the calendar month in which such date shall occur
(or such other dates as the Agent and the Borrower may agree) and (ii) as to any
subsequent Remittance Date, the period beginning on, and including, the first
day of the most recently ended calendar month and ending on, and including, the
last day of the most recently ended calendar month; provided, that the final
Remittance Period shall begin on, and include, the first day of the then current
calendar month and shall end on the Collection Date.
"Replacement Receivable" has the meaning set forth in Section 2.07
hereof.
"Required States" shall mean (i) for the period commencing on the date
hereof and ending on the six month anniversary from the date hereof, California,
Delaware, the District of Columbia, Illinois, Indiana, Iowa, Kansas,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Mexico, North
Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Utah, Virginia,
Washington or West Virginia, (ii) for the period commencing on the day
immediately following the six month anniversary from the date hereof and ending
on the nine month anniversary from the date hereof, the states listed in clause
(i) of this definition and the following states: Colorado, Connecticut, Florida,
Georgia, Kentucky, Louisiana, Maryland, Nebraska, New Hampshire, New Jersey, New
York, Rhode Island, Tennessee and Texas, or (iii) for the period commencing on
the day immediately following the nine month anniversary from the date hereof
until the Collection Date, all states where, with respect to any Pledged
Receivable, the related Obligor and the related Underlying Collateral are
located.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. (or its successors in interest).
"Scheduled Payments" means, with respect to any Receivable, the
periodic payments payable under the terms of the related Contract.
"Securities Account Agreement" means that certain Securities Account
Control Agreement, dated the date of this Agreement, among the Borrower, the
Servicer, the Agent's Bank
22
and the Agent, as such agreement may from time to time be amended, supplemented
or otherwise modified in accordance with the terms thereof.
"Servicer" means at any time the Person then authorized, pursuant to
Section 6.01, to service, administer and collect Pledged Receivables.
"Servicer Advance" has the meaning assigned to such term in Section
6.21.
"Servicer Default" means the occurrence of any of the following
events:
(i) the failure of the Servicer to deliver any payments, collections
or proceeds which it is obligated to deliver under the terms hereof or of
any other Transaction Document at the times it is obligated to make such
deliveries under the terms hereof or of any other Transaction Document
(after giving effect to any applicable grace periods hereunder or under any
other Transaction Document);
(ii) the failure of the Servicer to satisfy any of its reporting,
certification, notification or documentation requirements under the terms
hereof or of any other Transaction Document or the failure of the Servicer
to observe or perform any term, covenant or agreement hereunder or under
any other Transaction Document (other than those described in clause (i)
above);
(iii) any representation, warranty or statement of the Servicer made
herein or in any other Transaction Document shall prove to be incorrect in
any material respect;
(iv) the occurrence of an Event of Default;
(v) the occurrence of an Early Amortization Event described in clauses
(iv), (v) or (vi) of the definition of Early Amortization Events;
(vi) the occurrence of any Bankruptcy Event in respect of the
Servicer;
(vii) one or more final, non-appealable judgments or decrees for the
payment of money in an aggregate amount in excess of $500,000 shall be
entered against the Servicer or any of its Subsidiaries and such judgments
or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or
(viii) the Servicer is ordered to pay any amount in excess of
$1,000,000, or is enjoined from taking any action, in connection with any
action in which the Servicer is named the defendant, if such action
contains allegations of fraud, intentional misrepresentation or wrongful
conduct on the part of the Servicer in connection with its servicing,
lending or organization practices or other wrongdoing that has a material
adverse effect on the Servicer's ability to perform its obligations under
the Transaction Documents.
23
"Servicing Charges" means the sum of (a) all late payment charges paid
by Obligors under Contracts after payment in full of any Scheduled Payments due
in a prior Remittance Period and Scheduled Payments for the related Remittance
Period and (b) any other incidental charges or fees received from an Obligor,
including, but not limited to, late fees, collection fees and bounced check
charges.
"Servicing Fee" means, for any Remittance Period, an amount, payable
out of Collections on the Pledged Receivables and amounts applied to the payment
of, or treated as payments on, the Pledged Receivables, equal to (i) the
Servicing Fee Rate multiplied by (ii) the aggregate Outstanding Balance of all
Pledged Receivables as of the first day of such Remittance Period.
"Servicing Fee Rate" means, with respect to the Pledged Receivables,
the per annum rate of 1.50%.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Pledged Receivables,
whose name appears on a list of servicing officers furnished to the Agent by the
Servicer, as such list may from time to time be amended.
"Sinking Fund Account" has the meaning assigned thereto in the Sinking
Fund Account Agreement.
"Sinking Fund Account Agreement" means that certain Sinking Fund
Account Agreement dated the date of this Agreement among the Borrower, the
Servicer, the Agent's Bank and the Agent, on behalf of the Lender, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Sinking Fund Account Securities Account Control Agreement" means that
certain Sinking Fund Account Securities Account Control Agreement, dated the
date of this Agreement, among the Borrower, the Servicer, the Agent's Bank and
the Agent, as such agreement may from time to time be amended, supplemented or
otherwise modified in accordance with the terms thereof.
"Sinking Fund Collateral" has the meaning assigned thereto in the
Sinking Fund Account Agreement.
"Standby Back-Up Servicer's Fee" means, for any Remittance Period, an
amount, payable out of Collections on the Pledged Receivables and amounts
applied to the payment of, or treated as payments on, the Pledged Receivables,
equal to $250.00 per month.
"Subordinate Lien Contract" means any Mortgage Contract secured by a
Mortgage evidencing other than a first lien on the related Property.
"Subsequent Borrowing" means a Borrowing which occurs on a Subsequent
Borrowing Date.
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"Subsequent Borrowing Date" means each Business Day occurring after
the initial Borrowing Date on which the Borrower determines to request an
additional Borrowing from the Lender.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests, is owned or controlled directly or indirectly by such Person, or one
or more of the Subsidiaries of such Person, or a combination thereof.
"Substituted Receivable" has the meaning set forth in Section 2.07
hereof.
"Take-Out Securitization" means a financing transaction undertaken by
the Borrower or an Affiliate of the Borrower or FCC, involving the direct or
indirect sale or other conveyance of Receivables, Related Security and the Other
Conveyed Property related thereto to a Person that shall privately or publicly
sell securities, notes or certificates backed by such Receivables, Related
Security and the Other Conveyed Property related thereto.
"Tangible Net Worth" means, with respect to any Person, the amount
calculated in accordance with GAAP as (i) the consolidated net worth of such
Person and its consolidated Subsidiaries, plus (ii) to the extent not otherwise
included in such consolidated net worth, unsecured subordinated Debt of such
Person and its consolidated Subsidiaries, the terms and conditions of which are
reasonably satisfactory to the Agent, minus (iii) the consolidated intangibles
of such Person and its consolidated Subsidiaries, including, without limitation,
goodwill, trademarks, tradenames, copyrights, patents, patent allocations,
licenses and rights in any of the foregoing and other items treated as
intangibles in accordance with GAAP.
"Transaction Documents" means this Agreement, the Purchase and
Contribution Agreement, the Lockbox Agreement, the Securities Account Agreement,
the Fee Letter, the Custodial Agreement, the Securities Account Agreement, the
Sinking Fund Account Agreement, Sinking Fund Account Securities Account Control
Agreement and each document and instrument related to any of the foregoing.
"Transition Costs" means any documented expenses and allocated cost of
personnel reasonably incurred by the Back-Up Servicer in connection with a
transfer of servicing from the Servicer to the Back-Up Servicer as the successor
Servicer in an amount not to exceed $25,000.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"Underlying Collateral" means, with respect to Mortgage Contracts, the
Mortgaged Property (including without limitation, all buildings, fixtures and
improvements thereon and all additions, alterations and replacements made at any
time with respect thereto) and all other property serving as collateral for the
obligations of the Obligor under the related Mortgage Contract and with respect
to Non-Mortgage Contracts, the property purchased pursuant to the related
Non-Mortgage Contract serving as collateral for the obligations of the Obligor
under the related Non-Mortgage Contract.
25
"United States" means the United States of America.
"Unmatured Event of Default" means any event that, if it continues
uncured, will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
"US Home" means US Home Systems, Inc., a Delaware corporation.
"Weighted Average APR" means, with respect to any Pledged Receivables
at any time, an amount equal to the weighted average (weighted solely based on
the Outstanding Balance of such Receivables at such time) of the Coupon Rates
set forth in the Contracts related to such Receivables.
"Weighted Average FICO" means, with respect to any Pledged Receivables
at any time, an amount equal to the weighted average (weighted solely based on
the Outstanding Balance of such Receivables at such time) of the FICO Scores of
the Obligors related to such Receivables.
"Weighted Average Remaining Term" means, with respect to any Pledged
Receivables and as of any date of determination, the weighted average (weighted
solely based on the Outstanding Balances of such Receivables) of the remaining
terms of the Contracts related to such Receivables as of such date of
determination.
"Whole Loan Sale" means a financing transaction undertaken by the
Borrower or an Affiliate of the Borrower or FCC, involving the direct or
indirect sale or other conveyance of Receivables and the Related Security and
Other Conveyed Property related thereto, to any Person.
"Yield" means, with respect to any Fixed Period, the product of:
YR x L x ED
---
360
where: YR = the Yield Rate for such Fixed Period;
L = the aggregate face amount of commercial paper issued by the
Lender to fund the Loans Outstanding allocated to such Fixed
Period for purposes of calculating that portion of yield
attributable to CP Margin or, in the case of Loans Outstanding
allocated to such Fixed Period which are not funded by the
issuance of commercial paper and for purposes of calculating
that portion of Yield not attributable to CP Margin, the
aggregate amount of Loans Outstanding allocated to such Fixed
Period; and
ED = the actual number of days elapsed during such Fixed Period;
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (ii) Yield shall not be
26
considered paid by any distribution if at any time such distribution is required
to be rescinded by the Lender to the Borrower or any other Person for any reason
including, without limitation, such distribution becoming void or otherwise
avoidable under any statutory provision or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code.
"Yield Rate" means, with respect to any Fixed Period for any Loan
allocated to such Fixed Period:
(i) to the extent the Lender will be funding the applicable Loan on
the first day of such Fixed Period through the issuance of commercial
paper, a rate equal to the CP Rate for such Fixed Period; and
(ii) to the extent the Lender will not be funding the applicable Loan
through the issuance of commercial paper, (x) a rate equal to the Non-CP
Rate for such Fixed Period or (y) such other rate as the Agent and the
Borrower shall agree to in writing; provided, that, it if the Lender will
not be funding the applicable Loan through the issuance of commercial paper
solely due to the occurrence of a CP Disruption Event, solely for purposes
of determining the Non-CP Rate, clause (i) of the definition of Adjusted
Eurodollar Rate shall read "the CP Margin and";
provided, however, that with respect to any Fixed Period (or portion thereof)
subsequent to (x) the occurrence of an Early Amortization Event (other than the
occurrence of an event described in clause (i) of the definition of Early
Amortization Event ) the Yield Rate for any Loan allocated to such Fixed Period
(or portion thereof) shall be the Adjusted Eurodollar Rate (or with respect to
the occurrence of an event described in clause (i) of the definition of Early
Amortization Event the Yield Rate for any Loan allocated to such Fixed Period
(or portion thereof) shall be determined in accordance with clauses (i) and (ii)
of this defintion) and (y) the occurrence of an Event of Default, the Yield Rate
for any Loan allocated to such Fixed Period (or portion thereof) shall be the
Default Funding Rate.
SECTION 1.02 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the state of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.03 Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
ARTICLE II.
THE RECEIVABLES FACILITY
SECTION 2.01 Borrowings. On the terms and conditions hereinafter set
forth, the Lender shall make Loans to the Borrower secured by Pledged Assets
from time to time during the period from the date hereof until the earlier of
the Early Amortization Commencement Date or
27
the Facility Maturity Date. Under no circumstances shall the Lender make any
Loan if (a) the principal amount of such Loan is less than $250,000, or (b) the
effect of such Borrowing would result in, either (i) an Early Amortization Event
or an event that but for notice or lapse of time or both would constitute an
Early Amortization Event would occur or (ii) the aggregate Facility Amount would
exceed the lesser of (A) the Borrowing Limit and (B) the Capital Limit.
SECTION 2.02 The Initial Borrowing and Subsequent Borrowings. (a)
Until the occurrence of the earlier of the Early Amortization Commencement Date
and the Facility Maturity Date, the Lender will make Loans on any Business Day
at the request of the Borrower, subject to and in accordance with the terms and
conditions of Sections 2.01 and 2.02 and subject to the provisions of Article
III hereof.
(b) (i) The initial Borrowing shall be made on at least four (4)
Business Days' irrevocable written notice from the Borrower to the Agent
and each Subsequent Borrowing shall be made on at least three (3) Business
Days' irrevocable written notice from the Borrower to the Agent (any such
written notice, a "Notice of Borrowing"), provided that such Notice of
Borrowing is received by the Agent no later than 1:00 P.M. (New York City
time) on the Business Day of receipt. Any Notice of Borrowing received
after 1:00 p.m. (New York City time) shall be deemed received prior to 1:00
P.M. (New York City time) on the following Business Day. Each such Notice
of Borrowing shall specify (A) the aggregate amount of such Borrowing, (B)
the date of such Borrowing, (C) the requested Fixed Period(s) for such
Borrowing and the allocations of Loans to each such requested Fixed Period
and (D) the Eligible Receivables to be Pledged in connection with such
Borrowing (and upon such Borrowing, such Receivables shall be Pledged
Receivables hereunder). The Agent shall notify the Borrower whether the
duration of the Fixed Period(s) described in such Notice of Borrowing is
acceptable or, if not acceptable, the Agent shall advise the Borrower of
such Fixed Period(s) as may be acceptable. On the date of each Borrowing,
the Lender shall, upon satisfaction of the applicable conditions set forth
in Article III, make available to the Borrower on the applicable Borrowing
Date, no later than 4:00 P.M. (New York City time), in same day funds, the
amount of such Borrowing (net of amounts payable to or for the benefit of
the Lender), by payment into the account which the Borrower has designated
in writing.
(ii) Each Notice of Borrowing delivered to the Agent pursuant to this
Section 2.02(b) shall be accompanied by a copy of a Notice of Pledge (and
the Receivables Schedule attached thereto), which was sent to the Custodian
pursuant to the terms of the Custodial Agreement in connection with the
Pledge of Eligible Receivables to be made in connection therewith.
(c) The Loans shall bear interest at the applicable Yield Rate.
(d) Subject to Section 2.20 and the other terms, conditions,
provisions and limitations set forth herein, the Borrower may borrow, repay or
prepay and reborrow Loans, on and after the date hereof and prior to the earlier
to occur of the Facility Maturity Date and the Early Amortization Commencement
Date.
28
(e) Determinations by the Lender of the existence of any CP Disruption
Event (any such determination to be communicated to the Borrower by written
notice from the Agent promptly after the Agent learns of such event), or of the
effect of any CP Disruption Event on its making or maintaining Loans at the CP
Rate, shall be conclusive absent manifest error.
(f) Determinations by the Lender of the existence of any Eurodollar
Disruption Event (any such determination to be communicated to the Borrower by
written notice from the Agent promptly after the Agent learns of such event), or
of the effect of any Eurodollar Disruption Event on its making or maintaining
Loans at the Adjusted Eurodollar Rate, shall be conclusive absent manifest
error.
SECTION 2.03 Facility Maturity Date. Any Loans outstanding on the
Facility Maturity Date shall mature on such date. On the Facility Maturity Date,
the outstanding principal of all outstanding Loans, if any, and all Yield and
all Fees accrued thereon and all other Obligations shall be immediately due and
payable (and the Borrower shall pay all such amounts immediately).
SECTION 2.04 Selection of Fixed Periods. (a) At all times until the
earlier to occur of the Early Amortization Commencement Date and the Facility
Maturity Date, the Borrower shall, subject to the Agent's and the Lender's
approval and the limitations described below, request Fixed Periods and
allocations of a portion of the outstanding Loans to each selected Fixed Period,
so that all such outstanding Loans are at all times allocated to one or more
Fixed Periods. Subject to Section 2.04(c), the Yield Rate to apply to all Loans
outstanding shall be the CP Rate. The requested initial Fixed Period applicable
to any new Loan arising as a result of a Borrowing shall be requested in the
Notice of Borrowing, which shall be delivered in connection with the applicable
Subsequent Borrowing. Subject to the next sentence of this Section 2.04, each CP
Rollover Fixed Period shall commence on the last day of the immediately
preceding Fixed Period, and the duration of such CP Rollover Fixed Period shall
be such as the Borrower shall request in a Commercial Paper Remittance Report
delivered by Servicer on behalf of Borrower and the Agent shall approve;
provided, that such Commercial Paper Remittance Report was received by the Agent
not later than 12:30 P.M. (New York City time) on a day at least one Business
Day prior to such last day, except that if the Agent shall not have received
such report before 12:30 P.M. on such day or the Agent and the Borrower shall
not have so mutually agreed before 2:00 P.M. (New York City time) on such day,
such CP Rollover Fixed Period shall be one day, and the applicable Yield Rate
shall be the CP Rate plus 1.00%; provided that, notwithstanding the foregoing,
upon the occurrence and during the continuance of any Event of Default, the
Lender may cease to issue commercial paper notes to fund and maintain Loans
hereunder, and the applicable Yield Rate for all Fixed Periods in effect at the
time of such occurrence shall convert to, and for all Fixed Periods that come
into effect during the continuance of any Event of Default shall be, the Default
Funding Rate. Any Fixed Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day. Any Fixed
Period which commences before the Early Amortization Commencement Date and would
otherwise end on a date occurring after the Early Amortization Commencement Date
shall end on the Early Amortization Commencement Date. On and after the Early
Amortization Commencement Date, the Agent shall have the right to allocate
outstanding Loans, if any, to Fixed Periods of such duration as shall be
selected by the Agent. The Lender shall, on the first day of each Fixed Period
with respect to Loans which accrue Yield at the CP Rate, notify the Agent of the
Yield Rate for such Loans.
29
(b) References herein to Loans which accrue Yield at the Non-CP Rate
being allocated to a Fixed Period shall mean all such Loans that are outstanding
during such Fixed Period or a portion thereof.
(c) So long as no Event of Default or Early Amortization Event shall
have occurred and be continuing, each of the Lender and the Agent shall make
reasonable efforts to allow Loans to accrue Yield at the CP Rate; provided that
neither the Lender nor the Agent shall have any obligation to allow Loans to
accrue Yield at the CP Rate upon the occurrence of a CP Disruption Event or upon
a determination by the Lender, or the Agent on its behalf, that allowing Loans
to accrue Yield at the CP Rate would materially impair its ability to issue
commercial paper notes generally or would otherwise be disadvantageous to its
business generally.
SECTION 2.05 Remittance Procedures. The Servicer, as agent for the
Agent and the Lender, shall, with the written consent of the Agent, instruct the
Agent's Bank, and the Agent may instruct the Agent's Bank, to apply funds on
deposit in the Collection Account as described in this Section 2.05. No funds
shall be transferred from the Collection Account except in accordance with this
Section 2.05. Notwithstanding any other provision of this Section 2.05, no funds
shall be transferred from the Collection Account without the written consent of
the Agent.
(a) Yield and Liquidation Fees. On each Business Day (including any
Remittance Date), the Servicer shall, with the written consent of the Agent,
and, if the Servicer fails to do so, the Agent may direct the Agent's Bank to,
set aside in the Collection Account for transfer at the further direction of the
Lender or the Agent or any other duly authorized agent of the Lender (whether on
such day or on a subsequent day) collected funds in an amount equal to accrued
and unpaid Yield through such day on the Loans not so previously set aside and
the amount of any accrued and unpaid Liquidation Fees owed to the Lender on such
day. On the last day of each Fixed Period, the Agent shall notify the Servicer
of the accrued and unpaid Yield for such Fixed Period and the Servicer shall
direct the Agent's Bank to pay collected funds set aside in respect of accrued
and unpaid Yield pursuant to this Section 2.05(a) to the Lender (or the designee
of the Lender) in respect of payment of such accrued and unpaid Yield for such
Fixed Period; provided, however, that (i) in the case of any Loan accruing Yield
at the CP Rate, the portion of such Yield attributable to the CP Margin, and
(ii) in the case of any Loan accruing Yield at the Non-CP Rate, all such accrued
and unpaid Yield, shall remain set aside in the Collection Account until the
next Remittance Date and, at which time, shall be disbursed pursuant to Section
2.05(c). On any Business Day on which an amount is set aside in respect of
Liquidation Fees pursuant to this Section 2.05(a), the Agent shall direct the
Agent's Bank to pay such funds to the Lender in payment of such Liquidation
Fees.
(b) Fixed Period Loan Principal Repayment. The Servicer shall, with
the written consent of the Agent, and if the Servicer fails to do so the Agent
may, on the last day of each Fixed Period that is not a Remittance Date, direct
the Agent's Bank to transfer collected funds held by the Agent's Bank in the
Collection Account on such date, to pay the Agent for the account of the Lender
in payment (or partial payment) of the outstanding principal amount of all Loans
allocated to such Fixed Period, in an amount equal to the least of (i) the
amount of such collected funds held in the Collection Account, (ii) the
aggregate outstanding principal amount of Loans allocated to such Fixed Period
or, (iii) if no Early Amortization Event shall have occurred and be continuing,
an
30
amount equal to the excess, if any, of the Facility Amount immediately prior to
such distribution over the lesser of (A) the Capital Limit and (B) the Borrowing
Limit (after giving effect to any Borrowing made on such date and any
distributions of amounts on deposit in the Collection Account made on such
date).
(c) Remittance Date Transfers From Collection Account. The Servicer
shall, with the written consent of the Agent, and if the Servicer fails to do so
the Agent may, on each Remittance Date, direct the Agent's Bank to transfer
collected funds held by the Agent's Bank in the Collection Account (in excess of
the aggregate amounts (except amounts described in clauses (B) and (C) of
sub-paragraph (i) below) set aside and/or paid on such Remittance Date pursuant
to Section 2.05(a)), in the following amounts and priority:
(i) to the Agent for the account of the Lender in an amount equal to
(and for the pro rata payment of) (A) the Fees which are due and payable on
such Remittance Date pursuant to the terms of the Fee Letter, (B) any Yield
on any Loan accruing Yield at the CP Rate, which is attributable to the CP
Margin and which is accrued and unpaid as of the last day of the preceding
Remittance Period and (C) any Yield on any Loan accruing Yield at the
Non-CP Rate which is accrued and unpaid as of the last day of the preceding
Remittance Period;
(ii) (A) at any time after the occurrence of a Servicer Default and
the appointment of the Back-Up Servicer as the Servicer hereunder, to the
Back-Up Servicer in an amount equal to the Active Back-Up Servicer's Fees
which are accrued and unpaid as of the last day of the preceding Remittance
Period plus any Transition Costs not previously reimbursed to the Back-Up
Servicer and (B) at any time prior to the occurrence of a Servicer Default
and the appointment of the Back-Up Servicer as the Servicer hereunder, to
the Back-Up Servicer in an amount equal to the Standby Back-Up Servicer's
Fees which are accrued and unpaid as of the last day of the preceding
month;
(iii) to the Custodian in an amount equal to the Custodian's Fees
which were accrued and unpaid as of the last day of the preceding
Remittance Period due to the Custodian under the terms of the Custodial
Agreement and unpaid as of the last day of the preceding month;
(iv) to the Agent's Bank in an amount equal to the Agent's Bank Fees
which were accrued and unpaid as of the last day of the preceding month;
(v) to the Agent for the account of the Lender in an amount equal to
the Borrowing Base Deficiency (if any) as of such Remittance Date;
(vi) to the Sinking Fund Account in the amount of any Additional
Deposit required pursuant to Section 2.1(d) of the Sinking Fund Account
Agreement;
(vii) without limiting the obligation of the Borrower under the
Sinking Fund Agreement, to the Agent for the account of the Agent in an
amount equal to (and for
31
repayment of) any funds expended by the Agent to purchase any Purchased
Rate Caps which the Borrower failed to purchase in breach of its obligation
to do so under the terms of the Sinking Fund Agreement;
(viii) without limiting the obligation of the Borrower under the
Sinking Fund Agreement and at the election of the Agent, to the applicable
counterparty (as set forth in the Sinking Fund Agreement) in an amount
equal to (and for payment of) any Purchased Rate Caps which the Borrower
failed to purchase in breach of its obligation to do so under the terms of
the Sinking Fund Agreement;
(ix) at any time prior to the occurrence of a Servicer Default and the
appointment of the Back-Up Servicer as the Servicer hereunder, after giving
effect to such payment, to the Servicer in an amount equal to the Servicing
Fee which is accrued and unpaid as the last day of the preceding month;
(x) to the Servicer in an amount equal to any Servicer Advances (and
amounts to be reimbursed as Servicer Advances pursuant to Sections 6.11 and
6.21 hereof) not previously reimbursed to the Servicer;
(xi) to the Agent, for its own account or for the account of the
Lender or any Affected Party, as applicable, in an amount equal to the
aggregate amount of all other Obligations then due from the Borrower to the
Lender, the Agent or any Affected Party hereunder (other than those
specified in clause (xii) below);
(xii) on or after the occurrence of the Early Amortization
Commencement Date, to the Agent for the account of the Lender for the
repayment of Loans Outstanding in an amount equal to the lesser of (A) all
remaining funds in the Collection Account and (B) an amount necessary to
repay the outstanding principal amount of all Loans in full; and
(xiii) to the Borrower, any remaining amounts.
Upon its receipt of funds pursuant to clauses (i), (v), (xi) and (xii), the
Agent shall apply such funds as directed by the Lender or as otherwise provided
in this Agreement.
(d) Borrower Deficiency Payments. Notwithstanding anything to the
contrary contained in this Section 2.05 or in any other provision in this
Agreement, if, on any day prior to the Collection Date, the Facility Amount
shall exceed the Borrowing Limit, then the Borrower shall remit to the Agent,
prior to any Borrowing and in any event no later than the close of business of
the Agent on such day (or if such day is not a Business Day, no later than the
close of business of the Agent on the next succeeding Business Day), a payment
(to be applied by the Agent to repay Loans selected by the Agent, in its sole
discretion), in such amount as may be necessary to reduce the Facility Amount to
an amount less than or equal to the Borrowing Limit. Notwithstanding anything to
the contrary contained in this Section 2.05 or in any other provision in this
Agreement, if, on any day prior to the Collection Date, the Facility Amount
shall exceed the Capital Limit, then the Borrower shall (X) remit to the Agent,
prior to any Borrowing and in any event no later than the close of business of
the Agent on such day (or if such day is not a Business Day, no later than the
32
close of business of the Agent on the next succeeding Business Day), a payment
(to be applied by the Agent to repay Loans selected by the Agent, in its sole
discretion), in such amount as may be necessary to reduce the Facility Amount to
an amount less than or equal to the Capital Limit or (Y) Pledge additional
Eligible Receivables hereunder, prior to any Borrowing and in any event no later
than the close of business of the Agent on such day (or if such day is not a
Business Day, no later than the close of business of the Agent on the next
succeeding Business Day) in such amount as may be necessary to increase the
Capital Limit to an amount equal to or greater than the Facility Amount.
(e) Instructions to the Agent's Bank. All instructions and directions
given to the Agent's Bank by the Servicer or the Agent pursuant to this Section
2.05 shall be in writing (including instructions and directions transmitted to
the Agent's Bank by telecopy), and such written instructions and directions
shall be delivered with a written certification that such instructions and
directions are in compliance with the provisions of this Section 2.05. The
Servicer shall immediately transmit to the Agent by telecopy a copy of all
instructions and directions given to the Agent's Bank by such party pursuant to
this Section 2.05. The Agent shall immediately transmit to the Servicer by
telecopy a copy of all instructions and directions given to the Agent's Bank by
the Agent, pursuant to this Section 2.05.
(f) Transfers from Collection Account Related to the Sinking Fund
Account. The Servicer shall, with the written consent of the Agent, and if the
Servicer fails to do so the Agent may, on each Borrowing Date and each other
Business Day, if no Remittance Date or Borrowing Date shall have occurred during
the four Business Days immediately preceding such Business Day, direct the
Agent's Bank to transfer collected funds held by the Agent's Bank in the
Collection Account in the following amounts and priority:
(i) to the Sinking Fund Account in the amount of any Additional
Deposit required pursuant to Section 2.1(d) of the Sinking Fund Account
Agreement;
(ii) without limiting the obligations of the Borrower under the
Sinking Fund Account Agreement, to the Agent for the account of the Agent
in an amount equal to (and for repayment of) any funds expended by the
Agent to purchase any Purchased Rate Caps which the Borrower failed to
purchase notwithstanding its obligation to do so under the terms of the
Sinking Fund Account Agreement; and
(iii) without limiting the obligations of the Borrower under the
Sinking Fund Account Agreement and at the election of the Agent, to the
applicable counterparty in an amount equal to (and for payment of) any
Purchased Rate Caps which the Borrower failed to purchase notwithstanding
its obligation to do so under the terms of the Sinking Fund Account
Agreement.
SECTION 2.06 [Intentionally Omitted.]
SECTION 2.07 Substitution of Pledged Receivables. (a) The Borrower
may, upon two (2) Business Day's prior written notice to the Agent, replace any
Receivable as a Pledged Receivable ("Substituted Receivable") so long as (i)
simultaneously therewith, the Borrower Pledges (in accordance with all of the
terms and provisions contained herein) a Receivable or
33
Receivables (each, a "Replacement Receivable"), which (A) at the time of such
Pledge are Eligible Receivables and (B) which have an aggregate Outstanding
Balance that equals or exceeds the Outstanding Balance of the Substituted
Receivable being removed, (ii) the Weighted Average Remaining Term of all
Pledged Receivables will not increase or decrease by more than three months
after giving effect to such replacement, and (iii) if the Substituted Receivable
is either a Defaulted Receivable or a Delinquent Receivable at the time of such
replacement, the aggregate amount of Outstanding Balances (calculated at the
time of replacement) of all Defaulted Receivables and Delinquent Receivables
which were replaced in accordance with this Section 2.07 or repurchased by FCC
during the period beginning 365 days prior to the date of such replacement and
ending on and including the date of such replacement (after giving effect to
such replacement) shall not exceed an amount equal to 15% of the Outstanding
Balances of all of the Contracts purchased by the Borrower (each such
Outstanding Balance determined as of the time of purchase) under the Purchase
and Contribution Agreement during such period. Upon the replacement of a
Substituted Receivable, such Substituted Receivable shall no longer be a Pledged
Receivable for purposes of this Agreement.
(b) Solely for purposes of calculating the Annualized Default Rate and
the Delinquency Rate, (i) Substituted Receivables shall be deemed to be Pledged
Receivables for three Remittance Periods following their replacement and (ii)
any Substituted Receivable which was a Delinquent Receivable at the time of
replacement shall be deemed to have become a Defaulted Receivable as of the date
of such replacement.
SECTION 2.08 [Intentionally Omitted.]
SECTION 2.09 [Intentionally Omitted.]
SECTION 2.10 [Intentionally Omitted.]
SECTION 2.11 Payments and Computations, Etc. (a) All amounts to be
paid or deposited by the Borrower or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 1:00 P.M. (New York
City time) on the day when due in lawful money of the United States in
immediately available funds to the Collection Account or such other account as
is designated by the Lender. The Borrower shall, to the extent permitted by law,
pay to the Agent interest on all amounts not paid or deposited when due
hereunder (whether owing by the Borrower or the Servicer) at the Default Funding
Rate payable on demand; provided, however, that such interest rate shall not at
any time exceed the maximum rate permitted by applicable law. Such interest
shall be for the account of, and distributed by the Agent to, the Lender. Any
Obligation hereunder shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or returned by the
Lender to the Borrower or any other Person for any reason. All computations of
interest and all computations of Yield, Liquidation Fee and other fees hereunder
(including, without limitation, the Fees and the Servicing Fee) shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such
34
extension of time shall in such case be included in the computation of payment
of Yield, interest or any fee payable hereunder, as the case may be; provided,
however, that with respect to the calculation of Yield, such extension of time
shall not be included in more than one Fixed Period.
(c) If any Borrowing requested by the Borrower and approved by the
Lender and the Agent pursuant to Section 2.02 or any selection of any Fixed
Period requested by the Borrower and approved by the Agent pursuant to Section
2.04 is not for any reason whatsoever, except as a result of the gross
negligence or wilful misconduct of the Lender, the Agent or an Affiliate
thereof, made or effectuated, as the case may be, on the date specified
therefor, the Borrower shall indemnify the Lender against any loss, cost or
expense incurred by the Lender related thereto (other than any such loss, cost
or expense solely due to the gross negligence or willful misconduct of the
Lender, the Agent or an Affiliate thereof), including, without limitation, any
loss (including cost of funds and reasonable out-of-pocket expenses), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund Loans or maintain Loans during such
Fixed Period. The Lender shall provide to the Borrower documentation setting
forth the amounts of any loss, cost or expense referred to in the previous
sentence, such documentation to be conclusive absent manifest error.
SECTION 2.12 Fees. (a) The Borrower shall pay the Lender (either
directly or through the Agent) certain fees (the "Fees") in the amounts and on
the dates set forth in a fee letter (the "Fee Letter"), dated the date hereof,
among the Borrower, FCC, the Agent, and the Lender.
(b) All of the Fees payable pursuant to this Section 2.12 shall be
payable solely from amounts available for application pursuant to, and subject
to the priority of payment set forth in, Section 2.05.
SECTION 2.13 Increased Costs; Capital Adequacy. (a) If, due to either
(i) the introduction of or any change (including, without limitation, any change
by way of imposition or increase of reserve requirements) in or in the
interpretation, administration or application of any law or regulation
(including, without limitation, any law or regulation resulting in any interest
payments paid to a Lender under this Agreement being subject to United States
withholding tax) or any guideline of any accounting board or authority (whether
or not a part of government) which is responsible for the establishment or
interpretation of national or international accounting principles, in each case
whether foreign or domestic or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to the Agent, the Lender,
or any Affiliate, successor or assign thereof (each of which shall be an
"Affected Party") of agreeing to make or making, funding or maintaining any Loan
(or any reduction of the amount of any payment (whether of principal, interest,
fee, compensation or otherwise) to any Affected Party hereunder), as the case
may be, the Borrower shall, from time to time, within ten (10) days after
written demand complying with Section 2.13(c) by the Agent, on behalf of such
Affected Party, pay to the Agent, on behalf of such Affected Party, additional
amounts sufficient to compensate such Affected Party for such increased costs or
reduced payments. For the avoidance of doubt, any interpretation of Accounting
Research Bulletin No. 51 by the Financial Accounting Standards Board shall
constitute a change in the interpretation, administration or application of a
guideline subject to this Section 2.13(a).
35
(b) If either (i) the introduction of or any change in or in the
interpretation, administration or application of any law, guideline, rule or
regulation, directive or request or (ii) the compliance by any Affected Party
with any law, guideline, rule, regulation, directive or request, from any
central bank, any governmental authority or agency or any accounting board or
authority (whether or not a part of government) which is responsible for the
establishment or interpretation of national or international accounting
principles, in each case whether foreign or domestic (whether or not having the
force of law), including, without limitation, compliance by an Affected Party
with any request or directive regarding capital adequacy, has or would have the
effect of reducing the rate of return on the capital of any Affected Party, as a
consequence of its obligations hereunder or any related document or arising in
connection herewith or therewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy), by an amount deemed by such Affected Party to be material,
then, from time to time, after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis of such demand), the Agent
shall be paid, on behalf of such Affected Party (from Collections pursuant to,
and subject to the priority of payment set forth in, Section 2.05), such
additional amounts as will compensate such Affected Party for such reduction.
For the avoidance of doubt, any interpretation of Accounting Research Bulletin
No. 51 by the Financial Accounting Standards Board shall constitute a change in
the interpretation, administration or application of a guideline subject to this
Section 2.13(b).
(c) In determining any amount provided for in this Section 2.13, the
Affected Party may use any reasonable averaging and attribution methods. The
Agent, on behalf of any Affected Party making a claim under this Section 2.13,
shall submit to the Borrower a certificate setting forth in reasonable detail
the basis for and the computations of such additional or increased costs, which
certificate shall be conclusive absent demonstrable error.
(d) If, as a result of any event or circumstance similar to those
described in Section 2.13(a) or 2.13(b), any Affected Party (that is an Issuer)
is required to compensate a bank or other financial institution (including,
without limitation, DZ BANK) providing liquidity support, credit enhancement or
other similar support to such Affected Party in connection with this Agreement,
then, upon demand by the Agent, on behalf of such Affected Party, the Borrower
shall pay to the Agent, on behalf of such Affected Party such additional amount
or amounts as may be necessary to reimburse such Affected Party for any amounts
paid by it.
SECTION 2.14 Collateral Assignment of Agreements. The Borrower hereby
collaterally assigns to the Agent, for the benefit of the Lender, all of the
Borrower's right and title to and interest in, to and under (but not any
obligations under) the Purchase and Contribution Agreement, the Contract, any
insurance policies and the Contractor Sale Agreement or the NY Purchase
Agreement (as applicable) related to each Pledged Receivable, all other
agreements, documents and instruments evidencing, securing or guarantying any
Pledged Receivable and all other agreements, documents and instruments related
to any of the foregoing (the "Assigned Documents"). Without limiting any
obligation of the Servicer hereunder, the Borrower confirms and agrees that the
Agent (or any designee thereof, including, without limitation, the Servicer),
following an Event of Default or an Early Amortization Event, shall have the
right to enforce the
36
Borrower's rights and remedies under each Assigned Document, but without any
obligation on the part of the Agent, the Lender or any of their respective
Affiliates to perform any of the obligations of the Borrower under any such
Assigned Document. In addition, each of the Servicer and the Borrower confirms
and agrees that the Servicer and the Borrower will, upon receipt of notice or
discovery thereof, promptly send to the Agent a notice of (i) any breach of any
representation, warranty, agreement or covenant under any such Assigned Document
or (ii) any event or occurrence that, upon notice, or upon the passage of time
or both, would constitute such a breach, in each case, immediately upon learning
thereof. The parties hereto agree that such assignment to the Agent shall
terminate upon the Collection Date.
SECTION 2.15 Grant of a Security Interest. To secure the prompt and
complete payment when due of the Obligations and the performance by the Borrower
of all of the covenants and obligations to be performed by it pursuant to this
Agreement, the Borrower hereby (i) collaterally assigns and pledges to the
Agent, on behalf of the Lender (and its successors and assigns) and (ii) grants
a security interest to the Agent, on behalf of the Lender (and its successors
and assigns), in all of the following property whether tangible or intangible
and whether now owned or existing or hereafter arising or acquired and
wheresoever located (collectively, the "Pledged Assets") and all of the
Borrower's right, title and interest in, to and under the Pledged Assets:
(a) all Receivables purchased by or contributed (or otherwise
transferred or pledged pursuant to the terms of the Purchase and
Contribution Agreement) to the Borrower under the Purchase and Contribution
Agreement from time to time (the "Pledged Receivables"), all Other Conveyed
Property related to the Pledged Receivables purchased by or contributed (or
otherwise transferred or pledged pursuant to the terms of the Purchase and
Contribution Agreement) to the Borrower under the Purchase and Contribution
Agreement, all Related Security related to the Pledged Receivables, all
interest of the Borrower in all Underlying Collateral related to the
Pledged Receivables (together with all security interests in and all of the
Borrower's interests in any insurance proceeds related to such Underlying
Collateral and all proceeds from the disposition of such Underlying
Collateral, whether by sale to the related Obligors or otherwise), all
Collections and other monies due and to become due under the Contracts
related to the Pledged Receivables received on or after the applicable
Cut-Off Date (as defined in the Purchase and Contribution Agreement) for
such Pledged Receivables;
(b) the Assigned Documents, including, in each case, without
limitation, all monies due and to become due to the Borrower under or in
connection therewith;
(c) the Collection Account, the Lockbox, the Lockbox Account, the
Sinking Fund Account (and the Sinking Fund Collateral) and all other bank
and similar accounts relating to Collections with respect to Pledged
Receivables (whether now existing or hereafter established) and all funds
held therein, and all investments in and all income from the investment of
funds in the Collection Account, the Lockbox Account, the Sinking Fund
Account (and the Sinking Fund Collateral) and such other accounts;
(d) the Records relating to any Pledged Receivables;
37
(e) all UCC financing statements filed by the Borrower against FCC
under or in connection with the Purchase and Contribution Agreement;
(f) all Liquidation Proceeds relating to any Pledged Receivables;
(g) all Purchased Rate Caps; and
(h) all proceeds of the foregoing property described in clauses (a)
through (g) above, including interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for or on account of the sale or
other disposition of any or all of the then existing Pledged Receivables.
SECTION 2.16 Evidence of Debt. The Lender shall maintain an account or
accounts evidencing the indebtedness of the Borrower to the Lender resulting
from each Loan owing to the Lender from time to time, including the amounts of
principal and interest payable and paid to the Lender from time to time
hereunder. The entries made in such account(s) of the Lender shall be conclusive
and binding for all purposes, absent manifest error.
SECTION 2.17 Survival of Representations and Warranties; Repayment
Obligations. It is understood and agreed that the representations and warranties
set forth in Section 4.01 and Section 4.02 are made and true and correct on the
date of this Agreement, at the time of the initial Borrowing, and on each
Subsequent Borrowing Date and Remittance Date thereafter. If, as a result of the
breach of any of the representations and warranties in Section 4.01 or Section
4.02 or for any other reason there exists or would exist a Borrowing Base
Deficiency, the Borrower shall promptly (and, in any case, by the end of
business on the Business Day on which such Borrowing Base Deficiency occurred)
(X) repay to the Agent, for the account of the Lender, the portion of the Loans
as is necessary to cure such Borrowing Base Deficiency or (Y) Pledge additional
Eligible Receivables as is necessary to cure such Borrowing Base Deficiency. The
Borrower shall promptly reimburse the Agent and the Lender for any Liquidation
Fees in respect of any such repayment.
SECTION 2.18 Release of Pledged Receivables. (a) Subject to Section
2.20 hereof, upon (i) the repayment of any Loan (including, without limitation,
the repayment of any Loan in connection with a Take-Out Securitization or a
Whole Loan Sale), the Borrower may obtain the release of any Pledged Receivable
and the related Other Conveyed Property or Related Security securing such Loan
(including, without limitation, the release of any security interest of the
Agent or the Borrower therein) by depositing into an account designated by the
Agent the Release Price therefor on the date of such repayment plus, in the case
of any such release related to a Whole Loan Sale, the Disposition Fee (as
defined in the Fee Letter) payable in connection with such Whole Loan Sale;
provided, that the foregoing release shall only be available if, after giving
effect thereto and the application of the proceeds thereof in accordance with
the terms hereof, there shall not be a Borrowing Base Deficiency or Early
Amortization Event, or an event that but for notice or lapse of time or both
would constitute an Early Amortization Event or (ii) the substitution of any
Pledged Receivable in accordance with Section 2.07, the Borrower may, with the
consent of the Agent
38
(which shall not be unreasonably withheld), obtain the release of such
substituted Pledged Receivables and the related Other Conveyed Property or
Related Security.
(b) The Borrower shall notify the Agent of any Release Price to be
paid pursuant to this Section 2.18 on the Business Day on which such Release
Price shall be paid specifying the Pledged Receivables to be released and the
Release Price.
(c) Promptly after the Collection Date has occurred, the Lender and
the Agent, in accordance with their respective interests, shall re-assign and
transfer to the Borrower, for no consideration but at the sole expense of the
Borrower, their respective remaining interests in the Pledged Assets, free and
clear of any Adverse Claim resulting solely from an act by the Lender or the
Agent but without any other representation or warranty, express or implied, by
or recourse against the Lender or the Agent.
(d) Upon the request of the Borrower, and at the Borrower's expense,
the Agent will execute and deliver such instruments and perform such acts as may
be reasonably necessary to carry out the purposes of this Section 2.18.
SECTION 2.19 Treatment of Amounts Paid by the Borrower. Amounts paid
by the Borrower pursuant to Section 2.18 on account of Pledged Receivables shall
be treated as payments on Pledged Receivables hereunder.
SECTION 2.20 Prepayment; Termination. Except as expressly permitted or
required herein, including, without limitation, any repayment necessary to cure
a Borrowing Base Deficiency and any repayment from Collections on Pledged
Receivables (including Collections related to the prepayment of such Pledged
Receivables), no Loan may be repaid prior to the Early Amortization Commencement
Date without the Agent's prior written consent, which consent may be withheld in
the Agent's sole discretion; provided, however, that upon ten (10) Business
Days' prior written notice to the Agent, the Borrower may prepay, in part or in
whole, the principal of the Loans advanced hereunder in connection with a
Take-Out Securitization or a Whole Loan Sale (so long as (i) no selection
procedures adverse to the interests of the Agent or the Lender have been
utilized by the Borrower in selecting such Receivables for such Take-Out
Securitization or Whole Loan Sale and (ii) after giving effect to such Whole
Loan Sale the aggregate amount of Receivables sold in connection with Whole Loan
Sales during any calendar year shall not exceed $10,000,000). Notwithstanding
any other provision hereof, the Borrower shall not terminate this Agreement or
any other Transaction Document or reduce the Borrowing Limit prior to the
Facility Maturity Date without the Agent's prior written consent, which consent
may be withheld in the Agent's sole discretion.
39
ARTICLE III.
CONDITIONS OF LOANS
SECTION 3.01 Conditions Precedent to Initial Borrowing. The initial
Borrowing hereunder is subject to the conditions precedent that:
(a) the Structuring Fee (as defined in the Fee Letter) shall have been
paid in full and all other acts and conditions (including, without
limitation, the obtaining of any necessary regulatory approvals and the
making of any required filings, recordings or registrations) required to be
done and performed and to have happened prior to the execution, delivery
and performance of this Agreement and all related documents and to
constitute the same legal, valid and binding obligations, enforceable in
accordance with their respective terms, shall have been done and performed
and shall have happened in due and strict compliance with all applicable
laws; and
(b) the Agent shall have received on or before the date of such
Borrowing the items listed in Schedule I hereto, each in form and substance
satisfactory to the Agent and the Lender.
SECTION 3.02 Conditions Precedent to All Borrowings. Each Borrowing
(including the initial Borrowing, except as explicitly set forth below) by the
Borrower from the Lender shall be subject to the further conditions precedent
that:
(a) With respect to any such Borrowing (other than the initial
Borrowing), on or prior to the date of such Borrowing, the Servicer shall
have delivered to the Agent, in form and substance satisfactory to the
Agent, the most recent Monthly Remittance Report required by the terms of
Section 6.12(b);
(b) On the Borrowing Date of such Borrowing, the following statements
shall be true and correct, and the Borrower by accepting any amount of such
Borrowing shall be deemed to have certified that:
(i) the representations and warranties contained in Section 4.01
are true and correct in all material respects, before and after giving
effect to the Borrowing to take place on such Borrowing Date and to
the application of proceeds therefrom, on and as of such day as though
made on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Early Amortization Event
hereunder or an event that but for notice or lapse of time or both
would constitute an Early Amortization Event;
(iii) (a) the principal amount of such Loan being advanced on
such Borrowing Date is not less than $250,000 and (b) on and as of
such Borrowing Date,
40
after giving effect to such Borrowing, the Facility Amount does not
exceed the lesser of (A) the Borrowing Limit and (B) the Capital
Limit;
(iv) (A) the Borrower has delivered to the Agent a copy of the
Notice of Borrowing and the related Notice of Pledge (together with
the attached Receivables Schedule) pursuant to Section 2.02, each
appropriately completed and executed by the Borrower, (B) the Borrower
has delivered or caused to have been delivered to the Custodian the
Notice of Pledge and each item listed in the definition of Receivable
File with respect to the Receivables being Pledged hereunder three (3)
or, in the case of the initial Borrowing Date hereunder, six (6)
Business Days prior to such Borrowing Date, (C) the Contract related
to each Receivable being Pledged hereunder on such Borrowing Date has
been duly assigned by FCC to the Borrower and duly assigned by the
Borrower to the Agent and (D) by 2:30 P.M. (New York City time) on the
Business Day immediately preceding such Borrowing Date, a Collateral
Receipt from the Custodian confirming that, inter alia, the Receivable
Files received on or before such Business Day conform with the
Receivables Schedule delivered to the Custodian and the Agent pursuant
to Section 2.02;
(v) all terms and conditions of the Purchase and Contribution
Agreement required to be satisfied in connection with the assignment
of each Receivable being Pledged hereunder on such Borrowing Date (and
the Other Conveyed Property and Related Security related thereto),
including, without limitation, the perfection of the Borrower's
interests therein, shall have been satisfied in full, and all filings
(including, without limitation, UCC filings) required to be made by
any Person and all actions required to be taken or performed by any
Person in any jurisdiction to give the Agent, for the benefit of the
Lender, a first priority perfected security interest in such
Receivables, Related Security and the Other Conveyed Property related
thereto and the proceeds thereof shall have been made, taken or
performed;
(vi) (A) the Servicer shall have taken or caused to be taken all
steps necessary under all applicable law in order to cause a valid,
subsisting and enforceable perfected, first, second, third or fourth
priority (as appropriate) security interest to exist in FCC's favor in
the Underlying Collateral securing each Receivable related to a
Mortgage Contract being Pledged hereunder on such Borrowing Date, (B)
FCC shall have assigned such perfected first, second, third or fourth
priority (as appropriate) security interest in the Underlying
Collateral related to a Mortgage Contract referred to in clause (A)
above (and all proceeds thereof) to the Borrower pursuant to the
Purchase and Contribution Agreement and (C) the Borrower shall have
assigned such perfected first, second, third or fourth priority (as
appropriate) security interest in the Underlying Collateral related to
a Mortgage Contract (and the proceeds thereof) referred to in clause
(A) above to the Agent, for the benefit of the Lender, pursuant to
Section 2.15 hereof; and
(vii) the Borrower shall have taken all steps necessary under all
applicable law in order to cause to exist in favor of the Agent, for
the benefit of the Lender, a
41
valid, subsisting and enforceable first priority perfected security
interest in each Receivable being Pledged hereunder on such Borrowing
Date and the Borrower's interest in the Underlying Collateral related
to each Receivable being Pledged hereunder on such Borrowing Date;
(c) No law or regulation shall prohibit, and no order, judgment or
decree of any federal, state or local court or governmental body, agency or
instrumentality shall prohibit or enjoin, the making of such Loans by the
Lender in accordance with the provisions hereof;
(d) The Lender shall have received and found to be satisfactory with
respect to Pledged Receivables being Pledged in connection with such
Borrowing, which have been previously pledged to any lender by FCC, the
Borrower or any Affiliate thereof under any other financing facility,
evidence of the release of any liens granted in connection with such
financing with respect to any such Pledged Receivables; and
(e) After giving effect to such Borrowing, the Sinking Fund Account
shall be funded in the amount required under the Sinking Fund Account
Agreement.
SECTION 3.03 Advances Do Not Constitute a Waiver. No advance of a Loan
hereunder shall constitute a waiver of any condition to the Lender's obligation
to make such an advance unless such waiver is in writing and executed by the
Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Borrower. The
Borrower hereby represents and warrants, as of the date hereof, on each
Borrowing Date, on each Remittance Date and on the first day of each CP Rollover
Fixed Period, as follows:
(a) Each Receivable designated as an Eligible Receivable on any
Borrowing Base Certificate, Monthly Remittance Report or Commercial Paper
Remittance Report is an Eligible Receivable as of such date. Each
Receivable included as an Eligible Receivable in any calculation of the
Capital Limit or the Eligible Receivables Balance is an Eligible Receivable
as of such date.
(b) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation
and has the power and all licenses and permits in the Required States
necessary to own its assets and to transact the business in which it is
engaged and is duly qualified and in good standing under the laws of each
jurisdiction where the transaction of such business or its ownership of the
Pledged Receivables requires such qualification.
42
(c) The Borrower has the power, authority and legal right to make,
deliver and perform this Agreement and each of the Transaction Documents to
which it is a party and all of the transactions contemplated hereby and
thereby, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and each of the Transaction
Documents to which it is a party, and to grant to the Agent, for the
benefit of the Lender, a first priority perfected security interest in the
Pledged Assets on the terms and conditions of this Agreement. This
Agreement and each of the Transaction Documents to which the Borrower is a
party constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with their respective terms, except as
the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws of general
application affecting creditors' rights generally and by general principles
of equity (whether such enforceability is considered in a proceeding in
equity or at law). No consent of any other party and no consent, license,
approval or authorization of, or registration or declaration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance by the Borrower of this Agreement or any
Transaction Document to which it is a party or the validity or
enforceability of this Agreement or any such Transaction Document or the
Pledged Receivables, other than such as have been met or obtained.
(d) The execution, delivery and performance of this Agreement and all
other agreements and instruments executed and delivered or to be executed
and delivered pursuant hereto or thereto in connection with the Pledge of
the Pledged Assets will not (i) create any Adverse Claim on the Pledged
Assets or (ii) violate any provision of any existing law or regulation or
any order or decree of any court, regulatory body or administrative agency
or the certificate of incorporation or by-laws of the Borrower or any
contract or other agreement to which or the Borrower is a party or by which
the Borrower or any property or assets of the Borrower may be bound.
(e) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is presently pending or, to the knowledge of
the Borrower, threatened against the Borrower or any properties of Borrower
or with respect to this Agreement, which could reasonably be expected to
have a material adverse effect on the business, assets or financial
condition of the Borrower or which would draw into question the validity of
this Agreement, any Transaction Document to which the Borrower is a party
or any of the other applicable documents forming part of the Pledged
Assets.
(f) In selecting the Receivables to be Pledged pursuant to this
Agreement, no selection procedures were employed which were intended to be
adverse to the interests of the Lender.
(g) The grant of the security interest in the Pledged Assets by the
Borrower to the Agent, for the benefit of the Lender pursuant to this
Agreement, is in the ordinary course of business for the Borrower and is
not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction. No such Pledged Assets have been
sold, transferred, assigned or pledged by the Borrower to any Person, other
than the Pledge of
43
such Assets to the Agent, for the benefit of the Lender, pursuant to the
terms of this Agreement except for Pledged Assets which have been
previously sold or pledged to a third party to the extent that (i) such
transaction has been disclosed to the Agent in writing and (ii) any
ownership interest, security interest and/or other interest of such third
party in such Pledged Assets have been terminated and released in a manner
acceptable to the Agent prior to its Pledge hereunder.
(h) The Borrower has no Debt or other indebtedness other than Debt
incurred under (or contemplated by) the terms of the Transaction Documents.
(i) The Borrower has been formed solely for the purpose of engaging in
transactions of the types contemplated by this Agreement.
(j) No injunction, writ, restraining order or other order of any
nature adversely affects the Borrower's performance of its obligations
under this Agreement or any Transaction Document to which the Borrower is a
party.
(k) The Borrower has filed (on a consolidated basis or otherwise) on a
timely basis all tax returns (including, without limitation, all foreign,
federal, state, local and other tax returns) required to be filed, is not
liable for taxes payable by any other Person and has paid or made adequate
provisions for the payment of all taxes, assessments and other governmental
charges due from the Borrower. No tax lien or similar adverse claim has
been filed, and no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Borrower, as applicable, in connection
with the execution and delivery of this Agreement and the other Transaction
Documents and the transactions contemplated hereby or thereby have been
paid or shall have been paid if and when due.
(l) The chief executive office of the Borrower (and the location of
the Borrower's records regarding the Pledged Receivables (other than those
delivered to the Custodian)) is located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇
▇▇▇), ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(m) The Borrower's legal name is as set forth in this Agreement; other
than as disclosed on Schedule II hereto (as such schedule may be updated
from time to by the Agent upon receipt of a notice delivered to the Agent
pursuant to Section 6.20), the Borrower has not changed its name since its
incorporation; the Borrower does not have tradenames, fictitious names,
assumed names or "doing business as" names other than as disclosed on
Schedule II hereto (as such schedule may be updated from time to by the
Agent upon receipt of a notice delivered to the Agent pursuant to Section
6.20).
(n) The Borrower is solvent and will not become insolvent after giving
effect to the transactions contemplated hereby; the Borrower is paying its
debts as they become due; and the Borrower, after giving effect to the
transactions contemplated hereby, will have adequate capital to conduct its
business.
44
(o) The Borrower has no Subsidiaries.
(p) The Borrower has given fair consideration and reasonably
equivalent value in exchange for the sale of the Pledged Receivables by FCC
under the Purchase and Contribution Agreement.
(q) No Monthly Remittance Report, Borrowing Base Certificate or
Commercial Paper Remittance Report (each if prepared by the Borrower or to
the extent that information contained therein is supplied by the Borrower),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Borrower to the Agent or the Lender in
connection with this Agreement is or will be inaccurate in any respect as
of the date it is or shall be dated or (except as otherwise disclosed in
writing to the Agent or the Lender, as the case may be, at such time) as of
the date so furnished, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
(r) No proceeds of any Loans will be used by the Borrower to acquire
any security in any transaction, which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.
(s) There are no agreements in effect adversely affecting the rights
of the Borrower to make, or cause to be made, the grant of the security
interest in the Pledged Assets contemplated by Section 2.15.
(t) The Borrower is not an "investment company" or an "affiliated
person" of or "promoter" or "principal underwriter" for an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended, nor is the Borrower otherwise subject to regulation thereunder.
(u) No Event of Default or Unmatured Event of Default has occurred and
is continuing.
(v) Each of the Pledged Receivables was underwritten and is being
serviced in conformance with the Servicer's standard underwriting, credit,
collection, operating and reporting procedures and systems (including,
without limitation, the Credit and Collection Policy).
(w) The Borrower is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments
arising in the ordinary course of business) to the Pension Benefit Guaranty
Corporation (or any successor thereto) under ERISA.
(x) There is not now, nor will there be at any time in the future, any
agreement or understanding between the Servicer and the Borrower (other
than as expressly set forth
45
herein), providing for the allocation or sharing of obligations to make
payments or otherwise in respect of any taxes, fees, assessments or other
governmental charges.
SECTION 4.02 Representations and Warranties of the Servicer. The
Servicer (so long as the Servicer is not the Back-Up Servicer as successor
Servicer) hereby represents and warrants, as of the date hereof, on each
Borrowing Date, on each Remittance Date and on the first day of each CP Rollover
Fixed Period, as follows:
(a) Each Receivable designated as an Eligible Receivable on any
Borrowing Base Certificate, Monthly Remittance Report or Commercial Paper
Remittance Report is an Eligible Receivable. Each Receivable included as an
Eligible Receivable in any calculation of the Capital Limit or the Eligible
Receivables Balance is an Eligible Receivable.
(b) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the power and all licenses necessary to own its
assets and to transact the business in which it is engaged (which includes
servicing Receivables on behalf of third parties and itself) and is duly
qualified and in good standing under the laws of each jurisdiction where
its servicing of the Pledged Receivables requires such qualification.
(c) The Servicer has the power, authority and legal right to make,
deliver and perform this Agreement and each of the Transaction Documents to
which it is a party and all of the transactions contemplated hereby and
thereby, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and each of the Transaction
Documents to which it is a party. This Agreement and each of the
Transaction Documents to which the Servicer is a party constitutes the
legal, valid and binding obligation of the Servicer, enforceable against it
in accordance with their respective terms, except as the enforceability
hereof and thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws of general application affecting
creditors' rights generally and by general principles of equity (whether
such enforceability is considered in a proceeding in equity or at law). No
consent of any other party and no consent, license, approval or
authorization of, or registration or declaration with, any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance by the Servicer of this Agreement or any
Transaction Document to which it is a party or the validity or
enforceability of this Agreement or any such Transaction Document, other
than such as have been met or obtained.
(d) The execution, delivery and performance of this Agreement by the
Servicer and all other agreements and instruments executed and delivered or
to be executed and delivered by the Servicer pursuant hereto or thereto in
connection with the Pledge of the Pledged Assets will not (i) create any
Adverse Claim on the Pledged Assets or (ii) violate any provision of any
existing law or regulation or any order or decree of any court, regulatory
body or administrative agency or the certificate of incorporation or
by-laws of the Servicer or any material contract or other agreement to
which the Servicer is a party or by which the Servicer or any of its
property or assets may be bound.
46
(e) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is presently pending or, to the knowledge of
the Servicer, threatened against the Servicer or any properties of the
Servicer or with respect to this Agreement, which could reasonably be
expected to have a material adverse effect on the business, assets or
financial condition of the Servicer or which would draw into question the
validity of this Agreement, any Transaction Document to which the Servicer
is a party.
(f) No injunction, writ, restraining order or other order of any
nature adversely affects the Servicer's performance of its obligations
under this Agreement or any Transaction Document to which the Servicer is a
party.
(g) The Servicer has filed (on a consolidated basis or otherwise) on a
timely basis all tax returns (including, without limitation, all foreign,
federal, state, local and other tax returns) required to be filed, is not
liable for taxes payable by any other Person and has paid or made adequate
provisions for the payment of all taxes, assessments and other governmental
charges due from the Servicer. No tax lien or similar adverse claim has
been filed, and no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Servicer in connection with the
execution and delivery of this Agreement and the other Transaction
Documents to which it is a party and the transactions contemplated hereby
or thereby have been paid or shall have been paid if and when due.
(h) The chief executive office of the Servicer (and the location of
the Servicer's records regarding the Pledged Receivables (other than those
delivered to the Custodian)) is located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇
▇▇▇), ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(i) The Servicer's legal name is as set forth in this Agreement; other
than as disclosed on Schedule II hereto (as such schedule may be updated
from time to by the Agent upon receipt of a notice delivered to the Agent
pursuant to Section 6.20), the Servicer has not changed its name since its
formation; the Servicer does not have tradenames, fictitious names, assumed
names or "doing business as" names other than as disclosed on Schedule II
hereto (as such schedule may be updated from time to by the Agent upon
receipt of a notice delivered to the Agent pursuant to Section 6.20).
(j) The Servicer is solvent and will not become insolvent after giving
effect to the transactions contemplated hereby; the Servicer is paying its
debts as they become due; and the Servicer, after giving effect to the
transactions contemplated hereby, will have adequate capital to conduct its
business.
(k) As of the date hereof and as of the date of delivery of any
Monthly Remittance Report, Borrowing Base Certificate or Commercial Paper
Remittance Report, no Monthly Remittance Report, Borrowing Base Certificate
or Commercial Paper Remittance Report (each if prepared by the Servicer or
to the extent that information contained therein is supplied by the
Servicer), information, exhibit, financial statement, document, book,
record
47
or report furnished or to be furnished by the Servicer to the Agent or the
Lender in connection with this Agreement is or will be inaccurate in any
material respect, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
(l) The Servicer is not an "investment company" or an "affiliated
person" of or "promoter" or "principal underwriter" for an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended, nor is the Servicer otherwise subject to regulation thereunder.
(m) No Servicer Default has occurred and is continuing.
(n) Each of the Pledged Receivables was underwritten and is being
serviced in conformance with Servicer's standard underwriting, credit,
collection, operating and reporting procedures and systems (including,
without limitation, the Credit and Collection Policy).
(o) Any Computer Tape or Listing made available by the Servicer to the
Agent was complete and accurate in all material respects as of the date on
which such Computer Tape or Listing was made available.
(p) The Servicer is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments
arising in the ordinary course of business) to the Pension Benefit Guaranty
Corporation (or any successor thereto) under ERISA.
(q) There is not now, nor will there be at any time in the future, any
agreement or understanding between the Servicer and the Borrower (other
than as expressly set forth herein), providing for the allocation or
sharing of obligations to make payments or otherwise in respect of any
taxes, fees, assessments or other governmental charges.
SECTION 4.03 Resale of Receivables Upon Breach of Covenant or
Representation and Warranty by Borrower. The Borrower or the Servicer, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the representations, warranties
and/or covenants contained in Section 4.01 or Section 4.02; provided, however,
that the failure to provide any such notice shall not diminish, in any manner
whatsoever, any obligation of the Borrower under this Section 4.03 to sell any
Pledged Receivable. Upon the discovery by or notice to the Borrower of any such
breach that also constitutes a FCC Purchase Event under and as defined in the
Purchase and Contribution Agreement, the Borrower shall (if, after giving effect
to any reduction in the Eligible Receivables Balance caused by such breach, a
Borrowing Base Deficiency exists) have an obligation to, and the Borrower shall,
resell to FCC pursuant to the Purchase and Contribution Agreement (and the Agent
may enforce such obligation of the Borrower to sell) any Pledged Receivable
adversely affected by any such breach. The Servicer shall notify the Agent
promptly, in writing, of any failure by the Borrower to so resell
48
any such Pledged Receivable. In connection with the resale of such Pledged
Receivable, the Borrower shall remit funds in an amount equal to the Release
Price for such Pledged Receivable to the Collection Account on the date of such
resale. It is understood and agreed that the obligation of the Borrower to
resell to FCC, and the obligation of FCC to repurchase, any Receivables which
are adversely effected by a FCC Purchase Event is not intended to, and shall
not, constitute a guaranty of the collectibility or payment of any Receivable
which is not collected, not paid or uncollectible on account of the insolvency,
bankruptcy, or financial inability to pay of the related Obligor.
ARTICLE V.
GENERAL COVENANTS OF THE BORROWER AND THE SERVICER
SECTION 5.01 General Covenants. (a) The Borrower will observe all
corporate procedures required by its certificate of incorporation, by-laws and
the laws of its jurisdiction of incorporation. The Borrower will maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation and will promptly obtain and thereafter maintain qualifications to
do business as a foreign corporation in any other state in which it does
business and in which it is required to so qualify under applicable law.
(b) The Borrower will at all times ensure that (i) its board of
directors acts independently and in its interests and in the interest of its
creditors, (ii) it shall at all times maintain at least two independent
directors, each of whom (A) is not currently and have not been during the five
(5) years preceding the date of this Agreement an officer, director or employee
of the Borrower or an Affiliate thereof and (B) is not a holder of any equity
interest of the Borrower or an Affiliate thereof, (iii) its assets are not
commingled with those of FCC or any other Affiliate of the Borrower, (iv) its
board of directors duly authorizes all of its corporate actions, (v) it
maintains separate and accurate records and books of account and such books and
records are kept separate from those of FCC and any other Affiliate of the
Borrower and (vi) it maintains minutes of the meetings and other proceedings of
the shareholders and the board of directors. Where necessary, the Borrower will
obtain proper authorization from its shareholders for corporate action.
(c) The Borrower will pay its operating expenses and liabilities from
its own assets.
(d) The Borrower will not have any of its indebtedness guaranteed by
FCC or any Affiliate of FCC. Furthermore, the Borrower will not hold itself out,
or permit itself to be held out, as having agreed to pay or as being liable for
the debts of FCC, and the Borrower will not engage in business transactions with
FCC, except on an arm's-length basis. The Borrower will not hold FCC out to
third parties as other than an entity with assets and liabilities distinct from
the Borrower. The Borrower will cause any of its financial statements
consolidated with those of FCC to state that the Borrower is a separate
corporate entity with its own separate creditors who, in any liquidation of the
Borrower, will be entitled to be satisfied out of the Borrower's assets prior to
any value in the Borrower becoming available to the Borrower's equity holders.
The Borrower will not act in any other matter that could foreseeably mislead
others with respect to the Borrower's separate identity.
49
(e) In its capacity as Servicer, FCC will, to the extent necessary,
maintain separate records on behalf of and for the benefit of the Agent and the
Lender, act in accordance with instructions and directions, delivered in
accordance with the terms hereof, from the Borrower, the Agent and/or the Lender
in connection with its servicing of the Pledged Receivables hereunder, and will
ensure that, at all times when it is dealing with or in connection with the
Pledged Receivables in its capacity as Servicer, it holds itself out as
Servicer, and not in any other capacity.
(f) The Servicer (if FCC or an Affiliate thereof) shall, to the extent
required by applicable law, disclose all material transactions associated with
this transaction in appropriate regulatory filings and public announcements. The
annual financial statements of FCC (including any consolidated financial
statements) shall disclose the effects of the transactions contemplated by the
Purchase and Contribution Agreement as a sale or capital contribution of
Receivables, Related Security and Other Conveyed Property to the Borrower, and
the annual financial statements of the Borrower shall disclose the effects of
the transactions contemplated by this Agreement as a loan to the extent required
by and in accordance with GAAP, it being understood that the Loans to the
Borrower under this Agreement will be treated as debt on the consolidated
financial statements of FCC.
(g) The Borrower shall take all other actions necessary to maintain
the accuracy of the factual assumptions set forth in the legal opinions of
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., as special counsel to FCC and the Borrower, issued in
connection with the Purchase and Contribution Agreement and relating to the
issues of substantive consolidation and true conveyance of the Pledged
Receivables.
(h) Except as otherwise provided herein or in any other Transaction
Document, neither the Borrower nor the Servicer shall sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Pledged Receivable, any Collections
related thereto or any other Pledged Assets related thereto, or upon or with
respect to any account to which any Collections of any Receivable are sent, or
assign any right to receive income in respect thereof. Except as otherwise
provided herein or in any other Transaction Document, the Borrower shall not
create or suffer to exist any Adverse Claim upon or with respect to any of the
Borrower's assets. Except as otherwise provided herein or in any other
Transaction Document, the Servicer shall not create, or permit any action to be
taken by any Person to create, any Adverse Claim upon or with respect to any of
the Borrower's assets.
(i) The Borrower will not merge or consolidate with, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions), all or substantially all of its assets (whether now
owned or hereafter acquired) other than, with respect to asset dispositions in
connection with a Take-Out Securitization or a Whole Loan Sale, or acquire all
or substantially all of the assets or capital stock or other ownership interest
of any Person without the prior written consent of the Agent.
(j) The Borrower will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated by the Purchase and
Contribution Agreement in any
50
manner other than a sale or capital contribution and absolute assignment of
Receivables, Related Security and Other Conveyed Property by FCC to the Borrower
constituting a "true conveyance" for bankruptcy purposes, it being understood
that the Loans to the Borrower under this Agreement will be treated as debt on
the consolidated financial statements of FCC.
(k) The Borrower will not amend, modify, waive or terminate any terms
or conditions of the Purchase and Contribution Agreement without the written
consent of the Agent, and shall perform its obligations thereunder.
(l) The Borrower will not amend, modify or otherwise make any change
to its certificate of incorporation or by-laws without the consent of the Agent.
(m) Neither the Borrower nor the Servicer will make or allow to be
made any amendment to the Credit and Collection Policy without the prior written
consent of the Agent.
(n) If the Borrower or the Servicer receive any Collections, the
Borrower or the Servicer, as applicable, will remit such Collections to the
Collection Account within one (1) Business Day of the Borrower's or the
Servicer's receipt thereof.
(o) The Servicer and the Borrower shall cause the Obligor of each
Pledged Receivable to remit all Collections owed by such Obligor to the Lockbox
or by wire transfer to the Lockbox Account (and shall ensure that only funds
constituting Collections shall be deposited into the Lockbox Account). The Agent
shall cause (i) the Lockbox Bank to deposit all Collections in the Lockbox into
the Lockbox Account on each Business Day and (ii) the Lockbox Bank to remit all
Collections on deposit in the Lockbox Account to the Collection Account on each
Business Day.
(p) The Borrower shall deliver or cause to be delivered to the
Custodian six (6) Business Days prior to the initial Borrowing Date hereunder
and three (3) Business Days prior to any subsequent Borrowing Date hereunder a
Notice of Pledge and each item listed in the definition of Receivable File with
respect to the Receivables being Pledged hereunder on such Borrowing Date.
(q) The Borrower shall deliver to the Agent on each Purchase Date a
copy of the Assignment delivered to it on such Purchase Date.
(r) Each of the Servicer (and, if the Servicer is not FCC or an
Affiliate thereof, upon the Servicer gaining knowledge thereof) and the Borrower
shall promptly notify the Agent of the occurrence of any Servicer Default, Event
of Default or Early Amortization Event.
(s) Each of the Servicer and the Borrower shall, at their expense,
cooperate and take all actions reasonably requested by the Agent in connection
with obtaining a shadow rating with respect to the financing facility provided
for hereunder, including, without limitation providing to each of the Rating
Agencies all information requested by such Rating Agencies.
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(t) The Borrower shall (i) on or prior to the nine month anniversary
from the date hereof, deliver to the Agent an Opinion of Counsel, addressed and
acceptable to the Agent, stating that the Borrower has obtained all licenses and
permits necessary with respect to the ownership of the Receivables, Related
Rights and Other Conveyed Property by the Borrower and the performance of its
obligations contemplated herein and (ii) after the nine month anniversary from
the date hereof and prior to the Conveyance under the Purchase and Contribution
Agreement of any Receivables originated in any states which were not addressed
in the aforementioned opinion, deliver to the Agent an Opinion of Counsel with
respect to such states, addressed and acceptable to the Agent, stating (x) that
the Borrower has obtained all licenses and permits necessary with respect to the
ownership of such Receivables, Related Rights and Other Conveyed Property by the
Borrower and the performance of its obligations of the transactions contemplated
herein, (y) that FCC has obtained all licenses and permits necessary with
respect to the ownership of such Receivables, Related Rights and Other Conveyed
Property by FCC and the performance of its obligations contemplated herein and
(z) stating that the Agent and the Lender are exempt from federal, state and
local licensing and permit requirements with respect to the transaction
contemplated herein.
(u) (i) The Borrower shall obtain, and shall take all actions
necessary to maintain, all licenses and permits necessary to own its assets and
to transact the business in which it is engaged in the Required States, and (ii)
the Servicer shall obtain, and shall take all actions necessary to maintain, all
licenses and permits necessary to own its assets and to transact the business in
which it is engaged, with the understanding that the Borrower and the Servicer
each hereby agree that, in the event that each of the licenses applied for by
either of them in the States of Connecticut, Georgia, Indiana, Missouri, New
Hampshire, New York and Tennessee (collectively, the "Application States") have
not been received within forty-five (45) days after the date hereof, any
Receivables relating to Obligors located in any of the Application States for
which such license has not been received, will not be Eligible Receivables
hereunder, until such time as such license has been received..
ARTICLE VI.
ADMINISTRATION AND SERVICING; CERTAIN COVENANTS
SECTION 6.01 Appointment and Designation of the Servicer. (a) The
Borrower, the Lender and the Agent hereby appoint the Person designated by the
Agent from time to time (with the approval of the Lender), pursuant to this
Section 6.01 (the "Servicer"), as their agent to service, administer and collect
the Pledged Receivables and otherwise to enforce their respective rights and
interests in and under the Pledged Receivables and the other Pledged Assets. The
Servicer shall collect such Pledged Receivables under the conditions referred to
above by means of the collection procedures as set forth in the Credit and
Collection Policy, to the extent consistent with the provisions of this Article
VI. Unless otherwise specified by the Borrower, the Servicer's authorization
under this Agreement shall terminate on the Collection Date. Until the Agent
gives notice to the Borrower of a designation of a new Servicer upon the
occurrence and during the continuance of any Servicer Default, or consents in
writing to the appointment by the Borrower of a
52
new Servicer, FCC is hereby designated as, and hereby agrees to perform the
duties and obligations of, the Servicer, pursuant to the terms hereof at all
times until the earlier of the Agent's designation of a new Servicer (upon the
occurrence and during the continuance of any Servicer Default), the delivery by
the Agent of its written consent to the appointment by the Borrower of a new
Servicer or the Collection Date. Upon the occurrence and during the continuance
of any Servicer Default, the Agent may at any time (with the approval of the
Lender) designate as Servicer any Person to succeed FCC or any successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the
terms hereof. Each of the Borrower and FCC hereby grants to any successor
Servicer an irrevocable power of attorney to take any and all steps in the
Borrower's, FCC's or the Servicer's name, as applicable, and on behalf of the
Borrower or FCC, necessary or desirable, in the determination of such successor
Servicer, to service, administer or collect any and all Pledged Receivables.
(b) The Servicer is hereby authorized to act for the Borrower and the
Agent and, in such capacity, shall manage, service, administer and make
collections on the Pledged Receivables and perform the other actions required by
the Servicer under this Agreement for the benefit of the Agent and the Lender.
The Servicer agrees that its servicing of the Pledged Receivables shall be
carried out in accordance with customary and usual procedures of institutions
which service home improvement contracts and receivables and, to the extent more
exacting, the degree of skill and attention that the Servicer exercises from
time to time, with respect to all comparable home improvement contracts and
receivables that it services for itself or others (or that it formerly serviced
for itself or others) in accordance with the Credit and Collection Policy (or if
the Back-Up Servicer has been appointed as Servicer, the Back-Up Servicer's
customary collection policies) and, to the extent more exacting, the
requirements of this Article VI. The Servicer's duties shall include, without
limitation, collecting and posting of all Collections, responding to inquiries
of Obligors on the Pledged Receivables, investigating delinquencies, sending
invoices, payment statements or payment books to Obligors, reporting any
required tax information to Obligors, policing the Underlying Collateral,
enforcing the terms of the Contracts (and any documents related thereto) related
to any Pledged Receivables, complying with the terms of the Lockbox Agreement,
accounting for Collections, furnishing monthly and annual statements to the
Agent with respect to distributions and performing the other duties specified
herein.
(c) To the extent consistent with the standards, policies and
procedures otherwise required hereby, the Servicer 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. The Servicer is authorized to release liens on Underlying Collateral
in order to collect insurance proceeds with respect thereto and to liquidate
such Underlying Collateral in accordance with its customary standards, policies
and procedures; provided, however, that, notwithstanding the foregoing, the
Servicer shall not, (i) except pursuant to an order from a court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under any
Pledged Receivable or (ii) waive the right to collect the unpaid balance of any
Pledged Receivable from such Obligor, except that, subject to Section 6.02(a),
the Servicer may forego collection efforts if the amount which the Servicer, in
its reasonable judgment, expects to realize in connection with such collection
efforts is determined by the Servicer, in its reasonable judgment, to be less
than the reasonably expected costs of pursuing such collection efforts and if
the Servicer would forego such
53
collection efforts in accordance with its customary procedures. The Servicer is
hereby authorized to commence, in its own name (in its capacity as Servicer), if
possible, or in the name of the Borrower, the Agent or the Lender (provided that
if the Servicer is acting in the name of the Borrower, the Agent or the Lender,
the Servicer shall have obtained the Borrower's, the Agent's or the Lender's
consent, as the case may be, which consent shall not be unreasonably withheld),
a legal proceeding to enforce any Pledged Receivable (or any terms or provisions
of the related Contract) or to commence or participate in any other legal
proceeding (including, without limitation, a bankruptcy proceeding) relating to
or involving a Pledged Receivable or any related Contract, Obligor or Underlying
Collateral. If the Servicer commences or participates in such a legal proceeding
in its own name, the Borrower, the Agent or the Lender, as the case may be,
shall thereupon be deemed to have automatically assigned such Pledged Receivable
to the Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Borrower, the Agent or the Lender, as the case may be, to execute and
deliver in the Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any
such proceeding. The Borrower, the Agent or the Lender, as the case may be,
shall furnish the Servicer with any powers of attorney and other documents which
the Servicer may reasonably request in writing and which the Servicer deems
necessary or appropriate and take any other steps which the Servicer may deem
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement. If, however, in any suit or legal
proceeding it is held that the Servicer may not prosecute such suit or legal
proceeding on the grounds that it is not an actual party in interest or a holder
entitled to enforce such suit or legal proceeding, the Borrower shall take such
steps as the Servicer deems necessary to prosecute such suit or legal
proceeding, including bringing suit in its name.
SECTION 6.02 Collection of Receivable Payments; Modification and
Amendment of Receivables. (a) Consistent with and subject to the standards,
policies and procedures required by this Agreement, the Servicer shall collect
all payments called for under the terms and provisions of the Contracts related
to the Pledged Receivables (and the terms and provisions of any documents
related thereto) as and when the same shall become due and shall follow such
collection procedures with respect to the Pledged Receivables and the related
Contracts and insurance policies as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Borrower and the Lender with
respect thereto.
(b) The Servicer may not grant payment extensions or deferments on any
such Contract or permit any other modifications or amendments to any such
Contract (except to the extent that the effect of such payment extensions or
deferments or modifications or amendments with respect to any such Contract does
not have an adverse effect on the value, collectibility or credit risk
associated with any such Pledged Receivable related to such Contract); provided,
that if an Obligor payment falls due on any day which is not a Business Day, the
Servicer may grant a payment extension to the next Business Day.
(c) The Servicer shall remit all Collections received directly by the
Servicer to the Collection Account, without deposit into any intervening account
as soon as practicable, but in no event later than the end of the next business
on the Business Day of receipt thereof.
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SECTION 6.03 Realization Upon Receivables. Consistent with the
standards, policies and procedures required by this Agreement, the Servicer
shall, in accordance with the Servicer's customary policies and procedures and
the Credit and Collection Policy, use its best efforts to collect on, foreclose
upon (or otherwise comparably convert the ownership of) or liquidate any
Underlying Collateral securing a Pledged Receivable within 10 days of an uncured
failure of the related Obligor to make any payment which it is obligated to make
under the related Contract or an earlier date that would be customary under the
circumstances involved and, in any case, in a manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Borrower and
the Lender with respect thereto; provided, however, that the Servicer need not
foreclose upon (or otherwise comparably convert the ownership of) and liquidate
the Underlying Collateral securing such a Pledged Receivable if, in the
reasonable opinion of the Servicer, (a) such action would not be in the best
interests of the Borrower and the Lender with respect thereto, or (b) the value
of such Underlying Collateral does not exceed by more than an insignificant
amount the cost to foreclose upon (or otherwise comparably convert the ownership
of) and liquidate such Underlying Collateral. The Servicer is further authorized
to follow such customary practices and procedures as it shall deem necessary or
advisable, consistent with the standard of care required by Section 6.01, which
practices and procedures may include reasonable efforts to realize upon any
guaranties, selling the related Underlying Collateral at public or private sale,
the submission of claims under an Insurance Policy and other actions by the
Servicer in order to realize upon such Pledged Receivable. The foregoing is
subject to the provision that, in any case in which the Underlying Collateral
shall have suffered damage, the Servicer shall not expend funds in connection
with any repair or towards the repossession of such Underlying Collateral,
unless it shall determine in its discretion that such repair and/or repossession
shall increase the proceeds of liquidation of the related Pledged Receivable by
an amount greater than the amount of such expenses. All Liquidation Proceeds
shall be remitted directly by the Servicer to the Collection Account without
deposit into any intervening account as soon as practicable, but in no event
later than one (1) Business Day after receipt thereof. The Servicer shall pay on
behalf of the Borrower any taxes assessed on repossessed Underlying Collateral,
and the Servicer shall be entitled to reimbursement of any such tax as a
Servicer Advance.
SECTION 6.04 [Intentionally Omitted.]
SECTION 6.05 Maintenance of Security Interests in Underlying
Collateral. (a) The Servicer and the Borrower shall take all steps necessary,
under all applicable law, in order to (i) cause a valid, subsisting and
enforceable first priority perfected security interest to exist in favor of the
Agent (for the benefit of the Lender) in the Borrower's interests in the
Underlying Collateral, all Other Conveyed Property and all Related Security
related to each Receivable (and the proceeds thereof) being Pledged hereunder,
to secure a Loan on the Borrowing Date thereof including the filing of a UCC
financing statement in the applicable jurisdiction adequately describing the
Underlying Collateral, Other Conveyed Property and all Related Security and
naming the Borrower as debtor and the Agent as the secured party, (ii) ensure
that such security interest is and shall be prior to all other liens upon and
security interests in the Borrower's interests in such Underlying Collateral,
Other Conveyed Property and Related Security (and the proceeds thereof) that now
exist, or may hereafter arise or be created other than Permitted Liens, and
(iii) ensure that
55
immediately prior to the Pledge of such Receivable by the Borrower to the Agent
(for the benefit of the Lender), such Underlying Collateral, Other Conveyed
Property and Related Security is free and clear of all Adverse Claims other than
Permitted Liens; and
(b) The Servicer shall take all steps, as are necessary (subject to
Section 6.05(a)), to maintain perfection of the security interest in the
Borrower's interests in the Underlying Collateral, Other Conveyed Property and
Related Security related to each Pledged Receivable (and the proceeds thereof)
in favor of the Agent, for the benefit of the Lender, including but not limited
to, obtaining the execution by the Borrower and the recording, registering,
filing, rerecording, refiling, and reregistering of all security agreements,
financing statements and continuation statements as are necessary to maintain
and/or perfect such security interests granted by the Borrower and the
recordation of the Agent's lien on such Underlying Collateral. Without limiting
the generality of the foregoing, the Borrower and the Agent each hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary (subject to Section 6.05(a)) to re-perfect the security interest in
the Borrower's interests in any Underlying Collateral (and the Borrower's
interests therein), Other Conveyed Property and Related Security related to each
Pledged Receivable (and the proceeds thereof) in favor of the Agent, for the
benefit of the Lender, as may be necessary, due to the relocation of such
Underlying Collateral or for any other reason.
(c) [Intentionally Omitted.]
SECTION 6.06 Pledged Receivable Receipts. The Servicer shall make a
deposit into the Collection Account in an amount equal to the Collections
received, or made by, or on behalf of it, within one Business Day of such
Collections being received, or made by, or on behalf of it.
SECTION 6.07 [Intentionally Omitted.]
SECTION 6.08 Unidentified Payments; Lender's Right of Presumption. The
Borrower agrees and consents that the Servicer and/or the Agent may apply any
payment it receives (or any such payment the Servicer deposits into the
Collection Account) from an Obligor to any Loan secured by a Pledged Receivable
if the Servicer and/or the Agent is unable in good faith to determine whether
such payment from an Obligor relates to such Pledged Receivable.
SECTION 6.09 No Rights of Withdrawal. Until the Collection Date, the
Borrower shall have no rights of direction (except with respect to Permitted
Investments as set forth herein) or withdrawal with respect to amounts held in
the Collection Account or the Lockbox Account, except with respect to funds not
related to any Pledged Assets, which were incorrectly deposited into any such
account.
SECTION 6.10 Permitted Investments. The Borrower shall, pursuant to
written instruction, direct the Agent's Bank (and if the Borrower fails to do
so, the Agent may, pursuant to written instruction, direct the Agent's Bank) to
invest, or cause the investment of, funds on deposit in the Collection Account
in Permitted Investments, from the date of this Agreement until the Collection
Date. Absent any such written instruction, the Agent's Bank shall invest, or
56
cause the investment of, such funds in Permitted Investments described in clause
(v) of the definition thereof. A Permitted Investment acquired with funds
deposited in the Collection Account shall mature not later than the Business Day
immediately preceding any Remittance Date, and shall not be sold or disposed of
prior to its maturity. All such Permitted Investments shall be registered in the
name of the Securities Intermediary (as defined in the Securities Account
Agreement) or its nominee for the benefit of the Lender, and otherwise comply
with assumptions of the legal opinion of counsel for the Agent's Bank dated the
date hereof, delivered in connection with this Agreement. All income and gain
realized from any such investment, as well as any interest earned on deposits in
the Collection Account, shall be distributed in accordance with the provisions
of Article II hereof. The Borrower shall deposit in the Collection Account, as
the case may be (with respect to investments made hereunder of funds held
therein), an amount equal to the amount of any actual loss incurred, in respect
of any such investment, immediately upon realization of such loss. None of the
Agent's Bank or the Agent shall be liable for the amount of any loss incurred,
in respect of any investment, or lack of investment, of funds held in the
Collection Account.
SECTION 6.11 Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to be paid the Servicing
Fee from the Collection Account as provided in Section 2.05(c). The Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder and shall not be entitled to reimbursement
therefor, except with respect to reasonable expenses of the Servicer incurred in
connection with the repossession and disposition of any Underlying Collateral
(which the Servicer may retain from the proceeds of the disposition of such
Underlying Collateral) and any Servicer Advances made by the Servicer pursuant
hereto. The Servicing Fee may not be transferred in whole, or in part, except in
connection with the transfer of all the Servicer's responsibilities and
obligations under this Agreement.
SECTION 6.12 Reports to the Agent; Account Statements; Servicing
Information. (a) The Borrower will deliver to the Agent, (i) on the Early
Amortization Commencement Date, a report identifying the Pledged Receivables
(and any information with respect thereto requested by the Agent) on the day
immediately preceding the Early Amortization Commencement Date, and (ii) upon
the Agent's reasonable request and upon reasonable notice, on any other Business
Day, a report identifying the Pledged Receivables (and any information with
respect thereto, reasonably requested by the Agent) as of such day.
(b) At least five (5) Business Days prior to each Remittance Date, the
Servicer shall prepare and deliver, or have delivered to the Agent for the
Lender, (i) a Monthly Remittance Report and any other information reasonably
requested by the Agent, relating to all Pledged Receivables (including, if
requested, a Computer Tape or Listing), all information in the Monthly
Remittance Report and all other such information to be accurate as of the last
day of the immediately preceding Remittance Period, and (ii) in an electronic
format mutually acceptable to the Servicer and the Agent, all information
reasonably requested by the Agent relating to all Pledged Receivables. If any
Monthly Remittance Report indicates the existence of a Borrowing Base
Deficiency, the Borrower shall, on the date of delivery of such Monthly
Remittance Report, prepay to the Agent, for the account of the Lender, a portion
of the Loans or Pledge additional Eligible
57
Receivables, in either case, as is necessary to cure such Borrowing Base
Deficiency (or otherwise cure such Borrowing Base Deficiency).
(c) By no later than 1:00 P.M. (New York City time) on the Business
Day immediately preceding a Borrowing, the Borrower shall also prepare and
deliver to the Agent for the Lender a Borrowing Base Certificate signed by the
chief financial officer of the Borrower containing information accurate as of
the date of delivery of such Borrowing Base Certificate. If any Borrowing Base
Certificate indicates the existence of a Borrowing Base Deficiency, the Borrower
shall on the date of delivery of such Borrowing Base Certificate prepay to the
Agent, for the account of the Lender, a portion of the Loans or Pledge
additional Eligible Receivables, in either case, as is necessary to cure such
Borrowing Base Deficiency (or otherwise cure such Borrowing Base Deficiency).
(d) On the Business Day immediately preceding the last day of each
Fixed Period, the Servicer shall prepare and deliver, or have delivered to the
Agent for the Lender, a Commercial Paper Remittance Report containing
information accurate as of the date of delivery of such Commercial Paper
Remittance Report.
(e) At least five (5) Business Days prior to each Remittance Date
(each such day, a "Back-Up Servicer Delivery Date"), the Servicer shall prepare
and deliver, or have delivered, to the Back-Up Servicer (i) a Monthly Remittance
Report in respect of the immediately-preceding Remittance Period and (ii) a
computer tape or a diskette or any other electronic transmission in a format
acceptable to the Back-Up Servicer containing the information with respect to
the Pledged Receivables during such Remittance Period which was necessary for
preparation of such Monthly Remittance Report or is reasonably requested by the
Back-Up Servicer.
(f) The Borrower shall deliver to the Agent all reports it receives
pursuant to the Purchase and Contribution Agreement within one Business Day of
the receipt thereof.
SECTION 6.13 Statements as to Compliance; Financial Statements. (a)
The Servicer shall deliver to the Agent, the Back-Up Servicer, the Borrower and
the Lender on or before January 15 of each year, beginning with 2004, an
Officers' Certificate stating, as to each signatory thereof, that (x) a review
of the activities of the Servicer during the preceding calendar year (or the
portion of the preceding calendar year commencing on the date of this Agreement
and ending December 31, 2002 in the case of the first such review) and of its
performance under this Agreement has been made under such officer's supervision,
and (y) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such calendar year (or portion thereof, as the case may be) or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof and the action
being taken to cure such default.
(b) The Servicer (if FCC or an Affiliate thereof) shall, at its
expense, cause a firm of nationally recognized independent certified public
accountants acceptable to the Agent (the "Independent Accountants"), who may
also render other services to the Servicer, the Back-Up Servicer or to the
Borrower, to deliver to the Borrower and the Agent, on or before April 30 of
each
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year, beginning 2004, with respect to the twelve (12) months ended the
immediately preceding December 31, a statement (the "Accountants' Report")
addressed to the Board of Directors of the Servicer and to the Agent, to the
effect that such firm has examined such Borrowing Base Certificates, Monthly
Remittance Reports and Commercial Paper Remittance Reports prepared by the
Servicer during the twelve (12) months ended the immediately preceding December
31 as it deemed necessary in order to issue the Accountants' Report and issued
its report thereon, and that such examination was made in accordance with
generally accepted auditing standards and, accordingly, included such tests of
the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances. The Accountants' Report shall further
state that (i) a review in accordance with procedures agreed upon between the
Agent and the Borrower was made; and (ii) except as disclosed in the
Accountant's Report, no exceptions or errors in the Borrowing Base Certificates,
Monthly Remittance Reports and Commercial Paper Remittance Reports examined were
found except for (A) such exceptions as the Independent Accountants believe to
be immaterial and (B) such other exceptions as shall be set forth in the
Accountants' Report. The Accountants' Report shall also indicate that the firm
is independent of the Borrower and the Servicer within the meaning of the Code
of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) As soon as available and no later than forty-five (45) days after
the end of each fiscal quarter in each fiscal year of the Borrower, the Borrower
shall deliver to the Lender and the Agent two copies of:
(i) a balance sheet of the Borrower as of the end of such fiscal
quarter, which balance sheet shall be prepared and presented in accordance
with, and provide all necessary disclosure required by, GAAP and shall be
accompanied by a certificate signed by the financial vice president,
treasurer, chief financial officer or controller of the Borrower stating
that such balance sheet presents fairly the financial condition of the
Borrower and has been prepared in accordance with GAAP consistently
applied; and
(ii) statements of income, stockholders' equity and cash flow of the
Borrower for such fiscal quarter, which such statements shall be prepared
and presented in accordance with, and provide all necessary disclosure
required by, GAAP and shall be accompanied by a certificate signed by the
financial vice president, treasurer, chief financial officer or controller
of the Borrower stating that such financial statements present fairly the
financial condition and results of operations of the Borrower and have been
prepared in accordance with GAAP consistently applied.
(d) As soon as available and no later than forty-five (45) days after
the end of each fiscal quarter in each fiscal year of FCC, the Borrower shall
deliver to the Lender and the Agent two copies of:
(i) a consolidated and consolidating balance sheet of FCC and its
consolidated Subsidiaries (including the Borrower) as of the end of such
fiscal quarter, which such balance sheet shall be prepared and presented in
accordance with, and provide all necessary disclosure required by GAAP and
shall be accompanied by a certificate signed by the
59
financial vice president, treasurer, chief financial officer or
controller of FCC stating that such balance sheet presents fairly the
financial condition of the companies being reported upon and has been
prepared in accordance with GAAP consistently applied; and
(ii) consolidated statements of income, stockholders' equity and cash
flow of FCC and its consolidated Subsidiaries (including the Borrower) for
such fiscal quarter, which such statements shall be prepared and presented
in accordance with, and provide all necessary disclosure required by, GAAP
and shall be accompanied by a certificate signed by the financial vice
president, treasurer, chief financial officer or controller of FCC stating
that such financial statements present fairly the financial condition and
results of operations of the companies being reported upon and have been
prepared in accordance with GAAP consistently applied.
(e) As soon as available and no later than forty-five (45) days after
the end of each fiscal quarter in each fiscal year of US Home, the Borrower
shall deliver to the Lender and the Agent two copies of:
(i) a consolidated and consolidating balance sheet of US Home and its
consolidated Subsidiaries (including the Borrower and FCC) as of the end of
such fiscal quarter, setting forth in comparative form the corresponding
figures for the most recent year-end for which an audited balance sheet has
been prepared, which such balance sheet shall be prepared and presented in
accordance with, and provide all necessary disclosure required by GAAP and
shall be accompanied by a certificate signed by the financial vice
president, treasurer, chief financial officer or controller of US Home
stating that such balance sheet presents fairly the financial condition of
the companies being reported upon and has been prepared in accordance with
GAAP consistently applied; and
(ii) consolidated statements of income, stockholders' equity and cash
flow of US Home and its consolidated Subsidiaries (including the Borrower
and FCC) for such fiscal quarter, setting forth in comparative form the
corresponding figures for the comparable period one year prior thereto
(subject to normal year-end adjustments), which such statements shall be
prepared and presented in accordance with, and provide all necessary
disclosure required by, GAAP and shall be accompanied by a certificate
signed by the financial vice president, treasurer, chief financial officer
or controller of US Home stating that such financial statements present
fairly the financial condition and results of operations of the companies
being reported upon and have been prepared in accordance with GAAP
consistently applied.
(f) As soon as available and no later than ninety (90) days after the
end of each fiscal year of the Borrower, the Borrower shall deliver to the
Lender and the Agent two copies of:
(i) a balance sheet of the Borrower as of the end of the fiscal year,
setting forth in comparative form the figures for the previous fiscal year
and accompanied by an Officer's Certificate stating that such balance sheet
presents fairly the financial condition of the
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companies being reported upon and has been prepared in accordance with GAAP
consistently applied (except for changes in application in which such
officer concurs); and
(ii) statements of income, stockholders' equity and cash flow of the
Borrower for such fiscal year; in each case setting forth in comparative
form the figures for the previous fiscal year and accompanied by an
Officer's Certificate stating that such financial statements present fairly
the financial condition of the companies being reported upon and have been
prepared in accordance with GAAP consistently applied (except for changes
in application in which such accountants concur).
(g) As soon as available and no later than ninety (90) days after the
end of each fiscal year of FCC, the Borrower shall deliver to the Lender and the
Agent two copies of:
(i) a consolidated and consolidating balance sheet of FCC and its
consolidated Subsidiaries (including the Borrower) as of the end of the
fiscal year, setting forth in comparative form the figures for the previous
fiscal year and accompanied by an Officer's Certificate stating that such
balance sheet presents fairly the financial condition of the companies
being reported upon and has been prepared in accordance with GAAP
consistently applied (except for changes in application in which such
accountants concur); and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flow of FCC and its consolidated Subsidiaries
(including the Borrower) for such fiscal year; in each case setting forth
in comparative form the figures for the previous fiscal year and
accompanied by an Officer's Certificate stating that such financial
statements present fairly the financial condition of the companies being
reported upon and have been prepared in accordance with GAAP consistently
applied (except for changes in application in which such accountants
concur).
(h) As soon as available and no later than ninety (90) days after the
end of each fiscal year of US Home, the Borrower shall deliver to the Lender and
the Agent two copies of:
(i) a consolidated balance sheet of US Home and its consolidated
Subsidiaries (including the Borrower and FCC) as of the end of the fiscal
year, setting forth in comparative form the figures for the previous fiscal
year and accompanied by an opinion of a firm of independent certified
public accountants of nationally recognized standing acceptable to the
Agent stating that such balance sheet presents fairly the financial
condition of the companies being reported upon and has been prepared in
accordance with GAAP consistently applied (except for changes in
application in which such accountants concur); and
(ii) consolidated statements of income, stockholders' equity and cash
flow of US Home and its consolidated Subsidiaries (including the Borrower
and FCC) for such fiscal year; in each case setting forth in comparative
form the figures for the previous fiscal year and accompanied by an opinion
of a firm of independent certified public accountants of
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nationally recognized standing acceptable to the Agent stating that such
financial statements present fairly the financial condition of the
companies being reported upon and have been prepared in accordance with
GAAP consistently applied (except for changes in application in which such
accountants concur).:
(iii) a consolidating balance sheet and statements of income,
stockholder's equity and cash flow of US Home and its consolidated
Subsidiaries (including the Borrower and FCC) as of the end of the fiscal
year, setting forth in comparative form the figures for the previous fiscal
year and accompanied by an Officer's Certificate stating that such balance
sheet presents fairly the financial condition of the companies being
reported upon and has been prepared in accordance with GAAP consistently
applied (except for changes in application in which such officer concurs)
(i) On each Remittance Date the Servicer shall deliver to the Back-Up
Servicer, the Lender and the Agent two (2) copies of a Borrowing Base
Certificate containing information accurate as of such date.
SECTION 6.14 Access to Certain Documentation; Obligors. (a) The Lender
or the Agent (and their respective agents or professional advisors) shall at the
expense of the Borrower, have the right under this Agreement, once during each
calendar quarter, upon reasonable prior notice to the Servicer, to examine and
audit, during business hours or at such other times as might be reasonable under
applicable circumstances, any and all of the books, records, financial
statements or other information of the Servicer and/or the Borrower, or held by
another for the Servicer or the Borrower or on its behalf, concerning this
Agreement, provided, that the Borrower shall not be responsible for the expenses
of the Agent and the Lender to the extent that such expenses exceed $25,000 in
the aggregate in any calendar year. The Lender or the Agent (and their
respective agents or professional advisors) shall at the expense of the Borrower
and as frequently as the Lender or the Agent may desire, have the right under
this Agreement after the occurrence and during the continuance of an Event of
Default, upon reasonable prior notice to the Servicer, to examine and audit,
during business hours or at such other times as might be reasonable under
applicable circumstances, any and all of the books, records or other information
of the Servicer or the Borrower, or held by another for the Servicer or the
Borrower or on its behalf, concerning this Agreement. The Lender and the Agent
(and their respective agents and professional advisors) shall treat as
confidential any information obtained during the aforementioned examinations
which is not already publicly known or available; provided, however, that the
Lender or the Agent may disclose such information if required to do so by law or
by any regulatory authority.
(b) The Lender or the Agent (and their respective agents or
professional advisors) shall, at their own expense, have the right under this
Agreement to, not more frequently than once each calendar quarter, contact a
reasonable number of Obligors with respect to any Receivables which are Pledged
hereunder in order to procure such information related to such Obligor, the
related Contract and the Receivables as the Lender or the Agent deems reasonable
under the circumstances. The Servicer and the Borrower hereby agree to cooperate
with the Lender and the Agent (and their respective agents or professional
advisors) in connection with any attempt thereby to contact any such Obligor and
shall provide to the Lender and the Agent such information as is
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needed in order to facilitate such contact. The Lender and the Agent (and their
respective agents and professional advisors) shall treat as confidential any
information obtained during any such contact with any such Obligor which is not
already publicly known or available; provided, however, that the Lender or the
Agent (and their respective agents or professional advisors) may disclose such
information if required to do so by law or by any regulatory authority.
SECTION 6.15 Back-Up Servicer. If a Servicer Default shall occur and
is continuing, then the Agent may, by notice to the Servicer, the Borrower and
the Back-Up Servicer, terminate all of the rights and obligations of the
Servicer under this Agreement. Upon the delivery to the Servicer of such notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Pledged Assets or otherwise, shall pass to and be vested in the
Back-Up Servicer pursuant to and under this Section (unless the Agent shall have
appointed a different successor Servicer pursuant to Section 6.01 hereof or the
Back-Up Servicer is unable to act as Servicer and a successor is appointed as
provided in the fourth paragraph of this Section 6.15), and, without limitation,
the Back-Up Servicer is hereby authorized and empowered to execute and deliver,
on behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination or to perform the duties of the Servicer under this Agreement. The
Servicer agrees to cooperate with the Agent and the Back-Up Servicer in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, providing notification to the Obligors
of the assignment of the servicing function, providing the Back-Up Servicer with
all records, in electronic or other form, reasonably requested by it to enable
the Back- Up Servicer to assume the servicing functions hereunder and the
transfer to the Back-Up Servicer for administration by it of all cash amounts
which at the time should be or should have been deposited by the Servicer in the
Collection Account or thereafter be received by the Servicer with respect to the
Pledged Receivables. Neither the Agent nor the Back-Up Servicer shall be deemed
to have breached any obligation hereunder as a result of a failure to make or
delay in making any distribution as and when required hereunder caused by the
failure of the Servicer to remit any amounts received by it or to deliver any
documents held by it with respect to the Pledged Assets.
The Active Back-Up Servicer's Fees and Transition Costs shall be paid
out of Collections as set forth in Section 2.05(c) on and after the date, if
any, that the Back-Up Servicer assumes the responsibilities of the Servicer
pursuant to this Section. The Standby Back-Up Servicer's Fees and Transition
Costs shall be paid out of Collections as set forth in Section 2.05(c) prior to
the date, if any, that the Back-Up Servicer assumes the responsibilities of the
Servicer pursuant to this Section.
Any obligations of FCC under any Transaction Document other than in
its capacity as Servicer shall continue in effect notwithstanding FCC's
termination as Servicer.
On and after the time the Servicer receives a notice of termination
pursuant to this Section 6.15, the Back-Up Servicer shall be (and the Back-Up
Servicer hereby agrees to be) the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject
thereafter to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by
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the terms and provisions hereof; provided, however, that any failure to perform
such duties or responsibilities caused by the Servicer's failure to provide
information required by this Section 6.15 shall not be considered a default by
the Back-Up Servicer hereunder; provided, further, however, that the Back-Up
Servicer, as successor Servicer, shall have (i) no liability with respect to any
obligation which was required to be performed by the terminated Servicer prior
to the date that the Back-Up Servicer becomes the successor to the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer, (ii) no obligation to perform any repurchase or advancing
obligations, if any, of the Servicer, (iii) no obligation to pay any taxes
required to be paid by the Servicer (provided that the Back-Up Servicer shall
pay any income taxes for which it is liable), (iv) no obligation to pay any of
the fees and expenses of any other party to the transactions contemplated
hereby, and (v) no liability or obligation with respect to any Servicer
indemnification obligations of any prior Servicer, including the original
Servicer. The indemnification obligations of the Back-Up Servicer, upon becoming
a successor Servicer, are expressly limited to those arising on account of its
failure to act in good faith and with reasonable care under the circumstances.
In addition, the Back-Up Servicer shall have no liability relating to the
representations and warranties of the Servicer contained in Article IV.
Notwithstanding the above, the Agent may, if the Back-Up Servicer shall be
unwilling to so act, or shall, if the Back-Up Servicer is unable to so act, or
if the Lender so requests in writing to the Agent, appoint itself, or appoint
any established servicing institution having a net worth of not less than
$50,000,000, as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Pending appointment of a successor to the Servicer hereunder, and
after the Agent notifies the Servicer to discontinue performing servicing
functions under this Agreement, the Back-Up Servicer (or the Agent if there is
no Back-Up Servicer) shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Agent may make such
arrangements for the compensation of such successor out of payments on Pledged
Receivables as it and such successor shall agree; provided, however, that,
except as provided herein, no such compensation shall be in excess of that
permitted the Servicer hereunder, unless (i) agreed to by the Lender and (ii)
such compensation shall be on commercially competitive terms and rates. The
Borrower, the Agent and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Prior to each Remittance Date, provided that the Back-Up Servicer
shall have received the information specified in Section 6.12(e) within the time
specified therein, the Back-Up Servicer shall compare the information on the
computer tape or diskette (or other means of electronic transmission acceptable
to the Back-Up Servicer) most recently delivered to the Back-Up Servicer by the
Servicer pursuant to Section 6.12(e) with respect to such Remittance Date to the
corresponding Monthly Remittance Report delivered to the Back-Up Servicer by the
Servicer pursuant to Section 6.12(e) and shall:
(a) confirm that such Monthly Remittance Report is complete on its
face;
(b) confirm the distributions to be made on such Remittance Date
pursuant to Section 2.05(c) hereof to the extent the Back-Up Servicer is
able to do so given the information provided to it by the Servicer (it
being hereby agreed that the Back-Up Servicer shall promptly notify the
Servicer and the Agent if such information is insufficient and that
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the Servicer shall promptly provide to the Back-Up Servicer any additional
information required by the Back-Up Servicer);
(c) confirm the following information on such Monthly Remittance
Report: (i) Eligible Receivables Balance, (ii) the Delinquency Rate, (iii)
the Annualized Default Rate, and (iv) the Overconcentration Amount;
(d) confirm such other information as the Back-Up Servicer and the
Agent may agree; and
(e) at least two (2) Business Days prior to such Remittance Date,
provide written notice to the Agent, in form and substance satisfactory to
the Agent, that the confirmations described in clauses (a) through (d)
above have been completed;
In the event of any discrepancy between the information set forth in
subparagraphs (b) or (c) above as calculated by the Servicer and that determined
or calculated by the Back-Up Servicer, the Back-Up Servicer shall promptly
report such discrepancy to the Servicer and the Agent. In the event of a
discrepancy as described in the preceding sentence, the Servicer and the Back-Up
Servicer shall attempt to reconcile such discrepancy prior to the related
Remittance Date, but in the absence of a reconciliation, distributions on the
related Remittance Date shall be made consistent with the information calculated
by the Servicer, the Servicer and the Back-Up Servicer shall attempt to
reconcile such discrepancy prior to the next Remittance Date, and the Servicer
shall promptly report to the Agent regarding the progress, if any, which shall
have been made in reconciling such discrepancy. If the Back-Up Servicer and the
Servicer are unable to reconcile such discrepancy with respect to such Monthly
Remittance Report by the next Remittance Date, the Servicer shall cause
independent accountants acceptable to the Agent, at the Servicer's expense, to
examine such Monthly Remittance Report and attempt to reconcile such discrepancy
at the earliest possible date (and the Servicer shall promptly provide the Agent
with a report regarding such event). The effect, if any, of such reconciliation
shall be reflected in the Monthly Remittance Report for the next succeeding
Remittance Date.
Other than as specifically set forth in this Agreement, the Back-Up
Servicer shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer and shall have no liability for any action taken
or omitted by the Servicer.
The Back-Up Servicer may allow a subservicer to perform any and all of
its duties and responsibilities hereunder, including but not limited to its
duties as successor Servicer hereunder, should the Back-Up Servicer become the
successor Servicer pursuant to the terms of this Agreement; provided, however,
that the Back-Up Servicer shall remain liable for the performance of all of its
duties and obligations hereunder to the same extent as if no such subservicing
had occurred.
SECTION 6.16 Additional Remedies of Agent Upon Event of Default.
During the continuance of any Event of Default, the Agent, in addition to the
rights specified in Section 7.01, shall have the right, in its own name and as
agent for the Lender, to take all actions now
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or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Lender (including the institution and prosecution of all judicial,
administrative and other proceedings and the filings of proofs of claim and debt
in connection therewith). Except as otherwise expressly provided in this
Agreement, no remedy provided for by this Agreement shall be exclusive of any
other remedy, each and every remedy shall be cumulative and in addition to any
other remedy, and no delay or omission to exercise any right or remedy shall
impair any such right or remedy or shall be deemed to be a waiver of any Event
of Default.
SECTION 6.17 Waiver of Defaults. Upon consent of the Lender, the Agent
may waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall be effective unless it shall be in writing and signed by the Agent
on the Lender's behalf and no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 6.18 Maintenance of Certain Insurance. From the period
commencing on February 11, 2003 until the termination of the Servicer's duties
pursuant to the terms of this Agreement, the Servicer shall maintain in force an
"errors and omissions" and an employee fidelity insurance policy, in each case,
(i) in an amount not less than $1,000,000, (ii) in a form reasonably acceptable
to the Lender and the Agent, in any case, that would cover any loss of
Collections by the Servicer hereunder caused by employee dishonesty, (iii) with
an insurance company reasonably acceptable to the Lender and the Agent and (iv)
naming the Agent as loss payee. Unless otherwise directed by the Agent and the
Lender, the Servicer shall prepare and present, on behalf of itself, the Agent
and the Lender, claims under any such policy in a timely fashion in accordance
with the terms of such policy, and upon the filing of any claim on any policy
described in this Section, the Servicer shall promptly notify the Agent of such
claim and deposit the proceeds of any such claim into the Collection Account.
The Servicer shall deliver copies of such policies to the Agent on or prior to
February 11, 2003 together with a certification from the applicable insurance
company that such policy is in force on such date. The Servicer shall deliver
proof of maintenance of such policies, in form and substance reasonably
acceptable to the Agent, on the six month anniversary from February 11, 2003 and
on each succeeding six month anniversary thereafter (or if such day is not a
Business Day, the next succeeding Business Day).
SECTION 6.19 Segregation of Collections. The Servicer shall not
commingle funds constituting Collections with any other funds of the Servicer.
SECTION 6.20 UCC Matters; Protection and Perfection of Pledged Assets.
The Borrower will not change the jurisdiction of its incorporation or make any
change to its corporate name or use any tradenames, fictitious names, assumed
names, "doing business as" names or other names (other than those listed on
Schedule II hereto, as such schedule may be revised from time to time to reflect
name changes and name usage permitted under the terms of this Section 6.20 after
compliance with all terms and conditions of this Section 6.20 related thereto)
unless, prior to the effective date of any such name change or use, the Borrower
notifies the Agent of such change
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in writing and delivers to the Agent such financing statements as the Agent may
request to reflect such name change or use, together with such other documents
and instruments as the Agent may request in connection therewith. The Borrower
will not change the location of its chief executive office or the location of
its records regarding the Pledged Receivables unless, prior to the effective
date of any such change of location, the Borrower notifies the Agent of such
change of location in writing and delivers to the Agent such documents and
instruments as the Agent may request in connection therewith. The Borrower
agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action that
the Agent may reasonably request in order to perfect, protect or more fully
evidence the Lender's interest in the Pledged Assets acquired hereunder, or to
enable the Lender or the Agent to exercise or enforce any of their respective
rights hereunder. Without limiting the generality of the foregoing, the Borrower
will, upon the request of the Agent: (i) execute (if necessary) and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the Agent may request, and (ii) ▇▇▇▇ its master data
processing records evidencing such Pledged Receivables with a legend acceptable
to the Agent, evidencing that the Lender has acquired an interest therein as
provided in this Agreement. The Agent shall be entitled to conclusively rely on
the filings or registrations made by or on behalf of the Borrower without any
independent investigation and the Borrower's obligation to make such filings as
evidence that such filings have been made. The Borrower hereby authorizes the
Agent to file one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the Pledged
Receivables and the Other Conveyed Property and the Related Security related
thereto and the proceeds of the foregoing now existing or hereafter arising,
without the signature of the Borrower where permitted by law. The Borrower
hereby ratifies and authorizes the filing by the Agent of any such financing
statement made prior to the date hereof. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the Pledged
Receivables, or any part thereof, shall be sufficient as a financing statement.
The Borrower shall, upon the request of the Agent at any time after the
occurrence of an Event of Default and at the Borrower's expense, notify the
Obligors obligated to pay any Pledged Receivables, or any of them, of the
security interest of the Lender in the Pledged Assets. If the Borrower fails to
perform any of its agreements or obligations under this Section 6.20, the Agent
may (but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Borrower upon the Agent's demand therefor. For
purposes of enabling the Agent to exercise its rights described in the preceding
sentence and elsewhere in this Article VI, the Borrower and the Lender hereby
authorize each of the Agent and its successors and assigns to take any and all
steps in the Borrower's name and on behalf of the Borrower and the Lender
necessary or desirable, in the determination of the Agent, to collect all
amounts due under any and all Pledged Receivables, including, without
limitation, endorsing the Borrower's name on checks and other instruments
representing Collections and enforcing such Pledged Receivables and the related
Contracts and, if any, the related guarantees.
SECTION 6.21 Servicer Advances. The Servicer may, in its sole
discretion, make an advance in respect of any payment due on a Pledged
Receivable (other than a Defaulted Receivable) to the extent such payment has
not been received by the Servicer as of its due date and the Servicer reasonably
expects such payment will be ultimately recoverable (a "Servicer Advance"). The
Servicer shall deposit into the Collection Account in immediately available
funds
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the aggregate of all Servicer Advances to be made during a Remittance Period on
or prior to the Business Day immediately preceding the related Remittance Date.
The Servicer shall be entitled to reimbursement for such Servicer Advances from
monies in the Collection Account as provided in Section 2.05(c) hereof.
SECTION 6.22 Repurchase of Receivables Upon Breach of Covenant or
Representation and Warranty by Servicer. The Borrower or the Servicer, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Servicer's representations,
warranties and/or covenants pursuant to Section 6.05 or Article V; provided,
however, that the failure to provide any such notice shall not diminish, in any
manner whatsoever, any obligation of the Servicer hereunder to repurchase any
Pledged Receivable. Unless such breach shall have been cured by the last day of
the first full calendar month following the discovery by or notice to the
Servicer of such breach (and provided that a Borrowing Base Deficiency exists on
such last day), the Servicer (if FCC or an Affiliate thereof) shall have an
obligation, and the Borrower shall and the Agent may, enforce such obligation of
the Servicer (if FCC or an Affiliate thereof), to repurchase any Pledged
Receivable materially and adversely affected by such breach. The Borrower shall
notify the Agent promptly, in writing, of any failure by the Servicer to so
repurchase any such Pledged Receivable. In consideration of the repurchase of
such Pledged Receivable, the Servicer shall remit funds in an amount equal to
the Release Price for such Pledged Receivable to the Collection Account on the
date of such repurchase. The obligations of the Servicer under this Section 6.22
are in addition to, and in no way limit, any obligations of the Servicer in its
individual capacity under the Purchase and Contribution Agreement. It is
understood and agreed that the obligation of the Servicer to purchase any
Receivables is not intended to, and shall not, constitute a guaranty of the
collectibility or payment of any Receivable which is not collected, not paid or
uncollectible on account of the insolvency, bankruptcy, or financial inability
to pay of the related Obligor.
SECTION 6.23 Compliance with Applicable Law. The Servicer and the
Borrower shall at all times comply with all requirements of applicable federal,
state and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇
Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers'
and Sailors' Civil Relief Act of 1940 and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and all other consumer
credit laws and equal credit opportunity and disclosure laws) in the conduct of
its business.
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ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.01 Events of Default. If any of the following events
("Events of Default") shall occur:
(a) the occurrence of any Bankruptcy Event with respect to the
Borrower, the Servicer or US Home; or
(b) any representation or warranty made or deemed to be made by the
Borrower or the Servicer (or any of its officers) under or in connection
with this Agreement (or any remittance report or other information or
report delivered pursuant hereto) or any other Transaction Document shall
prove to be false or incorrect in any material respect; provided, however,
that if any breach described above is cured by the repurchase of
Receivables pursuant to Article VI of the Purchase and Contribution
Agreement or by a repayment pursuant to Section 2.17 hereof, such breach
shall cease to constitute an Event of Default; or
(c) (i) the Borrower or the Servicer shall fail to perform or observe
any term, covenant or agreement hereunder or under any other Transaction
Document in any material respect or (ii) either the Servicer or the
Borrower shall fail to make any payment or deposit to be made by it when
due hereunder or under any other Transaction Document; or
(d) the Borrower, the Servicer or US Home shall fail to pay any
principal of or premium or interest on any Debt in an amount in excess of
$250,000, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, accelera tion, demand or otherwise); or any
other default under any agreement or instrument relating to any Debt of the
Borrower, the Servicer or US Home in excess of $250,000 or any other event,
shall occur if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable or required to be prepaid (other
than by a regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(e) any Transaction Document, or any material provision thereof, shall
not be in full force and effect and enforceable in accordance with its
terms, or the Servicer, the Borrower or any Affiliate of any of the
foregoing shall so assert in writing; or
(f) any "errors or omissions" or employee fidelity insurance policy
required to be maintained by the Servicer under Section 6.18 shall not be
in full force and effect and enforceable in accordance with its terms, or
the Servicer or any party to such insurance policy shall so assert in
writing and any event described in this clause (f) remains unremedied for
ten (10) days after the occurrence thereof; or
(g) (i) the Lender shall at any time fail to have a valid, perfected,
first priority security interest in any of the Pledged Assets or (ii) any
purchase by the Borrower of a
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Receivable and the Collections, Related Security and Other Conveyed
Property under the Purchase and Contribution Agreement shall, for any
reason, cease to create in favor of the Borrower a perfected ownership
interest in such Receivable and the Collections, Related Security and the
Other Conveyed Property with respect thereto; provided, however, that if an
event described in the foregoing clause (i) or (ii) is cured by the
repurchase of Receivables pursuant to Article VI of the Purchase and
Contribution Agreement or by a repayment pursuant to Section 2.17 hereof,
such event shall cease to constitute an Event of Default; or
(h) a material adverse change shall have occurred in (i) (A) the
business, financial condition, results of operations or properties of the
Borrower, the Servicer or US Home, or (B) the ability of the Servicer or
the Borrower to perform its obligations under any of the Transaction
Documents to which it is a party; (ii) the validity, collectibility or
enforceability of the Pledged Receivables; (iii) the practical realization
by the Agent, for the benefit of the Lender, of the benefits or security
afforded under any of the Transaction Documents; or (iv) the first priority
perfected security interest in any of the Pledged Assets; or
(i) the Borrower's, the Servicer's or US Home's activities are
terminated for any reason, including any termination thereof by a
regulatory, tax or accounting body; or
(j) the occurrence of a Change of Control; or
(k) the occurrence of a Servicer Default; or
(l) (i) the Advance Percentage shall at any time be greater than the
Maximum Advance Percentage and such event shall remain unremedied for two
(2) Business Days or (ii) the Facility Amount exceeds the lesser of (x) the
Borrowing Limit or (y) the Capital Limit and such event shall remain
unremedied for two (2) Business Days; or
(m) the auditor's opinion accompanying the audited annual financial
statements of US Home, the Servicer or the Borrower is qualified in any
manner; or
(n) any failure shall have occurred on the part of the Borrower or FCC
to duly observe or perform in any material respect any covenant or
agreement related to any Purchased Rate Cap or any covenant or agreement
under the Sinking Fund Agreement; or
(o) One or more judgments for the payment of money in an aggregate
amount in excess of $10,000 shall be entered against the Borrower; or
(p) US Home shall, at any time, permit its Tangible Net Worth to be
less than $4,500,000;
then the Agent may, by notice to the Borrower, declare the Early Amortization
Commencement Date to have occurred; provided, that, in the case of any event
described in Section 7.01(a) above, the Early Amortization Commencement Date
shall be deemed to have occurred automatically upon
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the occurrence of such event. Upon any such declaration or automatic occurrence,
(i) the Borrower shall cease purchasing Receivables from FCC under the Purchase
and Contribution Agreement, (ii) the Lender may cease issuing commercial paper
notes to fund or maintain the Loans hereunder, (iii) the Liquidity/Credit
Enhancement Facility may be drawn upon by the Lender from time to time
thereafter in order to retire the maturing commercial paper notes issued to fund
or maintain the Loans hereunder (and the Loans hereunder, whether maintained by
the amounts so drawn under the Liquidity/Credit Enhancement Facility or
otherwise, shall bear interest at the Default Funding Rate), (iv) at the option
of the Lender in its sole discretion, the Lender may declare the Loans made to
the Borrower hereunder and all Yield and all Fees accrued on such Loans and any
other Obligations to be immediately due and payable (and the Borrower shall pay
such Loans and all such amounts and Obligations immediately), and (v) at the
option of the Lender in its sole discretion, the Agent, on behalf of the Lender,
may direct the Obligors to make all payments under the Pledged Receivables
directly to the Back-Up Servicer, the Agent, the Lender or any lockbox or
account established by any of such parties. In addition, upon any such
declaration or upon any such automatic occurrence, the Agent and the Lender
shall have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. If any Event of Default shall have occurred, the Non-CP Rate and the
CP Rate shall be increased to the Default Funding Rate, effective as of the date
of the occurrence of such Event of Default, and shall remain at the Default
Funding Rate.
SECTION 7.02 Additional Remedies of the Agent. (a) If, (i) upon the
Lender's declaration that the Loans made to the Borrower hereunder are
immediately due and payable pursuant to Section 7.01 or (ii) on the Facility
Maturity Date, the aggregate outstanding principal amount of the Loans, all
accrued Fees and Yield and any other Obligations are not immediately paid in
full, then the Agent, in addition to all other rights specified hereunder, shall
have the right, in its own name and as agent for the Lender, to immediately sell
in a commercially reasonable manner and on commercially reasonable terms, in a
recognized market (if one exists) at such price or prices as the Agent may
reasonably deem satisfactory, any or all Pledged Assets and apply the proceeds
thereof to the Obligations. The Borrower has the right to identify and introduce
any proposed bidders to the Agent; provided, however, that the Agent shall not
be obligated to consummate a transaction with such proposed bidders.
(b) The parties recognize that it may not be possible to sell all of
the Pledged Assets on a particular Business Day, or in a transaction with the
same purchaser, or in the same manner because the market for such Pledged Assets
may not be liquid. Accordingly, the Agent may elect, in its sole discretion, the
time and manner of liquidating any Pledged Assets, and nothing contained herein
shall obligate the Agent to liquidate any Pledged Assets on the date the Lender
declares the Loans made to the Borrower hereunder to be immediately due and
payable pursuant to Section 7.01 or to liquidate all Pledged Assets in the same
manner or on the same Business Day.
(c) Any amounts received from any sale or liquidation of the Pledged
Assets pursuant to this Section 7.02 in excess of the Obligations will be
returned to the Borrower, its successors or assigns, or to whosoever may be
lawfully entitled to receive the same, or as a court of competent jurisdiction
may otherwise direct.
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(d) The Agent and the Lenders shall have, in addition to all the
rights and remedies provided herein and provided by applicable federal, state,
foreign, and local laws (including, without limitation, the rights and remedies
of a secured party under the Uniform Commercial Code of any applicable state, to
the extent that the Uniform Commercial Code is applicable, and the right to
offset any mutual debt and claim), all rights and remedies available to the
lenders at law, in equity or under any other agreement between the Lender and
the Borrower.
(e) Except as otherwise expressly provided in this Agreement, no
remedy provided for by this Agreement shall be exclusive of any other remedy,
each and every remedy shall be cumulative and in addition to any other remedy,
and no delay or omission to exercise any right or remedy shall impair any such
right or remedy or shall be deemed to be a waiver of any Early Amortization
Event or Event of Default.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01 Indemnities by the Borrower. Without limiting any other
rights which the Agent, the Lender, the Back-Up Servicer, the Agent's Bank, the
Custodian or any of their respective Affiliates may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify the Agent, the Lender,
the Back-Up Servicer and each of their respective Affiliates (each, an
"Indemnified Party" for purposes of this Article VIII) from and against any and
all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts"), awarded against or
incurred by any of them arising out of or as a result of this Agreement or in
respect of any Pledged Assets, excluding, however, Indemnified Amounts to the
extent resulting solely from gross negligence, bad faith or willful misconduct
on the part of an Indemnified Party. Without limiting the foregoing, the
Borrower shall indemnify each Indemnified Party for Indemnified Amounts relating
to or resulting from any of the following:
(i) any Pledged Receivable treated as or represented by the Borrower
to be an Eligible Receivable which is not at the applicable time an
Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed made by
the Borrower or any of its officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect
when made or deemed made or delivered;
(iii) the failure by the Borrower to comply with any term, provision
or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any applicable law, rule or
regulation with respect to any Pledged Assets, or the nonconformity of any
Pledged Assets with any such applicable law, rule or regulation;
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(iv) the failure to vest and maintain vested in the Agent, for the
benefit of the Lender, or to transfer to the Agent, for the benefit of the
Lender, a first priority perfected security interest in the Receivables
which are, or are purported to be, Pledged Receivables, together with all
related Other Conveyed Property, Collections, Related Security and other
Pledged Assets related thereto (including, without limitation, the
Borrower's interest in and to any and all Underlying Collateral with
respect to such Receivables), free and clear of any Adverse Claim whether
existing at the time of the related Borrowing or at any time thereafter;
(v) the failure to maintain, as of the close of business on the
Business Day prior to the Collection Date, a Facility Amount which is less
than or equal to the lesser of (x) the Borrowing Limit on such Business Day
and (y) the Capital Limit on such Business Day (provided, that in
determining the Capital Limit for purposes of this Section 8.01(v), all
information used in such determination must be accurate as of the date of
such determination);
(vi) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables which
are, or are purported to be, Pledged Receivables or the other Pledged
Assets related thereto, whether at the time of any Borrowing or at any
subsequent time;
(vii) any dispute, claim, offset or defense (other than the discharge
in bankruptcy of an Obligor) to the payment of any Receivable which is, or
is purported to be, a Pledged Receivable (including, without limitation, a
defense based on such Receivable (or the Contract evidencing such
Receivable) not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms);
(viii) any failure of the Borrower to perform its duties or
obligations in accordance with the provisions of this Agreement;
(ix) the failure of the Borrower to pay when due any taxes payable in
connection with the Pledged Receivables or the Pledged Assets related
thereto;
(x) any repayment by the Agent or the Lender of any amount previously
distributed in payment of Loans or payment of Yield or Fees or any other
amount due hereunder, in each case which amount the Agent or the Lender
believes in good faith is required to be repaid;
(xi) the commingling by the Borrower of Collections of Pledged
Receivables at any time with other funds;
(xii) any litigation or proceeding related to this Agreement or the
use of proceeds of Loans or the Pledged Assets or any third-party
investigation related to this Agreement or the use of proceeds of Loans or
the Pledged Assets;
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(xiii) any failure by the Borrower to give reasonably equivalent value
to FCC in consideration for the transfer by FCC to the Borrower of any
Receivable or any attempt by any Person to void or otherwise avoid any such
transfer under any statutory provision or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code;
(xiv) any failure of the Borrower or any of its respective agents or
representatives to remit to the Collection Account, Collections of Pledged
Receivables remitted to the Borrower or any such agent or representative;
(xv) any failure on the part of the Borrower or FCC duly to observe or
perform in any material respect any covenant or agreement under the Sinking
Fund Agreement;
(xvi) the failure at any time of the Borrower to maintain funds in the
Sinking Fund Account in the amount required under the Sinking Fund Account
Agreement; and/or
(xvii) any environmental claims arising in connection with any
activity on Mortgaged Property constituting Underlying Collateral.
Any amounts subject to the indemnification provisions of this Section 8.01 shall
be paid by the Borrower to the Agent on behalf of the applicable Indemnified
Party within two (2) Business Days following receipt by the Borrower of the
Agent's written demand therefor on behalf of the applicable Indemnified Party
(and the Agent shall pay such amounts to the applicable Indemnified Party
promptly after the receipt by the Agent of such amounts). The Agent, on behalf
of any Indemnified Party making a request for indemnification under this Section
8.01, shall submit to the Borrower a certificate setting forth in reasonable
detail the basis for and the computations of the Indemnified Amounts with
respect to which such indemnification is requested, which certificate shall be
conclusive absent manifest or demonstrable error.
If the Borrower has made any payments in respect of Indemnified Amounts to
the Agent, on behalf of an Indemnified Party pursuant to this Section 8.01 and
such Indemnified Party thereafter collects any of such amounts from others, such
Indemnified Party will promptly repay such amounts collected to the Borrower,
without interest.
SECTION 8.02 Indemnities by Servicer. (a) Without limiting any other
rights which any Indemnified Party may have hereunder or under applicable law,
the Servicer (if FCC or one of its Affiliates) hereby agrees to indemnify each
Indemnified Party from and against any and all damages, losses, claims,
liabilities and related costs and expenses (including reasonable attorneys' fees
and disbursements) (all of the foregoing being collectively referred to as
"Servicer Indemnified Amounts") suffered or sustained by any Indemnified Party
as a consequence of any of the following, excluding, however, Servicer
Indemnified Amounts resulting solely from any gross negligence, bad faith or
willful misconduct of any Indemnified Party claiming indemnification hereunder:
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(i) the inclusion, in any computations made by it in connection with
any Borrowing Base Certificate, Monthly Remittance Report or Commercial
Paper Remittance Report or other report prepared by it hereunder, of any
Pledged Receivables which were not Eligible Receivables as of the date of
any such computation;
(ii) reliance on any representation or warranty made or deemed made by
the Servicer (if FCC or one of its Affiliates) or any of its officers under
or in connection with this Agreement, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
(iii) the failure by the Servicer (if FCC or any of its Affiliates) to
comply with (A) any term, provision or covenant contained in this
Agreement, or any agreement executed in connection with this Agreement, or
(B) any applicable law, rule or regulation applicable to it with respect to
any Pledged Assets;
(iv) any action or inaction by the Servicer (if FCC or one of its
Affiliates) that causes the Agent, for the benefit of the Lender, not to
have a first priority perfected security interest in the Receivables that
are, or are purported to be, Pledged Receivables, together with all related
Other Conveyed Property, Collections, Related Security and other Pledged
Assets related thereto (including without limitation, the Borrower's
interest in and to any and all Underlying Collateral with respect to such
Receivables), free and clear of any Adverse Claim whether existing at the
time of the related Borrowing or any time thereafter;
(v) the commingling by the Servicer (if FCC or one of its Affiliates)
of the Collections of Pledged Receivables at any time with any other funds;
(vi) any failure of the Servicer (if FCC or one of its Affiliates) or
any of its agents or representatives (including, without limitation,
agents, representatives and employees of the Servicer acting pursuant to
authority granted under Section 6.01 hereof) to remit to Collection
Account, Collections of Pledged Receivables remitted to the Servicer or any
such agent or representative;
(vii) the failure by the Servicer (if FCC or any of its Affiliates) to
perform any of its duties or obligations in accordance with the provisions
of this Agreement or errors or omissions related to such duties;
(viii) notwithstanding whether any Pledged Receivable shall have been
repurchased by the Servicer pursuant to Section 6.22, any of the events or
facts giving rise to a breach of any of the Servicer's representations,
warranties, agreements and/or covenants set forth in Article V or Article
VI; and/or
(ix) any environmental claims arising in connection with any activity
on Mortgaged Property constituting Underlying Collateral.
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(b) Any Servicer Indemnified Amounts shall be paid by the Servicer (if
FCC or one of its Affiliates) to the Agent, for the benefit of the applicable
Indemnified Party, within two (2) Business Days following receipt by the
Servicer of the Agent's written demand therefor on behalf of the applicable
Indemnified Party (and the Agent shall pay such amounts to the applicable
Indemnified Party promptly after the receipt by the Agent of such amounts). The
Agent, on behalf of any Indemnified Party making a request for indemnification
under this Section 8.02, shall submit to the Servicer a certificate setting
forth in reasonable detail the basis for and the computations of the Indemnified
Amounts with respect to which such indemnification is requested, which
certificate shall be conclusive absent manifest or demonstrable error. Any
Servicer Indemnified Amounts made by the Servicer to any Indemnified Party shall
be reimbursed to the Servicer by such Indemnified Party if a court of competent
jurisdiction makes a final, non-appealable judgement which determines that such
Servicer Indemnified Amounts suffered or sustained by such Indemnified Party
resulted solely from the gross negligence, bad faith or willful misconduct of
such Indemnified Party.
(c) If the Servicer has made any indemnity payments to the Agent, on
behalf of an Indemnified Party pursuant to this Section 8.02 and such
Indemnified Party thereafter collects any of such amounts from others, such
Indemnified Party will promptly repay such amounts collected to the Servicer,
without interest.
Each applicable Indemnified Party shall deliver to the indemnifying
party under Section 8.01 and Section 8.02, within a reasonable time after such
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by such Indemnified Party relating to the
claim giving rise to the Indemnified Amounts.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Amendments and Waivers. (a) Except as provided in Sec-
tion 9.01(b), no amendment or modification of any provision of this Agreement
shall be effective without the written agreement of the Borrower, the Servicer,
the Agent and the Lender, and no termination or waiver of any provision of this
Agreement or consent to any departure therefrom by the Borrower or the Servicer
shall be effective without the written concurrence of the Agent and the Lender;
provided, however, that no amendment, termination, waiver or consent referred to
in the preceding sentence shall, unless in writing and signed by the Custodian,
the Back-Up Servicer or the Agent's Bank, as the case may be, in addition to the
Agent and the Lender, affect the rights or duties of the Custodian, the Back-Up
Servicer or the Agent's Bank, as the case may be, under this Agreement. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
(b) Notwithstanding the provisions of Section 9.01(a), in the event
that there is more than one Lender, the written consent of each Lender shall be
required for any amendment, modification or waiver (i) reducing any outstanding
Loans, or the Yield thereon, (ii) postponing any
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date for any payment of any Loan, or the Yield thereon, (iii) modifying the
provisions of this Section 9.01, (iv) increasing the Capital Limit or the
Borrowing Limit or (v) increasing the Maximum Advance Percentage or reducing the
Minimum Overcollateralization Amount.
SECTION 9.02 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication, communication by facsimile copy or electronic
mail) and mailed, telexed, transmitted or delivered, as to each party hereto, at
its address set forth under its name on the signature pages hereof or specified
in such party's Assignment and Acceptance or at such other address (including,
without limitation, an electronic mail 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 (i) notice by
mail, five days after being deposited in the United States mails, first class
postage prepaid, (ii) notice by telex, when telexed against receipt of
answerback, or (iii) notice by facsimile copy or electronic mail, when verbal
communication of receipt is obtained, except that notices and communications
pursuant to Article II shall not be effective until received.
SECTION 9.03 No Waiver; Remedies. No failure on the part of the Agent
or the Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.04 Binding Effect; Assignability; Multiple Lenders. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Servicer, the Agent, the Lender, the Back-Up Servicer, the Custodian, the
Agent's Bank and their respective successors and permitted assigns. This
Agreement and the Lender's rights and obligations hereunder and interest herein
shall be assignable in whole or in part (including by way of the sale of
participation interests therein) by the Lender and its successors and assigns;
provided, however that (i) the commercial paper issued by any assignee of the
Lender or its successors and assigns shall have a rating from a nationally
recognized rating agency at least equal to the rating of the commercial paper of
the Lender at the time of the applicable assignment and (ii) DZ BANK shall
remain the Agent hereunder after any such assignment. None of the Borrower, the
Servicer or the Back-Up Servicer may assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the Lender
and the Agent. The parties to each assignment or participation made pursuant to
this Section 9.04 shall execute and deliver to the Agent, for its acceptance and
recording in its books and records, an assignment and acceptance agreement (an
"Assignment and Acceptance") or a participation agreement or other transfer
instrument reasonably satisfactory in form and substance to the Agent and the
Borrower. Each such assignment or participation shall be effective as of the
date specified in the applicable Assignment and Acceptance or other agreement or
instrument only after the execution, delivery, acceptance and recording thereof
as described in the preceding sentence. The Agent shall notify the Borrower of
any assignment or participation thereof made pursuant to this Section 9.04. The
Lender may, in connection with any assignment or participation or any proposed
assignment or participation pursuant to this Section 9.04, disclose to the
assignee or participant or proposed assignee or participant any information
relating to the Borrower and the Pledged Assets furnished to the Lender by or on
behalf of the Borrower or the
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Servicer; provided, however, that the Lender shall not disclose any such
information until it has obtained an agreement from such assignee or participant
or proposed assignee or participant that it shall treat as confidential (under
terms mutually satisfactory to the Agent and such assignee or participant or
proposed assignee or participant) any information obtained which is not already
publicly known or available.
(b) Whenever the term "Lender" is used herein, it shall mean Autobahn
and/or any other Person which shall have executed an Assignment and Acceptance;
provided, however, that each such party shall have a pro rata share of the
rights and obligations of the Lender hereunder in such percentage amount (the
"Commitment Percentage") as shall be obtained by dividing such party's
commitment to fund Loans hereunder by the total commitment of all parties to
fund Loans hereunder. Unless otherwise specified herein, any right at any time
of the Lender to enforce any remedy, or instruct the Agent to take (or refrain
from taking) any action hereunder, shall be exercised by the Agent only upon
direction by such parties that hold a majority of the Commitment Percentages at
such time.
(c) Subject to Section 9.04(a), each of the parties hereto hereby
agrees to execute any amendment to this Agreement that is required in order to
facilitate the addition of any new Lender hereunder as contemplated by this
Section 9.04.
(d) Any bank or other financial institution (including, without
limitation, DZ BANK) providing liquidity support, credit enhancement or other
similar support under the Liquidity/Credit Enhancement Facility may assign, in
whole or in part, its rights and obligations thereunder without the consent of
the Borrower or the Servicer.
SECTION 9.05 Term of This Agreement. This Agreement including, without
limitation, the Borrower's obligation to observe its covenants set forth in
Articles V and VI and the Servicer's obligation to observe its covenants set
forth in Articles V and VI, shall remain in full force and effect until the
Collection Date; provided, however, that the rights and remedies with respect to
any breach of any representation and warranty made or deemed made by the
Borrower or the Servicer pursuant to Articles III and IV and the indemnification
and payment provisions of Article VIII and Article IX and the provisions of
Section 9.08 and Section 9.09 shall be continuing and shall survive any
termination of this Agreement.
SECTION 9.06 GOVERNING LAW; JURY WAIVER; JURISDICTION. (a) THIS
AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE LENDER IN THE PLEDGED
RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
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(b) EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.
(c) EACH PARTY EXECUTING THIS AGREEMENT (I) AGREES THAT ANY SUIT, ACTION OR
OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
BROUGHT IN A COURT OF RECORD IN THE CITY AND STATE OF NEW YORK OR IN THE COURTS
OF THE UNITED STATES OF AMERICA LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK,
(II) CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING, AND (III) WAIVES ANY OBJECTION WHICH THEY MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 9.07 Costs, Expenses and Taxes. (a) In addition to the rights
of indemnification granted to the Back-Up Servicer, the Custodian, the Agent's
Bank, the Agent, the Lender and its Affiliates under Section 8.01 hereof, the
Borrower agrees to pay on demand all reasonable (and reasonably documented)
costs and expenses of the Back-Up Servicer, the Custodian, the Agent's Bank, the
Lender and the Agent incurred in connection with the preparation, execution,
delivery or administration of, or any waiver or consent issued or amendment
prepared in connection with, this Agreement, the other Transaction Documents and
the other documents to be delivered hereunder or in connection herewith or
therewith or incurred in connection with any amendment, waiver or modification
of this Agreement, any other Transaction Document, and any other documents to be
delivered hereunder or thereunder or in connection herewith or therewith that is
necessary or requested by any of the Borrower, the Servicer, the Lender or a
Rating Agency or made necessary or desirable as a result of the actions of any
regulatory, tax or accounting body affecting the Lender and its Affiliates, or
which is related to an Event of Default, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Back-Up Servicer,
the Custodian, the Agent's Bank, the Agent and the Lender with respect thereto
and with respect to advising the Back-Up Servicer, the Custodian, the Agent's
Bank, the Agent and the Lender as to their respective rights and remedies under
this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Back-Up Servicer, the Custodian, the
Agent's Bank, the Agent or the Lender in connection with the enforcement of this
Agreement and the other documents to be delivered hereunder or in connection
herewith.
(b) The Borrower shall pay on demand any and all stamp, sales, excise
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement, the other
documents to be delivered hereunder or any agreement or other document providing
liquidity support, credit enhancement or other similar support to the Lender
which is specific to this Agreement or the funding or maintenance of Loans
hereunder.
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(c) The Custodian shall pay all expenses it incurs in connection with
its services related to this Agreement and any other agreements executed in
connection herewith and the transactions contemplated hereby or thereby;
provided, that the Custodian shall be entitled to reimbursement for such expense
to the extent provided under the Custodial Agreement.
(d) The Borrower shall pay on demand all other costs, expenses and
taxes (excluding franchise and income taxes) incurred by the DZ Bank (in any
capacity) and/or any Issuer related to this Agreement, any other Transaction
Document or any interest rate protection agreement ("Other Costs"), including,
without limitation, the portion of the cost of rating such Issuer's commercial
paper by independent financial rating agencies which is allocable to commercial
paper issued to fund Loans hereunder, the taxes (excluding franchise and income
taxes) resulting from such Issuer's operations which are allocable to the
provision of Loans hereunder, and the reasonable fees and out-of-pocket expenses
of counsel for DZ Bank (in any capacity) and/or the Issuer, with respect to (i)
advising such Person as to its rights and remedies under this Agreement and the
other documents to be delivered hereunder or in connection herewith, (ii) the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith and (iii) advising such Person as to the issuance of
the Issuer's commercial paper notes to fund Loans hereunder and action in
connection with such issuance.
(e) Without limiting any other provision hereof, the Borrower shall
pay on demand all costs, expenses and fees of the Back-Up Servicer prior to the
occurrence of a Servicer Default and the appointment of the Back-Up Servicer as
Servicer hereunder related to its duties under this Agreement.
(f) Any Person making a claim under this Section 9.07 shall submit to
the Borrower a notice setting forth in reasonable detail the basis for and the
computations of the applicable costs, expenses, taxes or similar items.
SECTION 9.08 No Proceedings. Each of the Borrower, the Agent, the
Servicer and the Lender hereby agrees that it will not institute against, or
join any other Person in instituting against, any Issuer whose commercial paper
was issued to fund Loans advanced hereunder, any proceedings of the type
referred to in the definition of Bankruptcy Event so long as any commercial
paper issued by such Issuer shall be outstanding or there shall not have elapsed
one year and one day since the last day on which any such commercial paper shall
have been outstanding. The Servicer, the Back-Up Servicer, the Custodian and the
Agent's Bank each hereby agree that it will not institute against, or join any
other Person in instituting against, the Borrower any proceedings of the type
referred to in the definition of Bankruptcy Event (a) prior to the Collection
Date and (b) so long as any commercial paper issued by a Lender which is an
Issuer shall be outstanding or there shall not have elapsed one year and one day
since the last day on which any such commercial paper shall have been
outstanding.
SECTION 9.09 Recourse Against Certain Parties. No recourse under or
with respect to any obligation, covenant or agreement (including, without
limitation, the payment of any fees or any other obligations) of the Lender or
the Agent as contained in this Agreement or any other agreement, instrument or
document entered into by the Lender or the Agent pursuant hereto or in
80
connection herewith shall be had against any administrator of the Lender or the
Agent or any incorporator, affiliate, stockholder, officer, employee or director
of the Lender or the Agent or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood that the
agreements of each party hereto contained in this Agreement and all of the other
agreements, instruments and documents entered into by the Lender or the Agent
pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of such party (and nothing in this Section 9.09 shall be
construed to diminish in any way such corporate obligations of such party), and
that no personal liability whatsoever shall attach to or be incurred by any
administrator of the Lender or the Agent or any incorporator, stockholder,
affiliate, officer, employee or director of the Lender or the Agent or of any
such administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Lender or the Agent contained in
this Agreement or in any other such instruments, documents or agreements, or
which are implied therefrom, and that any and all personal liability of every
such administrator of the Lender or the Agent and each incorporator,
stockholder, affiliate, officer, employee or director of the Lender or the Agent
or of any such administrator, or any of them, for breaches by the Lender or the
Agent of any such obligations, covenants or agreements, which liability may
arise either at common law or in equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement. The provisions of this Section 9.09 shall
survive the termination of this Agreement.
SECTION 9.10 Execution in Counterparts; Severability; Integration.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement. In the event that any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than the Fee Letter.
SECTION 9.11 Tax Characterization. Notwithstanding any provision of
this Agreement, the parties hereto intend that the Loans advanced hereunder
shall constitute indebtedness of the Borrower for federal income tax purposes.
SECTION 9.12 Exclusivity. The Borrower and FCC hereby agree that
unless they have obtained the written consent of the Lender (which may be
granted or refused in the Lender's sole discretion) to do otherwise, from the
date hereof through and including the Facility Maturity Date, they will not, and
will cause their Affiliates not to, assign, transfer, pledge, convey, sell or
otherwise dispose of any Receivable (or any similar right to payment from any
Person related to home improvement loans) originated or otherwise acquired by
the Borrower, FCC or any
81
Affiliate thereof, except pursuant to the terms and provisions of this Agreement
and the other Transaction Documents; provided, however, that the provisions of
this Section 9.12 shall not apply to (i) Receivables which may be released from
the Pledge hereunder pursuant to Section 2.18 and (ii) Receivables which are
being financed through a Whole Loan Sale or a Take Out Securitization. The
Borrower and FCC hereby agree that, from the date hereof through and including
the Facility Maturity Date, they will, and will cause their Affiliates to, make
reasonable commercial efforts to originate each of their Receivables (or any
similar right to payment from any Person, the advancing of loans secured by real
estate or the financing of home improvements under installment sale contracts)
in such a manner that it will qualify as an Eligible Receivable hereunder.
[Signature page to follow.]
82
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE BORROWER: FCC ACCEPTANCE CORP.
By:
-------------------------------------
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇)
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE SERVICER: FIRST CONSUMER CREDIT, INC.
By:
-------------------------------------
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇)
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE AGENT: DZ BANK AG DEUTSCHE ZENTRAL-
GENOSSENSCHAFTSBANK, FRANKFURT AM
MAIN
By:
-------------------------------------
Title:
By:
-------------------------------------
Title:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
THE LENDER: AUTOBAHN FUNDING COMPANY LLC
By: DZ BANK AG DEUTSCHE ZENTRAL-
GENOSSENSCHAFTSBANK, FRANKFURT
AM MAIN
By:
---------------------------------
Title:
By:
---------------------------------
Title:
▇/▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ am Main
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
THE CUSTODIAN AND
THE AGENT'S BANK: U.S. BANK NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE BACK-UP SERVICER: COMPU-LINK CORPORATION
By:
-------------------------------------
Title:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ (CEO)
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇ (x1100)
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the following
items must be delivered to the Agent prior to the date of the initial Borrowing:
(a) A copy of this Agreement duly executed by each of the parties
hereto;
(b) A certificate of the Secretary or Assistant Secretary of the
Borrower, dated the date of this Agreement, certifying (i) the names and true
signatures of the incumbent officers authorized to sign on behalf of the
Borrower this Agreement and the other documents to be delivered by the Borrower
hereunder, (ii) that the copy of the certificate of incorporation of the
Borrower attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented and
is in full force and effect, (iii) that the copy of the by-laws of the Borrower
attached thereto is a complete and correct copy, and that such have not been
amended, modified or supplemented and is in full force and effect, and (iv) the
resolutions of the board of directors of the Borrower approving and authorizing
the execution, delivery and performance by the Borrower of this Agreement and
the documents related hereto;
(c) A good standing certificate, dated as of a recent date, for each
of the Borrower, issued by the secretary of state of the state of incorporation
thereof, and, a certificate of incorporation for each of the Borrower, dated as
of a recent date, certified by the secretary of state of the state of
incorporation thereof;
(d) Original copies of proper financing statements (the "Facility
Financing Statements") describing the Pledged Receivables, Other Conveyed
Property, Related Security and other Pledged Assets authorized to be filed, and
naming the Borrower as debtor and the Agent, on behalf of the Lender, as secured
party, and other, similar instruments or documents, as may be necessary or, in
the opinion of the Agent or the Lender, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Lender's
interests in all Pledged Receivables, Other Conveyed Property, Related Security
and other Pledged Assets;
(e) Original copies of proper financing statements authorized to be
filed, if any, necessary to release all security interests and other rights of
any Person in the Pledged Receivables, Other Conveyed Property, Related Security
and other Pledged Assets previously granted by FCC;
(f) Certified copies of requests for information or copies (or a
similar UCC search report certified by a party acceptable to the Agent), dated a
date reasonably near to the date of the initial Borrowing, listing all effective
financing statements, which name the Borrower (under its present name and any
previous name) as debtor, together with copies of such financing statements;
(g) One or more favorable Opinions of Counsel, with respect to such
matters as the Agent may reasonably request (including an opinion, with respect
to the first priority perfected
Sch. I-1
security interest of the Agent (for the benefit of the Lender), in the Pledged
Receivables, Other Conveyed Property, Related Security and other Pledged
Assets);
(h) One or more favorable Opinions of Counsel, with respect to the
true conveyance of the Pledged Receivables under the Purchase and Contribution
Agreement, and issues of substantive consolidation;
(i) One or more favorable Opinions of Counsel, addressed and
acceptable to the Agent, with respect to, among other things, the due
authorization, execution and delivery of, and enforceability of, this Agreement
and the other Transaction Documents;
(j) One or more favorable Opinions of Counsel, with respect to the
first priority perfected security interest of the Agent (for the benefit of the
Lender), in the Collection Account and the Sinking Fund Account and the funds
therein;
(k) One or more favorable Opinions of Counsel, addressed and
acceptable to the Agent, with respect to (i)certain regulatory and licensing
issues related to the (a) origination and ownership of the Receivables, Related
Rights and Other Conveyed Property by Contractors which are wholly-owned
subsidiaries of US Home, FCC, the Borrower and (b) the servicing of the
Receivables by the Servicer and (ii) the exemption of the Agent and the Lender
from federal, state and local licensing requirements with respect to the
transaction contemplated by the Transaction Documents.
(l) All conditions to the obligations of FCC and the Borrower under
the Purchase and Contribution Agreement shall have been satisfied in all
respects and a copy of all documents delivered thereunder shall be delivered to
the Agent and shall be reasonably satisfactory to the Agent;
(m) Any necessary third party consents to the closing of the
transactions contemplated hereby;
(n) A copy of each of the other Transaction Documents duly executed by
the parties thereto;
(o) Copies of the "errors and omissions" and fidelity insurance policy
referred to in Section 6.18 hereof together with a certification from the
applicable insurance company that such policies are in force on the date hereof;
and
(p) Such other documents, instruments, certificates and opinions as
the Agent may reasonably request shall have been delivered to the Agent.
Sch. I-2
Sch. I-3
SCHEDULE II
PRIOR NAMES, TRADENAMES, FICTITIOUS NAMES
AND "DOING BUSINESS AS" NAMES
Borrower: None.
Servicer: None.
Sch. II-1
SCHEDULE III
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO ELIGIBLE RECEIVABLES
The following representations and warranties are made by the Borrower and
the Servicer, with respect to each of the Contracts related to Pledged
Receivables, which are designated as being Eligible Receivables on a Borrowing
Base Certificate, a Monthly Remittance Report, a Commercial Paper Remittance
Report, or are otherwise represented to the Agent or the Lender as being
Eligible Receivables, or are included as Eligible Receivables in any calculation
set forth herein.
1. Such Contract represents the genuine, legal, valid, binding and
full recourse payment obligation of the Obligor thereunder, enforceable by the
Borrower in accordance with its terms (subject, as to enforceability, to
bankruptcy, insolvency and other similar laws relating to the enforcement of
creditors rights generally and the availability of equitable remedies) and the
Obligor, with respect to such Contract (and any guarantor of the Obligor's
obligations thereunder), had full legal capacity to execute and deliver such
Contract and any other documents related thereto.
2. No Obligor under such Contract is a Government Entity.
3. The Obligor under such Contract (except for a Contract which is a
Promotional Contract) shall have paid in full the first Scheduled Payment under
such Contract within thirty (30) days of the due date of such first Scheduled
Payment.
4. Such Contract, at the time of origination, conformed to all
requirements of the Credit and Collection Policy applicable to such Contract
and, in any case, no such Contract would be required to be written off pursuant
to the Credit and Collection Policy.
5. Such Contract (i) was originated by a Contractor in the ordinary
course of such Contractor's business and such Contractor had all necessary
licenses and permits to provide home improvement services and originate
Contracts in the state where the related Obligor and the related Underlying
Collateral were located, (ii) was purchased by FCC in the ordinary course of
FCC's business and FCC had all necessary licenses and permits to purchase and
own Contracts in the state where the related Obligor and the related Underlying
Collateral were located, (iii) was sold or contributed by FCC to the Borrower
under the Purchase and Contribution Agreement and the Borrower has all necessary
licenses and permits in the Required States to own Receivables and to purchase
and own Contracts in the state where the related Obligor and the related
Underlying Collateral are located (and if not covered by an Opinion of Counsel,
the Borrower has delivered evidence, in form and substance satisfactory to the
Agent, of such compliance with state laws), and (iv) contains customary and
enforceable provisions with respect to the collateral security related thereto.
6. No fraud and, in addition, no material error, omission,
misrepresentation, negligence or similar occurrence with respect to such
Contract and each other agreement included in
Sch. III-1
the Receivable File related to each such Contract has taken place on the part of
any Person, including, without limitation, the Obligor, the related Contractor,
any appraiser, any builder or developer, or any other party involved in the
origination or purchase of the Contract. Such Contract was sold to FCC by the
related Contractor without any fraud or material misrepresentation on the part
of the Contractor. Such Contract was sold to the Borrower by FCC without any
fraud or material misrepresentation on the part of FCC.
7. Such Contract was sold to FCC by (i) an Eligible Contractor
pursuant to a Contractor Sale Agreement which is in full force and effect and
with respect to which no defaults have occurred (except to the extent such
defaults are individually, or in the aggregate, inconsequential with respect to
such Contract) or (ii) with respect to Contracts originated in New York, First
Savings Bank, FSB pursuant to the NY Purchase Agreement which is in full force
and effect and with respect to which no defaults have occurred.
8. Such Contract is not the subject of any litigation on the part of
the Obligor, nor is it subject to any right of rescission, setoff, counterclaim
or defense on the part of the Obligor thereunder.
9. Such Contract (i) provides for regularly scheduled monthly payments
of principal and interest (except with respect to Promotional Contracts), (ii)
is calculated at a fixed yield, (iii) is fully amortizing in periodic
installments over its remaining term, (iv) provides for acceleration of the
indebtedness thereunder (to the extent allowed by applicable law) if the related
Obligor is in default under or has otherwise violated or breached any material
provision of such Contract and (v) prohibits any assignment of the Contract by
the related Obligor.
10. Such Contract is payable by an Obligor that is a natural person.
11. Such Contract (i) relates to a Property located in one of the
states of the United States or the District of Columbia, (ii) was originated in
the United States and (iii) is denominated in United States Dollars.
12. Such Contract is by its terms an absolute and unconditional
obligation of the related Obligor and is non-prepayable without the payment in
full of principal and accrued interest and finance charges prior to the
expiration of the term of such Contract; and the rights with respect to such
Contract are assignable by the Contractor and FCC (and their successors and
assigns) without the consent of or notice to any Person.
13. The items contained in the Receivable File with respect to such
Contract are substantially in the forms delivered to the Agent prior to the date
hereof or have otherwise been approved by the Agent in writing.
14. All requirements of applicable federal, state and local laws, and
regulations thereunder (including, without limitation, usury laws, licensing
laws and regulations, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
Sch. III-2
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations "B" and "Z",
the Soldiers' and Sailors' Civil Relief Act of 1940 and state adaptations of the
National Consumer Act, and of the Uniform Consumer Credit Code, and all other
consumer credit laws and equal credit opportunity and disclosure laws), in
respect of such Contract and each other agreement included in the Receivable
File related to such Contract, the origination thereof, and the Underlying
Collateral related thereto, have been complied with in all respects. The
consummation of the transactions contemplated by the Transaction Documents will
not involve the violation of any such laws or regulations.
15. Such Contract constitutes either an "Instrument" or "Chattel
Paper" within the meaning of the UCC, and there exists only one original copy of
each such Contract.
16. (A) With respect to each Mortgage Contract, the Contractor related
to such Mortgage Contract shall have taken or caused to be taken all steps
necessary under all applicable law in order to cause a valid, subsisting and
enforceable perfected, first, second, third or fourth priority (as appropriate)
security interest to exist in FCC's favor in the Underlying Collateral securing
each such Mortgage Contract, (B) FCC shall have assigned the perfected, first,
second, third or fourth priority (as appropriate) security interest in the
Underlying Collateral referred to in clause (A) above to the Borrower pursuant
to the Purchase and Contribution Agreement and, if applicable, by means of the
filing of a mortgage assignment in proper form and in the proper jurisdiction
and (C) the Borrower shall have assigned the perfected, first, second, third or
fourth priority (as appropriate) security interest in the Underlying Collateral
referred to in clause (A) above to the Agent, for the benefit of the Lender,
pursuant to Section 2.15 hereof and, if applicable, by means of the filing of a
mortgage assignment in proper form and in the proper jurisdiction.
17. The Borrower has taken all steps necessary under all applicable
law in order to perfect the security interest of the Agent, for the benefit of
the Lender, in (i) the Borrower's interest in the Underlying Collateral related
to such Contract and (ii) such Contract and the Receivable, Related Security and
Other Conveyed Property related thereto (and the proceeds thereof), and there
exists in favor of the Agent, for the benefit of the Lender, as secured party, a
valid, subsisting and enforceable first priority perfected security interest in
(i) the Borrower's interest in such Underlying Collateral and (ii) such Contract
and the Receivable, Related Security and Other Conveyed Property related thereto
(and the proceeds thereof) and such security interest is and shall be prior to
all other liens upon and security interests in (i) the Borrower's interest in
such Underlying Collateral and (ii) such Contract and the Receivable, Related
Security and Other Conveyed Property related thereto (and the proceeds thereof)
that now exist or may hereafter arise or be created (other than Permitted
Liens).
18. No such Contract is a Defaulted Receivable, except to the extent
that all defaults under any such Contract have been cured by the Obligor to the
satisfaction of the Servicer, and thereafter nine (9) consecutive Scheduled
Payments have been paid when due with respect to such Contract.
Sch. III-3
19. Such Mortgage Contract with respect to which the related
Underlying Collateral is located in the State of Georgia complies in all
respects with the Georgia Fair Lending Act.
20. The information pertaining to such Contract set forth in the
Schedule of Contracts (as defined in the Purchase and Contribution Agreement),
the related Assignment and each Borrowing Base Certificate, Commercial Paper
Remittance Report and Monthly Remittance Report is true and correct in all
material respects.
21. With respect to such Contract, by the Borrowing Date on which such
Contract is Pledged hereunder and on each relevant date thereafter, FCC and the
Borrower will have caused their master computer records relating to such
Contract to be clearly and unambiguously marked to show that such Contract has
been sold and/or contributed by FCC under the Purchase and Contribution
Agreement and Pledged by the Borrower under this Agreement.
22. With respect to such Contract there exists a Receivable File and
such Receivable File contains each item listed in the definition of Receivable
File with respect to such Contract and such Receivable File is in the possession
of the Custodian.
23. Such Contract has not been repaid, satisfied, subordinated or
rescinded, and the Underlying Collateral securing such Contract has not been
released from the lien of the Agent, for the benefit of the Lender, in whole or
in part.
24. Such Contract was not originated in, or is subject to the laws of,
any jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer, pledge and/or assignment of such Contract under this Agreement,
the related Contractor Sale Agreement or the Purchase and Contribution Agreement
and FCC or the related Contractor has not entered into any agreement with any
Obligor that prohibits, restricts or conditions the sale, transfer, pledge
and/or assignment of such Contract.
25. Such Contract has not been sold, transferred, assigned or pledged
by FCC to any Person other than the Borrower except for a Contract which has
been previously sold or pledged to a third party to the extent that (i) such
transaction has been disclosed to the Agent in writing and (ii) any ownership
interest, security interest and/or other interest of such third party in such
Contract has been terminated and released in a manner acceptable to the Agent
prior to its Pledge hereunder. FCC has not taken any action to convey any right
to any Person that would result in such Person having a right to payments due
under any such Contract or payments received under any related insurance policy
or otherwise to impair the rights of the Borrower, the Agent or the Lender in
such Contract, any related insurance policy or any proceeds thereof.
26. Such Contract is not assumable by another Person in a manner which
would release the Obligor thereof from such Obligor's obligations to the related
Contractor, FCC or the Borrower.
Sch. III-4
27. Such Contract and each other agreement included in the Receivable
File related to such Contract is free of any default of any party thereto
(including the related Contractor, FCC and the Borrower), counterclaims, offsets
and defenses, including the defense of usury, and from any rescission,
cancellation or avoidance, whether by operation of law or otherwise. There is no
default, breach, violation or event of acceleration (only to the extent such
event of acceleration has been or should have been declared in accordance with
the Credit and Collection Policy) existing under such Contract and each other
agreement included in the Receivable File related to such Contract and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration (only to the extent such event of acceleration has been or should
have been declared in accordance with the Credit and Collection Policy).
28. No selection procedures adverse to the Borrower, the Agent or the
Lender have been utilized in selecting such Contract from all other similar
Contracts originated by the related Contractor or purchased by FCC.
29. The Obligor and any guarantor with respect to each such Contract
received a legible, completely filled-in copy of such Contract and any other
document that such Obligor or such guarantor were, by the terms of the Contract
or applicable law, required to receive in connection with such Contract.
30. Such Contract and each other agreement included in the Receivable
File related to such Contract is in full force and effect in accordance with its
terms and neither the Borrower nor the Obligor has or will have suspended or
reduced any payments or obligations due or to become due thereunder by reason of
a default by any other party to such Contract or such other agreement; there are
no proceedings pending wherein such Obligor, any other obligated party or any
governmental agency has alleged that such Contract or such other agreement is
illegal or unenforceable.
31. The origination and collection practices used by the Servicer and
the related Contractor with respect to such Contract have been in all respects
legal, proper, prudent and customary in the home improvement financing and
servicing business.
32. The Obligor with respect to such Contract is not a partner, member
or Affiliate of the Borrower, the Servicer or any of the Servicer's Affiliates.
33. Neither the operation of any of the terms of such Contract or any
other agreement included in the Receivable File related to such Contract nor the
exercise by the Borrower, the Servicer, the related Contractor or the Obligor of
any right under such Contract or any other agreement included in the Receivable
File will render such Contract or any other agreement included in the Receivable
File related to such Contract unenforceable in whole or in part nor subject to
any right of rescission, setoff, claim, counterclaim or defense, and no such
right of rescission, set-off, claim, counterclaim or defense.
Sch. III-5
34. The Borrower, the related Contractor and/or the Servicer have duly
fulfilled all obligations on their part to be fulfilled under or in connection
with the origination, acquisition and assignment of such Contract, including,
without limitation, giving any notices or consents necessary to effect the
acquisition of the Contract by the Borrower, and have done nothing to impair the
rights of the Borrower or the Agent in the Contract or payments with respect
thereto. The Contract and each other agreement included in the Receivable File
related to such Contract (i) contain the entire agreement of the parties thereto
with respect to the subject matter thereof, (ii) have not been altered, modified
or amended in any respect (except to the extent such alteration, modification or
amendment is inconsequential or is required under applicable law) and (iii) are
free of concessions or understandings with the Obligor thereof of any kind not
expressed in writing therein.
35. The sale from FCC to the Borrower of such Contract and the Other
Conveyed Property and Related Security related thereto does not violate the
terms or provisions of any agreement to which the Borrower is a party or by
which it is bound.
36. The transfer, assignment and conveyance of such Contract and the
Related Security and Other Conveyed Property from FCC to the Borrower pursuant
to the Purchase and Contribution Agreement are not subject to and will not
result in any tax, fee or governmental charge payable by the Borrower or any
other Person to any federal, state or local government except for miscellaneous
mortgage filing fees and similar charges.
37. Such Contract is not deemed to be an executory contract or
unexpired lease subject to rejection by an Obligor under Section 365 of the
Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect
to such Obligor.
38. [Intentionally Omitted.]
39. The Underlying Collateral related to such Contract has not, and
will not, be used by the related Obligor in any manner or for any purpose which
would result in any material risk of liability being imposed upon FCC, the
Borrower, the Agent or the Lender under any federal state, local or foreign
laws, common laws, statutes, codes, ordinances, rules, regulations, permits,
judgments, agreements or orders related to or addressing the environment, health
or safety.
40. [Intentionally Omitted.]
41. The home improvements related to such Contract have been fully
completed to the satisfaction of the related Obligor and a Completion
Certificate with respect to such Contract has been executed by the Obligor and
Contractor related thereto.
42. Such Contract and all accompanying collateral documents are
genuine in all respects as appearing on their face and as represented in the
books and records of the Borrower and FCC, and all information set forth therein
is true and correct (except to the extent any error or omission set forth
therein is inconsequential).
Sch. III-6
43. [Intentionally Omitted.]
44. With respect to any Contract that has a prepayment penalty
feature, each such prepayment penalty is enforceable and each prepayment penalty
is permitted pursuant to federal, state and local law.
45. Such Contract does not contain provisions pursuant to which
monthly payments are (a) paid or partially paid with funds deposited in any
separate account established by the related Contractor, FCC, the Obligor, or
anyone on behalf of the Obligor or (b) paid by any source other than the
Obligor. (For purposes of clarification, clause (b) of this eligibility criteria
does not restrict payments with respect to a Contract by the Obligor's family or
friends.)
46. All payments made under such Contract have been properly credited
against the Outstanding Balance of such Contract.
47. Such Contract is not a revolving home equity line of credit.
48. Interest on such Contract is calculated on the basis of a (i)
360-day year consisting of twelve 30-day months or (ii) 365-day year.
49. The proceeds of such Contract have not been and shall not be used
to satisfy, in whole or part, any debt owed or owing by the related Obligor to
FCC or the Borrower or any Affiliate of FCC.
50. The proceeds of such Contract have been fully disbursed and the
related Obligor has no additional right to further fundings thereunder.
51. None of the proceeds of such Contract were used to finance
single-premium credit life insurance policies.
52. All parties which have had any interest in such Contract, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (i) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Property is located, and (ii) either (A) organized under the laws of such state,
(B) qualified to do business in such state, (C) a federal and savings loan
association, savings bank or national bank having a principal office in such
state, or (D) not doing business in such state.
53. All representations and warranties relating to each such Contract
and the Related Security set forth in the Transaction Documents are true in all
material respects.
54. [Intentionally Omitted.]
55. Such Contract is not subject to any servicing arrangement (with
respect to collection or enforcement) or any subservicing arrangement with any
Person other than the Servicer,
Sch. III-7
nor are any servicing rights relating to such Contract subject to any lien or
negative pledge in favor of any Person.
56. All improvements which were considered in determining the market
value of the related Property lay wholly within the boundaries and building
restrictions lines of the Property, and no improvements on adjoining properties
encroach upon the Property. At the time of origination, no improvement located
on or being part of the Property related to such Contract was in violation of
any applicable zoning law or regulation.
57. The Property related to such Contract (i) consists of a
residential dwelling which is a 1-4 family unit, a condominium or planned unit
development and, except in the case of a condominium, the land on which such
dwelling is constructed and (ii) is in material compliance with all
environmental laws, and FCC and the related Obligor, has not received notice of
any violation or potential violation of such law nor is there any pending action
or proceeding directly involving the Property of which FCC is aware in which
compliance with any environmental law, rule or regulation is an issue.
58. If such Contract is a Mortgage Contract, upon origination, an
insurance policy naming FCC and its successors and assigns as a loss payee is in
full force and effect with respect to such Contract and such insurance policy
provides for loss and physical damage coverage with respect to the related
Property in an amount equal to the full replacement value of such Property.
59. [Intentionally Omitted.]
60. The Property related to such Mortgage Contract is fully insured
against loss or damage by fire and such other hazards as are customary in the
area where the Property is located and, to the extent required by FCC as of the
date of purchase or the related Contractor as of the date of origination.
62. The inclusion at any time of such Contract as a Pledged Receivable
shall not cause the Weighted Average FICO Score to be less than 640.
63. With respect to such Contract, FCC has contacted directory
assistance or otherwise verified that the Obligor's phone number which was
submitted on the loan application is true and correct in all respects.
64. With respect to such Contract, FCC has a tape recording of the
Obligor's consent to the terms and conditions of the related Contract, which
verifies and confirms with such Obligor each of the specific matters described
in the Credit and Collection Policy, and such tape recording is on file at FCC.
65. With respect to such Contract, a welcome letter which reiterates
the material terms of such Contract and contains a set of temporary payment
coupons, a quality control inspection report and a copy of FCC's privacy and
protection policy, has been delivered to the Obligor.
Sch. III-8
66. With respect to each such Contract, FCC shall have received a
Completion Certificate, signed by both the related Obligor and Contractor.
67. At the time of origination, such Mortgage Contract did not have a
Cumulative LTV greater than 115%.
68. At the time of origination, such Contract did not have a Cost to
Value greater than 80%.
69. The Obligor related to such Contract has been directed to make
payments to the Lockbox Account.
70. If such Contract is a Non-Mortgage Contract, such Contract has a
stated maturity and an original term of 180 months or less and does not permit
renewal or extension of such term.
71. If such Contract is a Mortgage Contract, such Contract has a
stated maturity and an original term of 240 months or less and does not permit
renewal or extension of such term.
72. If such Contract is a Non-Mortgage Contract, the Original Balance
of such Contract was not greater than $20,000.
73. If such Contract is a Non-Mortgage Contract, the Obligor with
respect to such Contract had a FICO Score of at least 640.
74. Such Contract contains language by which the related Obligor
grants a security interest to the Contractor in the Underlying Collateral which
is the subject of each such Contract.
75. If such Contract is a Mortgage Contract, the Obligor with respect
to such Contract had a FICO Score of at least 580.
76. If such Contract is a Mortgage Contract, the Original Balance of
such Contract was not greater than $50,000.
77. If such Contract is a Subordinated Lien Contract, at the time of
origination or purchase thereof, the senior mortgage(s) is/are in full force and
effect.
78. If such Contract is a Mortgage Contract, upon default by the
Obligor on such Contract and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of such Contract will be
able to deliver good and merchantable title to the Mortgaged Property (subject
to only those exceptions to title as are generally acceptable to home equity
mortgage lending institutions, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Contract).
Sch. III-9
79. If such Contract is a Mortgage Contract, the Mortgage related to
such Mortgage Contract creates a valid, subsisting, enforceable and perfected,
first, second, third or fourth priority lien (as applicable) on the related
Mortgaged Property and the lien created thereby has been duly recorded.
80. [Intentionally Omitted.]
81. [Intentionally Omitted.]
82. [Intentionally Omitted.]
83. If such Contract is a Mortgage Contract, all costs, fees and
expenses incurred in making, closing and recording the Mortgage related to such
Mortgage Contract have been paid and such Obligor is not entitled to any refund
of any amounts paid or due to FCC or the related Contractor pursuant to the
Mortgage.
84. [Intentionally Omitted.].
85. If such Contract is a Mortgage Contract, the Mortgage related to
such Mortgage Contract is in a form generally acceptable in the secondary market
for comparable home improvement loans.
86. If such Contract is a Mortgage Contract, in the event the Mortgage
related to such Mortgage Contract constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in the Mortgage; and no fees or expenses
are or will become payable by the holder of the Mortgage to the trustee under
the deed of trust, except in connection with a trustee's sale after default by
the Obligor.
87. At the time of origination, FCC and the Borrower did not have
knowledge of any specific circumstances or specific condition with respect to
the Mortgage, the Mortgaged Property, the Obligor or the Obligor's credit
standing that can reasonably be expected to cause such Contract to become
delinquent, or adversely affect the value of such Contract as determined in
accordance with the Credit and Collection Policy.
88. If such Contract is a Mortgage Contract, no document relating to
such Contract provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property.
89. If the residential dwelling on the Property is a condominium unit
or a planned unit development, such condominium or planned unit development
meets the eligibility requirements of the Credit and Collection Policy with
respect to condominiums and planned unit developments, set forth in the Credit
and Collection Policy.
Sch. III-10
90. If such Contract is a Mortgage Contract, the Mortgage related to
such Contract contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Contract in the event that the
Mortgaged Property is sold or transferred with the prior written consent of the
mortgagee thereunder.
91. If such Contract is a Subordinate Lien Contract, either (i) no
consent for any Subordinate Lien Contract is required by the holder of the
related first, second third or fourth lien (as appropriate) or (ii) such consent
has been obtained and is contained in the Receivable File.
92. [Intentionally Omitted.]
93. With respect to such Contract, no amounts are owed to any
Contractor by the Borrower, the Servicer or any of their Affiliates.
94. If such Contract is a Promotional Contract, (i) such Contract has
an Original Balance of not greater than $20,000 and (ii) the Obligor related to
such Contract had a FICO Score of at least 680.
95. Neither FCC, the related Contractor or any of their Affiliates
have made any payments on behalf of the Obligor related to such Contract (except
as otherwise provided under the Transaction Documents).
Sch. III-11
SCHEDULE IV
CREDIT AND COLLECTION POLICY
Attached.
Sch. IV-1
SCHEDULE V
ELIGIBLE THIRD-PARTY CONTRACTORS
Attached.
Sch. IV-2
EXHIBIT A
FORM OF BORROWING BASE CERTIFICATE
(See attached.)
Exh. A-1
EXHIBIT B
FORM OF COMMERCIAL PAPER REMITTANCE REPORT
(See attached.)
Exh. B-1
EXHIBIT C
FORM OF MONTHLY REMITTANCE REPORT
(See attached.)
Exh. C-1
EXHIBIT D-1
FORM OF NON-MORTGAGE CONTRACT
(See attached.)
▇▇▇. ▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF NON-MORTGAGE CONTRACT
(See attached.)
Exh. D-2
EXHIBIT E
FORM OF MORTGAGE CONTRACT
(See attached.)
Exh. E-1
EXHIBIT F
AGENT'S BANK FEE
Exh. F-1
EXHIBIT G
CUSTODIAN'S FEES
(See attached.)
Exh. G-1
EXHIBIT H
FORM OF COMPLETION CERTIFICATE
Exh. H-1
EXHIBIT I
FORM OF CONTRACTOR SALE AGREEMENT
(See attached)
Exh. I-1