EXHIBIT 10.8
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U.S. $135,000,000
LOAN CERTIFICATE AND SERVICING AGREEMENT
by and among
CAPITALSOURCE ACQUISITION FUNDING LLC,
as the Seller
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CAPITALSOURCE FINANCE LLC,
as the Originator and as the Servicer
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VARIABLE FUNDING CAPITAL CORPORATION,
as the Purchaser
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WACHOVIA SECURITIES, INC.,
as the Administrative Agent and as the Purchaser Agent
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▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Backup Servicer and as the Collateral Custodian
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Dated as of February 28, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................... 2
Section 1.1 Certain Defined Terms............................................................ 2
Section 1.2 Other Terms...................................................................... 34
Section 1.3 Computation of Time Periods...................................................... 34
Section 1.4 Interpretation................................................................... 34
ARTICLE II PURCHASE OF THE VARIABLE FUNDING CERTIFICATE.............................................. 35
Section 2.1 The Variable Funding Certificate................................................. 35
Section 2.2 Procedures for Advances.......................................................... 35
Section 2.3 Reduction of the Facility Amount; Mandatory and Optional Repayments.............. 36
Section 2.4 Determination of Interest........................................................ 37
Section 2.5 Percentage Evidenced by the Variable Funding Certificate......................... 37
Section 2.6 Notations on Variable Funding Certificate........................................ 37
Section 2.7 Settlement Procedures During the Revolving Period................................ 38
Section 2.8 Settlement Procedures During the Amortization Period............................. 38
Section 2.9 Collections and Allocations...................................................... 39
Section 2.10 Payments, Computations, Etc...................................................... 40
Section 2.11 Optional Repurchase.............................................................. 41
Section 2.12 Fees............................................................................. 41
Section 2.13 Increased Costs; Capital Adequacy; Illegality.................................... 41
Section 2.14 Taxes............................................................................ 43
Section 2.15 Assignment of the Sale Agreement................................................. 44
Section 2.16 [Reserved.]...................................................................... 44
Section 2.17 Optional Sales................................................................... 44
ARTICLE III CONDITIONS TO ADVANCES.................................................................... 46
Section 3.1 Conditions to Closing and Initial Advance........................................ 46
Section 3.2 Conditions Precedent to All Advances............................................. 47
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................ 49
Section 4.1 Representations and Warranties of the Seller..................................... 49
Section 4.2 Representations and Warranties of the Seller Relating to the
Agreement and the Assets......................................................... 58
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TABLE OF CONTENTS
(continued)
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Section 4.3 Representations and Warranties of the Servicer................................... 59
Section 4.4 Representations and Warranties of the Backup Servicer............................ 62
Section 4.5 Representations and Warranties of the Collateral Custodian....................... 63
Section 4.6 Breach of Certain Representations and Warranties................................. 63
ARTICLE V GENERAL COVENANTS......................................................................... 64
Section 5.1 Affirmative Covenants of the Seller.............................................. 64
Section 5.2 Negative Covenants of the Seller................................................. 67
Section 5.3 [Reserved.]...................................................................... 69
Section 5.4 Affirmative Covenants of the Servicer............................................ 69
Section 5.5 Negative Covenants of the Servicer............................................... 72
Section 5.6 Affirmative Covenants of the Backup Servicer..................................... 73
Section 5.7 Negative Covenants of the Backup Servicer........................................ 73
Section 5.8 Affirmative Covenants of the Collateral Custodian................................ 73
Section 5.9 Negative Covenants of the Collateral Custodian................................... 73
ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS................................................. 74
Section 6.1 Designation of the Servicer...................................................... 74
Section 6.2 Duties of the Servicer........................................................... 74
Section 6.3 Authorization of the Servicer.................................................... 76
Section 6.4 Collection of Payments........................................................... 77
Section 6.5 Servicer Advances................................................................ 78
Section 6.6 Realization Upon Charged-Off Loans............................................... 79
Section 6.7 Maintenance of Insurance Policies................................................ 79
Section 6.8 Servicing Compensation........................................................... 80
Section 6.9 Payment of Certain Expenses by Servicer.......................................... 80
Section 6.10 Reports.......................................................................... 80
Section 6.11 Annual Statement as to Compliance................................................ 81
Section 6.12 Annual Independent Public Accountant's Servicing Reports......................... 81
Section 6.13 Limitation on Liability of the Servicer and Others............................... 82
Section 6.14 The Servicer Not to Resign....................................................... 82
Section 6.15 Servicer Defaults................................................................ 82
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TABLE OF CONTENTS
(continued)
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Section 6.16 Appointment of Successor Servicer................................................ 84
ARTICLE VII THE BACKUP SERVICER....................................................................... 86
Section 7.1 Designation of the Backup Servicer............................................... 86
Section 7.2 Duties of the Backup Servicer.................................................... 86
Section 7.3 Merger or Consolidation.......................................................... 87
Section 7.4 Backup Servicing Compensation.................................................... 88
Section 7.5 Backup Servicer Removal.......................................................... 88
Section 7.6 Limitation on Liability.......................................................... 88
Section 7.7 The Backup Servicer Not to Resign................................................ 89
ARTICLE VIII THE COLLATERAL CUSTODIAN.................................................................. 89
Section 8.1 Designation of Collateral Custodian.............................................. 89
Section 8.2 Duties of Collateral Custodian................................................... 90
Section 8.3 Merger or Consolidation.......................................................... 91
Section 8.4 Collateral Custodian Compensation................................................ 92
Section 8.5 Collateral Custodian Removal..................................................... 92
Section 8.6 Limitation on Liability.......................................................... 92
Section 8.7 The Collateral Custodian Not to Resign........................................... 93
Section 8.8 Release of Documents............................................................. 93
Section 8.9 Return of Required Loan Documents................................................ 94
Section 8.10 Access to Certain Documentation and Information Regarding
the Assets; Audits............................................................... 94
ARTICLE IX SECURITY INTEREST......................................................................... 95
Section 9.1 Grant of Security Interest....................................................... 95
Section 9.2 Release of Lien on Assets........................................................ 95
Section 9.3 Further Assurances............................................................... 96
Section 9.4 Remedies......................................................................... 96
Section 9.5 Waiver of Certain Laws........................................................... 96
Section 9.6 Power of Attorney................................................................ 96
ARTICLE X TERMINATION EVENTS........................................................................ 97
Section 10.1 Termination Events............................................................... 97
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TABLE OF CONTENTS
(continued)
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Section 10.2 Remedies......................................................................... 100
ARTICLE XI INDEMNIFICATION........................................................................... 101
Section 11.1 Indemnities by the Seller........................................................ 101
Section 11.2 Indemnities by the Servicer...................................................... 104
Section 11.3 After-Tax Basis.................................................................. 104
ARTICLE XII THE ADMINISTRATIVE AGENT AND THE PURCHASER AGENT.......................................... 104
Section 12.1 The Administrative Agent......................................................... 104
Section 12.2 Purchaser Agent.................................................................. 107
ARTICLE XIII MISCELLANEOUS............................................................................. 109
Section 13.1 Amendments and Waivers........................................................... 109
Section 13.2 Notices, Etc..................................................................... 109
Section 13.3 Ratable Payments................................................................. 109
Section 13.4 No Waiver; Remedies.............................................................. 110
Section 13.5 Binding Effect; Benefit of Agreement............................................. 110
Section 13.6 Term of this Agreement........................................................... 110
Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue............. 110
Section 13.8 Waiver of Jury Trial............................................................. 111
Section 13.9 Costs, Expenses and Taxes........................................................ 111
Section 13.10 No Proceedings................................................................... 112
Section 13.11 Recourse Against Certain Parties; Limitation on Liabilities...................... 112
Section 13.12 Protection of Right, Title and Interest in the Assets; Further
Action Evidencing Advances....................................................... 113
Section 13.13 Confidentiality.................................................................. 114
Section 13.14 Execution in Counterparts; Severability; Integration............................. 115
Section 13.15 Waiver of Setoff................................................................. 116
Section 13.16 Assignments...................................................................... 116
Section 13.17 Heading and Exhibits............................................................. 116
Section 13.18 Loans Subject to Retained Interest Provisions.................................... 116
Section 13.19 Reasonable Notice under Article 9 of the UCC..................................... 117
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EXHIBITS
EXHIBIT A-1 Form of Borrowing Notice (Advance)
EXHIBIT A-2 Form of Borrowing Notice (Reduction of Advances Outstanding and Facility Amount)
EXHIBIT A-3 Form of Borrowing Base Certificate
EXHIBIT B Form of Variable Funding Certificate
EXHIBIT C Form of Monthly Report
EXHIBIT D [Reserved]
EXHIBIT E-1 Form of Officer's Certificate as to Solvency (CapitalSource Acquisition Funding LLC)
EXHIBIT E-2 Form of Officer's Certificate as to Solvency (CapitalSource Finance LLC)
EXHIBIT F-1 Form of Officer's Closing Certificate (CapitalSource Acquisition Funding LLC)
EXHIBIT F-2 Form of Officer's Closing Certificate (CapitalSource Finance LLC)
EXHIBIT G-1 Form of Power of Attorney (CapitalSource Acquisition Funding LLC)
EXHIBIT G-2 Form of Power of Attorney (CapitalSource Finance LLC)
EXHIBIT H Form of Release of Required Loan Documents
EXHIBIT I Form of Assignment of Mortgage
EXHIBIT J Form of Servicer's Certificate
EXHIBIT K Form of Transferee Letter
EXHIBIT L Form of Lock-Box Agreement
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II List of Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Location of Required Loan Documents and Loan Files
SCHEDULE IV Loan List
SCHEDULE V Copies of Loan Agreements
SCHEDULE VI [Reserved]
SCHEDULE VII Credit and Collection Policy
SCHEDULE VIII Acquisition Agreement
SCHEDULE IX Loans Currently Past Due with Respect to Payments of Principal and Interest
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LOAN CERTIFICATE AND SERVICING AGREEMENT
THIS LOAN CERTIFICATE AND SERVICING AGREEMENT (such agreement as
amended, modified, waived, supplemented, replaced or restated from time to time,
the "Agreement") is made as of this February 28, 2003, by and among:
(1) CAPITALSOURCE ACQUISITION FUNDING LLC, a Delaware limited
liability company, as the seller (together with its successors and assigns in
such capacity, the "Seller");
(2) CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company ("CapitalSource Finance"), as the originator (together with its
successors and assigns in such capacity, the "Originator"), and as the servicer
(together with its successors and assigns in such capacity, the "Servicer");
(3) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation
(together with its successors and assigns, "VFCC"), as the purchaser (together
with its successors and assigns in such capacity, the "Purchaser");
(4) WACHOVIA SECURITIES, INC., a Delaware corporation (together
with its successors and assigns, "WSI"), as the agent for VFCC (together with
its successors and assigns in such capacity, the "Purchaser Agent") and as the
agent for the Purchaser Agent (together with its successors and assigns in such
capacity, the "Administrative Agent"); and
(5) ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION ("▇▇▇▇▇
Fargo"), not in its individual capacity but as the backup servicer (together
with its successors and assigns in such capacity, the "Backup Servicer"), and
not in its individual capacity but as the collateral custodian (together with
its successors and assigns in such capacity, the "Collateral Custodian").
RECITALS
WHEREAS, on February 28, 2003, the Originator acquired a pool of
floating rate senior secured loans from FINOVA Capital Corporation (the
"Financing Originator") pursuant to the terms of that certain Portfolio
Acquisition Agreement, by and between the Originator, the Financing Originator
and Finova Portfolio Services, Inc. (the "Acquisition Agreement"), a copy of
which is attached hereto as Schedule VIII;
WHEREAS, pursuant to the terms of the Sale Agreement (as defined
herein) the Originator will on the Closing Date transfer the Loans acquired from
the Financing Originator to the Seller;
WHEREAS, the parties hereto desire to enter into this Agreement to
provide, among other things, for (i) the sale of an undivided ownership interest
in the Assets by the Seller to the Administrative Agent, for the benefit of the
Purchaser, (ii) the servicing functions with respect to such Assets of the
Servicer, and (iii) the backup servicing and custodial functions with respect to
such Assets of the Backup Servicer and the Collateral Custodian, respectively;
WHEREAS, the Originator, the Servicer and the Seller acknowledge that,
in order to further secure the Variable Funding Certificate, the Seller is
granting to the Administrative Agent, on behalf of the Secured Parties, a first
priority perfected security interest in, among other things, the Assets,
including its rights under this Agreement and the Originator, the Servicer and
the Seller agree that all covenants and agreements made by the Originator, the
Servicer and the Seller herein with respect to the Assets shall be for the
benefit of the Administrative Agent and the Secured Parties; and
WHEREAS, all other conditions precedent to the execution of this
Agreement have been complied with.
NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises
and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are
defined above or in this Section 1.1.
(b) As used in this Agreement and its schedules, exhibits and
other attachments, unless the context requires a different meaning, the
following terms shall have the following meanings:
40 Act: Defined in Section 10.1(i).
Accrual Period: (a) with respect to each Advance (or portion thereof) funded at
an Interest Rate other than the CP Rate (i) with respect to the first Payment
Date, the period from and including the Closing Date to but excluding such first
Payment Date and (ii) with respect to any subsequent Payment Date, the period
from and including the previous Payment Date to but excluding such subsequent
Payment Date, and (b) with respect to each Advance (or portion thereof) funded
at an Interest Rate equal to the CP Rate (i) with respect to the first Payment
Date, the period from and including the Closing Date to and including the last
day of the calendar month in which the Closing Date occurs and (ii) with respect
to any subsequent Payment Date, the period ending on the last day of the
calendar month immediately preceding the month in which the Payment Date occurs
and commencing on the first (1st) day of such immediately preceding calendar
month.
Acquisition Agreement: Defined in the Recitals of this Agreement.
Additional Amount: Defined in Section 2.14(a).
Adjusted Eurodollar Rate: For any Accrual Period, an interest rate per annum
equal to a fraction, expressed as a percentage and rounded upwards (if
necessary) to the nearest 1/100 of 1%, (i) the
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numerator of which is equal to the LIBOR Rate for such Accrual Period and (ii)
the denominator of which is equal to 100% minus the Eurodollar Reserve
Percentage for such Accrual Period.
Administrative Agent: WSI, in its capacity as administrative agent for the
Purchaser Agent, together with its successors and assigns, including any
successor appointed pursuant to ARTICLE XII.
Advance: Defined in Section 2.1(b).
Advance Amount: With respect to any Advance under the Variable Funding
Certificate and any Funding Date, subject to the terms and conditions hereof, an
amount equal to the product of (a) the Advance Rate and (b) the Borrowing Base.
Advance Rate: An amount equal to 80%.
Advances Outstanding: On any day, the aggregate principal amount of all Advances
outstanding on such day, after giving effect to all repayments of Advances and
the makings of new Advances on such day.
Affected Party: The Administrative Agent, the Purchaser Agent, the Purchaser,
each Liquidity Bank, all assignees and participants of the Purchaser and each
Liquidity Bank, any successor to WSI as Administrative Agent and any sub-agent
of the Administrative Agent.
Affiliate: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or under common control with such Person,
or is a director or officer of such Person. For purposes of this definition,
"control" (including the terms "controlling," "controlled by" and "under common
control with") when used with respect to any specified Person means the
possession, direct or indirect, of the power to vote 20% or more of the voting
securities of such Person or to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
Agent's Account: A special account (account number 2000002391825) in the name of
the Administrative Agent maintained at Wachovia.
Aggregate Outstanding Loan Balance: With respect to all Eligible Loans included
as part of the Asset Pool, on any day, the sum of the Outstanding Loan Balances
of such Eligible Loans on such date. Notwithstanding anything to the contrary
contained herein, for purposes of determining the Aggregate Outstanding Loan
Balance, if any portion of a Loan is deemed to be "charged-off" in accordance
with the provisions of the definition of Charged-Off Loan, then the entire Loan
shall have a zero (0) Outstanding Loan Balance except in connection with the
calculation of Average Pool Charged-Off Ratio.
Aggregate Unpaids: At any time, an amount equal to the sum of all unpaid
Advances Outstanding, Interest, Breakage Costs and all other amounts owed by the
Seller to the Purchaser, the Purchaser Agent, the Administrative Agent, the
Backup Servicer and the Collateral Custodian hereunder (including, without
limitation, all Indemnified Amounts, other amounts payable under ARTICLE XI and
amounts required under Section 2.7, Section 2.8, Section 2.12, Section 2.13 and
Section 2.14 to the Affected Parties or Indemnified Parties) or by the Seller or
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any other Person under any fee letter (including, without limitation, the VFCC
Fee Letter, the Backup Servicer Fee Letter and the Collateral Custodian Fee
Letter) delivered in connection with the transactions contemplated by this
Agreement (whether due or accrued).
Alternative Rate: An interest rate per annum equal to the Adjusted Eurodollar
Rate; provided, however, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs.
Amortization Period: The period beginning on the Termination Date and ending on
the Collection Date.
Applicable Law: For any Person or property of such Person, all existing and
future applicable laws, rules, regulations (including proposed, temporary and
final income tax regulations), statutes, treaties, codes, ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority (including, without limitation, usury laws, the Federal Truth in
Lending Act, and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System), and applicable judgments, decrees, injunctions, writs,
awards or orders of any court, arbitrator or other administrative, judicial, or
quasi-judicial tribunal or agency of competent jurisdiction.
Asset: All right, title, and interest (whether now owned or hereafter acquired
or arising, and wherever located) of the Seller in all accounts, general
intangibles, instruments, chattel paper, documents, money, letters of credit,
advices of credit, deposit accounts, certificates of deposit, investment
property, goods, and other property consisting of, arising out of, or related to
any of the following: (i) the Loans, and all monies due or to become due in
payment under such Loans on and after the related Cut-Off Date, including but
not limited to all Collections, but excluding any Excluded Amounts; (ii) all
Related Security with respect to the Loans; and (iii) all income and Proceeds of
the foregoing.
Asset Pool: At any time, all then outstanding Assets.
Assignment Agreement: Each Membership Interest Assignment Agreement (including
the agreements dated as of February 28, 2003) by and between CapitalSource
Finance, as the assignor, and the Seller, as the assignee, executed in
connection herewith, as the same may be amended, modified, waived, supplemented
or restated from time to time.
Assignment of Mortgage: As to each Loan secured by an interest in real property,
one or more assignments, notices of transfer or equivalent instruments, each in
recordable form and sufficient under the laws of the relevant jurisdiction to
reflect the transfer of the related mortgage, deed of trust, security deed or
similar security instrument and all other documents related to such Loan and to
the Seller and to grant a perfected lien thereon by the Seller in favor of the
Administrative Agent, on behalf of the Secured Parties, each such Assignment of
Mortgage to be substantially in the form of Exhibit I hereto.
Availability: At any time, an amount equal to the positive excess (if any) of
(i) the amount by which the lesser of (a) the Facility Amount and (b) the
Maximum Availability exceeds the amount necessary to cure any
Overcollateralization Shortfall and any Required Equity Shortfall
4
minus (ii) the Advances Outstanding on such day; provided, however, during the
Amortization Period, the Availability shall be zero.
Available Funds: With respect to any Payment Date, all amounts received in the
Collection Account (including, without limitation, any Collections on Assets
included in the Asset Pool and earnings from Permitted Investments in the
Collection Account) during the Collection Period that ended on the last day of
the calendar month immediately preceding the calendar month in which such
Payment Date occurs.
Average Pool Charged-Off Ratio: As of any Determination Date, the percentage
equivalent of a fraction the numerator of which is equal to the sum of (1) the
Outstanding Loan Balance of all Loans (excluding equity and preferred stock
investments) that became Charged-Off Loans (net of Recoveries during such
Collection Period) during the Collection Period related to such Determination
Date and (2) the Outstanding Loan Balances of Loans (excluding equity and
preferred stock investments) that became Charged-Off Loans (net of Recoveries
during such Collection Periods) during the Collection Periods related to the
eleven (11) immediately preceding Determination Dates, and the denominator of
which is equal to a fraction the numerator of which is the sum of (1) the
Aggregate Outstanding Loan Balance (excluding equity and preferred stock
investments) as of the first (1st) day of the Collection Period related to such
Determination Date and (2) the Aggregate Outstanding Loan Balance (excluding
equity and preferred stock investments) as of the first (1st) day of the
immediately preceding eleven (11) Collection Periods and the denominator of
which is twelve (12).
Average Portfolio Charged-Off Ratio: As of any Determination Date, the
percentage equivalent of a fraction the numerator of which is equal to the sum
of (1) the Portfolio Outstanding Loan Balance of all Portfolio Loans (excluding
equity and preferred stock investments) that became Charged-Off Portfolio Loans
(net of Recoveries during such Collection Period) during the Collection Period
related to such Determination Date and (2) the Portfolio Outstanding Loan
Balances of all Portfolio Loans (excluding equity and preferred stock
investments) that became Charged-Off Portfolio Loans (net of Recoveries during
such Collection Periods) during the Collection Periods related to the eleven
(11) immediately preceding Determination Dates, and the denominator of which is
equal to a fraction the numerator of which is the sum of (1) the Portfolio
Aggregate Outstanding Loan Balance (excluding equity and preferred stock
investments) as of the first (1st) day of the Collection Period related to such
Determination Date and (2) the Portfolio Aggregate Outstanding Loan Balance
(excluding equity and preferred stock investments) as of the first (1st) day of
the immediately preceding eleven (11) Collection Periods and the denominator of
which is twelve (12).
Average Portfolio Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction (i) the numerator of which is equal to the
sum of (1) the Portfolio Delinquency Ratio on such Determination Date and (2)
the Portfolio Delinquency Ratio on the two (2) immediately preceding
Determination Dates and (ii) the denominator of which is equal to three (3).
Backup Servicer: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, not in its
individual capacity, but solely as Backup Servicer, its successor in interest
pursuant to Section 7.3 or such Person as shall have been appointed as Backup
Servicer pursuant to Section 7.5.
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Backup Servicer Fee Letter: The Backup Servicer Fee Letter, dated as of February
28, 2003, among the Servicer, the Administrative Agent, and the Backup Servicer,
as such letter may be amended, modified, supplemented, restated or replaced from
time to time.
Backup Servicer Termination Notice: Defined in Section 7.5.
Backup Servicing Fee: Defined in the Backup Servicer Fee Letter.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978 (11
U.S.C.Section 101, et seq.), as amended from time to time.
Base Rate: On any date, a fluctuating interest rate per annum equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.
Benefit Plan: Any employee benefit plan as defined in Section 3(3) of ERISA in
respect of which the Seller or any ERISA Affiliate of the Seller is, or at any
time during the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
Borrowing Base: On any date of determination, the difference of (i) the
Aggregate Outstanding Loan Balance, minus (ii) the Outstanding Loan Balance of
all Delinquent Loans and minus (iii) the amount (calculated without duplication)
by which such Eligible Loans exceed any applicable Pool Concentration Criteria.
Borrowing Base Certificate: Each certificate, in the form of Exhibit A-3,
required to be delivered by the Seller along with each Borrowing Notice.
Borrowing Notice: Each notice, in the form of Exhibit A-1 or Exhibit A-2,
required to be delivered by the Seller (i) in respect of (a) the Initial Advance
and each incremental Advance, or (b) any reduction of the Facility Amount or
repayment of Advances Outstanding; and (ii) on each Determination Date.
Breakage Costs: Any amount or amounts as shall compensate VFCC for any loss,
cost or expense incurred by VFCC (as determined by the Purchaser Agent on behalf
of VFCC, in the Purchaser Agent's sole discretion) as a result of (i) a
prepayment by the Seller of Advances Outstanding or Interest or (ii) any
difference between the CP Rate and the Adjusted Eurodollar Rate. All Breakage
Costs shall be due and payable hereunder upon demand.
Business Day: Any day other than a Saturday or a Sunday on which (a) banks are
not required or authorized to be closed in Minneapolis, Minnesota, New York
City, New York or Charlotte, North Carolina, and (b) if the term "Business Day"
is used in connection with the determination of the LIBOR Rate, dealings in
United States dollar deposits are carried on in the London interbank market.
CapitalSource Finance: Defined in the Preamble of this Agreement.
CapitalSource Funding CP Facility: That certain Third Amended and Restated Loan
Certificate and Servicing Agreement, dated as of February 25, 2003, by and among
CapitalSource Funding LLC, as the seller, CapitalSource Finance, as the
originator and as the servicer, VFCC, Fairway
6
Finance Corporation, Eiffel Funding, LLC and Hannover Funding Company LLC, as
the purchasers, WSI, as the administrative agent and the VFCC agent, BMO ▇▇▇▇▇▇▇
▇▇▇▇▇ Corp., as the agent for Fairway Finance Corporation, CDC Financial
Products Inc., as the agent for Eiffel Funding, LLC, Norddeutsche Landesbank
Girozentrale, as the agent for Hannover Funding Company LLC, and ▇▇▇▇▇ Fargo, as
the backup servicer and as the collateral custodian, as amended, modified,
waived, supplemented or restated from time to time.
Change-in-Control: Any of the following:
(a) The failure of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ and Farallon
Capital Partners L.P. and Affiliates thereof to own (directly or indirectly),
free and clear of all liens, at least 30% of the outstanding membership
interests of CapitalSource Holdings LLC;
(a) The failure of CapitalSource Holdings LLC to own (directly or
through wholly-owned subsidiaries), free and clear of all liens, 99.9% of the
outstanding voting membership interests of the Originator;
(b) the creation or imposition of any Lien on any membership
interests of the Seller; or
(c) the failure by Originator to own all of the membership
interests of the Seller.
Charged-Off Loan: A Loan (or portion thereof deemed to be "charged-off") as to
which any of the following first occurs: (i) the Servicer has determined or
should have reasonably determined in accordance with the Credit and Collection
Policy that such Loan is not collectible, (ii) (1) all or any portion of any one
or more payments remains unpaid for at least ninety (90) days from the original
due date for such payment or would be so delinquent but for any amendment or
modification made to such Loan resulting from the Obligor's inability to pay
such Loan in accordance with its terms, in which case not less than fifty
percent (50%) of the Outstanding Loan Balance of such Loan shall be deemed to be
"charged-off" for purposes of this Agreement, and (2) all or any portion of any
one or more payments remains unpaid for at least one hundred and eighty (180)
days from the original due date for such payment or would be so delinquent but
for any amendment or modification made to such Loan resulting from the Obligor's
inability to pay such Loan in accordance with its terms, in which case not less
than one hundred percent (100%) of the Outstanding Loan Balance of such Loan
shall be deemed to be "charged-off" for purposes of this Agreement, or (iii) (1)
the Obligor thereof or any Person obligated thereon is subject to an Insolvency
Event, in which case not less than fifty percent (50%) of the Outstanding Loan
Balance of such Loan shall be deemed to be "charged-off" as of the date of the
occurrence of such Insolvency Event for purposes of this Agreement, (2) the
Obligor thereof or any Person thereon is generally unable to meet its financial
obligations, (3) the Obligor thereof or any Person obligated thereunder has
suffered a material adverse change which materially affects its viability as an
ongoing concern or (4) adequate collateral or other source of payment does not
exist to repay the principal due under the Loan as determined by the Servicer.
Charged-Off Portfolio Loan: A Portfolio Loan (or portion thereof deemed to be
"charged-off") as to which any of the following first occurs: (i) the Servicer
has determined or should have reasonably determined in accordance with the
Credit and Collection Policy (or such similar
7
policies and procedures utilized by the Servicer in servicing such Portfolio
Loan) that such Portfolio Loan is not collectible, (ii) (1) all or any portion
of any one or more payments remains unpaid for at least ninety (90) days from
the original due date for such payment or would be so delinquent but for any
amendment or modification made to such Loan resulting from the Obligor's
inability to pay such Loan in accordance with its terms, in which case not less
than fifty percent (50%) of the Portfolio Outstanding Loan Balance of such
Portfolio Loan shall be deemed to be "charged-off" for purposes of this
Agreement, and (2) all or any portion of any one or more payments remains unpaid
for at least one hundred and eighty (180) days from the original due date for
such payment or would be so delinquent but for any amendment or modification
made to such Loan resulting from the Obligor's inability to pay such Loan in
accordance with its terms, in which case not less than one hundred percent
(100%) of the Portfolio Outstanding Loan Balance of such Portfolio Loan shall be
deemed to be "charged-off" for purposes of this Agreement, or (iii) (1) the
Obligor thereof or any Person obligated thereon is subject to an Insolvency
Event, in which case not less than fifty percent (50%) of the Portfolio
Outstanding Loan Balance of such Portfolio Loan shall be deemed to be
"charged-off" as of the date of the occurrence of such Insolvency Event for
purposes of this Agreement, (2) the Obligor thereof or any Person obligated
thereon is generally unable to meet its financial obligations, (3) the Obligor
or any Person obligated thereon has suffered a material adverse change which
materially affects its viability as an ongoing concern or (4) adequate
collateral or other source of payment does not exist to repay the principal due
under the Portfolio Loan as determined by the Servicer.
Clearing Agency: An organization registered as a "clearing agency" pursuant to
Section 17A of the Exchange Act.
Closing Date: February 28, 2003.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Collateral Custodian: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, not in
its individual capacity, but solely as Collateral Custodian, its successor in
interest pursuant to Section 8.3 or such Person as shall have been appointed
Collateral Custodian pursuant to Section 8.5.
Collateral Custodian Fee: Defined in the Collateral Custodian Fee Letter.
Collateral Custodian Fee Letter: The Collateral Custodian Fee Letter, dated as
of February 28, 2003, among the Originator, the Administrative Agent and the
Collateral Custodian, as such letter may be amended, modified, supplemented,
restated or replaced from time to time.
Collateral Custodian Termination Notice: Defined in Section 8.5.
Collection Account: Defined in Section 6.4(f).
Collection Date: The date following the Termination Date on which the Aggregate
Unpaids have been reduced to zero and indefeasibly paid in full.
8
Collection Period: Each calendar month, except in the case of the first
Collection Period, the period beginning on the Closing Date to and including the
last day of the calendar month in which the Closing Date occurs.
Collections: (a) All cash collections and other cash proceeds of any Loans,
including, without limitation, Scheduled Payments, Finance Charges, Prepayments,
Insurance Proceeds, and all Recoveries or other amounts received in respect
thereof but excluding any Excluded Amounts, and (b) any cash proceeds or other
funds received by the Seller or the Servicer with respect to any Related
Security.
Commercial Paper Notes: On any day, any short-term promissory notes of the
Purchaser issued by the Purchaser in the commercial paper market.
Commitment: The commitment of the Purchaser to make Advances in accordance
herewith in an amount not to exceed (i) (a) prior to the Termination Date, the
dollar amount set forth opposite the Purchaser's signature on the signature
pages hereto under the heading "Commitment" and (b) on or after the Termination
Date, the aggregate Advances Outstanding or (ii) with respect to each Advance,
the amount of such Advance.
Commitment Fee: Defined in the VFCC Fee Letter.
Consolidated Funded Indebtedness: As of any date of determination, all
outstanding Indebtedness of the Originator and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Tangible Net Worth: As of any date of determination, consolidated
equity of the Originator and its Subsidiaries, less intangible assets (including
goodwill), all determined in accordance with GAAP.
Contractual Obligation: With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.
CP Rate: For any day during any Accrual Period, the per annum rate equivalent to
the weighted average of the per annum rates paid or payable by VFCC from time to
time as interest on or otherwise (by means of interest rate ▇▇▇▇▇▇ or otherwise
taking into consideration any incremental carrying costs associated with
short-term promissory notes issued by VFCC maturing on dates other than those
certain dates on which VFCC is to receive funds) in respect of the promissory
notes issued by VFCC that are allocated, in whole or in part, by the Purchaser
Agent (on behalf of VFCC) to fund or maintain the Advances Outstanding funded by
VFCC during such period, as determined by the Purchaser Agent (on behalf of
VFCC) and reported to the Seller and the Servicer, which rates shall reflect and
give effect to (i) the commissions of placement agents and dealers in respect of
such promissory notes, to the extent such commissions are allocated, in whole or
in part, to such promissory notes by the Purchaser Agent (on behalf of VFCC) and
(ii) other borrowings by VFCC, including, without limitation, borrowings to fund
small or odd dollar amounts that are not easily accommodated in the commercial
paper market; provided, however, that if any component of such rate is a
discount
9
rate, in calculating the CP Rate, the Purchaser Agent shall for such component
use the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum.
Credit and Collection Policy: The written credit policies and procedures manual
of the Originator and the Servicer (which policies shall include without
limitation policies on a risk rating system, Loan Loss Reserve, due diligence
format, underwriting parameters and credit approval procedures) set forth on
Schedule VII, as may be as amended or supplemented from time to time in
accordance with Section 5.1(h) and Section 5.4(f).
Cut-Off Date: With respect to each Loan, the date on and after which Collections
on such Loan are to be transferred to the Asset Pool.
Deemed Collection: Defined in Section 2.3(c).
Delinquent Loan: A Loan (that is not a Charged-Off Loan) as to which (i) both
(a) any portion of a payment of interest or principal on such Loan is not paid
when due (without giving effect to any grace period or Servicer Advance) and (b)
within sixty (60) days of when such delinquent payment was first due all
delinquencies have not been cured, (ii) the Loan is modified or varied by the
Servicer or subservicer due to an Obligor's inability to pay principal or
interest, (iii) the related Obligor is not paying any of the accrued and unpaid
interest on a current basis, (iv) any portion of a payment of principal or
interest on such Loan comes from the proceeds of another loan made by the
Originator or its Affiliates to such Obligor, (v) has violated in any material
respect the cash recovery rate or other similar covenant contained in the
underlying loan documents for each Loan, or (vi) a Reduction Event has occurred.
Delinquent Portfolio Loan: A Portfolio Loan (that is not a Charged-Off Portfolio
Loan) as to which (i) both (a) any portion of a payment of interest or principal
on such Portfolio Loan is not paid when due (without giving effect to any grace
period or servicer advance) and (b) within sixty (60) days of when such
delinquent payment was first due all delinquencies have not been cured, (ii) the
Portfolio Loan is modified or varied by the servicer or subservicer due to an
obligor's inability to pay principal or interest (iii) the related Obligor is
not paying any of the accrued and unpaid interest on a current basis or (iv) any
portion of a payment of principal or interest on such Portfolio Loan comes from
the proceeds of another loan made by the Originator or its Affiliates to such
Obligor.
Determination Date: The last day of each Collection Period.
DIP Loan: Any loan to an Obligor that is a "debtor-in-possession" as defined
under the Bankruptcy Code.
Dollars: Means, and the conventional "$" signifies, the lawful currency of the
United States.
Eligible Loan: On any date of determination, each Loan (A) for which the
Administrative Agent, Collateral Custodian and Backup Servicer have received the
following no later than 12:00 p.m. Charlotte, North Carolina time on the day
prior to the Closing Date: (i) a copy of the duly executed original promissory
note and Loan Checklist in a form and substance satisfactory to the
Administrative Agent, (ii) a Borrowing Notice and Loan List delivered by the
Seller to the Collateral Custodian and the Administrative Agent as part of the
Borrowing Notice or Monthly
10
Report delivered by the Servicer, and (iii) a Borrowing Base Certificate;
provided, however, that if such Loan is part of a capital contribution or
Required Equity Contribution to the Seller the Collateral Custodian shall have
received the Required Loan Documents within three (3) Business Days of receipt
of the Certificate of Assignment, and (B) that satisfies each of the following
eligibility requirements:
(a) the information with respect to such Loan set forth on the
Loan List is true and correct;
(b) the Loan is a Senior Secured Loan (calculated by utilizing the
numerator in clause (a)(i) of the definition of Loan-to-Value Ratio);
(c) the Loan, together with the Related Security, has been
acquired by the Originator, sold to the Seller pursuant to (and in accordance
with) the Sale Agreement and the Seller has good title, free and clear of all
Liens (other than permitted Liens), on such Loan and Related Security;
(d) the Loan, (i) (together with the Collections and Related
Security related thereto) has been the subject of a grant by the Seller in favor
of the Administrative Agent, on behalf of the Secured Parties, of a first
priority perfected security interest, and (ii) with respect to which, at the
time of the sale of such Loan to the Seller, the Originator had a first priority
perfected security interest in substantially all of the Related Property
securing such Loan;
(e) at the time such Loan is included in the Asset Pool, the Loan
(i) is not, and since its acquisition by the Originator has never been, a
Charged-Off Loan, (ii) is not past due with respect to payments of principal or
interest (provided, that, if such Loan is past due at the time it is included in
the Asset Pool but not more than ten (10) days past due, the Originator and the
Servicer must reasonably believe that such Loan will promptly and in no event
later than the date of the next Scheduled Payment due on such Loan, be brought
current with respect to all payments due thereunder), and (iii) except as set
forth on Schedule IX, since January 1, 2002 has not been more than thirty (30)
days past due (after giving effect to a five (5) day grace period in determining
the number of days past due), with respect to payments of principal or interest;
(f) the Loan is an "eligible asset" as defined in Rule 3a-7 under
the 40 Act;
(g) the Loan is a contract the purchase of which with the proceeds
of Commercial Paper Notes would constitute a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended;
(h) the Loan is an "account", "chattel paper", "instrument" or a
"general intangible" within the meaning of Article 9 of the UCC of all
applicable jurisdictions;
(i) the Loan is to an Eligible Obligor and is denominated and
payable only in Dollars in the United States and does not permit the currency in
which or country in which such Loan is payable to be changed;
(j) the Loan is evidenced by a promissory note, security agreement
or instrument and related loan documents that have been duly authorized and
executed, are in full force and effect
11
and constitute the legal, valid, binding and absolute and unconditional payment
obligation of the related Obligor, enforceable against such Obligor in
accordance with their terms (subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
to general principles of equity, whether considered in a suit at law or in
equity), and there are no conditions precedent to the enforceability or validity
of the Loan that have not been satisfied or validly waived;
(k) the Loan does not contravene in any material respect any
Applicable Laws (including, without limitation, laws, rules and regulations
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices, licensing and privacy)
and with respect to which no part thereof is in violation of any Applicable Law
in any material respect;
(l) the Loan (i) satisfies all applicable requirements of, and was
originated, or acquired, underwritten and closed in all material respects
accordance with the Credit and Collection Policy (including, without limitation,
the execution by the Obligor of all documentation required by the Credit and
Collection Policy); (ii) does not contain a confidentiality provision that
restricts or purports to restrict in any material respect the ability of the
Administrative Agent or any Secured Party to exercise their rights under this
Agreement, including, without limitation, their rights to review the Loan, the
Required Loan Documents and Loan File; (iii) was purchased in the ordinary
course of the Originator's business; (iv) arises pursuant to loan documentation
with respect to which the Originator and the Financing Originator have performed
in all material respects all obligations required to be performed by them
thereunder; (v) is not subject to a guaranty by the Originator, the Financing
Originator or any Affiliate thereof; and (vi) is not a consumer loan;
(m) neither (i) the assignment of the Loan under the Acquisition
Agreement by the Financing Originator, (ii) the assignment of the Loan under the
Sale Agreement by the Originator nor (iii) the sale of the Loan and the granting
of a security interest hereunder by the Seller violates, conflicts with or
contravenes any Applicable Laws or any contractual or other restriction,
limitation or encumbrance;
(n) on or before the applicable Cut-Off Date, the Obligor of such
Loan shall have been directed to make all payments to the Lock-Box or directly
to the Lock-Box Account;
(o) the Loan requires the Obligor thereof to maintain adequate
property damage and liability insurance with respect to the real or tangible
personal property constituting the Related Property and the same has been at all
times covered by adequate physical damage and liability insurance policies
satisfactory to the Administrative Agent;
(p) the Related Property (i) is located in the United States, (ii)
has not been foreclosed on, or repossessed from the current Obligor, by the
Servicer, and (iii) if such Related Property constitutes real or tangible
personal property, has not suffered any material loss or damage that has not
been repaired or restored;
(q) [Reserved];
12
(r) the Loan is not subject to any litigation, dispute, refund,
claims of rescission, setoff, netting, counterclaim or defense whatsoever,
including but not limited to, claims by or against the Obligor thereof or a
payor to or account debtor of such Obligor;
(s) the Loan requires the Obligor to maintain the Related Property
(if such Related Property constitutes real or tangible personal property) in
good condition and to bear all the costs of operating and maintaining same,
including taxes and insurance relating thereto;
(t) the Loan provides (i) for periodic payments of interest and/or
principal in cash, which are due and payable on a monthly or quarterly basis
unless otherwise consented to in writing by the Administrative Agent, and (ii)
that the Servicer may accelerate all payments on the Loan if the Obligor is in
default under the Loan and any applicable grace period has expired;
(u) the Loan provides for cash payments that fully amortize the
Outstanding Loan Balance of such Loan on or by its maturity and does not provide
for such Outstanding Loan Balance to be discounted pursuant to a prepayment in
full;
(v) the Loan does not permit the Obligor to defer all or any
portion of the current cash interest due thereunder;
(w) the Loan does not permit the payment obligation of the Obligor
thereunder to be converted or exchanged for equity capital of such Obligor;
(x) the Loan shall not have been originated in, nor shall it be
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Loan under the Transaction Documents would be unlawful, void
or voidable;
(y) the Loan, together with the Required Loan Documents and Loan
File related thereto, is fully assignable and does not require the consent of or
notice to the Obligor or contain any other restriction on the transfer or the
assignment of the Loan other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Loan was sold to the Seller;
(z) the Obligor of such Loan is legally responsible for all taxes
relating to the Related Security or other security relating to such Loan, and
all payments in respect of the Loan are required to be made free and clear of,
and without deduction or withholding for or on account of, any taxes, unless
such withholding or deduction is required by Applicable Law in which case the
Obligor thereof is required to make "gross-up" payments that cover the full
amount of any such withholding taxes on an after-tax basis;
(aa) the Loan complies with the representations and warranties made
by the Seller and Servicer hereunder and all information provided by the Seller
or the Servicer with respect to the Loan is true and correct in all material
respects;
(bb) the Loan and the Related Security have not been sold,
transferred, assigned or pledged by the Seller to any Person;
13
(cc) with respect to the Originator's obligation to fund and the
actual funding of the Loan by the Originator, except for one (1) Loan to Byrider
Finance, Inc., the Originator has not assigned or granted participations to, in
whole or in part, any Person;
(dd) no selection procedure adverse to the interests of the
Administrative Agent, the Purchaser Agent or the Secured Parties was utilized by
the Seller or Originator in the selection of Loan for inclusion in the Asset
Pool;
(ee) the Loan has not been satisfied, rescinded or set-off by the
Seller, the Originator or the Obligor with respect thereto, and, to the
knowledge of the Seller and the Originator no Loan is subject to rescission,
set-off, counterclaim or defense, whether arising out of transactions concerning
the Loan, or otherwise, by the Seller, the Originator, or the Obligor with
respect thereto except for amendments to such Loan otherwise permitted under
Section 6.4(a) of this Agreement and in accordance with the Credit and
Collection Policy;
(ff) the particular Loan is not one as to which the Seller has
knowledge which should lead it to expect such Loan will not be paid in full;
(gg) if the Obligor of such Loan is the Obligor of more than one
(1) Loan, all such Loans are cross-collateralized and cross-defaulted;
(hh) the Obligor of such Loan is not the subject of an Insolvency
Event or Insolvency Proceedings;
(ii) the Loan is not a DIP Loan;
(jj) the Loan does not represent capitalized interest or payment
obligations relating to "put" rights;
(kk) the Loan is not a Loan or extension of credit by the
Originator to the Obligor for the purpose of making any past due principal,
interest or other payments due on such Loan;
(ll) the Loan is secured by a valid, perfected, first priority
security interest in substantially all of the assets that constitute the
collateral for the Loan subject to Permitted Liens;
(mm) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the making or performance
of the Loan have been duly obtained, effected or given and are in full force and
effect;
(nn) the Originator (i) has completed to its satisfaction, in
accordance with the Credit and Collection Policy, a due diligence audit and
collateral assessment with respect to such Loan and (ii) has done nothing to
impair the rights of the Administrative Agent, the Purchaser Agent or the
Secured Parties with respect to the Loan, the Related Security, the Scheduled
Payments or any income or Proceeds therefrom;
(oo) no provision of the Loan has been waived, modified, or altered
in any respect by the Seller or the Originator except in accordance with the
Credit and Collection Policy and by
14
instruments duly authorized and executed and contained in the Required Loan
Documents; provided, however, no such waiver, modification or alteration shall
(i) alter the status of such Loan as a Delinquent Loan or Charged-Off Loan, (ii)
in the reasonable judgment of the Administrative Agent, prevent or delay such
Loan from becoming a Delinquent Loan or Charged-Off Loan, or (iii) limit and/or
impair the rights of the Administrative Agent or the Secured Parties under this
Agreement;
(pp) the Loan is not subordinated to any other loan or financing to
the related Obligor;
(qq) if the Loan is a Revolving Loan, either it provides by its
terms that any future funding thereunder is in the Originator's sole and
absolute discretion or it is subject to the Retained Interest provision of this
Agreement;
(rr) the Face Amount of the Loan is the dollar amount thereof shown
on the books and records of the Originator and Seller;
(ss) such Loan has been re-underwritten by the Originator and
satisfies all of the Originator's underwriting criteria;
(tt) the Administrative Agent has received a satisfactory legal
opinion concerning the acquisition of such Loan by the Originator in a true sale
transaction;
(uu) the Administrative Agent has approved in writing such Loan for
inclusion in the Asset Pool and has completed its own due diligence with respect
to such Loan;
(vv) no portion of the proceeds used to make payments of principal
or interest on such Loan have come from a new loan by the Originator;
(ww) except for such statements of material fact or omissions that
would not individually or in the aggregate have a material adverse effect on the
interests of the Administrative Agent and the Secured Parties, no statement,
report or other document constituting a part of the Loan File with respect to
such Loan, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made; and
(xx) with respect to each Loan, as of the related Funding Date (i)
the collateral (including, but not limited to, the notes of the Obligors and
Assignments of Mortgage in each case where real property secures the Obligors'
notes) of the related Obligor securing such Loan is held by an Underlying
Custodian under an Underlying Custodial Agreement, (ii) the Underlying Custodial
Agreement for such Loan provides that (A) the related Underlying Custodian holds
the collateral of the Obligors on behalf of the Originator, and any other
assignee and (B) the Underlying Custodian will record and file the Assignments
of Mortgage in its name on behalf of the Seller and any other assignee upon the
request of the Originator and (iii) the Originator's rights under the Underlying
Custodial Agreement are fully assignable and have been assigned to the
Purchaser.
Eligible Obligor: On any date of determination, any Obligor that (i) is a
business organization (and not a natural person) duly organized and validly
existing under the laws of, and has its chief
15
executive offices in, the United States or any political subdivision thereof,
and has a billing address within the United States, (ii) is a legal operating
entity or holding company, (iii) has not entered into the Loan primarily for
such Obligor's personal, family or household purposes, (iv) is not a
Governmental Authority, (v) is not an Affiliate of any party hereto, (vi) is not
in the gaming, nuclear waste, biotechnology, natural resources or real estate
development industry, (vii) is not the subject of an Insolvency Proceeding,
(viii) as of the applicable Cut-Off Date, has an Eligible Risk Rating, and (ix)
is not an Obligor of a Charged-Off Loan or Delinquent Loan.
Eligible Repurchase Obligations: Repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (c)(ii) and (c)(iv) of the definition of Permitted
Investments.
Eligible Risk Rating: With respect to a designated Obligor, a "Loan Rating 1,"
"Loan Rating 2," or "Loan Rating 3" in accordance with the Credit and Collection
Policy.
Environmental Laws: Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 331 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C.Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300, et
seq.), the Environmental Protection Agency's regulations relating to underground
storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.), and the rules and regulations
thereunder, each as amended or supplemented from time to time.
Equity Contribution: On any date of determination, an amount equal to the
excess, if any, of (a) the sum of (i) the Borrowing Base on such date plus (ii)
all Principal Collections on deposit in the Principal Collections Account on
such date, minus (b) the Advances Outstanding on such date.
ERISA: The United States Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
ERISA Affiliate: (a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Seller, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Code) with the Seller, or
(c) a member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Seller, any corporation described in clause (a) above
or any trade or business described in clause (b) above.
16
Eurocurrency Liabilities: Defined in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
Eurodollar Disruption Event: The occurrence of any of the following: (a) any
Liquidity Bank shall have notified the Administrative Agent of a determination
by such Liquidity Bank or any of its assignees or participants 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 Dollars in the
London interbank market to fund any Advance, (b) any Liquidity Bank shall have
notified the Administrative Agent of the inability, for any reason, of such
Liquidity Bank or any of its assignees or participants to determine the Adjusted
Eurodollar Rate, (c) any Liquidity Bank shall have notified the Administrative
Agent of a determination by such Liquidity Bank or any of its assignees or
participants that the rate at which deposits of Dollars are being offered to
such Liquidity Bank or any of its assignees or participants in the London
interbank market does not accurately reflect the cost to such Liquidity Bank,
such assignee or such participant of making, funding or maintaining any Advance
or (d) any Liquidity Bank shall have notified the Administrative Agent of the
inability of such Liquidity Bank or any of its assignees or participants to
obtain Dollars in the London interbank market to make, fund or maintain any
Advance.
Eurodollar Reserve Percentage: For any period means the percentage, if any,
applicable during such period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
without limitation, any basic, emergency, supplemental, marginal or other
reserve requirements) with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities having a term of one (1) month.
Exchange Act: The United States Securities Exchange Act of 1934, as amended.
Excluded Amounts: (a) Any amount received in the Lock-Box by, on or with respect
to any Asset in the Asset Pool, which amount is attributable to the payment of
any tax, fee or other charge imposed by any Governmental Authority on such
Asset, (b) any amount representing a reimbursement of insurance premiums and (c)
any amount with respect to any Loan retransferred upon the occurrence of a
Warranty Event (if the Seller has decided that such Loan is no longer to be
included in the Asset Pool), to the extent such amount is attributable to a time
after the effective date of such replacement.
Face Amount: With respect to any Loan, the Outstanding Loan Balance thereof
shown on the applicable Loan List.
Facility Amount: $135,000,000, as such amount may vary from time to time upon
the written agreement of the parties hereto; provided, that, such amount may not
at any time exceed the aggregate Commitments then in effect; provided, further,
that, on or after the Termination Date, the Facility Amount shall mean the
Advances Outstanding.
17
Facility Termination Date: February 27, 2004, or such later date as the
Administrative Agent and the Purchaser Agent, in its sole discretion, shall
notify the Seller of in writing.
FDIC: The Federal Deposit Insurance Corporation, and any successor thereto.
Federal Funds Rate: For any period, a fluctuating interest rate per annum equal
for each day during such period to the weighted average of the overnight federal
funds rates as in Federal Reserve Board Statistical Release H.15(519) or any
successor or substitute publication selected by the Administrative Agent (or, if
such day is not a Business Day, for the next preceding Business Day), or, if,
for any reason, such rate is not available on any day, the rate determined, in
the sole opinion of the Administrative Agent, to be the rate at which overnight
federal funds are being offered in the national federal funds market at 9:00
a.m. Charlotte, North Carolina time.
Finance Charges: With respect to any Loan, any interest or finance charges owing
by an Obligor pursuant to or with respect to such Loan.
Financing Originator: Defined in the Recitals of this Agreement.
Fitch: Fitch, Inc. or any successor thereto.
Funding Date: The Business Day following the Closing Date, and as to any
incremental Advance, any Business Day that is one (1) Business Day immediately
following the receipt by the Administrative Agent and the Purchaser Agent of a
Borrowing Notice (along with a Borrowing Base Certificate) in accordance with
Section 2.2.
GAAP: Generally accepted accounting principles as in effect from time to time in
the United States.
Governmental Authority: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator and any accounting board or authority (whether or
not a part of the government) which is responsible for the establishment or
interpretation of national or international accounting principles.
Highest Required Investment Category: (i) With respect to ratings assigned by
Moody's, "Aa2" or "P-1" for one (1) month instruments, "Aa2" and "P-1" for three
(3) month instruments, "Aa3" and "P-1" for six (6) month instruments and "Aa2"
and "P-1" for instruments with a term in excess of six (6) months, (ii) with
respect to rating assigned by S&P, "A-1" for short-term instruments and "A" for
long-term instruments, and (iii) with respect to rating assigned by Fitch (if
such investment is rated by Fitch), "F-1+" for short-term instruments and "AAA"
for long-term instruments.
Increased Costs: Any amounts required to be paid by the Seller to an Affected
Party pursuant to Section 2.13.
Indebtedness: With respect to any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current
18
liabilities incurred in the ordinary course of business and payable in
accordance with customary trade practices) or that is evidenced by a note, bond,
debenture or similar instrument, (b) all obligations of such Person under leases
that shall have been or should be, in accordance with GAAP, recorded as capital
leases, (c) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (d) all liabilities secured by any Lien
on any property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, (e) all indebtedness,
obligations or liabilities of that Person in respect of derivatives, and (f)
obligations under direct or indirect guaranties in respect of obligations
(contingent or otherwise) to purchase or otherwise acquire, or to otherwise
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kind referred to in clauses (a) through (e) above.
Indemnified Amounts: Defined in Section 11.1(a).
Indemnified Parties: Defined in Section 11.1(a).
Independent Director: Defined in Section 4.1(u)(28).
Initial Advance: The first Advance.
Insolvency Event: With respect to a specified Person, (a) the filing of a decree
or order for relief by a court having jurisdiction in the premises in respect of
such Person or any substantial part of its property in an involuntary case under
any applicable Insolvency Law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty (60)
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
Insolvency Laws: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.
Insolvency Proceeding: Any case, action or proceeding before any court or other
Governmental Authority relating to any Insolvency Event.
Instrument: Any "instrument" (as defined in Article 9 of the UCC), other than an
instrument that constitutes part of chattel paper.
Insurance Policy: With respect to any Loan, an insurance policy covering
liability and physical damage to or loss of any real or tangible personal
property constituting the Related Property.
19
Insurance Proceeds: Any amounts payable or any payments made on or with respect
to a Loan under any Insurance Policy.
Interest: For each Accrual Period and each Advance Outstanding, the sum of the
products (for each day during such Accrual Period) of:
IR x P x 1
-
D
where:
IR = the Interest Rate applicable on such day;
P = the principal amount of such Advance on such day;
and
D = 360 or, to the extent the Interest Rate is
based on the Base Rate, 365 or 366 days, as
applicable.
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Interest in excess of the maximum permitted
by Applicable Law and (ii) Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
Interest Collections: Any and all amounts received in respect of any interest,
fees or other similar charges (including any Finance Charges) on or with respect
to a Loan from or on behalf of any Obligor that are deposited into the
Collection Account, or received by or on behalf of the Seller by the Servicer or
Originator in respect of a Loan, in the form of cash, checks, wire transfers,
electronic transfers or any other form of cash payment.
Interest Rate: For any Accrual Period and for each Advance outstanding by the
Purchaser for each day during such Accrual Period:
(i) to the extent the Purchaser has funded the applicable
Advance through the issuance of commercial paper, a rate equal to the
CP Rate; or
(ii) to the extent the Purchaser did not fund the
applicable Advance through the issuance of commercial paper, a rate
equal to the Alternative Rate;
provided, however, the Interest Rate shall be the Base Rate for any Accrual
Period for any Advance as to which the Purchaser has funded the making or
maintenance thereof by a sale of an interest therein to any Liquidity Bank under
the applicable Liquidity Agreement on any day other than the first day of such
Accrual Period and without giving such Liquidity Bank(s) at least two (2)
Business Days' prior notice of such assignment.
LIBOR Rate: For any day during any Accrual Period and any Advance or portion
thereof, an interest rate per annum equal to:
20
(1) the posted rate for thirty (30) day deposits in
Dollars appearing on Telerate page 3750 as of 11:00 a.m. (London time)
on the Business Day which is the second (2nd) Business Day immediately
preceding the applicable Funding Date (with respect to the initial
Accrual Period for such Advance) and as of the second (2nd) Business
Day immediately preceding the first (1st) day of the applicable Accrual
Period (with respect to all subsequent Accrual Periods for such
Advance); or
(2) if no such rate appears on Telerate page 3750 at such
time and day, then the LIBOR Rate shall be determined by Wachovia at
its principal office in Charlotte, North Carolina as its rate (each
such determination, absent manifest error, to be conclusive and binding
on all parties hereto and their assignees) at which thirty (30) day
deposits in Dollars are being, have been, or would be offered or quoted
by Wachovia to major banks in the applicable interbank market for
Eurodollar deposits at or about 11:00 a.m. (Charlotte, North Carolina
time) on such day.
Lien: Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person's assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties).
Liquidation Expenses: With respect to (a) any Loan, the aggregate amount of all
out-of-pocket expenses reasonably incurred by the Servicer (including amounts
paid to any subservicer) and any reasonably allocated costs of counsel (if any),
in each case in accordance with the Servicer's customary procedures in
connection with the repossession, refurbishing and disposition of any related
assets securing such Loan upon or after the expiration or earlier termination of
such Loan and other out-of-pocket costs related to the liquidation of any such
assets, including the attempted collection of any amount owing pursuant to such
Loan if it is a Charged-Off Loan, and if requested by the Administrative Agent,
the Servicer and Originator must provide to the Administrative Agent a breakdown
of the Liquidation Expenses for any Loan along with any supporting documentation
therefor, and (b) any Portfolio Loan, the aggregate amount of all out-of-pocket
expenses reasonably incurred by the Servicer (including amounts paid to any
subservicer) and any reasonably allocated costs of counsel (if any), in each
case in accordance with the Servicer's customary procedures in connection with
the repossession, refurbishing and disposition of any related assets securing
such Portfolio Loan upon or after the expiration or earlier termination of such
Portfolio Loan and other out-of-pocket costs related to the liquidation of any
such assets, including the attempted collection of any amount owing pursuant to
such Portfolio Loan if it is a Charged-Off Portfolio Loan, and if requested by
the Administrative Agent, the Servicer and Originator must provide to the
Administrative Agent a breakdown of the Liquidation Expenses for any Portfolio
Loan along with any supporting documentation therefor.
Liquidity Agreement: The Liquidity Purchase Agreement, dated as of February 28,
2003 among VFCC, as seller, the Liquidity Banks named therein, WSI, as deal
agent and documentation agent, and Wachovia, as liquidity agent and eligible
credit enhancer, as amended, supplemented, waived, modified or restated from
time to time.
Liquidity Bank: The Person or Persons who provide liquidity support to VFCC
pursuant to the Liquidity Agreement in connection with the issuance by the
Purchaser of Commercial Paper Notes.
21
Loan: Any loan purchased by the Originator from the Financing Originator
pursuant to and in accordance with the Acquisition Agreement that is identified
on a Loan List or contributed to the Seller eligible to be purchased by the
Seller and included as part of the Asset Pool on the Closing Date.
Loan Checklist: The list of loan documents attached as Schedule 5 to the
Acquisition Agreement that identifies the items contained in the related Loan
File, as amended from time to time therein.
Loan Files: With respect to any Loan and Related Security, copies of each of the
Required Loan Documents and duly executed originals (to the extent required by
the Credit and Collection Policy) and copies of any other Records relating to
such Loan and Related Security, all contained in the actual files delivered to
Seller by the Financing Originator.
Loan List: The Loan List provided by the Seller to the Administrative Agent and
the Collateral Custodian, in the form of Schedule IV hereto, as such list may be
amended, supplemented or modified from time to time in accordance with this
Agreement.
Loan Loss Reserve: With respect to each Watchlist Loan, an amount available to
cover any losses with respect to such Watchlist Loan equal to the amounts set
forth in the Credit and Collection Policy.
Loan-to-Value Ratio: With respect to any Loan, as of any date of determination,
the percentage equivalent of a fraction (a) the numerator of which is equal to
(i) the purchase price paid by the Originator to the Financing Originator under
the Acquisition Agreement, or (ii) the outstanding loan balance of such Loan as
of such date of determination and (b) the denominator of which is equal to the
total discounted collateral value of the collateral securing such Loan that is
subject to a first priority lien in favor of the Originator.
Lock-Box: The post office box to which Collections are remitted for retrieval by
a Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box Account, the
details of which are contained in Schedule II.
Lock-Box Account: The account maintained at the Lock-Box Bank for the purpose of
receiving Collections, the details of which are contained in Schedule II, as
such schedule may be amended from time to time.
Lock-Box Agreement: An agreement, in substantially the form of Exhibit L, among
the Originator, the Seller, the Administrative Agent and a Lock-Box Bank.
Lock-Box Bank: Bank of America, N.A., or any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
Material Adverse Effect: With respect to any event or circumstance, means a
material adverse effect on (a) the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Originator, the Servicer
or the Seller, (b) the validity, enforceability or collectibility of this
Agreement or any other Transaction Document or the validity, enforceability or
collectibility of the Loans generally or any material portion of the Loans, (c)
the rights and remedies of the Administrative Agent, the Purchaser, the
Purchaser Agent and the Secured
22
Parties, (d) the ability of the Seller, the Servicer, the Backup Servicer or the
Collateral Custodian to perform its obligations under this Agreement or any
Transaction Document, or (e) the status, existence, perfection, priority or
enforceability of the Administrative Agent's, the Purchaser Agent's, or the
Secured Parties' interest in the Assets.
Materials of Environmental Concern: Any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Laws, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
Maximum Availability: At any time, subject to the Minimum Overcollateralization
Amount, an amount equal to the product of the Borrowing Base and the Advance
Rate, plus the amount on deposit in the Principal Collections Account received
in reduction of the Outstanding Loan Balance of any Eligible Loan; provided,
however, during the Amortization Period, the Maximum Availability shall be equal
to the Advances Outstanding.
Minimum Overcollateralization Amount: As of any date of determination, an amount
equal to the greater of (a) the Required Equity Contribution or (b) the product
of (i) the Minimum Overcollateralization Percentage on such date and (ii) the
Borrowing Base on such date.
Minimum Overcollateralization Percentage: On any date of determination, the
greater of (a) one (1) minus the percentage equivalent of a fraction the
numerator of which is equal to the Maximum Availability on such date and the
denominator of which is equal to the Borrowing Base on such date, or (b) 20%.
Minimum Pool Yield: A Pool Yield equal to 3.0%.
Monthly Report: Defined in Section 6.10(b).
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Multiemployer Plan: A "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the immediately
preceding five (5) years contributed to by the Seller or any ERISA Affiliate on
behalf of its employees.
Obligor: With respect to any Loan, any Person or Persons obligated to make
payments pursuant to or with respect to such Loan, including any guarantor
thereof. For purposes of calculating any of the Pool Concentration Criteria, all
Loans in the Asset Pool or to be transferred to the Asset Pool the Obligor of
which is an Affiliate of another Obligor shall be aggregated with all Loans of
such other Obligor; for example, if Corporation A is an Affiliate of Corporation
B, and the aggregate Outstanding Loan Balance of all of Corporation A's Loans in
the Asset Pool constitutes 10% of the Aggregate Outstanding Loan Balance and the
aggregate Outstanding Loan Balance all of Corporation B's Loans in the Asset
Pool constitutes 10% of the Aggregate Outstanding Loan Pool Balance, the
combined Obligor concentration for Corporation A and Corporation B would be 20%.
Officer's Certificate: A certificate signed by a Responsible Officer of the
Seller or the Servicer, as the case may be, and delivered to the Collateral
Custodian.
23
Opinion of Counsel: A written opinion of counsel, which opinion and counsel are
acceptable to the Administrative Agent in its sole discretion.
Optional Sale: Defined in Section 2.17(a).
Optional Sale Date: Any Business Day, provided forty-five (45) days written
notice is given in accordance with Section 2.17(a).
Originator: Defined in the Preamble of this Agreement.
Outstanding Loan Balance: With respect to any Loan, the sum of (i) the purchase
price for such Loan paid by the Originator to the Financing Originator under the
Acquisition Agreement, plus (ii) in the case of Revolving Loans, the principal
amount of any additional funds advanced to the related Obligor pursuant to
Sections 2.1(b) and 2.2 on and after the Closing Date, minus (iii) the amount of
any Principal Collections received from the related Obligor and applied to
reduce the outstanding principal amount due on such Loan; provided, however,
that the Outstanding Loan Balance of any Loan shall be increased and reinstated
in the amount of any Principal Collections so received and applied if at any
time the distribution of such Principal Collections is rescinded or must
otherwise be returned for any reason.
Overcollateralization Amount: As of any date of determination, an amount equal
to the product of (i) the Overcollateralization Percentage on such date and (ii)
the Borrowing Base on such date.
Overcollateralization Percentage: As of any date of determination, the
percentage equivalent of (a) one (1) minus (b) a fraction (i) the numerator of
which is equal to the Advances Outstanding on such date and (ii) the denominator
of which is equal to the Aggregate Outstanding Loan Balance as of such date.
Overcollateralization Shortfall: As of any date of determination, the positive
difference, if any, of (a) the Minimum Overcollateralization Amount on such date
minus (b) the Overcollateralization Amount on such date.
Payment Date: The fifteenth (15th) day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day.
Payment Duties: Defined in Section 8.2(b)(4).
Pension Plan: Defined in Section 4.1(x) or Section 4.3(p), as applicable.
Permitted Investments: With respect to any Payment Date means negotiable
instruments or securities or other investments maturing on or before such
Payment Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Business Day immediately preceding the next Payment Date immediately following
such date of determination, and (c) that evidence:
24
(i) direct obligations of, and obligations fully
guaranteed as to full and timely payment by, the United States (or by
any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States);
(ii) demand deposits, time deposits or certificates of
deposit of depository institutions or trust companies incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the
Seller's investment or contractual commitment to invest therein, the
commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from Fitch and
each Rating Agency in the Highest Required Investment Category granted
by Fitch and such Rating Agency, which in the case of Fitch, shall be
"F-1+";
(iii) commercial paper, or other short term obligations,
having, at the time of the Seller's investment or contractual
commitment to invest therein, a rating in the Highest Required
Investment Category granted by each Rating Agency, which in the case of
Fitch, shall be "F-1+";
(iv) demand deposits, time deposits or certificates of
deposit that are fully insured by the FDIC and either have a rating on
their certificates of deposit or short-term deposits from ▇▇▇▇▇'▇ and
S&P of "P-1" and "A-1", respectively, and if rated by Fitch, from Fitch
of "F-1+";
(v) notes that are payable on demand or bankers'
acceptances issued by any depository institution or trust company
referred to in clause (ii) above;
(vi) investments in taxable money market funds or other
regulated investment companies having, at the time of the Seller's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category from ▇▇▇▇▇'▇, S&P and Fitch (if
rated by Fitch);
(vii) time deposits (having maturities of not more than
ninety (90) days) by an entity the commercial paper of which has, at
the time of the Seller's investment or contractual commitment to invest
therein, a rating of the Highest Required Investment Category granted
by Fitch and each Rating Agency; or
(viii) Eligible Repurchase Obligations with a rating
acceptable to the Rating Agencies, which in the case of Fitch, shall be
"F-1+" and in the case of S&P shall be "A-1".
The Collateral Custodian may pursuant to the direction of the Servicer or
Administrative Agent, as applicable, purchase or sell to itself or an Affiliate,
as principal or agent, the Permitted Investments described above.
Permitted Liens: Any of the following: (a) the lien of current taxes, water
charges, sewer rents, assessments and similar charges not yet due and payable or
payable but not yet delinquent,
25
including those which are being contested in good faith by appropriate
proceedings, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording which
are acceptable to mortgage lending institutions generally, which are
specifically referred to in the related title policy or which do not,
individually or in the aggregate, materially and adversely affect the current
use, value or marketability of the related real property interest, or which are
insured over by title insurance, (c) other matters to which like properties are
commonly subject which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by the
Mortgage or the current use of the property interest, including, without
limitation, liens of landlords, suppliers, mechanics, carriers, materialmen,
warehousemen or workmen, and any other liens imposed by law and created in the
ordinary course of business, (d) liens for amounts not yet due or payable or
those liens that are being contested in good faith by appropriate proceedings
and (e) Liens granted pursuant to or by the Transaction Documents.
Permitted Securitization Transaction: Any financing transaction undertaken by
the Seller or an Affiliate of the Seller that is secured, directly or
indirectly, by the Assets or any portion thereof or any interest therein,
including any sale, lease, whole loan sale, asset securitization, secured loan
or other transfer.
Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
Pledge Agreement: Each Membership Interest Pledge Agreement (including the
agreements dated as of February 28, 2003) by and between the Seller, as pledgor,
and the Administrative Agent, on behalf of the Secured Parties, as the pledgee,
executed in connection herewith, as the same may be amended, modified, waived,
supplemented or restated from time to time.
Pool Charged-Off Ratio: As of any Determination Date, the product of (i) twelve
(12) and (ii) the percentage equivalent of a fraction, (a) the numerator of
which is equal to the sum of the Outstanding Loan Balances of all Eligible Loans
that became Charged-Off Loans (net of Recoveries during such Collection Period)
during the Collection Period related to such Determination Date and (b) the
denominator of which is equal to the Aggregate Outstanding Loan Balance as of
the first (1st) day of the Collection Period related to such Determination Date.
Pool Concentration Criteria: On any day, each of the concentration limitations
as set forth below (which concentration limitations (unless otherwise indicated)
shall be measured on the basis of a percentage of the sum of (i) the Aggregate
Outstanding Loan Balance, minus (ii) the Outstanding Loan Balance of all
Delinquent Loans, plus (iii) the amount on deposit in the Principal Collections
Account received in reduction of the Outstanding Loan Balance of any Eligible
Loan, plus (iv) to the extent included as part of the Assets, the outstanding
principal amount of the CapitalSource Commercial Loan Trust 2002-1, Class C
Notes and Class D Notes, of the CapitalSource Commercial Loan Trust, Class D
Notes and Class E Notes and of the CapitalSource Commercial Loan Trust 2003-1,
2002-2Class D Notes and Class E Notes:
26
(1) the sum of the Outstanding Loan Balances of all Loans
to a single Obligor (including Affiliates thereof) shall not exceed 5%;
(2) the average Outstanding Loan Balance to a single
Obligor shall not exceed 2%; and
(3) the sum of the Outstanding Loan Balance of all Senior
Secured Loans (calculated by utilizing the numerator in clause (a)(ii)
of the definition of Loan-to-Value Ratio) shall not be less than 100%.
Pool Rate: As of any Determination Date, the annualized percentage equivalent of
a fraction, (a) the numerator of which is equal to all Interest Collections on
Loans included in the Aggregate Outstanding Loan Balance as of the first (1st)
day of the Collection Period related to such Determination Date that are
deposited into the Collection Account during such Collection Period, and (b) the
denominator of which is equal to the Aggregate Outstanding Loan Balance as of
the first (1st) day of such Collection Period.
Pool Yield: On any day, the positive difference, if any, of (a) the Pool Rate on
such day and (b) the sum of (i) the Interest Rate, (ii) the Program Fee Rate,
and (iii) the Servicing Fee Rate on such day.
Portfolio Aggregate Outstanding Loan Balance: With respect to all Portfolio
Loans, on any day, the sum of the Portfolio Outstanding Loan Balances of such
Portfolio Loans on such date. Notwithstanding anything to the contrary contained
herein, for purposes of determining the Portfolio Aggregate Outstanding Loan
Balance, if any portion of a Portfolio Loan is deemed to be "charged-off" in
accordance with the provisions of the definition of Charged-Off Portfolio Loan,
then the entire Portfolio Loan shall have a zero (0) Outstanding Loan Balance
except in connection with the calculation of the Average Portfolio Charged-Off
Ratio.
Portfolio Delinquency Ratio: As of any Determination Date, the percentage
equivalent of a fraction, (i) the numerator of which is equal to the sum of the
Portfolio Outstanding Loan Balances of all Delinquent Portfolio Loans on such
date and (ii) the denominator of which is equal to the Portfolio Aggregate
Outstanding Loan Balance on such date.
Portfolio Loan: Any loan owned or serviced by the Originator (including each
Loan).
Portfolio Outstanding Loan Balance: With respect to any Portfolio Loan, the sum
of (i) the portion of all future Scheduled Payments becoming due under or with
respect to such Portfolio Loan plus (ii) any past due Scheduled Payments with
respect to such Portfolio Loan.
Prepaid Loan: Any Loan (other than a Charged-Off Loan) that was terminated or
has been prepaid in full or in part prior to its scheduled expiration date.
Prepayment Amount: Defined in Section 6.4(b).
Prepayments: Any and all (i) partial or full prepayments on or with respect to a
Loan (including, with respect to any Loan and any Collection Period, any
Scheduled Payment, Finance Charge or portion thereof that is due in a subsequent
Collection Period that the Servicer has received, and
27
pursuant to the terms of Section 6.4(b) expressly permitted the related Obligor
to make, in advance of its scheduled due date, and that will be applied to such
Scheduled Payment on such due date), (ii) Recoveries, and (iii) Insurance
Proceeds.
Prime Rate: The rate announced by Wachovia from time to time as its prime rate
in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Wachovia in connection with extensions of credit to debtors.
Principal Collections: Any and all amounts received in respect of any principal
due and payable under the Loans from or on behalf of Obligors that are deposited
into the Principal Collections Account, or received by or on behalf of the
Seller by the Servicer or Originator in respect of Loans, in the form of cash,
checks, wire transfers, electronic transfers or any other form of cash payment.
Principal Collections Account: Defined in Section 6.4(f).
Proceeds: With respect to any Asset, whatever is receivable or received when
such Asset is sold, liquidated, foreclosed, exchanged, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes all rights to
payment with respect to any insurance relating to such Asset.
Program Fee: Defined in the VFCC Fee Letter.
Program Fee Rate: On any day, the rate set forth in the VFCC Fee Letter as the
"Program Fee Rate."
Purchaser: Defined in the Preamble of this Agreement.
Purchaser Agent: Defined in the Preamble of this Agreement.
Qualified Institution: Defined in Section 6.4(f).
Quarterly Determination Date: March 31, June 30, September 30 and December 31 of
each calendar year.
Rating Agency: Each of S&P, ▇▇▇▇▇'▇ and any other rating agency that has been
requested to issue a rating with respect to the commercial paper notes issued by
VFCC.
Records: All Loan and other documents, books, records and other information
(including without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) executed in connection
with the origination or acquisition of the Assets or maintained with respect to
the Assets and the related Obligors that the Seller, the Originator or the
Servicer have generated, in which the Seller, the Originator or the Servicer
have acquired an interest pursuant to the Sale Agreement or in which the Seller,
the Originator or the Servicer have otherwise obtained an interest.
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Recoveries: As of the time any Related Property or any other related property is
sold, discarded (after a determination by the Servicer that such Related
Property or any other related property has little or no remaining value) or
otherwise determined to be fully liquidated by the Servicer in accordance with
the Credit and Collection Policy (or such similar policies and procedures
utilized by the Servicer in servicing the Portfolio Loans) with respect to any
Charged-Off Loan or Charged-Off Portfolio Loan, the proceeds from the sale of
the Related Property or any other related property, the proceeds of any related
Insurance Policy, any other recoveries with respect to such Charged-Off Loan or
Charged-Off Portfolio Loan, the Related Property, any other related property,
and amounts representing late fees and penalties, net of Liquidation Expenses
and amounts, if any, received that are required under such Loan or Portfolio
Loan, as applicable, to be refunded to the related Obligor.
Reduction Event: With respect to any Loan included in the Assets, any claim of
rescission, set-off, counterclaim or other defense to payment of any kind or
nature asserted by the Obligor against the Financing Originator, the Originator,
the Seller, the Secured Parties or any assignee thereof.
Related Property: With respect to a Loan, any property or other assets pledged
as collateral to the Originator to secure repayment of such Loan, including all
Proceeds from any sale or other disposition of such property or other assets.
Related Security: All of the Seller's right, title and interest in and to:
(a) any Related Property securing a Loan and all Recoveries
related thereto;
(b) all Required Loan Documents, Loan Files related to any Loans,
Records, and the documents, agreements, and instruments included in the Loan
File or Records, including without limitation, rights of recovery of the Seller
against the Originator;
(c) all Insurance Policies with respect to any Loan, if any;
(d) all security interests, liens, guaranties, warranties, letters
of credit, accounts, bank accounts, mortgages or other encumbrances and property
subject thereto from time to time purporting to secure or support payment of any
Loan, together with all UCC financing statements or similar filings signed by an
Obligor relating thereto;
(e) the Collection Account, each Lock-Box and all Lock-Box
Accounts, together with all cash and investments in each of the foregoing other
than amounts earned on investments therein;
(f) the Acquisition Agreement;
(g) the Sale Agreement and the assignment to the Administrative
Agent of all UCC financing statements filed by the Seller against the Originator
under or in connection with the Sale Agreement
(h) each Underlying Custodial Agreement;
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(i) all "Collateral" (as defined in the Pledge Agreement); and
(j) the proceeds of each of the foregoing.
Reporting Date: The date that is three (3) Business Days prior to each Payment
Date.
Required Advance Reduction Amount: On any day, an amount equal to the positive
difference, if any, of (a) Advances Outstanding on such day minus (b) the
Maximum Availability on such day.
Required Equity Contribution: An Equity Contribution, at all times prior to the
Termination Date, of at least $25,000,000.
Required Equity Shortfall: On any day, the positive difference, if any, of (a)
the Required Equity Contribution on such day minus (b) the actual amount of the
Equity Contribution as of such day.
Required Loan Documents: With respect to any Loan, the duly executed original of
each of the following: the promissory note, any related loan agreement, the Loan
Checklist (to the extent included in the Loan File), intercreditor agreement (to
the extent included in the Loan File), subordination agreement (to the extent
included in the Loan File), UCC financing statements, guarantee (to the extent
included in the Loan File), a custodial agreement (to the extent included in the
Loan File), for each Loan secured by real property, an Assignment of Mortgage,
and for all Loans with a promissory note, an assignment (which may be by
endorsement or allonge), signed by an officer of the Originator and by an
Officer of the Seller.
Required Reports: Collectively, the Monthly Report, the Servicer's Certificate
required pursuant to Section 6.10(d)), the financial statements of the Servicer
required pursuant to Section 6.10(e), the annual statements as to compliance
required pursuant to Section 6.11, and the annual independent public
accountant's report required pursuant to Section 6.12.
Responsible Officer: With respect to any Person, any duly authorized officer of
such Person with direct responsibility for the administration of this Agreement
and also, with respect to a particular matter, any other duly authorized officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Restricted Junior Payment: (i) any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Seller now or
hereafter outstanding, except a dividend payment solely in interests of that
class of membership interests or in any junior class of membership interests of
the Seller; (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any class of the
Seller now or hereafter outstanding, (iii) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire membership interests of Seller now or
hereafter outstanding, and (iv) any payment of management fees by the Seller
(except for reasonable management fees to the Originator or its Affiliates in
reimbursement of actual management services performed).
Retained Interest: With respect to any Revolving Loan or any Loan with an
unfunded commitment on the part of the Originator that does not provide by its
terms that funding
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thereunder is in Originator's sole and absolute discretion and that is
transferred by the Originator to the Seller and/or by the Seller to the
Purchaser, all of the obligations, if any, to provide additional funding with
respect to such Revolving Loan.
Retransfer Date: Defined in Section 4.6.
Retransfer Price: Defined in Section 4.6.
Review Criteria: Defined in Section 8.2(b)(1).
Revolving Loan: A Loan that is a line of credit arising from an extension of
credit by the Originator to an Obligor; provided, however, any such Loan shall
exclude any Retained Interest.
Revolving Period: The period commencing on the Closing Date and ending on the
day immediately preceding the Termination Date.
S&P: Standard & Poor's, a division of The McGraw Hill Companies, Inc., and any
successor thereto.
Sale Agreement: The Sale and Contribution Agreement, dated as of February 28,
2003, between the Originator and the Seller, as amended, modified, supplemented,
replaced or restated from time to time.
Scheduled Payments: With respect to any Loan, each monthly, quarterly, or annual
payment of principal required to be made by the Obligor thereof under the terms
of such Loan; in all cases, excluding any payment in the nature of, or
constituting, interest.
Secured Party: (i) the Purchaser and (ii) the Administrative Agent and the
Purchaser Agent.
Seller: Defined in the Preamble of this Agreement.
Senior Secured Loan: Any Type of Loan secured by a first priority lien on the
Obligor's Related Property securing the loan and which has a Loan-to-Value Ratio
of less than 90%.
Servicer: CapitalSource Finance, and each successor (in the same capacity)
appointed as Successor Servicer pursuant to Section 6.16(a).
Servicer Advance: Defined in Section 6.5.
Servicer Default: Defined in Section 6.15.
Servicer Termination Notice: Defined in Section 6.15.
Servicer's Certificate: Defined in Section 6.10(d).
Servicing Fee: Defined in Section 2.12(b).
Servicing Fee Rate: 1.0% per annum.
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Solvent: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the property of such
Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of the property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute unreasonably small capital.
Subsidiary: As to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by such Person.
Successor Servicer: Defined in Section 6.16(a).
Tape: Defined in Section 7.2(b)(2).
Taxes: Any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Governmental Authority.
Termination Date: The earliest of (a) the date of the termination of the
Facility Amount pursuant to Section 2.3, (b) the Business Day designated by the
Seller to the Administrative Agent and the Purchaser Agent as the Termination
Date at any time following two (2) Business Days' prior written notice thereof
to the Administrative Agent and the Purchaser Agent, (c) the earlier of the date
the Liquidity Agreement shall cease to be in full force and effect, (d) the date
of the declaration of the Termination Date pursuant to Section 10.2(a) or the
date of the automatic occurrence of the Termination Date pursuant to Section
10.2(b), and (e) the second (2nd) Business Day prior to the Facility Termination
Date.
Termination Event: Defined in Section 10.1.
Term Loan: A Loan that is a term loan that has been fully funded and does not
contain any unfunded commitment on the part of the Originator arising from an
extension of credit by the Originator to an Obligor.
Transaction: Defined in Section 3.2.
Transaction Documents: The Agreement, the Sale Agreement, the Lock-Box
Agreement, the Assignment Agreement, the Pledge Agreement, each Underlying
Custodial Agreement, the
32
Variable Funding Certificate, the VFCC Fee Letter, the Backup Servicer Fee
Letter, the Collateral Custodian Fee Letter, any UCC financing statements filed
pursuant to the terms of this Agreement, and any additional document the
execution of which is necessary or incidental to carrying out the terms of the
foregoing documents.
Transition Expenses: The reasonable costs (including reasonable attorneys' fees)
of the Backup Servicer incurred in connection with the transferring the
servicing obligations under this Agreement and amending this Agreement to
reflect such transfer in an amount not to exceed $100,000.
Type of Loan: With respect to any Loan, shall mean a reference to whether such
loan is a Revolving Loan or a Term Loan.
UCC: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.
"Underlying Custodial Agreement" means, with respect to each Loan, that certain
custodial agreement entered into among the Originator, the Underlying Custodian
and certain other parties thereto (if any) under which such Underlying Custodian
agrees to hold certain underlying loan documents or other collateral of the
Obligors with respect to such Loan for the benefit of the Originator and its
assignees.
"Underlying Custodian" means the party acting as collateral custodian under an
Underlying Custodial Agreement.
United States: The United States of America.
Unmatured Termination Event: Any event that, with the giving of notice or the
lapse of time, or both, would become a Termination Event.
Variable Funding Certificate or VFC: Defined in Section 2.1(a).
VFCC: Defined in the Preamble of this Agreement.
VFCC Fee Letter: The VFCC Fee Letter Agreement, dated as of February 28, 2003,
among the Seller, the Servicer, the Administrative Agent, and the Purchaser
Agent, as such letter may be amended, modified, supplemented, restated or
replaced from time to time.
Wachovia: Wachovia Bank, National Association, a national banking association in
its individual capacity, and its successors and assigns.
Warranty Event: As to any Loan, the discovery that as of the related Cut-Off
Date or Funding Date there had existed a breach of any representation or
warranty relating to such Loan and the continuance of such breach through any
applicable determination date or beyond any applicable cure period.
Warranty Loan: Any Loan that fails to satisfy any criteria of the definition of
Eligible Loan; provided, however, that notwithstanding the foregoing, for
purposes of determining what is a
33
Warranty Loan, the criteria set forth in clauses (e), (ff) and (hh) of the
definition of Eligible Loan and clauses (vii), (viii) and (ix) in the definition
of Eligible Obligor shall apply only as of the applicable Cut-Off Date of such
Loan.
Watchlist Loan: Any Loan (that is not a Charged-Off Loan or Delinquent Loan) as
to which the Servicer has discovered circumstances which lead the Servicer to
reasonably expect loss or non-payment by the Obligor thereof.
▇▇▇▇▇ Fargo: Defined in the Preamble of this Agreement.
WSI: Defined in the Preamble of this Agreement.
SECTION 1.2 OTHER TERMS.
All accounting terms used but 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 used but not specifically defined herein, are used herein
as defined in such Article 9.
SECTION 1.3 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
SECTION 1.4 INTERPRETATION.
In each Transaction Document, unless a contrary intention appears:
(1) the singular number includes the plural number and
vice versa;
(2) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by the Transaction Documents;
(3) reference to any gender includes each other gender;
(4) reference to day or days without further
qualification means calendar days;
(5) reference to any time means Charlotte, North Carolina
time;
(6) reference to any agreement (including any Transaction
Document), document or instrument means such agreement, document or
instrument as amended, supplemented or modified and in effect from time
to time in accordance with the terms thereof and, if applicable, the
terms of the other Transaction Documents, and reference to any
promissory note includes any promissory note that is an extension or
renewal thereof or a substitute or replacement therefor; and
(7) reference to any Applicable Law means such Applicable
Law as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to
34
time, including rules and regulations promulgated thereunder and
reference to any Section or other provision of any Applicable Law means
that provision of such Applicable Law from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such Section or other provision.
ARTICLE II
PURCHASE OF THE VARIABLE FUNDING CERTIFICATE
SECTION 2.1 THE VARIABLE FUNDING CERTIFICATE.
(a) On the terms and conditions hereinafter set forth, on the
Closing Date, the Seller shall deliver to the Purchaser Agent, at its address
set forth on the signature pages of this Agreement, a duly executed variable
funding certificate (the "Variable Funding Certificate" or "VFC"), in
substantially the form of Exhibit B, dated as of the date of this Agreement, in
an aggregate face amount equal to the Facility Amount, and otherwise duly
completed. The Variable Funding Certificate shall evidence an undivided
ownership interest in the Assets purchased by the Purchaser in an amount equal,
at any time, to the percentage equivalent of a fraction (i) the numerator of
which is the Advances outstanding under the VFC on such day, and (ii) the
denominator of which is the total aggregate Advances Outstanding on such day.
Interest shall accrue, and the VFC shall be payable, as described herein. The
VFC purchased by VFCC shall be in the name of "Wachovia Securities, Inc., as the
Purchaser Agent" and shall be in the face amount equal to $135,000,000.
(b) On the terms and conditions hereinafter set forth, from the
Closing Date to, but not including, the Termination Date, the Seller may, at its
option, request the Purchaser to make advances of funds under the VFC in an
amount up to the Advance Amount (each, an "Advance") and VFCC shall make such
Advance in an amount equal to such requested Advance; provided, that, in no
event shall the Purchaser make any Advance if, after giving effect to such
Advance the aggregate Advances Outstanding hereunder would exceed the lesser of
(i) the Facility Amount or (ii) the Maximum Availability. Notwithstanding
anything contained in this Section 2.1 or elsewhere in this Agreement to the
contrary, the Purchaser shall not be obligated to provide the Purchaser Agent or
the Seller with aggregate funds in connection with an Advance that would exceed
the Purchaser's unused Commitment then in effect.
SECTION 2.2 PROCEDURES FOR ADVANCES.
(a) Each Advance hereunder shall be effected by the Seller (or the
Servicer on its behalf) delivering to the Administrative Agent and the Purchaser
Agent (with a copy to the Collateral Custodian and the Backup Servicer) a duly
completed Borrowing Notice (along with a Borrowing Base Certificate) no later
than 12:00 p.m. (North Carolina time) at least one (1) Business Day prior to the
proposed Funding Date. Each Borrowing Notice (along with a Borrowing Base
Certificate) shall (i) specify the desired amount of such Advance, which amount
must be at least equal to $250,000, (ii) specify the date of such Advance, (iii)
specify the Loans to be financed on such Funding Date (including the appropriate
file number; Outstanding Loan Balance for each Loan) and (iv) include a
representation that all conditions precedent for an
35
Advance described in ARTICLE III hereof have been met. Each Borrowing Notice
shall be irrevocable.
(b) On the date of each Advance, the Purchaser shall, upon
satisfaction of the applicable conditions set forth in ARTICLE III, make
available to the Seller in same day funds, at such bank or other location
reasonably designated by Seller in its Borrowing Notice given pursuant to this
Section 2.2, an amount equal to the lesser of (i) the amount requested by the
Seller for such Advance, (ii) an amount equal to the Availability on such
Funding Date or (iii) the Facility Amount.
(c) On or prior to the Closing Date, the Seller hereby authorizes
the Administrative Agent to prepare and file, at the Seller's expense, UCC
financing statements (including renewal statements) or amendments thereof or
supplements thereto or other instruments as the Administrative Agent may from
time to time deem necessary or appropriate in order to perfect and maintain the
security interest granted hereunder in accordance with the UCC. The Required
Loan Documents will not be physically delivered to the Purchaser or the
Administrative Agent, but instead will be held by the Collateral Custodian on
behalf of the Administrative Agent on behalf of the Secured Parties.
SECTION 2.3 REDUCTION OF THE FACILITY AMOUNT; MANDATORY AND OPTIONAL
REPAYMENTS.
(a) The Seller may, upon at least twenty (20) Business Days' prior
written notice (such notice to be received by the Administrative Agent and the
Purchaser Agent no later than 5:00 p.m. (North Carolina time) on such day) to
the Administrative Agent and the Purchaser Agent, terminate in whole or reduce
in part the portion of the Facility Amount that exceeds the sum of the Advances
Outstanding, accrued Interest and Breakage Costs; provided, however, that each
partial reduction of the Facility Amount shall be in an aggregate amount equal
to at least $1,000,000. Each notice of reduction or termination pursuant to this
Section 2.3(a) shall be irrevocable.
(b) Subject to the prior written approval of the Administrative
Agent and the Purchaser Agent, the Seller may, upon one (1) Business Days' prior
written notice (such notice to be received by the Administrative Agent and the
Purchaser Agent no later than 5:00 p.m. (North Carolina time) on such day) to
the Administrative Agent and the Purchaser Agent, reduce the Advances
Outstanding by remitting, to the Purchaser Agent, for payment to the Purchaser,
(i) cash and (ii) instructions to reduce such Advances Outstanding, related
accrued Interest and Breakage Costs; provided, that, no such reduction shall be
given effect if a Termination Event or Unmatured Termination Event has occurred,
is continuing or would result from such reduction. Any reduction of the Advances
Outstanding shall be in a minimum amount of $250,000. Any such reduction will
occur only if sufficient funds have been remitted to pay all such amounts in the
succeeding sentence in full. Upon receipt of such amounts, the Purchaser Agent
shall apply such amounts first to the reduction of the Advances Outstanding,
second to the payment of related accrued Interest on the amount of the Advances
Outstanding to be repaid by paying such amounts to the Purchaser, and third to
the payment of any Breakage Costs. Any notice relating to any prepayment
pursuant to this Section 2.3(b) shall be irrevocable.
36
(c) If on any day (i) the Administrative Agent, as agent for the
Secured Parties, does not own or have a valid and perfected first priority
security interest in each of the Assets, (ii) any Loan which has been
represented by the Seller to be an Eligible Loan is later determined not to have
been an Eligible Loan at the time such representation was made by Seller or
(iii) a Reduction Event occurs with respect to a Loan, upon the earlier of the
Seller's receipt of notice from the Administrative Agent or the Seller becoming
aware thereof and the Seller's failure to cure such breach within thirty (30)
days, the Seller shall be deemed to have received on such day a collection (a
"Deemed Collection") of such Loan in full and shall on such day pay to the
Administrative Agent, on behalf of the Purchaser, an amount equal to the
Outstanding Loan Balance of such Loan to be applied to the pro-rata reduction of
the principal of the VFC. In connection with any such Deemed Collection, the
Administrative Agent, as agent for the Secured Parties, shall automatically and
without further action, be deemed to transfer to the Seller, free and clear of
any Lien created by the Administrative Agent, all of the right, title and
interest of the Administrative Agent, as agent for the Secured Parties, in, to,
and under the Loan with respect to which the Administrative Agent has received
such Deemed Collection, but without any other representation and warranty of any
kind, express or implied.
SECTION 2.4 DETERMINATION OF INTEREST.
The Purchaser Agent shall determine the CP Rate and the Interest
(including unpaid Interest, if any, due and payable on a prior Payment Date) to
be paid by the Seller with respect to each Advance on each Payment Date for the
related Accrual Period and shall advise the Servicer thereof on the third (3rd)
Business Day prior to such Payment Date.
SECTION 2.5 PERCENTAGE EVIDENCED BY THE VARIABLE FUNDING
CERTIFICATE.
The variable percentage ownership interest in the Assets represented by
the VFC shall be initially computed on its date of purchase. Thereafter, until
the Termination Date, the VFC shall be automatically recomputed (or deemed to be
recomputed) on each day prior to the Termination Date. The variable percentage
ownership interest in the Assets represented by the VFC as computed (or deemed
recomputed) as of the close of business on the day immediately preceding the
Termination Date shall remain constant at all times on and after the Termination
Date. The variable percentage ownership interest in the Assets represented by
the VFC shall become zero when its Advances and Interest have been indefeasibly
paid in full.
SECTION 2.6 NOTATIONS ON VARIABLE FUNDING CERTIFICATE.
The Purchaser Agent is hereby authorized to enter on a schedule
attached to the VFC a notation (which may be computer generated) with respect to
each Advance under the VFC made by the Purchaser of: (a) the date and principal
amount thereof, and (b) each repayment of principal thereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of the Purchaser Agent to make any such
notation on the schedule attached to the VFC shall not limit or otherwise affect
the obligation of the Seller to repay the Advances in accordance with their
respective terms as set forth herein.
37
SECTION 2.7 SETTLEMENT PROCEDURES DURING THE REVOLVING PERIOD.
On each Payment Date during the Revolving Period, the Servicer shall
direct the Collateral Custodian to pay pursuant to the Monthly Report to the
following Persons, from (1) the Collection Account, to the extent of Available
Funds, and (2) Servicer Advances received with respect to the immediately
preceding Collection Period that ended on the last day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs, the
following amounts in the following order of priority:
(1) FIRST, to the Servicer, in an amount equal to any
unreimbursed Servicer Advances, for the payment thereof;
(2) SECOND, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fees to the end of the preceding
Collection Period, for the payment thereof;
(3) THIRD, to the extent not paid for by the Originator,
pro rata to the Backup Servicer and the Collateral Custodian, in an
amount equal to any accrued and unpaid Backup Servicing Fees,
Collateral Custodian Fees and Transition Expenses, for the payment
thereof;
(4) FOURTH, to the Purchaser Agent, in an amount equal to
any accrued and unpaid Interest, Program Fee, Commitment Fee and
Breakage Costs, for the payment thereof;
(5) FIFTH, to the Purchaser Agent, if the Required
Advance Reduction Amount is greater than zero, an amount necessary to
reduce the Required Advance Reduction Amount to zero, for the payment
thereof;
(6) SIXTH, to the Administrative Agent, the Purchaser
Agent, the Purchaser, the Backup Servicer, the Collateral Custodian,
the Affected Parties, the Indemnified Parties or the Secured Parties,
pro rata in accordance with the amount owed to such Person under this
SIXTH clause, all other amounts (other than Advances Outstanding) then
due under this Agreement, for the payment thereof; and
(7) SEVENTH, any remaining amount shall be distributed to
the Seller.
SECTION 2.8 SETTLEMENT PROCEDURES DURING THE AMORTIZATION PERIOD.
On each Payment Date during the Amortization Period, the Servicer shall
direct the Collateral Custodian to pay pursuant to the Monthly Report to the
following Persons, from (i) the Collection Account, to the extent of Available
Funds, and (ii) Servicer Advances received with respect to the immediately
preceding Collection Period, the following amounts in the following order of
priority:
(1) FIRST, to the Servicer, in an amount equal to any
unreimbursed Servicer Advances, for the payment thereof;
38
(2) SECOND, to the Servicer, in an amount equal to any
accrued and unpaid Servicing Fees to the end of the preceding
Collection Period, for the payment thereof;
(3) THIRD, to the extent not paid for by the Originator,
pro rata to the Backup Servicer and the Collateral Custodian, in an
amount equal to any accrued and unpaid Backup Servicing Fees,
Collateral Custodian Fees and Transition Expenses, for the payment
thereof;
(4) FOURTH, to the Purchaser Agent, in an amount equal to
any accrued and unpaid Interest, Program Fee, Commitment Fee and
Breakage Costs, for the payment thereof;
(5) FIFTH, to the Purchaser Agent, in an amount necessary
to reduce the Advances Outstanding and Aggregate Unpaids to zero, for
the payment thereof;
(6) SIXTH, to the Purchaser Agent, if the Required
Advance Reduction Amount is greater than zero, an amount necessary to
reduce the Required Advance Reduction Amount to zero, for the payment
thereof;
(7) SEVENTH, to the Administrative Agent, the Purchaser
Agent, the Purchaser, the Backup Servicer, the Collateral Custodian,
the Affected Parties, the Indemnified Parties or the Secured Parties,
pro rata in accordance with the amount owed to such Person under this
SEVENTH clause, all other amounts (other than Advances Outstanding)
then due under this Agreement, for the payment thereof; and
(8) EIGHTH, any remaining amount shall be distributed to
the Seller.
SECTION 2.9 COLLECTIONS AND ALLOCATIONS.
(a) Collections. The Servicer shall promptly identify any
collections received as being on account of Interest Collections, Principal
Collections or other Collections and shall transfer, or cause to be transferred,
all Collections received directly by it or on deposit in the form of available
funds in the Lock-Box Accounts to the Collection Account by the close of
business on the second (2nd) Business Day after such Collections are received.
In transferring Collections to the Collection Account, the Servicer shall
segregate Principal Collections and transfer the same to the corresponding
Principal Collections Account. The Servicer shall make such deposits or payments
on the date indicated therein by wire transfer, in immediately available funds.
The Servicer shall further include a statement as to the amount of Principal
Collections and Interest Collections on deposit in the Collection Account on
each Reporting Date in the Monthly Report delivered pursuant to Section 6.10(b).
(b) Initial Deposits. On the Closing Date, the Servicer will
deposit (in immediately available funds) into the Collection Account all
Collections received after the applicable Cut-Off Date and through and including
the Closing Date in respect of Eligible Loans being transferred to and included
as part of the Asset Pool on such date.
(c) Excluded Amounts. With the prior written consent of the
Administrative Agent and the Purchaser Agent, which consent shall not be
unreasonably withheld (a copy of which
39
will be provided by the Servicer to the Backup Servicer), the Servicer may
withdraw from the Collection Account any deposits thereto constituting Excluded
Amounts if the Servicer has, prior to such withdrawal and consent, delivered to
the Administrative Agent and the Purchaser Agent a report setting forth the
calculation of such Excluded Amounts in a format satisfactory to the
Administrative Agent and the Purchaser Agent in their sole discretion.
(d) Investment of Funds. Until the occurrence of a Termination
Event, to the extent there are uninvested amounts deposited in the Collection
Account, all amounts shall be invested in Permitted Investments selected by the
Servicer that mature no later than the Business Day immediately preceding the
next Payment Date; from and after the occurrence of a Termination Event, to the
extent there are uninvested amounts in the Collection Account (net of losses and
investment expenses), all amounts may be invested in Permitted Investments
selected by the Administrative Agent that mature no later than the Business Day
immediately preceding the next Payment Date. All earnings (net of losses and
investment expenses) thereon shall be retained or deposited into the Collection
Account and shall be applied pursuant to the provisions of Section 2.7 and
Section 2.8.
SECTION 2.10 PAYMENTS, COMPUTATIONS, ETC.
(a) Unless otherwise expressly provided herein, all amounts to be
paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m.
(Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the Agent's Account and if not
received before such time shall be deemed received on the next Business Day. The
Seller shall, to the extent permitted by law, pay to the Secured Parties
interest on all amounts not paid or deposited when due hereunder at 2% per annum
above the Base Rate, payable on demand; provided, however, that such interest
rate shall not at any time exceed the maximum rate permitted by Applicable Law.
Such interest shall be for the account of, and distributed by the Purchaser
Agent, to the Purchaser. All computations of interest and all computations of
Interest and other fees hereunder shall be made on the basis of a year
consisting of 360 days (other than calculations with respect to the Base Rate
which shall be based on a year consisting of 365 or 366 days, as applicable) for
the actual number of days (including the first but excluding the last day)
elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of Interest or any fee payable hereunder, as the case
may be.
(c) If any Advance requested by the Seller and approved by the
Purchaser and the Purchaser Agent, pursuant to Section 2.2, is not, for any
reason made or effectuated, as the case may be, on the date specified therefor,
the Seller shall indemnify the Purchaser against any reasonable loss, cost or
expense incurred by the Purchaser including, without limitation, any loss
(including loss of anticipated profits, net of anticipated profits in the
reemployment of such funds in the manner determined by the Purchaser), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Purchaser to fund or maintain such Advance.
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SECTION 2.11 OPTIONAL REPURCHASE.
At any time following the Termination Date when the Borrowing Base is
less than fifteen (15%) percent of the Borrowing Base as of the Termination
Date, the Seller may notify the Administrative Agent and the Purchaser Agent in
writing of its intention to purchase all remaining Assets. On the Payment Date
next succeeding any such notice, the Seller shall purchase all such` Assets for
a price equal to the Aggregate Unpaids and the proceeds of such purchase will be
deposited into the Collection Account and paid in accordance with Section 2.8.
SECTION 2.12 FEES.
(a) The Servicer on behalf of the Seller shall pay in accordance
with Section 2.7(4) and Section 2.8(4), as applicable, to the Purchaser Agent
from the Collection Account to the extent funds are available on each Payment
Date, monthly in arrears, the Program Fee and the Commitment Fee agreed to
between the Seller and the Purchaser Agent in the VFCC Fee Letter.
(b) The Servicer shall be entitled to receive a fee (the
"Servicing Fee"), monthly in arrears in accordance with Section 2.7(2) and
Section 2.8(2), as applicable, which fee shall be equal to the product of (i)
the Servicing Fee Rate, (ii) Aggregate Outstanding Loan Balance, as of the first
(1st) day of the immediately preceding Collection Period and (iii) the actual
number of days in such Collection Period divided by 360.
(c) The Backup Servicer shall be entitled to receive the Backup
Servicing Fee in accordance with Section 2.7(3) and Section 2.8(3), as
applicable.
(d) The Collateral Custodian shall be entitled to receive the
Collateral Custodian Fee in accordance with Section 2.7(3) and Section 2.8(3),
as applicable.
(e) The Seller shall pay to Mayer, Brown, ▇▇▇▇ & Maw on the
Closing Date, its reasonable estimated fees and out-of-pocket expenses in
immediately available funds and shall pay all additional reasonable fees and
out-of-pocket expenses of Mayer, Brown, ▇▇▇▇ & Maw within thirty (30) Business
Days after receiving an invoice for such amounts.
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
(a) If either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or regulation or (ii) the
compliance by an Affected Party with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
shall (a) subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to any
ownership interest in the Assets, or any right to make Advances hereunder, or on
any payment made hereunder, (b) impose, modify or deem applicable any reserve
requirement (including, without limitation, any reserve requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding any reserve
requirement, if any, included in the determination of Interest), special deposit
or similar requirement against assets of, deposits with or for the amount of, or
credit extended by, any Affected Party or (c) impose any other condition
affecting the ownership interest in the Assets conveyed to the Purchaser
hereunder or the Purchaser's rights hereunder, the result of which is to
41
increase the cost to any Affected Party or to reduce the amount of any sum
received or receivable by an Affected Party under this Agreement, then within
ten (10) days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Servicer shall pay (and to the extent the Servicer does not make such payment
the Seller shall pay) directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other Governmental Authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten (10) days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Servicer shall pay (and to the extent the Servicer does not
make such payment the Seller shall pay) directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction. For the avoidance of doubt, if the issuance of Interpretation No. 46
by the Financial Accounting Standards Board or any other change in accounting
standards or the issuance of any other pronouncement, release or interpretation,
causes or requires the consolidation of all or a portion of the assets and
liabilities of the Originator or Seller with the assets and liabilities of the
Administrative Agent, any Purchaser Agent, any Purchaser or any Liquidity Bank,
such event shall constitute a circumstance on which such Affected Party may base
a claim for reimbursement under this Section 2.13.
(c) If as a result of any event or circumstance similar to those
described in clause (a) or (b) of this Section 2.13, any Affected Party is
required to compensate a bank or other financial institution providing liquidity
support, credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of Advances
hereunder, then within ten (10) days after demand by such Affected Party, the
Servicer shall pay (or to the extent the Servicer does not make such payment the
Seller shall pay) to such Affected Party such additional amount or amounts as
may be necessary to reimburse such Affected Party for any amounts payable or
paid by it.
(d) In determining any amount provided for in this Section 2.13,
the Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.13 shall submit to the
Servicer a written description as to such additional or increased cost or
reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.
(e) If the Purchaser shall notify the Purchaser Agent that a
Eurodollar Disruption Event as described in clause (a) of the definition of
"Eurodollar Disruption Event" has occurred,
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the Purchaser Agent shall in turn so notify the Seller, whereupon all Advances
Outstanding of the Purchaser in respect of which Interest accrues at the
Adjusted Eurodollar Rate shall immediately be converted into Advances
Outstanding in respect of which Interest accrues at the Base Rate.
SECTION 2.14 TAXES.
(a) All payments made by an Obligor in respect of a Loan and all
payments made by the Seller or the Servicer under this Agreement will be made
free and clear of and without deduction or withholding for or on account of any
Taxes. If any Taxes are required to be withheld from any amounts payable to the
Administrative Agent, the Purchaser Agent, any Affected Party or any Secured
Party, then the amount payable to such Person will be increased (such increase,
the "Additional Amount") such that every net payment made under this Agreement
after withholding for or on account of any Taxes (including, without limitation,
any Taxes on such increase) is not less than the amount that would have been
paid had no such deduction or withholding been deducted or withheld. The
foregoing obligation to pay Additional Amounts, however, will not apply with
respect to net income or franchise taxes imposed on the Purchaser, any Affected
Party, the Administrative Agent or the Purchaser Agent, respectively, with
respect to payments required to be made by the Seller or Servicer under this
Agreement, by a taxing jurisdiction in which the Purchaser, any Affected Party,
the Administrative Agent or the Purchaser Agent, are organized, conducts
business or is paying taxes (as the case may be).
(b) The Servicer will indemnify (and to the extent the
indemnification provided by the Servicer is insufficient the Seller will
indemnify) each Affected Party for the full amount of Taxes payable by such
Person in respect of Additional Amounts and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. All payments
in respect of this indemnification shall be made within ten (10) days from the
date a written invoice therefor is delivered to the Seller.
(c) Within thirty (30) days after the date of any payment by the
Seller and the Servicer of any Taxes, the Seller and the Servicer will furnish
to the Administrative Agent and the Purchaser Agent at its address set forth
under its name on the signature pages hereof, appropriate evidence of payment
thereof.
(d) If the Purchaser is not created or organized under the laws of
the United States or a political subdivision thereof, the Purchaser shall
deliver to the Seller, with a copy to the Administrative Agent, (i) within
fifteen (15) days after the date hereof, two (or such other number as may from
time to time be prescribed by Applicable Laws) duly completed copies of IRS Form
W-8BEN or Form W-8ECI (or any successor forms or other certificates or
statements that may be required from time to time by the relevant United States
taxing authorities or Applicable Laws), as appropriate, to permit the Seller to
make payments hereunder for the account of the Purchaser without deduction or
withholding of United States federal income or similar Taxes and (ii) upon the
obsolescence of or after the occurrence of any event requiring a change in, any
form or certificate previously delivered pursuant to this Section 2.14(d),
copies (in such numbers as may from time to time be prescribed by Applicable
Laws or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under Applicable Laws or
regulations to permit the Seller and the Servicer to make payments
43
hereunder for the account of the Purchaser without deduction or withholding of
United States federal income or similar Taxes.
(e) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Purchaser in connection with this Agreement or the funding or maintenance of
Advances hereunder, the Purchaser is required to compensate a bank or other
financial institution in respect of Taxes under circumstances similar to those
described in this Section 2.14, then, within ten (10) days after demand by the
Purchaser, the Servicer shall pay (or to the extent the Servicer does not make
such payment the Seller shall pay) to the Purchaser such additional amount or
amounts as may be necessary to reimburse the Purchaser for any amounts paid by
it.
(f) Without prejudice to the survival of any other agreement of
the Seller and the Servicer hereunder, the agreements and obligations of the
Seller and the Servicer contained in this Section 2.14 shall survive the
termination of this Agreement.
SECTION 2.15 ASSIGNMENT OF THE SALE AGREEMENT.
The Seller hereby assigns to the Administrative Agent, for the ratable
benefit of the Secured Parties hereunder, all of the Seller's right, title and
interest in and to, but none of its obligations under, the Sale Agreement and
any UCC financing statements filed under or in connection therewith. In
furtherance and not in limitation of the foregoing, the Seller hereby assigns to
the Administrative Agent for the benefit of the Secured Parties its right to
indemnification under Article VIII of the Sale Agreement. The Seller confirms
that the Administrative Agent on behalf of the Secured Parties shall have the
sole right to enforce the Seller's rights and remedies under the Sale Agreement
and any UCC financing statements filed under or in connection therewith for the
benefit of the Secured Parties.
SECTION 2.16 [RESERVED.]
SECTION 2.17 OPTIONAL SALES.
(a) On any Optional Sale Date, the Seller shall have the right to
prepay all or a portion of the Advances Outstanding in connection with the sale
and assignment to the Seller by the Administrative Agent, on behalf of the
Secured Parties, of the Assets (each, an "Optional Sale"), subject to the
following terms and conditions:
(i) The Seller shall have given the Administrative Agent
at least forty-five (45) Business Days' prior written notice of its
intent to effect an Optional Sale, unless such notice is waived or
reduced by the Administrative Agent;
(ii) Any Optional Sale shall be in connection with a
Permitted Securitization Transaction;
(iii) Unless an Optional Sale is to be effected on a
Payment Date (in which case the relevant calculations with respect to
such Optional Sale shall be reflected on the applicable Monthly
Report), the Servicer shall deliver to the Administrative Agent a
certificate and evidence to the reasonable satisfaction of the
Administrative Agent (which
44
evidence may consist solely of a certificate from the Servicer) that
the Seller shall have sufficient funds on the related Optional Sale
Date to effect the contemplated Optional Sale in accordance with this
Agreement. In effecting an Optional Sale, the Seller may use the
Proceeds of sales of the Assets;
(iv) After giving effect to the Optional Sale and the
assignment to the Seller of the Assets on any Optional Sale Date, (x)
the remaining Advances Outstanding shall not exceed the lesser of the
Facility Amount and the Maximum Availability, (y) the representations
and warranties contained in Section 4.1 hereof shall continue to be
correct in all material respects, except to the extent relating to an
earlier date, (z) the eligibility of any Loan remaining as part of the
Assets after the Optional Sale will be redetermined as of the Optional
Sale Date, (aa) the Pool Concentration Criteria will be redetermined as
of the Optional Sale Date, and (bb) neither an Unmatured Termination
Event nor a Termination Event shall have resulted;
(v) On the related Optional Sale Date, the Administrative
Agent, the Purchaser Agent, on behalf of the Purchaser, shall have
received, as applicable, in immediately available funds, an amount
equal to the sum of (i) the portion of the Advances Outstanding to be
prepaid plus (ii) an amount equal to all unpaid Interest to the extent
reasonably determined by the Purchaser Agent to be attributable to that
portion of the Advances Outstanding to be paid in connection with the
Optional Sale plus (iii) an aggregate amount equal to the sum of all
other amounts due and owing to the Administrative Agent, the Collateral
Custodian, the Backup Servicer, the Purchaser Agent, the Purchaser and
the Affected Parties, as applicable, under this Agreement and the other
Transaction Documents, to the extent accrued to such date and to accrue
thereafter (including, without limitation, Breakage Costs); provided,
that, the Administrative Agent and the Purchaser Agent shall have the
right to determine whether the amount paid (or proposed to be paid) by
the Seller on the Optional Sale Date is sufficient to satisfy the
requirements of clauses (iii), (iv) and (v) and is sufficient to reduce
the Advances Outstanding to the extent requested by the Seller in
connection with the Optional Sale; and
(vi) On or prior to each Optional Sale Date, the Seller
shall have delivered to the Administrative Agent a list specifying all
Loans to be sold and assigned pursuant to such Optional Sale.
(b) In connection with any Optional Sale, following receipt by the
Purchaser Agent of the amounts referred to in clause (v) above, there shall be
sold and assigned to the Seller without recourse, representation or warranty all
of the right, title and interest of the Administrative Agent, the Purchaser
Agent, the Purchaser and the Secured Parties in, to and under the portion of the
Assets so retransferred and such portion of the Assets so retransferred shall be
released from the Lien of this Agreement (subject to the requirements of clause
(iv) above).
(c) The Seller hereby agrees to pay the reasonable legal fees and
expenses of the Administrative Agent, the Purchaser Agent and the Secured
Parties in connection with any Optional Sale (including, but not limited to,
expenses incurred in connection with the release of
45
the Lien of the Administrative Agent, the Secured Parties and any other party
having an interest in the Assets in connection with such Optional Sale).
(d) In connection with any Optional Sale, on the related Optional
Sale Date, the Administrative Agent, on behalf of the Secured Parties, shall, at
the expense of the Seller (i) execute such instruments of release with respect
to the portion of the Assets to be retransferred to the Seller, in recordable
form if necessary, in favor of the Seller as the Seller may reasonably request,
(ii) deliver any portion of the Assets to be retransferred to the Seller in its
possession to the Seller and (iii) otherwise take such actions, and cause or
permit the Collateral Custodian to take such actions, as are necessary and
appropriate to release the Lien of the Administrative Agent and the Secured
Parties on the portion of the Assets to be retransferred to the Seller and
release and deliver to the Seller such portion of the Assets to be retransferred
to the Seller.
ARTICLE III
CONDITIONS TO ADVANCES
SECTION 3.1 CONDITIONS TO CLOSING AND INITIAL ADVANCE.
The Purchaser shall not be obligated to make any Advance hereunder on
the occasion of the Initial Advance, nor shall the Purchaser, Administrative
Agent, the Purchaser Agent, the Backup Servicer and the Collateral Custodian be
obligated to take, fulfill or perform any other action hereunder, until the
following conditions have been satisfied, in the sole discretion of, or waived
in writing by, the Administrative Agent and the Purchaser Agent:
(a) Each Transaction Document shall have been duly executed by,
and delivered to, the parties thereto, and the Administrative Agent and the
Purchaser Agent shall have received such other documents, instruments,
agreements and legal opinions as the Administrative Agent and the Purchaser
Agent shall reasonably request in connection with the transactions contemplated
by this Agreement, including, without limitation, all those specified in the
Schedule of Documents attached hereto as Schedule I, each in form and substance
satisfactory to the Administrative Agent and the Purchaser Agent;
(b) The Administrative Agent and the Purchaser Agent shall have
received (i) satisfactory evidence that the Seller and the Servicer have
obtained all required consents and approvals of all Persons, including all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Transaction Documents to which each is a party
and the consummation of the transactions contemplated hereby or thereby or (ii)
an Officer's Certificate from each of the Seller and the Servicer in form and
substance reasonably satisfactory to the Administrative Agent and the Purchaser
Agent affirming that no such consents or approvals are required; it being
understood that the acceptance of such evidence or officer's certificate shall
in no way limit the recourse of the Administrative Agent, the Purchaser Agent or
any Secured Party against the Originator or the Seller for a breach of the
Originator's and the Seller's representation or warranty that all such consents
and approvals have, in fact, been obtained;
46
(c) The Seller, the Servicer and the Originator shall each be in
compliance in all material respects with all Applicable Laws and shall have
delivered to the Administrative Agent and the Purchaser Agent as to this and
other closing matters certification in the form of Exhibit F-1 and/or F-2;
(d) The Seller and the Servicer shall have delivered to the
Administrative Agent and the Purchaser Agent duly executed Powers of Attorney in
the form of Exhibits G-1 and G-2; and
(e) The Seller and the Servicer shall each have delivered to the
Administrative Agent and the Purchaser Agent a certificate as to Solvency in the
form of Exhibits E-1 and E-2 and a perfection certificate in form reasonably
acceptable to the Administrative Agent.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Each Advance to the Seller by the Purchaser (each, a "Transaction")
shall be subject to the further conditions precedent that:
(a) (1) With respect to any Advance (including the Initial
Advance), the Servicer shall have delivered to the Administrative Agent and the
Purchaser Agent (with a copy to the Collateral Custodian and the Backup
Servicer), no later than 12:00 p.m. Charlotte, North Carolina time, one (1)
Business Day prior to the related Funding Date in a form and substance
satisfactory to the Administrative Agent and the Purchaser Agent, a Borrowing
Notice (Exhibit A-1), Borrowing Base Certificate (Exhibit A-2), Loan List and
Monthly Report, if applicable, and containing such additional information as may
be reasonably requested by the Administrative Agent and the Purchaser Agent, and
(2) with respect to any reduction in Advances Outstanding pursuant to Section
2.3(b), the Servicer shall have delivered to the Administrative Agent and the
Purchaser Agent (with a copy to the Backup Servicer) at least one (1) Business
Day prior to any reduction of Advances Outstanding a Borrowing Notice (Exhibit
A-1) a Borrowing Base Certificate (Exhibit A-2) executed by the Servicer and the
Seller;
(b) On the date of such Transaction the following statements shall
be true and the Seller shall be deemed to have certified that:
(1) The representations and warranties contained in
Section 4.1, Section 4.2 and Section 4.3 are true and correct on and as
of such day as though made on and as of such day and shall be deemed to
have been made on such day;
(2) No event has occurred and is continuing, or would
result from such Transaction, that constitutes a Termination Event or
Unmatured Termination Event;
(3) On and as of such day, after giving effect to such
Transaction, the Advances Outstanding shall not exceed the lesser of
(x) the Facility Amount and (y) the Maximum Availability;
(4) After giving effect to such Advance or reduction of
Advances Outstanding, there is not and will be no deficiency in the
Minimum Overcollateralization Amount;
47
(5) On and as of such day, the Seller and the Servicer
each has performed all of the covenants and agreements contained in
this Agreement to be performed by such person at or prior to such day;
and
(6) 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 Advance or incremental Advance by the Purchaser in accordance with
the provisions hereof, the reduction of Advances Outstanding or any
other transaction contemplated herein;
(c) The Seller shall have delivered to the Collateral Custodian
(with a copy to the Backup Servicer and the Administrative Agent) no later than
12:00 p.m. Charlotte, North Carolina time one (1) Business Day prior to any
Funding Date, a copy of all duly executed original promissory notes of the Loans
not in the possession of an Underlying Custodian and, if any Loans are closed in
escrow, a certificate (in the form of Exhibit J) from the closing attorneys of
such Loans certifying the possession of the Required Loan Documents; provided,
however, notwithstanding the foregoing, the Required Loan Documents (including
any financing statements included in the Required Loan Documents) shall be in
the possession of the Collateral Custodian within two (2) Business Days of the
initial Funding Date;
(d) The Seller shall not have requested the Termination Date to
occur;
(e) The Facility Termination Date shall not have occurred;
(f) On the date of such Transaction, the Administrative Agent and
the Purchaser Agent shall have received such other approvals, opinions or
documents as the Administrative Agent and the Purchaser Agent may reasonably
require;
(g) The Required Equity Contribution shall have been made to the
Seller;
(h) [Reserved];
(i) The Seller and Servicer shall have delivered to the
Administrative Agent and the Purchaser Agent all reports required to be
delivered as of the date of such Transaction;
(j) The Seller shall have delivered to the Administrative Agent
and the Purchaser Agent an Officer's Certificate (which may be part of the
Borrowing Notice) in form and substance reasonably satisfactory to the
Administrative Agent and the Purchaser Agent certifying that each of the
foregoing conditions precedent has been satisfied;
(k) With respect to any Loan intended to be included as a part of
the Asset Pool, the Administrative Agent and the Purchaser Agent shall have
received an Opinion of Counsel in accordance with Schedule I; and
(l) The Seller shall have paid all fees required to be paid,
including all fees required hereunder and under the VFCC Fee Letter, and shall
have reimbursed the Purchaser, the Administrative Agent and the Purchaser Agent
for all fees, costs and expenses of closing the transactions contemplated
hereunder and under the other Transaction Documents, including the
48
reasonable attorney fees and any other legal and document preparation costs
incurred by the Purchaser, the Administrative Agent and the Purchaser Agent.
The failure of the Seller to satisfy any of the foregoing conditions
precedent in respect of any Advance shall give rise to a right of the
Administrative Agent and the Purchaser Agent, which right may be exercised at
any time on the demand of the Purchaser Agent, to rescind the related Advance
and direct the Seller to pay to the Administrative Agent for the benefit of the
Purchaser an amount equal to the Advances made during any such time that any of
the foregoing conditions precedent were not satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants as follows:
(a) Organization and Good Standing. The Seller has been duly
organized, and is validly existing as a limited liability company in good
standing, under the laws of the State of Delaware, and has not been organized
under the laws of any other jurisdiction, with all requisite limited liability
company power and authority to own or lease its properties and conduct its
business as such business is presently conducted, and had at all relevant times,
and now has all necessary power, authority and legal right to acquire, own and
sell the Assets in the Asset Pool.
(b) Due Qualification. The Seller is duly qualified to do business
and is in good standing as a limited liability company, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such qualification,
licenses or approvals.
(c) Power and Authority; Due Authorization; Execution and
Delivery. The Seller (i) has all necessary power, authority and legal right to
(a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (b) carry out the terms of the Transaction Documents to
which it is a party, (c) sell and assign an ownership interest in the Assets,
and (d) receive Advances and sell the Assets on the terms and conditions
provided herein and (ii) has duly authorized by all necessary company action the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and the sale and assignment of an ownership
interest in the Assets on the terms and conditions herein provided. This
Agreement and each other Transaction Document to which the Seller is a party
have been duly executed and delivered by the Seller.
(d) Binding Obligation. This Agreement and each other Transaction
Document to which the Seller is a party constitutes a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
respective terms, except as such enforceability may be limited by Insolvency
Laws and by general principles of equity (whether considered in a suit at law or
in equity).
49
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party and the fulfillment of the terms hereof and thereof will not (i)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the Seller's operating agreement or any Contractual Obligation of the Seller,
(ii) result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the Seller's properties pursuant to the terms of any such
Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.
(f) No Proceedings. There is no litigation, proceeding or
investigation pending or, to the best knowledge of the Seller, threatened
against the Seller, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any other Transaction Document to which the
Seller is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Seller is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental Authority
(if any) required for the due execution, delivery and performance by the Seller
of this Agreement and any other Transaction Document to which the Seller is a
party have been obtained.
(h) Bulk Sales. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not require compliance
with any "bulk sales" act or similar law by Seller.
(i) Solvency. The Seller is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under this Agreement and any
other Transaction Document to which the Seller is a party do not and will not
render the Seller not Solvent and the Seller shall deliver to the Administrative
Agent and the Purchaser Agent on the Closing Date a certification in the form of
Exhibit E-1.
(j) Selection Procedures. No procedures believed by the Seller to
be adverse to the interests of the Purchaser were utilized by the Seller in
identifying and/or selecting the Loans in the Asset Pool. In addition, each Loan
shall have been underwritten in accordance with and satisfy in all material
respects the standards of any Credit and Collection Policy that has been
established by the Seller or the Originator and is then in effect.
(k) Taxes. The Seller has filed or caused to be filed all tax
returns that are required to be filed by it. The Seller has paid or made
adequate provisions for the payment of all Taxes and all assessments made
against it or any of its property (other than any amount of Tax the validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on the
books of the Seller), and no tax lien has been filed and, to the Seller's
knowledge, no claim is being asserted, with respect to any such Tax, fee or
other charge.
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(l) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including, without limitation, the use of the
proceeds from the sale of the Assets) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulations issued pursuant thereto,
including, without limitation, Regulations T, U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II. The Seller does not own or
intend to carry or purchase, and no proceeds from the Advances will be used to
carry or purchase, any "margin stock" within the meaning of Regulation U or to
extend "purpose credit" within the meaning of Regulation U.
(m) Security Interest.
(1) This Agreement creates a valid and continuing
security interest (as defined in the applicable UCC) in the Assets in
favor of the Administrative Agent, on behalf of the Secured Parties,
which security interest is prior to all other Liens (except for
Permitted Liens), and is enforceable as such against creditors of and
purchasers from the Seller;
(2) the Loans, along with the related Loan Files,
constitute either a "general intangible," an "instrument," an
"account," "investment property," or "chattel paper," within the
meaning of the applicable UCC;
(3) the Seller owns and has good and marketable title to
the Assets free and clear of any Lien (other than Permitted Liens),
claim or encumbrance of any Person;
(4) the Seller has received all consents and approvals
required by the terms of any Loan to the sale and granting of a
security interest in the Loans hereunder to the Administrative Agent,
on behalf of the Secured Parties;
(5) the Seller has caused the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under Applicable Law in order to perfect the security
interest in the Assets granted to the Administrative Agent, on behalf
of the Secured Parties, under this Agreement;
(6) other than the security interest granted to the
Administrative Agent, on behalf of the Secured Parties, pursuant to
this Agreement, the Seller has not pledged, assigned, sold, granted a
security interest in or otherwise conveyed any of the Assets. The
Seller has not authorized the filing of and is not aware of any
financing statements against the Seller that include a description of
collateral covering the Assets other than any financing statement (A)
relating to the security interest granted to the Seller under the Sale
Agreement, or (B) that has been terminated. The Seller is not aware of
the filing of any judgment or tax lien filings against the Seller;
(7) all original executed copies of each underlying
promissory note that constitute or evidence each Loan has been, or
subject to the delivery requirements contained herein will be,
delivered to the Collateral Custodian;
(8) the Seller has received, or subject to the delivery
requirements contained herein will receive, a written acknowledgment
from the Collateral Custodian that the
51
Collateral Custodian or its bailee is holding the underlying promissory
notes that constitute or evidence the Loans solely on behalf of and for
the benefit of the Secured Parties; and
(9) none of the underlying promissory notes that
constitute or evidence the Loans has any marks or notations indicating
that they have been pledged, assigned or otherwise conveyed to any
Person other than the Administrative Agent, on behalf of the Secured
Parties.
(n) Reports Accurate. All Monthly Reports (if prepared by the
Seller, or to the extent that information contained therein is supplied by the
Seller), information, exhibits, financial statements, documents, books, records
or reports furnished or to be furnished by the Seller to the Administrative
Agent, the Purchaser Agent or the Purchaser in connection with this Agreement
are true, complete and correct.
(o) Location of Offices. The Seller's location (within the meaning
of Article 9 of the UCC) is Delaware. The office where the Seller keeps all the
Records is at the address of the Seller referred to in Section 13.2 hereof (or
at such other locations as to which the notice and other requirements specified
in Section 5.2(g) shall have been satisfied). The Seller's Federal Employee
Identification Number is correctly set forth on Exhibit I. The Seller has not
changed its name, whether by amendment of its certificate of formation, by
reorganization or otherwise, and has not changed its location within the four
(4) months preceding the Closing Date.
(p) Lock-Boxes. The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the Seller at such
Lock-Box Banks and the names, addresses and account numbers of all accounts to
which Collections of the Assets outstanding before the Initial Advance hereunder
have been sent, are specified in Schedule II (which shall be deemed to be
amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in Section
5.2(k)). The Seller has not granted any Person other than the Administrative
Agent and Collateral Custodian an interest in any Lock-Box Account at a future
time or upon the occurrence of a future event.
(q) Tradenames. The Seller has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which it has
done or is doing business.
(r) Sale Agreement. The Sale Agreement is the only agreement
pursuant to which the Seller purchases Assets.
(s) Value Given. The Seller shall have given reasonably equivalent
value to the Originator in consideration for the transfer to the Seller of the
Assets under the Sale Agreement, no such transfer shall have been made for or on
account of an antecedent debt owed by the Originator to the Seller, and no such
transfer is or may be voidable or subject to avoidance under any section of the
Bankruptcy Code.
(t) Accounting. The Seller accounts for the transfers to it from
the Originator of interests in Assets under the Sale Agreement as financings of
such Assets for tax and consolidated accounting purposes (with a notation that
it is treating the transfers as a sale for
52
legal and all other purposes on its books, records and financial statements, in
each case consistent with GAAP and with the requirements set forth herein).
(u) Special Purpose Entity. The Seller has not and shall not:
(1) engage in any business or activity other than the
purchase and receipt of Assets and related assets from the Originator
under the Sale Agreement, the sale of Assets under the Transaction
Documents, and such other activities as are incidental thereto;
(2) acquire or own any material assets other than (a) the
Assets and related assets from the Originator under the Sale Agreement
and (b) incidental property as may be necessary for the operation of
the Seller;
(3) merge into or consolidate with any Person or
dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case first obtaining the consent
of the Administrative Agent and the Purchaser Agent;
(4) fail to preserve its existence as an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization or formation, or without the prior
written consent of the Administrative Agent and the Purchaser Agent,
amend, modify, terminate or fail to comply with the provisions of its
operating agreement, or fail to observe company formalities;
(5) own any Subsidiary or make any investment in any
Person without the consent of the Administrative Agent and the
Purchaser Agent;
(6) except as permitted by this Agreement and the
Lock-Box Agreement, commingle its assets with the assets of any of its
Affiliates, or of any other Person;
(7) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than
indebtedness to the Secured Parties hereunder or in conjunction with a
repayment of all Advances owed to the Purchaser, except for trade
payables in the ordinary course of its business; provided, that, such
debt is not evidenced by a note and is paid when due;
(8) become insolvent or fail to pay its debts and
liabilities from its assets as the same shall become due;
(9) fail to maintain its records, books of account and
bank accounts separate and apart from those of any other Person;
(10) enter into any contract or agreement with any Person,
except upon terms and conditions that are commercially reasonable and
intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than such
Person;
53
(11) seek its dissolution or winding up in whole or in
part;
(12) fail to correct any known misunderstandings regarding
the separate identity of Seller and the Originator or any principal or
Affiliate thereof or any other Person;
(13) guarantee, become obligated for, or hold itself out
to be responsible for the debt of another Person;
(14) make any loan or advances to any third party,
including any principal or Affiliate, or hold evidence of indebtedness
issued by any other Person (other than cash and investment-grade
securities);
(15) fail to file its own separate tax return, or file a
consolidated federal income tax return with any other Person, except as
may be required by the Code and regulations;
(16) fail either to hold itself out to the public as a
legal entity separate and distinct from any other Person or to conduct
its business solely in its own name in order not (a) to mislead others
as to the identity with which such other party is transacting business,
or (b) to suggest that it is responsible for the debts of any third
party (including any of its principals or Affiliates);
(17) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;
(18) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or make
an assignment for the benefit of creditors;
(19) except as may be required by the Code and
regulations, share any common logo with or hold itself out as or be
considered as a department or division of (a) any of its principals or
affiliates, (b) any Affiliate of a principal or (c) any other Person;
(20) permit any transfer (whether in any one or more
transactions) of any direct or indirect ownership interest in the
Seller to the extent it has the ability to control the same, unless the
Seller delivers to the Administrative Agent and the Purchaser Agent an
acceptable non-consolidation opinion and the Administrative Agent
consents to such transfer;
(21) fail to maintain separate financial statements,
showing its assets and liabilities separate and apart from those of any
other Person;
(22) fail to pay its own liabilities and expenses only out
of its own funds;
(23) fail to pay the salaries of its own employees in
light of its contemplated business operations;
54
(24) acquire the obligations or securities of its
Affiliates or stockholders;
(25) fail to allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate;
(26) fail to use separate invoices and checks bearing its
own name;
(27) pledge its assets for the benefit of any other
Person, other than with respect to payment of the indebtedness to the
Secured Parties hereunder;
(28) fail at any time to have at least one (1) independent
director (an "Independent Director") who is not and has not been for at
least five (5) years a director, officer, employee, trade credit or
shareholder (or spouse, parent, sibling or child of the foregoing) of
(a) the Servicer, (b) the Seller, (c) any principal of the Servicer,
(d) any Affiliate of the Servicer, or (e) any Affiliate of any
principal of the Servicer; provided, however, such Independent Director
may be an independent director of another special purpose entity
affiliated with the Servicer or fail to ensure that all limited
liability company action relating to the selection, maintenance or
replacement of the Independent Director are duly authorized by the
unanimous vote of the board of directors (including the Independent
Director);
(29) fail to have the unanimous consent of all directors
(including the consent of the Independent Director) to (a) dissolve or
liquidate, in whole or part, or institute proceedings to be adjudicated
bankrupt or insolvent, (b) institute or consent to the institution of
bankruptcy or Insolvency Proceedings against it, (c) file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy or insolvency, (d) seek or
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for the
Seller, (e) make any assignment for the benefit of the Seller's
creditors, (f) admit in writing its inability to pay its debts
generally as they become due, or (g) take any action in furtherance of
any of the foregoing; and
(30) fail to comply with the assumptions specified in the
non-consolidation opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP, dated as of February 28,
2003, upon which the conclusions expressed therein are based.
(v) Confirmation from the Originator. The Seller has received in
writing from the Originator confirmation that the Originator will not cause the
Seller to file a voluntary petition under the Bankruptcy Code or Insolvency
Laws. Each of the Seller and the Originator is aware that in light of the
circumstances described in the preceding sentence and other relevant facts, the
filing of a voluntary petition under the Bankruptcy Code for the purpose of
making any Assets or any other assets of the Seller available to satisfy claims
of the creditors of the Originator would not result in making such assets
available to satisfy such creditors under the Bankruptcy Code.
(w) Investment Company Act. The Seller is not, and is not
controlled by, an "investment company" within the meaning of the 40 Act, as
amended, or is exempt from the provisions of the 40 Act.
55
(x) ERISA. The present value of all benefits vested under all
"employee pension benefit plans," as such term is defined in Section 3 of ERISA,
maintained by the Seller, or in which employees of the Seller are entitled to
participate, as from time to time in effect (in this paragraph, the "Pension
Plans"), does not exceed the value of the assets of the Pension Plan allocable
to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies,
withdrawals or reportable events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Seller to any material tax, penalty or
other liability. No notice of intent to terminate a Pension Plan has been
billed, nor has any Pension Plan been terminated under Section 4041(f) of ERISA,
nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer a Pension Plan and no event has
occurred or condition exists that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
(y) PUHCA. The Seller is not a "holding company" or a "subsidiary
holding company" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or any successor statute.
(z) Compliance with Law. The Seller has complied in all respects
with all Applicable Laws to which it may be subject, and no Asset in the Asset
Pool contravenes any Applicable Laws (including, without limitation, laws, rules
and regulations relating to licensing, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy).
(aa) Credit and Collection Policy. The Seller has complied in all
material respects with the Credit and Collection Policy with respect to all of
the Assets.
(bb) Collections. The Seller acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.
(cc) Set-Off, etc. No Asset has been satisfied, rescinded or
modified by the Seller, the Originator or the Obligor thereof, and, to the
knowledge of the Seller and the Originator no Asset is subject to rescission,
set-off, counterclaim or defense, whether arising out of transactions concerning
the Asset or otherwise, by the Seller, the Originator or the Obligor with
respect thereto, except for amendments to such Asset otherwise permitted under
Section 6.4(a) of this Agreement and in accordance with the Credit and
Collection Policy.
(dd) Full Payment. The Seller has no knowledge of any fact which
should lead it to expect that any Asset will not be paid in full.
(ee) Accuracy of Representations and Warranties. Each
representation or warranty by the Seller contained herein or in any certificate
or other document furnished by the Seller pursuant hereto or in connection
herewith is true and correct in all material respects.
(ff) Representations and Warranties in Sale Agreement. The
representations and warranties made by the Originator to the Seller in the Sale
Agreement are hereby remade by the
56
Seller on each date to which they speak in the Sale Agreement as if such
representations and warranties were set forth herein. For purposes of this
Section 4.1(ff), such representations and warranties are incorporated herein by
reference as if made by the Seller to the Administrative Agent, the Purchaser
Agent and each of the Secured Parties under the terms hereof mutatis mutandis.
(gg) Reaffirmation of Representations and Warranties by the Seller.
On each day that any Advance is made hereunder, the Seller shall be deemed to
have certified that all representations and warranties described in Section 4.1
hereof are correct on and as of such day as though made on and as of such day.
(hh) Environmental.
(1) Each item of the Related Property is in compliance
with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to such Related Property and there
are no conditions relating to such Related Property that could give
rise to liability under any applicable Environmental Laws.
(2) None of the Related Property contains, or has
previously contained, any Materials of Environmental Concern at, on or
under the Related Property in amounts or concentrations that constitute
or constituted a violation of, or could give rise to liability under,
Environmental Laws.
(3) None of the Seller, the Originator nor the Servicer
has received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard
to any of the Related Property, nor does any such Person have knowledge
or reason to believe that any such notice will be received or is being
threatened.
(4) Materials of Environmental Concern have not been
transported or disposed of from the Related Property, or generated,
treated, stored or disposed of at, on or under any of the Related
Property or any other location, in each case by or on behalf of the
Seller, the Originator and/or the Servicer in violation of, or in a
manner that would be reasonably likely to give rise to liability under,
any applicable Environmental Law.
(5) No judicial proceeding or governmental or
administrative action is pending or, to the best knowledge of the
Seller, the Originator and/or the Servicer, threatened, under any
Environmental Law to which any of the Seller, the Originator and/or the
Servicer is or will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements,
outstanding under any Environmental Law with respect to any of the
Seller, the Originator, the Servicer or the Related Property.
(6) There has been no release or threat of release of
Materials of Environmental Concern at or from any of the Related
Property, or arising from or related to the operations (including,
without limitation, disposal) of any of the Seller, the
57
Originator and/or the Servicer in connection with the Related Property
in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
(ii) USA PATRIOT Act. Neither the Seller nor any Affiliate of the
Seller is (i) a country, territory, organization, person or entity named on an
OFAC list, (ii) a Person that resides or has a place of business in a country or
territory named on such lists or which is designated as a "Non-Cooperative
Jurisdiction" by the Financial Action Task Force on Money Laundering, or whose
subscription funds are transferred from or through such a jurisdiction; (iii) a
"Foreign Shell Bank" within the meaning of the USA PATRIOT Act, i.e., a foreign
bank that does not have a physical presence in any country and that is not
affiliated with a bank that has a physical presence and an acceptable level of
regulation and supervision; or (iv) a person or entity that resides in or is
organized under the laws of a jurisdiction designated by the United States
Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.
The representations and warranties in Section 4.1(m) shall survive the
termination of this Agreement and such representations and warranties may not be
waived by any party hereto.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING
TO THE AGREEMENT AND THE ASSETS.
The Seller hereby represents and warrants, as of the Closing Date and
as of each Funding Date:
(a) Binding Obligation, Valid Transfer and Security Interest.
(1) This Agreement and each other Transaction Document to
which the Seller is a party each constitute a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its respective terms, except as such enforceability may be limited
by Insolvency Laws and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
(2) This Agreement constitutes a valid transfer to the
Administrative Agent, as agent for the Secured Parties, of all right,
title and interest of the Seller in, to and under all Assets in the
Asset Pool, free and clear of any Lien of any Person claiming through
or under the Seller or its Affiliates, except for Permitted Liens. This
Agreement creates a valid and continuing security interest in all
Assets in the Asset Pool to the Administrative Agent, as agent for the
Secured Parties, which upon the delivery of the Required Loan Documents
to the Collateral Custodian and the filing of the financing statements
described in Section 4.1(m) and shall be a first priority perfected
security interest in all Assets in the Asset Pool, subject only to
Permitted Liens. Neither the Seller nor any Person claiming through or
under Seller shall have any claim to or interest in the Collection
Account and, if this Agreement constitutes the grant of a security
interest in such property, except for the interest of Seller in such
property as a debtor for purposes of the UCC.
(b) Eligibility of Assets. As of the Closing Date, (i) the Loan
List and the information contained in the Borrowing Notice delivered pursuant to
Section 2.2 is an accurate
58
and complete listing in all material respects of all Assets in the Asset Pool as
of the Cut-Off Date and the information contained therein with respect to the
identity of such Assets and the amounts owing thereunder is true and correct in
all material respects as of the related Cut-Off Date, (ii) each such Loan that
is part of the Borrowing Base is an Eligible Loan as of such date, (iii) each
such Asset is free and clear of any Lien of any Person (other than Permitted
Liens) and in compliance with all Applicable Laws, (iv) with respect to each
such Asset, all consents, licenses, approvals or authorizations of or
registrations or declarations of any Governmental Authority required to be
obtained, effected or given by the Seller in connection with the transfer of an
ownership interest in such Assets to the Administrative Agent as agent for the
Secured Parties have been duly obtained, effected or given and are in full force
and effect, and (v) the representations and warranties set forth in Section
4.2(a) are true and correct with respect to each Asset.
(c) No Fraud. Each Loan was originated without any fraud or
material misrepresentation by the Financing Originator, the Originator or, to
the best of the Seller's knowledge, on the part of the Obligor.
SECTION 4.3 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer represents and warrants as follows:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, and has not been organized
under the laws of any other jurisdiction, with all requisite company power and
authority to own or lease its properties and to conduct its business as such
business is presently conducted and to enter into and perform its obligations
pursuant to this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business as a limited liability company and is in good standing as a limited
liability company, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property and or the conduct
of its business requires such qualification, licenses or approvals.
(c) Power and Authority; Due Authorization; Execution and
Delivery. The Servicer (i) has all necessary power, authority and legal right to
(a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (b) carry out the terms of the Transaction Documents to
which it is a party, and (c) sell and assign the Variable Funding Certificate on
the terms and conditions provided herein and (ii) has duly authorized by all
necessary company action the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
sale and assignment of an ownership interest in the Variable Funding Certificate
on the terms and conditions herein provided. This Agreement and each other
Transaction Document to which the Servicer is a party have been duly executed
and delivered by the Servicer.
(d) Binding Obligation. This Agreement and each other Transaction
Document to which the Servicer is a party constitutes a legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its respective terms, except as such
59
enforceability may be limited by Insolvency Laws and general principles of
equity (whether considered in a suit at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party and the fulfillment of the terms hereof and thereof will not (i)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the Servicer's operating agreement or any Contractual Obligation of the
Servicer, (ii) result in the creation or imposition of any Lien upon any of the
Servicer's properties pursuant to the terms of any such Contractual Obligation,
other than this Agreement, or (iii) violate any Applicable Law.
(f) No Proceedings. There is no litigation, proceedings or
investigations pending or, to the best knowledge of the Servicer, threatened
against the Servicer, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any other Transaction Document to which the
Servicer is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Servicer is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.
(g) All Consents Required. All approvals, authorizations,
consents, orders, licenses or other actions of any Person or of any Governmental
Authority (if any) required for the due execution, delivery and performance by
the Servicer of this Agreement and any other Transaction Document to which the
Servicer is a party have been obtained.
(h) Reports Accurate. All Servicer's Certificates and other
written and electronic information, exhibits, financial statements, documents,
books, records or reports furnished by the Servicer to the Administrative Agent,
the Purchaser Agent or the Purchaser in connection with this Agreement are
accurate, true and correct in all material respects.
(i) Credit and Collection Policy. The Servicer has complied in all
material respects with the Credit and Collection Policy with regard to the
underwriting and servicing of the Assets.
(j) Collections. The Servicer acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.
(k) Bulk Sales. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" act or similar law by
the Servicer.
(l) Solvency. The Servicer is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under this Agreement and any
other Transaction Document to which the Servicer is a party do not and will not
render the Servicer not Solvent and the Servicer shall deliver to the
Administrative Agent and the Purchaser Agent on the Closing Date a certification
in the form of Exhibit E-2.
(m) Taxes. The Servicer has filed or caused to be filed all tax
returns that are required to be filed by it. The Servicer has paid or made
adequate provisions for the payment of all Taxes
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and all assessments made against it or any of its property (other than any
amount of Tax the validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Servicer), and no tax lien has been
filed and, to the Servicer's knowledge, no claim is being asserted, with respect
to any such Tax, fee or other charge.
(n) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including, without limitation, the use of the
Proceeds from the sale of the Assets) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulations issued pursuant thereto,
including, without limitation, Regulations T, U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II. The Servicer does not own
or intend to carry or purchase, and no proceeds from the Advances will be used
to carry or purchase, any "margin stock" within the meaning of Regulation U or
to extend "purpose credit" within the meaning of Regulation U.
(o) Security Interest. The Servicer will take all steps necessary
to ensure that the Seller has granted a security interest (as defined in the
UCC) to the Administrative Agent, as agent for the Secured Parties, in the
Assets, which is enforceable in accordance with Applicable Law upon execution
and delivery of this Agreement. Upon the filing of UCC-1 financing statements
naming the Administrative Agent as secured party and the Seller as debtor, the
Administrative Agent, as agent for the Secured Parties, shall have a first
priority perfected security interest in the Assets (except for any Permitted
Liens). All filings (including, without limitation, such UCC filings) as are
necessary for the perfection of the Secured Parties' security interest in the
Assets have been (or prior to the applicable Advance will be) made.
(p) ERISA. The present value of all benefits vested under all
"employee pension benefit plans," as such term is defined in Section 3 of ERISA,
maintained by the Servicer, or in which employees of the Servicer are entitled
to participate, as from time to time in effect (herein called the "Pension
Plans"), does not exceed the value of the assets of the Pension Plan allocable
to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies,
withdrawals or reportable events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Servicer to any material tax, penalty
or other liability. No notice of intent to terminate a Pension Plan has been
billed, nor has any Pension Plan been terminated under Section 4041(f) of ERISA,
nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
(q) Investment Company Act. The Servicer is not, and is not
controlled by, an "investment company" within the meaning of the 40 Act, as
amended, or is exempt from the provisions of the 40 Act.
(r) USA PATRIOT Act. Neither the Servicer nor any Affiliate of the
Servicer is (i) a country, territory, organization, person or entity named on an
OFAC list, (ii) a Person that resides or has a place of business in a country or
territory named on such lists or which is designated as a "Non-Cooperative
Jurisdiction" by the Financial Action Task Force on Money
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Laundering, or whose subscription funds are transferred from or through such a
jurisdiction; (iii) a "Foreign Shell Bank" within the meaning of the USA PATRIOT
Act, i.e., a foreign bank that does not have a physical presence in any country
and that is not affiliated with a bank that has a physical presence and an
acceptable level of regulation and supervision; or (iv) a person or entity that
resides in or is organized under the laws of a jurisdiction designated by the
United States Secretary of the Treasury under Sections 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money laundering concerns.
(s) Underlying Custodial Agreements. With respect to each Loan,
the underlying loan documents and other collateral pledged by the Obligors is
held by the Collateral Custodian or an Underlying Custodian for the benefit of
the Originator and its assignees. The Originator's rights under each such
Underlying Custodial Agreement are fully assignable and have been assigned by it
to the Seller in connection with the transfer of the Loan Assets.
SECTION 4.4 REPRESENTATIONS AND WARRANTIES OF THE BACKUP SERVICER.
The Backup Servicer in its individual capacity and as Backup Servicer
represents and warrants as follows:
(a) Organization and Corporate Power. It is a duly organized and
validly existing national banking association in good standing under the laws of
the United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Backup Servicer under this
Agreement.
(b) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized by all necessary association action on its part, either in its
individual capacity or as Backup Servicer, as the case may be.
(c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Backup Servicer is a party or by which
it or any of its property is bound.
(d) No Violation. The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or Governmental Authority
applicable to the Backup Servicer, required in connection with the execution and
delivery of this Agreement, the performance by the Backup Servicer of the
transactions contemplated hereby and the fulfillment by the Backup Servicer of
the terms hereof have been obtained.
(f) Validity, Etc. This Agreement constitutes the legal, valid and
binding obligation of the Backup Servicer, enforceable against the Backup
Servicer in accordance with its terms,
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except as such enforceability may be limited by applicable Insolvency Laws or
general principles of equity (whether considered in a suit at law or in equity).
SECTION 4.5 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
CUSTODIAN.
The Collateral Custodian in its individual capacity and as Collateral
Custodian represents and warrants as follows:
(a) Organization and Corporate Power. It is a duly organized and
validly existing national banking association in good standing under the laws of
the United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Collateral Custodian under this
Agreement.
(b) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized by all necessary association action on its part, either in its
individual capacity or as Collateral Custodian, as the case may be.
(c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Collateral Custodian is a party or by
which it or any of its property is bound.
(d) No Violation. The execution and delivery of this Agreement,
the performance of the Transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or Governmental Authority
applicable to the Collateral Custodian, required in connection with the
execution and delivery of this Agreement, the performance by the Collateral
Custodian of the transactions contemplated hereby and the fulfillment by the
Collateral Custodian of the terms hereof have been obtained.
(f) Validity, Etc. The Agreement constitutes the legal, valid and
binding obligation of the Collateral Custodian, enforceable against the
Collateral Custodian in accordance with its terms, except as such enforceability
may be limited by applicable Insolvency Laws and general principles of equity
(whether considered in a suit at law or in equity).
SECTION 4.6 BREACH OF CERTAIN REPRESENTATIONS AND WARRANTIES.
If on any day a Loan is (or becomes) a Warranty Loan, no later than two
(2) Business Days following the earlier of knowledge by the Seller of such Loan
becoming a Warranty Loan or receipt by the Seller from the Administrative Agent
or the Servicer of written notice thereof, the Seller shall make a deposit to
the Collection Account (for allocation pursuant to Section 2.7 or Section 2.8,
as applicable) in immediately available funds in an amount equal to the sum of
(i) the Outstanding Loan Balance of each such Warranty Loan on such date, (ii)
any outstanding
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Servicer Advances thereon and (iii) any accrued and unpaid interest,
(collectively, the "Retransfer Price"). Upon confirmation of the deposit of such
Retransfer Price into the Collection Account (the "Retransfer Date"), such
Warranty Loan shall not be included in the Borrowing Base (and, if and when the
Seller elects to accept the retransfer of such Warranty Loan, the Asset Pool).
Upon the Retransfer Date of each Warranty Loan, the Administrative Agent, as
agent for the Secured Parties, shall (if and when the Seller elects to accept
the retransfer of such Warranty Loan) automatically and without further action
be deemed to transfer, assign and set-over to the Seller, without recourse,
representation or warranty, all the right, title and interest of the
Administrative Agent, as agent for the Secured Parties in, to and under such
Warranty Loan and all future monies due or to become due with respect thereto,
the Related Security, all Proceeds of such Warranty Loan, Recoveries and
Insurance Proceeds relating thereto, all rights to security for any such
Warranty Loan, and all Proceeds and products of the foregoing. The
Administrative Agent, as agent for the Secured Parties, shall (if and when the
Seller elects to accept the retransfer of such Warranty Loan), at the sole
expense of the Servicer, execute such documents and instruments of transfer as
may be prepared by the Servicer on behalf of the Seller and take other such
actions as shall reasonably be requested by the Seller to effect the transfer of
such Warranty Loan pursuant to this Section 4.6.
ARTICLE V
GENERAL COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE SELLER.
From the date hereof until the Collection Date:
(a) Compliance with Laws. The Seller will comply in all material
respects with all Applicable Laws, including those with respect to the Assets or
any part thereof.
(b) Preservation of Company Existence. The Seller will preserve
and maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material
Adverse Effect.
(c) Performance and Compliance with Assets. The Seller will, at
its expense, timely and fully perform and comply (or cause the Originator to
perform and comply pursuant to the Sale Agreement) with in all material respects
all provisions, covenants and other promises required to be observed by it under
the Assets and all other agreements related to such Assets.
(d) Keeping of Records and Books of Account. The Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Assets in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all or any portion of the Assets in the Asset
Pool.
(e) Originator's Assets. With respect to the Assets acquired by
the Seller, the Seller will (i) acquire such Assets pursuant to and in
accordance with the terms of the Sale Agreement,
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(ii) (at the Servicer's expense) take all action necessary to perfect, protect
and more fully evidence the Seller's ownership of such Assets free and clear of
any Lien other than the Lien created hereunder and Permitted Liens, including,
without limitation, (a) filing and maintaining (at the Servicer's expense),
effective financing statements against the Originator in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate, (iii) permit the Administrative Agent, the Purchaser Agent or their
respective agents or representatives to visit the offices of the Seller during
normal office hours and upon reasonable notice examine and make copies of all
documents, books, records and other information concerning the Assets and
discuss matters related thereto with any of the officers or employees of the
Seller having knowledge of such matters, and (iv) take all additional action
that the Administrative Agent or the Purchaser Agent may reasonably request to
perfect, protect and more fully evidence the respective interests of the parties
to this Agreement in the Assets.
(f) Delivery of Collections. The Seller will pay to the Servicer
promptly (but in no event later than two (2) Business Days after receipt) all
Collections received by Seller in respect of the Assets included in the Asset
Pool and cause the same to be promptly deposited into the Collection Account by
the Servicer in accordance with Section 5.4(k).
(g) Separate Corporate Existence. The Seller shall be in
compliance with the Special Purpose Entity requirements set forth in Section
4.1(u). The Seller confirms that the statements contained in the opinions of
▇▇▇▇▇▇ ▇▇▇▇▇ LLP regarding substantive consolidation matters and true sale
matters each delivered to the Administrative Agent on the Closing Date are, in
each case, true and correct with respect to itself, and that the Seller will
comply with any covenants or obligations assumed to be complied with by it in
such opinion as if such covenants and obligations were set forth herein.
(h) Credit and Collection Policy. The Seller will (a) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (b) furnish to the Administrative Agent and the Purchaser Agent,
prior to its effective date, prompt notice of any material changes in the Credit
and Collection Policy. The Seller will not agree to or otherwise permit to occur
any material change in the Credit and Collection Policy without the prior
consent of the Administrative Agent and the Purchaser Agent (which consent shall
not be unreasonably withheld).
(i) Termination Events. The Seller will provide the Administrative
Agent and the Purchaser Agent with immediate written notice of the occurrence of
each Termination Event and each Unmatured Termination Event of which the Seller
has knowledge or has received notice. In addition, no later than two (2)
Business Days following the Seller's knowledge or notice of the occurrence of
any Termination Event or Unmatured Termination Event, the Seller will provide to
the Administrative Agent and the Purchaser Agent a written statement of the
chief financial officer or chief accounting officer of Seller setting forth the
details of such event and the action that the Seller proposes to take with
respect thereto.
(j) Taxes. The Seller will file and pay any and all Taxes required
to meet the obligations of the Transaction Documents.
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(k) Use of Proceeds. The Seller will use the proceeds of the
Advances only to acquire Assets or to make distributions to its members in
accordance with the terms hereof.
(l) Obligor Notification Forms. The Seller shall furnish the
Administrative Agent with an appropriate power of attorney to send (at the
Administrative Agent's discretion after the occurrence of a Termination Event or
an Unmatured Termination Event) Obligor notification forms to give notice to the
Obligors of the Secured Parties' interest in the Assets and the obligation to
make payments as directed by the Administrative Agent.
(m) Adverse Claims. The Seller will not create, or participate in
the creation of, or permit to exist, any Liens in relation to each Lock-Box
Account other than as disclosed to the Administrative Agent and the Purchaser
Agent and existing as of the date of this Agreement.
(n) Seller's Assets. With respect to each Asset acquired by the
Secured Parties, the Seller will (i) take all action necessary to perfect,
protect and more fully evidence the Secured Parties' ownership of such Asset,
including, without limitation, (a) filing and maintaining (at the Servicer's
expense), effective financing statements against the Seller in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate and (ii) take all additional action that the Administrative Agent
may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in such Assets.
(o) Notices. The Seller will furnish to the Administrative Agent
and the Purchaser Agent:
(1) Income Tax Liability. Within ten (10) Business Days
after the receipt of revenue agent reports or other written proposals,
determinations or assessments of the Internal Revenue Service or any
other taxing authority which propose, determine or otherwise set forth
positive adjustments to the Tax liability of any Affiliated group
(within the meaning of Section 1504(a)(l) of the Code) which equal or
exceed $5,000,000 in the aggregate, telephonic, telex or telecopy
notice (confirmed in writing within five (5) Business Days) specifying
the nature of the items giving rise to such adjustments and the amounts
thereof;
(2) Auditors' Management Letters. Promptly after the
receipt thereof, any auditors' management letters are received by the
Seller or by its accountants;
(3) Representations. Forthwith upon receiving knowledge
of same, the Seller shall notify the Administrative Agent and the
Purchaser Agent if any representation or warranty set forth in Section
4.1 was incorrect at the time it was given or deemed to have been given
and at the same time deliver to the Administrative Agent and the
Purchaser Agent a written notice setting forth in reasonable detail the
nature of such facts and circumstances. In particular, but without
limiting the foregoing, the Seller shall notify the Administrative
Agent and the Purchaser Agent in the manner set forth in the preceding
sentence before any Funding Date of any facts or circumstances within
the knowledge of
66
the Seller which would render any of the said representations and
warranties untrue at the date when such representations and warranties
were made or deemed to have been made;
(4) ERISA. Promptly after receiving notice of any
"reportable event" (as defined in Title IV of ERISA) with respect to
the Seller (or any Affiliate thereof), a copy of such notice;
(5) Proceedings. As soon as possible and in any event
within three (3) Business Days after any executive officer of the
Seller receives notice or obtains knowledge thereof, of any settlement
of, material judgment (including a material judgment with respect to
the liability phase of a bifurcated trial) in or commencement of any
material labor controversy, material litigation, material action,
material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Assets, the Transaction Documents,
the Secured Parties' interest in the Assets, or the Seller, the
Servicer or the Originator or any of their Affiliates; provided,
however, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting (i) the
Assets, the Transaction Documents, the Secured Parties' interest in the
Assets, or the Servicer or the Originator or any of their Affiliates
(other than the Seller) in excess of $5,000,000 or more or (ii) the
Seller in excess of $1,000,000 or more shall be deemed to be material
for purposes of this Section 5.1(o); and
(6) Notice of Material Events. Promptly upon becoming
aware thereof, notice of any other event or circumstances that, in the
reasonable judgment of the Seller, is likely to have a Material Adverse
Effect.
(p) Other. The Seller will furnish to the Administrative Agent and
the Purchaser Agent promptly, from time to time, such other information,
documents, records or reports respecting the Assets or the condition or
operations, financial or otherwise, of Seller or Originator as the
Administrative Agent and the Purchaser Agent may from time to time reasonably
request in order to protect the interests of the Administrative Agent, the
Purchaser Agent or the Secured Parties under or as contemplated by this
Agreement.
SECTION 5.2 NEGATIVE COVENANTS OF THE SELLER.
From the date hereof until the Collection Date:
(a) Other Business. Seller will not (i) engage in any business
other than the transactions contemplated by the Transaction Documents, (ii)
incur any Indebtedness, obligation, liability or contingent obligation of any
kind other than pursuant to this Agreement, or (iii) form any Subsidiary or make
any Investments in any other Person.
(b) Assets Not to be Evidenced by Instruments. The Seller will
take no action to cause any Asset that is not, as of the Closing Date, evidenced
by an Instrument, to be so evidenced except in connection with the enforcement
or collection of such Asset.
(c) Security Interests. Except as otherwise permitted herein and
in respect of any Optional Sale and Permitted Securitization Transaction, the
Seller will not sell, pledge, assign or
67
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Asset, whether now existing or hereafter transferred hereunder,
or any interest therein, and the Seller will not sell, pledge, assign or suffer
to exist any Lien on its interest, if any, hereunder. The Seller will promptly
notify the Administrative Agent and the Purchaser Agent of the existence of any
Lien on any Assets and the Seller shall defend the right, title and interest of
the Administrative Agent as agent for the Secured Parties in, to and under the
Assets in the Asset Pool against all claims of third parties; provided, however,
that nothing in this Section 5.2(c) shall prevent or be deemed to prohibit the
Seller from suffering to exist Permitted Liens upon any of the Assets in the
Asset Pool.
(d) Mergers, Acquisitions, Sales, etc. The Seller will not be a
party to any merger or consolidation, or purchase or otherwise acquire any of
the assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, convey or lease any of its
assets, or sell or assign with or without recourse any Assets or any interest
therein (other than pursuant hereto or to the Sale Agreement).
(e) Deposits to Special Accounts. Except as otherwise provided in
the Lock-Box Agreement, the Seller will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account cash or
cash proceeds other than Collections in respect of Assets in the Asset Pool.
(f) Restricted Payments. The Seller shall not make any Restricted
Junior Payment, except that, so long as no Termination Event or Unmatured
Termination Event has occurred and is continuing or would result therefrom, the
Seller may declare and make distributions to its members on their membership
interests.
(g) Change of Name or Location of Loan Files. The Seller shall not
(x) change its name, identity or corporate structure (within the meaning of
Section 9-507(c) of the UCC), change the location of its jurisdiction of
organization, move the location of its principal place of business and chief
executive office, or change the offices where it keeps the records from the
location referred to in Section 13.2, or (y) move, or consent to the Collateral
Custodian or Servicer moving, the Required Loan Documents and Loan Files from
the location thereof on the Closing Date, unless the Seller has given at least
thirty (30) days' written notice to the Administrative Agent and has taken all
actions required under the UCC of each relevant jurisdiction in order to
continue the first priority perfected security interest of the Administrative
Agent, as agent for the Secured Parties, in the Assets.
(h) Accounting of Purchases. Other than for tax and consolidated
accounting purposes, the Seller will not account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby in any
manner other than as a sale of the Assets by the Seller to the Secured Parties.
Other than for tax and consolidated accounting purposes, the Seller will not
account for or treat (whether in financial statements or otherwise) the
transactions contemplated by the Sale Agreement in any manner other than as a
sale of the Assets by the Originator to the Seller.
(i) ERISA Matters. The Seller will not (a) engage or permit any
ERISA Affiliate to engage in any prohibited transaction for which an exemption
is not available or has not
68
previously been obtained from the United States Department of Labor, (b) permit
to exist any accumulated funding deficiency, as defined in Section 302(a) of
ERISA and Section 412(a) of the Code, or funding deficiency with respect to any
Benefit Plan other than a Multiemployer Plan, (c) fail to make any payments to a
Multiemployer Plan that the Seller or any ERISA Affiliate may be required to
make under the agreement relating to such Multiemployer Plan or any law
pertaining thereto, (d) terminate any Benefit Plan so as to result in any
liability, or (e) permit to exist any occurrence of any reportable event
described in Title IV of ERISA.
(j) Operating Agreement; Sale Agreement. The Seller will not
amend, modify, waive or terminate any provision of its operating agreement or
the Sale Agreement without the prior written consent of the Administrative Agent
and the Purchaser Agent.
(k) Changes in Payment Instructions to Obligors. The Seller will
not add or terminate any bank as a Lock-Box Bank or any Lock-Box Account from
those listed in Schedule II or make any change, or permit Servicer to make any
change, in its instructions to Obligors regarding payments to be made to Seller
or Servicer or payments to be made to any Lock-Box Bank, unless the
Administrative Agent has consented to such addition, termination or change
(which consent shall not be unreasonably withheld) and has received duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank or with
respect to each new Lock-Box Account, as the case may be.
(l) Extension or Amendment of Assets. The Seller will not, except
as otherwise permitted in Section 6.4(a), extend, amend or otherwise modify, or
permit the Servicer to extend, amend or otherwise modify, the terms of any Asset
(including the Related Security).
(m) Credit and Collection Policy. The Seller will not materially
amend, modify, restate or replace, in whole or in part, the Credit and
Collection Policy without the prior written consent of the Administrative Agent
and the Purchaser Agent (which consent will not be unreasonably withheld).
SECTION 5.3 [RESERVED.]
SECTION 5.4 AFFIRMATIVE COVENANTS OF THE SERVICER.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Servicer will comply in all material
respects with all Applicable Laws, including those with respect to the Assets or
any part thereof.
(b) Preservation of Company Existence. The Servicer will preserve
and maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material
Adverse Effect.
(c) Obligations and Compliance with Assets. The Servicer will duly
fulfill and comply with all obligations on the part of the Seller to be
fulfilled or complied with under or in
69
connection with each Asset and will do nothing to impair the rights of the
Administrative Agent, as agent for the Secured Parties, or of the Secured
Parties in, to and under the Assets.
(d) Keeping of Records and Books of Account. The Servicer will
maintain and implement administrative and operating procedures (including
without limitation, an ability to recreate records evidencing Assets in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Assets and the identification of the Assets
in the Asset Pool. The Servicer shall permit the Administrative Agent, the
Purchaser Agent or their respective agents or representatives, to visit the
offices of the Servicer during normal office hours and upon reasonable notice
and examine and make copies of all documents, books, records and other
information concerning the Assets and discuss matters related thereto with any
of the officers or employees of the Servicer having knowledge of such matters.
The Servicer will on or prior to the date hereof, ▇▇▇▇ its master data
processing records and other books and records relating to the Assets with a
legend, acceptable to the Administrative Agent and the Purchaser Agent,
describing the sale of the Assets (A) from the Originator to the Seller, and (B)
from the Seller to the Purchaser.
(e) Preservation of Security Interest. The Servicer (at its own
expense) will execute and file such financing and continuation statements and
any other documents that may be required by any law or regulation of any
Governmental Authority to preserve and protect fully the security interest of
the Administrative Agent as agent for the Secured Parties in, to and under the
Assets.
(f) Credit and Collection Policy. The Servicer will (i) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (ii) furnish to the Administrative Agent and the Purchaser Agent,
prior to its effective date, prompt notice of any proposed material change in
the Credit and Collection Policy. Without the prior written consent of the
Administrative Agent and the Purchaser Agent (which consent will not be
unreasonably withheld), the Servicer will not agree to or otherwise permit to
occur any material change in the Credit and Collection Policy, which change
would impair the collectibility of any of the Assets or otherwise adversely
affect the interests or remedies of the Administrative Agent, the Purchaser
Agent or the Secured Parties under this Agreement or any other Transaction
Document.
(g) Termination Events. The Servicer will provide the
Administrative Agent and the Purchaser Agent with immediate written notice of
the occurrence of each Termination Event and each Unmatured Termination Event of
which the Servicer has knowledge or has received notice. In addition, no later
than two (2) Business Days following the Servicer's knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Servicer
will provide to the Administrative Agent and the Purchaser Agent a written
statement of the chief financial officer or chief accounting officer of the
Servicer setting forth the details of such event and the action that the
Servicer proposes to take with respect thereto.
(h) Taxes. The Servicer will file and pay any and all Taxes
required to meet the obligations of the Seller and the Servicer under the
Transaction Documents.
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(i) Other. The Servicer will promptly furnish to the
Administrative Agent and the Purchaser Agent such other information, documents,
records or reports respecting the Assets or the condition or operations,
financial or otherwise, of the Seller or the Servicer as the Administrative
Agent and the Purchaser Agent may from time to time reasonably request in order
to protect the interests of the Administrative Agent, the Purchaser Agent or
Secured Parties under or as contemplated by this Agreement.
(j) Proceedings. As soon as possible and in any event within three
(3) Business Days after any executive officer of the Servicer receives notice or
obtains knowledge thereof, of any settlement of, material judgment (including a
material judgment with respect to the liability phase of a bifurcated trial) in
or commencement of any material labor controversy material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Assets, the Transaction Documents, the Secured Parties'
interest in the Assets, or the Seller, the Servicer or the Originator or any of
their Affiliates; provided, however, notwithstanding the foregoing, any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Assets, the Transaction Documents, the Secured Parties' interest
in the Assets, or (i) the Servicer or the Originator or any of their Affiliates
(other than the Seller) in excess of $5,000,000 or more or (ii) the Seller in
excess of $1,000,000 or more shall be deemed to be material for purposes of this
Section 5.4(j).
(k) Deposit of Collections. The Servicer shall promptly (but in no
event later than two (2) Business Days after receipt) deposit into the
Collection Account any and all Collections received by the Seller, the Servicer
or any of their Affiliates.
(l) Servicing of Loans. With respect to the Loans, the Servicer
shall: (i) segregate all Loan Files with respect to such Loans; (ii) keep
separate records with respect to such Loans; and (iii) identify each such Type
of Loan on the Servicing Reports required hereunder with respect to such Loans.
(m) Change-in-Control. Upon the occurrence of a Change-in-Control
(including any merger or consolidation of the Originator or transfer of
substantially all of its assets and its business), the Servicer shall provide
the Administrative Agent and the Purchaser Agent with notice of such
Change-in-Control within thirty (30) days after completion of the same.
(n) Amendment of Lock-Box Agreement. Within 30 days from the date
hereof, the Servicer shall use all reasonable efforts to cause that certain
Amended and Restated Three Party Agreement Relating to Lockbox Services and
Control, dated as of May 16, 2002, among ▇▇▇▇▇ Fargo, Bank of America, N.A., WSI
(f/k/a First Union Securities, Inc.), the Servicer and CapitalSource Funding
LLC, to be amended, amended and restated, or otherwise modified in a manner
acceptable to the Administrative Agent.
(o) Amendment of Intercreditor Agreement. Within 30 days from the
date hereof, the Servicer shall use all reasonable efforts to cause that certain
Intercreditor and Lockbox Administration Agreement, dated as of May 16, 2002,
among ▇▇▇▇▇ Fargo, Bank of America, N.A., WSI, the parties thereto as
securitization agents, the Servicer and CapitalSource Funding
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LLC, to be amended, amended and restated, or otherwise modified in a manner
acceptable to the Administrative Agent.
SECTION 5.5 NEGATIVE COVENANTS OF THE SERVICER.
From the date hereof until the Collection Date.
(a) Deposits to Special Accounts. Except as otherwise provided in
the Lock-Box Agreement, the Servicer will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account cash or
cash proceeds other than Collections in respect of the Assets in the Asset Pool.
(b) Mergers, Acquisition, Sales, etc. The Servicer will not
consolidate with or merge into any other Person or convey or transfer its
properties and assets substantially as an entirety to any Person, unless the
Servicer is the surviving entity and unless:
(1) the Servicer has delivered to the Administrative
Agent and the Purchaser Agent an Officer's Certificate and an Opinion
of Counsel each stating that any consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 5.5
and that all conditions precedent herein provided for relating to such
transaction have been complied with and, in the case of the Opinion of
Counsel, that such supplemental agreement is legal, valid and binding
with respect to the Servicer and such other matters as the
Administrative Agent may reasonably request;
(2) the Servicer shall have delivered notice of such
consolidation, merger, conveyance or transfer to the Administrative
Agent and the Purchaser Agent;
(3) after giving effect thereto, no Termination Event or
Servicer Default or event that with notice or lapse of time would
constitute either a Termination Event or a Servicer Default shall have
occurred; and
(4) the Administrative Agent and the Purchaser Agent have
consented in writing to such consolidation, merger, conveyance or
transfer.
(c) Change of Name or Location of Loan Files. The Servicer shall
not (x) change its name, move the location of its principal place of business
and chief executive office, change the offices where it keeps records concerning
the Assets from the location referred to in Section 13.2, or change the
jurisdiction of its formation, or (y) move, or consent to the Collateral
Custodian moving, the Required Loan Documents and Loan Files from the location
thereof on the Closing Date, unless the Servicer has given at least thirty (30)
days' written notice to the Administrative Agent and has taken all actions
required under the UCC of each relevant jurisdiction in order to continue the
first priority perfected security interest of the Administrative Agent as agent
for the Secured Parties in the Assets in the Asset Pool.
(d) Change in Payment Instructions to Obligors. The Servicer will
not add or terminate any bank as a Lock-Box Bank or any Lock-Box Account from
those listed in Schedule II or make any change in its instructions to Obligors
regarding payments to be made to the Seller or the Servicer or payments to be
made to any Lock-Box Bank, unless the Administrative Agent
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has consented to such addition, termination or change (which consent shall not
be unreasonably withheld) and has received duly executed copies of Lock-Box
Agreements with each new Lock-Box Bank or with respect to each new Lock-Box
Account, as the case may be.
(e) Extension or Amendment of Assets. The Servicer will not,
except as otherwise permitted in Section 6.4(a), extend, amend or otherwise
modify the terms of any Asset.
SECTION 5.6 AFFIRMATIVE COVENANTS OF THE BACKUP SERVICER.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Backup Servicer will comply in all
material respects with all Applicable Laws.
(b) Preservation of Existence. The Backup Servicer will preserve
and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
in each jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.
SECTION 5.7 NEGATIVE COVENANTS OF THE BACKUP SERVICER.
From the date hereof until the Collection Date, the Backup Servicer
will not make any changes to the Backup Servicing Fee set forth in the Backup
Servicer Fee Letter without the prior written approval of the Administrative
Agent and the Purchaser Agent.
SECTION 5.8 AFFIRMATIVE COVENANTS OF THE COLLATERAL CUSTODIAN.
From the date hereof until the Collection Date:
(a) Compliance with Law. The Collateral Custodian will comply in
all material respects with all Applicable Laws.
(b) Preservation of Existence. The Collateral Custodian will
preserve and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation and qualify and remain qualified in good standing
in each jurisdiction where failure to preserve and maintain such existence,
rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.
(c) Location of Required Loan Documents. The Required Loan
Documents shall remain at all times in the possession of the Collateral
Custodian at the address set forth herein unless notice of a different address
is given in accordance with the terms hereof or unless the Administrative Agent
agrees to allow certain Required Loan Documents to be released to the Servicer
on a temporary basis in accordance with the terms hereof.
SECTION 5.9 NEGATIVE COVENANTS OF THE COLLATERAL CUSTODIAN.
From the date hereof until the Collection Date:
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(a) Required Loan Documents. The Collateral Custodian will not
dispose of any documents constituting the Required Loan Documents in any manner
that is inconsistent with the performance of its obligations as the Collateral
Custodian pursuant to this Agreement and will not dispose of any Asset except as
contemplated by this Agreement.
(b) No Changes in Collateral Custodian Fee. The Collateral
Custodian will not make any changes to the Collateral Custodian Fee set forth in
the Collateral Custodian Fee Letter without the prior written approval of the
Administrative Agent and the Purchaser Agent.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 6.1 DESIGNATION OF THE SERVICER.
(a) Initial Servicer. The servicing, administering and collection
of the Assets in the Asset Pool shall be conducted by the Person designated as
the Servicer hereunder from time to time in accordance with this Section 6.1.
Until the Administrative Agent gives to the Originator a Servicer Termination
Notice, the Originator is hereby designated as, and hereby agrees to perform the
duties and responsibilities of, the Servicer pursuant to the terms hereof.
(b) Successor Servicer. Upon the Servicer's receipt of a Servicer
Termination Notice (with a copy to the Backup Servicer) from the Administrative
Agent pursuant to the terms of Section 6.15, the Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner that the
Administrative Agent reasonably believes will facilitate the transition of the
performance of such activities to a successor Servicer, and the successor
Servicer shall assume each and all of the Servicer's obligations to service and
administer the Assets in the Asset Pool, on the terms and subject to the
conditions herein set forth, and the Servicer shall use its best reasonable
efforts to assist the successor Servicer in assuming such obligations.
(c) Subcontracts. The Servicer may, with the prior consent of the
Administrative Agent, subcontract with any other Person for servicing,
administering or collecting the Assets; provided, however, that the Servicer
shall remain liable for the performance of the duties and obligations of the
Servicer pursuant to the terms hereof and that any such subcontract may be
terminated upon the occurrence of a Servicer Default.
(d) Servicing Programs. In the event that the Servicer uses any
software program in servicing the Assets that it licenses from a third party,
the Servicer shall use its best reasonable efforts to obtain, either before the
Closing Date or as soon as possible thereafter, whatever licenses or approvals
are necessary to allow the Administrative Agent or the Servicer to use such
program.
SECTION 6.2 DUTIES OF THE SERVICER.
(a) Appointment. The Seller hereby appoints the Servicer as its
agent, as from time to time designated pursuant to Section 6.1, to service the
Assets and enforce its respective rights in and under such Assets. The Servicer
hereby accepts such appointment and agrees to perform the duties and obligations
with respect thereto as set forth herein. The Servicer and the Seller
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hereby acknowledge that the Administrative Agent, the Purchaser Agent and the
Secured Parties are third party beneficiaries of the obligations undertaken by
the Servicer hereunder.
(b) Duties. The Servicer shall take or cause to be taken all such
actions as may be necessary or advisable to collect the Assets from time to
time, all in accordance with Applicable Laws, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. Without
limiting the foregoing, the duties of the Servicer shall include the following:
(1) preparing and submitting of claims to, and
post-billing liaison with, Obligors on each Asset;
(2) maintaining all necessary servicing records with
respect to the Assets and providing such reports to the Administrative
Agent and the Purchaser Agent in respect of the servicing of the Assets
(including information relating to its performance under this
Agreement) as may be required hereunder or as the Administrative Agent
and the Purchaser Agent may reasonably request;
(3) maintaining and implementing administrative and
operating procedures (including, without limitation, an ability to
recreate servicing records evidencing the Assets in the event of the
destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or
advisable for the collection of the Assets;
(4) promptly delivering to the Administrative Agent, the
Purchaser Agent or the Collateral Custodian, from time to time, such
information and servicing records (including information relating to
its performance under this Agreement) as the Administrative Agent, the
Purchaser Agent or the Collateral Custodian may from time to time
reasonably request;
(5) identifying each Asset clearly and unambiguously in
its servicing records to reflect that such Asset is owned by the Seller
and that the Seller is selling an undivided ownership interest therein
to the Secured Parties pursuant to this Agreement;
(6) notifying the Administrative Agent and the Purchaser
Agent of any material action, suit, proceeding, dispute, offset,
deduction, defense or counterclaim (1) that is or is threatened to be
asserted by an Obligor with respect to any Asset (or portion thereof)
of which it has knowledge or has received notice; or (2) that is
reasonably expected to have a Material Adverse Effect;
(7) notifying the Administrative Agent and the Purchaser
Agent of any proposed change in the Credit and Collection Policy that
could have an adverse effect on the collectibility of the Assets, on
the Seller or on the interests of the Administrative Agent, the
Purchaser Agent or any Secured Party;
(8) using its best efforts to maintain the perfected
security interest of the Administrative Agent, as agent for the Secured
Parties, in the Assets;
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(9) maintaining in the same manner as the Collateral
Custodian holds the Required Loan Documents, the Loan File (other than
Required Loan Documents) with respect to each Asset; and
(10) the Servicer shall make payments pursuant to the
terms of the Monthly Report in accordance with Section 2.7 and Section
2.8.
(c) Notwithstanding anything to the contrary contained herein, the
exercise by the Administrative Agent, the Purchaser Agent and the Secured
Parties of their rights hereunder shall not release the Servicer, the Originator
or the Seller from any of their duties or responsibilities with respect to the
Assets. The Secured Parties, the Administrative Agent, the Purchaser Agent and
the Collateral Custodian (except in the role of Backup Servicer) shall not have
any obligation or liability with respect to any Assets, nor shall any of them be
obligated to perform any of the obligations of the Servicer hereunder.
(d) Any payment by an Obligor in respect of any Indebtedness owed
by it to the Originator or the Seller shall, except as otherwise specified by
such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Administrative Agent, be applied as a Collection of an Asset
of such Obligor (starting with the oldest such Asset) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other obligation of such Obligor.
SECTION 6.3 AUTHORIZATION OF THE SERVICER.
(a) Each of the Seller, the Administrative Agent, the Purchaser
Agent and the Purchaser hereby authorizes the Servicer (including any successor
thereto) to take any and all reasonable steps in its name and on its behalf
necessary or desirable and not inconsistent with the sale of the Assets in the
Asset Pool to the Purchaser, in the determination of the Servicer, to collect
all amounts due under any and all Assets, including, without limitation,
endorsing any of their names on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Assets and, after the delinquency of
any Assets and to the extent permitted under and in compliance with Applicable
Law, to commence proceedings with respect to enforcing payment thereof, to the
same extent as the Originator could have done if it had continued to own such
Assets. The Originator, the Seller and the Administrative Agent, on behalf of
the Secured Parties, shall furnish the Servicer (and any successors thereto)
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder, and shall cooperate with the Servicer to the fullest extent in order
to ensure the collectibility of the Assets. In no event shall the Servicer be
entitled to make the Secured Parties, the Collateral Custodian, the
Administrative Agent or the Purchaser Agent a party to any litigation without
such party's express prior written consent, or to make the Seller a party to any
litigation (other than any routine foreclosure or similar collection procedure)
without the Administrative Agent's and the Purchaser Agent's consent.
(b) After a Termination Event has occurred and is continuing, at
the direction the Administrative Agent, the Servicer shall take such action as
the Administrative Agent may deem
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necessary or advisable to enforce collection of the Assets; provided, however,
that the Administrative Agent may, at any time that a Termination Event or
Unmatured Termination Event has occurred and is continuing, notify any Obligor
with respect to any Assets of the assignment of such Assets to the
Administrative Agent and direct that payments of all amounts due or to become
due be made directly to the Administrative Agent and the Purchaser Agent or any
servicer, collection agent or lock-box or other account designated by the
Administrative Agent and the Purchaser Agent and, upon such notification and at
the expense of the Seller, the Administrative Agent may enforce collection of
any such Assets, and adjust, settle or compromise the amount or payment thereof.
SECTION 6.4 COLLECTION OF PAYMENTS.
(a) Collection Efforts, Modification of Assets. The Servicer will
use its best efforts to collect all payments called for under the terms and
provisions of the Assets included in the Asset Pool as and when the same become
due in accordance with the Credit and Collection Policy, and will follow those
collection procedures that it follows with respect to all comparable Assets that
it services for itself or others. The Servicer may not waive, modify or
otherwise vary any provision of an Asset in a manner that would impair the
collectibility of the Asset or in any manner contrary to the Credit and
Collection Policy.
(b) Prepaid Loan. The Servicer may not voluntarily permit an Asset
to become a Prepaid Loan, unless such prepayment will not result in the
Collection Account receiving an amount (the "Prepayment Amount") less than the
sum of (a) the Outstanding Loan Balance on the date of such payment, (b) any
outstanding Servicer Advances thereon and (c) any accrued and unpaid interest.
(c) Acceleration. If required by the Credit and Collection Policy,
the Servicer shall accelerate the maturity of all or any Scheduled Payments and
other amounts due under any Asset in which a default under the terms thereof has
occurred and is continuing (after the lapse of any applicable grace period)
promptly after such Asset becomes a Charged-Off Loan.
(d) Taxes and other Amounts. To the extent provided for in any
Asset, the Servicer will use its best efforts to collect all payments with
respect to amounts due for taxes, assessments and insurance premiums relating to
such Asset and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
(e) Payments to Lock-Box Account. On or before the applicable
Cut-Off Date, the Servicer shall have instructed all Obligors to make all
payments in respect of the Assets to the Lock-Box or directly to the Lock-Box
Account.
(f) Establishment of the Collection Account. The Servicer shall
cause to be established, on or before the Closing Date, with the Collateral
Custodian, and maintained in the name of the Administrative Agent, as agent for
the Secured Parties, with an office or branch of a depository institution or
trust company a segregated corporate trust account entitled Collection Account
for Wachovia Securities, Inc., as Administrative Agent for the Secured Parties
(the "Collection Account"), and the Servicer shall further maintain a subaccount
within the Collection Account for the purpose of segregating, within two (2)
Business Days of the receipt of
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any Collections, Principal Collections (the "Principal Collections Account"),
over which the Collateral Custodian as agent for the Secured Parties shall have
control and from which neither the Originator, Servicer nor the Seller shall
have any right of withdrawal except in accordance with Section 2.7(b); provided,
however, that at all times such depository institution or trust company shall be
acceptable to the Administrative Agent and a depository institution organized
under the laws of the United States of America or any one of the States thereof
or the District of Columbia (or any domestic branch of a foreign bank), (i) (a)
that has either (1) a long-term unsecured debt rating of "A" or better by S&P
and "A2" or better by ▇▇▇▇▇'▇ or (2) a short-term unsecured debt rating or
certificate of deposit rating of "A-1" or better by S&P or "P-1" or better by
▇▇▇▇▇'▇, (b) the parent corporation of which has either (1) a long-term
unsecured debt rating of "A" or better by S&P and "A2" or better by ▇▇▇▇▇'▇ or
(2) a short-term unsecured debt rating or certificate of deposit rating of "A-1"
or better by S&P and "P-1" or better by ▇▇▇▇▇'▇ or (c) is otherwise acceptable
to the Administrative Agent and (ii) whose deposits are insured by the FDIC (any
such depository institution or trust company, a "Qualified Institution").
(g) [Reserved].
(h) Adjustments. If (i) the Servicer makes a deposit into the
Collection Account in respect of a Collection of an Asset and such Collection
was received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.
SECTION 6.5 SERVICER ADVANCES.
For each Collection Period, if the Servicer determines that any
Scheduled Payment (or portion thereof) that was due and payable pursuant to an
Asset during such Collection Period was not received prior to the last day of
such Collection Period, the Servicer shall make an advance in an amount up to
the amount of such delinquent Scheduled Payment (or portion thereof); in
addition, if on any day there are not sufficient funds on deposit in the
Collection Account to pay Interest, the Servicer shall make an advance in an
amount necessary to pay such Interest (in either case, any such advance, a
"Servicer Advance"). Notwithstanding the preceding sentence, (i) the Servicer
shall be required to make a Servicer Advance with respect to any Asset if, and
only if, the Servicer determines (such determination to be conclusive and
binding) in good faith that such Servicer Advance will ultimately be recoverable
from future collections on, or liquidation of, the Asset Pool, and (ii) the
Servicer's obligation to make a Servicer Advance shall cease as to any Loan on
the day such Loan becomes a Defaulted Loan. The Servicer will deposit any
Servicer Advances into the Collection Account on or prior to 9:00 a.m.
(Charlotte, North Carolina time) on the Business Day prior to the related
Payment Date, in immediately available funds. Notwithstanding anything to the
contrary contained herein, no Successor Servicer shall have any responsibility
to make Servicer Advances.
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SECTION 6.6 REALIZATION UPON CHARGED-OFF LOANS.
The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property relating to a
Charged-Off Loan and will act as sales and processing agent for Related Property
that it repossesses. The Servicer will follow such other practices and
procedures as it deems necessary or advisable and as are customary and usual in
its servicing of contracts and other actions by the Servicer in order to realize
upon such Related Property, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Related Property at public or private sale in circumstances other
than those described in the preceding sentence. Without limiting the generality
of the foregoing, unless the Administrative Agent has specifically given
instruction to the contrary, the Servicer may sell any such Related Property to
the Servicer or its Affiliates for a purchase price equal to the then fair
market value thereof, any such sale to be evidenced by a certificate of a
Responsible Officer of the Servicer delivered to the Administrative Agent
setting forth the Loan, the Related Property, the sale price of the Related
Property and certifying that such sale price is the fair market value of such
Related Property. In any case in which any such Related Property has suffered
damage, the Servicer will not expend funds in connection with any repair or
toward the repossession of such Related Property unless it reasonably determines
that such repair and/or repossession will increase the Recoveries by an amount
greater than the amount of such expenses. The Servicer will remit to the
Collection Account the Recoveries received in connection with the sale or
disposition of Related Property relating to a Charged-Off Loan.
SECTION 6.7 MAINTENANCE OF INSURANCE POLICIES.
The Servicer will use its best efforts to ensure that each Obligor
maintains an Insurance Policy with respect to any Related Property in an amount
as is customary and commercially reasonable for the type of assets that comprise
the Related Property and shall ensure that each such Insurance Policy names the
Servicer as loss payee (if applicable) and as an insured thereunder and all of
the Seller's right, title and interest therein is fully assigned to the
Administrative Agent, as agent for the Secured Parties. Additionally, if
applicable, the Servicer will require that each Obligor maintain property damage
insurance during the term of each Asset in amounts and against risks customarily
insured against by the Obligor on property owned by it to the extent required by
the related loan documents. If an Obligor fails to maintain property damage
insurance, the Servicer may in its discretion to the extent permitted by the
related loan documents purchase and maintain such insurance on behalf of, and at
the expense of, the Obligor. In connection with its activities as Servicer, the
Servicer agrees to present, on behalf of the Administrative Agent, claims to the
insurer under any Insurance Policy and any such liability policy, and to settle,
adjust and compromise such claims, in each case, consistent with the terms of
each applicable Asset. The Servicer's Insurance Policies with respect to the
Related Property will insure against liability for physical damage relating to
such Related Property in accordance with the requirements of the Credit and
Collection Policy. The Servicer hereby disclaims any and all right, title and
interest in and to any Insurance Policy and Insurance Proceeds with respect to
any Related Property, including any Insurance Policy with respect to which it is
named as loss payee and as an insured, and agrees that it has no equitable,
beneficial or other interest in the Insurance Polices and Insurance Proceeds
other than being named as loss payee and as an insured. The Servicer
acknowledges that with respect to the Insurance Policies and Insurance
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Proceeds thereof that it is acting solely in the capacity as agent for the
Administrative Agent, as agent for the Secured Parties.
SECTION 6.8 SERVICING COMPENSATION.
As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive the
Servicing Fee to the extent of funds available therefor pursuant to the
provisions of Section 2.7(2) or Section 2.8(2), as applicable.
SECTION 6.9 PAYMENT OF CERTAIN EXPENSES BY SERVICER.
The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Seller, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.6; provided,
however, for avoidance of doubt, to the extent Liquidation Expenses relate to a
Loan and a Retained Interest such Liquidation Expenses shall be allocated pro
rata. The Servicer will be required to pay all reasonable fees and expenses
owing to any bank or trust company in connection with the maintenance of the
Collection Account and the Lock-Box Account. The Servicer shall be required to
pay such expenses for its own account and shall not be entitled to any payment
therefor other than the Servicing Fee.
SECTION 6.10 REPORTS.
(a) Borrowing Notice. On each Funding Date and on each reduction
of Advances Outstanding pursuant to Section 2.3(b), the Seller (and the Servicer
on its behalf) will provide a Borrowing Notice, updated as of such date, to the
Administrative Agent and the Purchaser Agent (with a copy to the Collateral
Custodian).
(b) Monthly Report. On each Reporting Date, the Servicer will
provide to the Seller, the Administrative Agent, the Purchaser Agent and the
Backup Servicer, a monthly statement including a Borrowing Base calculated as of
the most recent Determination Date (a "Monthly Report"), with respect to the
related Collection Period, signed by a Responsible Officer of the Servicer and
the Seller and substantially in the form of Exhibit C.
(c) [Reserved].
(d) Servicer's Certificate. Together with each Monthly Report, the
Servicer shall submit to the Administrative Agent and the Purchaser Agent, a
certificate (a "Servicer's Certificate"), signed by a Responsible Officer of the
Servicer and substantially in the form of Exhibit J.
(e) Financial Statements. The Servicer will submit to the
Administrative Agent, the Purchaser Agent, the Purchaser and the Backup
Servicer, within forty-five (45) days of the end of each of its fiscal quarters,
commencing March 31, 2003, unaudited consolidated financial statements for the
Servicer, as of the end of each such fiscal quarter. The Servicer will submit to
the Administrative Agent, the Purchaser Agent, the Purchaser and the Backup
Servicer, within
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ninety (90) days of the end of each of its fiscal years, commencing December 31,
2003, consolidated audited financial statements for the Servicer, audited by a
nationally recognized firm of independent certified public accountants as of the
end of each such fiscal year. For the purposes of this Section 6.10(e), the term
financial statements shall include a balance sheet, income statement and a cash
flow statement.
(f) Tax Returns. Upon demand by the Administrative Agent and the
Purchaser Agent, copies of all federal, state and local Tax returns and reports
filed by the Seller and Servicer, or in which the Seller or Servicer was
included on a consolidated or combined basis (excluding sales, use and like
taxes).
SECTION 6.11 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will provide to the Administrative Agent and the Purchaser
Agent, within three months following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 2003, a fiscal
report signed by a Responsible Officer of the Servicer certifying that (a) a
review of the activities of the Servicer, and the Servicer's performance
pursuant to this Agreement, for the fiscal period ending on the last day of such
fiscal year has been made under such Person's supervision and (b) the Servicer
has performed or has caused to be performed in all material respects all of its
obligations under this Agreement throughout such year and no Servicer Default
has occurred and is continuing.
SECTION 6.12 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S SERVICING
REPORTS.
The Servicer will cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish to the Administrative Agent, the Purchaser Agent, the Collateral
Custodian and the Backup Servicer, within ninety (90) days following the end of
each fiscal year of the Servicer, commencing with the fiscal year ending on
December 31, 2003: (i) a report relating to such fiscal year to the effect that
(a) such firm has reviewed certain documents and records relating to the
servicing of the Assets, and (b) based on such examination, such firm is of the
opinion that the Monthly Reports for such year were prepared in compliance with
this Agreement, except for such exceptions as it believes to be immaterial and
such other exceptions as will be set forth in such firm's report and (ii) a
report covering such fiscal year to the effect that such accountants have
applied certain agreed-upon procedures (which procedures shall have been
approved by the Administrative Agent and the Purchaser Agent) to certain
documents and records relating to the Assets under any Transaction Document,
compared the information contained in the Monthly Reports and the Servicer's
Certificates delivered during the period covered by such report with such
documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted in
compliance with this ARTICLE VI of this Agreement, except for such exceptions as
such accountants shall believe to be immaterial and such other exception as
shall be set forth in such statement. In the event such independent public
accountants require the Collateral Custodian or Backup Servicer to agree to the
procedures to be performed by such firm in any of the reports required to be
prepared pursuant to this Section 6.12, the Servicer shall direct the Collateral
Custodian or Backup Servicer, as applicable, in writing to so agree; it being
understood and agreed that the Collateral Custodian or Backup Servicer,
respectively, will deliver such letter of agreement in conclusive reliance upon
the
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direction of the Servicer, and neither the Collateral Custodian nor the Backup
Servicer has made any independent inquiry or investigation as to, and shall have
no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
SECTION 6.13 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS
Except as provided herein, the Servicer shall not be under any
liability to the Administrative Agent, the Purchaser Agent, the Secured Parties
or any other Person for any action taken or for refraining from the taking of
any action pursuant to this Agreement whether arising from express or implied
duties under this Agreement; provided, however, notwithstanding anything to the
contrary contained herein nothing shall protect the Servicer against any
liability that would otherwise be imposed by reason of its willful misfeasance,
bad faith or negligence in the performance of duties or by reason of its willful
misconduct hereunder.
SECTION 6.14 THE SERVICER NOT TO RESIGN.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the Servicer's determination that (i) the performance
of its duties hereunder is or becomes impermissible under Applicable Law and
(ii) there is no reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent, the Purchaser Agent and the Backup Servicer. No such
resignation shall become effective until a Successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
6.2.
SECTION 6.15 SERVICER DEFAULTS.
If any one of the following events (a "Servicer Default") shall occur
and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit (including without limitation with respect to Collections) as required
by this Agreement which continues unremedied for a period of one (1) Business
Day;
(b) any failure by the Servicer to give instructions or notice to
the Administrative Agent and the Purchaser Agent as required by this Agreement,
or to deliver any required Monthly Report or other Required Reports hereunder on
or before the date occurring two (2) Business Days after the date such
instruction, notice or report is required to be made or given, as the case may
be, under the terms of this Agreement;
(c) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or the other Transaction Documents to which
the Servicer is a party and the same continues unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such failure requiring the same to be remedied shall have been given to the
Servicer by the Administrative Agent and the Purchaser Agent and (ii) the date
on which the Servicer becomes aware thereof;
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(d) any representation, warranty or certification made by the
Servicer in any Transaction Document or in any certificate delivered pursuant to
any Transaction Document shall prove to have been incorrect when made, which has
a Material Adverse Effect on the Administrative Agent, the Purchaser Agent or
the Secured Parties and which continues to be unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such incorrectness requiring the same to be remedied shall have been given to
the Servicer by the Administrative Agent or the Purchaser Agent and (ii) the
date on which the Servicer becomes aware thereof;
(e) an Insolvency Event shall occur with respect to the Servicer;
(f) any material delegation of the Servicer's duties that is not
permitted by Section 6.1;
(g) any financial or other information reasonably requested by the
Administrative Agent, the Purchaser Agent or the Purchaser is not provided as
requested within a reasonable amount of time following such request;
(h) the rendering against the Servicer of one or more final
judgments, decrees or orders for the payment of money in excess of United States
$5,000,000, individually or in the aggregate, and the continuance of such
judgment, decree or order unsatisfied and in effect for any period of more than
sixty (60) consecutive days without a stay of execution;
(i) the failure of the Servicer to make any payment due with
respect to any recourse debt or other obligations, which debt or other
obligations are in excess of United States $5,000,000, individually or in the
aggregate, or the occurrence of any event or condition that would permit
acceleration of such recourse debt or other obligations whether or not waived;
(j) the Servicer fails to maintain a GAAP balance sheet net worth
equal to at least 90% of the total drawn capital of the Servicer;
(k) any change in the management of the Servicer (whether by
resignation, termination, disability, death or lack of day to day management)
relating to ▇▇▇▇ ▇▇▇▇▇▇▇, unless the same is waived in writing by the
Administrative Agent and the Purchaser Agent;
(l) any change in the control of the Servicer that takes the form
of either a merger or consolidation that does not comply with the provisions of
Section 5.5;
(m) the Servicer fails in any material respect to comply with the
Credit and Collection Policy regarding the servicing of the Assets;
(n) the Servicer consents or agrees to, or otherwise permits to
occur, any amendment, modification, change, supplement or rescission of or to
the Credit and Collection Policy (after the adoption of same) in whole or in
part that could be reasonably expected to have a Material Adverse Effect upon
the Assets, the Administrative Agent, the Purchaser Agent or the Secured
Parties, without the prior written consent of the Administrative Agent and the
Purchaser Agent;
(o) CapitalSource Finance ceases to be the Servicer; or
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(p) the Servicer fails to maintain the Loan Loss Reserve for any
Watchlist Loans;
then notwithstanding anything herein to the contrary, so long as any such
Servicer Default shall not have been remedied within any applicable cure period
prior to the date of the Servicer Termination Notice (defined below), the
Administrative Agent, by written notice to the Servicer (with a copy to the
Backup Servicer) (a "Servicer Termination Notice"), may terminate all of the
rights and obligations of the Servicer as Servicer under this Agreement.
SECTION 6.16 APPOINTMENT OF SUCCESSOR SERVICER.
(a) On and after the receipt by the Servicer of a Servicer
Termination Notice pursuant to Section 6.15, the Servicer shall continue to
perform all servicing functions under this Agreement until the date specified in
the Servicer Termination Notice or otherwise specified by the Administrative
Agent in writing or, if no such date is specified in such Servicer Termination
Notice or otherwise specified by the Administrative Agent, until a date mutually
agreed upon by the Servicer and the Administrative Agent. The Administrative
Agent may at the time described in the immediately preceding sentence in its
sole discretion, appoint the Backup Servicer as the Servicer hereunder, and the
Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Backup Servicer. As compensation therefor,
the Backup Servicer shall be entitled to the Servicing Fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided herein; including, without limitation, Transition
Expenses. In the event that the Administrative Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unable to
assume such obligations on such date, the Administrative Agent shall as promptly
as possible appoint a successor servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Administrative Agent and the Purchaser Agent. The
Servicer shall cooperate fully and in all respects in transferring the servicing
to the Successor Servicer, including without limitation, delivering possession
of or granting licenses to any software or computer used in connection with the
servicing of the Assets and delivering possession of the Loan Files In the event
that a Successor Servicer has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Administrative Agent shall petition a
court of competent jurisdiction to appoint any established financial
institution, having a net worth of not less than United States $50,000,000 and
whose regular business includes the servicing of Assets, as the Successor
Servicer hereunder.
(b) Upon its appointment, the Backup Servicer (subject to Section
6.16(a)) or the Successor Servicer, as applicable, shall be the successor in all
respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Backup Servicer or the Successor Servicer, as applicable; provided,
however, that the Backup Servicer or Successor Servicer, as applicable, shall
have (i) no liability with respect to any action performed by the terminated
Servicer prior to the date that the Backup Servicer or Successor Servicer, as
applicable, 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 advancing obligations, if any, of the Servicer unless
it elects to in its sole discretion, (iii) no
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obligation to pay any taxes required to be paid by the Servicer (provided that
the Backup Servicer or Successor Servicer, as applicable, 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 Backup Servicer or the Successor Servicer, as applicable,
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 Backup Servicer or Successor Servicer, as
applicable, shall have no liability relating to the representations and
warranties of the Servicer contained in ARTICLE IV. Further, for so long as the
Backup Servicer shall be the Successor Servicer, the provisions of Section 2.13,
Section 2.14(b) and Section 2.14(e) of this Agreement shall not apply to it in
its capacity as Servicer.
(c) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this
Agreement and shall pass to and be vested in the Seller and, without limitation,
the Seller is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the Seller in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing of the Assets.
(d) Upon the Backup Servicer receiving notice that it is required
to serve as the Servicer hereunder pursuant to the foregoing provisions of this
Section 6.16, the Backup Servicer will promptly begin the transition to its role
as Servicer. Notwithstanding the foregoing, the Backup Servicer may, in its
discretion, appoint, or petition a court of competent jurisdiction to appoint,
any established servicing institution 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. As compensation, any Successor Servicer
(including, without limitation, the Administrative Agent) so appointed shall be
entitled to receive the Servicing Fee, together with any other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided herein that accrued prior thereto, including, without limitation,
Transition Expenses. In the event the Backup Servicer is required to solicit
bids as provided herein, the Backup Servicer shall solicit, by public
announcement, bids from banks and mortgage servicing institutions meeting the
qualifications set forth in Section 6.16(a) above. Such public announcement
shall specify that the Successor Servicer shall be entitled to the full amount
of the Servicing fee as servicing compensation, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise that accrued prior thereto. Within thirty (30) days after any such
public announcement, the Backup Servicer shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Backup
Servicer shall deduct from any sum received by the Backup Servicer from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder and the amount
of any unreimbursed Servicing Advances. After such deductions, the remainder of
such sum shall be paid by the Backup Servicer to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Backup
Servicer and such successor shall take such action,
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consistent with this Agreement, as shall be necessary to effectuate any such
succession. No appointment of a successor to the Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been
provided by the Backup Servicer to the Administrative Agent and the Purchaser
Agent and the Backup Servicer shall have consented thereto. The Backup Servicer
shall not resign as servicer until a Successor Servicer has been appointed and
accepted such appointment. Notwithstanding anything to the contrary contained
herein, in no event shall ▇▇▇▇▇ Fargo, in any capacity, be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any Successor Servicer under this
Agreement and the transactions set forth or provided for by this Agreement.
ARTICLE VII
THE BACKUP SERVICER
SECTION 7.1 DESIGNATION OF THE BACKUP SERVICER.
(a) Initial Backup Servicer. The backup servicing role with
respect to the Assets in the Asset Pool shall be conducted by the Person
designated as Backup Servicer hereunder from time to time in accordance with
this Section 7.1. Until the Administrative Agent shall give to ▇▇▇▇▇ Fargo a
Backup Servicer Termination Notice, ▇▇▇▇▇ Fargo is hereby designated as, and
hereby agrees to perform the duties and obligations of, a Backup Servicer
pursuant to the terms hereof.
(b) Successor Backup Servicer. Upon the Backup Servicer's receipt
of Backup Servicer Termination Notice from the Administrative Agent of the
designation of a replacement Backup Servicer pursuant to the provisions of
Section 7.5, the Backup Servicer agrees that it will terminate its activities as
Backup Servicer hereunder.
SECTION 7.2 DUTIES OF THE BACKUP SERVICER.
(a) Appointment. The Seller and the Administrative Agent, as agent
for the Secured Parties, each hereby appoints ▇▇▇▇▇ Fargo to act as Backup
Servicer, for the benefit of the Administrative Agent, the Purchaser Agent and
the Secured Parties, as from time to time designated pursuant to Section 7.1.
The Backup Servicer hereby accepts such appointment and agrees to perform the
duties and obligations with respect thereto set forth herein.
(b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 7.5, the Backup Servicer shall perform, on behalf of
the Administrative Agent and the Secured Parties, the following duties and
obligations:
(1) On or before the Closing Date, the Backup Servicer
shall accept from the Servicer delivery of the information required to
be set forth in the Monthly Reports (if any) in hard copy and on
computer tape; provided, however, the computer tape is in an MS DOS, PC
readable ASCII format or other format to be agreed upon by the Backup
Servicer and the Servicer on or prior to closing.
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(2) Not later than 12:00 noon New York City time on each
Reporting Date, the Servicer shall deliver to the Backup Servicer the
loan tape, which shall include but not be limited to the following
information: (x) for each Asset in the Asset Pool, the name and number
of the related Obligor, the collection status, the loan status, the
date of each Scheduled Payment and the Outstanding Loan Balance, (y)
the Borrowing Base and (z) the Aggregate Outstanding Loan Balance (the
"Tape"). The Backup Servicer shall accept delivery of the Tape.
(3) Prior to the related Payment Date, the Backup
Servicer shall review the Monthly Report to ensure that it is complete
on its face and that the following items in such Monthly Report have
been accurately calculated, if applicable, and reported: (A) the
Borrowing Base, (B) the Backup Servicing Fee, (C) the Assets that are
current and not past due, (D) the Assets that are 1 - 30 days past due,
(E) the Assets that are ▇▇ - ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, (▇) the Assets that are
▇▇ - ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, (▇) the Assets that are 90+ days past due, (H)
the Pool Charged-Off Ratio, and (I) the Aggregate Outstanding Loan
Balance. The Backup Servicer by a separate written report shall notify
the Administrative Agent and the Servicer of any disagreements with the
Monthly Report based on such review not later than the Business Day
preceding such Payment Date to such Persons.
(4) If the Servicer disagrees with the report provided
under paragraph (iii) above by the Backup Servicer or if the Servicer
or any subservicer has not reconciled such discrepancy, the Backup
Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer if possible, and notify
the Administrative Agent of the resolution thereof. The Servicer hereby
agrees to cooperate at its own expense with the Backup Servicer in
reconciling any discrepancies herein. If within twenty (20) days after
the delivery of the report provided under paragraph (iii) above by the
Backup Servicer, such discrepancy is not resolved, the Backup Servicer
shall promptly notify the Administrative Agent of the continued
existence of such discrepancy. Following receipt of such notice by the
Administrative Agent, the Servicer shall deliver to the Administrative
Agent, the Secured Parties and the Backup Servicer no later than the
related Payment Date a certificate describing the nature and amount of
such discrepancies and the actions the Servicer proposes to take with
respect thereto.
(c) Reliance on Tape. With respect to the duties described in
Section 7.2(b), the Backup Servicer, is entitled to rely conclusively, and shall
be fully protected in so relying, on the contents of each Tape, including, but
not limited to, the completeness and accuracy thereof, provided by the Servicer.
SECTION 7.3 MERGER OR CONSOLIDATION.
Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup
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Servicer under this Agreement without further act on the part of any of the
parties to this Agreement provided such Person is organized under the laws of
the United States of America or any one of the States thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (a) that has either (1)
a long-term unsecured debt rating of "A" or better by S&P and "A2" or better by
▇▇▇▇▇'▇ or (2) a short-term unsecured debt rating or certificate of deposit
rating of "A-1" or better by S&P or "P-1" or better by ▇▇▇▇▇'▇, (b) the parent
corporation which has either (1) a long-term unsecured debt rating of "A" or
better by S&P and "A2" or better by ▇▇▇▇▇'▇ or (2) a short-term unsecured debt
rating or certificate of deposit rating of "A-1" or better by S&P and "P-1" or
better by ▇▇▇▇▇'▇ or (c) is otherwise acceptable to the Administrative Agent.
SECTION 7.4 BACKUP SERVICING COMPENSATION.
As compensation for its back-up servicing activities hereunder, the
Backup Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. To the extent that such Backup Servicing Fee is not paid by the
Servicer, the Backup Servicer shall be entitled to receive the unpaid balance of
its Backup Servicing Fee to the extent of funds available therefor pursuant to
Section 2.7(3) and Section 2.8(3), as applicable. The Backup Servicer's
entitlement to receive the Backup Servicing Fee shall cease (excluding any
unpaid outstanding amounts as of that date) on the earliest to occur of: (i) it
becoming the Successor Servicer, (ii) its removal as Backup Servicer pursuant to
Section 7.5, or (iii) the termination of this Agreement. Upon becoming Successor
Servicer pursuant to Section 6.16, the Backup Servicer shall be entitled to the
Servicing Fee.
SECTION 7.5 BACKUP SERVICER REMOVAL.
The Backup Servicer may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Backup Servicer (the
"Backup Servicer Termination Notice"). In the event of any such removal, a
replacement Backup Servicer may be appointed by the Administrative Agent.
SECTION 7.6 LIMITATION ON LIABILITY.
(a) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, nominees, attorneys
and custodians in performing any of its duties and obligations under this
Agreement, it being understood by the parties hereto that the Backup Servicer
will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations
for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of
its officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.
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(b) The Backup Servicer shall not be liable for any obligation of
the Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document delivered
to the Backup Servicer hereunder or on which the Backup Servicer must rely in
order to perform its obligations hereunder, and the Secured Parties, the
Administrative Agent and the Collateral Custodian each agree to look only to the
Servicer to perform such obligations. The Backup Servicer shall have no
responsibility and shall not be in default hereunder or incur any liability for
any failure, error, malfunction or any delay in carrying out any of its duties
under this Agreement if such failure or delay results from the Backup Servicer
acting in accordance with information prepared or supplied by a Person other
than the Backup Servicer or the failure of any such other Person to prepare or
provide such information. The Backup Servicer shall have no responsibility,
shall not be in default and shall incur no liability for (i) any act or failure
to act of any third party, including the Servicer, (ii) any inaccuracy or
omission in a notice or communication received by the Backup Servicer from any
third party, (iii) the invalidity or unenforceability of any Asset under
Applicable Law, (iv) the breach or inaccuracy of any representation or warranty
made with respect to any Asset, or (v) the acts or omissions of any successor
Backup Servicer.
SECTION 7.7 THE BACKUP SERVICER NOT TO RESIGN.
The Backup Servicer shall not resign (except with prior consent of the
Administrative Agent which consent shall not be unreasonably withheld) from the
obligations and duties hereby imposed on it except upon the Backup Servicer's
determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that
the Backup Servicer could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the
resignation of the Backup Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Administrative Agent and
the Purchaser Agent. No such resignation shall become effective until a
successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.
ARTICLE VIII
THE COLLATERAL CUSTODIAN
SECTION 8.1 DESIGNATION OF COLLATERAL CUSTODIAN.
(a) Initial Collateral Custodian. The role of collateral custodian
with respect to the Required Loan Documents shall be conducted by the Person
designated as Collateral Custodian hereunder from time to time in accordance
with this Section 8.1. Until the Administrative Agent shall give to ▇▇▇▇▇ Fargo
a Collateral Custodian Termination Notice, ▇▇▇▇▇ Fargo is hereby designated as,
and hereby agrees to perform the duties and obligations of, Collateral Custodian
pursuant to the terms hereof.
(b) Successor Collateral Custodian. Upon the Collateral
Custodian's receipt of a Collateral Custodian Termination Notice from the
Administrative Agent of the designation of a successor Collateral Custodian
pursuant to the provisions of Section 8.5, the Collateral Custodian agrees that
it will terminate its activities as Collateral Custodian hereunder.
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SECTION 8.2 DUTIES OF COLLATERAL CUSTODIAN.
(a) Appointment. The Seller and the Administrative Agent each
hereby appoints ▇▇▇▇▇ Fargo to act as Collateral Custodian, for the benefit of
the Administrative Agent, as agent for the Secured Parties. The Collateral
Custodian hereby accepts such appointment and agrees to perform the duties and
obligation with respect thereto set forth herein.
(b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 8.5, the Collateral Custodian shall perform on
behalf of the Administrative Agent and the Secured Parties, the following duties
and obligations:
(1) The Collateral Custodian shall take and retain
custody of the Required Loan Documents delivered by the Seller pursuant
to Section 3.2 hereof in accordance with the terms and conditions of
this Agreement, all for the benefit of the Secured Parties and subject
to the Lien thereon in favor of the Administrative Agent as agent for
the Secured Parties. Within five (5) Business Days of its receipt of
any Required Loan Documents, the Collateral Custodian shall review the
related Asset and Required Loan Documents to confirm that (A) such
Asset has been properly executed and has no missing or mutilated pages,
(B) UCC and other filings (required by the Required Loan Documents)
have been made, (C) an Insurance Policy exists with respect to any real
or personal property constituting the Related Property, and (D)
confirming the related Outstanding Loan Balance, Loan number and
Obligor name with respect to such Asset is referenced on the related
Loan List and is not a duplicate Asset (collectively, the "Review
Criteria"). In order to facilitate the foregoing review by the
Collateral Custodian, in connection with each delivery of Required Loan
Documents hereunder to the Collateral Custodian, the Servicer shall
provide to the Collateral Custodian an electronic file (in EXCEL or a
comparable format) that contains the related Loan List or that
otherwise contains the Loan number and the name of the Obligor with
respect to each related Asset. If, at the conclusion of such review,
the Collateral Custodian shall determine that (i) the Outstanding Loan
Balances of the Assets it has received Required Loan Documents with
respect to is less than as set forth on the electronic file, the
Collateral Custodian shall immediately notify the Administrative Agent
of such discrepancy, and (ii) any Review Criteria is not satisfied, the
Collateral Custodian shall within one (1) Business Day notify the
Servicer of such determination and provide the Servicer with a list of
the non-complying Assets and the applicable Review Criteria that they
fail to satisfy. The Servicer shall have five (5) Business Days to
correct any non-compliance with a Review Criteria. If after the
conclusion of such time period the Servicer has still not cured any
non-compliance by an Asset with a Review Criteria, the Collateral
Custodian shall promptly notify the Seller and the Administrative Agent
of such determination by providing a written report to such persons
identifying, with particularity, each Asset and each of the applicable
Review Criteria that such Asset fails to satisfy. In addition, if
requested in writing by the Servicer and approved by the Administrative
Agent within ten (10) Business Days of the Collateral Custodian's
delivery of such report, the Collateral Custodian shall return any
Asset which fails to satisfy a Review Criteria to the Seller. Other
than the foregoing, the Collateral Custodian shall not have any
responsibility for reviewing any Required Loan Documents.
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(2) In taking and retaining custody of the Required Loan
Documents, the Collateral Custodian shall be deemed to be acting as the
agent of the Administrative Agent and the Secured Parties; provided,
however, that the Collateral Custodian makes no representations as to
the existence, perfection or priority of any Lien on the Required Loan
Documents or the instruments therein; and provided, further, that, the
Collateral Custodian's duties as agent shall be limited to those
expressly contemplated herein.
(3) All Required Loan Documents shall be kept in fire
resistant vaults, rooms or cabinets at the locations specified on
Schedule III attached hereto, or at such other office as shall be
specified to the Administrative Agent by the Collateral Custodian in a
written notice delivered at least forty-five (45) days prior to such
change. All Required Loan Documents shall be placed together with an
appropriate identifying label and maintained in such a manner so as to
permit retrieval and access. All Required Loan Documents shall be
clearly segregated from any other documents or instruments maintained
by the Collateral Custodian.
(4) The Collateral Custodian shall make payments pursuant
to the terms of the Monthly Report in accordance with Section 2.7 and
Section 2.8 (the "Payment Duties").
(5) On each Reporting Date, the Collateral Custodian
shall provide a written report to the Administrative Agent and the
Servicer (in a form acceptable to the Administrative Agent) identifying
each Asset for which it holds Required Loan Documents, the
non-complying Assets and the applicable Review Criteria that any
non-complying Asset fails to satisfy.
(6) In performing its duties, the Collateral Custodian
shall use the same degree of care and attention as it employs with
respect to similar Assets that it holds as Collateral Custodian.
(c) Acknowledgement. All parties acknowledge and agree that the
Collateral Custodian's execution of this Agreement shall constitute the
Collateral Custodian's written acknowledgment and agreement that the Collateral
Custodian is holding any Collateral it receives that may be perfected by
possession under the UCC on behalf of and for the benefit of the Administrative
Agent and the Secured Parties.
SECTION 8.3 MERGER OR CONSOLIDATION.
Any Person (i) into which the Collateral Custodian may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Collateral Custodian shall be a party, or (iii) that may succeed to the
properties and assets of the Collateral Custodian substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Collateral Custodian hereunder, shall be the
successor to the Collateral Custodian under this Agreement without further act
of any of the parties to this Agreement.
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SECTION 8.4 COLLATERAL CUSTODIAN COMPENSATION.
As compensation for its collateral custodian activities hereunder, the
Collateral Custodian shall be entitled to a Collateral Custodian Fee (the
"Collateral Custodian Fee") from the Servicer. To the extent that such
Collateral Custodian Fee is not paid by the Servicer, the Collateral Custodian
shall be entitled to receive the unpaid balance of its Collateral Custodian Fee
to the extent of funds available therefor pursuant to the provision of Section
2.7(3) or Section 2.8(3), as applicable. The Collateral Custodian's entitlement
to receive the Collateral Custodian Fee shall cease on the earlier to occur of:
(i) its removal as Collateral Custodian pursuant to Section 8.5 or (ii) the
termination of this Agreement.
SECTION 8.5 COLLATERAL CUSTODIAN REMOVAL.
The Collateral Custodian may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Collateral Custodian (the
"Collateral Custodian Termination Notice"); provided, however, notwithstanding
its receipt of a Collateral Custodian Termination Notice, the Collateral
Custodian shall continue to act in such capacity until a successor Collateral
Custodian has been appointed, has agreed to act as Collateral Custodian
hereunder, and has received all Required Loan Documents held by the previous
Collateral Custodian.
SECTION 8.6 LIMITATION ON LIABILITY.
(1) The Collateral Custodian may conclusively rely on and
shall be fully protected in acting upon any certificate, instrument,
opinion, notice, letter, telegram or other document delivered to it and
that in good faith it reasonably believes to be genuine and that has
been signed by the proper party or parties. The Collateral Custodian
may rely conclusively on and shall be fully protected in acting upon
(a) the written instructions of any designated officer of the
Administrative Agent or (b) the verbal instructions of the
Administrative Agent.
(2) The Collateral Custodian may consult counsel
satisfactory to it and the advice or opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(3) The Collateral Custodian shall not be liable for any
error of judgment, or for any act done or step taken or omitted by it,
in good faith, or for any mistakes of fact or law, or for anything that
it may do or refrain from doing in connection herewith except in the
case of its willful misconduct or grossly negligent performance or
omission of its duties and in the case of the negligent performance of
its Payment Duties and in the case of its negligent performance of its
duties in taking and retaining custody of the Required Loan Documents.
(4) The Collateral Custodian makes no warranty or
representation and shall have no responsibility (except as expressly
set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Assets, and will not be required to and will not
make any
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representations as to the validity or value (except as expressly set
forth in this Agreement) of any of the Assets. The Collateral Custodian
shall not be obligated to take any legal action hereunder that might in
its judgment involve any expense or liability unless it has been
furnished with an indemnity reasonably satisfactory to it.
(5) The Collateral Custodian shall have no duties or
responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement and no covenants or
obligations shall be implied in this Agreement against the Collateral
Custodian.
(6) The Collateral Custodian shall not be required to
expend or risk its own funds in the performance of its duties
hereunder.
(7) It is expressly agreed and acknowledged that the
Collateral Custodian is not guaranteeing performance of or assuming any
liability for the obligations of the other parties hereto or any
parties to the Assets.
SECTION 8.7 THE COLLATERAL CUSTODIAN NOT TO RESIGN.
The Collateral Custodian shall not resign from the obligations and
duties hereby imposed on it except upon the Collateral Custodian's determination
that (i) the performance of its duties hereunder is or becomes impermissible
under Applicable Law and (ii) there is no reasonable action that the Collateral
Custodian could take to make the performance of its duties hereunder permissible
under Applicable Law. Any such determination permitting the resignation of the
Collateral Custodian shall be evidenced as to clause (i) above by an Opinion of
Counsel to such effect delivered to the Administrative Agent and the Purchaser
Agent. No such resignation shall become effective until a successor Collateral
Custodian shall have assumed the responsibilities and obligations of the
Collateral Custodian hereunder.
SECTION 8.8 RELEASE OF DOCUMENTS.
(a) Release for Servicing. From time to time and as appropriate
for the enforcement or servicing any of the Assets, the Collateral Custodian is
hereby authorized (unless and until such authorization is revoked by the
Administrative Agent), upon written receipt from the Servicer of a request for
release of documents and receipt in the form annexed hereto as Exhibit H, to
release to the Servicer the related Required Loan Document or the documents set
forth in such request and receipt to the Servicer. All documents so released to
the Servicer shall be held by the Servicer in trust for the benefit of the
Administrative Agent in accordance with the terms of this Agreement. The
Servicer shall return to the Collateral Custodian the Required Loan Document or
other such documents (i) immediately upon the request of the Administrative
Agent, or (ii) when the Servicer's need therefor in connection with such
foreclosure or servicing no longer exists, unless the Asset shall be liquidated,
in which case, upon receipt of an additional request for release of documents
and receipt certifying such liquidation from the Servicer to the Collateral
Custodian in the form annexed hereto as Exhibit H, the Servicer's request and
receipt submitted pursuant to the first sentence of this subsection shall be
released by the Collateral Custodian to the Servicer.
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(b) Limitation on Release. The foregoing provision respecting
release to the Servicer of the Required Loan Documents and documents by the
Collateral Custodian upon request by the Servicer shall be operative only to the
extent that at any time the Collateral Custodian shall not have released to the
Servicer active Required Loan Documents (including those requested) pertaining
to more than fifteen (15) Assets at the time being serviced by the Servicer
under this Agreement. Any additional Required Loan Documents or documents
requested to be released by the Servicer may be released only upon written
authorization of the Administrative Agent. The limitations of this paragraph
shall not apply to the release of Required Loan Documents to the Servicer
pursuant to the immediately succeeding subsection.
(c) Release for Payment. Upon receipt by the Collateral Custodian
of the Servicer's request for release of documents and receipt in the form
annexed hereto as Exhibit H (which certification shall include a statement to
the effect that all amounts received in connection with such payment or
repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required
Loan Document to the Servicer.
SECTION 8.9 RETURN OF REQUIRED LOAN DOCUMENTS.
The Seller may, with the prior written consent of the Administrative
Agent (such consent not to be unreasonably withheld), require that the
Collateral Custodian return each Required Loan Document (a) delivered to the
Collateral Custodian in error, (b) as to which the lien on the Related Property
has been so released pursuant to Section 9.2, (c) that has been repaid by the
Seller pursuant to Section 4.6 or (d) that is required to be redelivered to the
Seller in connection with the termination of this Agreement, in each case by
submitting to the Collateral Custodian and the Administrative Agent a written
request in the form of Exhibit H hereto (signed by both the Seller and the
Administrative Agent) specifying the Assets to be so returned and reciting that
the conditions to such release have been met (and specifying the Section or
Sections of this Agreement being relied upon for such release). The Collateral
Custodian shall upon its receipt of each such request for return executed by the
Seller and the Administrative Agent promptly, but in any event within five (5)
Business Days, return the Required Loan Documents so requested to the Seller.
SECTION 8.10 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE ASSETS; AUDITS.
The Collateral Custodian shall provide to the Administrative Agent and
the Purchaser Agent access to the Required Loan Documents and all other
documentation regarding the Assets in the Asset Pool including in such cases
where the Administrative Agent and the Purchaser Agent is required in connection
with the enforcement of the rights or interests of the Secured Parties, or by
applicable statutes or regulations, to review such documentation, such access
being afforded without charge but only (i) upon two (2) Business Days prior
written request, (ii) during normal business hours and (iii) subject to the
Servicer's and Collateral Custodian's normal security and confidentiality
procedures. Prior to the Closing Date and periodically thereafter at the
discretion of the Administrative Agent and the Purchaser Agent, the
Administrative Agent and the Purchaser Agent may review the Servicer's
collection and administration of the Assets in order to assess compliance by the
Servicer with the Credit and Collection Policy, as well as with
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this Agreement and may conduct an audit of the Assets and Required Loan
Documents in conjunction with such a review. Such review shall be reasonable in
scope and shall be completed in a reasonable period of time. Without limiting
the foregoing provisions of this Section 8.10, from time to time on request of
the Administrative Agent, the Collateral Custodian shall permit certified public
accountants or other auditors acceptable to the Administrative Agent to conduct,
at the Servicer's expense, a review of the Required Loan Documents and all other
documentation regarding the Assets.
ARTICLE IX
SECURITY INTEREST
SECTION 9.1 GRANT OF SECURITY INTEREST.
The parties to this Agreement intend that the conveyance of the Assets
in the Asset Pool by the Seller to the Purchaser be treated as sales for all
purposes. If, despite such intention, a determination is made that such
transactions not be treated as sales, then the parties hereto intend that this
Agreement constitute a security agreement and the transactions effected hereby
constitute secured loans by the Purchaser to the Seller under Applicable Law.
For such purpose, the Seller hereby transfers, conveys, assigns and grants as of
the Closing Date to the Administrative Agent, as agent for the Secured Parties,
a lien and continuing security interest in all of the Seller's right, title and
interest in, to and under (but none of the obligations under) all Assets,
whether now existing or hereafter arising or acquired by the Seller, and
wherever the same may be located, to secure the prompt, complete and
indefeasible payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Aggregate Unpaids of the Seller arising in
connection with this Agreement and each other Transaction Document, whether now
or hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including, without limitation, all Aggregate Unpaids. The assignment
under this Section 9.1 does not constitute and is not intended to result in a
creation or an assumption by the Administrative Agent, the Purchaser Agent, the
Liquidity Banks or any of the Secured Parties of any obligation of the Seller or
any other Person in connection with any or all of the Assets or under any
agreement or instrument relating thereto. Anything herein to the contrary
notwithstanding, (a) the Seller shall remain liable under the Assets to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by the Administrative Agent, as agent for the Secured Parties, of any of its
rights in the Assets shall not release the Seller from any of its duties or
obligations under the Assets, and (c) none of the Administrative Agent, the
Purchaser Agent, the Liquidity Banks or any Secured Party shall have any
obligations or liability under the Assets by reason of this Agreement, nor shall
the Administrative Agent, the Purchaser Agent, the Liquidity Banks or any
Secured Party be obligated to perform any of the obligations or duties of the
Seller thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 9.2 RELEASE OF LIEN ON ASSETS.
At the same time as (i) any Asset in the Asset Pool expires by its
terms and all amounts in respect thereof have been paid in full by the related
Obligor and deposited in the Collection Account, (ii) any Asset becomes a
Prepaid Loan and all amounts in respect thereof have been
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paid in full by the related Obligor and deposited in the Collection Account, or
(iii) this agreement terminates in accordance with Section 13.6, the
Administrative Agent as agent for the Secured Parties will, to the extent
requested by the Servicer, release its interest in such Asset. In connection
with any sale of such Related Property, the Administrative Agent as agent for
the Secured Parties will after the deposit by the Servicer of the Proceeds of
such sale into the Collection Account, at the sole expense of the Servicer,
execute and deliver to the Servicer any assignments, bills of sale, termination
statements and any other releases and instruments as the Servicer may reasonably
request in order to effect the release and transfer of such Related Property;
provided, that, the Administrative Agent as agent for the Secured Parties will
make no representation or warranty, express or implied, with respect to any such
Related Property in connection with such sale or transfer and assignment.
Nothing in this section shall diminish the Servicer's obligations pursuant to
Section 6.6 with respect to the Proceeds of any such sale.
SECTION 9.3 FURTHER ASSURANCES.
The provisions of Section 13.12 shall apply to the security interest
granted under Section 9.1 as well as to the Advances hereunder.
SECTION 9.4 REMEDIES.
Upon the occurrence of a Termination Event, the Administrative Agent
and Secured Parties shall have, with respect to the Assets granted pursuant to
Section 9.1, and in addition to all other rights and remedies available to the
Administrative Agent and Secured Parties under this Agreement or other
Applicable Law, all rights and remedies of a secured party upon default under
the UCC.
SECTION 9.5 WAIVER OF CERTAIN LAWS.
Each of the Seller and the Servicer agrees, to the full extent that it
may lawfully so agree, that neither it nor anyone claiming through or under it
will set up, claim or seek to take advantage of any appraisement, valuation,
stay, extension or redemption law now or hereafter in force in any locality
where any Assets may be situated in order to prevent, hinder or delay the
enforcement or foreclosure of this Agreement, or the absolute sale of any of the
Assets or any part thereof, or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and each of the
Seller and the Servicer, for itself and all who may at any time claim through or
under it, hereby waives, to the full extent that it may be lawful so to do, the
benefit of all such laws, and any and all right to have any of the properties or
assets constituting the Assets marshaled upon any such sale, and agrees that the
Administrative Agent or any court having jurisdiction to foreclose the security
interests granted in this Agreement may sell the Assets as an entirety or in
such parcels as the Administrative Agent or such court may determine.
SECTION 9.6 POWER OF ATTORNEY.
Each of the Seller and the Servicer hereby irrevocably appoints the
Administrative Agent its true and lawful attorney (with full power of
substitution) in its name, place and stead and at is expense, in connection with
the enforcement of the rights and remedies provided for in this Agreement,
including without limitation the following powers: (a) to give any necessary
receipts
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or acquittance for amounts collected or received hereunder, (b) to make all
necessary transfers of the Assets in connection with any such sale or other
disposition made pursuant hereto, (c) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in
connection with any such sale or other disposition, the Seller and the Servicer
hereby ratifying and confirming all that such attorney (or any substitute) shall
lawfully do hereunder and pursuant hereto, and (d) to sign any agreements,
orders or other documents in connection with or pursuant to any Transaction
Document. Nevertheless, if so requested by the Administrative Agent or the
Purchaser Agent, the Seller shall ratify and confirm any such sale or other
disposition by executing and delivering to the Administrative Agent or such
purchaser all proper bills of sale, assignments, releases and other instruments
as may be designated in any such request.
ARTICLE X
TERMINATION EVENTS
SECTION 10.1 TERMINATION EVENTS.
The following events shall be Termination Events ("Termination Events")
hereunder:
(a) as of any Determination Date, the Average Portfolio
Delinquency Ratio exceeds 5.0%; or
(b) as of any Determination Date, the Average Pool Charged-Off
Ratio exceeds 2.0%; or
(c) as of any Determination Date, the Average Portfolio
Charged-Off Ratio exceeds 2.5%; or
(d) the Advances Outstanding on any day exceeds the lesser of the
Facility Amount and Maximum Availability and the same continues unremedied for
two (2) Business Days; provided, however, during the period of time that such
event remains unremedied, no additional Advances will be made under this
Agreement and any payments required to be made by the Servicer on a Payment Date
shall be made under Section 2.8; or
(e) a Servicer Default occurs and is continuing; or
(f) the Facility Termination Date shall have occurred; or
(g) failure on the part of the Seller or Originator to make any
payment or deposit (including without limitation with respect to Collections)
required by the terms of any Transaction Document on the day such payment or
deposit is required to be made and the same continues unremedied for two (2)
Business Days; or
(h) the occurrence of an Insolvency Event relating to (i) the
Originator, the Seller or the Servicer, or (ii) any Affiliate of the Originator
if the occurrence of such Insolvency Event has a Material Adverse Effect; or
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(i) the Seller shall become required to register as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "40 Act") or the arrangements contemplated by the Transaction Documents
shall require registration as an "investment company" within the meaning of the
40 Act; or
(j) a regulatory, tax or accounting body has ordered that the
activities of the Seller or any Affiliate of the Seller contemplated hereby be
terminated or, as a result of any other event or circumstance, the activities of
the Seller contemplated hereby may reasonably be expected to cause the Seller or
any of its respective Affiliates to suffer materially adverse regulatory,
accounting or tax consequences; or
(k) there shall exist any event or occurrence that has caused a
Material Adverse Effect; or
(l) there shall have occurred any event that materially adversely
impairs the ability of the Originator to originate Assets of a credit quality
which are at least of the credit quality of the Assets included in the Initial
Advance; or
(m) the Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Code with regard to any assets of the Seller or
the Originator and such lien shall not have been released within five (5)
Business Days, or the Pension Benefit Guaranty Corporation shall file notice of
a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Seller or the Originator and such lien shall not have been released within five
(5) Business Days; or
(n) any Change-in-Control shall occur; or
(o) any material adverse change in the credit quality of the
Originator, Seller or Servicer shall occur; or
(p) (1) any Transaction Document, or any lien or security
interest granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Seller, the Originator, or the
Servicer,
(2) the Seller, the Originator, the Servicer or any other
party shall, directly or indirectly, contest in any manner the
effectiveness, validity, binding nature or enforceability of any
Transaction Document or any lien or security interest thereunder, or
(3) any security interest securing any obligation under
any Transaction Document shall, in whole or in part, cease to be a
perfected first priority security interest; or
(q) any failure on the part of the Seller or the Originator duly
to observe or perform in any material respect any other covenants or agreements
of the Seller or the Originator set forth in this Agreement or the other
Transaction Documents to which the Seller or the Originator is a party and the
same continues unremedied for a period of thirty (30) days after the earlier to
occur of (i) the date on which written notice of such failure requiring the same
to be remedied shall
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have been given to the Seller or the Originator by the Administrative Agent and
(ii) the date on which the Seller or the Originator becomes aware thereof; or
(r) any representation, warranty or certification made by the
Seller or the Originator in any Transaction Document or in any certificate
delivered pursuant to any Transaction Document shall prove to have been
incorrect when made, which has a Material Adverse Effect on the Secured Parties
and which continues to be unremedied for a period of thirty (30) days after the
earlier to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Seller or the
Originator by the Administrative Agent and (ii) the date on which the Seller or
the Originator becomes aware thereof; or
(s) any failure by the Seller to give instructions or notice to
the Administrative Agent as required by this Agreement, or to deliver any
required Monthly Report or other Required Reports hereunder on or before the
date occurring two (2) Business Days after the date such instruction, notice or
report is required to be made or given, as the case may be, under the terms of
this Agreement; or
(t) the failure of the Seller, the Servicer or the Originator to
make any payment due with respect to recourse debt or other obligations in
excess of $500,000 in the aggregate (with respect to the Servicer or the
Originator only after giving effect to any previous failure to make payments by
the Servicer or the Originator as applicable) or the occurrence of any event or
condition that would permit acceleration of such recourse debt or other
obligations whether or not such event or condition has been waived; or
(u) (1) the rendering of one or more final judgments, decrees or
orders by a court or arbitrator of competent jurisdiction for the payment of
money in excess of United States $10,000,000, individually or in the aggregate,
against the Originator, or United Sates $2,000,000 against the Seller,
individually or in the aggregate, and the Originator shall not have either (i)
discharged or provided for the discharge of any such judgment, decree or order
in accordance with its terms or (ii) perfected a timely appeal of such judgment,
decree or order and caused the execution of same to be stayed during the
pendency of the appeal or (2) the Originator or the Seller shall have made
payments of amounts in excess of United States $5,000,000 by the Originator, or
United States $1,000,000 by the Seller, in the settlement of any litigation,
claim or dispute (excluding payments made from insurance proceeds); or
(v) as of any Determination Date, the Pool Yield does not equal or
exceed the Minimum Pool Yield and the same continues unremedied by the following
Determination Date; or
(w) the Seller or Originator defaults in making any payment
required to be made under a material agreement for borrowed money to which
either is a party in excess of $500,000 in the aggregate (with respect to the
Originator only after giving effect to any previous failures to make payments by
the Originator) and such default is not cured within the applicable cure period,
if any, provided for under such agreement; or
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(x) the Seller, the Originator or the Servicer agrees or consents
to, or otherwise permits to occur, any amendment, modification, change,
supplement or rescission of or to the Credit and Collection Policy in whole or
in part that could be reasonably be expected to have a Material Adverse Effect
upon the Assets or interest of the Administrative Agent or any Secured Parties,
without the prior written consent of the Administrative Agent or the Secured
Parties;
(y) as of any Quarterly Determination Date, the Originator's ratio
of Consolidated Funded Indebtedness to Consolidated Tangible Net Worth is more
than 4 to 1; or
(z) the occurrence of a "Termination Event" under and as defined
in the CapitalSource Funding CP Facility.
SECTION 10.2 REMEDIES.
(a) Upon the occurrence of a Termination Event (other than a
Termination Event described in Section 10.1(i)), the Administrative Agent shall,
at the request, or may with the consent of, the Purchaser, by notice to the
Seller, declare the Termination Date to have occurred and the Amortization
Period to have commenced, without demand, protest, or notice of any kind, all of
which are hereby expressly waived by the Seller and all Aggregate Unpaids owing
by the Seller shall be accelerated and become immediately due and payable.
(b) Upon the occurrence of a Termination Event described in
Section 10.1(i), the Termination Date shall occur immediately and the
Amortization Period shall commence automatically, without demand, protest, or
notice of any kind, all of which are hereby expressly waived by the Seller and
all Aggregate Unpaids owing by the Seller shall be accelerated and become
immediately due and payable.
(c) Upon the occurrence of any Termination Event described in
Section 10.1, no Advances will thereafter be made, and the Administrative Agent
and the Secured Parties 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 each applicable jurisdiction and other Applicable Laws, which rights
shall be cumulative, and also may require the Seller and Servicer to, and the
Seller and Servicer hereby agrees that they will at the Servicer's expense and
upon request of the Administrative Agent forthwith, assemble all or any part of
the Assets as directed by the Administrative Agent and make the same available
to the Administrative Agent at a place to be designated by the Administrative
Agent and (ii) without notice except as specified below, sell the Assets or any
part thereof in one or more parcels at a public or private sale, at any of the
Administrative Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable. The Seller agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to the Seller of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Administrative Agent shall
not be obligated to make any sale of Assets regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. All cash Proceeds received by the Administrative Agent in respect of
any sale of, collection from, or other realization upon, all or any part of the
Assets (after payment
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of any amounts incurred in connection with such sale) shall be deposited into
the Collection Account and to be applied against all or any part of the
Aggregate Unpaids pursuant to Section 2.8 or otherwise in such order as the
Administrative Agent shall elect in its discretion.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 INDEMNITIES BY THE SELLER.
(a) Without limiting any other rights that any such Person may
have hereunder or under Applicable Law, the Seller hereby agrees to indemnify
the Administrative Agent, the Purchaser Agent, the Backup Servicer, the
Collateral Custodian, the Secured Parties, the Affected Parties and each of
their respective assigns and officers, directors, employees and agents thereof
(collectively, the "Indemnified Parties"), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and expenses,
including attorneys' fees and disbursements (all of the foregoing being
collectively referred to as the "Indemnified Amounts") awarded against or
incurred by such Indemnified Party and other non-monetary damages of any such
Indemnified Party or any of them arising out of or as a result of this Agreement
or the ownership of an interest in the Assets or in respect of any Asset,
excluding, however, (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or (b)
Indemnified Amounts that have the effect of recourse for non-payment of the
Assets in the Asset Pool due to credit problems of the Obligors (except as
otherwise specifically provided in this Agreement). If the Seller has made any
indemnity payment pursuant to this Section 11.1 and such payment fully
indemnified the recipient thereof and the recipient thereafter collects any
payments from others in respect of such Indemnified Amounts then, the recipient
shall repay to the Seller an amount equal to the amount it has collected from
others in respect of such indemnified amounts. Without limiting the foregoing,
the Seller shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:
(1) any representation or warranty made or deemed made by
the Seller, the Servicer (if the Originator or one of its Affiliates is
the Servicer) or any of their respective officers under or in
connection with this Agreement or any other Transaction Document, which
shall have been false or incorrect in any material respect when made or
deemed made or delivered;
(2) the failure by the Seller or the Servicer (if the
Originator or one of its Affiliates is the Servicer) 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, with respect to any Assets or the nonconformity of any
Assets with any such Applicable Law;
(3) the failure to vest and maintain vested in the
Administrative Agent, as agent for the Secured Parties, an undivided
ownership interest in the Assets, together with all Collections, free
and clear of any Lien (other than Permitted Liens) whether existing at
the time of any Advance or at any time thereafter;
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(4) the failure to maintain, as of the close of business
on each Business Day prior to the Termination Date, an amount of
Advances Outstanding that is less than or equal to the lesser of (x)
the Facility Amount and (y) the Maximum Availability on such Business
Day;
(5) the failure to file, or any delay in filing,
financing statements, continuation statements or other similar
instruments or documents under the UCC of any applicable jurisdiction
or other Applicable Laws with respect to any Assets, whether at the
time of any Advance or at any subsequent time;
(6) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment
with respect to any Asset in the Asset Pool (including, without
limitation, a defense based on the Asset not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or services related to such Asset or the furnishing or
failure to furnish such merchandise or services;
(7) any failure of the Seller or the Servicer (if the
Originator or one of its Affiliates is the Servicer) to perform its
duties or obligations in accordance with the provisions of this
Agreement or any of the other Transaction Documents to which it is a
party or any failure by the Originator, the Seller or any Affiliate
thereof to perform its respective duties under any Asset;
(8) the failure of any Lock-Box Bank to remit any amounts
held in a Lock-Box Account pursuant to the instructions of the Servicer
or the Administrative Agent (to the extent such Person is entitled to
give such instructions in accordance with the terms hereof and of any
applicable Lock-Box Agreement) whether by reason of the exercise of
set-off rights or otherwise;
(9) any inability to obtain any judgment in, or utilize
the court or other adjudication system of, any state in which an
Obligor may be located as a result of the failure of the Seller or the
Originator to qualify to do business or file any notice or business
activity report or any similar report;
(10) any action taken by the Seller or the Originator (in
its capacity as Servicer) in the enforcement or collection of any
Asset;
(11) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with the Related Property
or services that are the subject of any Asset;
(12) any claim, suit or action of any kind arising out of
or in connection with Environmental Laws including any vicarious
liability;
(13) the failure by Seller to pay when due any Taxes for
which the Seller is liable, including without limitation, sales, excise
or personal property taxes payable in connection with the Assets;
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(14) any repayment by the Administrative Agent, the
Purchaser Agent or a Secured Party of any amount previously distributed
in reduction of Advances Outstanding or payment of Interest or any
other amount due hereunder, in each case which amount the
Administrative Agent, the Purchaser Agent or a Secured Party believes
in good faith is required to be repaid;
(15) the commingling of Collections on the Assets at any
time with other funds;
(16) any investigation, litigation or proceeding related
to this Agreement or the use of proceeds of Advances or the security
interest in the Assets;
(17) any failure by the Seller to give reasonably
equivalent value to the Originator in consideration for the transfer by
the Originator to the Seller of any item of Assets 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;
(18) the use of the proceeds of any Advance in a manner
other than as provided in this Agreement and the Sale Agreement;
(19) the failure of the Seller, the Originator or any of
their respective agents or representatives to remit to the Servicer or
the Administrative Agent or the Purchaser Agent, Collections on the
Assets remitted to the Seller, the Originator, the Servicer or any such
agent or representative;
(20) any untrue statement of a material fact or omission
to state a material fact necessary to make the statements contained in
any statement, report or other document constituting part of the Loan
File with respect to a Loan not misleading; or
(21) any violation, or alleged violation, of any
Applicable Law with respect to the Loans or the Related Security,
including those with respect to usury.
(b) Any amounts subject to the indemnification provisions of this
Section 11.1 shall be paid by the Seller to the Indemnified Party within five
(5) Business Days following such Person's demand therefor.
(c) If for any reason the indemnification provided above in this
Section 11.1 is unavailable to the Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Seller or the Servicer, as the case may
be, shall contribute to the amount paid or payable by such Indemnified Party as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Seller or the Servicer, as the case
may be, on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.
(d) The obligations of the Seller under this Section 11.1 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agent, the Servicer, the Backup Servicer or the Collateral Custodian and the
termination of this Agreement.
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SECTION 11.2 INDEMNITIES BY THE SERVICER.
(a) Without limiting any other rights that any such Person may
have hereunder or under Applicable Law, the Servicer hereby agrees to indemnify
each Indemnified Party, forthwith on demand, from and against any and all
Indemnified Amounts awarded against or incurred by any such Indemnified Party by
reason of any acts, omissions or alleged acts or omissions of the Servicer,
including, but not limited to (i) any representation or warranty made by the
Servicer under or in connection with any Transaction Document, any Monthly
Report, Servicer's Certificate or any other information or report delivered by
or on behalf of the Servicer pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed made, (ii)
the failure by the Servicer to comply with any Applicable Law, (iii) the failure
of the Servicer to comply with its duties or obligations in accordance with the
Agreement, or (iv) any litigation, proceedings or investigation against the
Servicer. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
(b) Any amounts subject to the indemnification provisions of this
Section 11.2 shall be paid by the Servicer to the Indemnified Party within five
(5) Business Days following such Person's demand therefor.
(c) The Servicer shall have no liability for making
indemnification hereunder to the extent any such indemnification constitutes
recourse for uncollectible or uncollected Assets.
(d) The obligations of the Servicer under this Section 11.2 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agent, the Backup Servicer or the Collateral Custodian and the termination of
this Agreement.
(e) Any indemnification pursuant to this Section 11.2 shall not be
payable from the Assets.
SECTION 11.3 AFTER-TAX BASIS.
Indemnification under Section 11.1 and Section 11.2 shall be in an
amount necessary to make the Indemnified Party whole after taking into account
any tax consequences to the Indemnified Party of the receipt of the indemnity
provided hereunder, including the effect of such tax or refund on the amount of
tax measured by net income or profits that is or was payable by the Indemnified
Party.
ARTICLE XII
THE ADMINISTRATIVE AGENT
AND THE PURCHASER AGENT
SECTION 12.1 THE ADMINISTRATIVE AGENT.
(a) The Purchaser Agent and each Secured Party hereby appoints and
authorizes the Administrative Agent as its agent and bailee for purposes of
perfection pursuant to the applicable UCC and hereby further authorizes the
Administrative Agent to appoint additional agents and
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bailees to act on its behalf and for the benefit of each of the Purchaser Agent
and each Secured Party. Each of the Purchaser Agent and each Secured Party
further authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Transaction Documents as are delegated to the Administrative Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. In furtherance, and without limiting the generality, of the foregoing,
each Secured Party hereby appoints the Administrative Agent as its agent to
execute and deliver all further instruments and documents, and take all further
action that the Administrative Agent may deem necessary or appropriate or that a
Secured Party may reasonably request in order to perfect, protect or more fully
evidence the security interests granted by the Seller hereunder, or to enable
any of them to exercise or enforce any of their respective rights hereunder,
including, without limitation, the execution by the Administrative Agent as
secured party/assignee of such financing or continuation statements, or
amendments thereto or assignments thereof, relative to all or any of the Assets
now existing or hereafter arising, and such other instruments or notices, as may
be necessary or appropriate for the purposes stated hereinabove. The Purchaser
Agent may direct the Administrative Agent to take any such incidental action
hereunder. With respect to other actions which are incidental to the actions
specifically delegated to the Administrative Agent hereunder, the Administrative
Agent shall not be required to take any such incidental action hereunder, but
shall be required to act or to refrain from acting (and shall be fully protected
in acting or refraining from acting) upon the direction of the Purchaser Agent;
provided, however, that the Administrative Agent shall not be required to take
any action hereunder if the taking of such action, in the reasonable
determination of the Administrative Agent, shall be in violation of any
Applicable Law or contrary to any provision of this Agreement or shall expose
the Administrative Agent to liability hereunder or otherwise. In the event the
Administrative Agent requests the consent of the Purchaser Agent or the
Purchaser pursuant to the foregoing provisions and the Administrative Agent does
not receive a consent (either positive or negative) from such Person within ten
(10) Business Days of such Person's receipt of such request, then the Purchaser
Agent or the Purchaser shall be deemed to have declined to consent to the
relevant amendments.
(b) The Administrative Agent shall exercise such rights and powers
vested in it by this Agreement and the other Transaction Documents, and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs.
(c) Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Administrative Agent under or in connection with this Agreement or any of the
other Transaction Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrative Agent:
(i) may consult with legal counsel (including counsel for the Seller or the
Originator), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation and shall not be responsible for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any of the other Transaction Documents on the part of the Seller,
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the Originator, or the Servicer or to inspect the property (including the books
and records) of the Seller, the Originator, or the Servicer; (iv) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any of the other
Transaction Documents or any other instrument or document furnished pursuant
hereto or thereto; and (v) shall incur no liability under or in respect of this
Agreement or any of the other Transaction Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or sent
by the proper party or parties.
(d) Credit Decision with Respect to the Administrative Agent. The
Purchaser Agent and each Secured Party acknowledges that it has, independently
and without reliance upon the Administrative Agent, or any of the Administrative
Agent's Affiliates, and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party. The
Purchaser Agent and each Secured Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent, or any of the
Administrative Agent's Affiliates, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party.
(e) Indemnification of the Administrative Agent. The Purchaser
Agent and the Purchaser agree to indemnify the Administrative Agent (to the
extent not reimbursed by the Seller or the Servicer), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement or any of the other
Transaction Documents, or any action taken or omitted by the Administrative
Agent hereunder or thereunder; provided, that, the Purchaser Agent shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, the Purchaser Agent and the Purchaser agree to
reimburse the Administrative Agent, promptly upon demand for any out-of-pocket
expenses (including counsel fees) incurred by the Administrative Agent in
connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
other Transaction Documents, to the extent that such expenses are incurred in
the interests of or otherwise in respect of the Purchaser Agent, or the
Purchaser hereunder and/or thereunder and to the extent that the Administrative
Agent is not reimbursed for such expenses by the Seller or the Servicer.
(f) Successor Administrative Agent. The Administrative Agent may
resign at any time, effective upon the appointment and acceptance of a successor
Administrative Agent as provided below, by giving at least five (5) days'
written notice thereof to the Purchaser Agent and the Seller and may be removed
at any time with cause by the Purchaser Agent. Upon any such resignation or
removal, the Purchaser Agent shall appoint a successor Administrative Agent. The
Purchaser Agent agrees that it shall not unreasonably withhold or delay its
approval of the appointment of a successor Administrative Agent. If no such
successor Administrative
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Agent shall have been so appointed, and shall have accepted such appointment,
within thirty (30) days after the retiring Administrative Agent's giving of
notice of resignation or the removal of the retiring Administrative Agent, then
the retiring Administrative Agent may, on behalf of the Secured Parties, appoint
a successor Administrative Agent which successor Administrative Agent shall be
either (i) a commercial bank organized under the laws of the United States or of
any state thereof and have a combined capital and surplus of at least
$50,000,000 or (ii) an Affiliate of such a bank. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this ARTICLE XII shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
(g) Payments by the Administrative Agent. Unless specifically
allocated to a specific Purchaser Agent pursuant to the terms of this Agreement,
all amounts received by the Administrative Agent on behalf of the Purchaser
Agent shall be paid by the Administrative Agent to the Purchaser Agent, or if
there are no Advances Outstanding in accordance with the most recent applicable
Commitment, on the Business Day received by the Administrative Agent, unless
such amounts are received after 12:00 noon on such Business Day, in which case
the Administrative Agent shall use its reasonable efforts to pay such amounts to
the Purchaser Agent on such Business Day, but, in any event, shall pay such
amounts to the Purchaser Agent not later than the following Business Day.
SECTION 12.2 PURCHASER AGENT.
(a) Authorization and Action. VFCC hereby designates and appoints
WSI as the Purchaser Agent hereunder, and authorizes the Purchaser Agent to take
such actions as agent on its behalf and to exercise such powers as are delegated
to the Purchaser Agent by the terms of this Agreement together with such powers
as are reasonably incidental thereto. The Purchaser Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with VFCC, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Purchaser Agent shall be read into this Agreement or otherwise exist for the
Purchaser Agent. In performing its functions and duties hereunder, the Purchaser
Agent shall act solely as agent for VFCC and does not assume nor shall be deemed
to have assumed any obligation or relationship of trust or agency with or for
the Seller or any of its successors or assigns. The Purchaser Agent shall not be
required to take any action that exposes the Purchaser Agent to personal
liability or that is contrary to this Agreement or Applicable Law. The
appointment and authority of the Purchaser Agent hereunder shall terminate at
the indefeasible payment in full of the Aggregate Unpaids.
(b) Delegation of Duties. The Purchaser Agent may execute any of
its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Purchaser Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
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(c) Exculpatory Provisions. Neither the Purchaser Agent nor any of
its directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement (except for its, their or such Person's own gross negligence or
willful misconduct or, in the case of the Purchaser Agent, the breach of its
obligations expressly set forth in this Agreement), or (ii) responsible in any
manner to VFCC for any recitals, statements, representations or warranties made
by the Seller contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement, for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, for any failure of the Seller to
perform its obligations hereunder, or for the satisfaction of any condition
specified in ARTICLE III. The Purchaser Agent shall not be under any obligation
to VFCC to ascertain or to inquire as to the observance or performance of any of
the agreements or covenants contained in, or conditions of, this Agreement, or
to inspect the properties, books or records of the Seller. The Purchaser Agent
shall not be deemed to have knowledge of any Unmatured Termination Event,
Termination Event or Servicer Default unless the Purchaser Agent has received
notice from the Seller or a Secured Party.
(d) Reliance. The Purchaser Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller),
independent accountants and other experts selected by the Purchaser Agent. The
Purchaser Agent shall in all cases be fully justified in failing or refusing to
take any action under this Agreement or any other document furnished in
connection herewith unless it shall first receive such advice or concurrence of
VFCC, as it deems appropriate, or it shall first be indemnified to its
satisfaction by VFCC; provided, that, unless and until the Purchaser Agent shall
have received such advice, the Purchaser Agent may take or refrain from taking
any action as the Purchaser Agent shall deem advisable and in the best interests
of VFCC. The Purchaser Agent shall in all cases be fully protected in acting, or
in refraining from acting, in accordance with a request of VFCC, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon VFCC.
(e) Non-Reliance on the Purchaser Agent. VFCC expressly
acknowledges that neither the Purchaser Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Purchaser Agent
hereafter taken, including, without limitation, any review of the affairs of the
Seller, shall be deemed to constitute any representation or warranty by the
Purchaser Agent. VFCC represents and warrants to the Purchaser Agent that it has
and will, independently and without reliance upon the Purchaser Agent, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement.
(f) The Purchaser Agent in its Individual Capacity. The Purchaser
Agent and any of its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Seller or any Affiliate of the
Seller as though the Purchaser Agent were not the Purchaser Agent hereunder.
With respect to the Advances made pursuant to this Agreement, the
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Purchaser Agent and each of its Affiliates shall have the same rights and powers
under this Agreement as the Purchaser and may exercise the same as though it
were not the Purchaser Agent and the term "Purchaser" shall include the
Purchaser Agent in its individual capacity.
(g) Successor Purchaser Agent. The Purchaser Agent may, upon five
(5) days' notice to the Seller and VFCC, and the Purchaser Agent will, upon the
direction of VFCC, resign as Purchaser Agent. If the Purchaser Agent shall
resign, then VFCC, during such five (5) day period, shall appoint a successor
agent. If for any reason no successor Purchaser Agent is appointed by VFCC
during such five (5) day period, then effective upon the expiration of such five
(5) day period, the Seller shall make all payments it otherwise would have made
to the Purchaser Agent in respect of the Aggregate Unpaids or under any fee
letter delivered in connection herewith directly to VFCC and for all purposes
shall deal directly with VFCC. After any retiring Purchaser Agent's resignation
hereunder as Purchaser Agent, the provisions of ARTICLE XI and ARTICLE XII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Purchaser Agent under this Agreement.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 AMENDMENTS AND WAIVERS.
Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Seller, the Servicer, the Backup Servicer, the
Collateral Custodian, the Administrative Agent and the Secured Parties. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 13.2 NOTICES, ETC.
All notices, reports and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto
(provided, however, for avoidance of doubt, Lord Securities Corporation shall
not receive notices, reports and other communications provided pursuant to
ARTICLE II, and Section 6.10, Section 6.11 and Section 6.12 hereof). All such
notices and communications shall be effective, upon receipt, or in the case of
(a) notice by mail, five (5) days after being deposited in the United States
mail, first class postage prepaid, (b) notice by telex, when telexed against
receipt of answer back, or (c) notice by facsimile copy, when verbal
communication of receipt is obtained.
SECTION 13.3 RATABLE PAYMENTS.
If any Secured Party, whether by setoff or otherwise, has payment made
to it with respect to any portion of the Aggregate Unpaids owing to such Secured
Party (other than payments received pursuant to Section 11.1) in a greater
proportion than that received by any other Secured Party, such Secured Party
agrees, promptly upon demand, to purchase for cash without recourse
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or warranty a portion of the Aggregate Unpaids held by the other Secured Parties
so that after such purchase each Secured Party will hold its ratable proportion
of the Aggregate Unpaids; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Secured Party, such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.
SECTION 13.4 NO WAIVER; REMEDIES.
No failure on the part of the Administrative Agent, the Purchaser
Agent, the Collateral Custodian, the Backup Servicer or a Secured Party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any rights and remedies provided by law.
SECTION 13.5 BINDING EFFECT; BENEFIT OF AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
Seller, the Servicer, the Administrative Agent, the Purchaser Agent, the Backup
Servicer, the Collateral Custodian, the Secured Parties and their respective
successors and permitted assigns.
SECTION 13.6 TERM OF THIS AGREEMENT.
This Agreement, including, without limitation, the Seller's
representations and covenants set forth in ARTICLE IV and ARTICLE V, and the
Servicer's representations, covenants and duties set forth in ARTICLE VI,
ARTICLE VII and ARTICLE VIII, create and constitute the continuing obligation of
the parties hereto in accordance with its terms, and shall remain in full force
and effect until the Collection Date; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by the Seller pursuant to ARTICLE III and ARTICLE IV, the
indemnification and payment provisions of ARTICLE XI and the provisions of
Section 13.9, Section 13.10 and Section 13.11, shall be continuing and shall
survive any termination of this Agreement.
SECTION 13.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
OBJECTION TO VENUE.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND HEREBY AGREES
TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE
OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
110
SECTION 13.8 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
AND HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 13.9 COSTS, EXPENSES AND TAXES.
(a) In addition to the rights of indemnification granted to the
Administrative Agent, the Purchaser Agent, the Backup Servicer, the Collateral
Custodian, the Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under ARTICLE XI hereof, the Seller and
Originator agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Purchaser Agent, the Backup Servicer, the Collateral
Custodian and the Secured Parties incurred in connection with the preparation,
execution, delivery, administration (including periodic auditing), renewal,
amendment or modification of, or any waiver or consent issued in connection
with, this Agreement and the other documents to be delivered hereunder or in
connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent, the Purchaser
Agent, the Backup Servicer, the Collateral Custodian and the Secured Parties
with respect thereto and with respect to advising the Administrative Agent, the
Purchaser Agent, the Backup Servicer, the Collateral Custodian and the Secured
Parties as to their respective rights and remedies under this Agreement and the
other documents to be delivered hereunder or in connection herewith, and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Administrative Agent, the Purchaser Agent, the Backup Servicer,
the Collateral Custodian or the Secured Parties in connection with the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith.
(b) The Seller and Originator 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 Purchaser in connection with this Agreement or the funding or
maintenance of Advances hereunder.
(c) The Seller and Originator shall pay on demand all other
reasonable costs, expenses and Taxes (excluding income taxes) incurred by the
Administrative Agent, the Purchaser Agent or the Secured Parties, including,
without limitation, all costs and expenses incurred by the Administrative Agent
and the Purchaser Agent in connection with periodic audits of the Seller's or
the Servicer's books and records.
111
SECTION 13.10 NO PROCEEDINGS.
(a) Each of the parties hereto (other than VFCC) hereby agrees
that it will not institute against, or join any other Person in instituting
against, VFCC, the Administrative Agent, the VFCC or any Liquidity Banks any
Insolvency Proceeding so long as any commercial paper issued by VFCC shall be
outstanding and there shall not have elapsed one (1) year and one (1) day since
the last day on which any such commercial paper shall have been outstanding.
(b) Each of the parties hereto (other than the Administrative
Agent without the consent of the Purchaser Agent) hereby agrees that it will not
institute against, or join any other Person in instituting against, the Seller
any Insolvency Proceeding so long as there shall not have elapsed one (1) year
and one (1) day since the Collection Date.
SECTION 13.11 RECOURSE AGAINST CERTAIN PARTIES; LIMITATION ON
LIABILITIES.
(a) No recourse under or with respect to any obligation, covenant
or agreement (including, without limitation, the payment of any fees or any
other obligations) of the Administrative Agent, the Purchaser Agent, or any
Secured Party as contained in this Agreement or any other agreement, instrument
or document entered into by it pursuant hereto or in connection herewith shall
be had against any administrator of the Administrative Agent, the Purchaser
Agent, or any Secured Party, or any incorporator, affiliate, stockholder,
officer, employee or director of the Administrative Agent, the Purchaser Agent,
or any Secured Party, or of any such administrator, as such, by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that the
agreements of the Administrative Agent, the Purchaser Agent, or any Secured
Party contained in this Agreement and all of the other agreements, instruments
and documents entered into by it pursuant hereto or in connection herewith are,
in each case, solely the corporate obligations of the Administrative Agent, the
Purchaser Agent, or any Secured Party, and that no personal liability whatsoever
shall attach to or be incurred by any administrator of the Administrative Agent,
the Purchaser Agent, or any Secured Party or any incorporator, stockholder,
affiliate, officer, employee or director of the Administrative Agent, the
Purchaser Agent, or any Secured Party or of any such administrator, as such, or
any other of them, under or by reason of any of the obligations, covenants or
agreements of the Administrative Agent, the Purchaser Agent, or any Secured
Party contained in this Agreement or in any other such instruments, documents or
agreements, or that are implied therefrom, and that any and all personal
liability of every such administrator of the Administrative Agent, the Purchaser
Agent, or any Secured Party and each incorporator, stockholder, affiliate,
officer, employee or director of the Administrative Agent, the Purchaser Agent,
or any Secured Party or of any such administrator, or any of them, for breaches
by the Administrative Agent, the Purchaser Agent, or any Secured Party of any
such obligations, covenants or agreements, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement. The provisions of this Section 13.11 shall survive the
termination of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
VFCC shall not have any obligation to pay any amount required to be paid by it
hereunder in excess of any amount
112
available to VFCC after paying or making provision for the payment of its
Commercial Paper Notes. All payment obligations of VFCC hereunder are contingent
on the availability of funds in excess of the amounts necessary to pay its
Commercial Paper Notes; and each of the other parties hereto agrees that it will
not have a claim under Section 101(5) of the Bankruptcy Code if and to the
extent that any such payment obligation owed to it by VFCC exceeds the amount
available to VFCC to pay such amount after paying or making provision for the
payment of its Commercial Paper Notes.
(c) Notwithstanding any contrary provision set forth herein, no
claim may be made by the Seller, the Originator or the Servicer or any other
Person against the Administrative Agent and the Secured Parties or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect to any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and the Seller, the Originator and
the Servicer each hereby waives, releases, and agrees not to ▇▇▇ upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected.
(d) No obligation or liability to any Obligor under any of the
Loans is intended to be assumed by the Administrative Agent and the Secured
Parties under or as a result of this Agreement and the transactions contemplated
hereby
SECTION 13.12 PROTECTION OF RIGHT, TITLE AND INTEREST IN THE
ASSETS; FURTHER ACTION EVIDENCING ADVANCES.
(a) The Servicer shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the right, title and interest of the Administrative
Agent as agent for the Secured Parties and of the Secured Parties to the Assets
to be promptly recorded, registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect the right, title and interest of
the Administrative Agent as agent for the Secured Parties hereunder to all
property comprising the Assets. The Servicer shall deliver to the Administrative
Agent file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this Section
13.12(a).
(b) The Seller agrees that from time to time, at its expense, it
will promptly execute and deliver all instruments and documents, and take all
actions, that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the Advances hereunder and the security
interest granted in the Assets, or to enable the Administrative Agent or the
Secured Parties to exercise and enforce their rights and remedies hereunder or
under any Transaction Document.
(c) If the Seller or the Servicer fails to perform any of its
obligations hereunder, the Administrative Agent or any Secured Party may (but
shall not be required to) perform, or cause
113
performance of, such obligation; and the Administrative Agent's or such Secured
Party's costs and expenses incurred in connection therewith shall be payable by
the Seller as provided in ARTICLE XI. The Seller irrevocably authorizes the
Administrative Agent and appoints the Administrative Agent as its
attorney-in-fact to act on behalf of the Seller (i) to execute on behalf of the
Seller as debtor and to file financing statements necessary or desirable in the
Administrative Agent's sole discretion to perfect and to maintain the perfection
and priority of the interest of the Secured Parties in the Assets and (ii) to
file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Assets as a financing statement in such
offices as the Administrative Agent in its sole discretion deems necessary or
desirable to perfect and to maintain the perfection and priority of the
interests of the Secured Parties in the Assets. This appointment is coupled with
an interest and is irrevocable.
(d) Without limiting the generality of the foregoing, Seller will
on February 28, of each year, unless the Collection Date shall have occurred:
(1) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
(2) deliver or cause to be delivered to the
Administrative Agent an opinion of the counsel for Seller, in form and
substance reasonably satisfactory to the Administrative Agent,
confirming and updating the opinion delivered pursuant to Section 3.1
with respect to perfection and otherwise to the effect that the
security interest hereunder continues to be an enforceable and
perfected security interest, subject to no other Liens of record except
as provided herein or otherwise permitted hereunder, which opinion may
contain usual and customary assumptions, limitations and exceptions.
SECTION 13.13 CONFIDENTIALITY.
(a) Each of the Administrative Agent, the Purchaser Agent, the
Secured Parties, the Servicer, the Collateral Custodian, the Backup Servicer and
the Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and all information with respect
to the other parties, including all information regarding the business of the
Seller and the Servicer hereto and their respective businesses obtained by it or
them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each such party and its officers
and employees may (i) disclose such information to its external accountants,
attorneys, investors, potential investors and the agents of such Persons
("Excepted Persons"); provided, however, that each Excepted Person shall, as a
condition to any such disclosure, agree for the benefit of the Administrative
Agent, the Purchaser Agent, the Secured Parties, the Servicer, the Collateral
Custodian, the Backup Servicer and the Seller that such information shall be
used solely in connection with such Excepted Person's evaluation of, or
relationship with, the Seller and its affiliates, (ii) disclose the existence of
the Agreement, but not the financial terms thereof, (iii) disclose such
information as is required by Applicable Law and (iv) disclose the Agreement and
such information in any suit, action, proceeding or investigation (whether in
law or in equity or pursuant to arbitration) involving any of the Transaction
Documents for the purpose of defending itself, reducing its liability, or
protecting or exercising any of its claims, rights, remedies, or interests under
or in connection with any of the Transaction Documents. It is understood that
the financial terms that may not be
114
disclosed except in compliance with this Section 13.13(a) include, without
limitation, all fees and other pricing terms, and all Termination Events,
Servicer Defaults, and priority of payment provisions.
(b) Anything herein to the contrary notwithstanding, the Seller
and the Servicer each hereby consents to the disclosure of any nonpublic
information with respect to it (i) to the Administrative Agent, the Purchaser
Agent, the Collateral Custodian, the Backup Servicer or the Secured Parties by
each other, (ii) by the Administrative Agent, the Purchaser Agent, the
Collateral Custodian, the Backup Servicer and the Secured Parties to any
prospective or actual assignee or participant of any of them provided such
Person agrees to hold such information confidential, or (iii) by the
Administrative Agent, the Purchaser Agent, and the Secured Parties to any Rating
Agency, commercial paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to VFCC and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing, provided each such Person is
informed of the confidential nature of such information. In addition, the
Secured Parties, the Administrative Agent and the Purchaser Agent, may disclose
any such nonpublic information as required pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
(c) Notwithstanding anything herein to the contrary, the foregoing
shall not be construed to prohibit (i) disclosure of any and all information
that is or becomes publicly known; (ii) disclosure of any and all information
(a) if required to do so by any applicable statute, law, rule or regulation, (b)
to any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Administrative Agent's, the Purchaser
Agent's, the Secured Parties', the Collateral Custodian's or the Backup
Servicer's business or that of their affiliates, (c) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Administrative Agent, the
Purchaser Agent, the Secured Parties, the Collateral Custodian or the Backup
Servicer or an officer, director, employer, shareholder or affiliate of any of
the foregoing is a party, (d) in any preliminary or final offering circular,
registration statement or contract or other document approved in advance by the
Seller, the Servicer or the Originator or (e) to any affiliate, independent or
internal auditor, agent, employee or attorney of the Collateral Custodian or
Backup Servicer having a need to know the same, provided that the Collateral
Custodian or Backup Servicer advises such recipient of the confidential nature
of the information being disclosed; or (iii) any other disclosure authorized by
the Seller, Servicer or Originator.
SECTION 13.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts (including by facsimile), each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement and any agreements or letters (including fee letters) executed in
connection herewith contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof
115
and shall constitute the entire agreement among the parties hereto with respect
to the subject matter hereof, superseding all prior oral or written
understandings other than any fee letter delivered by the Originator to the
Administrative Agent, the Purchaser Agent, and the Secured Parties.
SECTION 13.15 WAIVER OF SETOFF.
Each of the parties hereto (other than VFCC) hereby waives any right of
setoff it may have or to which it may be entitled under this Agreement from time
to time against VFCC or its assets.
SECTION 13.16 ASSIGNMENTS.
VFCC may at any time assign, or grant a security interest or sell a
participation interest in, any Advance (or portion thereof) to any Person;
provided, that, in the case of an assignment of the Variable Funding
Certificate, the assignee (other than any assignee that is a Liquidity Bank)
shall execute and deliver to the Servicer and the Administrative Agent a
Transferee Letter substantially in the form of Exhibit K hereto. The parties to
any such assignment, grant or sale of participation interest shall execute and
deliver to the Purchaser Agent, for its acceptance and recording in its books
and records, such agreement or document as may be satisfactory to such parties
and the Purchaser Agent. The Seller shall not assign or delegate, or grant any
interest in, or permit any Lien to exist upon, any of the Seller's rights,
obligations or duties under this Agreement without the prior written consent of
the Administrative Agent.
SECTION 13.17 HEADING AND EXHIBITS.
The headings herein are for purposes of references only and shall not
otherwise affect the meaning or interpretation of any provision hereof. The
schedules and exhibits attached hereto and referred to herein shall constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
SECTION 13.18 LOANS SUBJECT TO RETAINED INTEREST PROVISIONS.
(a) With respect to any Loan included in the Assets subject to the
Retained Interest provisions of this Agreement, the Seller will own only the
principal portion of such Loans outstanding as of the applicable Cut-Off Date.
Principal Collections received by the Seller or the Servicer on any Revolving
Loans will be allocated first to the portion of such Revolving Loan owned by the
Seller, until the principal amount of such portion is reduced to zero, and then
to the portion not owned by the Seller; provided, however, if (i) a payment
default occurs with respect to any of the related Loans or (ii) the Originator
has determined in its sole discretion that an Obligor's credit has deteriorated
or the Originator has determined in its sole discretion to reduce its commitment
to an Obligor, then Principal Collections received on the applicable Loan will
be allocated between the portion owned by the Seller and the portion not owned
by the Seller, pro rata based upon the outstanding principal amount of each such
portion.
(b) With respect to any Term Loans included in the Assets subject
to the Retained Interest provisions of this Agreement, Principal Collections and
Interest Collections received by the Servicer will be allocated between the
portion owned by the Seller and to the portion not
116
owned by the Seller (if any) on a pro rata basis according to the outstanding
principal amount of such portion.
SECTION 13.19 REASONABLE NOTICE UNDER ARTICLE 9 OF THE UCC.
Each party hereto acknowledges and agrees that any notice sent to them
at the address set forth on the signature pages of this Agreement by certified
or registered mail, return receipt requested, or by overnight courier, not less
than five (5) days prior to any sale or other disposition by the Administrative
Agent and/or the Secured Parties under Article 9 of the UCC, shall constitute
reasonable notice of such sale or other disposition under Article 9 of the UCC.
[Remainder of Page Intentionally Left Blank.]
117
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: CAPITALSOURCE ACQUISITION FUNDING
LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
Title: Senior Vice President
__________________________________
CapitalSource Acquisition Funding LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE ORIGINATOR CAPITALSOURCE FINANCE LLC
AND SERVICER:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
Title: Senior Vice President
__________________________________
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
S-1 Loan Certificate and Servicing Agreement 2002-1
VFCC: VARIABLE FUNDING CAPITAL
CORPORATION
Commitment:
By: Wachovia Securities, Inc.,
$135,000,000 as attorney-in-fact
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
___________________________________
Title: Vice President
__________________________________
Variable Funding Capital Corporation
c/o Wachovia Securities, Inc.
One Wachovia Center, Mail Code: NC0610
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With respect to notices required pursuant to Section 13.2, a copy of notices
sent to VFCC shall be sent to:
Lord Securities Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE ADMINISTRATIVE AGENT AND WACHOVIA SECURITIES, INC.
THE PURCHASER AGENT:
By: /s/ ▇▇▇ ▇▇▇▇
___________________________________
Name: ▇▇▇ ▇▇▇▇
___________________________________
Title: __________________________________
Wachovia Securities, Inc.
One Wachovia Center, Mail Code: NC0610
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Conduit Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
S-2 Loan Certificate and Servicing Agreement 2002-1
THE BACKUP SERVICER: ▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Backup
Servicer
By: /s/ ▇▇▇ ▇▇▇▇▇
_____________________________________
Name: ▇▇▇ ▇▇▇▇▇
___________________________________
Title: Assistant Vice President
__________________________________
▇▇▇▇▇ Fargo Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
MAC N9311-161
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Asset-Backed Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE COLLATERAL CUSTODIAN: ▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Collateral Custodian
By: /s/ ▇▇▇ ▇▇▇▇▇
_____________________________________
Name: ▇▇▇ ▇▇▇▇▇
___________________________________
Title: Assistant Vice President
__________________________________
▇▇▇▇▇ Fargo Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
MAC N9311-161
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Asset-Backed Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
S-3 Loan Certificate and Servicing Agreement 2002-1