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EXHIBIT 10.14
U.S. $75,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 15, 1997
Among
BVFU FUNDING CORP.
as the Seller
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BANKVEST CAPITAL CORP.
as the Servicer
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the INVESTORS
named herein
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VARIABLE FUNDING CAPITAL CORPORATION
as a Purchaser
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FIRST UNION CAPITAL MARKETS CORP.
as the Deal Agent
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and
FIRST UNION NATIONAL BANK
as the Liquidity Agent
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and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as the Collateral Custodian and Backup Servicer
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms................................................................... 1
Section 1.2 Other Terms............................................................................. 23
Section 1.3 Computation of Time Periods............................................................. 23
ARTICLE II
THE PURCHASE FACILITY
Section 2.1 Purchases of Asset Interest............................................................. 24
Section 2.2 The Initial Purchase, Subsequent Purchases and
Incremental Purchases................................................................... 24
Section 2.3 Reduction of the Purchase Limit; Repurchase............................................. 25
Section 2.4 Selection of Fixed Periods.............................................................. 26
Section 2.5 Percentage Evidenced by Asset Interest.................................................. 26
Section 2.6 Dividing or Combining Asset Interests................................................... 26
Section 2.7 Non-Liquidation Settlement Procedures................................................... 27
Section 2.8 Settlement Procedures Following a Payout Event.......................................... 28
Section 2.9 Collections and Allocations............................................................. 29
Section 2.10 Payments, Computations, Etc............................................................. 30
Section 2.11 [Reserved].............................................................................. 31
Section 2.12 Fees. ................................................................................ 31
Section 2.13 Increased Costs; Capital Adequacy; Illegality........................................... 31
Section 2.14 Taxes. ................................................................................ 32
Section 2.15 Assignment of the Purchase Agreement.................................................... 34
Section 2.16 Substitution of Contracts............................................................... 35
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase................................................. 36
Section 3.2 Conditions Precedent to All Purchases and Remittances of Collections..................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Seller............................................ 37
Section 4.2 Representations and Warranties of Seller Relating to the Agreement and the Contracts.... 41
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.1 General Covenants....................................................................... 42
Section 5.2 Covenants of Seller..................................................................... 43
Section 5.3 Release of Lien on Equipment............................................................ 47
Section 5.4 Hedging of Contracts.................................................................... 47
Section 5.5 Retransfer of Ineligible Contracts...................................................... 48
Section 5.6 Retransfer of Assets.................................................................... 48
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties...................................................... 49
Section 6.2 Collection of Payments.................................................................. 52
Section 6.3 Servicer Advances....................................................................... 53
Section 6.4 Realization Upon Defaulted Contract..................................................... 54
Section 6.5 Maintenance of Insurance Policies....................................................... 54
Section 6.6 Representations and Warranties of Servicer.............................................. 54
Section 6.7 Representations and Warranties of Backup Servicer and Collateral Custodian.............. 56
Section 6.8 Covenants of Servicer................................................................... 57
Section 6.9 Covenants of Backup Servicer and Collateral Custodian................................... 58
Section 6.10 Servicing Compensation.................................................................. 58
Section 6.11 Custodial Compensation.................................................................. 59
Section 6.12 Payment of Certain Expenses by Servicer................................................. 59
Section 6.13 Reports................................................................................. 59
Section 6.14 Annual Statement as to Compliance....................................................... 60
Section 6.15 Annual Independent Public Accountant's Servicing Reports................................ 60
Section 6.16 Adjustments............................................................................. 60
Section 6.17 Merger or Consolidation of the Servicer................................................. 61
Section 6.18 Limitation on Liability of the Servicer and Others...................................... 61
Section 6.19 Indemnification of the Seller, the Backup Servicer,
the Collateral Custodian, the Deal Agent and the Purchasers......................... 61
Section 6.20 The Servicer Not to Resign.............................................................. 62
Section 6.21 Access to Certain Documentation and Information Regarding the Contracts................. 62
Section 6.22 Backup Servicer......................................................................... 62
Section 6.23 Identification of Records............................................................... 63
Section 6.24 Servicer Defaults....................................................................... 64
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Section 6.25 Appointment of Successor Servicer...................................................... 65
Section 6.26 Notification........................................................................... 66
Section 6.27 Protection of Right, Title and Interest to Assets...................................... 66
Section 6.28 Subservicers........................................................................... 67
ARTICLE VII
PAYOUT EVENTS
Section 7.1 Payout Events.......................................................................... 67
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnities by the Seller.............................................................. 69
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
Section 9.1 Authorization and Action............................................................... 71
Section 9.2 Delegation of Duties................................................................... 72
Section 9.3 Exculpatory Provisions................................................................. 72
Section 9.4 Reliance............................................................................... 73
Section 9.5 Non-Reliance on Deal Agent, Liquidity Agent and Other Purchasers....................... 74
Section 9.6 Reimbursement and Indemnification...................................................... 74
Section 9.7 Deal Agent and Liquidity Agent in their Individual Capacities.......................... 74
Section 9.8 Successor Deal Agent or Liquidity Agent................................................ 74
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Assignments and Participations......................................................... 75
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendments and Waivers................................................................. 78
Section 11.2 Notices, Etc........................................................................... 79
Section 11.3 Ratable Payments....................................................................... 79
Section 11.4 No Waiver, Remedies.................................................................... 80
Section 11.5 Binding Effect......................................................................... 80
Section 11.6 Term of this Agreement................................................................. 80
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Section 11.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE................... 80
Section 11.8 WAIVER OF JURY TRIAL................................................................... 81
Section 11.9 Costs, Expenses and Taxes.............................................................. 81
Section 11.10 No Proceedings......................................................................... 82
Section 11.11 Recourse Against Certain Parties....................................................... 82
Section 11.12 Protection of Ownership Interests of the Purchasers; Intent of
Parties; Security Interest ........................................................ 83
Section 11.13 Confidentiality........................................................................ 83
Section 11.14 Execution in Counterparts; Severability; Integration................................... 84
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EXHIBITS
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EXHIBIT A Form of Notice of Sale
EXHIBIT B Form of Lock-Box Notices
EXHIBIT C "Limited Purpose" Provisions of Seller's Certificate of
Incorporation
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Monthly Report
EXHIBIT F Form of Servicer's Certificate
EXHIBIT G Form of Purchase Certificate
SCHEDULES
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SCHEDULE I Condition Precedent Documents
SCHEDULE II Lock-Box Banks and Lock-Box Accounts
SCHEDULE III Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IV Substitute Contracts Criteria
SCHEDULE V Location of Contract Files
SCHEDULE VI List of Contracts
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THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement") is made as of
August 15, 1997, among:
(1) BVFU FUNDING CORP., a Delaware corporation, as seller (the "Seller");
(2) BANKVEST CAPITAL CORP., a Massachusetts corporation ("BVCC"), as
servicer (the "Servicer");
(3) the financial institutions listed on the signature pages of this
Agreement under the heading "Investors" and their respective
successors and assigns (the "Investors");
(4) VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation ("VFCC");
(5) FIRST UNION CAPITAL MARKETS CORP. ("FCMC"), as deal agent (the "Deal
Agent") and as documentation agent (the "Documentation Agent");
(6) FIRST UNION NATIONAL BANK ("First Union"), as liquidity agent (the
"Liquidity Agent"); and
(7) NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION ("Norwest"), as
collateral custodian (the "Collateral Custodian") and backup servicer
(the "Backup Servicer").
IT IS AGREED 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 exhibits, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined).
ADCB: On any date of determination, the sum of the Discounted
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Contract Balance of each Eligible Contract (excluding all Defaulted Contracts,
Casualty Loss Contracts, Early Termination Contracts and Contracts subject to a
Warranty Event) included in the Asset Pool as of the date of such determination.
Addition Date: With respect to any Additional Contracts, the date on
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which such Additional Contracts become Pool Assets.
Additional Contracts: All Contracts that become Pool Assets after the
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Closing Date.
Additional Cut Off Date: Each date on and after which Collections on
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an Additional Contract are to be transferred to the Asset Pool.
Add-On Purchase: Any Incremental Purchase hereunder to be funded
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through the issuance of additional Commercial Paper Notes as part of an existing
tranche of Commercial Paper Notes (i.e., a tranche issued in respect of a
Purchase meeting the $5,000,000 or $10,000,000 minimum requirement set forth in
Section 2.2(b), as applicable) in connection with the rollover of such tranche
in full.
Adjusted Eurodollar Rate: On any day, an interest rate per annum
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equal to the quotient, expressed as a percentage and rounded upwards (if
necessary), to the nearest 1/100 of 1%, obtained by dividing (i) the LIBOR Rate
on such day by (ii) 100% minus the Eurodollar Reserve Percentage on such day.
Administration Agreement: That certain Administration Agreement
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executed between VFCC and First Union Capital Markets Corp., as the same may be
amended, supplemented, or otherwise modified from time to time.
Adverse Claim: A lien, security interest, charge, encumbrance or
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other right or claim of any Person.
Affected Party: As defined in Section 2.13(a).
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Affiliate: With respect to a Person means any other Person
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controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
Agent's Account: A special account (account number 01 41 96 47) in
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the name of the Deal Agent or, so long as VFCC is the sole Purchaser hereunder,
in the name of VFCC, maintained at Bankers Trust Company.
Aggregate Unpaids: At any time, an amount equal to the sum of all
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Yield (accrued and to accrue), Capital and all other amounts owed hereunder or
under any fee letter delivered by the Originator to the Deal Agent and the
Purchasers at such time (whether due or accrued).
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Agreement: This Receivables Purchase Agreement, dated as of August
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15, 1997, as amended, modified, supplemented or restated from time to time.
Alternative Rate: An interest rate per annum equal to the Adjusted
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Eurodollar Rate or the Base Rate, as the Seller shall select in accordance with
the terms of this Agreement; provided, however, that the "Alternative Rate" for
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any Capital allocated to a Fixed Period shall be the Base Rate if (a) on or
before the first day of such Fixed Period, the relevant Purchaser shall have
notified the Deal Agent that a Eurodollar Disruption Event has occurred, (b)
such Fixed Period is a period of less than one month or (c) such Capital is less
than $5,000,000.
Asset: All right, title and interest of the transferring party in, to
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and under any and all of the following:
(i) the Existing Contracts and Additional Contracts, and all moneys
due or to become due in payment of such Contracts on and after the related Cut
Off Date, any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but excluding any
Scheduled Payments due prior to the related Cut Off Date and any Excluded
Amounts;
(ii) the Equipment related to such Contracts including all proceeds
from any sale or other disposition of such Equipment;
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the obligor thereunder and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income and proceeds of the foregoing.
Asset Interest: At any time, an undivided variable percentage
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ownership interest in all Assets. Each Asset Interest shall be calculated in
accordance with Section 2.5 for each Fixed Period with an amount of Capital with
respect to such Asset Interest as is allocated to such Fixed Period pursuant to
Section 2.4. The undivided percentage interest of an Asset Interest shall equal
c
c + --- R
C
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ADCB
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where:
c = equals the Capital in respect of such Asset Interest.
C = aggregate Capital.
R = aggregate Overcollateralization
Asset Pool: At any time, all then outstanding Assets.
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Assignment and Acceptance: An assignment and acceptance entered into
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by an Investor and an Eligible Assignee, and accepted by the Deal Agent, in
substantially the form of Exhibit D hereto.
Backup Servicer: Norwest Bank Minnesota, National Association, and
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its successors and assigns.
Backup Servicer Fee Rate: The rate per annum set forth in the fee
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letter, dated August 19, 1997, delivered by the Originator to the Deal Agent and
the Purchasers.
Backup Servicing Fee: As defined in Section 6.22.
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Bankruptcy Code: The Federal Bankruptcy Code, as amended from time to
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time (Title 11 of the United States Code).
Base Rate: On any date, a fluctuating rate of interest per annum
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equal to the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus
1.0%.
Benefit Plan: Any employee benefit plan as defined in Section 3(3) of
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ERISA in respect of which the Seller or any ERISA Affiliate of the Seller is, or
at any time during the immediately preceding six years was, an "employer" as
defined in Section 3(5) of ERISA.
Blended Discount Rate: For any Determination Date, a rate per annum
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equal to the weighted average (calculated based on the applicable Outstanding
Balances) of (i) the Blended Discount Rate as of the immediately preceding
Determination Date and (ii) the Sale Discount Rate, if any, for any Contract
transferred to the Asset Pool on the most recent Purchase Date, if any,
occurring on or after the immediately preceding Determination Date; provided,
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however, that the Blended Discount Rate for the first Determination Date
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following the Closing Date shall be the Sale Discount Rate applicable to the
Original Contracts.
Business Day: Any day of the year other than a Saturday or a Sunday
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on which (a) banks are not required or authorized to be closed in New York City,
Minneapolis, Minnesota, and Charlotte, North Carolina and (b) if the term
"Business Day" is used in connection with the Adjusted Eurodollar Rate, dealings
in United States dollar deposits are carried on in the London interbank market.
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Capital: For each Asset Interest, the amount paid to the Seller for
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such Asset Interest at the time of its purchase by the Purchaser pursuant to
this Agreement, or such amount divided or combined in accordance with Section
2.6, in each case reduced from time to time by Collections distributed on
account of such Capital pursuant to Sections 2.7 or 2.8; provided, however, that
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such Capital shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must be returned
for any reason.
Capital Limit: At any time, an amount equal to the product of the
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ADCB at such time and .88.
Casualty Loss: With respect to any item of Equipment, the loss,
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theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
Casualty Loss Contract: Any Contract that is subject to a Casualty
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Loss.
Closing Date: August 15, 1997.
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Code: The Internal Revenue Code of 1986, as amended.
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Collateral Custodian: Norwest.
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Collection Account: As defined in Section 6.2(f).
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Collection Date: The date following the Termination Date on which the
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aggregate outstanding Capital has been reduced to zero, the Purchasers have
received all Yield and other amounts due to the Purchasers in connection with
this Agreement and the Deal Agent has received all amounts due to it in
connection with this Agreement.
Collections: (a) All cash collections and other cash proceeds of any
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Asset, including, without limitation, Scheduled Payments, Prepayments, Insurance
Proceeds and Recoveries, all as related to amounts attributable to the Contracts
in the Asset Pool or the related Equipment, but excluding any Excluded Amounts
and (b) any other funds received by the Seller or the Servicer with respect to
any Contract or related Equipment.
Commercial Paper Notes: On any day, any short-term promissory notes
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issued by VFCC with respect to financing its purchase of an Asset Interest
hereunder.
Commitment: For each Investor, the commitment of such Investor to
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purchase Asset Interests from the Seller in an amount not to exceed the amount
set forth opposite such Investor's name on the signature pages of this
Agreement, as such amount may be modified in accordance with the terms hereof.
Commitment Fee: As defined in Section 2.12(a) hereof.
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Commitment Fee Rate: The rate per annum set forth in any fee letter
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delivered by the Originator to the Deal Agent and the Purchasers.
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Commitment Termination Date: August 14, 1998 or such later date to
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which the Commitment Termination Date may be extended (if extended) in the sole
discretion of VFCC and each Investor in accordance with the terms of Section
2.1(b).
Contract: Any lease of Equipment by the Originator or by a third
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party, in each case as lessor, to an Obligor.
Contract Files: With respect to each Contract, the fully executed
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original counterpart (for UCC purposes) of the Contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Collateral Custodian holds, evidencing ownership of such Equipment (if
applicable) and all other documents originally delivered to the Seller or held
by the Collateral Custodian with respect to any Contract.
Contract List: The contract list provided by the Seller to the Deal
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Agent and the Collateral Custodian, in the form of Schedule VI hereto.
CP Disruption Event: The inability of a Purchaser, at any time,
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whether as a result of a prohibition, a contractual restriction or any other
event or circumstance whatsoever, to raise funds through the issuance of its
commercial paper notes (whether or not constituting commercial paper notes
issued to fund Purchases hereunder) in the United States commercial paper
market.
CP Rate: As to a Fixed Period, a rate equivalent to the rate (or if
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more than one rate, the weighted average of the rates) at which commercial paper
notes of VFCC having a term equal to such Fixed Period may be sold by any
placement agent or commercial paper dealer selected by VFCC, as agreed between
each such agent or dealer and VFCC and notified by VFCC to the Deal Agent and
the Servicer (inclusive of the Placement Agent Fee Rate); provided, however, if
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the rate (or rates) as agreed between any such agent or dealer and VFCC with
regard to any Fixed Period for the applicable Purchase is a discounted rate (or
rates), the "CP Rate" for such Fixed Period shall be the rate (or if more than
one rate, the weighted average of the rates) resulting from converting such
discount rate (or rates) to an interest-bearing equivalent rate per annum.
Credit and Collection Policy: The written credit and collection
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policies of the Originator and Servicer in effect on the date hereof, as amended
or supplemented from time to time with the prior written consent of the Deal
Agent.
Custodial Fee: As defined in Section 6.11.
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Cut Off Date: With respect to each Existing Contract, the date on and
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after which Collections on such Existing Contract are to be transferred to the
Asset Pool, and with respect to each Additional Contract, the related Additional
Cut Off Date.
Debt: With respect to any Person, (a) indebtedness of such Person for
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borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or
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other similar instruments, (c) obligations of such Person to pay the deferred
purchase price of property or services, (d) obligations of such Person as
obligor under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (e) obligations secured by an Adverse Claim
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations and (f) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above.
Default Ratio: As of any Determination Date, the percentage
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equivalent of a fraction, the numerator of which is equal to twice the sum of
the Discounted Contract Balance of Contracts that became Defaulted Contracts net
of Recoveries during the immediately preceding six calendar months and the
denominator of which is the average of the ADCB as of each of the current
Determination Date and each of the immediately preceding five Determination
Dates.
Defaulted Contract: (i) A Contract in the Asset Pool as to which (i)
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the Servicer has determined or should have determined in accordance with its
Credit and Collection Policy that such Contract is not collectible or is subject
to repossession, or (ii) a Contract in the Asset Pool as to which all or a
portion of any one or more Scheduled Payments is more than 120 days past due in
an aggregate amount equal to the higher of (A) ten dollars or more or (B) ten
percent or more of any Scheduled Payment.
Delinquency Ratio: As of any Determination Date, the percentage
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equivalent of a fraction, the numerator of which is the average of the
Discounted Contract Balance of Delinquent Contracts as of such Determination
Date and each of the immediately preceding two Determination Dates and the
denominator of which is the average of the ADCB as of such Determination Date
and each of the immediately preceding two Determination Dates.
Delinquent Contract: A Contract in the Asset Pool as to which all or
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a portion of any one or more Scheduled Payments in an aggregate amount of ten
dollars or more, or ten percent or more, of any Scheduled Payment thereunder are
delinquent for 60 days or more.
Determination Date: The last Business Day of each calendar month.
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Discounted Contract Balance: With respect to any Contract, (i) as of
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the related Cut Off Date, the present value of all remaining Scheduled Payments
becoming due under such Contract after the applicable Cut Off Date discounted
monthly at the Sale Discount Rate and (ii) as of any other date of
determination, the present value of all remaining Scheduled Payments becoming
due under such Contract after such Determination Date discounted monthly at the
Blended Discount Rate.
The "Discounted Contract Balance" for each Contract shall be
calculated assuming:
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(i) all payments due in any Monthly Period as due on the last day
of the Monthly Period;
(ii) payments are discounted on a monthly basis using a 30 day month
and a 360 day year; and
(iii) all security deposits and drawings under letters of credit, if
any, issued in support of a Contract are applied to reduce Scheduled
Payments in inverse order of the due date thereof.
Early Termination Contracts: Any Contract that the Servicer has
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allowed the related Obligor to terminate prior to the date on which the final
Scheduled Payment is due thereunder.
Eligible Assignee: (a) A Person whose short-term rating is at least
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A-1 from S&P and P-1 from Moody's, or whose obligations under this Agreement are
guaranteed by a Person whose short-term rating is at least A-1 from S&P and P-1
from Moody's, or (b) such other Person satisfactory to VFCC, the Deal Agent and
each of the rating agencies rating the Commercial Paper and approved, in
writing, by the Seller; provided, however, that no such approval shall be
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required in the event any Investor is required by any rating agency rating
VFCC's commercial paper notes or by any regulatory agency to make an assignment.
Eligible Contract: On any Determination Date, each Contract with
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respect to which each of the following is true:
(a) the information with respect to the Contract and the Equipment
subject to the Contract is true and correct in all material respects;
(b) immediately prior to the transfer hereunder of the Contract and
any related Equipment (or security interest therein), the Contract was owned by
the Seller free and clear of any Adverse Claim;
(c) no Scheduled Payment related to the Contract is (i) more than 60
days delinquent, (ii) a payment as to which the Servicer has failed to make a
Servicer Advance, (iii) a payment as to which the related Equipment has been
repossessed or (iv) a payment as to which the related Equipment has been
charged-off in accordance with the credit and collection policies of the
Servicer;
(d) no provision of the Contract has been waived, altered or modified
in any respect except as allowed under the Credit and Collection Policy of the
Servicer;
(e) the Contract is a valid and binding payment obligation of the
Obligor and is enforceable in accordance with its terms (except as may be
limited by applicable Insolvency Laws and the availability of equitable
remedies);
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(f) the Contract is not and will not be subject to rights of
rescission, setoff, counterclaim or defense and no such rights have been
asserted or threatened with respect to the Contract;
(g) the Contract, at the time it is sold to VFCC does not violate the
laws of the United States or any state in any manner which would create
liability for any Purchaser or which would materially and adversely affect the
enforceability or collectibility of such Contract;
(h) (i) the Contract and any related Equipment have not been sold,
transferred, assigned or pledged by the Seller to any other Person and, with
respect to a Contract that is a "true lease," any Equipment related to such true
lease is owned by the Seller free and clear of any Liens of any third parties
(except for any Permitted Liens) and (ii) such Contract is secured by a fully
perfected Lien of the first priority on the related Equipment;
(i) the Contract constitutes chattel paper, an account, an instrument
or a general intangible as defined under the UCC and if the Contract constitutes
"chattel paper" for purposes of the UCC, there is not more than one "secured
party's original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or transfer to
the Deal Agent of the Contract and all right, title and interest in the related
Equipment have been made in all appropriate jurisdictions;
(k) the Obligor is not the subject of bankruptcy or other insolvency
proceedings;
(l) the Obligor's billing address is in the United States and the
Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written consent of an
Obligor or contain any other restriction on the transfer or assignment of the
Contract (other than a consent or waiver of such restriction that has been
obtained prior to the Closing Date, with respect to an Existing Contract, or the
Addition Date, with respect to an Additional Contract);
(n) the obligations of the related Obligor under the Contract are
irrevocable, unconditional and non-cancelable (without the right to set off for
any reason and net of any maintenance or cost per copy charges);
(o) the Contract has a remaining term to maturity of not greater than
60 months, provided, however, that up to 10% (by ADCB) may have a remaining term
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to maturity of not greater than 72 months;
(p) no adverse selection procedure was used in selecting the Contract
for the Asset Pool;
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(q) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in accordance
with the Servicer's normal requirements;
(r) the Contract is not a "consumer lease" as defined in Section 2A-
103(l)(e) of the UCC;
(s) the Contract is not subject to any guarantee by the Servicer nor
has the Seller or the Originator established any specific credit reserve with
respect to the related Obligor;
(t) the Contract provides that (i) the Originator, the Seller or the
Servicer may accelerate all remaining Scheduled Payments if the Obligor is in
default under any of its obligations under such Contract and (ii) the Obligor
thereof may not elect to utilize its security deposit to offset any remaining
Scheduled Payment;
(u) the Obligor under the Contract is required to maintain the
Equipment in good working order and bear all costs of operating the Equipment
(including the payment of Taxes);
(v) no provision of such Contract provides for a Prepayment Amount
less than the amount calculated in accordance with the definition of Prepayment
Amount;
(w) the Contract has not been terminated as a result of a Casualty
Loss to the related Equipment or for any other reason;
(x) the Discounted Contract Balance of such Contract, when aggregated
with the Discounted Contract Balance of each other Contract having the same
Obligor, does not exceed the Portfolio Concentration Criteria;
(y) the Discounted Contract Balance of such Contract does not include
the amount of any security deposit held by the Servicer or the Seller; such
Contract provides that in the event of a Casualty Loss, the Obligor is required
to pay an amount not less than the present value of all remaining Scheduled
Payments discounted at the Blended Discount Rate plus any past due amounts as of
the date of determination;
(aa) the Obligor thereunder has represented to the Originator that
such Obligor has accepted the related Equipment and has had a reasonable
opportunity to inspect and test such Equipment and the Originator has not been
notified of any defects therein; and
(bb) all payments in respect of a Contract will be made free and clear
of, and without deduction or withholding for or on account of, any Taxes.
Equipment: The tangible assets financed or leased by an Obligor
---------
pursuant to a Contract and/or, unless the context otherwise requires, a security
interest in such assets, such
-10-
tangible assets to consist of small ticket equipment, including without
limitation small manufacturing, automotive repair, printing, information and
document processing and storage, telecommunications and office equipment.
ERISA: The U.S. Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
ERISA Affiliate: (a) Any corporation which is a member of the same
---------------
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Seller; (b) A trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with the
Seller or (c) A member of the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the Seller, any corporation described in
clause (a) above or any trade or business described in clause (b) above.
Eurocurrency Liabilities: As defined in Regulation D of the Board of
------------------------
Governors of the Federal Reserve System, as in effect from time to time.
Eurodollar Disruption Event: With respect to all Capital allocated to
---------------------------
any Fixed Period, any of the following: (a) a determination by a Purchaser that
it would be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain United
States dollars in the London interbank market to make, fund or maintain any
Purchase for such Fixed Period, (b) the failure of one or more of the Reference
Banks to furnish timely information for purposes of determining the Adjusted
Eurodollar Rate, (c) a determination by a Purchaser that the rate at which
deposits of United States dollars are being offered to such Purchaser in the
London interbank market does not accurately reflect the cost to such Purchaser
of making, funding or maintaining any Purchase for such Fixed Period or (d) the
inability of a Purchaser to obtain United States dollars in the London interbank
market to make, fund or maintain any Purchase for such Fixed Period.
Eurodollar Reserve Percentage: Of any Reference Bank for any Fixed
-----------------------------
Period, for any Capital means the overcollateralization percentage applicable
during such Fixed Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such Fixed
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 emergency, supplemental or other
marginal reserve requirement) for such Reference Bank with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Fixed Period.
Excluded Amounts: (a) Any collections on deposit in the Collection
----------------
Account or otherwise received by the Servicer on or with respect to the Asset
Pool or related Equipment, which collections are attributable to any Taxes, fees
or other charges imposed by any Governmental Authority, (b) any collections
representing reimbursements of insurance premiums or payments for services that
were not financed by the Originator, (c) any collections with respect to
Contracts repurchased or substituted for with respect to a Warranty Event, or
otherwise replaced by a Substitute Contract and (d) any late fees, insufficient
funds
-11-
charges, inspection charges, collection fees, delinquency fees, repossession
fees or UCC fees, extension fees, documentation fees, maintenance fees and
insurance fees.
Existing Contracts: The Contracts purchased by the Seller under the
------------------
Purchase Agreement and owned by the Seller on the Closing Date.
Facility Financing Statement: As defined in Schedule I.
----------------------------
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
federal funds rates as quoted by First Union and confirmed in Federal Reserve
Board Statistical Release H.15(519) or any successor or substitute publication
selected by First Union (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 First Union, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 A.M. Charlotte, North Carolina time.
Filing Locations: [Massachusetts].
----------------
First Union: First Union National Bank, in its individual capacity,
-----------
and its successors or assigns.
Fixed Period: For any outstanding Capital, (a) if Yield in respect of
------------
all or any part thereof is computed by reference to the CP Rate, a period of 1
to and including 60 days, (b) if Yield in respect thereof is computed by
reference to the Adjusted Eurodollar Rate, a period of one, two or three months
and (c) if Yield in respect thereof is computed at the Base Rate, a period of 1
to and including 31 days, in each case, as determined pursuant to Section 2.4.
GAAP: Generally accepted accounting principles as in effect from time
----
to time in the United States.
Governmental Authority: With respect to any Person, any nation or
----------------------
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.
H.15: As defined in Section 5.4.
----
Hedge Counterparty: With respect to this Agreement, each related
------------------
party, approved in writing by the related Investor, which has entered into a
Hedging Agreement with the Seller (and assigned to the Deal Agent on behalf of
VFCC) and as to which such party's (a) long-term unsecured debt obligations are
rated at least "A-" by S&P and "A3" by Moody's, and (b) short-term unsecured
debt obligations are rated at least "A-1" by S&P and "P-1" by Moody's.
-12-
Hedged Amount: As defined in Section 5.4.
-------------
Hedged Costs: With respect to any Payment Date, the amount of hedging
------------
costs, including, without limitation, payments to the Hedge Counterparty, as
payable out of funds in the Collection Account on such Payment Date as provided
by Section 2.7.
Hedged Level: As defined in Section 5.4.
------------
Hedging Agreement: With respect to this Agreement, each hedging
-----------------
agreement entered into by the Seller and a Hedge Counterparty.
Increased Costs: Any amounts required to be paid by the Seller to an
---------------
Affected Party pursuant to Section 2.12.
Incremental Purchase: Any Purchase that increases the aggregate
--------------------
outstanding Capital hereunder.
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 liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person and (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.
Indemnified Amounts: As defined in Section 8.1
-------------------
Indemnified Persons: As defined in Section 6.19.
-------------------
Ineligible Contract: As defined in Section 5.5.
-------------------
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 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
-13-
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 of the United States of America
---------------
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.
Instrument: Any "instrument" (as defined in Article 9 of the UCC),
----------
other than an instrument which constitutes part of chattel paper.
Insurance Policy: With respect to any Contract, an insurance policy
----------------
covering physical damage to or loss of the related Equipment.
Insurance Proceeds: Depending on the context, any amounts payable or
------------------
any payments made, to the Servicer under any Insurance Policy.
Investment: With respect to any Person, any direct or indirect loan,
----------
advance or investment by such Person in any other Person, whether by means of
share purchase, capital contribution, loan or otherwise, excluding the
acquisition of Assets pursuant to the Purchase Agreement and excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.
Investor: First Union and each liquidity bank that is a party to the
--------
Liquidity Purchase Agreement dated as of August 15, 1997 between the Purchaser,
the Liquidity Agent and each other liquidity bank a party thereto.
Issuer: VFCC and any other Purchaser whose principal business
------
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
LIBOR Rate: For a Fixed Period, an interest rate per annum equal to
----------
the sum of the rate appearing on the Telerate Page 3750 as of 11:00 a.m. (London
time) on the Business Day which is the second Business Day immediately preceding
the first day of such Fixed Period for a term comparable to such Fixed Period
or, if no such rate appears on such day, the average (rounded upward to the
nearest one-sixteenth (1/16) of one percent) per annum rate of interest
determined by First Union at its principal office in Charlotte, North Carolina
(each such determination, absent manifest error, to be conclusive and binding)
as of two Business Days prior to the first day of the applicable Fixed Period,
to be the rate at which deposits in immediately available funds in U.S. dollars
are being, have been, or would be offered or quoted by the First Union to major
banks in the interbank market for Eurodollar deposits at or about 11:00 A.M.
(Charlotte, North Carolina time) on such day, for a term comparable to such
Fixed Period and in an amount approximately equal to the requested Capital.
-14-
Lien: With respect to any Asset, (a) any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such Asset or
(b) the interest of a vendor or lessor under any conditional sale agreement,
financing lease or other title retention agreement relating to such Asset.
Liquidation Expenses: With respect to any Contract, 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 internal counsel, in each case in accordance with the Servicer's customary
procedures in connection with the repossession, refurbishing and disposition of
any related Equipment upon or after the expiration or earlier termination of
such Contract and other out-of-pocket costs related to the liquidation of any
such Equipment, including the attempted collection of any amount owing pursuant
to such Contract if it is a Defaulted Contract.
Lock-Box: A post office box to which Collections are remitted for
--------
retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box
Account.
Lock-Box Account: An account maintained for the purpose of receiving
----------------
Collections at a bank or other financial institution which has executed a Lock-
Box Notice for the purpose of receiving Collections.
Lock-Box Bank: Any of the banks or other financial institutions
-------------
holding one or more Lock-Box Accounts.
Lock-Box Notice: A notice, in substantially the form of Exhibit B,
---------------
among the Seller, the Originator (if applicable) and a Lock-Box Bank.
Monthly Period: As to any Determination Date, the calendar month
--------------
ended on such Determination Date.
Monthly Report: As defined in Section 6.13(a).
--------------
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
-------
Multiemployer Plan: A "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding five years contributed to by the Seller or any ERISA
Affiliate on behalf of its employees.
Norwest: Norwest Bank Minnesota, National Association.
-------
Notice of Sale: A notice, substantially in the form of Exhibit A
--------------
hereto, delivered pursuant to Section 2.2.
Obligor: A Person obligated to make payments pursuant to a Contract
-------
including any guarantor thereof.
-15-
Officer's Certificate: A certificate signed by any officer of the
---------------------
Seller or the Servicer and delivered to the Collateral Custodian, as the case
may be.
Opinion of Counsel: A written opinion of counsel, who may be counsel
------------------
for Seller or the Servicer and who shall be reasonably acceptable to the Deal
Agent.
Original Contract: Each Contract identified by account number and
-----------------
Outstanding Balance as of the related Cut Off Date in the Contract List.
Originator: BankVest Capital Corp. or any wholly owned subsidiary
----------
thereof.
Originator Assets: Any Asset that was transferred to the Seller by
-----------------
the Originator.
Outstanding Balance: Of any Asset at any time, the then outstanding
-------------------
principal balance thereof.
Overcollateralization: At any time with respect to any Asset
---------------------
Interest, an amount equal to the product of (a) the ADCB at such time and (b)
.12.
Payment Date: The 20th day of each calendar month or, if such day is
------------
not a Business Day, the next succeeding Business Day.
Payout Event: As defined in Section 7.1.
------------
Permitted Investments: Any one or more of the following types of
---------------------
investments:
(a) marketable obligations of the United States of America, the
full and timely payment of which are backed by the full faith and credit of
the United States of America and which have a maturity of not more than 270
days from the date of acquisition;
(b) marketable obligations, the full and timely payment of which
are directly and fully guaranteed by the full faith and credit of the
United States of America and which have a maturity of not more than 270
days from the date of acquisition;
(c) bankers' acceptances and certificates of deposit and other
interest-bearing obligations (in each case having a maturity of not more
than 270 days from the date of acquisition) denominated in dollars and
issued by any bank with capital, surplus and undivided profits aggregating
at least $100,000,000, the short-term obligations of which are rated A-1 by
S&P and P-1 by Moody's;
(d) repurchase obligations with a term of not more than ten days
for underlying securities of the types described in clauses (a), (b) and
(c) above entered into with any bank of the type described in clause (c)
above;
-16-
(e) commercial paper rated at least A-1 by S&P and P-1 by
Moody's; and,
(f) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the United
States of America or any state thereof (or domestic branches of any foreign
bank) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided, however that at
-------- -------
the time such investment, or the commitment to make such investment, is
entered into, the short-term debt rating of such depository institution or
trust company shall be at least A-1 by S&P and P-1 by Moody's.
Permitted Liens: (a) shall mean, with respect to Contracts in the
---------------
Asset Pool:
(i) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable, (ii) Liens in favor of
the Seller created pursuant to a Purchase Agreement and transferred to
the Asset Pool hereunder and (iii) Liens in favor of the Deal Agent as
agent for the Purchasers created pursuant to this Agreement; and
(b) with respect to the related Equipment:
(i) materialmen's, warehousemen's and mechanics' liens and
other Liens arising by operation of law in the ordinary course of
business for sums not due, (ii) Liens for state, municipal or other
local taxes if such taxes shall not at the time be due and payable,
(iii) Liens in favor of the Seller created pursuant to a Purchase
Agreement and transferred to the Asset Pool hereunder and (iv) Liens
in favor of the Deal Agent as agent for the Purchasers created
pursuant to this Agreement.
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.
Placement Agent Fee Rate: On any day the fee (or if more than one,
------------------------
the average of the fees) charged by dealers in or placement agents for
Commercial Paper Notes in connection with the sale or placement of such
Commercial Paper Notes.
Pool Assets: On any day any Asset in the Asset Pool.
-----------
Portfolio Concentration Criteria: The following concentration
--------------------------------
limitations at all times measured on the basis of percentage of ADCB:
-17-
(a) the sum of the Discounted Contract Balances of Contracts relating
to any one individual Obligor is limited to the greater of (i) U.S. $500,000 and
(ii) 1.0% of the ADCB;
(b) the sum of the Discounted Contract Balance of the 25 obligors
with the largest aggregate Discounted Contract Balances is limited to 15% of the
ADCB;
(c) the sum of the Discounted Contract Balances of Contracts relating
to any one type of Equipment is limited to 30% of the ADCB;
(d) the sum of the Discounted Contract Balances of Contracts
originated by any one vendor is limited to 15% of the ADCB;
(e) the sum of the Discounted Contract Balances of Obligors located
in any one state is limited to 10% of the ADCB, with the exception of Obligors
located in Massachusetts (in which the sum of the Discount Contract Balance of
Obligors is limited to 25% of the ADCB), California (in which the sum of the
Discount Contract Balance of Obligors is limited to 20% of the ADCB) and New
York (in which the sum of the Discount Contract Balance of Obligors is limited
to 15% of the ADCB);
(f) the sum of the Discounted Contract Balances of Contracts whose
Obligors are municipalities or other government related organizations is limited
to 2% of the ADCB;
(g) the sum of the Discounted Contract Balances of which the payment
terms are non-monthly is limited to 5% of the ADCB;
(h) the sum of the Discounted Contract Balances of Contracts
originated by the Originator (including Contracts originated in the name of a
third party so long as the Originator actually financed and services such
Contracts) must at all times equal 90% or more of the ADCB, and all Contracts
must have been financed by the Originator; and
(i) the sum of the Discounted Contract Balances of Contracts under
which the obligations of the related Obligor are not irrevocable and
unconditional and non-cancelable ("Conditional Contracts") is limited to 10% of
the ADCB, and the Obligors under all Conditional Contracts must be governmental
entities or municipalities.
Prepaid Contract: Any Contract that has terminated or been prepaid in
----------------
full prior to its scheduled expiration date (including because of a Casualty
Loss), other than a Defaulted Contract.
Prepayment Amount: As specified in Section 6.2(b).
-----------------
Prepayments: Any and all (i) partial and full prepayments on a
-----------
Contract (including, with respect to any Contract and any Monthly Period, any
Scheduled Payment or portion thereof which is due in a subsequent Monthly Period
which the Servicer has received,
-18-
and expressly permitted the related Obligor to make, in advance of its scheduled
due date, and which will be applied to such Scheduled Payment on such due date),
(ii) cash proceeds or rents realized from the sale, lease, re-lease or re-
financing of Equipment under a Prepaid Contract, net of Liquidation Expenses,
and (iii) Recoveries.
Prime Rate: The rate announced by First Union 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 First Union in connection with extensions of credit to
debtors.
Program Fee: As defined in Section 2.12(b).
-----------
Program Fee Agreement: The letter agreement, dated August 19, 1997,
---------------------
among the Seller, the Servicer and the Deal Agent, setting forth, among other
things, the Commitment Fee, the Program Fee and the Servicing Fee.
Program Fee Rate: The rate per annum set forth in the Program Fee
----------------
Agreement.
Purchase: A purchase by a Purchaser of an Asset Interest from the
--------
Seller pursuant to Article II, including without limitation, the remittance by
the Servicer to the Seller of Collections of Pool Assets pursuant to Section
2.7(b).
Purchase Agreement: The Purchase Agreement dated as of the date
------------------
hereof, between the Originator and the Seller, as amended, modified,
supplemented or restated from time to time.
Purchase Certificate: Each certificate, in the Form of Exhibit G,
-------------------- ---------
delivered on the date of the Initial Purchase and on the date of each
Incremental Purchase.
Purchase Date: The Closing Date, and as to any Incremental Purchase,
-------------
any Business Day that is (i) at least one (1) calendar month following the
immediately preceding Purchase Date and (ii) two (2) Business Days immediately
following the receipt by the Deal Agent of a written request by the Seller to
sell an Asset Interest, such notice to be in the form of Exhibit A hereto and to
---------
conform to requirements of Section 3.2 hereof.
Purchase Limit: At any time, $75,000,000, on or after the Termination
--------------
Date, the "Purchase Limit" shall mean the aggregate outstanding Capital.
Purchasers: Collectively, VFCC and the Investors and any other Person
----------
that agrees, pursuant to the pertinent Assignment and Acceptance, to purchase an
Asset Interest pursuant to this Agreement.
Qualified Institution: As defined in Section 6.2.
---------------------
-19-
Rating Agency: Each of Standard & Poor's, Moody's and any other
-------------
rating agency that has been requested to issue a rating with respect to the
commercial paper notes issued by the Issuer.
Records: All Contracts and other documents, books, records and other
-------
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to Assets and the related Obligors which the Seller has
itself generated, in which the Seller has acquired an interest pursuant to the
Purchase Agreement or in which the Seller has otherwise obtained an interest.
Recoveries: With respect to a Defaulted Contract, proceeds from the
----------
sale, lease, re-lease or refinancing of the Equipment, proceeds of any related
Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment and related property, and other amounts
representing late fees and penalties net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
Reference Bank: Any bank which furnishes information for purposes of
--------------
determining the Adjusted Eurodollar Rate.
Register: As defined in Section 10.1(c).
--------
Reinvestment Termination Date: The Business Day that the Seller
-----------------------------
designates as the Reinvestment Termination Date by notice to the Deal Agent at
least ten Business Days prior to such Business Day or, if any of the conditions
precedent in Section 3.2 are not satisfied, the Business Day that the Deal Agent
designates as the Reinvestment Termination Date by notice to the Seller at least
one Business Day prior to such Business Day.
Replaced Contract: As defined in Section 2.16(a).
-----------------
Reporting Date: The 10th day of the month or the first Business Day
--------------
thereafter.
Required Investors: At a particular time, Investors with Commitments
------------------
in excess of 66 2/3% of the Purchase Limit.
Required Reports: Collectively, the Monthly Report, the Servicer's
----------------
Certificate and the quarterly financial statement of the Servicer required to be
delivered to the Deal Agent pursuant to Section 6.13(c) hereof.
Requirements of Law: For any Person shall mean the certificate of
-------------------
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without
-20-
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).
Responsible Officer: As to any Person, any officer of such Person
-------------------
with direct responsibility for the administration of this Agreement and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Retransfer Date: As defined in Section 5.6.
---------------
S&P: Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc. and any successor thereto.
Sale Discount Rate: For any Contract to be transferred to the Asset
------------------
Pool by the Seller, a rate per annum, calculated on the Business Day immediately
preceding such transfer, equal to the sum of (i) the fixed interest rate
associated with the Hedge Agreement related to such purchase, (ii) the Program
Fee Rate, (iii) the Placement Agent Fee Rate and (iv) the Servicing Fee Rate.
Scheduled Payments: On any Determination Date with respect to any
------------------
Contract, (a) each monthly, quarterly, annual or seasonal rent or financing
(whether principal or principal and interest) payment scheduled to be made by
the Obligor thereof after such Determination Date under the terms of such
Contract, reduced by a number of such scheduled payments equal to a number
(rounding upwards to the next highest integer if such number is not an integer)
obtained by dividing (i) the dollar amount of any security deposit related to
such Contract by (ii) the amount of a single scheduled payment under such
Contract, (b) any payment due from the Obligor of such Contract at the
expiration or other termination of such Contract and (c) any payments in
connection with a Warranty Event.
Seller: BVFU Funding Corp., or any permitted successor thereto.
------
Servicer: BankVest Capital Corp. and its permitted successors and
--------
assigns.
Servicer Advance: An advance of Scheduled Payments made by the
----------------
Servicer pursuant to Section 6.3.
Servicer Default: As specified in Section 6.24.
----------------
Servicer's Certificate: As defined in Section 6.13(b).
----------------------
Servicing Fee: As specified in Section 2.12(c).
-------------
Servicing Fee Rate: The rate per annum set forth in any fee letter
------------------
delivered by the Originator to the Deal Agent and the Purchasers.
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
-21-
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(31) 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 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.
Structuring Fee: The structuring fee agreed to between the Seller and
---------------
the Deal Agent in the Program Fee Agreement.
Subservicer: Portfolio Financial Servicing (formerly ▇▇▇▇▇▇▇
-----------
Financial Servicing Company, L.P.) and its permitted successors and assigns.
Substitute Contract: On any day, an Eligible Contract which meets
-------------------
each of the conditions for substitution set forth in Schedule IV hereto.
Successor Servicer: As defined in Section 6.25(a).
------------------
Swap Rate: As defined in Section 5.4.
---------
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 government or other taxing authority.
Termination Date: The earliest of (a) the date of termination of the
----------------
Purchase Limit pursuant to Section 2.3, (b) the date of the occurrence of a
Payout Event pursuant to Section 7.1, (c) the Reinvestment Termination Date and
(d) ___________, 19__.
Termination Notice: As defined in Section 6.24.
------------------
Transaction: As defined in Section 3.2.
-----------
UCC: The Uniform Commercial Code as from time to time in effect in
---
the specified jurisdiction.
United States: The United States of America.
-------------
Unreimbursed Servicer Advances: At any time, the amount of all
------------------------------
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Section 2.7 and which the
Servicer has determined in its sole discretion will not be recoverable from
Collections with respect to the related Contract.
-22-
Warranty Event: As to any Pool Asset, the occurrence and continuance
--------------
of a material breach of any representation or warranty relating to such
Contract.
Yield: For each Asset Interest for any Fixed Period, the product of
-----
YRT x C x ED
------------
360
where:
C = the Capital allocated to such Fixed Period;
ED = the actual number of days elapsed during such Fixed
Period; and
YRT = the Yield Rate for such Fixed Period;
provided, however that (a) no provision of this Agreement shall require the
-------- -------
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (b) Yield shall not be considered paid by any distribution if
at any time such distribution is rescinded or must otherwise be returned for any
reason.
Yield Rate: means the sum of (i) the Program Fee Rate and (ii):
----------
(A) to the extent the relevant Purchaser will be funding the
applicable Purchase on the first day of such Fixed Period through the issuance
of commercial paper, a rate equal to the CP Rate for such Fixed Period, and
(B) to the extent the relevant Purchaser will not be funding the
applicable Purchase on the first day of such Fixed Period through the issuance
of commercial paper, a rate equal to the Alternative Rate for such Fixed Period
or such other rate as the Deal Agent and the Seller shall agree to in writing.
Section 1.2 Other Terms.
-----------
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in
the State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
Section 1.3 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."
-23-
ARTICLE II
THE PURCHASE FACILITY
Section 2.1 Purchases of Asset Interest.
---------------------------
(a) On the terms and conditions hereinafter set forth, the Seller may
on any Purchase Date, at its option, sell and assign Asset Interests to the
Purchasers. The Deal Agent may act on behalf of and for the benefit of the
Purchasers in this regard. VFCC may, in its sole discretion, purchase, or if
VFCC shall decline to purchase, the Liquidity Agent shall purchase on behalf of
the Investors, Asset Interests from time to time during the period from the date
hereof to but not including the Termination Date. Under no circumstances shall
any Purchaser make the initial Purchase or any Incremental Purchase if, after
giving effect to such Purchase or Incremental Purchase, the aggregate Capital
outstanding hereunder would exceed the lesser of (i) the Purchase Limit or (ii)
the Capital Limit.
(b) The Seller may, within 60 days, but no later than 45 days, prior
to the then Commitment Termination Date, by written notice to the Deal Agent,
make written request for VFCC and the Investors to extend the Commitment
Termination Date for an additional period of 364 days. The Deal Agent will give
prompt notice to VFCC and each of the Investors of its receipt of such request
for extension of the Commitment Termination Date. VFCC and each Investor shall
make a determination, in their sole discretion and after a full credit review,
not less than 15 days prior to the then applicable Commitment Termination Date
as to whether or not it will agree to extend the Commitment Termination Date;
provided, however, that the failure of VFCC or any Investor to make a timely
-------- -------
response to the Seller's request for extension of the Commitment Termination
Date shall be deemed to constitute a refusal by VFCC or the Investor, as the
case may be, to extend the Commitment Termination Date. The Commitment
Termination Date shall only be extended upon the consent of both (i) VFCC and
(ii) 100% of the Investors.
SECTION 2.2 THE INITIAL PURCHASE, SUBSEQUENT PURCHASES AND
-----------------------------------------------
INCREMENTAL PURCHASES.
---------------------
(a) Subject to the conditions described in Section 2.1, the initial
Purchase and each Incremental Purchase shall be made in accordance with the
procedures described in Section 2.2(b). After the Collection Date has occurred,
each of the Purchasers and the Deal Agent, in accordance with their respective
interests, shall assign and transfer to the Seller their respective remaining
interest in Asset Interests to the Seller free and clear of any Adverse Claim
resulting solely from an act or omission by a Purchaser or the Deal Agent, but
without any other representation or warranty, express or implied.
(b) The initial Purchase and each Incremental Purchase shall be made
pursuant to the terms of a Purchase Certificate in the form of Exhibit G hereto,
---------
after receipt by the Purchaser of a Notice of Sale delivered by the Seller to
the Deal Agent at least two Business Days prior to such proposed Purchase Date
or, if the Yield to accrue with respect to such Purchase or Incremental Purchase
is computed by reference to the Adjusted Eurodollar
-24-
Rate, on at least three Business Days' notice from the Seller to the Deal Agent,
and each such notice shall specify (i) the aggregate amount of such initial
Purchase or Incremental Purchase which amount must satisfy the applicable
minimum requirement set forth in the following sentence, (ii) the date of such
Purchase or Incremental Purchase, (iii) the duration of the initial Fixed
Periods for the Capital arising as a result of such Purchase or Incremental
Purchase and (iv) the rate at which Yield is to accrue on such Capital for such
Fixed Periods. The Seller shall deliver no more than two such notices in any
calendar month, and each amount specified in any such notice must satisfy the
following minimum requirements, as applicable, as a condition to the related
Purchase: (i) the initial Purchase shall be in an amount equal to $10,000,000 or
an integral multiple of $10,000 in excess thereof; (ii) each Add-On Purchase
shall be in an amount equal to $10,000 or an integral multiple of $10,000 in
excess thereof; and (iii) each Incremental Purchase hereunder other than an Add-
On Purchase shall be in an amount equal to $5,000,000 or an integral multiple of
$10,000 in excess thereof; provided, however, that if such Incremental Purchase
-------- -------
is to be made hereunder at a time when there are no outstanding Commercial Paper
Notes issued in respect of a Purchase of $5,000,000 or an integral multiple of
$10,000 in excess thereof, then such Incremental Purchase shall be in an amount
equal to $10,000,000 or an integral multiple of $10,000 in excess thereof.
Following receipt of such notice, the Deal Agent will consult with VFCC in order
to assist VFCC in determining whether or not to make the purchase. If VFCC
declines to make a proposed purchase, the initial Purchase or Incremental
Purchase will be made by the Investors. The Deal Agent shall notify the Seller
whether the duration of the initial Fixed Periods described in such notice is
acceptable or, if not acceptable, the Deal Agent shall advise the Seller of such
Fixed Periods as may be acceptable. On the date of such Purchase or Incremental
Purchase, as the case may be, VFCC or each Investor shall, upon satisfaction of
the applicable conditions set forth in Article III, make available to the Seller
in same day funds, at ____________________________, an amount equal to (i)
Capital of the Asset Interest related to such initial Purchase or Incremental
Purchase, as the case may be, in the case of a purchase by VFCC or (ii) such
Investor's pro rata share of the Capital related to such Asset Interest, in the
case of a purchase by the Investors.
SECTION 2.3 REDUCTION OF THE PURCHASE LIMIT; REPURCHASE.
-------------------------------------------
(a) The Seller may, upon at least five Business Days' notice to the
Deal Agent, terminate in whole or reduce in part the portion of the Purchase
Limit that exceeds the sum of the aggregate Capital and Yield accrued and to
accrue thereon, and the Commitments of the Investors shall be reduced
proportionately; provided, however, that each partial reduction of the Purchase
-------- -------
Limit shall be in an aggregate amount equal to $1,000,000 or an integral
multiple thereof. Each notice of reduction or termination pursuant to this
Section 2.3(a) shall be irrevocable.
(b) Pursuant to the provisions of Section 2.7(b) and Section 2.8(b),
the Seller may, at any time prior to the occurrence of the Termination Date,
reduce the Purchaser's Asset Interest by remitting to the Purchaser (i) cash and
(ii) instructions to apply such cash to the reduction of Capital.
-25-
SECTION 2.4 SELECTION OF FIXED PERIODS.
--------------------------
Each Asset Interest shall at all times have an associated amount of
Capital, a Yield Rate and a Fixed Period applicable to it. At all times
hereafter until the Termination Date, the Deal Agent shall, after consultation
with the Purchasers, select (a) Fixed Periods and allocate a portion of the
outstanding Capital to each selected Fixed Period, so that the outstanding
Capital is at all times allocated to a Fixed Period and (b) Yield Rates to apply
to such Capital for such Fixed Periods. Each subsequent Fixed Period shall
commence on the last day of the immediately preceding Fixed Period, and the
duration of and Yield Rate applicable to such subsequent Fixed Period shall be
such as the Deal Agent shall, after consultation with the Purchasers, select.
Any Fixed Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day; provided, however, that
-------- -------
if Yield in respect of such Fixed Period is computed by reference to the
Adjusted Eurodollar Rate, and such next succeeding Business Day is in the next
calendar month, then such Fixed Period shall end on the next preceding Business
Day. In addition, whenever any Fixed Period as to which Yield accrues at the
Adjusted Eurodollar Rate commences on the last Business Day in a month or on a
day for which there is no numerically corresponding day in the month in which
such Fixed Period ends, the last day of such Fixed Period shall occur on the
last Business Day of the month in which such Fixed Period ends. Furthermore, if
a CP Disruption Event shall have occurred and be continuing, the relevant
Purchaser, or the Deal Agent on its behalf, may, upon notice to the Seller,
terminate any Fixed Period then in effect if such Purchaser has funded the
Capital allocated to such Fixed Period by issuing its commercial paper notes.
Any Fixed Period which commences before the Termination Date and would otherwise
end on a date occurring after the Termination Date shall end on the Termination
Date. On or after the Termination Date, the Deal Agent shall have the right to
allocate outstanding Capital to Fixed Periods of such duration as shall be
selected by the Deal Agent. The relevant Purchaser shall, on the first day of
each Fixed Period, notify the Deal Agent of the Yield Rate for the Capital
allocated to such Fixed Period. The initial Yield Rate for any Asset Interest
transferred to the Investors pursuant to Section 2.1 or 2.2 shall be the Base
Rate.
SECTION 2.5 PERCENTAGE EVIDENCED BY ASSET INTEREST.
--------------------------------------
Each Asset Interest shall be initially computed on its date of
purchase. Thereafter, until the Termination Date, each Asset Interest shall be
automatically recomputed (or deemed to be recomputed) on each day prior to the
Termination Date. The variable percentage represented by an Asset Interest 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
after the Termination Date. The variable percentage represented by the Asset
Interest shall become zero when its Capital and Yield has been collected in
full.
SECTION 2.6 DIVIDING OR COMBINING ASSET INTERESTS.
-------------------------------------
The Seller or a Purchaser may, upon notice to and consent by the Deal
Agent received at least three Business Days prior to the end of a Fixed Period
for any Asset Interest,
-26-
take any of the following actions at the end of such Fixed Period with respect
to such Asset Interest: (i) divide the Asset Interest owned by a Purchaser into
two or more portions of Asset Interests having aggregate Capital equal to the
Capital of such divided Asset Interest, (ii) combine one portion of an Asset
Interest of a Purchaser with another portion of an Asset Interest of such
Purchaser with a Fixed Period ending on the same day, creating a new portion of
an Asset Interest having Capital equal to the Capital of the two portions of
Asset Interest combined or (iii) combine the Asset Interest of a Purchaser with
the Asset Interest to be purchased on such day by such Purchaser, creating a new
Asset Interest having Capital equal to the Capital of the two Asset Interests
combined; provided, that an Asset Interest of VFCC may not be combined with an
Asset Interest of the Investors.
SECTION 2.7 NON-LIQUIDATION SETTLEMENT PROCEDURES.
-------------------------------------
The provisions of this Section 2.7 shall apply during the term of this
Agreement prior to the occurrence of the Termination Date.
(a) On each Payment Date, the Servicer shall pay to the following
Persons, from (i) the Collection Account, to the extent of available funds, (ii)
a Servicer Advance and (iii) to the extent amounts pursuant to the preceding
clauses (i) and (ii) are insufficient, Seller's own funds, the following amounts
in the following order of priority:
(i) FIRST, to any Hedging Counterparty, an amount equal to any
-----
accrued and unpaid amounts under any Hedging Agreement, for the payment
thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
------
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal any accrued and
-----
unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any accrued
------
and unpaid Servicing Fee, for the payment thereof;
(v) FIFTH, to the Backup Servicer, in an amount equal to the
-----
accrued and unpaid Backup Servicing Fee, for the payment thereof;
(vi) SIXTH, to the Collateral Custodian, in an amount equal to
-----
any accrued and unpaid Custodial Fee, for the payment thereof;
(vii) SEVENTH, to the Deal Agent, in an amount equal to all
-------
accrued and unpaid ;
(viii) EIGHTH, to the Deal Agent, in the amount of any unpaid
------
Increased Costs and/or Taxes, for payment to the Purchasers in respect
thereof;
-27-
(ix) NINTH, to the extent that funds are available, any
-----
remaining amounts may be reinvested in additional Eligible Contracts
provided that the level of Capital would not exceed the Capital Limit; and
(x) TENTH, any remaining amount shall be distributed to the
-----
Seller.
(b) Notwithstanding anything to the contrary contained in this
Section 2.7 or any other provision in this Agreement, if, on any Business Day
prior to the Termination Date the outstanding amount of Capital shall exceed the
lesser of (i) the Purchase Limit or (ii) the Capital Limit, then the Seller
shall remit to the Deal Agent, prior to any reinvestment of funds as set forth
in Section 2.7(a) and in any event no later than the close of business of the
Deal Agent on the next succeeding Business Day, a payment (to be applied by the
Deal Agent to outstanding Capital allocated to Fixed Periods selected by the
Deal Agent, in its sole discretion) in such amount as may be necessary to reduce
outstanding Capital to an amount less than or equal to the lesser of (i) the
Purchase Limit and (ii) the Capital Limit.
SECTION 2.8 SETTLEMENT PROCEDURES FOLLOWING A PAYOUT EVENT.
----------------------------------------------
The provisions of this Section 2.8 shall apply during the term of this
Agreement after the occurrence of the Termination Date.
(a) On each Business Day on which a Fixed Period ends, the Servicer
shall pay to the Agent's account, from (i) the Collection Account, to the extent
of available funds, (ii) a Servicer Advance and (iii) to the extent amounts
pursuant to the preceding clauses (i) and (ii) are insufficient, Seller's own
funds, an amount equal to the accrued and unpaid Yield on the Capital related to
such Fixed Period.
(b) On each Payment Date, after applying funds as set forth in
paragraph (a) above, the Servicer shall pay to the following Persons, from (i)
the Collection Account, to the extent of available funds, (ii) a Servicer
Advance and (iii) to the extent amounts pursuant to the preceding clauses (i)
and (ii) are insufficient, Seller's own funds, the following amounts in the
following order of priority:
(i) FIRST, to any Hedging Counterparty, an amount equal to any
-----
accrued and unpaid amounts under any Hedging Agreement, for the payment
thereof;
(ii) SECOND, to the Servicer, in an amount equal to any
------
Unreimbursed Servicer Advances, for the payment thereof;
(iii) THIRD, to the Servicer, in an amount equal to the accrued
-----
and unpaid Servicing Fee arrearage, for the payment thereof;
(iv) FOURTH, to the Servicer, in an amount equal to any accrued
------
and unpaid Servicing Fee, for the payment thereof;
-28-
(v) FIFTH, to the Backup Servicer, in an amount equal to the
-----
accrued and unpaid Backup Servicing Fee, for the payment thereof;
(vi) SIXTH, to the Collateral Custodian, in an amount equal to
-----
the accrued and unpaid Custodial Fee, for the payment thereof;
(vii) SEVENTH, to the Deal Agent, in an amount equal to all
-------
accrued and unpaid Yield;
(viii) EIGHTH, to the Deal Agent, in the amount of any unpaid
------
Increased Costs and/or Taxes, for payment to the Purchasers in respect
thereof;
(ix) NINTH, to the extent that funds are available, to the
-----
Deal Agent for payment to the Purchasers in reduction of the aggregate
Capital; and
(x) TENTH, upon the reduction of the Capital to zero and the
-----
payment in full of all other amounts due and owing to any party, any
remaining amount shall be distributed to the Seller.
(b) If at any time on or after the Termination Date, the Deal Agent
or the Seller determines that as of the close of business on the day immediately
preceding the Termination Date the outstanding amount of Capital exceeded the
lesser of (i) the Purchase Limit, or (ii) the Capital Limit, then the Seller
shall immediately remit to the Deal Agent, for the benefit of the Purchasers,
the amount (to be applied against Capital) which would have been required to
make the outstanding amount of Capital equal to the lesser of (i) the Purchase
Limit, or (ii) the Capital Limit as of the close of business on the date
immediately preceding the Termination Date.
SECTION 2.9 COLLECTIONS AND ALLOCATIONS.
---------------------------
(a) Collections. The Servicer shall transfer, or cause to be
-----------
transferred, all Collections on deposit in the form of available funds in the
Lock-Box Account to the Collection Account by the close of business on the
Business Day such Collections are received in the Lock-Box Account. The
Servicer shall promptly (but in no event later than three Business Days after
the receipt thereof) deposit all Collections received directly by it in the
Collection Account.
The Servicer shall make such deposits or payments on the date
indicated therein by electronic funds transfer through the Automated Clearing
House system, or by wire transfer, in immediately available funds.
(b) Initial Deposits. On the Closing Date and on each Addition Date
----------------
thereafter, 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 or Addition Date, as the case may be,
in respect of Contracts being transferred to the Asset Pool on such date.
-29-
(c) Excluded Amounts. The Servicer may withdraw from the Collection
----------------
Account any Collections constituting Excluded Amounts if the Servicer has, prior
to such withdrawal, delivered to the Deal Agent a report setting forth the
calculation of such Excluded Amounts in a format reasonably satisfactory to the
Deal Agent.
SECTION 2.10 PAYMENTS, COMPUTATIONS, ETC.
---------------------------
(a) All amounts to be paid or deposited by the Seller or the Servicer
hereunder shall be paid or deposited in accordance with the terms hereof no
later than 11:00 A.M. (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. The Seller shall, to the extent permitted by law, pay to the Purchaser
interest on all amounts not paid or deposited when due hereunder at 1% 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 retained by the Deal Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date for
distribution by the Deal Agent of such overdue amount to the Purchasers, in
which case such interest accruing after such date shall be for the account of,
and distributed by the Deal Agent to the Purchasers. All computations of
interest and all computations of Yield and other fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of Yield, interest or any fee payable hereunder, as the
case may be; provided, however, that, if such extension would cause payment of
-------- -------
Yield on or Capital of any Asset Interest on which Yield accrues at the Adjusted
Eurodollar Rate to be made in the next following month, such payment shall be
made on the next preceding Business Day.
(c) If any Purchase or Incremental Purchase requested by the Seller
and approved by a Purchaser and the Deal Agent pursuant to Section 2.2 or any
selection of a subsequent Fixed Period and applicable Yield Rate for any Capital
allocated to such Fixed Period requested by the Seller and approved by the Deal
Agent pursuant to Section 2.4 is not for any reason whatsoever related to the
default or nonperformance by the Seller made or effectuated, as the case may be,
on the date specified therefor, the Seller shall indemnify the Purchaser against
any loss, cost or expense incurred by the Purchaser, including, without
limitation, any loss (including loss of anticipated profits, net of anticipated
profits in the reemployment of such funds in the manner determined by the
Purchaser), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Purchaser to fund or
maintain such Purchase or Incremental Purchase, as the case may be, during such
Fixed Period.
-30-
SECTION 2.11 [RESERVED].
--------
SECTION 2.12 FEES.
----
(a) The Servicer shall pay to the Deal Agent from the Collection
Account on each Payment Date, monthly in arrears a fee agreed to between the
Servicer and the Deal Agent (the "Commitment Fee").
(b) The Servicer shall pay to the Deal Agent from the Collection
Account on each Payment Date, monthly in arrears, a fee (the "Program Fee")
agreed to between the Servicer and the Deal Agent in the fee letter agreement
between such parties dated the date hereof (the "Program Fee Agreement").
(c) The Servicer shall be entitled to receive a fee (the "Servicing
Fee"), monthly in arrears in accordance with Section 2.7(a) or 2.8(b), as
applicable, which fee shall be equal to the product of (i) the Servicing Fee
Rate agreed to between the Servicer and the Deal Agent in the Program Fee
Agreement and (ii) ADCB for the preceding Determination Date.
(d) The Back-up Servicer shall be entitled to receive the Back-up
Servicing Fee in accordance with Section 2.7(a) or 2.8(b) as applicable.
(e) The Collateral Custodian shall be entitled to receive the
Custodial Fee in accordance with Section 2.7(a) or 2.8(b), as applicable.
(f) The Seller shall pay to the Deal Agent, on the Closing Date, the
Structuring Fee in immediately available funds.
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 a Purchaser or any Affiliate thereof (each of which, an "Affected
Party") with any guideline or request from any central bank or other
governmental agency or authority (whether or not having the force of law), (A)
shall subject an Affected Party to any Tax (except for Taxes on the overall net
income of such Affected Party), duty or other charge with respect to an Asset
Interest, or any right to make Purchases hereunder, or on any payment made
hereunder or (B) shall impose, modify or deem applicable any reserve requirement
(including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement,
if any, included in the determination of Yield), special deposit or similar
requirement against assets of, deposits with or for the amount of, or credit
extended by, any Affected Party or (C) shall impose any other condition
affecting an Asset Interest or a Purchaser's rights hereunder, the result of
which is to increase the cost to any Affected Party or to reduce the amount of
any sum received or receivable by an Affected Party under this Agreement, then
within ten days after demand by such Affected Party (which demand shall be
-31-
accompanied by a statement setting forth the basis for such demand), the Seller
shall pay directly to such Affected Party such additional amount or amounts as
will compensate such Affected Party for such additional or increased cost
incurred or such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Seller shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction.
(c) If as a result of any event or circumstance similar to those
described in clauses (a) or (b) of this section, any Affected Party is required
to compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in connection
with this Agreement or the funding or maintenance of Purchases hereunder, then
within ten days after demand by such Affected Party, the Seller shall pay to
such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any amounts paid by it.
(d) In determining any amount provided for in this section, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this section shall submit to the Seller a
certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error.
(e) If a Purchaser shall notify the Deal Agent that a Eurodollar
Disruption Event as described in clause (a) of the definition of "Eurodollar
Disruption Event" has occurred, the Deal Agent shall in turn so notify the
Seller, whereupon all Capital in respect of which Yield accrues at the Adjusted
Eurodollar Rate for the then current Fixed Period shall immediately be converted
into Capital in respect of which Yield accrues at the Base Rate for the
remainder of such Fixed Period.
SECTION 2.14 TAXES.
-----
(a) All payments made by an Obligor in respect of a Contract 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, unless such withholding or deduction is required by law. In such event,
the Obligor, Seller, or Servicer (as the case may be) shall pay to the
appropriate taxing authority any such Taxes required to be
-32-
deducted or withheld and the amount payable to each Purchaser or the Deal Agent
(as the case may be) will be increased (such increase, the "Additional Amount")
such that every net payment made under this Agreement after deduction or
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 a Purchaser or the Deal Agent,
respectively, with respect to payments required to be made by the Seller or
Servicer under this Agreement, by a taxing jurisdiction in which such Purchaser
or Deal Agent is organized or conducts business (as the case may be). If a
Purchaser or the Deal Agent pays any Taxes in respect of which the Seller is
obligated to pay Additional Amounts under this Section 2.14(a), the Seller shall
promptly reimburse such Purchaser or Deal Agent in full.
(b) The Seller will indemnify each Purchaser and the Deal Agent for
the full amount of Taxes in respect of which the Seller is required to pay
Additional Amounts (including, without limitation, any Taxes imposed by any
jurisdiction on such Additional Amounts) paid by such Purchaser or the Deal
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto; provided, however, that
-------- -------
such Purchaser or the Deal Agent, as appropriate, making a demand for indemnity
payment shall provide the Seller, at its address set forth under its name on the
signature pages hereof, with a certificate from the relevant taxing authority or
from a responsible officer of such Purchaser or the Deal Agent stating or
otherwise evidencing that such Purchaser or the Deal Agent has made payment of
such Taxes and will provide a copy of or extract from documentation, if
available, furnished by such taxing authority evidencing assertion or payment of
such Taxes. This indemnification shall be made within ten days from the date
the Purchaser or the Deal Agent (as the case may be) makes written demand
therefor.
(c) Within 30 days after the date of any payment by the Seller of any
Taxes, the Seller will furnish to the Deal Agent, at its address set forth under
its name on the signature pages hereof, appropriate evidence of payment thereof.
(d) If a Purchaser is not created or organized under the laws of the
United States or a political subdivision thereof, such Purchaser shall, to the
extent that it may then do so under applicable laws and regulations, deliver to
the Seller with a copy to the Deal Agent (i) within 15 days after the date
hereof, or, if later, the date on which such Purchaser becomes a Purchaser
hereof two (or such other number as may from time to time be prescribed by
applicable laws or regulations) duly completed copies of IRS Form 4224 or Form
1001 (or any successor forms or other certificates or statements which may be
required from time to time by the relevant United States taxing authorities or
applicable laws or regulations), as appropriate, to permit the Seller to make
payments hereunder for the account of such Purchaser, as the case may be,
without deduction or withholding of United States federal income or similar
Taxes and (ii) upon the obsolescence of or after the occurrence of any event
requiring a change in, any form or certificate previously delivered pursuant to
this Section 2.14(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
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applicable laws or regulations to permit the Seller to make payments hereunder
for the account of such Purchaser, without deduction or withholding of United
States federal income or similar Taxes.
(e) For any period with respect to which a Purchaser or the Deal
Agent has failed to provide the Seller with the appropriate form, certificate or
statement described in clause (d) of this section (other than if such failure is
due to a change in law occurring after the date of this Agreement), the Deal
Agent or such Purchaser, as the case may be, shall not be entitled to
indemnification under clauses (a) or (b) of this section with respect to any
Taxes.
(f) Within 30 days of the written request of the Seller therefor, the
Deal Agent and the Purchaser, as appropriate, shall execute and deliver to the
Seller such certificates, forms or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Seller in applying for refunds of Taxes remitted hereunder provided, however,
-------- -------
that the Deal Agent and the Purchaser shall not be required to deliver such
certificate if in their respective sole discretion it is determined that the
deliverance of such certificate would have a material adverse affect on the Deal
Agent or Purchaser and provided further, however, that the Seller shall
-------- ------- -------
reimburse the Deal Agent or Purchaser for any expenses incurred in the delivery
of such certificate.
(g) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the Purchasers
in connection with this Agreement or the funding or maintenance of Purchases
hereunder, the Purchasers are required to compensate a bank or other financial
institution in respect of Taxes under circumstances similar to those described
in this section then within ten days after demand by the Purchasers, the Seller
shall pay to the Purchasers such additional amount or amounts as may be
necessary to reimburse the Purchasers for any amounts paid by them.
(h) Without prejudice to the survival of any other agreement of the
Seller hereunder, the agreements and obligations of the Seller contained in this
section shall survive the termination of this Agreement.
SECTION 2.15 ASSIGNMENT OF THE PURCHASE AGREEMENT.
------------------------------------
The Seller hereby represents, warrants and confirms to the Deal Agent
that the Seller has assigned to the Deal Agent, for the ratable benefit of the
Purchasers hereunder, all of the Seller's right and title to and interest in the
Purchase Agreement. The Seller confirms that following a Payout Event the Deal
Agent shall have the sole right to enforce the Seller's rights and remedies
under the Purchase Agreement for the benefit of the Purchasers, but without any
obligation on the part of the Deal Agent, the Purchasers or any of their
respective Affiliates, to perform any of the obligations of the Seller under the
Purchase Agreement. The Seller further confirms and agrees that such assignment
to the Deal Agent shall terminate upon the Collection Date; provided, however,
-------- -------
that the rights of the Deal Agent and the Purchasers pursuant to such assignment
with respect to rights and remedies in connection with any indemnities and any
breach of any representation, warranty or covenants made by the Originator
pursuant to the Purchase Agreement, which rights and remedies survive the
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Termination of the Purchase Agreement, shall be continuing and shall survive any
termination of such assignment.
SECTION 2.16 SUBSTITUTION OF CONTRACTS.
-------------------------
On any day prior to the occurrence of the Termination Date, the Deal
Agent as agent for the Purchasers may, in its sole discretion, by written notice
to the Seller, request that any Contract subject to a Warranty Event or in
respect of which the Obligor thereunder has requested the rewriting and/or
restructuring of such Contract be replaced by one or more other Contracts (each,
a "Substitute Contract"), provided that no such replacement shall occur unless
each of the following conditions is satisfied as of the date of such replacement
and substitution:
(a) the Seller has previously recommended to the Deal Agent in
writing that the Contract to be replaced should be replaced (each a "Replaced
Contract");
(b) each Substitute Contract is an Eligible Contract on the date of
substitution;
(c) after giving effect to any such substitution, the aggregate of
all outstanding Capital does not exceed the lesser of the (i) Purchase Limit and
(ii) the Capital Limit;
(d) the aggregate Discounted Contract Balance (at the Blended
Discount Rate as of the date of substitution) of such Substitute Contracts shall
be equal to or greater than the aggregate Discounted Contract Balances (at the
Blended Discount Rate as of the date of substitution) of Contracts being
replaced;
(e) such Substitute Contracts, at the time of substitution by the
Seller, shall have approximately the same weighted average life as the replaced
Contracts;
(f) all representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true and correct as of the date of substitution of
any such Substitute Contract;
(g) the substitution of any Substitute Contract does not cause a
Payout Event to occur; and
(h) the Seller shall deliver to the Deal Agent on the date of such
substitution a certificate of a Responsible Officer certifying that each of the
foregoing is true and correct as of such date.
In connection with any such substitution, the Deal Agent as agent for
the Purchasers shall, automatically and without further action, be deemed to
transfer to the Seller, free and clear of any Lien created pursuant to this
Agreement, all of the right, title and interest of the Deal Agent as Agent for
the Purchasers in, to and under such Replaced Contract, and the Deal Agent as
agent for the Purchasers shall be deemed to represent and warrant that it has
the corporate authority and has taken all necessary corporate action to
accomplish such
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transfer, but without any other representation and warranty, express or implied.
Any right of the Deal Agent as agent for the Purchasers to substitute any
Contract in the Asset Pool pursuant to this Section 2.16 shall be in addition
to, and without limitation of, any other rights and remedies that the Deal Agent
as agent for the Purchasers or any Purchaser may have to require the Seller or
the Servicer, as applicable, to substitute for, or accept retransfer of, any
Contract pursuant to the terms of this Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE.
----------------------------------------
The initial Purchase hereunder is subject to the condition precedent
that the Deal Agent shall have received on or before the date of such purchase
the items listed in Schedule I, each (unless otherwise indicated) dated such
----------
date, in form and substance satisfactory to the Deal Agent and the Purchasers.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES AND REMITTANCES OF
--------------------------------------------------------
COLLECTIONS.
-----------
Each Purchase (including the initial Purchase) from the Seller by a
Purchaser, the right of the Servicer to remit Collections to the Seller pursuant
to Section 2.7(b) and each Incremental Purchase (each, a "Transaction") shall be
subject to the further conditions precedent that (a) with respect to any
Purchase (other than the initial Purchase) or Incremental Purchase, on or prior
to the date of such Purchase or Incremental Purchase, the Servicer shall have
delivered to the Deal Agent, in form and substance satisfactory to the Deal
Agent, a completed Monthly Report dated within 10 days prior to the date of such
Purchase or Incremental Purchase and containing such additional information as
may be reasonably requested by the Deal Agent; (b) on the date of such
Transaction the following statements shall be true and the Seller shall be
deemed to have certified that:
(i) The representations and warranties contained in Sections
4.1 and 4.2 are true and correct on and as of such day as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Transaction which constitutes a Payout Event,
(iii) On and as of such day, after giving effect to such
Transaction, the outstanding Capital does not exceed the lesser of (x) the
Purchase Limit, or (y) the Capital Limit,
(iv) On and as of such day, the Seller and the Servicer each
has performed all of the agreements contained in this Agreement to be
performed by such person at or prior to such day, and
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(v) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Purchase, remittance of Collections or Incremental Purchase by the
Purchaser in accordance with the provisions hereof; and
(c) on the date of such Transaction, the Deal Agent shall have received such
other approvals, opinions or documents as the Deal Agent may reasonably require.
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 is a corporation duly
------------------------------
organized and validly existing in good standing under the laws of the State of
Delaware, and has full corporate power, authority and legal right to own or
lease its properties and conduct its business as such properties are presently
owned or leased and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and the Purchase
Agreement.
(b) Due Qualification. The Seller is duly qualified to do business
-----------------
and is in good standing as a corporation, and has obtained or will obtain all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would have a material adverse
effect on its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and delivery of this Agreement
-----------------
and the Purchase Agreement and the consummation of the transactions provided for
herein and therein have been duly authorized by the Seller by all necessary
corporate action on the part of the Seller and do not contravene the Seller's
certificate of incorporation or by-laws.
(d) No Conflict. The execution and delivery of this Agreement and the
-----------
Purchase Agreement, the performance of the transactions contemplated hereby and
thereby and the fulfillment of the terms hereof and thereof 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 Seller is a party or by which it or any of its property is bound.
(e) No Violation. The execution and delivery of this Agreement and
------------
the Purchase Agreement, the performance of the transactions contemplated hereby
and thereby and the fulfillment of the terms hereof and thereof will not
conflict with or violate, in any material respect, any Requirements of Law
applicable to the Seller.
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(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Seller, threatened against the Seller,
before any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
the Purchase Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the Purchase Agreement or (iii)
seeking any determination or ruling that could reasonably be expected to be
adversely determined, and if adversely determined, would materially and
adversely affect the performance by the Seller of its obligations under this
Agreement or the Purchase Agreement.
(g) All Consents Required. All approvals, authorizations, consents,
---------------------
orders or other actions of any Person or of any Governmental Authority required
in connection with the execution and delivery by the Seller of this Agreement
and the Purchase Agreement, the performance by the Seller of the transactions
contemplated by this Agreement and the Purchase Agreement, and the fulfillment
of the terms hereof and thereof by the Seller, have been obtained.
(h) Bulk Sales. The execution, delivery and performance of this
----------
Agreement do not require compliance with any "bulk sales" law by Seller.
(i) Solvency. The transactions under this Agreement and/or the
--------
Purchase Agreement do not and will not render the Seller not Solvent.
(j) Selection Procedures. No procedures believed by the Seller to be
--------------------
materially adverse to the interests of VFCC or the Purchasers were utilized by
the Seller in identifying and/or selecting the Contracts in the Asset Pool. In
addition, each Contract shall have been underwritten in accordance with and
satisfy the standards of any Credit and Collection Policy which has been
established by the Seller or the Originator and is then in effect. Such Credit
and Collection Policy or procedure may be amended from time to time in the
Seller's or the Originator's normal course of business provided that the Seller
shall provide notification to the Purchaser of any material change in such
credit and collection policy or procedure.
(k) Taxes. The Seller has filed or caused to be filed all Tax returns
-----
which, to its knowledge, are required to be filed. The Seller has paid 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
generally accepted accounting principles 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.
(l) Agreements Enforceable. This Agreement and the Purchase Agreement
----------------------
constitute the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with their 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).
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(m) Exchange Act Compliance. No proceeds of any Purchase or
-----------------------
Incremental Purchase will be used by the Seller to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(n) No Liens. Each Asset, together with the Contract related thereto,
--------
shall, at all times, be owned by the Seller free and clear of any Adverse Claim
except as provided herein, and upon each Purchase, remittance of Collections or
Incremental Purchase, the relevant Purchaser shall acquire a valid and perfected
first priority undivided ownership interest in each Asset then existing or
thereafter arising and Collections with respect thereto, free and clear of any
Adverse Claim except as provided hereunder. No effective financing statement or
other instrument similar in effect covering any Asset or Collections with
respect thereto shall at any time be on file in any recording office except such
as may be filed in favor of the Deal Agent relating to this Agreement.
(o) Purchase Limit and Capital Limit. As of the close of business on
--------------------------------
each Business Day prior to the Termination Date, the amount of Capital
outstanding shall not exceed the lesser of (x) the Purchase Limit on such
Business Day or (y) the Capital Limit on such Business Day.
(p) Reports Accurate. No Monthly Report (if prepared by the Seller,
----------------
or to the extent that information contained therein is supplied by the Seller),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Seller to the Deal Agent or a Purchaser in
connection with this Agreement is or will be inaccurate in any material respect
as of the date it is or shall be dated or (except as otherwise disclosed to the
Deal Agent or such Purchaser, as the case may be, at such time) as of the date
so furnished, and no such document contains or will contain any material
misstatement of fact or omits or shall omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(q) Location of Offices. The principal place of business and chief
-------------------
executive are located at the address of the Seller referred to in Section 11.2
hereof (or at such other locations as to which the notice and other requirements
specified in Section 5.2(m) shall have been satisfied).
(r) 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 Purchase
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 respect
thereof).
(s) Tradenames. Except as described in Schedule III, 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.
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(t) Purchase Agreement. The Purchase Agreement is the only agreement
------------------
pursuant to which the Seller purchases Assets.
(u) 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 Purchase 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; no event or circumstance has occurred that would constitute
a Payout Event pursuant to Section 7.1.
(v) Special Purpose Entity. The Certificate of Incorporation of the
Seller includes substantially the provisions set forth on Exhibit C hereto, and
---------
the Originator has confirmed in writing to the Seller that, so long as the
Seller is not "insolvent" within the meaning of the Bankruptcy Code, the
Originator will not cause the Seller to file a voluntary petition under the
Bankruptcy Code or any other bankruptcy or insolvency laws. Each of the Seller
and the Originator 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 the assets of the Seller
available to satisfy claims of the creditors of the Originator would not result
in making such assets available to satisfy such creditors under the Bankruptcy
Code.
(w) Accounting. The Seller accounts for the transfers to it from the
----------
Originator of interests in Assets and Collections under the Purchase Agreement
as sales of such Assets and transfers of Asset Interests as sales of such Asset
Interests in its books, records and financial statements, in each case
consistent with GAAP and with the requirements set forth herein.
(x) Separate Entity. The Seller is operated as an entity with assets
---------------
and liabilities distinct from those of the Originator and any Affiliates thereof
(other than the Seller), and the Seller hereby acknowledges that the Deal Agent
and the Purchasers are entering into the transactions contemplated by this
Agreement in reliance upon the Seller's identity as a separate legal entity from
the Originator and from each such other Affiliate of the Originator.
(y) Security Interest. The Seller has granted a security interest (as
-----------------
defined in the UCC) to the Deal Agent, as agent for the Purchasers, in the
Assets and Collections, 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 Deal Agent as secured party and the Seller as
debtor, the Deal Agent, as agent for the Purchasers, shall have a first priority
perfected security interest in the Assets and Collections. All filings
(including, without limitation, such UCC filings) as are necessary in any
jurisdiction to perfect the interest of the Deal Agent as agent for the
Purchasers, in the Assets and Collections have been (or prior to the applicable
Purchase will be) made.
(z) Investments. The Seller does not own or hold directly or
-----------
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
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(aa) Business. Since its incorporation, the Seller has conducted no
--------
business other than the purchase and receipt of Contracts and related assets
from the Originator under the Purchase Agreement, the sale of Contracts under
this Agreement and such other activities as are incidental to the foregoing.
(bb) Investment Company Act. The Seller is not an "investment company"
----------------------
within the meaning of the Investment Company Act of 1940, as amended.
(cc) 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.
The representations and warranties set forth in this section shall survive the
transfer of the Assets to the Deal Agent as agent for the Purchasers. Upon
discovery by the Seller, the Servicer, any Purchaser, the Liquidity Agent or the
Deal Agent of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the
others.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF SELLER RELATING TO THE
--------------------------------------------------------
AGREEMENT AND THE CONTRACTS.
---------------------------
The Seller hereby represents and warrants to the Deal Agent, each
Purchaser, the Liquidity Agent and each Investor that, as of the Closing Date
and as of each Addition Date:
(a) Binding, Obligation, Valid Transfer and Security Interest.
---------------------------------------------------------
(i) This Agreement and the Purchase Agreement each constitutes a
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its 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).
(ii) This Agreement constitutes either (A) a valid transfer to
the Deal Agent as agent for the Purchasers of all right, title and interest
of the Seller in, to and under the transferred Assets to the extent of the
aggregate Asset Interests, and such transfer will be free and clear of any
Lien of any Person claiming through or under the Seller or its Affiliates,
except for Permitted Liens, or (B) a grant of a security interest in such
property to the Deal Agent as agent for the Purchasers. Upon the filing of
the financing statements described in Section 6.9(c) and, in the case of
Additional Contracts on the applicable Addition Date, the Deal Agent as
agent for the Purchasers shall have a first priority perfected security
interest in such property, 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.
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(b) Eligibility of Contracts. As of the Closing Date, (i) Schedule I
------------------------
to this Agreement and the information contained in the Purchase Certificate
delivered pursuant to Section 2.2(b) is an accurate and complete listing in all
material respects of all the Existing Contracts in the Asset Pool as of the
Closing Date and the information contained therein with respect to the identity
of such Contracts and the amounts owing thereunder is true and correct in all
material respects as of the related Cut Off Date, (ii) each such Contract is an
Eligible Contract, (iii) each such Contract and the related Equipment is free
and clear of any Lien of any Person (other than Permitted Liens) and in
compliance with all Requirements of Law applicable to the Seller and (iv) with
respect to each such Contract, all consents, licenses, approvals or
authorizations of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Seller in connection
with the transfer of an interest in such Contract and the related Equipment to
the Deal Agent as agent for the Purchasers have been duly obtained, effected or
given and are in full force and effect. On each Addition Date on which
Additional Contracts are added by the Seller to the Asset Pool, the Seller shall
be deemed to represent and warrant that (i) such Additional Contract referenced
on the related Purchase Certificate delivered pursuant to Section 2.2(b) hereof
is an Eligible Contract, (ii) each such Additional Contract and the related
Equipment is free and clear of any Lien of any Person (other than Permitted
Liens) and in compliance with all Requirements of Law applicable to Seller
and/or the Originator, (iii) with respect to each such Additional Contract, all
consents, licenses, approvals, authorizations, registrations or declarations
with any Governmental Authority required to be obtained, effected or given by
the Seller in connection with the addition of such Contract and the related
Equipment to the Asset Pool have been duly obtained, effected or given and are
in full force and effect and (iv) the representations and warranties set forth
in Section 4.2(a) are true and correct with respect to each Contract transferred
on such day as if made on such day.
(c) Notice of Breach. The representations and warranties set forth in
----------------
this Section 4.2 shall survive the transfer of an interest in the respective
Contracts and related Equipment, or interests therein, to the Deal Agent as
agent for the Purchasers. Upon discovery by the Seller, the Servicer, any
Purchaser, the Deal Agent, the Liquidity Agent or any Investor of a breach of
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the others.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.1 General Covenants.
-----------------
Until the date on which all Aggregate Unpaids have been indefeasibly
paid in full, the Seller hereby covenants that:
(a) Compliance with Laws, Preservation of Corporate Existence. The
---------------------------------------------------------
Seller will comply in all material respects with all applicable laws, rules,
regulations and orders and preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges.
-42-
SECTION 5.2 COVENANTS OF SELLER.
-------------------
The Seller hereby covenants that:
(a) Contracts Not to be Evidenced by Instruments. The Seller will
--------------------------------------------
take no action to cause any Contract which is not, as of the Closing Date or the
related Addition Date, as the case may be, evidenced by an Instrument, to be so
evidenced except in connection with the enforcement or collection of such
Contract.
(b) Security Interests. The Seller will not sell, pledge, assign or
------------------
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Contract in the Asset Pool or related Equipment, 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 immediately notify the Deal Agent
of the existence of any Lien on any Contract in the Asset Pool or related
Equipment; and the Seller shall defend the right, title and interest of the Deal
Agent as agent for the Purchasers in, to and under the Contracts in the Asset
Pool and the related Equipment, against all claims of third parties; provided,
--------
however, that nothing in this section 5.2(b) shall prevent or be deemed to
-------
prohibit the Seller from suffering to exist Permitted Liens upon any of the
Contracts in the Asset Pool or any related Equipment.
(c) Delivery of Collections. The Seller agrees to pay to the Servicer
-----------------------
promptly (but in no event later than three Business Days after receipt) all
Collections received by Seller in respect of the Contracts in the Asset Pool.
(d) Compliance with the Law. Seller hereby agrees to comply in all
-----------------------
material respects with all Requirements of Law applicable to Seller, the
Contracts and the Equipment.
(e) Activities of Seller. The Seller shall not engage in any business
--------------------
or activity of any kind, or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, lease or other undertaking, which is not
directly related to the transactions contemplated and authorized by this
Agreement or the Purchase Agreements.
(f) Indebtedness. The Seller shall not create, incur, assume or
------------
suffer to exist any Indebtedness or other liability whatsoever, except (i)
obligations incurred under this Agreement, or (ii) liabilities incident to the
maintenance of its corporate existence in good standing.
(g) Guarantees. The Seller shall not become or remain liable,
----------
directly or indirectly, in connection with any Indebtedness or other liability
of any other Person, whether by guarantee, endorsement (other than endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise.
(h) Investments. The Seller shall not make or suffer to exist any
-----------
loans or advances to, or extend any credit to, or make any investments (by way
of transfer of property,
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contributions to capital, purchase of stock or securities or evidences of
indebtedness, acquisition of the business or assets, or otherwise) in, any
Person except for purchases of Contracts pursuant to the Purchase Agreements, or
(ii) for investments in Permitted Investments in accordance with the terms of
this Agreement.
(i) Merger; Sales. The Seller shall not enter into any transaction of
-------------
merger or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire or be acquired by any Person, or convey,
sell, lease or otherwise dispose of all or substantially all of its property or
business, except as provided for in this Agreement.
(j) Distributions. The Seller shall not declare or pay, directly or
-------------
indirectly, any dividend or make any other distribution (whether in cash or
other property) with respect to the profits, assets or capital of the Seller or
any Person's interest therein, or purchase, redeem or otherwise acquire for
value any of its capital stock now or hereafter outstanding, except that so long
as no Payout Event has occurred and is continuing and no Payout Event would
occur as a result thereof or after giving effect thereto and the Seller would
continue to be Solvent as a result thereof and after giving effect thereto, the
Seller may declare and pay cash or stock dividends on its capital stock.
(k) Agreements. The Seller shall not become a party to, or permit any
----------
of its properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except this Agreement and the Purchase
Agreements, or amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Deal Agent or the
Servicer.
(l) Separate Corporate Existence. The Seller shall:
----------------------------
(i) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. The funds of
the Seller will not be diverted to any other Person or for other than
corporate uses of the Seller.
(ii) Ensure that, to the extent that it shares the same officers
or other employees as any of its stockholders or Affiliates, the salaries
of and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each
such entity shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly contracts with
any of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that the Seller
contracts or does business with vendors or service providers when the goods
and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such
entities for whose benefit the goods and services are provided, and each
such entity shall bear its fair share of
-44-
such costs. All material transactions between Seller and any of its
Affiliates shall be only on an arm's length basis.
(iv) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its
Affiliates. To the extent that Seller and any of its stockholders or
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity
shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding all
regular and special stockholders, and directors' meetings appropriate to
authorize all corporate action, keeping separate and accurate minutes of
its meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate books,
records and accounts, including, but not limited to, payroll and
intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "non-substantive consolidation" opinion of
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.C. delivered on the Closing Date, upon which the
conclusions expressed therein are based.
(m) Location of Seller, Records; Instruments. The Seller (x) shall
----------------------------------------
not move outside the State of Massachusetts, the location of its chief executive
office, without 45 days' prior written notice to the Deal Agent and (y) shall
not move, or consent to the Collateral Custodian or Servicer moving, the
Contract Files from the possession of the Collateral Custodian thereof on the
Closing Date, without 45 days' prior written notice to the Deal Agent and (z)
will promptly take all actions required of each relevant jurisdiction in order
to continue the first priority perfected security interest of the Deal Agent as
agent for the Purchasers in all Assets in the Asset Pool. The Seller will give
the Deal Agent prompt notice of a change within the State of Massachusetts of
the location of its chief executive office.
(n) Accounting of Purchases. Other than for federal income tax
-----------------------
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 the sale, or absolute assignment, of Assets by the Seller to a
Purchaser. The Seller will not account for or treat (whether in financial
statements or otherwise) the transaction contemplated by the Purchase Agreement
in any manner other than as the sale, or absolute assignment, of the Originator
Assets by the Originator to the Seller, as the case may be.
(o) 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 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
-45-
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.
(p) Nature of Business. The Seller will engage in no business other
------------------
than the purchase of Assets from the Originator, the sale of Asset Interests to
a Purchaser and the other transactions permitted or contemplated by this
Agreement.
(q) Originator Assets. With respect to each Asset acquired by the
-----------------
Seller, the Seller will (i) acquire such Asset pursuant to and in accordance
with the terms of the Purchase Agreement, (ii) take all action necessary to
perfect, protect and more fully evidence the Seller's ownership of such Asset,
including, without limitation, (A) filing and maintaining effective financing
statements (Form UCC-1) against the Originator in all necessary or appropriate
filing offices, and filing continuation statements, amendments or assignments
with respect thereto in such filing offices and (B) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate
and (iii) take all additional action that the Deal Agent may reasonably request
to perfect, protect and more fully evidence the respective interests of the
parties to this Agreement in the Assets and other Asset Interest related
thereto.
(r) Transactions with Affiliates. The Seller will not enter into, or
----------------------------
be a party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement and the Purchase
Agreement, and (ii) other transactions (including, without limitation, the lease
of office space or computer equipment or software by the Seller to or from an
Affiliate) (A) in the ordinary course of business, (B) pursuant to the
reasonable requirements of the Seller's business, (C) upon fair and reasonable
terms that are no less favorable to the Seller than could be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Seller, and (D) not inconsistent with the factual assumptions set forth in the
opinion letters issued by ▇▇▇▇▇▇▇▇▇ and Manello, P.C. and delivered to the Deal
Agent as a condition to the initial Purchase as such assumptions may be modified
in any subsequent opinion letters delivered to the Deal Agent hereunder pursuant
to Section 3.2(c) or otherwise. It is understood that any compensation
arrangement for officers shall be permitted under clause (ii)(A) through (C)
above if such arrangement has been expressly approved by the board of directors
of the Seller.
(s) Debt; Investments. The Seller will not incur any Debt other than
-----------------
Debt arising hereunder. The Seller will not make any Investments other than
Permitted Investments.
(t) Change in the Purchase Agreement. The Seller will not amend,
--------------------------------
modify, waive or terminate any terms or conditions of the Purchase Agreement.
(u) Amendment to Certificate of Incorporation. The Seller will not
-----------------------------------------
amend, modify or otherwise make any change to its Certificate of Incorporation
which would delete or otherwise nullify or circumvent the provisions set forth
on Exhibit C hereto.
---------
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(v) Credit and Collection Policy. The Seller shall not cause or
----------------------------
permit any changes to be made to the Credit and Collection Policy in any manner
that would materially and adversely affect the collectibility of the Contracts
sold hereunder without the prior written consent of the Deal Agent.
SECTION 5.3 RELEASE OF LIEN ON EQUIPMENT.
----------------------------
At the same time as (i) any Contract in the Asset Pool expires by its
terms and all amounts in respect thereof have been paid by the related Obligor
and deposited in the Collection Account or (ii) any Contract becomes a Prepaid
Contract and all amounts in respect thereof have been paid by the related
Obligor and deposited in the Collection Account, the Deal Agent as agent for the
Purchasers will, to the extent requested by the Servicer, release its interest
in such Contract; provided, however, that such release will not constitute a
-------- -------
release of their respective interests in the Equipment or the proceeds of such
Contract or Equipment. In connection with any sale of such Equipment on or
after the occurrence of (i) or (ii) above, the Deal Agent as agent for the
Purchasers 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 Equipment; provided that the
Deal Agent as agent for the Purchasers will make no representation or warranty,
express or implied, with respect to any such Equipment in connection with such
sale or transfer and assignment. Nothing in this section shall diminish the
Servicer's obligations pursuant to Section 6.1(c) with respect to the proceeds
of any such sale.
SECTION 5.4 HEDGING OF CONTRACTS.
--------------------
On or prior to the Purchase Date, the Seller shall have entered into
the Hedging Agreement with the Hedge Counterparty. On each Purchase Date the
Seller shall assign to the Deal Agent on behalf of VFCC all of the Seller's
rights under the Hedging Agreements relating to the Contracts conveyed on such
Purchase Date. Each Hedging Agreement shall (i) have a scheduled Termination
Date that coincides with the last Scheduled Payment due to occur for the
Contracts conveyed on such Purchase Date; (ii) provide for a notional amount
from time to time equal to one hundred percent (100%) of the Capital (the
"Hedged Level"), of the aggregate amount (discounted to the present value at the
"Swap Rate" defined below) of all remaining Scheduled Payments on the Contracts
on such Purchase Date (the "Hedged Amount"); (iii) provide that the Hedge
Counterparty's payment obligations shall be calculated by reference to the
Hedged Amount and a per annum rate determined by reference to USD-CP-H.15, as
defined in the 1991 ISDA Definitions published by the International Swap Dealers
Association, Inc. and as determined in accordance with the procedures in effect
on the date of this Agreement (the "H.15"), for a period of 30 days, as
determined on the immediately preceding Payment Date; (iv) provide that the
Seller's payment obligations shall be calculated by reference to the Hedged
Amount and a per annum fixed rate agreed to between the Seller and the Hedge
Counterparty (the "Swap Rate"); (v) provide for net payments to be paid on each
Payment Date and any early termination date thereunder (A) on behalf of the
Seller,
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solely out of funds in the Collection Account and (B) by the Hedge Counterparty
for deposit into the Collection Account, for distribution in accordance with the
Agreement and (vi) provide for early termination at the option of the Required
Investors upon the disposition of the related Contracts. In the event the H.15
is no longer available, then the rate described in clause (iii) above shall be
determined by reference to such other publication or method of calculation as
shall be reasonably agreed between the Seller and the Purchaser in order to
effect an economically equivalent business deal between such parties. The
Servicer will provide the Deal Agent with written notice confirming the amounts,
if any, to be paid by or to the Hedge Counterparty on each Payment Date and any
early termination date.
SECTION 5.5 RETRANSFER OF INELIGIBLE CONTRACTS.
----------------------------------
In the event of a breach of any representation or warranty set forth
in Section 4.2 with respect to a Contract in the Asset Pool (each such Contract,
an "Ineligible Contract"), no later than the earlier of (i) knowledge by the
Seller of such Contract becoming an Ineligible Contract and (ii) receipt by the
Seller from the Deal Agent or Servicer of written notice thereof, the Seller
shall repurchase each such Ineligible Contract and any related Equipment
selected by the Servicer as to which such breach related, and the Deal Agent as
agent for the Purchasers shall convey, without recourse, representation or
warranty, all of its right, title and interest in such Ineligible Contract. In
any of the foregoing instances, the Seller shall accept the retransfer of each
such Ineligible Contract, and there shall be deducted from the ADCB the
Discounted Contract Balance (calculated using the Blended Discount Rate as of
the most recent Determination Date) of each such Ineligible Contract. On and
after the date of retransfer the Ineligible Contract so retransferred shall not
be included in the Asset Pool. In consideration of such retransfer the Seller
shall, on the date of retransfer of such Ineligible Contract make a deposit to
the Collection Account (for allocation pursuant to Section 2.7 or 2.8, as
applicable in immediately available funds in an amount equal to the Discounted
Contract Balance of such Ineligible Contract (calculated using the Blended
Discount Rate as of the most recent Determination Date)). Upon each retransfer
to the Seller of such Ineligible Contract, the Deal Agent, as agent for the
Purchasers, shall 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 Deal Agent, as agent for the
Purchasers, in, to and under such Contract and all monies due or to become due
with respect thereto, the related Equipment and all proceeds of such Contract
and Recoveries and Insurance Proceeds relating thereto and all rights to
security for any such Contract, and all proceeds and products of the foregoing.
The Deal Agent, as agent for the Purchasers, shall, 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 Ineligible
Contract pursuant to this subsection.
SECTION 5.6 RETRANSFER OF ASSETS.
--------------------
In the event of a breach of any representation or warranty set forth
in Section 4.2 hereof which breach could reasonably be expected to have a
material adverse affect on the rights of the Purchasers, the Deal Agent, as
agent of the Purchasers, (or on the ability of the
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Seller to perform its obligations hereunder), by notice then given in writing to
the Seller, the Servicer may direct the Seller to accept retransfer of all of
the Contracts in the Asset Pool and the Seller shall be obligated to accept
retransfer of such Contracts on a Payment Date specified by the Seller (such
date, the "Retransfer Date"). The Seller shall deposit on the Retransfer Date an
amount equal to the deposit amount provided below for such Contracts in the
Collection Account for distribution to the Purchasers. The deposit amount for
such retransfer will be equal to the sum of (i) the outstanding Capital at the
end of the Business Day preceding the Payment Date on which the retransfer is
scheduled to be made, plus (ii) an amount equal to all accrued and to accrue
with respect to unpaid Program Fees, Commitment Fees and Yield in respect of
such Capital at the applicable Blended Discount Rate through the latest maturing
Fixed period less (iii) the amount, if any, available in the Collection Account
on such Payment Date. On the Retransfer Date, provided that such amounts have
been deposited in full into the Collection Account, the Contracts in the Asset
Pool (or security interests therein) and all monies due or to become due with
respect thereto, the related Equipment (or security interests therein) and all
proceeds thereof, and all proceeds and products of the foregoing, shall be
transferred to the Seller and the Deal Agent as agent for the Purchasers shall,
at the sole expense of the Servicer, execute and deliver such instruments of
transfer, in each case without recourse, representation or warranty, as shall be
prepared and reasonably requested by the Servicer on behalf of the Seller to
vest in the Seller, or its designee or assignee, all right, title and interest
of the Deal Agent as agent for the Purchasers in, to and under the Contacts in
the Asset Pool, all monies due or to become due with respect thereto, the
related Equipment and all proceeds thereof and Insurance Proceeds relating
thereto. If the Deal Agent gives a notice directing the Seller to accept a
retransfer as provided above, the obligation of Seller to accept a retransfer of
the Contracts in the Asset Pool pursuant to this Section 5.6 shall constitute
the sole remedy respecting a breach of the representations and warranties
contained in Section 4.2 available to the Purchasers and the Deal Agent on
behalf of the Purchasers.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 6.1 Appointment and Acceptance; Duties.
----------------------------------
(a) Appointment of Initial Servicer and Collateral Custodian.
--------------------------------------------------------
BankVest Capital Corp. is hereby appointed as Servicer pursuant to this
Agreement. BankVest Capital Corp. accepts the appointment and agrees to act as
the Servicer pursuant to this Agreement. Norwest is hereby appointed as
Collateral Custodian pursuant to this Agreement. Norwest accepts the
appointment and agrees to act as the Collateral Custodian pursuant to this
Agreement.
(b) General Duties. The Servicer will manage, service, administer,
--------------
collect and enforce the Assets in the Asset Pool on behalf of the Purchasers
(the "Servicing Duties") and will have full power and authority to do any and
all things in connection with the performance of the Servicing Duties which it
deems necessary or desirable and as shall not contravene the provisions of this
Agreement. The Servicer will perform the Servicing Duties
-49-
with reasonable care, using that degree of skill and attention that a prudent
person engaging in such activities would exercise, but in any event shall not
act with less care than the Servicer exercises with respect to all comparable
contracts that it services for itself or others. The Servicing Duties will
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors regarding the Assets in the Asset Pool, investigating
delinquencies and making Servicer Advances, remitting payments to the Deal Agent
in a timely manner, furnishing monthly, quarterly and annual statements with
respect to collections and payments in accordance with the provisions of this
Agreement, and using its best efforts to maintain the perfected first priority
security interest of the Deal Agent as agent for the Purchasers in the Assets.
The Servicer will follow customary standards, policies, and procedures and will
have full power and authority, acting alone, to do any and all things in
connection with the performance of the Servicing Duties that it deems necessary
or desirable. If the Servicer commences a legal proceeding to enforce a
Defaulted Contract or commences or participates in a legal proceeding (including
a bankruptcy proceeding) relating to or involving an Asset in the Asset Pool,
the Deal Agent as agent for the Purchasers will be deemed to have automatically
assigned the related Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Purchasers, pursuant to this Section 6.1(b), to
execute and deliver, on behalf of itself and the Deal Agent as agent for the
Purchasers, any and all instruments of satisfaction or cancellation, or partial
or full release or discharge, and all other notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceedings. If in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, then the Deal Agent will, at the Servicer's expense and direction,
take steps on behalf of the Deal Agent as agent for the Purchasers to enforce
the Contract, including bringing suit in the name of the Deal Agent as agent for
the Purchasers.
(c) Disposition Upon Termination of Contract. Upon the termination of
---------------------------------------
a Contract included in the Asset Pool as a result of a default by the Obligor
thereunder the Servicer will use commercially reasonable efforts to dispose of
any related Equipment. Without limiting the generality of the foregoing, the
Servicer may dispose of any such Equipment by purchasing such Equipment or by
selling such Equipment to any of its Affiliates for a purchase price equal to
the fair market value thereof, any such sale to be evidenced by a certificate of
a Responsible Officer of the Servicer delivered to the Deal Agent setting forth
the Contract, the Equipment, the sale price of the Equipment and certifying that
such sale price is the fair market value of such Equipment.
(d) Further Assurances. The Deal Agent will, at the sole expense of
------------------
the Servicer, furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
(e) Custodial Duties. The Collateral Custodian shall take and retain
----------------
custody of the Contract Files in accordance with the terms and conditions of
this Agreement, all for the benefit of the Purchasers and subject to the Lien
thereon in favor of the Deal Agent as agent
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for the Purchasers. In so taking and retaining custody of the Contract Files,
the Collateral Custodian shall be deemed to be acting as the agent of the Deal
Agent as agent for the Purchasers, provided, however, that the Collateral
-------- -------
Custodian makes no representations as to the existence, perfection or priority
of any Lien on the Contract Files or the instruments therein, and provided,
--------
further, that the Collateral Custodian's duties as agent shall be limited to
-------
those expressly contemplated herein. All Contract Files shall be kept in
fireproof vaults or cabinets at the locations specified on Schedule V attached
hereto, or at such other office as shall be specified to the Deal Agent by the
Collateral Custodian in a written notice delivered at least 45 days prior to
such change. All Contract Files shall be placed together in a separate file
cabinet with an appropriate identifying label and maintained in such a manner so
as to permit retrieval and access. All Contract Files shall be clearly
segregated from any other documents or instruments maintained by the Collateral
Custodian. The Collateral Custodian shall clearly indicate that such Contract
Files are the sole property of the Seller and that the Seller has granted an
interest therein to the Deal Agent on behalf of the Purchasers. In performing
its duties, the Collateral Custodian shall use the same degree of care and
attention as it employs with respect to similar Contracts which it holds as
Custodian.
(f) Concerning the Collateral Custodian. (i) 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 which in good faith it reasonably believes to be genuine and
which has been signed by the proper party or parties. The Collateral Custodian
may rely conclusively on and shall be fully protected by in acting upon (i) the
written instructions of any designated officer of the Deal Agent or (ii) the
verbal instructions of the Deal Agent.
(ii) 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.
(iii) 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 which it may do
or refrain from doing in connection herewith except in the case of its
willful misconduct or negligent performance or omission.
(iv) 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, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Contracts, as will not be
required to and will not make any representations as to the validity or
value (except as expressly set forth in this Agreement) of any of the
Contracts. The Collateral Custodian shall not be obligated to take any
legal action hereunder which might in its judgment involve any expense or
liability unless it has been furnished with an indemnity reasonably
satisfactory to it.
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(v) 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.
(vi) The Collateral Custodian shall not be required to expend or risk
its own funds in the performance of its duties hereunder.
(vii) 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
Contracts.
SECTION 6.2 COLLECTION OF PAYMENTS.
----------------------
(a) Collection Efforts; Modification of Contracts. The Servicer will
---------------------------------------------
make reasonable efforts to collect all payments called for under the terms and
provisions of the Contracts in the Asset Pool as and when the same become due,
and will follow those collection procedures which it follows with respect to all
comparable Contracts that it services for itself or others. The Servicer may
not waive, modify or otherwise vary any provision of a Contract. The Servicer
may in its discretion waive any late payment charge or any other fees that may
be collected in the ordinary course of servicing any Contract in the Asset Pool.
(b) Prepaid Contract. The Servicer may not permit a Contract in the
----------------
Asset Pool to become a Prepaid Contract (which shall not include a Contract that
becomes a Prepaid Contract due to a Casualty Loss), unless (x) the Servicer
------
provides an Additional Contract or (y) such prepayment will not result in the
Collection Account receiving an amount (the "Prepayment Amount") less than the
sum of (A) the Discounted Contract Balance on the date of such prepayment
calculated using the Blended Discount Rate in effect on the date of such payment
and (B) any outstanding Servicer Advances thereon. After a Payout Event has
occurred, the Servicer may not permit a Contract in the Asset Pool to become a
Prepaid Contract (which shall not include a Contract that becomes an Prepaid
Contract due to a Casualty Loss), unless the Servicer collects an amount equal
------
to the sum of the Discounted Contract Balance plus accrued and unpaid interest
and any outstanding Servicer Advances thereon plus any swap breakage costs
associated with the prepayment.
(c) Acceleration. The Servicer shall accelerate the maturity of all
------------
or any Scheduled Payments under any Contract in the Asset Pool under which a
default under the terms thereof has occurred and is continuing (after the lapse
of any applicable grace period) promptly after such Contract becomes a Defaulted
Contract.
(d) Taxes and other Amounts. To the extent provided for in any
-----------------------
Contract in the Asset Pool, 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 Contracts or the Equipment and remit such amounts to
the appropriate Governmental Authority or insurer on or prior to the date such
payments are due.
-52-
(e) Payments to Lock-Box Account. On or before the Closing Date with
----------------------------
respect to the Existing Contracts and on or before the relevant Addition Date,
with respect to Additional Contracts, the Servicer shall have instructed all
Obligors to make all payments in respect of the Contracts in the Asset Pool to a
Lock-Box or directly to a Lock-Box Account.
(f) Establishment of the Collection Account. The Servicer shall cause
---------------------------------------
to be established, on or before the Closing Date, and maintained in the name of
the Deal Agent as agent for the Purchasers, with an office or branch of a
depository institution or trust company 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) a segregated corporate trust account
(the "Collection Account"); provided, however, that at all times such depository
-------- -------
institution or trust company shall be 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) which
has either (1) a long-term unsecured debt rating of A- or better by S&P and A-3
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 A-3 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 Deal Agent and (ii)
whose deposits are insured by the Federal Deposit Insurance Corporation (any
such depository institution or trust company, a "Qualified Institution").
SECTION 6.3 SERVICER ADVANCES.
-----------------
For each Monthly Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) which was due and payable pursuant to a Contract in
the Asset Pool during such Monthly Period was not received prior to the end of
such Monthly 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 accrued Yield of any Asset Interest the Fixed Period of which
ends on such day, the Servicer shall make an advance in the amount necessary to
pay such Yield (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 Contract 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 the liquidation of, the Asset Pool and payments under any
Hedging Agreement, (ii) the Servicer's obligation to make a Servicer Advance for
any Contract shall cease on the day such Contract becomes a Defaulted Contract
or is charged-off pursuant to the Servicer's Credit and Collection Policies [and
(iii) any successor Servicer, including the Backup Servicer, will not be
obligated to make any Servicer Advances]. The Servicer will deposit any
Servicer Advances into the Collection Account on or prior to 11:00 a.m.
(Charlotte, North Carolina time) on the related Payment Date, in immediately
available funds.
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SECTION 6.4 REALIZATION UPON DEFAULTED CONTRACT.
-----------------------------------
The Servicer will use its best efforts to repossess or otherwise
comparably convert the ownership of any Equipment relating to a Defaulted
Contract and will act as sales and processing agent for Equipment which 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
Equipment, which practices and procedures may include reasonable efforts to
enforce all obligations of Obligors and repossessing and selling such Equipment
at public or private sale in circumstances other than those described in the
preceding sentence. Without limiting the generality of the foregoing, the
Servicer may sell any such Equipment 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 Deal Agent setting forth the Contract, the Equipment, the sale price of the
Equipment and certifying that such sale price is the fair market value of such
Equipment. In any case in which any such Equipment has suffered damage, the
Servicer will not expend funds in connection with any repair or toward the
repossession of such Equipment 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 Equipment
relating to a Defaulted Contract.
SECTION 6.5 MAINTENANCE OF INSURANCE POLICIES.
---------------------------------
The Servicer will use its best efforts to ensure that each Obligor
maintains an Insurance Policy with respect to the related Equipment in an amount
at least equal to the sum of the Discounted Contract Balance of the related
Contract and shall ensure that each such Insurance Policy names the Deal Agent,
as agent for the Purchasers, as loss payee and as an insured thereunder;
provided that the Servicer, in accordance with its Credit and Collection Policy,
may allow Obligors to self-insure. Additionally, the Servicer will require that
each Obligor maintain property damage liability insurance during the term of
each Contract in amounts and against risks customarily insured against by the
Obligor on equipment owned by it. If an Obligor fails to maintain property
damage insurance, the Servicer may 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 Deal
Agent as agent for the Purchasers, claims to the insurer under each Insurance
Policy and any such liability policy, and to settle, adjust and compromise such
claims, in each case, consistent with the terms of each Contract. The
Servicer's Insurance Policies with respect to the related Equipment will insure
against liability for personal injury and property damage relating to such
Equipment, will name the Deal Agent as agent for the Purchasers as loss payee
and as an insured thereunder and will contain a breach of warranty clause.
SECTION 6.6 REPRESENTATIONS AND WARRANTIES OF SERVICER.
------------------------------------------
The Servicer represents and warrants to the Deal Agent as agent for
the Purchasers and the Purchasers that, as of the Closing Date and on each
Addition Date, insofar
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as any of the following affects the Servicer's ability to perform its
obligations pursuant to this Agreement in any material respect:
(a) Organization and Good Standing. The Servicer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of
Massachusetts with all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified to do business as a
-----------------
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or lease of
its property and or the conduct of its business (other than the performance of
its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Seller or of the Purchasers. The Servicer is qualified to do
business as a corporation, is in good standing, and has obtained all licenses
and approvals as required under the laws of all states in which the performance
of its obligations pursuant to this Agreement requires such qualification,
standing, license or approval.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms. The
Servicer has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action. The execution, delivery and
performance of this Agreement does not contravene the Servicer's Certificate of
Incorporation or by-laws.
(d) No Violation. The consummation of the transactions contemplated
------------
by, and the fulfillment of the terms of, this Agreement by the Servicer (with or
without notice or lapse of time) will not (i) conflict with, result in any
breach of any of the terms or provisions of, or constitute a default under, the
articles of incorporation or by-laws of the Servicer, or any term of any
agreement, indenture, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or any of its property is bound, (ii) result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to the Servicer or any of its properties.
(e) No Consent. No consent, approval, authorization, order,
----------
registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Servicer or any of its
properties is required to be obtained by or with respect to the Servicer in
order for the Servicer to enter into this Agreement or perform its obligations
hereunder.
(f) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except as such enforceability may be limited by (i)
applicable Insolvency Laws and (ii) general principles of equity (whether
considered in a suit at law or in equity).
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(g) No Proceeding. There are no proceedings or investigations pending
-------------
or threatened against the Servicer, before any Governmental Authority (i)
asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might (in the reasonable judgment of
the Servicer) materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this Agreement.
(h) Reports Accurate. No Servicer Certificate, information, exhibit,
----------------
financial statement, document, book, record or report furnished or to be
furnished by the Servicer to the Deal Agent or a Purchaser in connection with
this Agreement is or will be inaccurate in any material respect as of the date
it is or shall be dated or (except as otherwise disclosed to the Deal Agent or
such Purchaser, as the case may be, at such time) as of the date so furnished,
and no such document contains or will contain any material misstatement of fact
or omits or shall omit to state a material fact or any fact necessary to make
the statements contained therein not misleading.
SECTION 6.7 REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER AND
-----------------------------------------------------
COLLATERAL CUSTODIAN.
--------------------
Each of the Backup Servicer and the Collateral Custodian represents
and warrants to the Deal Agent as agent for the Purchasers and the Purchasers
that, as of the Closing Date and on each Addition Date, insofar as any of the
following affects the Backup Servicer's or the Custodian's, as the case may be,
ability to perform its obligations pursuant to this Agreement in any material
respect:
(a) Organization and Good Standing. Norwest is a national banking
------------------------------
association duly organized, validly existing and in good standing under the laws
of the United States of America with all requisite corporate power and authority
to own its properties and to conduct its business as presently conducted and to
enter into and perform its obligations pursuant to this Agreement.
(b) Due Qualification. Each of the Backup Servicer and the Collateral
-----------------
Custodian is qualified to do business as a corporation, is in good standing, and
has obtained all licenses and approvals as required under the laws of all states
in which the performance of its obligations pursuant to this Agreement requires
such qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing, or be so licensed or approved
would not have a material adverse effect on the interests of the Seller or the
Purchasers.
(c) Power and Authority. Each of the Backup Servicer and the
-------------------
Custodian has the corporate power and authority to execute and deliver this
Agreement and to carry out its terms. Each of the Backup Servicer and the
Custodian has duly authorized the execution, delivery and performance of this
Agreement by all requisite corporate action.
(d) No Violation. The consummation of the transactions contemplated
------------
by, and the fulfillment of the terms of, this Agreement by the Backup Servicer
or the Custodian
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(with or without notice or lapse of time) will not (i) conflict with, result in
any breach of any of the terms or provisions of, or constitute a default under,
the articles of incorporation or by-laws of the Backup Servicer or the
Custodian, or any term of any material agreement, indenture, mortgage, deed of
trust or other instrument to which the Backup Servicer or the Custodian is a
party or by which it or any of its property is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or (iii) violate any law, regulation, order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
applicable to Norwest or any of its properties.
(e) No Consent. No consent, approval, authorization, order,
----------
registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Backup Servicer or the
Custodian or any of its respective properties is required to be obtained by or
with respect to Norwest in order for the Backup Servicer or the Custodian to
enter into this Agreement or perform its obligations hereunder.
(f) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of Norwest, enforceable against the Backup Servicer and the
Custodian in accordance with its terms, except as such enforceability may be
limited by (i) applicable Insolvency Laws and (ii) general principles of equity
(whether considered in a suit at law or in equity).
(g) No Proceeding. There are no proceedings or investigations pending
-------------
or, to the best of its knowledge, threatened, against the Backup Servicer or the
Custodian, before any Governmental Authority (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) seeking any determination
or ruling that might (in the reasonable judgment of the Backup Servicer or the
Custodian, as the case may be) materially and adversely affect the performance
by the Backup Servicer or the Custodian of its obligations under, or the
validity or enforceability of, this Agreement.
SECTION 6.8 COVENANTS OF SERVICER.
---------------------
The Servicer hereby covenants that:
(a) Compliance with Law. The Servicer will comply with all laws and
-------------------
regulations of any Governmental Authority applicable to the Servicer or the
Contracts in the Asset Pool and related Equipment and Contract Files or any part
thereof.
(b) Obligations with Respect to Contracts; Modifications. 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 connection with each
Contract in the Asset Pool and will do nothing to impair the rights of the Deal
Agent as agent for the Purchasers or of the Purchasers in, to and under the
Assets. The Servicer will perform such obligations under the Contracts in the
Asset Pool and will not change or modify the Contracts.
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(c) No Bankruptcy Petition. Prior to the date that is one year and
----------------------
one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, the Servicer will not institute
against the Seller or VFCC, or join any other Person in instituting against the
Seller or VFCC, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 6.8(c) will
survive the termination of this Agreement.
SECTION 6.9 COVENANTS OF BACKUP SERVICER AND COLLATERAL CUSTODIAN.
-----------------------------------------------------
Each of the Backup Servicer and the Custodian hereby covenants that:
(a) Contract Files. The Collateral Custodian will, at its own cost
--------------
and expense, maintain all Contract Files in accordance with the terms of this
Agreement. Without limiting the generality of the preceding sentence, the
Collateral Custodian will not dispose of any documents constituting the Contract
Files in any manner which is inconsistent with the performance of its
obligations as the Collateral Custodian pursuant to this Agreement and will not
dispose of any Contract except as contemplated by this Agreement.
(b) Compliance with Law. Each of the Backup Servicer and the
-------------------
Custodian will comply with all laws and regulations of any Governmental
Authority applicable to the Backup Servicer and the Collateral Custodian or the
Contracts in the Asset Pool and related Equipment and Contract Files or any part
thereof.
(c) Preservation of Security Interest. Each of the Backup Servicer
---------------------------------
and the Custodian will execute and file such financing and continuation
statements and any other documents reasonably requested by the Deal Agent to be
filed or which may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Deal Agent as agent
for the Purchasers in, to and under the Assets.
(d) No Bankruptcy Petition. Prior to the date that is one year and
----------------------
one day after the payment in full of all amounts owing in respect of all
outstanding commercial paper issued by VFCC, neither the Backup Servicer nor the
Custodian will institute against the Seller or VFCC, or join any other Person in
instituting against the Seller or VFCC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States. This
Section 6.9 (d) will survive the termination of this Agreement.
(e) Location of Contract Files. The Contract Files 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.
SECTION 6.10 SERVICING COMPENSATION.
----------------------
As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") in
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respect of each Monthly Period (or portion thereof) equal to one-twelfth of the
product of (A) the Servicing Fee Rate and (B) the ADCB as on the most recent
Determination Date, such Servicing Fee to be payable monthly in arrears on each
Payment Date to the extent of funds available therefor pursuant to the
provisions of Section 2.7 or 2.8, as applicable.
SECTION 6.11 CUSTODIAL COMPENSATION.
----------------------
As compensation for its custodial activities hereunder and
reimbursement for its expenses, the Collateral Custodian shall be entitled to
receive a custodial fee (the "Custodial Fee") in respect of each Monthly Period
(or portion thereof) equal to [$4 per [new] Contract File] [delivered during
such Monthly Period].
SECTION 6.12 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 6.4. 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 6.13 REPORTS.
-------
(a) Monthly Report. With respect to each Determination Date and the
--------------
related Monthly Period, the Servicer will provide to the Deal Agent, on the
related Reporting Date, a monthly statement (a "Monthly Report"), signed by a
Responsible Officer of the Servicer and substantially in the form of Exhibit E.
---------
(b) Servicer's Certificate. Together with each Monthly Report, the
----------------------
Servicer shall submit to the Purchaser a certificate (a "Servicer's
Certificate"), signed by a Responsible Officer of the Servicer and substantially
in the form of Exhibit F.
---------
(c) Financial Statements. The Servicer will submit to the Purchaser
--------------------
and the Backup Servicer, within 45 days of the end of each of its fiscal
quarters, commencing November 15, 1997 unaudited financial statements (including
an analysis of delinquencies and losses for each fiscal quarter) as of the end
of each such fiscal quarter. The Servicer will submit to the Purchaser, within
90 days of the end of each of its fiscal years, commencing September 30, 1997
audited financial statements (including an analysis of delinquencies and losses
for each fiscal year describing the causes thereof and sufficient to determine
whether a Payout Event has occurred or is reasonably likely to occur and
otherwise reasonably satisfactory to the Deal Agent) as of the end of each such
fiscal year.
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SECTION 6.14 ANNUAL STATEMENT AS TO COMPLIANCE.
---------------------------------
The Servicer will provide to the Deal Agent and the Backup Servicer,
on or prior to September 30 of each year, commencing September 30, 1998, an
annual 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 period ending on the last day of the
immediately preceding 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 (or if a Servicer Default has so
occurred and is continuing, specifying each such event, the nature and status
thereof and the steps necessary to remedy such event, and, if a Servicer Default
occurred during such year and no notice thereof has been given to the Deal
Agent, specifying such Servicer Default and the steps taken to remedy such
event).
SECTION 6.15 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 Deal Agent and the Backup Servicer, on or prior to September 30
of each year, commencing September 30, 1998, (i) a report relating to the
previous fiscal year to the effect that (a) such firm has reviewed certain
documents and records relating to the servicing of the Contracts in the Asset
Pool, 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
the preceding fiscal year to the effect that such accountants have applied
certain agreed-upon procedures to certain documents and records relating to the
servicing of Contracts under this Agreement, compared the information contained
in 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
exceptions as shall be set forth in such statement.
SECTION 6.16 ADJUSTMENTS.
-----------
If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of a Contract in the Asset Pool and such Collection was
received by the Servicer in the form of a check which 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.
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SECTION 6.17 MERGER OR CONSOLIDATION OF THE SERVICER.
---------------------------------------
The Servicer shall 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:
(i) the Servicer has delivered to the Deal Agent and the Backup
Servicer 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 6.17 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 Deal
Agent may request;
(ii) the Servicer shall have delivered notice of such consolidation,
merger, conveyance or transfer to the Deal Agent; and
(iii) after giving effect thereto, no Payout Event or event which
with notice or lapse of time would constitute a Payout Event shall have
occurred.
SECTION 6.18 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
--------------------------------------------------
Except as provided herein, neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer shall be under any
liability to the Deal Agent, the Purchasers 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, that this provision shall not protect the Servicer or any such Person
-------
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of its willful misconduct hereunder.
SECTION 6.19 INDEMNIFICATION OF THE SELLER, THE BACKUP SERVICER, THE
-------------------------------------------------------
COLLATERAL CUSTODIAN, THE DEAL AGENT AND THE PURCHASERS.
-------------------------------------------------------
The Servicer shall indemnify and hold harmless the Seller, the Backup
Servicer, the Collateral Custodian, the Deal Agent, the Liquidity Agent and each
Purchaser (collectively, the "Indemnified Persons") from and against any loss,
liability, expense, damage or injury suffered or sustained by any Indemnified
Person by reason of any acts, omissions or alleged acts or omissions of the
Servicer, including, but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim.
Notwithstanding the foregoing, the Servicer shall not indemnify an Indemnified
Person if such loss, liability, expense, damage or injury results or arises (i)
as a result of fraud, gross negligence or breach of fiduciary duty by such
Indemnified Person; and (ii) under any Tax law, including without limitation any
federal, state or local income or franchise taxes or any other Tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure
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to comply therewith) required to be paid by the Seller, the Backup Servicer, the
Collateral Custodian, the Deal Agent, the Liquidity Agent or the Purchasers in
connection herewith to any taxing authority. The provisions of this indemnity
shall run directly to and be enforceable by an injured party subject to the
limitations hereof.
Any indemnification pursuant to this Section shall not be payable from
the Assets.
The obligations of the Servicer under this Section 6.19 shall survive
the resignation or removal of the Deal Agent, the Liquidity Agent, the Backup
Servicer or the Collateral Custodian and the termination of this Agreement.
SECTION 6.20 THE SERVICER NOT TO RESIGN.
--------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that (i) the performance of its duties
hereunder is or becomes impermissible under applicable law and (ii) there is no
reasonable action which 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 Deal 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 6.25.
SECTION 6.21 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
-----------------------------------------------
REGARDING THE CONTRACTS.
-----------------------
The Collateral Custodian shall provide to the Deal Agent access to the
Contract Files and all other documentation regarding the Contracts in the Asset
Pool and the related Equipment in such cases where the Deal Agent is required in
connection with the enforcement of the rights or interests of the Purchasers, or
by applicable statutes or regulations to review such documentation, such access
being afforded without charge but only (i) upon reasonable prior 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 Deal Agent,
the Deal Agent may review the Servicer's collection and administration of the
Contracts in order to assess compliance by the Servicer with the Servicer's
written policies and procedures, as well as with this Agreement and may conduct
an audit of the Contracts and Contract Files in conjunction with such a review.
Such review shall be reasonable in scope and shall be completed in a reasonable
period of time.
SECTION 6.22 BACKUP SERVICER.
---------------
The Backup Servicer shall perform the obligations from time to time
applicable to it under this Agreement, which shall include, following the
resignation or removal of the
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Servicer hereunder, all of the obligations of the Servicer hereunder, except as
otherwise specifically set forth herein.
[The Backup Servicer hereby agrees to defend and indemnify the
Purchasers, the Deal Agent and the Liquidity Agent against any and all claims,
damages, losses, liabilities, costs and expenses whatsoever (including
reasonable attorney's fees and disbursements) which any of the Purchasers, the
Deal Agent or the Liquidity Agent may incur by reason of or in connection with
any action taken by the Backup Servicer relative to any Asset (other than any
such action taken solely and strictly in accordance with written instructions
received by the Backup Servicer from the Deal Agent and not involving any
negligence or willful misconduct on the part of the Backup Servicer), or any
failure of the Backup Servicer to take an action relative to any Asset
constituting negligence or willful misconduct on the part of the Servicer,
including any action or failure to act which causes any Asset or the realization
of Collections to fail to comply with the terms and conditions of such Asset or
the provisions of any Requirement of Law applicable to the Seller, the Backup
Servicer, the Deal Agent, the Liquidity Agent or any Purchaser. None of the
Deal Agent, the Liquidity Agent or any Purchaser shall have any obligation to
take any action or commence any proceedings to realize upon any Defaulted
Contract or to enforce any of its rights or remedies with respect thereto or
with respect to the Seller as a condition to the right of any of the Deal Agent,
the Liquidity Agent or any Purchaser to obtain indemnification from the Backup
Servicer under this subsection.]
As compensation for its back-up servicing obligations hereunder, the
Backup Servicer shall be entitled to receive a back-up servicing fee in respect
of each Monthly Period (or portion thereof) until the first to occur of the date
on which the Backup Servicer becomes a Successor Servicer, resigns or is removed
as Backup Servicer or termination of this Agreement (the "Backup Servicing
Fee"), payable monthly in arrears on the related Payment Date, in an amount
equal to one-twelfth of the product of (i) the Backup Servicer Fee Rate and (ii)
the ADCB on the first day of the preceding Monthly Period.
Subject to the terms of the Backup Servicing Agreement, the Backup
Servicer may resign at any time by not less than 180 days notice to the Deal
Agent, the Liquidity Agent, the Servicer, the Seller and the Originator. In
addition, the Backup Servicer may be removed without cause by the Deal Agent by
notice then given in writing to the Servicer, the Seller and the Backup
Servicer. In the event of any such resignation or removal, the Backup Servicer
may be replaced by (i) the Servicer, acting with the consent of the Deal Agent
or (ii) if no such replacement is appointed within 30 days following such
removal or resignation, by the Deal Agent. [However, the Backup Servicer shall
not be relieved of its back-up servicing obligations until such replacement is
consummated.]
SECTION 6.23 IDENTIFICATION OF RECORDS.
-------------------------
The Servicer shall clearly and unambiguously identify each Contract in
the Asset Pool and the related Equipment in its computer or other records to
reflect that such
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Contracts and Equipment have been transferred to and are owned by the Seller and
that an interest therein has been transferred by the Seller pursuant to this
Agreement.
SECTION 6.24 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 or to give instructions or notice to the Deal Agent as required by this
Agreement, or to deliver any required Monthly Report or other Required Reports
hereunder on or before the date occurring three Business Days after the date
such payment, transfer, deposit, instruction or notice or report is required to
be made or given, as the case may be, under the terms of this Agreement;
(b) 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 which has a material adverse effect on the
Purchasers, which continues unremedied for a period of 30 days after the first
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 Deal Agent and
(ii) the date on which the Servicer becomes aware thereof;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Purchasers and which continues to be unremedied for a
period of 30 days after the first 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 Deal Agent and (ii) the date on which the Servicer
becomes aware thereof;
(d) an Insolvency Event shall occur with respect to the Servicer;
(e) an Insolvency Event shall occur with respect to the Subservicer
and the Seller fails to replace the Subservicer with the Backup Servicer or
other acceptable party within 30 days;
(f) any material delegation of the Servicer's or Subservicer's duties
which is not permitted by Section 7.1;
(g) any financial or Asset information reasonably requested by the
Deal Agent or the Purchaser as provided herein is not reasonably provided as
requested;
(h) the rendering against the Servicer of a final judgment, decree or
order for the payment of money in excess of U.S. $1,000,000 and the continuance
of such judgment, decree or order unsatisfied and in effect for any period of 61
consecutive days without a stay of execution;
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(i) the failure of the Servicer to make any payment due with respect
to aggregate recourse debt or other obligations with an aggregate principal
amount exceeding U.S. $1,000,000 or the occurrence of any event or condition
which would permit acceleration of such recourse debt or other obligations if
such event or condition has not been waived;
(j) any change in the management of the Servicer relating to the
positions of President, CEO, Chairman of the Board and Executive Vice President;
or
(k) any change in the control of the Servicer which takes the form of
either a merger or consolidation in which the Servicer is not the surviving
entity, then, so long as such Servicer Default shall not have been remedied, the
Deal Agent, by written notice to the Servicer (a "Termination Notice"), may
terminate all of the rights and obligations of the Servicer as Servicer under
this Agreement.
SECTION 6.25 APPOINTMENT OF SUCCESSOR SERVICER.
---------------------------------
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 6.24, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Deal Agent in writing or, if no such date
is specified in such Termination Notice or otherwise specified by the Deal
Agent, until a date mutually agreed upon by the Servicer and the Deal Agent.
The Deal 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; provided, however,
-------- -------
that the Successor Servicer shall not (i) be responsible or liable for any past
actions or omissions of the outgoing Servicer or (ii) be obligated to make
Servicer Advances. In the event that the Deal Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unwilling
or unable to assume such obligations on such date, the Deal Agent shall as
promptly as possible appoint a successor servicer (the Backup Servicer or any
such other successor, the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Deal Agent. If the Deal Agent within 60 days of receipt of a Termination Notice
is unable to obtain any bids from eligible servicers and the Servicer delivers
an Officer's Certificate to the effect that it cannot in good faith cure the
Servicer Default which gave rise to a transfer of servicing, then the Deal Agent
shall offer the Seller the right to accept retransfer of all the Assets and the
Seller may accept re-transfer of all the Assets, provided, however, that if the
-------- -------
long-term unsecured debt obligations of the Seller are not rated at the time of
such purchase at least investment grade by each rating agency providing a rating
in respect of such long-term unsecured debt obligations, no such re-transfer
shall occur unless the Seller shall deliver an Opinion of Counsel reasonably
acceptable to the Deal Agent that such re-transfer would not constitute a
fraudulent conveyance of the Seller. The amount to be paid and deposited in
respect of such re-transfer shall be equal to the sum of the Capital outstanding
plus all Yield that has accrued thereon and that will accrue thereon. In the
event that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer
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ceases to act as Servicer, the Deal Agent shall petition a court of competent
jurisdiction to appoint any established financial institution having a net worth
of not less than U.S. $50,000,000 and whose regular business includes the
servicing of Contracts as the Successor Servicer hereunder.
(b) Upon its appointment, the Backup Servicer 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.
(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 on the
Contracts in the Asset Pool.
SECTION 6.26 NOTIFICATION.
------------
Upon the Servicer becoming aware of the occurrence of any Servicer
Default, the Servicer shall immediately give written notice thereof to the Deal
Agent and the Backup Servicer.
SECTION 6.27 PROTECTION OF RIGHT, TITLE AND INTEREST TO ASSETS.
-------------------------------------------------
(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 Deal Agent as
agent for the Purchaser and of the Purchasers 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 Deal Agent as agent
for the Purchasers hereunder to all property comprising the Assets. The
Servicer shall deliver to the Deal 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 subsection 6.27(a).
(b) The Servicer will give the Deal Agent at least 45 days prior
written notice of any relocation of any office from which it services Contracts
in the Asset Pool or keeps the Contract Files or of its principal executive
office and whether, as a result of such relocation, the applicable provisions of
the UCC or any other applicable law governing the
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perfection of interests in property would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the security interest of the Deal Agent
as agent for the Purchasers in the Contracts in the Asset Pool and the proceeds
thereof. The Servicer will at all times maintain each office from which it
services Contracts in the Asset Pool within the United States of America.
SECTION 6.28 SUBSERVICERS.
------------
The Servicer shall have the right to subcontract pursuant to a written
agreement with the Subservicer and such other Persons as the Deal Agent and the
Purchasers may approve in writing for the performance of the duties and
obligations of the Servicer hereunder. The Deal Agent shall be notified of all
subcontracts with subservicers and provided a copy thereof. Notwithstanding the
performance of any of its obligations hereunder by any subservicer, the Servicer
shall remain obligated and liable to the Deal Agent and the Purchasers for the
servicing of the Contracts in accordance with the provisions of this Agreement,
without any diminution of such obligation or liability by virtue of such
performance by any subservicer. The fees and expenses of any such subservicer
shall be as agreed between the Servicer and such subservicer from time to time
and neither the Issuer, the Deal Agent nor any Purchaser shall have any
responsibility therefor. Servicer covenants and agrees that in the event the
Deal Agent and the Purchasers shall notify the Servicer that they have reason to
believe that a subservicer would be unable to perform its obligations under the
applicable subservicing agreement, it shall terminate all of the rights and
obligations of such subservicer under such subservicing agreement and appoint
another subservicer satisfactory to the Deal Agent and the Purchasers.
ARTICLE VII
PAYOUT EVENTS
SECTION 7.1 PAYOUT EVENTS.
-------------
If any of the following events ("Payout Events") shall occur:
(a) as of any Reporting Date, the Delinquency Ratio for the preceding
Determination Date exceeds 4.5%;
(b) as of any Reporting Date, the Default Ratio for the preceding
Determination Date exceeds 3.0%;
(c) the Reinvestment Termination Date shall have occurred;
(d) the level of Capital exceeds the Capital Limit and the Seller does
not, within one Business Day, contribute Eligible Contracts and/or cash
collateral sufficient to cause the Capital to comply with the Capital Limit;
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(e) the Seller is not in compliance with the Portfolio Concentration
Criteria;
(f) a Servicer Default occurs and is continuing;
(g) (i) failure on the part of the Seller to make any payment or
deposit required by the terms of this Agreement on the day such payment or
deposit is required to be made or
(ii) failure on the part of the Seller to observe or perform any
of its covenants or agreements set forth in this Agreement, which failure
has a material adverse effect on the interests of the Deal Agent, any
Purchaser, the Liquidity Agent or any Investor and which continues
unremedied for a period of 30 days or more after written notice to Seller;
provided, that only a five day cure period shall apply in the case of a
--------
failure by the Seller to observe its covenants not to grant a security
interest or otherwise intentionally create a Lien on the Contracts;
(h) any representation or warranty made by the Seller in this
Agreement or any information required to be given by the Seller to the Deal
Agent to identify Contracts pursuant to this Agreement, shall prove to have been
incorrect in any material respect when made or delivered and which continues to
be incorrect in any material respect for a period of 30 days after written
notice or actual knowledge thereof;
(i) the occurrence of an Insolvency Event relating to the Originator,
the Seller or the Servicer;
(j) the occurrence of an Insolvency Event relating to the Subservicer
and the Subservicer is not replaced within 30 days;
(k) the passage of 60 days following receipt by the Purchaser of a
written notification of the Seller's intent to terminate the revolving period;
(l) the Seller shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "40 Act") or the
arrangements contemplated by this Agreement shall require registration as an
"investment company" within the meaning of the 40 Act;
(m) 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
(n) on any day, less than 100% of the Capital is subject to Hedging
Agreements.
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then, and in any such event, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
occurrence, the Deal Agent and the Purchasers shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNITIES BY THE SELLER.
-------------------------
Without limiting any other rights which the Deal Agent, the Backup
Servicer, the Collateral Custodian, the Purchasers or any of their respective
Affiliates may have hereunder or under applicable law, the Seller hereby agrees
to indemnify the Deal Agent, the Liquidity Agent, the Purchasers, and each of
their respective Affiliates from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the ownership of the Asset
Interest or in respect of any Asset or any Contract, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of the Deal Agent, the Backup Servicer, the Collateral
Custodian, the Liquidity Agent, such Purchaser or such Affiliate and (ii)
recourse (except with respect to payment and performance of obligations provided
for in this Agreement) for Defaulted Contracts. Without limiting the foregoing,
the Seller shall indemnify the Deal Agent, the Backup Servicer, the Collateral
Custodian, the Liquidity Agent, the Purchasers and each of their respective
Affiliates for Indemnified Amounts relating to or resulting from:
(i) any Purchased Asset treated as or represented by the Seller to
be an Eligible Contract which is not at the applicable time an Eligible
Contract;
(ii) reliance on any representation or warranty made or deemed made
by the Seller, the Servicer (if the Originator or one of its Affiliates) or
any of their respective officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect
when made or deemed made or delivered;
(iii) the failure by the Seller or the Servicer (if the Originator or
one of its Affiliates) to comply with any term, provision or covenant contained
in this Agreement or any agreement executed in connection with this Agreement,
or with any applicable law, rule or regulation with respect to any Asset, the
related Contract, or the nonconformity of any Asset, the related Contract with
any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the relevant
Purchaser or to transfer to such Purchaser, an undivided ownership interest in
the Assets, together with all
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Collections, free and clear of any Adverse Claim whether existing at the time of
any Purchase or at any time thereafter;
(v) the failure to maintain, as of the close of business on each
Business Day prior to the Termination Date, an amount of Capital outstanding
which is less than or equal to the lesser of (x) the Purchase Limit on such
Business Day, or (y) the Capital Limit on such Business Day;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Assets
which are, or are purported to be, Pool Assets, whether at the time of any
Purchase or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than the discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any Asset which
is, or is purported to be, a Purchased Asset (including, without limitation, a
defense based on such Asset or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance with its
terms), or any other claim resulting from the sale of the merchandise or
services related to such Asset or the furnishing or failure to furnish such
merchandise or services;
(viii) any failure of the Seller or the Servicer (if the Originator or
one of its Affiliates) to perform its duties or obligations in accordance with
the provisions of this Agreement or any failure by the Originator, the Seller or
any Affiliate thereof to perform its respective duties under the Contracts;
(ix) any 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 merchandise or services which are the subject of
any Asset or Contract;
(x) the failure by Seller to pay when due any Taxes, including
without limitation, sales, excise or personal property taxes payable in
connection with the Pool Assets;
(xi) any repayment by the Deal Agent, the Liquidity Agent or a
Purchaser of any amount previously distributed in reduction of Capital or
payment of Yield or any other amount due hereunder, in each case which amount
the Deal Agent, the Liquidity Agent or a Purchaser believes in good faith is
required to be repaid;
(xii) the commingling of Collections of Pool Assets at any time with
other funds;
(xiii) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or reinvestments or the ownership
of the Asset Interest or in respect of any Asset or Contract;
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(xiv) any failure by the Seller to give reasonably equivalent value
to the Originator in consideration for the transfer by the Originator to the
Seller of any 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; or
(xv) the failure of the Seller, the Originator or any of their
respective agents or representatives to remit to the Servicer or the Deal Agent,
Collections of Pool Assets remitted to the Seller or any such agent or
representative.
Any amounts subject to the indemnification provisions of this Section 8.1 shall
be paid by the Seller to the Deal Agent within two Business Days following the
Deal Agent's demand therefor.
ARTICLE IX
THE DEAL AGENT AND THE LIQUIDITY AGENT
SECTION 9.1 AUTHORIZATION AND ACTION.
------------------------
(a) Each Purchaser hereby designates and appoints the Deal Agent as
Deal Agent hereunder, and authorizes the Deal Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Deal
Agent by the terms of this Agreement together with such powers as are reasonably
incidental thereto. The Deal Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Deal
Agent shall be read into this Agreement or otherwise exist for the Deal Agent.
In performing its functions and duties hereunder, the Deal Agent shall act
solely as agent for the Purchasers 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 Deal Agent shall not be
required to take any action which exposes the Deal Agent to personal liability
or which is contrary to this Agreement or applicable law. The appointment and
authority of the Deal Agent hereunder shall terminate at the indefeasible
payment in full of the Aggregate Unpaids or under any fee letter delivered by
the Originator to the Deal Agent and the Purchasers.
(b) Each Investor hereby designates and appoints FUNB as Liquidity
Agent hereunder, and authorizes the Liquidity Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the
Liquidity Agent by the terms of this Agreement together with such powers as are
reasonably incidental thereto. The Liquidity Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Investor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Liquidity Agent shall be read into this Agreement or otherwise exist for the
Liquidity Agent. In performing its functions and duties hereunder, the
Liquidity Agent shall act solely as agent for the Investors and does not assume
nor shall be
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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 Liquidity Agent shall
not be required to take any action which exposes the Liquidity Agent to personal
liability or which is contrary to this Agreement or applicable law. The
appointment and authority of the Liquidity Agent hereunder shall terminate at
the indefeasible payment in full of all Capital, Yield and any amount at any
time due hereunder or under any fee letter delivered by the Originator to the
Deal Agent and the Purchasers.
SECTION 9.2 DELEGATION OF DUTIES.
--------------------
(a) The Deal 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 Deal Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
(b) The Liquidity 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
Liquidity Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
SECTION 9.3 EXCULPATORY PROVISIONS.
----------------------
(a) Neither the Deal 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 Deal Agent, the breach of its obligations expressly set forth in
this Agreement), or (ii) responsible in any manner to any of the Purchasers 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 or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Seller to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Deal Agent shall not be under any obligation to any Purchaser
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 Deal Agent shall
not be deemed to have knowledge of any Payout Event unless the Deal Agent has
received notice from the Seller or a Purchaser.
(b) Neither the Liquidity 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 Liquidity Agent, the breach of its obligations expressly set
forth in this Agreement), or (ii) responsible in any manner to the Deal Agent or
any of the Purchasers for any recitals, statements, representations or
warranties made by the Seller contained in this Agreement or in any certificate,
report, statement or other
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document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Seller to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Liquidity Agent shall not be under any obligation to the Deal
Agent or any Purchaser 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 Liquidity Agent shall not be deemed to have knowledge of any Payout
Event unless the Liquidity Agent has received notice from the Seller, the Deal
Agent or a Purchaser.
SECTION 9.4 RELIANCE.
--------
(a) The Deal 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 Deal Agent. The Deal 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 or the Required Investors or all of the
Purchasers, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless and
until the Deal Agent shall have received such advice, the Deal Agent may take or
refrain from taking any action, as the Deal Agent shall deem advisable and in
the best interests of the Purchasers. The Deal Agent shall in all cases be
fully protected in acting, or in refraining from acting, in accordance with a
request of VFCC or the Required Investors or all of the Purchasers, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Purchasers.
(b) The Liquidity 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 Liquidity Agent. The Liquidity 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 Required Investors as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Investors, provided that unless and until the Liquidity Agent shall have
--------
received such advice, the Liquidity Agent may take or refrain from taking any
action, as the Liquidity Agent shall deem advisable and in the best interests of
the Investors. The Liquidity Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of the
Required Investors and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Investors.
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SECTION 9.5 NON-RELIANCE ON DEAL AGENT, LIQUIDITY AGENT AND OTHER
-----------------------------------------------------
PURCHASERS.
----------
Each Purchaser expressly acknowledges that neither the Deal Agent, the
Liquidity 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 Deal 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 Deal Agent or the Liquidity
Agent. Each Purchaser represents and warrants to the Deal Agent and to the
Liquidity Agent that it has and will, independently and without reliance upon
the Deal Agent, the Liquidity Agent or any other Purchaser 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.
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION.
---------------------------------
The Investors agree to reimburse and indemnify VFCC, the Deal Agent,
the Liquidity Agent and each of their respective officers, directors, employees,
representatives and agents ratably according to their pro rata shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which VFCC,
the Liquidity Agent, acting in its capacity as Liquidity Agent, or the Deal
Agent, acting in its capacity as Deal Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses incurred by VFCC, the Liquidity
Agent, acting in its capacity as Liquidity Agent, or the Deal Agent, in its
capacity as Deal Agent and acting on behalf of the Purchasers, in connection
with the administration and enforcement of this Agreement.
SECTION 9.7 DEAL AGENT AND LIQUIDITY AGENT IN THEIR INDIVIDUAL
--------------------------------------------------
CAPACITIES.
----------
The Deal Agent, the Liquidity Agent and each of their respective
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
Deal Agent or the Liquidity Agent, as the case may be, were not the Deal Agent
or the Liquidity Agent, as the case may be, hereunder. With respect to the
acquisition of Asset Interests pursuant to this Agreement, the Deal Agent, the
Liquidity Agent and each of their respective Affiliates shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Deal Agent or the Liquidity Agent, as the case
may be, and the terms "Investor," "Purchaser," "Investors" and "Purchasers"
shall include the Deal Agent or the Liquidity Agent, as the case may be, in its
individual capacity.
SECTION 9.8 SUCCESSOR DEAL AGENT OR LIQUIDITY AGENT.
---------------------------------------
(a) The Deal Agent may, upon 5 days' notice to the Seller and the
Purchasers, and the Deal Agent will, upon the direction of all of the Purchasers
(other than the Deal Agent, in its individual capacity) resign as Deal Agent.
If the Deal Agent shall resign,
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then the Required Investors during such 5-day period shall appoint from among
the Purchasers a successor agent. If for any reason no successor Deal Agent is
appointed by the Required Investors during such 5-day period, then effective
upon the expiration of such five-day period, the Purchasers shall perform all of
the duties of the Deal Agent hereunder and the Seller shall make all payments in
respect of the Aggregate Unpaids or under any fee letter delivered by the
Originator to the Deal Agent and the Purchasers directly to the applicable
Purchaser and for all purposes shall deal directly with the Purchasers. After
any retiring Deal Agent's resignation hereunder as Deal Agent, the provisions of
this Article IX and Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Deal Agent under this Agreement.
(b) The Liquidity Agent may, upon 5 days' notice to the Seller, the
Deal Agent and the Investors, and the Liquidity Agent will, upon the direction
of all of the Investors (other than the Liquidity Agent, in its individual
capacity) resign as Liquidity Agent. If the Liquidity Agent shall resign, then
the Required Investors during such 5-day period shall appoint from among the
Investors a successor Liquidity Agent. If for any reason no successor Liquidity
Agent is appointed by the Required Investors during such 5-day period, then
effective upon the expiration of such five-day period, the Investors shall
perform all of the duties of the Liquidity Agent hereunder and all payments in
respect of the Capital, Yield and any amount due at any time hereunder or under
any fee letter delivered by the Originator to the Deal Agent and the Purchasers
directly to the applicable Investor and for all purposes shall deal directly
with the Investors. After any retiring Liquidity Agent's resignation hereunder
as Liquidity Agent, the provisions of this Article IX and Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Liquidity Agent under this Agreement.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
SECTION 10.1 ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
(a) Each Investor may upon at least 30 days notice to VFCC, the Deal
Agent, the Liquidity Agent and S&P and ▇▇▇▇▇'▇, assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement; provided, however, that (i) each such assignment shall be of a
-------- -------
constant, and not a varying percentage of all of the assigning Investor's rights
and obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Investor being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than the lesser of (A) $15,000,000 or an integral
multiple of $1,000,000 in excess of that amount and (B) the full amount of the
assigning Investor's Commitment, (iii) each such assignment shall be to an
Eligible Assignee, (iv) the parties to each such assignment shall execute and
deliver to the Deal Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 or such lesser amount as shall be approved by the Deal Agent and
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(v) the parties to each such assignment shall have agreed to reimburse the Deal
Agent, the Liquidity Agent and VFCC for all fees, costs and expenses (including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for each of the Deal Agent, the Liquidity Agent and VFCC) incurred by the Deal
Agent, the Liquidity Agent and VFCC, respectively, in connection with such
assignment, and provided further that upon the effective date of such assignment
-------- -------
the provisions of Section 3.03(f) of the Administration Agreement shall be
satisfied. Upon such execution, delivery and acceptance by the Deal Agent and
the Liquidity Agent and the recording by the Deal Agent, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be the date of acceptance thereof by the Deal Agent and the Liquidity
Agent, unless a later date is specified therein, (i) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of an Investor hereunder and (ii) the Investor assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Investor's rights and obligations under this Agreement, such Investor
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Investor assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Investor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Investor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of VFCC or the performance or observance by VFCC of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Deal Agent or the
Liquidity Agent, such assigning Investor or any other Investor and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assigning Investor and such assignee confirm that such
assignee is an Eligible Assignee; (vi) such assignee appoints and authorizes
each of the Deal Agent and the Liquidity Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
such agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as an Investor.
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(c) The Deal Agent shall maintain at its address referred to herein a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Investors and the
Commitment of, and the Capital of, each Asset interest owned by each investor
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and VFCC, the
Seller and the Investors may treat each Person whose name is recorded in the
Register as an Investor hereunder for all purposes of this Agreement. The
Register shall be available for inspection by VFCC, the Liquidity Agent or any
Investor at any reasonable time and from time to time upon reasonable prior
notice.
(d) Subject to the provisions of Section 10.1(a), upon its receipt of
an Assignment and Acceptance executed by an assigning Investor and an assignee,
the Deal Agent and the Liquidity Agent shall each, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit D
---------
hereto, accept such Assignment and Acceptance, and the Deal Agent shall then (i)
record the information contained therein in the Register and (ii) give prompt
notice thereof to VFCC.
(e) Each Investor may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and each Asset Interest owned by it); provided, however, that (i)
-------- -------
such Investor's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged, (ii) such Investor shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Deal Agent and the other Investors shall continue
to deal solely and directly with such Investor in connection with such
Investor's rights and obligations under this Agreement, and provided further
-------- -------
that the Deal Agent shall have confirmed that upon the effective date of such
participation the provisions of Section 3.03(f) of the Administration Agreement
shall be satisfied. Notwithstanding anything herein to the contrary, each
participant shall have the rights of an Investor (including any right to receive
payment) under Sections 2.12 and 2.13; provided, however, that no participant
-------- -------
shall be entitled to receive payment under either such Section in excess of the
amount that would have been payable under such Section by the Seller to the
Investor granting its participation had such participation not been granted, and
no Investor granting a participation shall be entitled to receive payment under
either such Section in an amount which exceeds the sum of (i) the amount to
which such Investor is entitled under such Section with respect to the any
portion of any Asset Interest owned by such Investor which is not subject to any
participation plus (ii) the aggregate amount to which its participants are
----
entitled under such Sections with respect to the amounts of their respective
participations. With respect to any participation described in this Section
10.1, the participant's rights as set forth in the agreement between such
participant and the applicable Investor to agree to or to restrict such
Investor's ability to agree to any modification, waiver or release of any of the
terms of this Agreement or to exercise or refrain from exercising any powers or
rights which such Investor may have under or in respect of this Agreement shall
be limited to the right to consent to any of the matters set forth in Section
11.1 of this Agreement.
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(f) Each Investor may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.1, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Seller or VFCC furnished to such
Investor by or on behalf of the Seller or VFCC.
(g) In the event (i) an Investor ceases to qualify as an Eligible
Assignee, or (ii) an Investor makes demand for compensation pursuant to Section
2.12 or Section 2.13, VFCC may, and, upon the direction of the Seller and prior
to the occurrence of an Event of Termination, shall, in any such case,
notwithstanding any provision to the contrary herein, replace such Investor with
an Eligible Assignee by giving three Business Days' prior written notice to such
Investor. In the event of the replacement of an Investor, such Investor agrees
(i) to assign all of its rights and obligations hereunder to an Eligible
Assignee selected by VFCC upon payment to such Investor of the amount of such
Investors Asset Interests together with any accrued and unpaid Yield thereon,
all accrued and unpaid commitment fees owing to such Investor and all other
amounts owing to such Investor hereunder and (ii) to execute and deliver an
Assignment and Acceptance and such other documents evidencing such assignment as
shall be necessary or reasonably requested by VFCC or the Deal Agent. In the
event that any Investor ceases to qualify as an Eligible Assignee, such affected
Investor agrees (1) to give the Deal Agent, the Seller and VFCC prompt written
notice thereof and (2) subject to the following proviso, to reimburse the Deal
Agent, the Liquidity Agent, the Seller, VFCC and the relevant assignee for all
fees, costs and expenses (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for each of the Deal Agent, the Liquidity
Agent, the Seller and VFCC and such assignee) incurred by the Deal Agent, the
Liquidity Agent, the Seller, VFCC and such assignee, respectively, in connection
with any assignment made pursuant to this Section 10.1(g) by such affected
Investor; provided, however, that such affected Investor's liability for such
-------- -------
costs, fees and expenses shall be limited to the amount of any up-front fees
paid to such affected Investor at the time that it became a party to this
Agreement.
(h) Nothing herein shall prohibit any Investor from pledging or
assigning as collateral any of its rights under this Agreement to any Federal
Reserve Bank in accordance with applicable law and any such pledge or collateral
assignment may be made without compliance with Section 10.1(a) or Section
10.1(b).
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 AMENDMENTS AND WAIVERS.
----------------------
(a) Except as provided in this Section 11.1, no amendment, waiver or
other modification of any provision of this Agreement shall be effective without
the written agreement of the Seller, the Deal Agent, the Backup Servicer, the
Collateral Custodian and the Required Investors. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
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(b) No amendment, waiver or other modification of this Agreement
shall:
(i) without the consent of each affected Purchaser, (A) extend
the Commitment Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Yield (or any component thereof), (C) reduce any fee
payable to the Deal Agent for the benefit of the Purchasers, (D) except
pursuant to Article X hereof, change the amount of the Capital of any
Purchaser, an Investor's pro rata share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this Section 11.1(b), (F) consent to or permit the assignment
or transfer by the Seller of any of its rights and obligations under this
Agreement or (G) amend or modify any defined term (or any defined term used
directly or indirectly in such defined term) used in clauses (A) through
(E) above in a manner which would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written consent of the Deal Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
(c) Notwithstanding the foregoing provisions of this Section 11.1,
without the consent of the Investors, the Deal Agent may, with the consent of
the Seller amend this Agreement solely to add additional Persons as Investors
hereunder. Any modification or waiver shall apply to each of the Purchasers
equally and shall be binding upon the Seller, the Purchasers and the Deal Agent.
SECTION 11.2 NOTICES, ETC.
------------
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or specified in such party's Assignment and Acceptance or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States 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, except that
notices and communications pursuant to Article II shall not be effective until
received with respect to any notice sent by mail or telex.
SECTION 11.3 RATABLE PAYMENTS.
----------------
If any Purchaser, whether by setoff or otherwise, has payment made to
it with respect to any portion of the Aggregate Unpaids owing to such Purchaser
(other than payments received pursuant to Section 7.1 in a greater proportion
than that received by any other Purchaser, such Purchaser agrees, promptly upon
demand, to purchase for cash without recourse or warranty a portion of the
Aggregate Unpaids held by the other Purchasers so that
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after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
SECTION 11.4 NO WAIVER, REMEDIES.
-------------------
No failure on the part of the Deal Agent or a Purchaser to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 11.5 BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Seller, the Deal Agent, the Backup Servicer, the Collateral Custodian, the
Purchasers and their respective successors and permitted assigns.
SECTION 11.6 TERM OF THIS AGREEMENT.
----------------------
This Agreement, including, without limitation, the Seller's obligation
to observe its covenants set forth in Article V, and the Servicer's obligation
to observe its covenants set forth in Article VI, shall remain in full force and
effect until the Collection Date; provided, however, that the rights and
-------- -------
remedies with respect to any breach of any representation and warranty made or
deemed made by the Seller pursuant to Articles III and IV and the
indemnification and payment provisions of Article VIII and Article IX and the
provisions of Section 11.9 and Section 11.10 shall be continuing and shall
survive any termination of this Agreement.
SECTION 11.7 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 PURCHASERS, THE SELLER, THE
LIQUIDITY AGENT AND THE DEAL AGENT HEREBY AGREES TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF
THE PARTIES HERETO 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.
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SECTION 11.8 WAIVER OF JURY TRIAL.
--------------------
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PURCHASERS, THE
SELLER AND THE DEAL AGENT 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 11.9 COSTS, EXPENSES AND TAXES.
-------------------------
(a) In addition to the rights of indemnification granted to the Deal
Agent, the Liquidity Agent, the Purchasers and its Affiliates under Article VIII
hereof, the Seller agrees to pay on demand all costs and expenses of the
Purchasers, the Liquidity Agent, the Backup Servicer, the Collateral Custodian
and the Deal Agent incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), 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 Deal Agent, the Liquidity Agent, the Backup
Servicer, the Collateral Custodian and the Purchasers with respect thereto and
with respect to advising the Deal Agent, the Liquidity Agent, the Backup
Servicer, the Collateral Custodian and the Purchasers 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 Deal Agent,
the Liquidity Agent, the Backup Servicer, the Collateral Custodian or the
Purchasers in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith.
(b) The Seller shall pay on demand any and all commissions of
placement agents and dealers in respect of commercial paper notes issued to fund
the Purchase of any Asset Interest and any and all stamp, sales, excise and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the other documents
to be delivered hereunder or any agreement or other document providing liquidity
support, credit enhancement or other similar support to the Purchaser in
connection with this Agreement or the funding or maintenance of Purchases
hereunder.
(c) The Seller shall pay on demand all other costs, expenses and
Taxes (excluding income taxes) incurred by any Issuer or any shareholder of such
Issuer ("Other Costs"), including, without limitation, the cost of auditing such
Issuer's books by certified public accountants, the cost of rating such Issuer's
commercial paper by independent financial rating agencies, the Taxes (excluding
income taxes) resulting from such Issuer's operations,
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and the reasonable fees and out-of-pocket expenses of counsel for the Issuer or
any counsel for any general or limited partner or shareholder of the Issuer with
respect to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith or matters relating to the
Issuer's operations and (iii) advising such Person as to the issuance of the
Issuer's commercial paper notes and action in connection with such issuance.
SECTION 11.10 NO PROCEEDINGS.
--------------
Each of the Seller, the Deal Agent, the Liquidity Agent, the Servicer,
the Subservicer, the Backup Servicer, the Collateral Custodian and the
Purchasers hereby agrees that it will not institute against, or join any other
Person in instituting against VFCC any proceedings of the type referred to in
Section 6.8(c) and 6.9(c) so long as any commercial paper issued by VFCC shall
be outstanding or there shall not have elapsed one year and one day since the
last day on which any such commercial paper shall have been outstanding.
SECTION 11.11 RECOURSE AGAINST CERTAIN PARTIES.
--------------------------------
No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of any Purchaser 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 such Purchaser or
any incorporator, affiliate, stockholder, officer, employee or director of such
Purchaser or of any such administrator, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of such
-------- --------- ------ --- ----------
Purchaser contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such Purchaser,
and that no personal liability whatsoever shall attach to or be incurred by any
administrator of such Purchaser or any incorporator, stockholder, affiliate,
officer, employee or director of such Purchaser 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 such Purchaser contained in this Agreement or in any
other such instruments, documents or agreements, or which are implied therefrom,
and that any and all personal liability of every such administrator of such
Purchaser and each incorporator, stockholder, affiliate, officer, employee or
director of such Purchaser or of any such administrator, or any of them, for
breaches by such Purchaser of any such obligations, covenants or agreements,
which liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement. The provisions of this
Section 11.11 shall survive the termination of this Agreement.
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SECTION 11.12 PROTECTION OF OWNERSHIP INTERESTS OF THE PURCHASERS;
----------------------------------------------------
INTENT OF PARTIES; SECURITY INTEREST.
------------------------------------
(a) 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 may reasonably be necessary or desirable, or that the Deal Agent
may reasonably request, to perfect, protect or more fully evidence the Asset
Interests and the undivided ownership interest in the Assets in the Asset Pool
represented by such Asset Interests, or to enable the Deal Agent or the
Purchasers to exercise and enforce their rights and remedies hereunder.
(b) If the Seller or the Servicer fails to perform any of its
obligations hereunder after five Business Days notice from the Deal Agent, the
Deal Agent or any Purchaser may (but shall not be required to) perform, or cause
performance of, such obligation; and the Deal Agent's or such Purchaser's costs
and expenses incurred in connection therewith shall be payable by the Seller (if
the Servicer that fails to so perform is the Seller or an Affiliate thereof) as
provided in Article VIII, as applicable. The Seller irrevocably authorizes the
Deal Agent and appoints the Deal 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 Deal Agents sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Purchasers 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 Deal Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Purchasers in the Assets. This
appointment is coupled with an interest and is irrevocable.
(c) The parties hereto intend that the conveyance of Asset Interests
by the Seller to the Purchasers shall be treated as sales for all purposes. If,
despite such intention, a determination is made that such transactions shall not
be treated as sales, then the parties hereto intend that this Agreement
constitutes a security agreement and the transactions effected hereby constitute
secured loans by the Purchasers to the Seller under applicable law. For such
purpose, the Seller hereby transfers, conveys, assigns and grants to the Deal
Agent, for the benefit of the Purchasers, a continuing security interest in all
Assets, all Collections and the proceeds of the foregoing to secure the
repayment of all Capital, all payments at any time due or accrued in respect of
the Yield on any Asset Interest and all other payments at any time due (whether
accrued or due) by the Seller hereunder (including without limit any amount
owing under Article VIII hereof) or under any fee letter to the Deal Agent and
each Purchaser.
SECTION 11.13 CONFIDENTIALITY.
---------------
(a) Each of the Deal Agent, the Purchasers, the Liquidity Agent and
the Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and the other confidential
proprietary information with respect to the other parties hereto and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except
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that each such party and its officers and employees may (i) disclose such
information to its external accountants, attorneys, investors, potential
investors, lenders and potential lenders and the agents of such Persons
("Excepted Persons"), and as required by an applicable law or order of any
judicial or administrative proceeding; provided, however, that each Excepted
--------
Person shall, as a condition to any such disclosure, execute a confidentiality
agreement reasonably satisfactory in form and substance to the Deal Agent to the
effect that such information shall be used solely in connection with such
Excepted Person's evaluation of, or relationship with, the Seller and its
affiliates, and (ii) disclose the existence of the Agreement, but not the
financial terms thereof.
(b) Anything herein to the contrary notwithstanding, the Seller
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Deal Agent, the Liquidity Agent or the Purchasers by each other,
(ii) by the Deal Agent or the Purchasers to any prospective or actual assignee
or participant of any of them or (iii) by the Deal Agent, the Liquidity Agent or
a Purchaser to any Rating Agency, Commercial Paper dealer or provider of a
surety, guaranty or credit or liquidity enhancement to a Purchaser 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 Purchasers, the Liquidity Agent and the Deal
Agent may disclose any such nonpublic information 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).
SECTION 11.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
----------------------------------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than any fee letter delivered by the Originator to the Deal Agent and the
Purchasers.
[Signature to Follow]
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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: BVFU FUNDING CORP.
By _____________________________
Title:
BVFU Funding Corp.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
THE SERVICER: BANKVEST CAPITAL CORP.
By _____________________________
Title:
Bankvest Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
THE INVESTORS: FIRST UNION NATIONAL BANK
By _____________________________
Title:
Commitment: $75,000,000
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confimation No: (____)
-85-
VFCC: VARIABLE FUNDING CAPITAL CORPORATION
By First Union Capital Markets Corp., as
attorney-in-fact
By _____________________________
Title:
Variable Funding Capital Corporation
c/o First Union Capital Markets Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Lord Securities Corp.
Attention:
Facsimile No.: (_____) __________
Confirmation No.: (_____) __________
THE DEAL AGENT: FIRST UNION CAPITAL MARKETS CORP.
By _____________________________
Title:
First Union Capital Markets Corp.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
-86-
THE LIQUIDITY AGENT: FIRST UNION NATIONAL BANK
By _____________________________
Title:
First Union National Bank
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (_____) __________
THE COLLATERAL CUSTODIAN: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By _____________________________
Title:
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Servicer --
Asset-Backed Administration
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
THE BACKUP SERVICER: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By _____________________________
Title:
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Servicer --
Asset-Backed Administration
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
-87-
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.1 of the Agreement, each of the following items
must be delivered to the Deal Agent prior to the date of the initial Purchase:
1. A copy of this Agreement duly executed by the Seller and the Servicer;
2. Certificates of the Secretary or Assistant Secretary of each of the
Seller and of the Servicer, each dated the date of this Agreement, certifying
(i) the names and true signatures of the incumbent officers of such Person
authorized to sign this Agreement and the other documents to be delivered by it
hereunder (on which certificate the Deal Agent, the Liquidity Agent and the
Purchasers may conclusively rely until such time as the Deal Agent shall receive
from the Seller or the Servicer, as the case may be, a revised certificate
meeting the requirements of this paragraph (b), (ii) that the copy of the
certificate of incorporation of such Person attached thereto is a complete and
correct copy and that such certificate of incorporation has not been amended,
modified or supplemented and is in full force and effect, (iii) that the copy of
the bylaws of such Person attached thereto is a complete and correct copy and
that such by-laws have not been amended, modified or supplemented and are in
full force and effect, and (iv) the resolutions of such Person's board of
directors approving and authorizing the execution, delivery and performance by
such Person of this Agreement and the documents related thereto;
3. Good standing certificate for the Seller issued by the Secretary of
State of Delaware.
4. Good standing certificate for the Servicer issued by the Secretary of
State of Massachusetts.
5. Qualification to do Business Certificate of Seller issued by the
Secretary of State of Massachusetts.
6. Acknowledgment copies of proper financing statements, dated a date
reasonably near to the date of the initial Purchase, describing the Assets and
naming the Originator [Leasevest] as debtor and the Seller [Originator] as
secured party, or other, similar instruments or documents, as may be necessary
or, in the opinion of the Deal Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Seller's interests in all
Assets;
7. Acknowledgment copies of proper financing statements (the "Facility
Financing Statement"), dated a date reasonably near to the date of the initial
Purchase, describing the Assets and naming the Seller as debtor and the Deal
Agent, on behalf of the Purchasers, as secured party, or other, similar
instruments or documents, as may be necessary
or, in the opinion of the Deal Agent or the Purchaser, desirable under the UCC
of all appropriate jurisdictions or any comparable law to perfect the
Purchaser's interests in all Assets;
8. Acknowledgment copies of proper financing statements, if any, necessary
to release all security interests and other rights of any Person in the Assets
previously granted by the Seller;
9. Certified copies of requests for information or copies (or a similar
search report certified by a party acceptable to the Deal Agent), dated a date
reasonably near to the date of the initial Purchase, listing all effective
financing statements which name the Seller (under its present name and any
previous name) as debtor and which are filed in the applicable jurisdictions
together with copies of such financing statements (none of which, other than the
financing statements filed in connection with this transaction, shall cover any
Assets or Contracts);
10. An accurate and complete listing in all material respects of all the
Existing Contracts in the Asset Pool as of the Closing Date and any Addition
Date;
11. Payment of the Structuring Fee and the estimated legal fees and
expenses of counsel to the Deal Agent;
12. Undated executed copies of Lock-Box Notices to the Lock-Box Banks; and
13. Opinions of ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.C., counsel to the Seller as to
such matters as the Deal Agent may reasonably request.
SCHEDULE II
LOCK-BOX BANK AND ACCOUNT NUMBER
Lock-Box Bank: PNC Bank, N.A.
Lock-Box Account Number: 641652
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
None
SCHEDULE IV
SUBSTITUTE CONTRACTS CRITERIA
Each Substitute Contract must satisfy each of the following conditions.
(i) At the time of substitution, such Substitute Contracts have in
the aggregate a Discounted Contract Balance (at the Blended Discount Rate as of
the date of substitution) of not less than the Discounted Contract Balances of
the Contracts being replaced (at the Blended Discount Rate as of the date of
substitution); and
(ii) Such Substitute Contracts, at the time of substitution by the
Seller shall have approximately the same weighted average life as the remaining
Scheduled Payments of Assets in the Asset Pool and shall not materially extend
the final maturity of the originally Scheduled Payments of Assets in the Asset
Pool.
In addition, on a cumulative basis, the sum of the Discounted Contract
Balance of Contracts substituted for Defaulted Contracts is not to exceed 5% of
the average number of Contracts outstanding under the facility and, on a
cumulative basis, the sum of the Discounted Contract Balance of Contracts
substituted for all Contracts, other than Prepaid Contracts, is not to exceed
more than 10% of the average under the facility.