Exhibit 10.3
Executed Copy
AMENDED AND RESTATED SERVICING AGREEMENT
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CREDITRUST SPV99-2, LLC,
as Issuer
and
CREDITRUST CORPORATION,
as Servicer of the Consumer Receivables
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Administrative Agent
Dated as of March 1, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................................................. 1
SECTION 1.01 Definitions............................................................................ 1
SECTION 1.02 Interpretation......................................................................... 8
ARTICLE II SERVICER'S DUTIES AS CUSTODIAN............................................................ 8
SECTION 2.01 Duties as Custodian.................................................................... 8
SECTION 2.02 Effective Period and Termination....................................................... 9
ARTICLE III ADMINISTRATION AND SERVICING OF CONSUMER RECEIVABLES..................................... 9
SECTION 3.01 Duties of Servicer..................................................................... 9
SECTION 3.02 Collection of Consumer Receivable Payments............................................. 10
SECTION 3.03 Covenants of Servicer.................................................................. 10
SECTION 3.04 Servicing Fee; Payment of Certain Expenses by Servicer................................. 12
SECTION 3.05 Monthly Servicer Report................................................................ 13
SECTION 3.06 Annual Statement as to Compliance; Annual Accountants Report........................... 12
SECTION 3.07 Access to Certain Documentation and Information........................................ 14
ARTICLE IV THE ACCOUNTS; PAYMENTS; STATEMENTS TO LENDERS............................................. 14
SECTION 4.01 Accounts............................................................................... 14
SECTION 4.02 Collections............................................................................ 15
SECTION 4.03 Intentionally Omitted.................................................................. 15
SECTION 4.04 Allocations and Payments............................................................... 15
SECTION 4.05 Statements to Lenders.................................................................. 16
ARTICLE V INTENTIONALLY OMITTED...................................................................... 17
ARTICLE VI INTENTIONALLY OMITTED..................................................................... 17
ARTICLE VII THE SERVICER............................................................................. 17
SECTION 7.01 Representations of the Servicer........................................................ 17
SECTION 7.02 Liability of Servicer; Indemnities..................................................... 19
SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations of, the Servicer.......... 20
SECTION 7.04 Limitation on Liability of Servicer and Others......................................... 20
SECTION 7.05 Servicer Not to Resign................................................................. 20
SECTION 7.06 General Covenants of Servicer.......................................................... 21
ARTICLE VIII SERVICER DEFAULT; EVENTS OF DEFAULT; REMEDIES........................................... 24
SECTION 8.01 Servicer Default....................................................................... 24
SECTION 8.02 Consequences of a Servicer Default..................................................... 23
SECTION 8.03 Appointment of Successor Servicer...................................................... 24
SECTION 8.04 Notification to Lenders................................................................ 26
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SECTION 8.05 Waiver of Past Servicer Defaults....................................................... 25
SECTION 8.06 Intentionally Omitted.................................................................. 27
ARTICLE IX INTENTIONALLY OMITTED..................................................................... 25
ARTICLE X INTENTIONALLY OMITTED...................................................................... 25
ARTICLE XI MISCELLANEOUS PROVISIONS.................................................................. 25
SECTION 11.01 Amendment............................................................................. 25
SECTION 11.02 Intentionally Omitted................................................................. 27
SECTION 11.03 Limitation of Rights of Lenders....................................................... 26
SECTION 11.04 Governing Law......................................................................... 26
SECTION 11.05 Notices............................................................................... 26
SECTION 11.06 Severability of Provisions; Counterparts.............................................. 26
SECTION 11.07 Assignment............................................................................ 28
SECTION 11.08 No Petition........................................................................... 28
SECTION 11.09 Lender Direction...................................................................... 27
SECTION 11.10 No Substantive Review of Compliance Documents......................................... 29
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AMENDED AND RESTATED SERVICING AGREEMENT
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THIS AMENDED AND RESTATED SERVICING AGREEMENT (this "Agreement"), dated
as of March 1, 2000, is made and entered into by and among CREDITRUST SPV99-2,
LLC, as issuer (the "Issuer"), CREDITRUST CORPORATION, as servicer (the
"Servicer"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as administrative
agent (the "Administrative Agent"). This Agreement hereby amends and restates
that certain servicing agreement (the "Original Servicing Agreement"), dated as
of August 2, 1999, by and between the Issuer and the Servicer.
WHEREAS, the Issuer and the Servicer each desire to amend and restate
the Original Servicing Agreement; and
WHEREAS, the Issuer, the Servicer and the Administrative Agent, inter
alia, are parties to the Bridge Loan Agreement (as hereinafter defined); and
WHEREAS, the Issuer, the Servicer and the Administrative Agent desire
to set forth their agreement as to the Servicer's servicing of certain
collateral owned by Issuer and pledged to the Administrative Agent as security
for Issuer's obligations under the Bridge Loan Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party agrees as follows for
the benefit of the other parties and the Lenders to the extent provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
Except as otherwise provided in this Agreement, whenever used herein,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Account Control Agreement" means the Account Control Agreement, dated
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October 10, 1999, by and among the Issuer, Capital, the Servicer (in its
capacity as parent guarantor), the Administrative Agent, and First Union
National Bank, Capital Management Group.
"Account Security Agreement" means the Account Security Agreement,
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dated October 10, 1999, by and among the Issuer, Capital, the Servicer (in its
capacity as parent guarantor), and the Administrative Agent.
"Accounts" means the Collection Account and the Securities Account.
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"Administrative Agent" means Norwest Bank Minnesota, National
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Association, acting pursuant to the authority granted in the Bridge Loan
Agreement.
"Administrative Agent Fee" means those fees set forth in the Letter
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Agreement with the Administrative Agent, dated November 4, 1999, as such shall
be from time to time amended.
"Affiliate" means, with respect to any specified Person, any other
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Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control," when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the term "controlling" and
"controlled" have meanings correlative to the foregoing.
"Available Funds" means, with respect to any Payment Date and the next
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preceding Determination Date, the sum of (i) the Net Proceeds recovered with
respect to each Consumer Receivable and received in the Collection Account prior
to the Determination Date (including amounts deposited by the Servicer pursuant
to the last sentence of the definition of "Net Proceeds"), plus (ii) all
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available funds on deposit in the Collection Account (other than Net Proceeds of
Consumer Receivables) as of the opening of business of the Administrative Agent
on such Determination Date, and any earnings on investment of any funds, less
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amounts paid out of the Collection Account in pre-payment of interest on the
Notes pursuant to the terms thereof.
"Bridge Loan Agreement" means that certain bridge loan agreement dated
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August 2, 1999, by and among the Issuer, Capital, the Servicer, the
Administrative Agent and certain lenders named therein.
"Business Day" means any day other than a Saturday, a Sunday or a day
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on which banking institutions in the State of Maryland, the State of Minnesota
or the State of New York are required or authorized by law, regulation,
executive order or governmental decree to be closed.
"By-laws" means the bylaws of Issuer.
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"Capital" means Creditrust SPV99-2 Capital, Inc., a Delaware
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corporation.
"Closing Date" means March 1, 2000.
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"Collection Account" means the Lockbox Account as defined under the
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Account Security Agreement.
"Collection Period" means, with respect to any Determination Date or
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Payment Date, the period beginning on the first day of the calendar month
immediately preceding the month in which such Determination Date or Payment Date
occurs and ending on the last day of such calendar month.
"Conversion Fee" has the meaning set forth in the Bridge Loan
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Agreement.
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"Consumer Account" means any receivable generated on a credit card
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account, revolving account, or installment account.
"Consumer Receivable" means any receivable in connection with a
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Consumer Account.
"Corporate Trust Office" means the office of the Administrative Agent
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at which at any particular time its corporate trust business shall be
principally administered, which office at the date of execution of this
Agreement is located at Sixth Street and Marquette Avenue, MAC N9303-120,
Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate Trust Services.
"Customary Procedures" means the customary practices, policies,
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standards and procedures of the Servicer relating to the acquisition and
collection of comparable defaulted consumer receivables that it services for
itself or others, in each case as in effect on the Closing Date which include
backup servicing files and disaster recovery plans, as the same may be modified
by the Servicer from time to time thereafter, and shall include compliance with
all applicable laws, rules and regulations and compliance with the terms of this
Agreement.
"Determination Date" means, with respect to any Payment Date, the
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second Business Day next preceding such Payment Date.
"Final Payment Date" shall mean the earlier of September 30, 2002 or
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(ii) the Payment Date which follows the Payment Date on which all proceeds of a
sale of the assets of the Issuer were distributed.
"GAAP" means generally accepted accounting principles that are (i)
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consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (ii) consistently applied with past financial statements of the Servicer and
its subsidiaries; provided that a certified public accountant would, insofar as
the use of such accounting principles is pertinent, be in a position to deliver
an unqualified opinion (other than a qualification regarding changes in
generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
"Independent Member" has the meaning set forth in the Amended and
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Restated Limited Liability Company Operating Agreement of the Issuer.
"Insolvency Event" means, with respect to a specified Person, (a) the
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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 bankruptcy, insolvency or other similar
law now or hereafter in effect, or the filing of a petition against such Person
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which case remains unstayed and
undismissed within 30 days of such filing, or the appointing of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the ordering of the
winding-up or liquidation of such Person's business; or (b) the commencement by
such Person of
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a voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person of its inability to pay its debts generally as they become due.
"Insolvency Proceeding" means any proceeding of the sort described in
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the definition of Insolvency Event.
"Interest Carryover Shortfall" when used in reference to either the
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Note Balance or the Conversion Fee, means, with respect to any Payment Date, the
excess, if any, of (i) the Interest Distributable Amount in connection with the
Note Balance or the Conversion Fee, as applicable, for such Payment Date and all
prior Payment Dates, over (ii) the amount of interest, if any, actually paid to
Lenders on such Payment Date and all prior Payment Dates.
"Interest Distributable Amount" when used in reference to either the
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Note Balance or the Conversion Fee, means, with respect to any Payment Date, the
product of (A) one-twelfth of the Note Rate and (B) the Note Balance or the
unpaid amount of the Conversion Fee, as applicable, as of the immediately
preceding Payment Date (after giving effect to payments in reduction of the Note
Balance or the Conversion Fee made on such immediately preceding Payment Date,
if any) or, in the case of the initial Payment Date, the Original Note Balance
or the original Conversion Fee, as applicable; provided, however, that with
respect to the initial Payment Date, the amount calculated in accordance with
the preceding clause shall be multiplied by a fraction, the numerator of which
is the number of days from and including the Closing Date to, but not including,
the initial Payment Date and the denominator of which is 30.
"Issuer" means Creditrust SPV99-2, LLC, in its capacity as issuer of
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the Notes pursuant to the Bridge Loan Agreement, and each successor thereto (in
the same capacity.
"Lenders" has the meaning set forth in the Bridge Loan Agreement.
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"Lien" means any security interest, lien, charge, pledge, equity or
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encumbrance of any kind.
"LLC Agreement" means the limited liability company agreement of
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Issuer.
"Loan Documents" has the meaning provided in the Bridge Loan Agreement.
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"Majority Lenders" has the same meaning set forth in the Bridge Loan
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Agreement.
"Monthly Servicer Report" means an Officer's Certificate of the
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Servicer completed and executed pursuant to Section 3.05, substantially in the
form attached hereto as Exhibit A.
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"Net Proceeds" means, with respect to a Consumer Receivable, all monies
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in available funds actually collected, received or otherwise recovered from or
for the account of the related Obligor on such Consumer Receivable, less any
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amounts not credited to the Collection Account due to insufficient funds, less
Third-Party Fees, which will be deducted from collections on such Consumer
Receivable by such third parties or by the Servicer, however applicable. Such
Third-Party Fees shall not exceed $924,000 in the aggregate throughout the life
of this Agreement (commencing August 2, 1999). The Servicer shall reimburse to
the Collection Account (either from its own funds or by reduction of the
Servicing Fee) the amount by which any Third-Party Fees deducted from any
amounts any third parties remit on account of a Consumer Receivable exceed the
aforestated aggregate maximum amount.
"Note(s)" means the Bridge Note(s) issued under and defined in the
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Bridge Loan Agreement and held by the Lenders.
"Note Balance" means the principal balance from time to time under the
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Notes.
"Note Rate" means the applicable interest rate from time to time under
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the Notes.
"Obligations" has the meaning provided in the Bridge Loan Agreement.
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"Obligor" on a Consumer Receivable means any Person who owes or may be
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liable for payments under such Consumer Receivable.
"Officer's Certificate" means a certificate signed by a Responsible
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Officer of the Issuer or the Servicer, as the case may be, and delivered to the
Administrative Agent.
"Opinion of Counsel" means a written opinion of counsel, who may be an
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employee of or outside counsel to the Person responsible for providing such
opinion, and which opinion shall be reasonably acceptable to the Administrative
Agent and the Majority Lenders.
"Original Note Balance" means $40,000,000.
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"Original Servicing Agreement" means that certain servicing agreement
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entered into by and between the Issuer and the Servicer, dated as of August 2,
1999.
"Payment Date" means the twelfth day of each calendar month or, if such
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day is not a Business Day, the next succeeding Business Day.
"Permitted Expenses" means Lenders' legal fees incurred in connection
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with the Bridge Loan Agreement and Amendment No. 1 thereto, Issuer's legal fees
incurred in connection with the Bridge Loan Agreement and Amendment No. 1
thereto not to exceed $30,000 in the aggregate, and reimbursement to the Issuer
of the fees of R.R. Xxxxxxxx & Sons Co. in the amount of $77,850.37. Except as
provided in the preceding sentence, expenses of capital markets and similar
transactions (whether closed or failed) are not Permitted Expenses and may not
be paid from collections of Consumer Receivables (but reasonable expenses of
closed
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transactions may be deducted from the proceeds thereof before they are applied
to the payment of the Notes).
"Permitted Investments" has the meaning set forth in the Bridge Loan
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Agreement.
"Person" means any legal person, including any individual, corporation,
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partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Prepayment Date" has the meaning set forth in the Bridge Loan
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Agreement.
"Receivable File" means, to the extent applicable in the circumstances:
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(a) the agreements pursuant to which a Consumer Receivable was purchased by or
on behalf of the Issuer; (b) any other documents received from or made available
by the related financial institution or merchant which originated the Consumer
Receivable (or other seller of the Consumer Receivables) in respect of such
Consumer Receivable; (c) a copy of the marked computer records indicating the
interest of Administrative Agent on behalf of the Lenders in the Consumer
Receivable; and (d) any and all other documents and records that the Issuer or
the Servicer, as the case may be, shall keep on file, in accordance with its
customary procedures, relating to such Consumer Receivable or the related
Obligor.
"Related Person" and "Related Person Transaction" have the meanings
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given in Section 7.06(a) of this Agreement.
"Responsible Officer" means as follows:
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(i) when used with respect to the Administrative Agent, any
officer within the Corporate Trust Office of the Administrative Agent,
including any vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the
Administrative Agent customarily performing functions similar to those
performed by any of the above designated officers 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
such particular subject, and
(ii) when used with respect to the Issuer or the Servicer, the
chief executive officer, the president, the chief financial officer,
the chief legal officer, the chief recovery officer or the chief
acquisitions officer of the Issuer or the Servicer, as the case may be.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Account" means the account established under the Account
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Control Agreement.
"Servicer" means Creditrust Corporation, in its capacity as servicer of
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the Consumer Receivables pursuant to this Agreement, and each successor thereto
(in the same capacity) appointed pursuant to Section 8.03 of this Agreement.
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"Servicer Default" shall have the meaning specified in Section 8.01 of
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this Agreement.
"Servicing Fee" means the fee payable to the initial Servicer on each
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Payment Date, calculated pursuant to Section 3.04 of this Agreement, for
services rendered during the related Collection Period, which shall be, for any
Payment Date, equal to forty percent (40%) of all Net Proceeds collected,
received or otherwise recovered from or for the account of the Obligors during
such Collection Period subject to reduction pursuant to Section 3.04 of this
Agreement. The term "Servicing Fee" for a Successor Servicer shall mean the fee
payable to a Successor Servicer for servicing pursuant to Section 8.03 of this
Agreement. For this purpose, Net Proceeds shall not include amounts reimbursed
to the Collection Account pursuant to the last sentence of the definition of Net
Proceeds.
"Successor Servicer" has the meaning provided in Section 8.03 of this
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Agreement.
"Third-Party Fees" means, with respect to a Consumer Receivable and any
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Collection Period, the amount of (i) any contingency attorneys' fees paid to
contingency collection lawyers retained or otherwise engaged by the Servicer
under fee or compensation arrangements that are contingent upon and determined
by reference to amounts said lawyers recover in respect of the related Consumer
Receivable, which fees must be commercially reasonable, and (ii) court costs
(which term does not include attorneys' fees) incurred in connection with
collection of Consumer Receivables.
"Transaction Documents" means, collectively, this Agreement, the Bridge
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Loan Agreement, Amendment No. 1 to Bridge Loan Agreement, the LLC Agreement, the
Notes, the Account Control Agreement, the Account Security Agreement, and each
of the other documents, instruments and agreements entered into in connection
with any of the foregoing or the transactions contemplated thereby.
"UCC" means the Uniform Commercial Code as in effect in the State of
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Maryland.
"United States" means the United States of America.
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"Vice President" of any Person means any vice president of such Person,
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whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"Voting Interests" means the aggregate voting power evidenced by the
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Notes, corresponding to the outstanding Note Balance of the Notes held by
individual Lenders; provided, however, that where the Voting Interests are
relevant in determining whether the vote of the requisite percentage of Lenders
necessary to effect any consent, waiver, request or demand shall have been
obtained, the Voting Interests shall be deemed to be reduced by the amount equal
to the Voting Interests (without giving effect to this provision) represented by
the interests evidenced by any Note registered in the name of, or in the name of
a Person or entity holding for the benefit of, the Issuer, the Servicer or any
Person actually known to a Responsible Officer of
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the Administrative Agent to be an Affiliate of either or both of the Issuer and
the Servicer, and the vote of such Voting Interest shall not be considered.
SECTION 1.02 Interpretation.
Unless otherwise indicated in this Agreement:
(a) reference to and the definition of any document (including
this Agreement) shall be deemed a reference to such document as it may be
amended or modified from time to time;
(b) all references to an "Article," "Section," "Schedule" or
"Exhibit" are to an Article or Section hereof or to a Schedule or an Exhibit
attached hereto;
(c) defined terms in the singular shall include the plural and
vice versa, and the masculine, feminine or neuter gender shall include all
genders;
(d) the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement;
(e) in the computation of periods 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 means "to but excluding";
(f) periods of days referred to in this Agreement shall be counted
in calendar days unless Business Days are expressly prescribed and references in
this Agreement to months and years shall be to calendar months and calendar
years unless otherwise specified;
(g) accounting terms not otherwise defined herein and accounting
terms partly defined herein to the extent not defined, shall have the respective
meanings given to them under GAAP; and
(h) the headings in this Agreement are for the purpose of
reference only and do not limit or affect its meaning.
ARTICLE II
SERVICER's DUTIES AS CUSTODIAN
SECTION 2.01 Duties as Custodian.
(a) The Servicer, in its capacity as custodian, shall hold all
documents relating to the Receivable Files on behalf of the Lenders and maintain
such accurate and complete accounts, records and computer systems pertaining to
each Consumer Receivable as shall enable the
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Servicer to comply with this Agreement. In performing its duties as custodian,
the Servicer shall act with reasonable care and with that degree of skill and
attention that it exercises with respect to the Receivable Files of comparable
defaulted receivables that the Servicer services for itself. The Servicer shall
conduct periodic examinations of the files of Consumer Receivables serviced by
it pursuant to this Agreement, and of the related accounts, records and computer
systems, in such a manner as shall reasonably enable the Lenders to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Lenders any material failure on its part to hold the Consumer Receivables
and maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure.
(b) The Servicer shall maintain each Receivable File at its office
specified in Section 11.05 or at such other office as shall be specified to the
Lenders. The Servicer shall make available to the Lenders or their duly
authorized representatives, attorneys or auditors the Receivable Files and the
accounts, records and computer systems maintained by the Servicer with respect
thereto upon not less than two (2) Business Days' prior written notice for
examination during normal business hours.
SECTION 2.02. Effective Period and Termination.
The Servicer's appointment as custodian of the Consumer Receivables
shall continue in full force and effect so long as it is the Servicer under this
Agreement. If all of the rights and obligations of the Servicer have been
terminated pursuant to this Agreement, the appointment of the Servicer as
custodian of the Receivable Files shall immediately terminate. As soon as
practicable, but not more than two (2) Business Days after any termination of
such appointment, the Servicer shall deliver the Receivable Files to the Lenders
or their agent at such place or places as the Administrative Agent or a majority
of the Lenders may reasonably designate.
ARTICLE III
ADMINISTRATION AND SERVICING OF CONSUMER RECEIVABLES
SECTION 3.01 Duties of Servicer.
The Servicer, as agent for the Issuer, shall manage, service,
administer and make collections on and in respect of the Consumer Receivables
with reasonable care, and in any event with not less than that degree of skill
and attention that the Servicer exercises with respect to all comparable
defaulted consumer receivables that it services for itself or others (whether or
not the Servicer shall then be servicing comparable defaulted consumer
receivables for itself or others). The Servicer's duties shall include
collecting and posting all payments, responding to inquiries of Obligors or by
federal, state or local government authorities with respect to the Consumer
Receivables, investigating delinquencies, implementation of payment plans,
sending payment information to Obligors, reporting tax information to Obligors
in accordance with its customary practices, accounting for collections,
preparing and furnishing Monthly Servicer Reports, publishing monthly and annual
statements to the Administrative Agent with respect to payments, generating
federal income tax information and performing the other duties specified herein.
In performing the above-referenced services, the Servicer shall perform in
accordance with
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Customary Procedures and shall have full power and authority, acting alone, to
do any and all things in connection with such managing, servicing,
administration and collection that it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer shall be
authorized and empowered by the Issuer to execute and deliver, on behalf of
itself, the Administrative Agent, the Lenders, or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Consumer
Receivables. The Servicer is hereby authorized to commence, in its own name or
in the name of the Issuer, a legal proceeding to enforce a Consumer Receivable
or to commence or participate in a legal proceeding (including without
limitation a bankruptcy proceeding) relating to or involving a Consumer
Receivable if the Servicer reasonably believes that doing so should increase the
ultimate recovery on the Consumer Receivable. If the Servicer commences or
participates in such a legal proceeding in its own name, the Issuer shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection on behalf of the party retaining an interest in such Consumer
Receivable, such Consumer Receivable and the other property owned by the Issuer
with respect to such Consumer Receivable 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 Issuer to execute and deliver in
the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Consumer Receivable on the grounds that it shall
not be a real party in interest or a holder entitled to enforce such Consumer
Receivable, the Issuer on behalf of the Lenders shall, at the Servicer's expense
and written direction, take reasonable steps to enforce such Consumer
Receivable. The Servicer shall deposit or cause to be deposited into the
Collection Account, within one Business Day of its receipt thereof, all Net
Proceeds realized in connection with any such action pursuant to Section 4.02.
The Issuer shall furnish the Servicer with any powers of attorney and other
documents and take any other steps which the Servicer may deem reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
SECTION 3.02 Collection of Consumer Receivable Payments.
The Servicer shall make reasonable efforts to collect all payments due
and payable in connection with the Consumer Receivables, and shall at all times
follow the Customary Procedures in so doing. The Servicer shall be authorized to
write down the balance of any Consumer Receivable in accordance with the
Customary Procedures without the prior consent of the Issuer; provided, however,
that such write-down will not affect the rights of the Lenders to any amounts
thereafter collected with respect to such Consumer Receivable. The Servicer may,
in accordance with the Customary Procedures, waive any charges or fees that
otherwise may be collected in the ordinary course of servicing the Consumer
Receivables. Without limiting the foregoing, the Servicer shall comply with
Section 4.28 of the Bridge Loan Agreement.
SECTION 3.03 Covenants of Servicer.
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The Servicer hereby makes the following covenants with respect to each
Consumer Receivable on which the Lenders are relying in making and converting
the Loans:
(a) Fulfillment of Obligations. The Servicer shall duly fulfill
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all obligations on its part to be fulfilled under or in connection with the
Consumer Receivables pursuant to this Agreement, shall perform such obligations
in accordance with the Customary Procedures, and shall maintain in effect all
licenses and qualifications required in order to service the Consumer
Receivables and shall comply in all respects with all other requirements of law,
rules and regulations in connection with servicing the Consumer Receivables, the
failure to comply with which would have a material adverse effect on the Issuer
or rights or interests of the Lenders or Administrative Agent on behalf of the
Lenders.
(b) No Rescission or Cancellation. The Servicer shall not permit
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any rescission or cancellation of the Consumer Receivables except as ordered by
a court of competent jurisdiction or other governmental authority; provided,
however, that the writing down of a Consumer Receivables balance in accordance
with Customary Procedures shall not be deemed a rescission or cancellation of
such Consumer Receivables.
(c) No Impairment. The Servicer shall do nothing to impair the
-------------
rights of the Issuer or the Lenders with respect to the Consumer Receivables;
provided, however, that the writing down of a Consumer Receivable balance in
accordance with Customary Procedures shall not be deemed an impairment of the
rights of the Issuer or the Lenders. The Servicer shall not engage in any
pattern of conduct under which it intentionally elects (i) to write down a
Consumer Receivable balance from an Obligor rather than writing down a Consumer
Account due from the same Obligor which is not a part of the Consumer
Receivables, or (ii) to apply a payment received from an Obligor to a Consumer
Account which is not a Consumer Receivable rather than to a Consumer Receivable
(unless expressly instructed to do so by an Obligor) if the Servicer has actual
knowledge that such write-downs or payment applications discriminate against the
Lenders, or with knowledge that the effect of such intentional election is to
discriminate against the Lenders.
(d) No Instruments. Except in connection with its enforcement or
--------------
collection of the Consumer Receivables, the Servicer shall take no action to
cause any Consumer Receivables to be evidenced by any instruments (as defined in
the UCC), and if any Consumer Receivable is so evidenced (whether or not in
connection with such enforcement or collection), it shall be assigned and
delivered to the Administrative Agent.
(e) No Sub-Servicing. The Servicer shall not delegate its
----------------
servicing obligations under this Agreement; provided, however, that the
delegation of recovery obligations to third party attorneys engaged by the
Servicer shall not be deemed a breach of this clause (e).
(f) Maintenance of Records.
----------------------
-11-
(i) The Servicer shall maintain accounts and records as to
each Consumer Receivable accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Consumer Receivable,
including payments and recoveries made and payments owing (and the nature of
each, if applicable) and (ii) reconciliation between payments or recoveries on
(or with respect to) each Consumer Receivable and the amounts from time to time
deposited in the Collection Account in respect of such Consumer Receivable.
(ii) The Servicer shall maintain its computer records so that
the Servicer's master computer records (including any back-up archives) that
refer to any Consumer Receivable indicate clearly the interest of the Lenders in
such Consumer Receivable and that the Consumer Receivable is owned by the
Lenders. Indication of the Lenders' interest in a Consumer Receivable shall be
deleted from or modified on the Servicer's computer records when, and only when,
the Consumer Receivable has been paid in full pursuant to this Agreement or
irrevocably assigned to a third-party in accordance with this Agreement and the
Loan Documents
(iii) Upon request, the Servicer shall furnish to the
Lenders, within two (2) Business Days of such request, a list of all Consumer
Receivables (by account number and name of Obligor).
SECTION 3.04 Servicing Fee; Payment of Certain Expenses By Servicer.
As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Payment Date the Servicing Fee as
provided in Section 4.04. Except to the extent otherwise provided herein, the
Servicer shall be required to pay, whether or not it is receiving any servicing
compensation, all expenses incurred in connection with servicing the Consumer
Receivables including, without limitation, recovery and collection expenses
related to the enforcement of the Consumer Receivables (other than those
specified in the following proviso), payment of all fees and expenses that are
not expressly stated in this Agreement to be payable by the Administrative
Agent, the Lenders or the Issuer; provided, however, that the Servicer shall not
be liable for any liabilities, costs or expenses of the Lenders arising 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 to comply
therewith), except as otherwise expressly provided in this Agreement. In the
event that, commencing August 31, 2000, and on the last day of each February and
August thereafter, the cumulative amount of Net Proceeds (calculated without
subtracting Third-Party Fees up to the maximum amount thereof permitted to be
incurred as set forth in the definition of Net Proceeds) in respect of all
Consumer Receivables from August 2, 1999 to such dates is not at least equal to
the amounts specified in Exhibit D applicable to such dates, the Servicing Fee
---------
shall thereafter be reduced to thirty percent (30%) of Net Proceeds.
SECTION 3.05 Monthly Servicer Report.
On or before 12:00 noon New York, New York time on each Determination
Date, the Servicer shall (i) deliver to the Lenders and the Administrative Agent
by electronic mail and by facsimile a Monthly Servicer Report executed by a
Responsible Officer of the Servicer
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substantially in the form attached hereto as Exhibit A (and setting forth such
---------
additional information as requested by the Administrative Agent or any Lender
from time to time, which information the Servicer is able to reasonably provide)
containing all information necessary to make the payments required by Section
4.04 in respect of the Collection Period immediately preceding the date of such
Monthly Servicer Report and the information necessary for the Administrative
Agent to send statements to Lenders pursuant to Section 4.05(a); and (ii)
deliver to the Administrative Agent by first class mail a computer diskette
containing the information fields identified in Exhibit B updated through the
---------
end of such Collection Period. Servicer represents and warrants that the
information fields set forth on Exhibit B are the same as those provided to
---------
administrative agents in its other asset-backed transactions. Servicer agrees to
provide to the Administrative Agent, at Servicer's cost and expense and upon
three (3) business days' notice, any other information Servicer possesses or
controls in respect of the Consumer Receivables as the Administrative Agent may
request.
SECTION 3.06 Annual Statement as to Compliance; Annual Accountants
Report.
(a) The Servicer shall deliver to the Administrative Agent, on or
before March 31st of each calendar year, beginning with March 31, 2000, an
Officer's Certificate executed by the chief financial officer of the Servicer,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period ended December 31st (or, in the case of the first such statement
from August 2, 1999 through March 31, 2000) and of its performance under this
Agreement has been made under the supervision of the officer executing the
Officer's Certificate, and (ii) to such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement in
all material respects throughout such period or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Administrative Agent, promptly
after having obtained knowledge thereof, but in no event later than three
Business Days thereafter, an Officer's Certificate specifying the nature and
status of any Servicer Default, or Event of Default, or other occurrence which
occurrence would have a material adverse effect on the right or interests of the
Lenders.
(c) So long as any Obligations remain outstanding under the Bridge Loan
Agreement, the Servicer, at its own expense, shall cause Xxxxx Xxxxxxxx LLP or
another firm of nationally recognized independent public accountants acceptable
to the Majority Lenders and the Administrative Agent (which accountants may also
render other services to the Servicer or to the Issuer) to deliver to the
Administrative Agent a report containing the results of the application of the
procedures set forth in Exhibit C attached hereto with respect to the Servicer's
---------
accounting for matters regarding the Consumer Receivables held by the Issuer,
including cash receipts, account posting and remittances to the Issuer, the
Servicer, the Administrative Agent, or the Lenders during the preceding calendar
year. The first reporting period is from August 2, 1999 through December 31,
1999, and each subsequent reporting period is each calendar year. Each such
report must be delivered on or before April 15 of the succeeding year. Such
report shall also indicate that the firm is independent with respect to the
Issuer and the Servicer within the meaning of the Code of Professional Ethics of
the American Institute of Certified Public
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Accountants. In the event such independent public accountants require the
Administrative Agent to agree to the procedures to be performed by such firm in
any of the reports required to be prepared pursuant to this Section 3.06, the
Servicer shall direct the Administrative Agent in writing to so agree; it being
understood and agreed that the Administrative Agent will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Administrative Agent has not made any independent inquiry or investigation as
to, and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
SECTION 3.07. Access to Certain Documentation and Information.
The Servicer shall provide the Administrative Agent, any Successor
Servicer and the Lenders with access to the documentation relating to the
Consumer Receivables as reasonably requested. In each case, access to
documentation relating to the Consumer Receivables shall be afforded without
charge, upon reasonable request and during normal business hours at the offices
of the Servicer. Nothing in this Section shall impair the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, which obligation shall be evidenced by an Opinion of
Counsel to such effect, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
ARTICLE IV
THE ACCOUNTS; PAYMENTS;
STATEMENTS TO LENDERS
SECTION 4.01 Accounts.
The Issuer shall establish and maintain, or cause to be established and
maintained, the Collection Account and the Securities Account, in accordance
with the Account Security Agreement and the Account Control Agreement for the
benefit of the Lenders. All amounts held in the Collection Account and the
Securities Account shall, to the extent permitted by this Agreement, the Bridge
Loan Agreement and applicable laws, rules and regulations, be invested in
Permitted Investments by the depository institution or trust company then
maintaining such Account only upon written direction of the Issuer, or the
Administrative Agent during the continuance of an Event of Default as defined in
the Bridge Loan Agreement. Earnings on investment of funds in the Collection
Account and Securities Account shall remain in such Accounts for disposition in
accordance with this Agreement. The taxpayer identification number associated
with each of the Accounts shall be that of the Issuer and the Issuer will report
for federal, state and local income tax purposes the income, if any, earned on
funds in the relevant Account. The Issuer hereby acknowledges that all amounts
on deposit in each Account (including investment earnings thereon) are held in
trust by the Administrative Agent for the benefit of the Lenders, subject to any
express rights of the Issuer set forth herein, and shall
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remain at all times during the term of this Agreement under the sole dominion
and control of the Administrative Agent.
SECTION 4.02 Collections.
The Servicer shall comply with Section 4.28 of the Bridge Loan
Agreement in establishing a blocked account and "lock box" and, to the extent it
receives collections that would otherwise have been made to the lock box, shall
remit to the Collection Account all amounts it receives by or on the behalf of
the Obligors or in respect of the Consumer Receivables within one Business Day
of receipt thereof or conversion thereto. The Servicer shall, by automatic
clearing house ("ACH") transfer, transfer from the Collections Account to the
Securities Account on a daily basis all monies in the Collection Account. Other
than as specifically contemplated pursuant to this Section 4.02, the Servicer
shall not remit to the Collection Account, and shall take all reasonable actions
to prevent other Persons from remitting to the Collection Account, amounts which
do not constitute payments, collections or recoveries received, made or realized
in respect of the Consumer Receivables or the liquidation thereof, and the
Administrative Agent will return to Issuer any such amounts upon receiving
written evidence reasonably satisfactory to the Administrative Agent that such
amounts are not properly part of the Collection Account.
SECTION 4.03 Intentionally Omitted.
SECTION 4.04 Allocations and Payments.
(a) On each Determination Date, the Servicer shall calculate, (i) the
amount of funds on deposit in each of the Accounts and the amount of Available
Funds, and (ii) as applicable, the Administrative Agent Fee, the Permitted
Expenses, the Servicing Fee, the Interest Distributable Amount with respect to
the Note Balance and the Conversion Fee, the Conversion Fee, and the amount to
be paid to Lenders in respect of principal, which amounts shall be set forth in
the Monthly Servicer Report for the related Payment Date. The Servicer shall
send the Monthly Servicer Report by electronic mail and by facsimile to the
Administrative Agent and the Lenders by 12:00 noon New York, New York time on
each such Determination Date.
(b) Prior to 11:00 a.m. on the Business Day immediately preceding each
Payment Date, the Administrative Agent shall transfer or cause to be transferred
from the Securities Account to the Collection Account the applicable monies due
to be disbursed as shown on the Monthly Servicer Report. On each Payment Date,
the Administrative Agent shall make the following payments from the Collection
Account in the following order of priority and in the amounts set forth in the
Monthly Servicer Report for such Payment Date; provided, however, that such
payments shall be made only to the extent of Available Funds (it being
understood that a failure to pay when due any amounts required to be paid under
the Bridge Loan Agreement and the Notes as a result of a lack of Available
Funds, which results in a Default or Event of Default under the Bridge Loan
Agreement, the Notes or the Guaranty, shall nonetheless continue to constitute a
Default and an Event of Default under the Note, the Bridge Loan Agreement and
the Guarantee, notwithstanding that such failure results from a lack of
Available Funds), and provided, further that, except for pre-payment of interest
on the Notes, which shall be made
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pursuant to the terms of the Notes, payments from the Collections Account shall
be made only on the Payment Date:
(i) to the Administrative Agent, an amount equal to the
sum of the Administrative Agent Fee for such Payment Date, plus all accrued and
unpaid Administrative Agent Fees, if any, for prior Payment Dates, plus all
reasonable out of pocket expenses of the Administrative Agent;
(ii) to the Lenders, pro rata based on their respective
Note Balances, and to the other parties entitled thereto, however applicable,
the amount of the Permitted Expenses for which copies of the xxxx or invoice
setting forth the amount due have been submitted to the Administrative Agent and
the Lenders.
(iii) to the Lenders, pro rata, based on their respective
Note Balances, an amount equal to the sum of the Interest Distributable Amount
with respect to the Note Balances for such Payment Date plus any outstanding
amount of Interest Carryover Shortfall with respect to the Note Balances, if
any, for prior Payment Dates, any amounts owing to the Lenders pursuant to
Section 7.02 hereof and any interest payable pursuant to Section 2.4(d) of the
Bridge Loan Agreement, less any amounts previously paid with respect to interest
on the Note Balances for such Payment Date;
(iv) to the Lenders, pro rata, based on their respective
Note Balances, an amount equal to the sum of the Interest Distributable Amount
with respect to the Conversion Fee for such Payment Date plus any outstanding
amount of Interest Carryover Shortfall with respect to the Conversion Fee, if
any, for prior Payment Dates and interest on overdue interest with respect to
the Conversion Fee calculated as set forth in Section 2.4(d) of the Bridge Loan
Agreement, less any amounts previously paid with respect to interest on the
Conversion Fee for such Payment Date;
(v) to the Servicer, an amount equal to the sum of the
Servicing Fee for the related Collection Period, plus all accrued and unpaid
Servicing Fees, if any, for prior Collection Periods;
(vi) to the Lenders, pro rata, based on their respective
Note Balances, an amount equal to the accrued but unpaid Conversion Fee payable
to the Lenders;
(vii) to the Lenders, pro rata, based on their respective Note
Balances, in reduction of the Note Balance of the Notes, until the Note Balance
is reduced to zero, and if such Payment Date is the Final Payment Date or
Prepayment Date as defined in the Bridge Loan Agreement, and there is an
outstanding Note Balance (after payment of the amounts described in clauses (i)
through (vi) above), the Administrative Agent will withdraw from all remaining
funds on deposit in the applicable Account an amount equal to the lesser of the
amount then on deposit therein and the amount of the outstanding Note Balance
and remit such lesser amount to the Lenders in reduction of the outstanding Note
Balance;
(viii)to the Issuer.
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(c) The Servicer shall on each Payment Date instruct the
Administrative Agent to distribute to each Lender of record by wire transfer of
immediately available funds, the amount to be paid to such Lender in respect of
the related Note on such Payment Date. In the event the Monthly Servicer Report
is not transmitted to the Administrative Agent as required above, the
Administrative Agent shall notify the Lenders thereof and shall, on the Payment
Date, make such payments as the Majority Lenders shall authorize.
SECTION 4.05 Statements to Lenders.
(a) On or prior to each Payment Date, the Administrative Agent shall
transmit to each Lender of record the Monthly Servicer Report furnished pursuant
to Section 3.05, setting forth for the related Collection Period the information
provided in Exhibit A.
---------
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Administrative
Agent shall mail a statement or statements prepared by the Servicer to each
Person who at any time during such calendar year shall have been a Lender that
provides the information that is necessary under applicable law for the
preparation of income tax returns and such other information in connection with
the Consumer Receivables as is requested by the Lenders.
ARTICLE V
INTENTIONALLY OMITTED
ARTICLE VI
INTENTIONALLY OMITTED
ARTICLE VII
THE SERVICER
SECTION 7.01 Representations of the Servicer.
The Servicer hereby makes the following representations which shall
speak as of March 1, 2000:
(a) Organization and Good Standing. The Servicer is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Maryland, with corporate power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is presently conducted, and had at all relevant times, and now has, corporate
power, authority and legal right to service the Consumer Receivables and to hold
the Receivables Files and Collateral.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all
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jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Consumer Receivables as required by
this Agreement) requires such qualification, licenses and approvals, except
where the failure to be qualified or to obtain such qualifications, licenses and
approvals would not materially and adversely affect the rights or interests of
any of the Lender.
(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and each of the other Loan
Documents to which it is a party, and to carry out their respective terms; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligations. This Agreement and each of the other Loan
Documents to which the Servicer is a party constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally or by general principles of equity.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and each of the other Loan Documents and the fulfillment of
the terms of this Agreement and each of the other Loan Documents does not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation, as amended and restated, or bylaws of the Servicer,
or conflict with or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Servicer is a party or by
which it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate, any law,
order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties; which
breach, default, conflict, Lien or violation would have a material adverse
effect on the rights or interests of the Issuer or the Lenders.
(f) No Proceedings. There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now pending,
or to the Servicer's knowledge, threatened, against or affecting the Servicer:
(i) asserting the invalidity of this Agreement, the Notes, or any of the other
Loan Documents, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Loan Documents, or (iii) seeking any determination or ruling that
might materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement, the
Notes or any of the other Loan Documents.
(g) Not an Investment Company. The Servicer is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act, and none of the issuance of the Notes, the
execution and delivery of the Loan Documents to which the Servicer is a party,
or the performance by the Servicer of its obligations
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thereunder, will violate any provision of the Investment Company Act, or any
rule, regulation or order issued by the Securities and Exchange Commission
thereunder.
(h) Ownership of the Issuer. One hundred percent (100%) of the
membership interests of the Issuer are directly owned (both beneficially and of
record) by the Servicer except for the interest of the Independent Member. Such
membership interests are validly issued and nonassessable and no one other than
the Servicer has any options, warrants or other rights to acquire Units from the
Issuer, subject to the pledge under the Parent Guarantee and Collateral
Agreement.
SECTION 7.02 Liability of Servicer; Indemnities
(a) Obligations. The Servicer shall be liable in accordance
-----------
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement and shall have no other obligations or liabilities
under this Agreement. Such obligations shall include the following:
(i) the Servicer shall indemnify, defend and hold
harmless the Administrative Agent, the Lenders and the Issuer from and against
any taxes that may at any time be asserted against the Administrative Agent, the
Lenders or the Issuer with respect to the transactions contemplated in this
Agreement or any of the other Transaction Documents, including, without
limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege or license taxes (but not including any
taxes asserted with respect to, and as of the date of, the issuance and original
sale of the Notes, or asserted with respect to ownership of the Consumer
Receivables, or federal or other income taxes arising out of payments on the
Notes, except to the extent the Servicer is liable therefore under Section 2.10
of the Bridge Loan Agreement) and costs and expenses in defending against the
same;
(ii) the Servicer shall indemnify, defend and hold
harmless the Administrative Agent, the Issuer and the Lenders from and against
any and all costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or liability arose out of,
and was imposed upon the Administrative Agent, the Issuer or any Lender through
the negligence, willful misfeasance or bad faith of the Servicer in connection
with the transactions contemplated by this Agreement and the other Transaction
Documents, or by reason of the breach by the Servicer of any of its
representations, warranties or covenants hereunder or under any of the other
Transaction Documents; and
(iii) the Servicer shall indemnify, defend and hold
harmless the Administrative Agent from and against all costs, expenses, losses,
claims, damages and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties contained in this
Agreement, except to the extent that such cost expense, loss, claim, damage or
liability: (A) shall be due to the willful misfeasance, bad faith or negligence
of the Administrative Agent, or (B) relates to any tax other than the taxes with
respect to which either the Issuer or the Servicer shall be required to
indemnify the Administrative Agent.
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(b) Expenses. Indemnification under this Section shall include,
--------
without limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to this
Section and the recipient thereafter collects any of such amounts from others,
the recipient shall promptly repay such amounts collected to the Servicer,
without interest, so long as no amounts are outstanding under the Loan
Documents.
(c) Survival. The provisions of this Section shall survive
--------
the resignation or removal of the Servicer or the Administrative Agent and the
termination of this Agreement.
SECTION 7.03 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.
Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party, or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement; provided,
however, that such merger, consolidation or conversion shall not cause a
Servicer Default. The Servicer shall provide notice of any merger, consolidation
or succession pursuant to this Section to the Administrative Agent and the
Lenders.
SECTION 7.04 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Administrative Agent or
the Lenders, except as provided in this Agreement, for any action taken or for
refraining from the taking of any action pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence of the
Servicer in connection with the transactions contemplated by this Agreement and
any of the other Transaction Documents, or the breach by the Servicer of any of
its representations, warranties or covenants hereunder or under any of the other
Transaction Documents.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Consumer Receivables in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement and the
interests of the Lenders under this Agreement.
(c) The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement if it believes in good faith that such
reliance is reasonable.
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SECTION 7.05 Servicer Not to Resign; Termination.
Subject to the provisions of Section 7.03, Creditrust Corporation
shall not resign from the obligations and duties hereby imposed on it as
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of Creditrust
Corporation shall be communicated to the Administrative Agent and the Lenders at
the earliest practicable time and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered to the Administrative Agent and
the Lenders concurrently with or promptly after such notice. No such resignation
shall become effective until a Successor Servicer accepted in writing by the
Majority Lenders shall have been appointed. This Agreement shall not be
terminable by Creditrust Corporation unless the Lenders have been paid all
principal, interest and other amounts due and to become due under this
Agreement, the Notes and the Bridge Loan Agreement.
SECTION 7.06 General Covenants of the Servicer.
The Servicer covenants and agrees that from the Closing Date until it
is no longer the Servicer hereunder:
(a) Related Person Transaction. Without the prior written consent of
--------------------------
the Majority of the Lenders, Servicer shall not enter into any Related Person
Transaction other than on terms that are no less favorable to Servicer and the
Issuer than those that would have been obtained in a comparable transaction by
Servicer with a non-Related Person. The term "Related Person" means, as to
Servicer, any stockholder, director, officer or employee thereof or any relative
thereof or an Affiliate of the Servicer. The term "Related Person Transaction"
means, (i) any sale, lease, transfer or other disposition of Servicer's property
to any Related Person, (ii) the making of any contract, agreement,
understanding, loan, advance, guarantee, or other credit support with or for the
benefit of any Related Person or (iii) any other transaction with a Related
Person that under the rules of the Nasdaq Stock Market, Inc. is required to be
approved by the Board of Directors.
(b) Sale of Assets. Without the prior written consent of the Majority
--------------
of the Lenders, Servicer shall not convey, sell, lease, license, transfer or
otherwise dispose of, in one transaction or in a series of transactions, all or
substantially all of its assets, other than with respect to securitization
transactions of its receivables.
(c) Bankruptcy.
----------
(i) The Servicer shall not take any action in any capacity to file
any bankruptcy, reorganization or Insolvency Proceedings against Issuer, or
cause Issuer to commence any reorganization, bankruptcy proceedings or
Insolvency Proceedings under any applicable state or federal law, including
without limitation any readjustment of debt, or marshaling of assets or
liabilities or similar proceedings.
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(ii) In the event that the Servicer shall become the subject of
any Insolvency Proceeding, the Servicer hereby irrevocably waives the benefit of
any automatic stay or similar provision in connection with any efforts to remove
the Servicer as Servicer hereunder and agrees not to contest its removal as
Servicer in any action in any such Insolvency Proceeding.
(d) Legal Existence. The Servicer shall do or cause to be done all
---------------
things necessary on its part to preserve and keep in full force and effect its
existence as a corporation in the jurisdiction of its incorporation, and to
maintain each of its licenses, approvals, registrations or qualifications in all
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such licenses, approvals, registrations or qualifications;
except for failures to maintain any such licenses, approvals, registrations or
qualifications which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Servicer to perform its
obligations hereunder or under any of the other Loan Documents.
(e) Compliance with Laws. The Servicer shall comply in all material
--------------------
respects, with all laws, rules and regulations and orders of any governmental
authority applicable to its operation, the noncompliance with which would have a
material adverse effect on the business, financial condition or results of
operations of the Servicer or on the ability of the Servicer to perform its
obligations hereunder or under any of the other Loan Documents.
(f) Taxes. The Servicer shall pay and discharge all taxes,
-----
assessments and governmental charges or levies imposed upon the Servicer or upon
its and its subsidiaries' (to the extent the Servicer is liable therefor) income
and profits, or upon any of its property or any part thereof, before the same
shall become in default, provided that the Servicer shall not be required to pay
and discharge any such tax, assessment, charge or levy so long as the validity
or amount thereof shall be contested in good faith by appropriate proceedings
and the Servicer shall have set aside on its books adequate reserves with
respect to any such tax, assessment, charge or levy so contested, or so long as
the failure to pay any such tax, assessment, charge or levy would not have a
material adverse effect on the ability of the Servicer to perform its
obligations hereunder.
(g) Financial Statements. The Servicer shall maintain its
---------------------
financial books and records in accordance with GAAP. The Servicer shall
furnish to the Lenders the financial information required by Section 4.4 of the
Bridge Loan Agreement.
(h) Compliance with all Loan Documents. The Servicer hereby covenants
----------------------------------
and agrees to comply with the terms of, employ the procedures outlined in and
enforce the obligations of the parties to all of the Loan Documents to which the
Servicer is a party.
(i) No Change in Principal Executive Office or Location of Records.
--------------------------------------------------------------
The Servicer covenants that it shall maintain its principal place of business
and principal executive office, and the office where it maintains all of its
records, at 0000 Xxxxxxxx Xxxx., Xxxxxxxxx, XX 00000. The Servicer agrees that
it will not change the location of its principal place of business and principal
executive office except in compliance with the Guarantee and Collateral
Agreement. As of the Closing Date, each Receivable File shall be kept by the
Servicer at its offices at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, XX 00000.
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(j) Maintenance of Insurance. The Servicer hereby covenants and agrees
------------------------
to maintain one or more policies of "all-risk" property and general liability
insurance with financially sound and reputable insurers, providing coverage in
scope and amount which is at least consistent with the scope and amount of such
insurance coverage obtained by prudent and similarly situated Persons in the
same jurisdiction and the same business as the Servicer.
(k) Separate Identity. The Servicer hereby covenants and agrees
------------------
to take all actions required to maintain the Issuer's status as a separate
legal entity. Without limiting the foregoing, the Servicer shall:
(i) cause Issuer to conduct all of its business, and make
all communications to third parties (including all invoices (if any), letters,
checks and other instruments) solely in its own name (and not as a division of
any other Person), and require that its employees, if any, when conducting its
business identify themselves as such;
(ii) cause Issuer to at all times have at least one
Independent Member, with at least one independent director, and have at least
one officer responsible for managing its day-to-day business and manage such
business by or under the direction of its board of managers;
(iii) cause Issuer to maintain its books and records
separate from those of any Affiliate;
(iv) cause Issuer to prepare its financial statements
separately from those of its Affiliates and ensure that any consolidated
financial statements have notes to the effect that the Issuer is a separate
entity whose creditors have a claim on its assets prior to those assets becoming
available to its equity holders and therefore to any creditors of such equity
holders, as the case may be;
(v) cause Issuer to not commingle its funds or other assets
with those of any of its Affiliates (other than in respect of items of payment
or funds which may be commingled until deposited into the Collection Account in
accordance with this Agreement), and not to hold its assets in any manner that
would create an appearance that such assets belong to any such Affiliate, not
maintain bank accounts or other depository accounts to which any such Affiliate
is an account party, into which any such Affiliate makes deposits or from which
any such Affiliate has the power to make withdrawals, and not act as an agent or
representative of any of its Affiliates in any capacity;
(vi) not permit Issuer to guarantee any obligation of any of
its Affiliates nor have any of its obligations guaranteed by any such Affiliate
(either directly or by seeking credit based on the assets of such Affiliate), or
otherwise hold itself out as responsible for the debts of any Affiliate, except
in each instance as provided in the Bridge Loan Agreement or any documents
executed by Issuer or any Affiliate in connection therewith;
(vii) cause Issuer to maintain at all times stationery
separate from that of any Affiliate and have all its officers and employees
conduct all of its business solely in its own name;
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(viii) cause Issuer to hold regular meetings of its board of
managers in accordance with the provisions of its LLC Agreement and otherwise
take such actions as are necessary on its part to ensure that all company
procedures required by its LLC Agreement and By-laws are duly and validly taken;
(ix) cause Issuer to respond to any inquires made directly
to it with respect to ownership of a Consumer Receivable by stating that it is
the owner of such contributed Consumer Receivable, and, if requested to do so,
that the Lenders have been granted a security interest in such Consumer
Receivable; and
(x) cause Issuer to take such other actions as are
necessary on its part to ensure that the facts and assumptions set forth in any
non-consolidation opinion delivered by Issuer's counsel remain true and correct
at all times.
(l) Benefit Plan. The Servicer hereby covenants and agrees to
------------
comply in all material respects with the provisions of ERISA, the Internal
Revenue Code, and all other applicable laws, and the regulations and
interpretations thereunder to the extent applicable, with respect to each
Benefit Plan. Servicer covenants that it will not, and it will cause any ERISA
Affiliate to not:
(i) engage in any non-exempt prohibited transaction
(within the meaning of Code Section 4975 or ERISA Section 406) with respect to
any Benefit Plan which would result in a material liability to the Servicer;
(ii) permit to exist any accumulated funding deficiency,
as defined in Section 302(a) of ERISA and Section 412(a) of the Code, with
respect to any Benefit Plan of the Servicer or any ERISA affiliate which is
subject to Section 302(q) of ERISA or 412 of the Code;
(iii) terminate any Benefit Plan of the Servicer or any ERISA
Affiliate so as to result in any material liability to the Servicer or an ERISA
Affiliate; or
(iv) create any defined benefit plan (as defined in ERISA).
ARTICLE VIII
SERVICER DEFAULT; EVENTS DEFAULT; REMEDIES
SECTION 8.01 Servicer Default.
For purposes of this Agreement, each of the following shall constitute
a "Servicer Default":
(a) any Event of Default under the Bridge Loan Agreement;
(b) any default in the payment by Servicer of any amount required
by this Agreement to be paid to the Administrative Agent;
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(c) any breach of any of the representations and warranties made by
Servicer in this Agreement;
(d) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement, or any of the other Transaction Documents to which the Servicer is a
party, which failure (i) would have a material adverse effect on the rights or
interests of the Lenders, the Administrative Agent or the Issuer and (ii)
continues unremedied for a period of 30 days after the date on which a
Responsible Officer of the Servicer becomes or in the exercise of reasonable
care should have become aware of such failure; or
(e) On August 31, 2000, and on the last day of each February and
August thereafter, the cumulative amount of Net Proceeds (calculated without
subtracting Third-Party Fees up to the maximum amount thereof permitted to be
incurred as set forth in the definition of Net Proceeds) collected in respect of
the Consumer Receivables from August 2, 1999 to such dates is not at least equal
to the amounts specified in Exhibit D applicable to such dates.
---------
Upon the occurrence of any such event the Servicer shall not be
relieved from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of this Agreement and the Servicer shall
provide the Administrative Agent and the Lenders prompt notice of such failure
or delay by it, together with a description of its effort to so perform its
obligations. The Servicer shall notify the Administrative Agent in writing of
any Servicer Default that it discovers within one Business Day of such
discovery. The Administrative Agent shall have no duty or obligation to
determine whether or not a Servicer Default has occurred.
SECTION 8.02 Consequences of a Servicer Default.
(a) If a Servicer Default shall occur and be continuing, so long as
such Servicer Default has not been cured or waived pursuant to Section 8.05, the
Administrative Agent shall, upon the direction of the Majority Lenders and the
identification by the Majority Lenders of a Successor Servicer, terminate all
(but not less than all) of the rights and obligations of the Servicer, as
Servicer under this Agreement and the other Transaction Documents, in and to the
Consumer Receivables and proceeds thereof. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Notes, the Consumer Receivables, the
Transaction Documents or otherwise, shall, without further action, pass to and
be vested in the Successor Servicer as provided in Section 8.03, and, without
limitation, the Successor Servicer shall be hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Consumer Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the Successor Servicer in effecting
the termination of the responsibilities and rights of the predecessor Servicer
under this Agreement, including, without limitation, the transfer to the
Successor Servicer, for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit with respect to the
Consumer Receivables, or have been deposited by the predecessor Servicer in the
Accounts
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with respect to the Consumer Receivables or thereafter received by the
predecessor Servicer with respect to the Consumer Receivables. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the Successor Servicer, and amending this
Agreement to reflect such succession as Servicer pursuant to this Section shall
be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses (the amount of such costs and expenses
are referred to herein as the "Transition Fees"). In no event shall the
Successor Servicer be entitled to receive a servicing fee in excess of the fee
payable under this Agreement prior to the succession.
(b) In addition to the remedial provisions set forth in clause (a)
above, and not by way of limitation of any remedies to which any of the
Administrative Agent or the Lenders are entitled upon the occurrence of a
Servicer Default, the Issuer and the Servicer acknowledge and agree that, so
long as a Servicer Default shall occur and be continuing, and such Servicer
Default has not been cured or waived pursuant to Section 8.05, the
Administrative Agent shall, upon the direction of the Majority Lenders and may
(with the written consent of the Majority Lenders), at its discretion, by notice
then given in writing to the Servicer, direct the Servicer (or Successor
Servicer) to (x) deposit all checks and other items of collections received in
respect of Consumer Receivables directly into an Account immediately upon
receipt, and/or (y) instruct each Obligor to remit all collections in respect of
receivables directly to an Account designated for such purpose.
SECTION 8.03 Appointment of Successor Servicer.
Upon a Servicer Default or the resignation of the Servicer, the
Majority Lenders shall have the right to appoint a successor to the Servicer
("Successor Servicer") reasonably satisfactory to them and upon such terms and
conditions as shall be reasonably satisfactory to the Majority Lenders and the
Successor Servicer. Any Successor Servicer appointed pursuant to this Section
8.03 must have, and must certify that it has, the experience and ability to
service the Consumer Receivables in accordance with the obligations of the
Servicer hereunder. The Successor Servicer shall be entitled to compensation
equal to a fee calculated in accordance with the first sentence in the
definition of "Servicing Fee."
SECTION 8.04 Notification to Lenders.
Upon a Responsible Officer of the Administrative Agent obtaining actual
knowledge of (i) the occurrence of a Servicer Default or (ii) any termination
of, or appointment of a successor to, the Servicer pursuant to this Agreement,
the Administrative Agent shall give prompt written notice thereof to Lenders at
their respective addresses appearing in its records.
SECTION 8.05 Waiver of Past Servicer Defaults.
The Administrative Agent shall at the direction of the Majority Lenders
waive any Servicer Default or other default by the Servicer in the performance
of its obligations hereunder and its consequences, except a default in making
any required deposits to or payments from the Accounts in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Servicer Default arising therefrom shall be deemed to have
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been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived.
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
INTENTIONALLY OMITTED
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 Amendment.
With the prior written consent of the holders of Notes evidencing at
least two-thirds of the Voting Interests and the Issuer, the Servicer and the
Issuer may at any time and from time to time supplement, modify or amend any of
the terms or provisions of this Agreement, provided, however, that any amendment
to this Agreement affecting the rights or obligations of the Administrative
Agent shall also require the prior written consent of the Administrative Agent.
No supplement, amendment, or modification will be effective unless made in
compliance with the previous sentence.
SECTION 11.02 Intentionally Omitted.
SECTION 11.03 Limitation of Rights of Lenders.
(a) The death or incapacity of any Lender shall not operate to
terminate this Agreement or the Issuer, nor entitle its legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Issuer, nor otherwise affect the
rights, obligations and liabilities of the parties to this Agreement or any of
them.
(b) Except as expressly provided in this Agreement, no Lender shall
have any right to vote or in any manner otherwise control the operation and
management of the Issuer, or the obligations of the parties to this Agreement,
nor shall anything set forth in this Agreement, or contained in the terms of the
Notes, be construed so as to constitute the Lenders from time to time as
partners or members of an association; nor shall any Lender be under any
liability to any third person by reason of any action pursuant to any provision
of this Agreement.
SECTION 11.04 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and the obligations, rights and remedies of
the parties under this Agreement shall be determined in accordance with such
laws, including Section 5-1401 of the General Obligation Law of New York, but
otherwise without regard to conflict of laws provisions.
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SECTION 11.05 Notices.
All demand, notices and communications under this Agreement shall be in
writing, and either personally delivered, mailed by certified mail, return
receipt requested, or sent by facsimile transmission, and shall be deemed to
have been duly given upon receipt, in the case of the Issuer or the Servicer, by
the agent for service which shall be its President whose address is 0000
Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at such other address as shall
be designated by the Issuer or the Servicer in a written notice to the
Administrative Agent, and, in the case of the Administrative Agent, by the
Corporate Trust Services of the Corporate Trust Office. Any notice required or
permitted to be mailed to a Lender shall be given by first class mail, postage
prepaid, at the address of such Lender as shown in records of the Issuer and/or
the Administrative Agent. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Lender shall receive such notice.
SECTION 11.06 Severability of Provisions; Counterparts.
(a) If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid or
unenforceable in any jurisdiction, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Notes, or the
rights of the Lenders.
(b) This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall constitute but one and the same instrument.
SECTION 11.07 Assignment.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 7.03 and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not be
assigned by the Issuer or the Servicer without the prior written consent of the
Lenders evidencing not less than 66 2/3% of the Voting Interests.
SECTION 11.08 No Petition.
Each of the Servicer and the Administrative Agent covenants and agrees
that prior to the date which is one year and one day after the termination of
this Agreement, it will not institute against, or join any other Person in
instituting against, the Issuer any bankruptcy, reorganization arrangement,
insolvency or liquidation proceeding or other proceedings under any federal or
state bankruptcy or similar law. Notwithstanding the foregoing, nothing herein
shall be deemed to prohibit the Administrative Agent from filing proofs of claim
or otherwise participating in any such proceeding instituted by another person.
This Section 11.08 shall survive the termination of
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this Agreement or the termination of the Servicer or the Administrative Agent,
as the case may be, under this Agreement.
SECTION 11.09 Lender Direction.
Notwithstanding anything to the contrary contained in this Agreement,
provided the Administrative Agent has sent notices to Lenders in accordance with
this Agreement, the Administrative Agent may act as directed by the Majority
Lenders (but only to the extent the Lenders are entitled under this Agreement to
so direct the Administrative Agent with respect to such action) responding in
writing to the request contained in such notice. In addition, the Administrative
Agent shall not have any liability to any Lender with respect to any action
taken pursuant to such notice if the Lender does not respond to such notice
within the time period set forth in such Notice, which shall be reasonable.
SECTION 11.10 No Substantive Review of Compliance Documents.
Other than as specifically set forth in this Agreement, any reports,
information or other documents provided to the Administrative Agent are for
purposes only of enabling the sending party to comply with its document delivery
requirements hereunder and the Administrative Agent's receipt of any such
information shall not constitute constructive or actual notice of any
information contained therein or determinable from any information contained
therein, including the Issuer or the Servicer's compliance with any of its
covenants, representations or warranties hereunder.
SECTION 11.10 Third-Party Beneficiary. The Lenders are third party
beneficiaries of this Agreement and are entitled to enforce the terms hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
CREDITRUST SPV99-2, LLC,
as Issuer
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
CREDITRUST CORPORATION,
as Servicer
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and
Chief Executive Officer
BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as
Administrative Agent
By: __________________________________
Name:
Title:
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EXHIBIT A
Form of Monthly Servicer Report
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EXHIBIT B
Information Fields for Monthly Diskette
Customer Information Fields Receivable Information Fields
--------------------------- -----------------------------
Primary Debtor's Name Type of Account
Primary Debtor's Social Security Number Date Purchased
Primary Debtor's Mailing Address Charged-off Balance
Secondary Debtor's Name Charged-off Date
Secondary Debtor's Social Security Number Name of Seller
Account Home Phone Number Seller Assigned Account Number
Account Work Phone Number Negotiated Settlement Amount
Debtor ID Last Payment Date
Total Amount Paid to Date
Next Payment Amount
Total Amount Outstanding
Package ID
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EXHIBIT C
Annual Accountant's Report Procedures
With respect to Creditrust Receivables-Backed Notes, Series 1999-2, the
following procedures will be applied to prepare the report required pursuant to
Section 3.06 of the related Servicing Agreement dated as of March 1, 2000.
1. Test for daily transfer of funds from the Collection Account into
the Securities Account (the blocked account).
2. Trace daily deposit from Mozart receivables ledger to Collections
Account.
3. Select randomly for each month, 30 customer payment items from the
Mozart daily deposit summaries for Pool 1999-2 and:
A) Trace individual payment item to timely posting in Mozart
receivables ledger.
B) Verify that the individual payment item was properly applied
to Pool 1999-2.
4. Select randomly for each month, 30 customer payment items from the
Issuer's receivables ledger (i.e. Mozart database) and:
A) Trace total for the day to Collection Account deposit slip.
B) Agree the following to the Mozart daily deposit summary for
that day
1) Amount of payment.
2) Date of payment (must be within one business day of
posting to the receivables ledger (i.e. Mozart database)).
5. Agree Mozart receivables daily postings to Mozart Monthly
Servicer Report.
6. Select the last two days of each month and three random dates
during each month and verify the prior ending day balances to
beginning day cumulative payments received.
7. If any exceptions are found in either sample, expand that sample to
60 items and report all exceptions.
8. Recalculate all calculations on each Monthly Servicer Report.
9. Agree all amounts that are greater than or equal to $1,000 in the
twelve (12) months of Monthly Servicer Reports to the Issuer's
bank statements, subsidiary ledgers, Accounts, Norwest investment
revenue summaries and the Amended and Restated Servicing
Agreement.
10. Report all exceptions.
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EXHIBIT D
* Text of exhibit omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
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