U.S. $250,000,000 RECEIVABLES LOAN AND SECURITY AGREEMENT Dated as of October 31, 2006 Among RESOURCE CAPITAL FUNDING II, LLC, as the Borrower and LEAF FINANCIAL CORPORATION, as the Servicer and MORGAN STANLEY BANK, as a Lender and Collateral Agent...
EXECUTION
COPY
[incorporates
First Amendment,
dated
as
of December 21, 2006]
U.S.
$250,000,000
Dated
as
of October 31, 2006
Among
RESOURCE
CAPITAL FUNDING II, LLC,
as
the
Borrower
and
LEAF
FINANCIAL CORPORATION,
as
the
Servicer
and
XXXXXX
XXXXXXX BANK,
as
a
Lender and Collateral Agent
and
U.S.
BANK
NATIONAL ASSOCIATION,
as
the
Custodian and the Lender’s Bank
and
LYON
FINANCIAL SERVICES, INC. (D/B/A U.S. BANK PORTFOLIO SERVICES),
as
the
Backup Servicer
This
RECEIVABLES LOAN AND SECURITY AGREEMENT is made as of October 31, 2006,
among:
(1) RESOURCE
CAPITAL FUNDING II, LLC, a Delaware limited liability company (the “Borrower”);
(2) LEAF
FINANCIAL CORPORATION, a Delaware corporation (“LEAF
Financial”
or
the
“initial Servicer”), as the Servicer (as defined herein);
(3) XXXXXX
XXXXXXX BANK (“Xxxxxx
Xxxxxxx”),
as a
Lender and Collateral Agent (as defined herein);
(4) U.S.
BANK
NATIONAL ASSOCIATION, as the Custodian and the Lender’s Bank (as each such term
is defined herein); and
(5) LYON
FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), a Minnesota
corporation, as the Backup Servicer (as defined herein).
IT
IS
AGREED as follows:
ARTICLE
I.
DEFINITIONS
SECTION
1.01 Certain
Defined Terms.
i)
Certain
capitalized terms used throughout this Agreement are defined above or in this
Section 1.01.
(b) As
used
in this Agreement and the exhibits and schedules thereto (each of which is
hereby incorporated herein and made a part hereof), the following terms shall
have the following meanings (such meanings to be equally applicable to both
the
singular and plural forms of the terms defined):
“Accountants’
Report”
has
the
meaning assigned to that term in Section 6.11(b).
“Active
Backup Servicer’s Fee”
means,
for any Fee Period or portion thereof after the occurrence of a Servicer Default
and the appointment of the Backup Servicer as Servicer hereunder, an amount,
payable out of Collections on the Pledged Receivables and amounts applied to
the
payment of, or treated as payments on, the Pledged Receivables, equal to the
greater of (i) the Active Backup Servicing Fee Rate, multiplied by the Net
Eligible Receivables Balance as of the first day of such Fee Period, multiplied
by a fraction, the numerator of which shall be the actual number of days in
such
Fee Period and the denominator of which shall be 360, and (ii) $5,000. The
Active Backup Servicer’s Fees shall also include reasonable out-of-pocket
expenses incurred by the Backup Servicer in performing its duties as
Servicer.
“Active
Backup Servicing Fee Rate”
means
1.00%.
“Active
Backup Servicer’s Indemnified Amounts”
has
the
meaning assigned to that term in Section 6.09.
“Adjusted
Eurodollar Rate”
means,
with respect to any Interest Period for any Loan allocated to such Interest
Period, an interest rate per annum equal to the sum of (i) the Adjusted
Eurodollar Rate Margin and (ii) an interest rate per annum equal to the
average of the interest rates per annum (rounded upwards, if necessary, to
the
nearest 1/16 of 1%) reported during such Interest Period on Telerate Access
Service Page 3750 (British Bankers Association Settlement Rate) as the London
Interbank Offered Rate for United States dollar deposits having a term of thirty
(30) days and in a principal amount of $1,000,000 or more (or, if such page
shall cease to be publicly available or, if the information contained on such
page, in the Lender’s sole judgment, shall cease to accurately reflect such
London Interbank Offered Rate, such rate as reported by any publicly available
recognized source of similar market data selected by the Lender that, in the
Lender’s reasonable judgment, accurately reflects such London Interbank Offered
Rate).
“Adjusted
Eurodollar Rate Margin”
has
the
meaning ascribed thereto in the Fee Letter.
“Adverse
Claim”
means
a
lien, security interest, charge, encumbrance or other right or claim of any
Person other than, with (i) respect to the Pledged Assets, any lien,
security interest, charge, encumbrance or other right or claim in favor of
the
Collateral Agent or (ii) any Permitted Lien.
“Affected
Party”
has
the
meaning assigned to that term in Section 2.09.
“Affiliate”
when
used with respect to a Person, means any other Person controlling, controlled
by
or under common control with such Person. For the purposes of this definition,
“control,” when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
“Agreement”
means
this Receivables Loan and Security Agreement, as the same may be amended,
restated, supplemented and/or otherwise modified from time to time hereafter
in
accordance with its terms.
“Allonge”
means
an allonge in the form attached hereto as Exhibit G.
“Amortized
Equipment Cost”
means,
as of any date of determination, (i) for any Pool A Receivable, the
net investment with respect to such Pool A Receivables, where “net
investment” means (a) the present value of the remaining Scheduled Payments
under the related Contract, discounted at the rate at which the present value
of
all Scheduled Payments under the related Contract, including any Balloon Payment
or Put Payment, equals the original equipment cost related to such Receivable,
plus (b) the associated amortized indirect costs related to the applicable
equipment, amortized using the interest method over the life of the related
Contract and (ii) for any Pool B Receivable, the net investment with
respect to such Pool B Receivable, where “net investment” means
(a) the sum of the present values of the remaining Underlying Scheduled
Payments under each related Eligible Underlying Contract, discounted at the
rate
at which the present value of all scheduled payments under such Eligible
Underlying Contract, including any Balloon Payment or Put Payment, equals the
original equipment cost related to
2
such
Eligible Underlying Contract, plus (b) the associated amortized indirect
costs related to the applicable equipment, amortized using the interest method
over the life of the related Underlying Contract.
“Annualized
Default Rate”
means,
as of any date of determination after the end of the first Collection Period
following the date hereof, an amount (expressed as a percentage) equal to
(i) the product of (A) the aggregate Discounted Balances of all
Pledged Receivables which were Eligible Receivables at the time of their Pledge
hereunder and which became Defaulted Receivables during the six (or such lesser
number of Collection Periods since the date hereof) immediately preceding
Collection Periods and (B) 2 (if six or more Collection Periods have
occurred since the date hereof), 2.4 (if five Collection Periods have occurred
since the date hereof), 3 (if four Collection Periods have occurred since
the date hereof), 4 (if three Collection Periods have occurred since the
date hereof), 6 (if two Collection Periods have occurred since the date
hereof) or 12 (if one Collection Period has occurred since the date hereof)
divided by (ii) the average Eligible Receivables Balance as of the first
Business Day of each of the six (or such lesser number of Collection Periods
since the date hereof) immediately preceding Collection Periods.
“Annualized
Net Loss Rate”
means,
as of any date of determination after the end of the first Collection Period
following the date hereof, an amount (expressed as a percentage) equal to
(i) the product of (A) (x) the aggregate Discounted Balances of
all Pledged Receivables which were Eligible Receivables at the time of their
Pledge hereunder and which became Defaulted Receivables during the six (or
such
lesser number of Collection Periods since the date hereof) immediately preceding
Collection Periods minus
(y) Recoveries received during the six (or such lesser number of Collection
Periods since the date hereof) immediately preceding Collection Periods and
(B) 2 (if six or more Collection Periods have occurred since the date
hereof), 2.4 (if five Collection Periods have occurred since the date
hereof), 3 (if four Collection Periods have occurred since the date
hereof), 4 (if three Collection Periods have occurred since the date
hereof), 6 (if two Collection Periods have occurred since the date hereof)
or 12 (if one Collection Period has occurred since the date hereof) divided
by (ii) the Eligible Receivables Balance as of the first Business Day of
the six (or such lesser number of Collection Periods since the date hereof)
immediately preceding Collection Periods.
“Applicable
Date”
has
the
meaning set forth in definition of Pool B Annualized Net Loss Rate.
“Assigned
Documents”
has
the
meaning assigned to that term in Section 2.10.
“Assignment”
has
the
meaning set forth in the Purchase and Sale Agreement.
“Assignment
and Acceptance”
has
the
meaning assigned to that term in Section 9.04.
“Available
Funds”
has
the
meaning assigned to that term in Section 2.04(c).
“Backup
Servicer”
means
Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) or any
successor Backup Servicer appointed by the Lender pursuant to Section 6.13.
3
“Backup
Servicer Delivery Date”
has
the
meaning assigned to that term in Section 6.10(d).
“Balloon
Payment”
means
a
payment due, or which may be required, at the end of the term of a Contract
or
Underlying Contract (which constitutes a loan) equal to the principal amount
under such Contract or Underlying Contract which remains outstanding after
the
payment of all regular scheduled payments of principal during the term of such
Contract or Underlying Contract.
“Bankruptcy
Code”
means
Xxxxx 00, Xxxxxx Xxxxxx Code, 11 U.S.C. §§ 101 et seq.,
as
amended.
“Bankruptcy
Event”
shall
be deemed to have occurred with respect to a Person if either:
(c) a
case or
other proceeding shall be commenced, without the application or consent of
such
Person, in any court, seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up, or composition or readjustment of debts of such Person,
the appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of its
assets, or any similar action with respect to such Person under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue undismissed,
or
unstayed and in effect, for a period of 60 consecutive days; or an order for
relief in respect of such Person shall be entered in an involuntary case under
the federal bankruptcy laws or other similar laws now or hereafter in effect;
or
(d) such
Person shall commence a voluntary case or other proceeding under any applicable
bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other
similar law now or hereafter in effect, or shall consent to the appointment
of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for such Person or for any substantial
part of its property, or shall make any general assignment for the benefit
of
creditors, or shall fail to, or admit in writing its inability to, pay its
debts
generally as they become due, or, if a corporation or similar entity, its board
of directors or members shall vote to implement any of the
foregoing.
“Base
Rate”
means,
on any date, a fluctuating rate of interest per annum equal to the arithmetic
average of the rates of interest publicly announced by JPMorgan Chase Bank
and
Citibank, N.A. (or their respective successors) as their respective prime
commercial lending rates (or, as to any such bank that does not announce such
a
rate, such bank’s “base” or other rate determined by the Lender to be the
equivalent rate announced by such bank), except that, if any such bank shall,
for any period, cease to announce publicly its prime commercial lending (or
equivalent) rate, the Lender shall, during such period, determine the Base
Rate
based upon the prime commercial lending (or equivalent) rates announced publicly
by the other such bank or, if each such bank ceases to announce publicly its
prime commercial lending (or equivalent) rate, based upon the prime commercial
lending (or equivalent) rate or rates announced publicly by one or more other
banks selected by the Lender. The prime commercial lending (or equivalent)
rates
used in computing the Base Rate are not intended to be the lowest rates of
interest charged by
4
such
banks in connection with extensions of credit to debtors. The Base Rate shall
change as and when such banks’ prime commercial lending (or equivalent) rates
change.
“Borrower”
has
the
meaning assigned to that term in the preamble hereto.
“Borrower
Pension Plan”
means
a
“pension plan” as such term is defined in section 3(2) of ERISA, which is
subject to title IV of ERISA and to which the Borrower or any ERISA Affiliate
of
Borrower may have any liability, including any liability by reason of having
been a substantial employer within the meaning of section 4063 of ERISA at
any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
“Borrowing”
means
a
borrowing of Loans under this Agreement.
“Borrowing
Base”
means,
at any time, the sum of the Pool A Borrowing Base plus the Pool B
Borrowing Base at such time.
“Borrowing
Base Certificate”
means
a
report, in substantially the form of Exhibit A,
prepared by the Borrower (or the initial Servicer on its behalf) for the benefit
of Lender pursuant to Section 6.10(c).
“Borrowing
Base Deficiency”
means,
at any time, that the Borrowing Base is less than the Facility Amount, an amount
equal to the amount of such deficiency.
“Borrowing
Base Surplus”
means,
at any time, that the Borrowing Base exceeds the Facility Amount, an amount
equal to the amount of such excess.
“Borrowing
Date”
means,
with respect to any Borrowing, the date on which such Borrowing is funded,
which
date, other than in the case of the initial Borrowing, shall be a Subsequent
Borrowing Date.
“Borrowing
Limit”
means
initially (i) prior to and including the first anniversary of the Closing Date,
$100,000,000 and (ii) after the first anniversary of the Closing Date until
the
Facility Maturity Date, $250,000,000, as such amounts may be increased pursuant
to Section 2.16;
provided,
however,
that at
all times, on or after the Program Termination Date, the Borrowing Limit shall
mean the aggregate outstanding principal balance of the Loans.
“Breakage
Fee”
means,
for Loans allocated to any Interest Period during which such Loans are repaid
(in whole or in part) prior to the end of such Interest Period, the breakage
costs, if any, related to such repayment plus the amount, if any, by which
(i) interest (calculated without taking into account any Breakage Fee),
which would have accrued on the amount of the payment of such Loans during
such
Interest Period (as so computed) if such payment had not been made, as the
case
may be, exceeds (ii) the sum of (A) interest actually received by the
Lender in respect of such Loans for such Interest Period and, if applicable,
(B) the income, if any, received by the Lender from the Lender’s investing
the proceeds of such payments on such Loans.
5
“Business
Day”
means
a
day of the year other than a Saturday or a Sunday or any other day on which
banks are authorized or required to close in New York City, Xx. Xxxx, Xxxxxxxxx
xx Xxxx Xxxx Xxxx, Xxxx; provided,
that,
if any determination of a Business Day shall relate to a Loan bearing interest
at the Adjusted Eurodollar Rate, the term “Business Day” shall also exclude any
day on which banks are not open for dealings in dollar deposits in the London
interbank market.
“Calculated
Swap Amortizing Balance”
means,
with respect to a Qualifying Interest Rate Swap and as of any date of
determination, the projected scheduled amortizing balance of the Pledged
Receivables which were Pledged during the period ending on the Remittance Date
on which such Qualifying Interest Rate Swap became effective and beginning
on
the day following the immediately preceding Remittance Date, determined by
the
Servicer and accepted by the Lender based upon the Discounted Balance of such
Pledged Receivables as of such date of determination, adjusted for prepayments
using an absolute prepayment speed which, in the judgment of the Lender, is
consistent with the speed with which the Pledged Receivables have prepaid in
the
past.
“Capital
Stock”
of
any
Person means any and all shares, interests, rights to purchase, warrants,
options, contingent share issuances, participations or other equivalents of
or
interest in equity (however designated) of such Person.
“Cash
Reserve”
means
any amount paid to the Originator, the Servicer or the Borrower by an Obligor
that is an Underlying Originator as a cash reserve which may be drawn upon
if
amounts due under the related Underlying Originator Loan Contract are not paid
when due (or by the end of any cure period related thereto), which has not
previously been refunded to such Obligor or applied toward such Obligor’s
obligations under such Underlying Originator Loan Contract.
“Cash
Reserve Account”
has
the
meaning assigned to that term in Section 2.06.
“Cash
Reserve Account Agreement”
means
any Securities Account Agreement with respect to any Cash Reserve Account
established by an Originator, among the Borrower, the Servicer, the Lender’s
Bank and the Lender, in form and substance satisfactory to the parties thereto,
as such agreement may from time to time be amended, supplemented or otherwise
modified in accordance with the terms thereof.
“Certificate
of Title”
means
with respect to a Vehicle, an original certificate of title issued by the
Registrar of Titles of the applicable State.
“Change
of Control”
means
that at any time (i) Owner shall own directly or indirectly less than 100%
of
all membership interests of the Borrower, (ii) Resource America shall own
directly or indirectly less than 50.1% of all Capital Stock or voting power
of
the initial Servicer, (iii) the initial Servicer shall own directly or
indirectly less than 80% of all Capital Stock or voting power of Originator
and
Owner, (iv) Resource America, Owner or the Borrower merges or consolidates
with any other Person without the prior written consent of the Lender,
(v) the initial Servicer or the Originator merges or consolidates with any
other Person and the initial Servicer or the Originator, as applicable, is
not
the surviving entity or (vi) either of Crit XxXxxx
6
or
Xxxxx
Xxxxxx is not employed in a senior management position at the initial Servicer,
is not involved in the day-to-day operations of the initial Servicer or is
not
able to perform substantially all of his duties as an employee of the initial
Servicer during any three month period and, in each case, has not been replaced
by a person approved by the Lender in writing within 90 days of any such
event.
“Closing
Date”
means
October 31, 2006.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Collateral
Agent”
means
the Lender in its capacity as collateral agent on behalf of the Secured
Parties.
“Collateral
Receipt”
has
the
meaning assigned to that term in the Custodial Agreement.
“Collection
Account”
means
a
special trust account (account number 106682000 at the Lender’s Bank) in the
name of the Borrower and under the control of the Lender; provided,
that
the funds deposited therein (including any interest and earnings thereon) from
time to time shall constitute the property and assets of the Borrower and the
Borrower shall be solely liable for any taxes payable with respect to the
Collection Account.
“Collection
Account Agreement”
means
that certain Collection Account Agreement, dated the date of this Agreement,
among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such
agreement may from time to time be amended, supplemented or otherwise modified
in accordance with the terms thereof.
“Collection
Date”
means
the date on which the aggregate outstanding principal amount of the Loans have
been repaid in full and all interest and Fees and all other Obligations have
been paid in full, and the Lender shall have no further obligation to make
any
additional Loans.
“Collection
Period”
means,
(i) with respect to any Remittance Date (including the initial Remittance Date),
the period beginning on, and including, the first day of the most recently
ended
calendar month and ending on, and including, the last day of the most recently
ended calendar month; provided,
that
the final Collection Period shall begin on, and include, the first day of the
then current calendar month and shall end on the Collection Date and (ii) in
any
context other than with respect to any Remittance Date, a calendar
month.
“Collections”
means,
without duplication, with respect to any Pledged Receivable, all Scheduled
Payments (and, in the case of a Pledged Pool B Receivable after a Pool B
Termination Event has occurred with respect to the related Underlying
Originator, all Underlying Scheduled Payments) related to such Receivable,
all
prepayments and related penalty payments with respect to the Contract (and
any
related Underlying Contract related to a Pledged Pool B Receivable after a
Pool
B Termination Event has occurred with respect to the related Underlying
Originator) related to such Receivable, all overdue payments and related
interest and penalty payments with respect to the Contract (and any related
Underlying Contract related to a Pledged Pool B Receivable after a Pool B
Termination Event has occurred with respect to the related Underlying
Originator) related to such Receivable, all Guaranty Amounts, all Insurance
Proceeds, all Servicing Charges, all proceeds under “buyout letters” or other
prepayment/termination
7
agreements
and all Recoveries related to such Receivable, all amounts paid to the Borrower
related to such Receivable pursuant to the terms of the Purchase and Sale
Agreement, all amounts paid by the Servicer related to such Receivable in
connection with its obligations under Section 6.20
hereof,
and all other payments received with respect to the Contract (and, if
applicable, Underlying Contract) related to such Receivable, all cash receipts
and proceeds in respect of the Other Conveyed Property or Related Security
(including, without limitation, the Obligor Collateral) related to such
Receivable, any Servicer Advances related to such Receivable, and any amounts
paid to the Borrower under or in connection with any Qualifying Interest Rate
Swap or the hedging arrangements contemplated thereunder.
“Commitment
Percentage”
has
the
meaning assigned to that term in Section 9.04(b).
“Computer
Tape or Listing”
means
the computer tape or listing (whether in electronic form or otherwise) generated
by the Servicer on behalf of the Borrower, which provides information relating
to the Receivables included in the Net Eligible Receivables
Balance.
“Contract”
means
a
Pool A Contract or a Pool B Contract.
“Credit
and Collection Policy”
means
(i) collectively, the “Operations Policies & Procedures” memorandum, the
“Limited Recourse Term Debt Facility” memorandum of the Servicer, and certain
other items, as annexed hereto as Schedule IV
as such
policy may hereafter be amended, modified or supplemented from time to time
in
compliance with this Agreement and (ii) with respect to any Servicer other
than
LEAF Financial, that Servicer’s collection policies for similar assets in effect
from time to time.
“Critical
Defaults”
has
the
meaning assigned to that term in Section 5.01(u)
hereof.
“Custodial
Agreement”
means
that certain Custodial Agreement dated as of the date hereof among the Servicer,
the Borrower, the Lender and the Custodian, together with all instruments,
documents and agreements executed in connection therewith, as such Custodial
Agreement may from time to time be amended, restated, supplemented and/or
otherwise modified in accordance with the terms thereof.
“Custodian”
means
U.S. Bank National Association (or a sub-custodian on its behalf) or any
substitute Custodian appointed by the Lender pursuant to the Custodial
Agreement.
“Custodian’s
Fee”
means,
for any Fee Period, an amount, payable out of Collections on the Pledged
Receivables and amounts applied to the payment of, or treated as payments on,
the Pledged Receivables, equal to the aggregate fees listed in that certain
“Schedule of Fees” letter dated October 19, 2006 between U.S. Bank National
Association and Leaf Financial Corporation which relate to such Fee
Period.
“Debt”
of
any
Person means (i) indebtedness of such Person for borrowed money,
(ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments related to transactions that are classified as
financings under GAAP, (iii) obligations of such Person to pay the deferred
purchase price of property or services, (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with
GAAP,
recorded as capital leases, (v) obligations secured by an Adverse Claim
upon property or assets
8
owned
(under GAAP) by such Person, even though such Person has not assumed or become
liable for the payment of such obligations and (vi) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor, against loss in respect of, indebtedness or obligations
of
others of the kinds referred to in clauses (i) through (v)
above.
“Default
Funding Rate”
means
an interest rate per annum equal to 1.50% plus the Base Rate.
“Defaulted
Receivable”
means,
as of any date of determination, any Pledged Receivable:
(i) with
respect to which any part of any Scheduled Payment, or any tax-related payment,
owed by the applicable Obligor under the terms of the related Contract remains
unpaid for more than 120 days after the due date therefor set forth in such
Contract;
(ii) with
respect to which the first or second Scheduled Payment is not paid in full
when
due under the related Contract;
(iii) with
respect to which any payment or other material terms of the related Contract
have been modified due to credit related reasons after such Contract was
acquired by the Borrower pursuant to the Purchase and Sale
Agreement;
(iv) which
has
been or should be charged off as a result of the occurrence of a Bankruptcy
Event with respect to the related Obligor or Underlying Obligor, if any, or
which has been or should otherwise be deemed uncollectible by the Servicer,
in
each case, in accordance with the Credit and Collection Policy; or
(v) with
respect to which the Servicer has repossessed the related
Equipment.
“Delinquency
Rate”
means,
as of any date of determination, an amount (expressed as a percentage) equal
to
(i) the aggregate Discounted Balances of all Delinquent Receivables as of
the last day of the immediately preceding Collection Period divided by
(ii) the Net Eligible Receivables Balance as of such day.
“Delinquent
Receivable”
means,
as of any date of determination, any Pledged Receivable (other than a Defaulted
Receivable) with respect to which any part of any Scheduled Payment (or other
amount payable under the terms of the related Contract) remains unpaid for
more
than 60 days but not more than 120 days after the due date therefor set
forth in such Contract.
“Depository
Institution”
means
a
depository institution or trust company, incorporated under the laws of the
United States or any State thereof, that is subject to supervision and
examination by federal and/or State banking authorities.
“Discount
Rate”
means,
as of any date of determination, a percentage equal to the sum of (i) the
Weighted Average Swapped Rate as of such date of determination, (ii) the
Adjusted Eurodollar Rate Margin, (iii) at any time prior to the occurrence
of a
Servicer Default and the appointment of the Backup Servicer as Servicer
hereunder, the Servicing Fee Rate and the
9
Standby
Backup Servicing Fee Rate, (iv) at any time after the occurrence of a
Servicer Default and the appointment of the Backup Servicer as Servicer
hereunder, the Active Backup Servicing Fee Rate and (vi) a rate per annum
equal to 0.05%.
“Discounted
Balance”
means,
with respect to any Contract or Underlying Contract, as of any date of
determination, the present value of the aggregate amount of Scheduled Payments
or, in the case of an Underlying Contract, Underlying Scheduled Payments
(including any Balloon Payment or Put Payment but, in any event, calculated
without giving effect to any booked residual value with respect to any related
Equipment) due or to become due under the terms of the related Contract or
Underlying Contract after the Cut-Off Date applicable to the Receivable related
thereto, which remain unpaid as of such date of determination, calculated by
discounting such aggregate amount of such Scheduled Payments or, in the case
of
an Underlying Contract, such Underlying Scheduled Payments to such date of
determination at an annual rate equal to the Discount Rate.
“Dollar
Purchase Option Contract”
means
a
Contract or an Underlying Contract, as applicable, (i) in connection with
which an agreement was executed which grants the related Obligor or Underlying
Obligor, as applicable, a right to purchase the Equipment or Underlying
Equipment leased under such Contract or Underlying Contract for $1.00 or other
nominal consideration at the end of the initial term of such Contract or
Underlying Contract or (ii) grants the related Obligor or Underlying
Obligor, as applicable, a right to purchase the Equipment or Underlying
Equipment leased under such Contract for $1.00 or other nominal consideration
at
the end of the initial term of such Contract.
“Eligible
Depository Institution”
means
a
Depository Institution the short term unsecured senior indebtedness of which
is
rated at least Prime-1 by Xxxxx’x, A-1 by S&P, and F1 by Fitch, if rated by
Fitch.
“Eligible
Pool A Receivable”
means,
at any time, a Pledged Pool A Receivable with respect to which each of the
representations and warranties regarding the Contract related to such Pledged
Pool A Receivable contained in Schedule III-A
hereto
is true and correct at such time.
“Eligible
Pool A Receivables Balance”
means,
at any time, the aggregate Discounted Balances of all Eligible Pool A
Receivables which are Pledged hereunder to secure Loans at such
time.
“Eligible
Pool B Receivable”
means,
at any time, a Pledged Pool B Receivable with respect to which each of the
representations and warranties regarding the Contract related to such Pledged
Pool B Receivable contained in Schedule III-B
hereto
is true and correct at such time.
“Eligible
Pool B Receivables Balance”
means,
at any time, the aggregate Discounted Balances of all Eligible Pool B
Receivables which are Pledged hereunder to secure Loans at such
time.
“Eligible
Pool B Underlying Lease Contract”
means,
at any time, an Underlying Lease Contract with respect to which each of the
representations and warranties contained in Schedule III-C
hereto
is true and correct at such time.
10
“Eligible
Pool B Underlying Loan Contract”
means,
at any time, an Underlying Loan Contract with respect to which each of the
representations and warranties contained in Schedule III-C
hereto
is true and correct at such time.
“Eligible
Receivable”
means,
at any time, a Pledged Receivable which is an Eligible Pool A Receivable or
an Eligible Pool B Receivable at such time.
“Eligible
Receivables Balance”
means,
at any time, the aggregate Discounted Balances of all Eligible Receivables
which
are Pledged hereunder to secure Loans at such time.
“Eligible
Underlying Contract”
means
an Eligible Pool B Underlying Lease Contract or Eligible Pool B
Underlying Loan Contract.
“Eligible
Underlying Originator”
means
an Underlying Originator that has been approved by the initial Servicer in
accordance with the Credit and Collection Policy.
“Equipment”
means
the equipment or Vehicle (i) leased to an Obligor, or serving as collateral
for
a loan to an Obligor, under a Contract together with any replacement parts,
additions and repairs thereof, and any accessories incorporated therein and/or
affixed thereto or (ii) leased to an Underlying Obligor, or serving as
collateral for a loan to an Underlying Obligor, under a Underlying Contract
together with any replacement parts, additions and repairs thereof, and any
accessories incorporated therein and/or affixed thereto.
“Equipment
Category”
means
any of the Equipment Categories set forth on Schedule V hereto, as such schedule
may be updated from time to time by the Borrower with the consent of the Lender
(which such consent shall not be unreasonably withheld).
“ERISA”
means
the United States Employee Retirement Income Security Act of 1974, as amended
from time to time.
“ERISA
Affiliate”
means
a
corporation, trade or business that is, along with any Person, a member of
a
controlled group of corporations or a controlled group of trades or businesses,
as described in section 414 of the Internal Revenue Code of 1986, as amended,
or
section 4001 of ERISA.
“Eurodollar
Disruption Event”
means
any of the following: (i) a determination by the Lender that it would be
contrary to law or to the directive of any central bank or other governmental
authority (whether or not having the force of law) to obtain United States
dollars in the London interbank market to make, fund or maintain any Loan,
(ii) a determination by the Lender that the rate at which deposits of
United States dollars are being offered in the London interbank market does
not
accurately reflect the cost to the Lender of making, funding or maintaining
any
Loan or (iii) the inability of the Lender to obtain United States dollars
in the London interbank market to make, fund or maintain any Loan.
“Eurodollar
Index”
means
an index based upon an interest rate reported on Telerate Access Service
Page 3750 (British Bankers Association Settlement Rate) as the London
Interbank Offered Rate for United States dollar deposits.
11
“Event
of Default”
has
the
meaning assigned to that term in Section 7.01.
“Exception
Sublimit Receivable”
means
a
Pool A Receivable arising under a Lease Contract related to Equipment having
an
original cost of less than $100,000 as to which the original, executed Lease
Contract has not been forwarded to the Custodian for inclusion in the related
Receivable File.
“Facility
Amount”
means,
at any time, the sum of the aggregate Loans Outstanding hereunder bearing
interest at the Interest Rate, plus
accrued
interest and Fees with respect to such amounts.
“Facility
Maturity Date”
means
the third anniversary of the date of this Agreement.
“Fee
Letter”
has
the
meaning assigned to that term in Section 2.08(a).
“Fee
Period”
means
a
period commencing on (and including) a Remittance Date and ending on (and
including) the day prior to the next Remittance Date; provided,
that,
the initial Fee Period hereunder shall commence on (and include) the date hereof
and end on (and include) December 22, 2006.
“Fees”
has
the
meaning assigned to that term in Section 2.08(a).
“Fitch”
means
Fitch, Inc. (or its successors in interest).
“FMV
Contract”
means
a
Contract or an Underlying Contract, as applicable, which (i) in connection
with which any agreement was executed which grants the related Obligor or
Underlying Obligor, as applicable, a right to purchase the Equipment or
Underlying Equipment leased under such Contract or Underlying Contract for
the
fair market value thereof at the end of the initial term of such Contract or
Underlying Contract or (ii) grants the related Obligor or Underlying
Obligor, as applicable, a right to purchase the Equipment or Underlying
Equipment leased under such Contract for the fair market value thereof at the
end of the initial term of such Contract.
“GAAP”
means
generally accepted accounting principles as in effect from time to time in
the
United States.
“Global
Overconcentration Amount”
means,
at any time (x) after the first anniversary of the Closing Date or (y) the
aggregate outstanding principal balance of the Loans is greater than
$35,000,000, without duplication, the sum of:
(vi) the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables related to any one Obligor (or any Affiliate thereof) at such time
exceeds $3,000,000;
(vii) the
amount by which the sum of the Discounted Balances at such time of all Eligible
Pool A Receivables related to the three Obligors which, together with any
Affiliates thereof, owe the greatest amounts under their respective Contracts,
in the aggregate, exceeds $9,500,000;
12
(viii) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
with respect to which the related Contract is a Non-Level Payment Contract
exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables
at
such time;
(ix) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
with respect to which the related Contract provides for Scheduled Payments
to be
paid for any period other than monthly exceeds 10% of the sum of the Discounted
Balances of all Eligible Receivables at such time;
(x) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
related to Obligor Collateral located in the State of California at such time
exceeds 30% of the sum of the Discounted Balances of all Eligible Receivables
at
such time;
(xi) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
related to Obligor Collateral located in any State other than the State of
California exceeds 20% of the sum of the Discounted Balances of all Eligible
Receivables at such time;
(xii) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
related to Equipment within any one Equipment Category exceeds the sum of the
Discounted Balances of all Eligible Receivables at such time multiplied by
35%;
(xiii) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
(including, without limitation, Vehicle Sublimit Pledged Receivable), with
respect to which the related Obligor Collateral is a Vehicle or other type
of
equipment which requires a security interest therein to be noted on the
certificate of title with respect thereto in order to be perfected, exceeds
20%
of the sum of the Discounted Balances of all Eligible Receivables at such
time;
(xiv) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
which are Vehicle Sublimit Pledged Receivables, exceeds 5% of the sum of the
Discounted Balances of all Eligible Receivables at such time;
(xv) the
amount by which the sum of the Discounted Balances of all Eligible Receivables,
with respect to which the related Obligor is a Government Entity, exceeds 10%
of
the sum of the Discounted Balances of all Eligible Receivables at such
time;
(xvi) the
amount by which the sum of the Discounted Balances of all Eligible Receivables,
which are Exception Sublimit Receivables, exceeds 10% of the sum of the
Discounted Balances of all Eligible Receivables at such time (it being
understood and agreed that, notwithstanding anything herein to the contrary
(including clauses
(x)
and
(y)
above),
this component of the Global Overconcentration Amount shall apply at all times
on and after the Closing Date); and
13
(xvii) the
amount by which the sum of the Discounted Balances of all Eligible Receivables
with respect to which the related Obligor Collateral is a work vehicle exceeds
20% of the sum of the Discounted Balances of all Eligible Receivables at such
time.
“Government
Entity”
means
the United States, any State, any political subdivision of a State and any
agency or instrumentality of the United States or any State or political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
“Guaranty
Amounts”
means
any and all amounts paid by any guarantor with respect to the applicable
Contract.
“Holdback
Amount”
means,
with respect to any Pool B Receivable, the amount of any loan principal or
purchase price which would otherwise be advanced by the Originator to the
applicable Obligor pursuant to the terms of such Contract, but which was held
back by the Originator as a liquidity reserve or similar reserve.
“Included
Repurchased Receivable”
means
any Receivable repurchased by the Originator pursuant to Section 6.1(b) of
the
Purchase and Sale Agreement with respect to which, as of the date of repurchase,
any part of any Scheduled Payment (or other amount payable under the terms
of
the related Contract) remained unpaid after the due date therefor set forth
in
such Contract.
“Indemnified
Amounts”
has
the
meaning assigned to that term in Section 8.01.
“Independent
Accountants”
has
the
meaning assigned to that term in Section 6.11(b).
“Initial
Qualified Swap Counterparty”
means
Xxxxxx Xxxxxxx Capital Services Inc., a Delaware corporation and its successors
and permitted assigns.
“Insurance
Certificate”
means
the insurance certificate related to the Insurance Policy with respect to such
Receivable (which insurance certificate shall list the Originator as a loss
payee).
“Insurance
Policy”
means,
with respect to any Obligor Collateral, the insurance policy maintained by
or on
behalf of the Obligor pursuant to the related Contract that covers physical
damage to the related Equipment (in an amount sufficient to insure completely
the value of such Equipment) and general liability (including policies procured
by the Borrower or the Servicer, or any agent thereof, on behalf of the
Obligor).
“Insurance
Proceeds”
means,
with respect to an item of Obligor Collateral and a related Contract, any amount
paid under an Insurance Policy or an Underlying Insurance Policy issued with
respect to such Obligor Collateral and/or the related Contract.
“Interest
Period”
means,
for any outstanding Loans, a period determined pursuant to Section 2.03(a).
“Interest
Rate”
has
the
meaning assigned to such term in Section
2.03(b).
14
“LEAF
Financial”
has
the
meaning assigned to that term in the preamble hereto.
“Lease
Contract”
means
(i) a “Master Lease Schedule” in the form attached hereto as Exhibit D-1(b),
Exhibit D-1(c),
Exhibit D-1(d),
together with a “Master Lease Agreement” in the form attached hereto as
Exhibit D-1(a)
which is
related to, and incorporated by reference into, a “Master Lease Schedule” (as
such exhibits may be updated from time to time by the Borrower with the consent
of the Lender), (ii) a “Lease Agreement” in the form attached hereto as
Exhibit D-1(e)
or (iii)
a lease agreement otherwise approved by the Servicer in compliance with the
Credit and Collection Policy, pursuant to which Equipment is leased to an
Obligor by Originator, together with all schedules, supplements and amendments
thereto and each other document and instrument related to such
lease.
“Lender”
means,
collectively, Xxxxxx Xxxxxxx and/or any other Person that is an Affiliate of
Xxxxxx Xxxxxxx and/or, with the consent of the Borrower (which such consent
shall not be unreasonably withheld) at any time prior to the occurrence of
a
Program Termination Event (and without the consent of the Borrower at any time
after the occurrence of a Program Termination Event), any other Person that
is
not an Affiliate of Xxxxxx Xxxxxxx, in each case, that agrees, pursuant to
the
pertinent Assignment and Acceptance, to make Loans secured by Pledged Assets
pursuant to Article II of this Agreement.
“Lender’s
Bank”
means
U.S. Bank National Association and its successors and assigns that are Eligible
Depository Institutions.
“Lender’s
Bank Fee”
means
an annual fee paid in advance, payable out of Collections on the Pledged
Receivables and amounts applied to the payment of, or treated as payments on,
the Pledged Receivables, equal to $7,000. The “Lender’s Bank Fee” shall also
include (i) a one-time acceptance fee of $4,500 payable on the Closing Date
and
(ii) reasonable out-of-pocket expenses incurred by the Lender’s Bank in the
performance of its duties.
“Liquidation
Proceeds”
means,
with respect to a Receivable with respect to which the related Obligor
Collateral has been repossessed or foreclosed upon by the Servicer, all amounts
realized with respect to such Receivable net of (i) reasonable expenses of
the Servicer incurred in connection with the collection, repossession,
foreclosure and/or disposition of the related Obligor Collateral and
(ii) amounts that are required to be refunded to the Obligor on such
Receivable; provided,
however,
that
the Liquidation Proceeds with respect to any Receivable shall in no event be
less than zero.
“Loan”
means
each loan advanced by the Lender to the Borrower on a Borrowing Date pursuant
to
Article II.
“Loan
Contract”
means,
collectively, (i) a “Term Note (Level Payments)” together with the “Master Loan
and Security Agreement” related thereto and incorporated by reference therein,
each in the form attached hereto as Exhibit D-2(a)
(as such
exhibit may be updated from time to time by the Borrower with the consent of
the
Lender), (ii) a “Term Note (Level Payments)” or “Term Note (Step Payments)”
together with the “Master Loan and Security Agreement” related thereto and
incorporated by reference therein, each in the form attached hereto as
Exhibit D-2(b)
(as such
exhibit may be updated from time to time by the Borrower with the consent of
the
15
Lender)
or (iii) a loan agreement and promissory note otherwise approved by the Servicer
in compliance with the Credit and Collection Policy, in each case, pursuant
to
which the Originator makes a loan to an Obligor secured by Equipment purchased
by such Obligor, together with all schedules, supplements and amendments thereto
and each other document and instrument related thereto.
“Loans
Outstanding”
means
the sum of the principal amounts of Loans loaned to the Borrower for the initial
and any subsequent borrowings pursuant to Sections 2.01
and
2.02,
reduced
from time to time by Collections with respect to any Pledged Receivable received
and distributed as repayment of principal amounts of Loans outstanding pursuant
to Section 2.04
and any
other amounts received by the Lender to repay the principal amounts of Loans
outstanding pursuant to Section 2.15
or
otherwise; provided,
however,
that
the principal amounts of Loans outstanding shall not be reduced by any
Collections with respect to any Pledged Receivable or other amounts if at any
time such Collections or other amounts are rescinded or must be returned for
any
reason.
“Lockbox”
means
a
post office box to which Collections with respect to any Pledged Receivable
are
remitted for retrieval by the Lockbox Bank and for deposit by the Lockbox Bank
into the Lockbox Account.
“Lockbox
Account”
means
the deposit account (account number 153910088597 at
the
Lockbox Bank) in the name of “U.S. Bank NA as Securities Intermediary for LEAF
Financial and various lenders”.
“Lockbox
Bank”
means
U.S. Bank National Association and its successors in interest.
“Lockbox
Intercreditor Agreement”
means
the Amended and Restated Lockbox Intercreditor Agreement, dated as of April
18,
2005, among the Lockbox Bank, the Servicer, the Borrower, and certain other
parties.
“Material
Adverse Effect”
means
a
material adverse effect on (i) the ability of the Borrower, the Originator
and/or the Servicer to conduct its business, (ii) the ability of the
Borrower, the Originator and/or the Servicer to perform its respective
obligations under this Agreement and/or any other Transaction Document to which
it is a party, (iii) the validity or enforceability of this Agreement
and/or any other Transaction Document to which the Borrower, the Originator
and/or the Servicer is a party, (iv) the rights and remedies of the Lender
under this Agreement and/or any of the Transaction Documents and/or (v) the
validity, enforceability or collectibility of all or any portion of the Pledged
Receivables.
“Minimum
Tangible Net Worth
means,
with respect to Resource America, a Tangible Net Worth (measured as of each
fiscal quarter end) of not less than $125,000,000.
“Monthly
Remittance Report”
means
a
report, in substantially the form of Exhibit C,
furnished by the Servicer to the Lender pursuant to Section 6.10(b).
“Moody’s”
means
Xxxxx’x Investors Service, Inc. (or its successors in interest).
“Xxxxxx
Xxxxxxx”
has
the
meaning assigned to that term in the preamble hereto.
16
“Net
Eligible Receivables Balance”
means,
at any time, (i) the Eligible Receivables Balance at such time, minus
(ii) the Overconcentration Amount at such time.
“Non-Level
Payment Contract”
means
a
Contract that does not provide for level Scheduled Payments during the term
of
such Contract.
“Notice
of Borrowing”
has
the
meaning assigned to that term in Section 2.02(b)
hereof.
“Notice
of Pledge”
has
the
meaning assigned to that term in the Custodial Agreement.
“Obligations”
means
all present and future indebtedness and other liabilities and obligations
(howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, or due or to become due) of the Borrower to the Secured Parties
arising under this Agreement and/or any other Transaction Document and shall
include, without limitation, all liability for principal of and interest on
the
Loans, indemnifications and other amounts due or to become due by the Borrower
to the Secured Parties under this Agreement and/or any other Transaction
Document, including, without limitation, interest, fees and other obligations
that accrue after the commencement of an insolvency proceeding (in each case
whether or not allowed as a claim in such insolvency proceeding).
“Obligor”
means,
collectively, each Person obligated to make payments under a
Contract.
“Obligor
Collateral”
means
(i) the Equipment leased to an Obligor under a Lease Contract,
(ii) the Equipment and other property pledged by an Obligor to secure its
obligations under a Loan Contract, (iii) the Equipment and other property
pledged by an Obligor to secure its obligations under a Practice Acquisition
Loan Contract and (iv) the Underlying Originator Loan Collateral and other
property pledged by an Obligor to secure its obligations under an Underlying
Originator Loan Contract.
“Obligor
Financing Statement”
means
a
UCC financing statement filed by Originator against an Obligor under a Contract
which evidences a security interest in the related Obligor
Collateral.
“Officer’s
Certificate”
means
a
certificate signed by the president, the secretary, the chief financial officer
or any vice president of any Person.
“Opinion
of Counsel”
means
a
written opinion of independent counsel acceptable to the Lender, which opinion,
if such opinion or a copy thereof is required by the provisions of this
Agreement or any other Transaction Document to be delivered to the Borrower
or
the Lender, is acceptable in form and substance to the Lender.
“Originator”
means
LEAF Funding, Inc., a Delaware corporation.
“Originator
Insurance Agreement”
means
that certain letter agreement regarding the Originator’s obligations as named
loss payee under Insurance Policies and Underlying Insurance Policies, dated
as
of the date hereof, among the Originator, the Servicer, the Borrower and the
Lender, as such agreement may from time to time be amended, restated,
supplemented and/or otherwise modified in accordance with the terms
thereof.
17
“Other
Commercial Contract”
means
any agreement approved by the Servicer in compliance with the Credit and
Collection Policy, in each case, pursuant to which the commercial Obligor
thereunder agrees to make periodic payments in connection with any loan,
services, rental or sale, together with all schedules, supplements and
amendments thereto and each other document and instrument related
thereto.
“Other
Conveyed Property”
means,
with respect to any Receivable, all of the Borrower’s right, title and interest
in, to and under (i) all Collections and other monies at any time received
or receivable with respect to such Receivable after the applicable Cut-Off
Date
(as defined in the Purchase and Sale Agreement), (ii) the Equipment or
Underlying Equipment related to such Receivable (to the extent of the Borrower’s
ownership rights, if any, therein), (iii) in the case of a Receivable
related to any Contract, any and all agreements, documents, certificates and
instruments evidencing the Borrower’s security interest or other interest in and
to the related Obligor Collateral or any intercreditor agreement with respect
thereto, including, without limitation, any Certificate of Title, (iv) the
Obligor Collateral related to such Receivable including, without limitation,
the
security interest in such Obligor Collateral granted by the related Obligor
to
Originator under the related Contract and assigned by Originator to the Borrower
under the Purchase and Sale Agreement, (v) the Obligor Financing Statement,
if any, related to such Receivable, (vi) the Insurance Policy and any
proceeds from the Insurance Policy relating to such Receivable, including
rebates of premiums not otherwise due to an Obligor, (vii) the related
Contract and all other items required to be contained in the related Receivable
File, any and all other documents or electronic records that the Borrower keeps
on file in accordance with its customary procedures relating to such Receivable,
the related Obligor Collateral or the related Obligor, (viii) any Security
Deposits or Cash Reserve related to such Receivable, (ix) all property
(including the right to receive future Liquidation Proceeds) that secures such
Receivable and that has been acquired by or on behalf of the Borrower pursuant
to the liquidation of such Receivable, and (x) all present and future
rights, claims, demands, causes and chooses in action in respect of any or
all
of the foregoing and all payments on or under and all proceeds and investments
of any kind and nature in respect of any of the foregoing.
“Overconcentration
Amount”
means,
at any time, the sum of the Pool A Overconcentration Amount at such time and
the
Pool B Overconcentration Amount at such time.
“Overdue
Payment”
means,
with respect to a Collection Period, all payments due in a prior Collection
Period that the Servicer receives from or on behalf of an Obligor during such
Collection Period, including any Servicing Charges.
“Owner”
means
(i) the Originator or (ii) subject to the prior written consent of the Lender
(such consent not to be unreasonably withheld), any other subsidiary of the
initial Servicer which acquires all or part of the membership interests of
the
Borrower.
“Parallel
Defaults”
has
the
meaning assigned to that term in Section 5.01(u)
hereof.
“Permitted
Investments”
means
any one or more of the following:
18
(i)
direct
obligations of, or obligations fully guaranteed as to principal and interest
by,
the United States or any agency
or instrumentality
thereof, provided such obligations are backed by the full faith and credit
of
the United States;
(ii) repurchase
obligations (the collateral for which is held by a third party or the Trustee),
with respect to any security described in clause (i) above, provided that
the long-term unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by Moody’s and S&P in one of their two
highest long-term rating categories and if rated by Fitch, in one of its two
highest long-term rating categories;
(iii) certificates
of deposit, time deposits, demand deposits and bankers’ acceptances of any bank
or trust company incorporated under the laws of the United States or any State
thereof or the District of Columbia, provided that the short-term commercial
paper of such bank or trust company (or, in the case of the principal depository
institution in a depository institution holding company, the long-term unsecured
debt obligations of the depository institution holding company) at the date
of
acquisition thereof has been rated by Moody’s and S&P in their highest
short-term rating category, and if rated by Fitch, in its highest short-term
rating category;
(iv) commercial
paper (having original maturities of not more than 270 days) of any
corporation incorporated under the laws of the United States or any State
thereof or the District of Columbia, having a rating, on the date of acquisition
thereof, of no less than A-1 by Moody’s, P-1 by S&P and F-1 if rated by
Fitch;
(v) money
market
mutual funds, including funds managed by the Lender’s Bank or its Affiliates,
registered under the Investment Company Act of 1940, as amended, having a
rating, at the time of such investment, of no less than Aaa by Moody’s, AAA by
S&P and AAA if rated by Fitch; and
(vi) any
other
investments approved in writing by the Lender.
provided,
that no
such instrument shall be a Permitted Investment if such instrument evidences
the
right to receive either (a) interest only payments with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument, where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation. Each Permitted Investment may be purchased by the Lender’s Bank or
through an Affiliate of the Lender’s Bank.
“Permitted
Liens”
means:
(i) with
respect to Obligor Collateral, (A) liens and security interests in favor of
the Collateral Agent, granted pursuant to the Transaction Documents,
(B) the interests of an Obligor arising under the Contract to which it is a
party in the Obligor Collateral related to such Contract, (C) liens for
taxes, assessments, levies, fees and other governmental and similar charges
either not yet due or being contested
19
in good faith and by appropriate proceedings, provided, that appropriate
reserves shall have been established with respect to any such taxes either
not
yet due or being contested in good faith and by appropriate proceedings,
(D) any liens with respect to any mechanics, suppliers, materialmen,
laborers, employees, repairmen and other like liens arising in the ordinary
course of a servicer’s, lessor’s/lender’s or lessee’s/borrower’s business
securing obligations which are not due and payable, and (E) salvage rights
of insurers with respect to the equipment subject to a Contract under insurance
policies maintained pursuant to the Transaction Documents or a Contract;
and
(ii) with
respect to Underlying Collateral, in addition to the Permitted Liens described
in clause (i) above, (x) liens in favor of Originator or the Borrower,
granted by the applicable Underlying Obligor, in each case, solely to the extent
assigned to the Collateral Agent and (y) the interests of an Underlying
Obligor arising under the Underlying Contract to which it is a party in the
Underlying Originator Loan Collateral related to such Underlying
Contract.
“Person”
means
an individual, partnership, corporation (including a business trust), limited
liability company, joint stock company, trust, unincorporated association,
joint
venture, government (or any agency or political subdivision thereof) or other
entity.
“Pledge”
means
the pledge of any Receivable pursuant to Article II.
“Pledged
Assets”
has
the
meaning assigned to that term in Section 2.11.
“Pledged
Receivables”
means
Pledged Pool A Receivables and Pledged Pool B
Receivables.
“Pledged
Pool A Receivables”
has
the
meaning assigned to that term in Section 2.11(a).
“Pledged
Pool B Receivables”
has
the
meaning assigned to that term in Section 2.11(a).
“Pledged
Receivables Balance”
means,
at any time, the aggregate Discounted Balances of all Receivables which are
Pledged hereunder to secure Loans at such time.
“Pool A
Annualized Net Loss Rate”
means,
as of any date of determination after the end of the third Collection Period
following the date hereof, an amount (expressed as a percentage) equal to
(i) the product of (A) (x) the aggregate Discounted Balances of
all Pledged Pool A Receivables which were Eligible Pool A Receivables
at the time of their Pledge hereunder and which became Defaulted Receivables
during the six (or such lesser number of Collection Periods since the date
hereof) immediately preceding Collection Periods minus
(y) Recoveries related to Pool A Receivable received during the six
(or such lesser number of Collection Periods since the date hereof) immediately
preceding Collection Periods and (B) 2 (if six or more Collection Periods
have occurred since the date hereof), 2.4 (if five Collection Periods have
occurred since the date hereof), 3 (if four Collection Periods have
occurred since the date hereof), 4 (if three Collection Periods have
occurred since the date hereof), 6 (if two Collection Periods have occurred
since the date hereof) or 12 (if one Collection Period has occurred since
the date hereof) divided by (ii) the Eligible Pool A Receivables
Balance as of the first Business Day of the six (or
20
such
lesser number of Collection Periods since the date hereof) immediately preceding
Collection Periods.
“Pool
A
Borrowing Base”
means,
at any time, the lowest of:
(i) 98%
of
the Amortized Equipment Cost with respect to all Eligible Pool A
Receivables; and
(ii) an
amount
equal to the Pool A Net Eligible Receivables Balance multiplied by a
percentage equal to 92%.
“Pool
A
Contract”
means
a
Lease Contract, a Loan Contract, a Practice Acquisition Loan Contract, a Real
Estate Contract or an Other Commercial Contract.
“Pool
A
Lease File”
has
the
meaning assigned to that term in clause
(a)
of the
definition of “Receivable File”.
“Pool A
Loan”
has
the
meaning assigned to that term in Section 2.01.
“Pool
A
Loan File”
has
the
meaning assigned to that term in clause
(b)
of the
definition of “Receivable File”.
“Pool A
Net Eligible Receivables Balance”
means,
at any time, (i) the Eligible Pool A Receivables Balance at such time
minus
(ii) the Pool A Overconcentration Amount at such time.
“Pool A
Overconcentration Amount”
means,
at any time, (x) after the first anniversary of the Closing Date or (y) the
aggregate outstanding principal balance of the Loans is greater than
$35,000,000, without duplication, the sum of:
(i)
an
amount
equal to the Global Overconcentration Amount at such time multiplied by a
fraction the numerator of which is the aggregate Discounted Balances of all
Eligible Pool A Receivables at such time and the denominator of which is
the aggregate Discounted Balances of all Eligible Receivables at such
time;
(ii)
the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables with respect to which the related Contract has a remaining term
greater than 85 months and equal to or less than 120 months exceeds 50% of
the
sum of the Discounted Balances of all Eligible Pool A Receivables at such
time;
(iii)
the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables with respect to which the related Contract has a remaining term
greater than 120 months exceeds 15% of the sum of the Discounted Balances of
all
Eligible Pool A Receivables at such time;
(iv)
the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables with respect to which the related Contract has a Discounted Balance
greater than $1,000,000 exceeds 50% of the sum of the Discounted Balances of
all
Eligible Pool A Receivables at such time;
21
(v) the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables related to any one vendor of Equipment (or Affiliate thereof) at
such time exceeds 35% of the sum of the Discounted Balances of all Eligible
Pool A Receivables at such time;
(vi) the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables arising under a Contract which provides for a Balloon Payment or
Put
Payment, the amount of which is in excess of 34% of the original amount of
the
Scheduled Payments to be made under such Contract, exceeds 20% of the sum of
the
Discounted Balances of all Eligible Pool A Receivables at such
time;
(vii) the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables arising from Practice Acquisition Loan Contracts at such time
exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A
Receivables at such time; and
(viii) the
amount by which the sum of the Discounted Balances of all Eligible Pool A
Receivables that are Stand Alone Working Capital Loans at such time exceeds
15%
of the sum of the Discounted Balances of all Eligible Pool A Receivables at
such time.
“Pool A
Receivable”
means
the rights to all payments from an Obligor under a Pool A Contract,
including, without limitation, any right to the payment with respect to
(i) Scheduled Payments, (ii) any prepayments or overdue payments made
with respect to such Scheduled Payments, (iii) any Guaranty Amounts,
(iv) any Insurance Proceeds, (v) any Servicing Charges and
(vi) any Recoveries.
“Pool A
Termination Event”
means
the occurrence of any of the following events:
(i) the
rolling weighted average of the Delinquency Rates in respect of any three
consecutive Collection Periods, calculated by the Lender solely with respect
to
Pool A Receivables, exceeds 3.5%;
(ii) the
Annualized Default Rate, calculated by (or in a manner satisfactory to) the
Lender solely with respect to Pool A Receivables, exceeds 4.0%;
or
(iii) the
Pool
A Annualized Net Loss Rate exceeds 3.5%.
“Pool
B
Annualized Net Loss Rate”
means
with respect to any Underlying Originator, as of any date of determination
at
least three Collection Periods after the date that the Pool B Receivable
22
related
to such Underlying Originator is Pledged hereunder (the “Applicable
Date”),
an
amount (expressed as a percentage) equal to (i) the product of
(A) (x) the aggregate Discounted Balances of all Underlying Contracts
related to such Underlying Originator which were Eligible Underlying Contracts
at the time of the Pledge of the related Pool B Receivable hereunder and as
to which an Underlying Contract Event of Default has occurred during the six
(or
such lesser number of Collection Periods since the Applicable Date) immediately
preceding Collection Periods minus
(y) recoveries received by the Underlying Originator during the six (or
such lesser number of Collection Periods since the Applicable Date) immediately
precedingCollection Periods and (B) 2 (if six or more Collection
Periods have occurred since the Applicable Date), 2.4 (if five Collection
Periods have occurred since the Applicable Date), 3 (if four Collection
Periods have occurred since the Applicable Date), 4 (if three Collection
Periods have occurred since the Applicable Date), 6 (if two Collection
Periods have occurred since the Applicable Date) or 12 (if one Collection
Period has occurred since the Applicable Date) divided by (ii) the
aggregate Discounted Balances of all Underlying Contracts related to such
Underlying Originator which are Eligible Underlying Contracts as of the first
Business Day of the six (or such lesser number of Collection Periods since
the
Applicable Date) immediately preceding Collection Periods.
“Pool
B
Borrowing Base”
means,
at any time, (x) the sum of the amounts calculated with respect to each Eligible
Pool B Receivable, equal to the least of:
(i) the
sum
of (A) 92% of the aggregate Discounted Balance of all related Underlying
Contracts and (B) the amount of funds on deposit in the Cash Reserve Account
related to such Eligible Pool B Receivable;
(ii) 100%
of
the Amortized Equipment Cost with respect to such Eligible Pool B Receivable
at
such time (calculated without giving effect to any associated amortized indirect
costs related to the applicable Equipment) minus the Holdback Amount for such
Eligible Pool B Receivable; or
(iii) the
Discounted Balance of such Eligible Pool B Receivable
minus
(y) the
Pool B Overconcentration Amount.
“Pool B
Contract”
means
an Underlying Originator Loan Contract.
“Pool B
Loan”
has
the
meaning assigned to that term in Section 2.01.
“Pool
B
Master Receivable File”
has
the
meaning assigned to that term in clause
(c)
of the
definition of “Receivable File”.
“Pool
B
Micro Ticket Receivables”
means
a
Pool B Receivable related to equipment with an original cost of less than $3000
and with respect to which the related Obligor is Northern Leasing Systems,
Inc.
or any other Obligor as approved in writing by the Lender in its sole
discretion.
“Pool B
Net Eligible Receivables Balance”
means,
at any time, (i) the Eligible Pool B Receivables Balance at such time
minus
(ii) the Pool B Overconcentration Amount at such time.
“Pool B
Overconcentration Amount”
means,
at any time, (x) after the first anniversary of the Closing Date or (y) the
aggregate outstanding principal balance of the Loans is greater than
$35,000,000, without duplication, the sum of:
23
(i) an
amount
equal to the Global Overconcentration Amount at such time multiplied by a
fraction the numerator of which is the aggregate Discounted Balances of all
Eligible
Pool B Receivables at such time and the denominator of which is the
aggregate Discounted Balances of all Eligible Receivables at such
time;
(ii) the
amount by which the sum of the Discounted Balances of all Eligible Pool B
Receivables related to any one Underlying Originator (or Affiliate thereof)
at
such time exceeds $25,000,000;
(iii) the
amount by which the sum of the Discounted Balances of all Eligible Pool B
Receivables related to any one Underlying Obligor (or Affiliate thereof) at
such
time exceeds $1,000,000;
(iv) the
amount by which the sum of the Discounted Balances of all Eligible Pool B
Receivables with respect which the related Contract has a remaining term greater
than 84 months exceeds 20% of the sum of the Discounted Balances of all
Eligible Pool B Receivables at such time; and
(v) the
amount by which the sum of the Discounted Balances of all Eligible Pool B
Receivables that are Pool B Micro Ticket Receivables at such time exceeds
$15,000,000.
“Pool B
Receivable”
means
the rights to all payments from an Obligor under a Pool B Contract,
including, without limitation, any right to the payment with respect to
(i) Scheduled Payments and Underlying Scheduled Payments, (ii) any
prepayments or overdue payments made with respect to such Scheduled Payments
and
Underlying Scheduled Payments, (iii) any Guaranty Amounts, (iv) any
Insurance Proceeds, (v) any Servicing Charges and (vi) any
Recoveries.
“Pool B
Termination Event”
means,
with respect to an Underlying Originator, the occurrence of any of the following
events:
(i) other
than with respect to Pool B Micro Ticket Receivables, the rolling weighted
average of the Underlying Delinquency Rates with respect to such Underlying
Originator in respect of any three consecutive Collection Periods exceeds
8%;
(ii) other
than with respect to Pool B Micro Ticket Receivables, the Pool B Annualized
Net
Loss Rate with respect to such Underlying Originator in respect of any
Collection Period exceeds 6%;
(iii) other
than with respect to Pool B Micro Ticket Receivables, the current amount of
recourse, if any, against such Underlying Originator with respect to its
obligations under the related Underlying Originator Loan Contract is less than
5% of the maximum amount of such recourse;
24
(iv) with
respect to Pool B Micro Ticket Receivables only, the rolling weighted average
of
the Underlying Delinquency Rates with respect to such Underlying Originator
in
respect of any three consecutive Collection Periods exceeds
10%;
(v) with
respect to Pool B Micro Ticket Receivables only, the Pool B Annualized Net
Loss
Rate with respect to such Underlying Originator in respect of any Collection
Period exceeds 25%;
(vi) with
respect to Pool B Micro Ticket Receivables only, the current amount of recourse,
if any, against such Underlying Originator with respect to its obligations
under
the related Underlying Originator Loan Contract is less than 5% of the maximum
amount of such recourse; or
(vii) the
occurrence of any Bankruptcy Event in respect of such Underlying
Originator.
“Pool
B
Underlying Lease File”
has
the
meaning assigned to that term in clause
(d)
of the
definition of “Receivable File”.
“Pool
B
Underlying Loan File”
has
the
meaning assigned to that term in clause
(e)
of the
definition of “Receivable File”.
“Practice
Acquisition Loan Contract”
means,
collectively, a “Term Note (Level Payments)” together with the “Master Loan and
Security Agreement” related thereto and incorporated by reference therein, each
in the form attached hereto as Exhibit D-3
(as such
exhibit may be updated from time to time by the Borrower with the consent of
the
Lender) or a loan agreement and promissory note otherwise approved by the
Servicer in compliance with the Credit and Collection Policy, pursuant to which
Originator makes a loan to an Obligor to enable such Obligor to acquire a
dental, medical, osteopathic medical, optometric or veterinary practice, secured
by Equipment related to the practice of dentistry, medicine or veterinary
medicine and certain non-equipment assets, together with all schedules,
supplements and amendments thereto and each other document and instrument
related thereto.
“Prepayment
Amount”
means
the principal amount of Loans repaid by the Borrower in connection with an
optional prepayment of Loans made by the Borrower pursuant to Section 2.15
hereof.
“Prepayment
Date”
means
any date on which an optional prepayment of Loans is made by the Borrower
pursuant to Section 2.15 hereof.
“Prepayment
Premium”
has
the
meaning ascribed thereto in the Fee Letter.
“Program
Termination Cure Event”
means
the occurrence of any of the following events:
(i) following
the occurrence of a Program Termination Event described in clause (iv),
(v), (vi), (vii), (viii) or (ix) of the definition thereof, such Program
Termination Event is cured within the following two Collection Periods and
two
further Collection Periods pass without the occurrence of such a Program
Termination Event; or
25
(ii) following
the occurrence of a Program Termination Event described in clause (xi) of
the definition thereof, such Program Termination Event is cured; provided
that, in
any event, no other Program Termination Event shall have occurred and be
continuing.
“Program
Termination Date”
means
the earliest of (i) the date of occurrence of any event described in
Section 7.01(a)
hereof,
(ii) the date of the declaration of the Program Termination Date pursuant
to any other subsection of Section 7.01
or
(iii) the date of the declaration of the Program Termination Date by, and
at the option of, the Lender upon the occurrence of a Program Termination
Event.
“Program
Termination Event”
means
the occurrence of any of the following events:
(i) a
regulatory, tax or accounting body has ordered that the activities of the Lender
or any Affiliate thereof contemplated hereby be terminated or, as a result
of
any other event or circumstance, the activities of the Lender or any Affiliate
contemplated hereby may reasonably be expected to cause the Lender or the
Person, if any, then acting as the administrator or the manager for the Lender
or any of its Affiliates to suffer materially adverse regulatory, accounting
or
tax consequences;
(ii) an
Event
of Default has occurred and is continuing;
(iii) the
Facility Maturity Date shall have occurred;
(iv) other
than with respect to Pool B Micro Ticket Receivables, the
Annualized Default Rate exceeds 4.5%;
(v) other
than with respect to Pool B Micro Ticket Receivables, the rolling weighted
average of the Delinquency Rates in respect of any three consecutive Collection
Periods exceeds 4.0%;
(vi) other
than with respect to Pool B Micro Ticket Receivables, the Annualized Net Loss
Rate exceeds 4.0%;
(vii) with
respect to Pool B Micro Ticket Receivables only, the Annualized Default Rate
exceeds 25.0%;
(viii) with
respect to Pool B Micro Ticket Receivables only, the rolling weighted average
of
the Delinquency Rates in respect of any three consecutive Collection Periods
exceeds 10.0%;
(ix) with
respect to Pool B Micro Ticket Receivables only, the Annualized Net Loss Rate
exceeds 25.0%;
26
(x) a
Servicer Default has occurred and is continuing; or
(xi) (1) any
Qualifying Swap Counterparty ceases to maintain the long-term debt ratings
required of a Qualifying Swap Counterparty and (A) does not post cash
collateral in a manner acceptable to the Lender within 45 days and (B) is
not replaced
within 45 days by a replacement acceptable to the Lender or (2) the
Borrower fails to comply with any term, covenant or agreement hereunder related
to the maintenance of any Qualifying Interest Rate Swaps; or
(xii) the
occurrence of three or more Pool A Termination Events and/or Pool B
Termination Events.
“Purchase
and Sale Agreement”
means
that certain Purchase and Sale Agreement, dated as of the date hereof, between
the Originator, as seller, and the Borrower, as purchaser, together with all
instruments, documents and agreements executed in connection therewith, as
such
Purchase and Sale Agreement may from time to time be amended, supplemented
or
otherwise modified in accordance with the terms hereof.
“Purchase
Date”
has
the
meaning set forth in the Purchase and Sale Agreement.
“Put
Payment”
means
with respect to any Contract or Underlying Contract constituting a lease, the
payment, if any, required to be made by the Obligor under the terms of such
lease in connection with the required purchase by such Obligor or Underlying
Obligor of the related Equipment or Underlying Equipment at the end of the
term
of such lease.
“QSC
Subordinated Termination Payment”
means
a
termination payment required to be made by the Borrower to a Qualifying Swap
Counterparty upon the termination of the related Qualifying Interest Rate Swap
pursuant to an event of default or termination event (other than Illegality
or
Tax Event) (each as defined in the related Qualifying Interest Rate Swap) as
to
which the Qualifying Swap Counterparty was the defaulting party or the sole
affected party under the Qualifying Interest Rate Swap.
“Qualifying
Interest Rate Swap”
means
(X) an interest rate swap agreement (i) between the Borrower and a
Qualifying Swap Counterparty, (ii) under which the Borrower shall receive a
floating rate of interest based on a Eurodollar Index acceptable to the Lender
in exchange for the payment by the Borrower of a fixed rate of interest equal
to
the applicable Swapped Rate, (iii) the effective date of which is a
Borrowing Date, (iv) having a varying notional balance which is, as of the
effective date thereof, in an amount equal to the aggregate principal amount
of
the Loans advanced on such effective date and (v) which shall otherwise be
on such terms and conditions and pursuant to such documentation as shall be
acceptable to the Lender or (Y) an alternative interest rate hedging
agreement agreed to in writing by the Borrower and the Lender.
“Qualifying
Swap Counterparty”
means
Xxxxxx Xxxxxxx Capital Services Inc. (or any successors or permitted assigns)
or
any other financial institution that is in the business of entering into
interest rate swap transactions, is acceptable to the Lender and has a long-term
senior unsecured debt rating of “A” or higher (or the equivalent) by each Rating
Agency then rating such long-term senior unsecured debt) or posts cash
collateral in a manner and amount satisfactory to the Lender.
27
“Rating
Agencies”
means
Xxxxx’x, S&P and Fitch, or any other nationally recognized statistical
rating organizations as may be designated by the Lender.
“Real
Estate Contract”
means
a
loan agreement and promissory note approved
by the Servicer in compliance with the Credit and Collection Policy, in each
case, pursuant to which the Originator makes a loan to an Obligor secured by
rentals or other receivables arising from the use of real property, together
with all schedules, supplements and amendments thereto and each other document
and instrument related thereto.
“Receivable”
means
a
Pool A Receivable or a Pool B Receivable.
“Receivable
File”
means
with respect to each Receivable:
(a) if
such
Receivable is related to a Lease Contract the following items (collectively,
a
“Pool
A
Lease File”):
(i) (1) the
related original, executed Lease Contract (or, in the case of a Lease Contract
under a master lease, a machine or facsimile copy of the related master lease
certified by an authorized officer of the Borrower and stamped “I hereby certify
that this is a true and exact copy of the original” and an original, executed
schedule thereto describing the related Equipment) unless such Lease Contract
is
related to an Exception Sublimit Receivable, in which event the executed Lease
Contract (or, in the case of Lease Contracts under a master lease, the related
schedule) may be a machine or facsimile copy certified in the manner described
above, (2) a true, executed copy of the related delivery/installation
certificate or acknowledgment and acceptance of delivery certificate if such
Receivable is related to Equipment with an original cost in excess of $50,000,
(3) a true copy of the Insurance Certificate if such Receivable is
related to Equipment with an original cost in excess of $100,000, (4) other
than with respect to a Lease Contract related to Equipment which has an original
cost of less than $25,000 if such Lease Contract is a Dollar Purchase Option
Contract or $50,000 if such Lease Contract is a FMV Contract, a “transmittal
order” from the Servicer to a filing service company and an “in process report”
from such filing service company to the Servicer (or other evidence of the
submission of the related UCC financing statement for filing in the appropriate
filing office) and, within 45 days of the related Contract being executed,
a file-stamped copy of the related UCC financing statement and (5) vendor
order(s) or invoice(s); and
(ii) copies
of
any additional documents, other than servicing related documents, that the
Borrower keeps on file with respect to such Receivable;
(b) if
such
Receivable is related to a Loan Contract or a Practice Acquisition Loan Contract
the following items (collectively, a “Pool
A
Loan File”):
(i) (1) the
original, executed promissory note (with fully executed, original Allonge
attached thereto), (2) a true, executed copy of the related “Master Loan
and Security Agreement”, (3) a true copy of the related Insurance
Certificate if such Receivable is related to Equipment with an original cost
in
excess of
28
$100,000
and (4) other than with respect to a Receivable related to Equipment which
has an original cost of less than $25,000, a “transmittal order” from the
Servicer to afiling service company and an “in process report” from such filing
service company to the Servicer (or other evidence of the submission of the
related UCC financing statement for filing in the appropriate filing office)
and, within 45 days of the related Contract being executed, a file-stamped
copy of the related UCC financing statement; and
(ii) copies
of
any additional documents, other than servicing related documents, that the
Borrower keeps on file with respect to such Receivable;
(c) if
such
Receivable is related to an Underlying Originator Loan Contract the following
items (collectively, a “Pool
B
Master Receivable File”):
(i) (1) the
original, executed promissory note (with fully executed, original Allonge
attached thereto) unless such Underlying Originator Loan Contract is in the
form
of a “Master Purchase and Sale Agreement,” (2) a true, executed copy of the
related security agreement and (3) a “transmittal order” from the Servicer to a
filing service company and an “in process report” from such filing service
company to the Servicer (or other evidence of the submission of the related
UCC
financing statement for filing in the appropriate filing office) and, within
45
days of the related Contract being executed, a file-stamped copy of the related
UCC financing statement; and
(ii) copies
of
any additional documents, other than servicing related documents, that the
Borrower keeps on file with respect to such Receivable;
(d) if
such
Receivable is related to a Underlying Originator Loan Contract which finances
an
Underlying Lease Contract the following items (collectively, a “Pool
B
Underlying Lease File”):
(i) (1) the
related original, executed Underlying Lease Contract (or, in the case of an
Underlying Lease Contract under a master lease, a machine or facsimile copy
of
the related master lease certified by an authorized officer of the Borrower
and
stamped “I hereby certify that this is a true and exact copy of the original”
and an original, executed schedule thereto describing the related Equipment),
(2) a true, executed copy of the related delivery/installation certificate
or
acknowledgment and acceptance of delivery certificate, (3) a true, executed
copy of the related purchase agreement, (4) a true copy of the related
Underlying Insurance Certificate if such Underlying Lease Contract is related
to
Equipment with an original cost in excess of $100,000, (5) other than with
respect to an Underlying Lease Contract related to Equipment which has an
original cost of less than $25,000 if such Underlying Lease Contract is a Dollar
Purchase Option Contract or $50,000 if such Underlying Lease Contract is a
FMV
Contract, a “transmittal order” from the Underlying Originator to a filing
service company and an “in process report” from such filing service company to
the Underlying Originator (or other evidence of the submission of the related
UCC
29
financing statement for filing in the appropriate filing office) and, within
45 days of the related Underlying Lease Contract being executed, a
file-stamped copy of the related UCC financing statement and (6) vendor
order or invoice; and
(ii) copies
of
any additional documents, other than servicing related documents, that the
Borrower keeps on file with respect to such Receivable;
(e) if
such
Receivable is related to an Underlying Originator Loan Contract which finances
an Underlying Loan Contract the following items (collectively, a “Pool
B
Underlying Loan File”):
(i) (1) the
original, executed promissory note (with fully executed, original Allonge
attached thereto), (2) a true, executed copy of the related security
agreement, (3) a true copy of the related Underlying Insurance Certificate
if such Underlying Loan Contract is related to Equipment with an original cost
in excess of $100,000 and (4) other than with respect to an Underlying Loan
Contract related to Equipment which has an original cost of less than $25,000
a
“transmittal order” from the Underlying Originator to a filing service company
and an “in process report” from such filing service company to the Underlying
Originator (or other evidence of the submission of the related UCC financing
statement for filing in the appropriate filing office) and, within 45 days
of the related Contract being executed, a file-stamped copy of the related
UCC
financing statement; and
(ii) copies
of
any additional documents, other than servicing related documents, that the
Borrower keeps on file with respect to such Receivable.
In
addition, if the Obligor Collateral related to such Receivable (other than
a
Vehicle Sublimit Pledged Receivable) is a Vehicle, the related Receivable File
shall include the original copy of the Certificate of Title with respect to
such
Vehicle which such Certificate of Title notes the owner of such Vehicle as
being
the Borrower and indicates “Xxxxxx Xxxxxxx Bank” as the sole lienholder with
respect to such Vehicle or (prior to the 90th day after such Receivable was
first included in the calculation of the Eligible Receivables Balance, if such
Certificate of Title has not yet been received by the Servicer or the Borrower)
a copy of the application for such Certificate of Title.
“Receivables
Schedule”
has
the
meaning assigned to that term in the Custodial Agreement.
“Records”
means
all documents, books, records and other information (including, without
limitation, tapes, disks, punch cards and related property and rights)
maintained with respect to Receivables and the related Obligors which the
Borrower has itself generated, in which the Borrower has acquired an interest
pursuant to the Purchase and Sale Agreement or in which the Borrower has
otherwise obtained an interest.
“Recoveries”
means,
for any Collection Period during which, or any Collection Period after the
date
on which, any Receivable becomes a Defaulted Receivable and with respect to
such
Defaulted Receivable, all payments that the Servicer received from or on behalf
of
30
the
related Obligor during such Collection Period in respect of such Defaulted
Receivable or from the repossession, liquidation or re-leasing of the related
Obligor Collateral, including but not limited to Scheduled Payments, Overdue
Payments, Guaranty Amounts and Insurance Proceeds.
“Registrar
of Titles”
means
with respect to any State, the governmental agency or body responsible for
the
registration of, and the issuance of certificates of title relating to, motor
vehicles and liens thereon.
“Related
Security”
means
with respect to any Receivable:
(i) any
and
all security interests or liens and property subject thereto from time to time
securing or purporting to secure payment of such Receivable;
(ii) all
guarantees, indemnities, warranties, letters of credit, insurance policies
and
proceeds and premium refunds thereof and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable; and
(iii) all
proceeds of the foregoing.
“Release
Price”
means,
with respect to a Pledged Receivable to be released hereunder, an amount equal
to the Discounted Balance of such Pledged Receivable at the time of such release
plus
interest
accrued thereon at the Discount Rate from and including the Remittance Date
immediately preceding the date such Pledged Receivable is to be released through
(but not including) the next succeeding Remittance Date.
“Remittance
Date”
means
the twenty-third (23rd)
day of
each month beginning December, 2006, or, if such date is not a Business Day,
the
next succeeding Business Day; provided, that the final Remittance Date shall
occur on the Collection Date.
“Resource
America”
means
Resource America, Inc., a Delaware corporation.
“Rollover
Interest Period”
means
any Interest Period other than any Interest Period (i) applicable to the
Loan arising as a result of the Borrowing on the initial Borrowing Date or
(ii) applicable to any new Loan arising as a result of a Borrowing on a
Subsequent Borrowing Date.
“S&P”
means
Standard & Poor’s Ratings Group, a division of The XxXxxx-Xxxx Companies,
Inc. (or its successors in interest).
“Scheduled
Payments”
means,
with respect to any Receivable, the periodic payments payable under the terms
of
the related Contract (but not including any such periodic payment to the extent
paid in advance by the related Obligor).
“Secured
Parties”
means
the Lender, the Servicer, the Backup Servicer, the Custodian, the Lender’s Bank,
each Qualified Swap Counterparty and their respective successors and
assigns.
31
“Security
Deposit”
means
any amount paid to the Servicer or the Borrower by an Obligor as a security
deposit or as a payment in advance of any amounts to become due under a
Contract, which has not previously been refunded to such Obligor or applied
toward such Obligor’s obligations under such Contract (for purposes of
clarification, a Cash Reserve shall not be deemed to constitute a Security
Deposit).
“Security
Deposit Account”
has
the
meaning assigned to that term in Section 2.05.
“Security
Deposit Account Agreement”
means
that certain Securities Account Agreement, dated the date of this Agreement,
among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such
agreement may from time to time be amended, supplemented or otherwise modified
in accordance with the terms thereof.
“Servicer”
means,
at any time, LEAF Financial or any other Person then authorized, pursuant to
Section 6.01,
to
service, administer and collect Pledged Receivables.
“Servicer
Advance”
has
the
meaning assigned to such term in Section 6.19.
“Servicer
Default”
means
the occurrence of any of the following events:
(i) the
failure of the Servicer to deliver any payments, collections or proceeds which
it is obligated to deliver under the terms hereof or of any other Transaction
Document at the times it is obligated to make such deliveries under the terms
hereof or of any other Transaction Document, and such failure remains unremedied
for two Business Days;
(ii) the
failure of the Servicer to satisfy any of its reporting, certification,
notification or documentation requirements under the terms hereof or of any
other Transaction Document or the failure of the Servicer to observe or perform
any material term, covenant or agreement hereunder or under any other
Transaction Document (other than those described in clause (i) above) and
such failure shall remain unremedied for 10 days after the Servicer first
has knowledge, whether constructive or actual, of such failure;
(iii) any
representation, warranty or statement of the Servicer made herein or in any
other Transaction Document shall prove to be incorrect in any material respect,
and, solely if such incorrect representation, warranty or statement can be
remedied, such representation, warranty or statement is not made true within
15 days;
(iv) the
occurrence of an Event of Default;
(v) the
occurrence of a Program Termination Event described in clauses (iv), (v),
(vi), (vii), (viii), (ix) or (xii) of the definition of Program Termination
Events; or
(vi) the
occurrence of any Bankruptcy Event in respect of the Servicer.
32
“Servicer
Pension Plan”
means
a
“pension plan” as such term is defined in section 3(2) of ERISA, which is
subject to title IV of ERISA and to which the Servicer or any ERISA Affiliate
of
Servicer may have any liability, including any liability by reason of having
been a substantial employer within the meaning of section 4063 of ERISA at
any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
“Servicing
Charges”
means
the sum of (a) all late payment charges paid by Obligors under Contracts
after payment in full of any Scheduled Payments due in a prior Collection Period
and Scheduled Payments for the related Collection Period and (b) any other
incidental charges or fees received from an Obligor, including, but not limited
to, late fees, collection fees, taxes and charges for insufficient
funds.
“Servicing
Fee”
means,
for any Fee Period, an amount, payable out of Collections on the Pledged
Receivables and amounts applied to the payment of, or treated as payments on,
the Pledged Receivables, equal to (i) the Servicing Fee Rate multiplied by
(ii) the Net Eligible Receivables Balance as of the first day of such Fee
Period multiplied by (iii) a fraction, the numerator of which shall be the
actual number of days in such Fee Period and the denominator of which shall
be
360. Upon assuming the duties of the Servicer hereunder, the Backup Servicer
shall also be entitled to receive a one-time acceptance fee of $60,000, which
shall be considered part of the “Servicing Fee” hereunder but shall be in
addition to the amount set forth in the sentence above.
“Servicing
Fee Rate”
means
1.00%.
“Stand
Alone Working Capital Loan”
means
a
loan to a dental, medical, osteopathic medical, optometric or veterinary
practice that may be secured by all assets of such dental, medical, osteopathic
medical, optometric or veterinary practice or that might be
unsecured.
“Standby
Backup Servicer’s Fee”
means,
for any Fee Period or portion thereof prior to the occurrence of a Servicer
Default and the appointment of the Backup Servicer as Servicer hereunder, an
amount, payable out of Collections on the Pledged Receivables and amounts
applied to the payment of, or treated as payments on, the Pledged Receivables,
equal to the greater of (i) the Standby Backup Servicing Fee Rate, multiplied
by
the Net Eligible Receivables Balance as of the first day of such Fee Period,
multiplied by a fraction, the numerator of which shall be the actual number
of
days in such Fee Period and the denominator of which shall be 360, or (ii)
$1,500. The “Standby Backup Servicer’s Fee” shall also include (i) a one-time
acceptance fee of $4,000 payable on the Closing Date and (ii) reasonable
out-of-pocket expenses incurred by the Standby Backup Servicer in the
performance of its duties.
“Standby
Backup Servicing Fee Rate”
means
.0215%.
“State”
means
one of the fifty states of the United States or the District of
Columbia.
“Subsequent
Borrowing”
means
a
Borrowing which occurs on a Subsequent Borrowing Date.
“Subsequent
Borrowing Date”
means
each Business Day occurring after the initial Borrowing Date on an additional
Borrowing is funded from the Lender to the Borrower.
33
“Swapped
Rate”
means,
with respect to any Qualifying Interest Rate Swap, the annual rate of interest
(expressed as a percentage) which the Borrower, as the fixed-rate payor, is
required to pay under such Qualifying Interest Rate Swap in order to receive
the
floating rate of interest provided for under such Qualifying Interest Rate
Swap.
“Tangible
Net Worth”
means,
with respect to any Person, the amount calculated in accordance with GAAP as
(i) the consolidated net worth of such Person and its consolidated
subsidiaries, plus
(ii) to the extent not otherwise included in such consolidated net worth,
unsecured subordinated Debt of such Person and its consolidated subsidiaries,
the terms and conditions of which are reasonably satisfactory to the Lender,
minus
(iii) the consolidated intangibles of such Person and its consolidated
subsidiaries, including, without limitation, goodwill, trademarks, tradenames,
copyrights, patents, patent allocations, licenses and rights in any of the
foregoing and other items treated as intangibles in accordance with
GAAP.
“Transaction
Documents”
means
this Agreement, the Purchase and Sale Agreement, the Lockbox Intercreditor
Agreement, the
Collection Account Agreement, the Security Deposit Account Agreement, each
Cash
Reserve Account Agreement, the Fee Letter, the Custodial Agreement, the
Originator Insurance Agreement, any lease bailment agreement with a
sub-custodian and each Qualifying Interest Rate Swap and each document and
instrument related to any of the foregoing.
“Transition
Costs”
means
any documented expenses and allocated cost of personnel reasonably incurred
by
the Backup Servicer in connection with a transfer of servicing from the Servicer
to the Backup Servicer as the successor Servicer; provided, that such expenses
and allocated costs do not exceed $60,000.
“UCC”
means
the Uniform Commercial Code as from time to time in effect in the specified
jurisdiction.
“Underlying
Collateral”
means
the Underlying Equipment leased or sold to an Underlying Obligor, or serving
otherwise as collateral for a loan to an Underlying Obligor under an Underlying
Contract.
“Underlying
Contract”
means
an Underlying Lease Contract or an Underlying Loan Contract.
“Underlying
Contract Event of Default”
means,
as of any time of determination, the occurrence and continuation of any of
the
following events with respect to any Underlying Contract:
(i) any
Underlying Scheduled Payment (or other amount payable under the terms of the
related Underlying Contract) remains unpaid for more than 120 days after
the due date therefor set forth in such Underlying Contract;
(ii) the
first
or second Underlying Scheduled Payment is not paid in full when due under the
related Underlying Contract;
34
(iii) any
payment or other material terms of the related Underlying Contract have been
modified due to credit related reasons after such Underlying Contract was
acquired by Originator;
(iv) such
Underlying Contract has been or should be charged off as a result of the
occurrence of a Bankruptcy Event with respect to the related Underlying Obligor,
if any, or has been or should otherwise be deemed uncollectible by the
Underlying Originator in accordance with its credit and collection policy;
or
(v) the
related Underlying Equipment has been repossessed.
“Underlying
Delinquency Rate”
means
with respect to any Underlying Originator, as of any date of determination,
an
amount (expressed as a percentage) equal to (i) the aggregate Discounted
Balances of all Underlying Contracts related to such Underlying Originator
as to
which any part of any Underlying Scheduled Payment (or other amount payable
under the terms of the related Underlying Contract) remains unpaid for more
than
30 days but not more than 120 days after the due date therefor set
forth in such Underlying Contract as of the last day of the immediately
preceding Collection Period divided by (ii) the aggregate Discounted
Balances with respect to all Eligible Pool B Underlying Lease Contracts and
Eligible Pool B Underlying Loan Contracts related to such Underlying
Originator as of such day.
“Underlying
Equipment”
means
the equipment or Vehicle leased or sold to an Underlying Obligor by an
Underlying Originator, or serving as collateral for a loan to an Underlying
Obligor by an Underlying Originator, under an Underlying Contract together
with
any replacement parts, additions and repairs thereof, and any accessories
incorporated therein and/or affixed thereto.
“Underlying
Insurance Certificate”
means
with respect to any Pool B Receivable, the insurance certificate related to
the Underlying Insurance Policy with respect to the Underlying Contract relating
to such Receivable (which insurance certificate shall list the
Originator or
the
Underlying Originator as the loss payee).
“Underlying
Insurance Policy”
means,
with respect to any Underlying Collateral, the insurance policy maintained
by or
on behalf of the Obligor pursuant to the related Contract that covers physical
damage to the related Equipment (in an amount sufficient to insure completely
the value of such Equipment) and general liability (including policies procured
by the Borrower or the Servicer, or any agent thereof, on behalf of the
Obligor).
“Underlying
Lease Contract”
means
a
lease contract pursuant to which Underlying Equipment is leased to an Underlying
Obligor by an Underlying Originator, together with all schedules, supplements
and amendments thereto and each other document and instrument related to such
lease contract.
“Underlying
Lease Documents”
means,
with respect to any Pool B Receivable, the Underlying Lease Contract and
all agreements, documents or instruments evidencing, securing, guaranteeing
or
otherwise relating to the obligations of the Underlying Obligor
thereunder.
35
“Underlying
Loan Contract”
means,
collectively, a promissory note, a loan agreement and a security agreement
pursuant to which an Underlying Originator makes a loan to an Underlying Obligor
secured by Underlying Equipment owned by such Underlying Obligor, together
with
all schedules, supplements and amendments thereto and each other document and
instrument related thereto.
“Underlying
Loan Documents”
means,
with respect to any Pool B Receivable, the Underlying Loan Contract and all
agreements, documents or instruments evidencing, securing, guaranteeing or
otherwise relating to the obligations of the Underlying Obligor thereunder,
including, without limitation, the note or notes evidencing such
indebtedness.
“Underlying
Obligor”
means,
collectively, each Person obligated to make payments under an Underlying
Contract.
“Underlying
Originator”
means
an Obligor engaged, in the ordinary course of business in providing financing
to
Underlying Obligors for the purposes of acquiring Underlying
Equipment.
“Underlying
Originator Credit and Collection Policy”
means
the credit and collection policy of an Underlying Originator, as such policy
may
hereafter be amended, modified or supplemented from time to time in compliance
with this Agreement.
“Underlying
Originator Loan Collateral”
means
Underlying Loan Contracts and Underlying Lease Contracts and all other assets
of
the Underlying Originators which secure the obligations of Underlying
Originators under an Underlying Originator Loan Contract, or which are sold
to
the Originator by Underlying Originators under an Underlying Originator Loan
Contract, in each case whether now owned or hereafter acquired, and including
without limitation the Underlying Loan Documents, the Underlying Lease
Documents, Underlying Security Deposit (if any) and the Underlying Equipment
related thereto, together with all proceeds of every kind and nature, including
proceeds of proceeds, of any and all of the foregoing.
“Underlying
Originator Loan Contract”
means,
collectively, a “Master Purchase and Sale Agreement,” a “Master Loan and
Security Agreement,” or a “Loan and Security Agreement,” each of which complies
with all of the criteria set forth in Exhibit D-4
hereto
(as such exhibit may be updated from time to time by the Borrower with the
consent of the Lender), pursuant to which Originator makes a purchase of
Underlying Originator Loan Collateral from an Underlying Originator or makes
a
loan to an Underlying Originator secured by Underlying Originator Loan
Collateral, together with all schedules, supplements and amendments thereto
and
each other document and instrument related thereto.
“Underlying
Scheduled Payments”
means,
with respect to any Underlying Contract, the periodic payments payable under
the
terms of such Underlying Contract (but not including any such periodic payment
to the extent paid in advance by the related Underlying Obligor).
“Underlying
Security Deposit”
means
any amount paid to an Underlying Originator by an Underlying Obligor as a
security deposit or as a payment in advance of any amounts to become due under
an Underlying Contract, which has not previously been refunded to such
Underlying Obligor or applied toward such Underlying Obligor’s obligations under
such Underlying Contract.
36
“United
States”
means
the United States of America.
“Unmatured
Event of Default”
means
any event that, if it continues uncured, will, with lapse of time or notice
or
lapse of time and notice, constitute an Event of Default.
“Vehicle”
means
a
new or a used automobile, minivan, sports utility vehicle, light duty truck
or
heavy duty truck.
“Vehicle
Sublimit Pledged Receivable”
means
a
Pledged Receivable, with respect to which the related Obligor Collateral or
Underlying Collateral is a Vehicle or other type of equipment which requires
a
security interest therein to be noted on the certificate of title with respect
thereto in order to be perfected, but the Borrower has not forwarded to the
Custodian for inclusion in the appropriate Receivable File an original
Certificate of Title which indicates the owner of the related Vehicle as being
the Borrower and indicates “Xxxxxx Xxxxxxx Bank” as the sole lienholder with
respect to such Vehicle.
“Weighted
Average Swapped Rate”
means,
as of any date of determination, the weighted average (weighted solely based
on
the Calculated Swap Amortizing Balances of such Qualifying Interest Rate Swaps
as of such date of determination) of the Swapped Rates of the Qualifying
Interest Rate Swaps in effect on such date of determination.
SECTION
1.02 Other
Terms.
All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of
New
York, and not specifically defined herein, are used herein as defined in such
Article 9.
SECTION
1.03 Computation
of Time Periods.
Unless
otherwise stated in this Agreement, in the computation of a period of time
from
a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but
excluding.”
ARTICLE
II.
THE
RECEIVABLES FACILITY
SECTION
2.01 Borrowings.
On the
terms and conditions hereinafter set forth, the Lender shall make loans
(“Loans”)
to the
Borrower secured by Pledged Assets from time to time during the period from
the
date hereof until the earlier of the Program Termination Date or the Facility
Maturity Date. Separate Loans will be made to finance the Borrower’s acquisition
of (x) Pool A Receivables (“Pool A
Loans”)
and
(y) Pool B Receivables (“Pool B
Loans”),
and
no Loan shall finance both Pool A Receivables and Pool B Receivables.
Under no circumstances shall the Lender make, or the Borrower request, any
Loan
if (a) the principal amount of such Loan is less than (i) with respect to
the initial Borrowing only, $10,000,000 and (ii) with respect to any Subsequent
Borrowing, $500,000, or (b) after giving effect to the Borrowing of such
Loan, either (i) a Program Termination Event or an event that but for
notice or lapse of time or both would constitute a Program Termination Event
has
occurred and is continuing or (ii) the aggregate
37
Facility
Amount hereunder would exceed the lesser of (A) the Borrowing Limit and
(B) the Borrowing Base. Under no circumstances shall the Lender make, or
the Borrower request, any Loan secured by Pool A Receivables if after
giving effect to the Borrowing of such Loan, either (1) the aggregate
Facility Amount hereunder, calculated solely with respect to Loans secured
by
Pool A Receivables, would exceed the Pool A Borrowing Base or
(2) a Pool A Termination Event shall exist. Under no circumstances
shall the Lender make, or the Borrower request, any Loan secured by any
Pool B Receivable if after giving effect to the Borrowing of such Loan,
either (1) the aggregate Facility Amount hereunder, calculated solely with
respect to Loans secured by Pool B Receivables, would exceed the Pool B
Borrowing Base or (2) a Pool B Termination Event shall exist with
respect to the Underlying Originator related to such Pool B
Receivable.
SECTION
2.02 The
Initial Borrowing and Subsequent Borrowings.
(a) Until
the
occurrence of the earlier of the Program Termination Date and the Facility
Maturity Date, the Lender will make Loans on any Business Day at the request
of
the Borrower, subject to and in accordance with the terms and conditions of
Sections 2.01
and
2.02
and
subject to the provisions of Article III
hereof.
(b) (1) The
initial Borrowing shall be made on at least five (5) Business Days’ irrevocable
written notice from the Borrower to the Lender and each Subsequent Borrowing
shall be made on at least three (3) Business Days’ irrevocable written notice
from the Borrower to the Lender (any such written notice, a “Notice
of Borrowing”),
provided that such Notice of Borrowing is received by the Lender no later than
12:00 noon (New York City time) on the Business Day of receipt. Any Notice
of
Borrowing received after 12:00 noon (New York City time) shall be deemed
received prior to 12:00 noon (New York City time) on the following Business
Day.
Each such Notice of Borrowing shall specify (A) the aggregate amount of
such Borrowing, (B) the date of such Borrowing, (C) the allocation of
the Loans as Pool A Loans and Pool B Loans, and (D) the Eligible
Pool A Receivables and the Eligible Pool B Receivables to be Pledged
in connection with such Borrowing (and upon such Borrowing, such Receivables
shall be Pledged Receivables hereunder). On the date of each Borrowing, the
Lender shall, upon satisfaction of the applicable conditions set forth in
Article III,
make
available to the Borrower on the applicable Borrowing Date, no later than 2:00
P.M. (New York City time), in same day funds, the amount of such Borrowing
(net
of amounts payable to or for the benefit of the Lender), by payment into the
account which the Borrower has designated in writing.
(ii) Each
Notice of Borrowing delivered to the Lender pursuant to this Section 2.02(b)
shall be
in an electronic file format acceptable to the Lender (A) accompanied by a
copy
of the Notice of Pledge (and the Receivables Schedule attached thereto), which
was sent to the Custodian pursuant to the terms of the Custodial Agreement
in
connection with the pledge of Eligible Receivables to be made in connection
therewith and (B) specifying for each Receivables pledged therein the
information set forth on Exhibit B hereto.
(iii) The
Loans
shall bear interest at the Interest Rate.
38
(iv) Subject
to Section 2.15
and the
other terms, conditions, provisions and limitations set forth herein, the
Borrower may borrow, repay or prepay and reborrow Loans, on and after the date
hereof and prior to the earlier to occur of the Facility Maturity Date and
the
Program Termination Date.
(v) Determinations
by the Lender of the existence of any Eurodollar Disruption Event (any such
determination to be communicated to the Borrower by written notice from the
Lender promptly after the Lender learns of such event), or of the effect of
any
Eurodollar Disruption Event on its making or maintaining Loans at the Adjusted
Eurodollar Rate, shall be conclusive absent manifest error.
SECTION
2.03 Determination
of Interest Periods and Interest Rates.
(a) The
initial Interest Period applicable to any new Loan arising as a result of a
Borrowing shall commence on, and include, the date of such Borrowing and shall
terminate on, and include, the day immediately prior to the next occurring
Remittance Date or such earlier date as the Lender may determine (an
“Early
Interest Period Termination Date”).
All
outstanding Pool A Loans allocated to one or more initial Interest Periods
or
Rollover Interest Periods maturing on the same date shall be combined and
allocated to a single Rollover Interest Period at the end of such initial
Interest Periods or Rollover Interest Periods. All outstanding Pool B Loans
allocated to one or more initial Interest Periods or Rollover Interest Periods
maturing on the same date shall be combined and allocated to a single Rollover
Interest Period at the end of such initial Interest Periods or Rollover Interest
Periods. Each Rollover Interest Period shall commence on, and include, the
Remittance Date following the last day of the immediately preceding Interest
Period (or, if applicable, on an Early Interest Period Termination Date) and
shall terminate on, and include, the day immediately prior to the next occurring
Remittance Date.
(b) The
interest rate per annum (the “Interest
Rate”)
applicable to any Loan for any Interest Period shall be equal to the Adjusted
Eurodollar Rate; provided,
however,
that if
the Lender shall have notified the Borrower that a Eurodollar Disruption Event
has occurred, the Interest Rate for such Loan shall be equal to the Base Rate
until such Eurodollar Disruption Event has ceased, at which time the Interest
Rate shall again be equal to the Adjusted Eurodollar Rate. Notwithstanding
the
foregoing:
(c) upon
the
occurrence and during the continuance of any Program Termination Event, the
applicable Interest Rate for all Interest Periods in effect at the time of
such
occurrence shall convert to, and for all Interest Periods that come into effect
during the continuance of any Event of Default shall be, the Default Funding
Rate;
(d) upon
the
occurrence and during the continuance of any Pool A Termination Event, the
applicable Interest Rate for all Interest Periods with respect to all Pool
A
Loans in effect at the time of such occurrence shall convert to, and for all
Interest Periods with respect to all Pool A Loans that come into effect during
the continuance of any Pool A Termination Event shall be, the Default Funding
Rate; and
(e) upon
the
occurrence and during the continuance of any Pool B Termination Event, the
applicable Interest Rate for all Interest Periods with respect to all Pool
B
Loans in effect at the time of such occurrence shall convert to, and for all
Interest Periods with respect to all Pool B Loans that come into effect during
the continuance of any Pool B Termination Event shall be, the Default Funding
Rate.
39
SECTION
2.04 Remittance
Procedures.
The
Servicer, as agent for the Lender, shall instruct the Lender’s Bank and, if the
Servicer fails to do so, the Collateral Agent shall instruct the Lender’s Bank,
to apply funds on deposit in the Collection Account as described in this
Section 2.04.
(a) Interest
and Breakage Fees.
On each
Business Day (including any Remittance Date), the Servicer shall, and, if the
Servicer fails to do so, the Lender may direct the Lender’s Bank to, retain in
the Collection Account for transfer at the further direction of the Lender
or
any duly authorized agent of the Lender (whether on such day or on a subsequent
day) collected funds in an amount equal to accrued and unpaid interest through
such day on the Loans not so previously retained and the amount of any accrued
and unpaid Breakage Fees owed to the Lender on such day. On or before the last
day of each Interest Period, the Lender shall notify the Servicer of the accrued
and unpaid interest for such Interest Period and the Servicer shall, on the
last
day of each Interest Period, direct the Lender’s Bank to pay collected funds set
aside in respect of accrued and unpaid interest pursuant to this Section 2.04(a)
to the
Lender (or the designee of the Lender) in respect of payment of such accrued
and
unpaid interest for such Interest Period. On any Business Day on which an amount
is set aside in respect of Breakage Fees pursuant to this Section 2.04(a),
the
Servicer shall direct the Lender’s Bank to pay such funds to the Lender in
payment of such Breakage Fees.
(b) Interest
Period Loan Principal Repayment.
The
Servicer shall, and if the Servicer fails to do so the Lender may, by 10:00
a.m.
(St. Xxxx, Minnesota time) on the last day of each Interest Period that is
not a
Remittance Date, direct the Lender’s Bank to transfer collected funds held by
the Lender’s Bank in the Collection Account on such date, to pay the Lender in
payment (or partial payment) of the outstanding principal amount of all Loans
allocated to such Interest Period, in an amount equal to the least of
(i) the amount of such collected funds held in the Collection Account other
than funds set aside pursuant to Section 2.04(a),
(ii) the aggregate outstanding principal amount of Loans allocated to such
Interest Period, (iii) if no Program Termination Event shall have occurred
and be continuing, an amount equal to the sum of (A) the excess, if any, of
the Facility Amount immediately prior to such distribution, calculated solely
with respect to Loans secured by Pool A Receivables over the Pool A
Borrowing Base and (B) the excess, if any, of the Facility Amount
immediately prior to such distribution, calculated solely with respect to Loans
secured by Pool B Receivables over the Pool B Borrowing Base (with respect
to Pool A Loans and Pool B Loans collectively, after giving effect to
any Borrowing made on such date and any distributions of amounts on deposit
in
the Collection Account made on such date) or (iv) if no Program Termination
Event shall have occurred and be continuing, an amount equal to the excess,
if
any, of the Facility Amount immediately prior to such distribution over the
lesser of (A) the Borrowing Base and (B) the Borrowing Limit (after
giving effect to any Borrowing made on such date and any distributions of
amounts on deposit in the Collection Account made on such date).
40
each
Remittance Date, direct the Lender’s Bank to transfer collected funds held by
the Lender’s Bank in the Collection Account which were remitted to the
Collection Account during the Collection Period with respect to such Remittance
Date (“Available
Funds”),
in
the following amounts and priority:
(i) to
the
Borrower, in an amount equal to such funds which were paid by Obligors with
respect to their obligation under the related Contracts to pay any taxes (it
being agreed by the Borrower that such amount shall be promptly paid to the
taxing authorities entitled thereto);
(ii) to
the
related Qualifying Swap Counterparty under each Qualifying Interest Rate Swap,
in an amount equal to (and for the payment of) all amounts which are due and
payable by the Borrower to such Qualifying Swap Counterparty on such Remittance
Date, pursuant to the terms of the applicable Qualifying Interest Rate Swap
or
this Agreement, other than any QSC Subordinated Termination Amounts which are
due and payable by the Borrower pursuant to the applicable Qualifying Interest
Rate Swap;
(iii) on
a pro
rata basis, to (x) the Backup Servicer in an amount equal to the Standby
Backup Servicer’s Fee (to the extent accrued and unpaid as of the last day of
the immediately preceding Fee Period) at any time prior to the occurrence of
a
Servicer Default and the appointment of the Backup Servicer as the Servicer
hereunder and (y) the Custodian, the Custodian’s Fee and (z) the
Lender’s Bank, the Lender’s Bank Fee;
(iv) at
any
time after the occurrence of a Servicer Default and the appointment of the
Backup Servicer as the Servicer hereunder, to the Backup Servicer in an amount
equal to (1) the Active Backup Servicer’s Fees which are accrued and unpaid as
of the last day of the immediately preceding Fee Period plus (2) any Transition
Costs not previously reimbursed to the Backup Servicer plus (3) the Active
Backup Servicer’s Indemnified Amounts;
(v) to
the
Lender in an amount equal to (and for the pro rata payment of) (A) the Fees
which are due and payable on such Remittance Date pursuant to the terms of
the
Fee Letter and (B) any interest on any Loan which is accrued and unpaid as
of the last day of the immediately preceding Fee Period;
(vi) at
any
time prior to the occurrence of a Servicer Default and the appointment of the
Backup Servicer as the Servicer hereunder, to the Servicer in an amount equal
to
the Servicing Fee which is accrued and unpaid as the last day of the immediately
preceding Fee Period;
(vii) to
the
Lender (for application to the repayment of Loans Outstanding) in an amount
equal to the sum (in the following order, if the available amount should be
insufficient to pay in full such sum), without duplication, of:
(x) any
Borrowing Base Deficiency;
41
(y) the
excess of the aggregate Facility Amount hereunder, calculated solely with
respect to Loans secured by Pool A Receivables, over the Pool A
Borrowing Base; and
(z) the
excess of
the aggregate Facility Amount hereunder, calculated solely with respect to
Loans
secured by Pool B Receivables, over the Pool B Borrowing
Base;
(viii) on
a pro
rata basis, (A) to the Servicer in an amount equal to any Servicer Advances
(and amounts to be reimbursed as Servicer Advances pursuant to Section 6.03)
not
previously reimbursed to the Servicer and (B) to the Lender in an amount
equal to the aggregate amount of all other Obligations then due from the
Borrower to the Lender or any Affected Party hereunder for the account of such
parties as applicable (other than those specified in clauses (ix) through (xii)
below);
(ix) on
or after
the occurrence of the Program Termination Date (but prior to any Program
Termination Cure Event with respect to the Program Termination Event related
to
such Program Termination Date), to the Lender for the repayment of Loans
Outstanding in an amount equal to the lesser of (A) all remaining Available
Funds in the Collection Account and (B) an amount necessary to repay the
outstanding principal amount of all Loans in full;
(x) on
or
after the occurrence of a Pool A Termination Event, to the Lender for the
repayment of Pool A Loans in an amount equal to the lesser of (A) all
remaining Available Funds in the Collection Account and (B) an amount
necessary to repay the outstanding principal amount of all Pool A Loans in
full;
(xi) on
or after
the occurrence of a Pool B Termination Event with respect to any Underlying
Originator, to the Lender for the repayment of Pool B Loans related to such
Underlying Originator in an amount equal to the lesser of (A) all remaining
Available Funds in the Collection Account and (B) an amount necessary to
repay the outstanding principal amount of all Pool B Loans related to such
Underlying Originator in full;
(xii) to
the
related Qualifying Swap Counterparty under each Qualifying Interest Rate Swap
in
an amount equal to (and for the payment of) any QSC Subordinated Termination
Payments which are due and payable by the Borrower to such Qualifying Swap
Counterparty on such Remittance Date pursuant to the applicable Qualifying
Interest Rate Swap; and
(xiii) to
the
order of the Borrower, any remaining amounts.
(d) Borrower
Deficiency Payments.
Notwithstanding anything to the contrary contained in this Section 2.04
or in
any other provision in this Agreement, if, on any day prior to the Collection
Date, the Facility Amount shall exceed the Borrowing Limit, then the Borrower
shall remit to the Lender, prior to any Borrowing and in any event no later
than
the close of business of the Lender on such day (or if such day is not a
Business Day, no later than the close of
42
business
of the Lender on the next succeeding Business Day), a payment (to be applied
by
the Lender to repay Loans selected by the Lender, in its sole discretion),
in
such amount as may be necessary to reduce the Facility Amount to an amount
less
than or equal to the Borrowing Limit. Notwithstanding anything to the contrary
contained in this Section 2.04
or in
any other provision in this Agreement, if, on any day prior to the Collection
Date, the Facility Amount shall exceed the Borrowing Base, then the Borrower
shall (X) remit to the Lender, prior to any Borrowing and in any event no
later than the close of business of the Lender on such day (or if such day
is
not a Business Day, no later than the close of business of the Lender on the
next succeeding Business Day), a payment (to be applied by the Lender to repay
Loans selected by the Lender, in its sole discretion), in such amount as may
be
necessary to reduce the Facility Amount to an amount less than or equal to
the
Borrowing Base or (Y) Pledge additional Eligible Receivables hereunder,
prior to any Borrowing and in any event no later than the close of business
of
the Lender on such day (or if such day is not a Business Day, no later than
the
close of business of the Lender on the next succeeding Business Day) in such
amount as may be necessary to increase the Borrowing Base to an amount equal
to
or greater than the Facility Amount.
(e) Pool A
Deficiency Payments.
Notwithstanding anything to the contrary contained in this Section 2.04
or in
any other provision in this Agreement, if, on any day prior to the Collection
Date, the aggregate Facility Amount hereunder, calculated solely with respect
to
Loans secured by Pool A Receivables, would exceed the Pool A Borrowing
Base, then the Borrower shall remit to the Lender, prior to any Borrowing and
in
any event no later than the close of business of the Lender on such day (or
if
such day is not a Business Day, no later than the close of business of the
Lender on the next succeeding Business Day), a payment (to be applied by the
Lender to repay Loans with respect to Pool A Receivables selected by the
Lender, in its sole discretion), in such amount as may be necessary to reduce
such excess to zero.
(f) Pool B
Deficiency Payments.
Notwithstanding anything to the contrary contained in this Section 2.04
or in
any other provision in this Agreement, if, on any day prior to the Collection
Date, the aggregate Facility Amount hereunder, calculated solely with respect
to
Loans secured by Pool B Receivables, would exceed the Pool B Borrowing
Base, then the Borrower shall remit to the Lender, prior to any Borrowing and
in
any event no later than the close of business of the Lender on such day (or
if
such day is not a Business Day, no later than the close of business of the
Lender on the next succeeding Business Day), a payment (to be applied by the
Lender to repay Loans with respect to Pool B Receivables selected by the
Lender, in its sole discretion), in such amount as may be necessary to reduce
such excess to zero.
(g) Instructions
to the Lender’s Bank.
All
instructions and directions given to the Lender’s Bank by the Servicer, the
Borrower or the Lender pursuant to this Section 2.04
shall be
in writing (including instructions and directions transmitted to the Lender’s
Bank in electronic format), and such written instructions and directions shall
be delivered with a written certification that such instructions and directions
are in compliance with the provisions of this Section 2.04.
The
Servicer and the Borrower shall immediately transmit to the Lender by telecopy
a
copy of all instructions and directions given to the Lender’s Bank by such party
pursuant to this Section 2.04.
The
Lender shall immediately transmit to the Servicer and the Borrower
by telecopy a copy of all instructions and directions given to the Lender’s Bank
by the Lender, pursuant to this Section 2.04.
43
SECTION
2.05 Security
Deposit Account.
(a) On
or
before the date hereof, the Borrower shall enter into a Security Deposit Account
Agreement and open and maintain a segregated trust account (the “Security
Deposit Account”)
at the
Lender’s Bank, for the receipt of amounts representing any Security Deposits
with respect to any Pool A Contract by the related Obligor. The Servicer shall
promptly deposit into the Security Deposit Account, all Security Deposits
related to Pledged Pool A Receivables which are in the possession of, or come
into the possession of, the Servicer or the Originator. Monies received in
the
Security Deposit Account shall be invested in Permitted Investments at the
written direction of the Servicer or the Lender (as determined in accordance
with the Security Deposit Account Agreement) during the term of this Agreement,
and any income or other gain realized from such investment shall be held in
the
Security Deposit Account, subject to disbursement and withdrawal as herein
provided. No such Permitted Investment shall mature later than the Business
Day
preceding the next following Remittance Date and shall not be sold or disposed
of prior to its maturity. Monies shall be subject to withdrawal in accordance
with Section 2.05(d)
hereof.
(b) The
Servicer shall provide to the Borrower monthly written confirmation of
investments of funds held in the Security Deposit Account, describing the
Permitted Investments in which such amounts have been invested. Any funds not
so
invested shall be insured by the Federal Deposit Insurance
Corporation.
(c) If
any
amounts invested as provided in Section 2.05(a)
hereof
shall be subject to disbursement from the Security Deposit Account as set forth
in Section 2.05(d)
hereof,
the Servicer shall cause such investments of such Security Deposit Account
to be
sold or otherwise converted to cash to the credit of such Security Deposit
Account. The Servicer shall not be liable for any investment loss resulting
from
investment of money in the Security Deposit Account in any Permitted Investment
in accordance with the terms hereof (other than in its capacity as obligor
under
any Permitted Investment and other than to the extent such loss results from
the
gross negligence or wilful misconduct of the Servicer).
(d) Disbursements
from the Security Deposit Account shall be made, to the extent funds therefore
are available, only as follows:
(i) for
deposit in the Collection Account in accordance with the direction of the
Servicer prior to 2:00 p.m. New York time on the Business Day prior to any
Remittance Date to the extent that the Servicer, in accordance with the terms
of
a Pool A Contract, has determined that amounts in respect of a Security Deposit
shall be applied as full or partial Recoveries or, in its discretion, as a
full
or partial Scheduled Payment under such Pool A Contract;
(ii) the
Security Deposit with respect to a Pledged Pool A Receivable shall be paid
to or
upon the order of the Servicer at any time that the Pool A Contract with respect
to which such Security Deposit has been made is no longer a Pledged Pool AReceivable,
whether through maturity of such Pool A Contract or repurchase by the Servicer,
for further disposition by the Servicer in accordance with the terms of the
related Pool A Contract or applicable law; and
44
(iii) any
amounts
remaining in the Security Deposit Account upon the Collection Date shall be
distributed to or at the direction of the Servicer for further disposition
in
accordance with the terms of the related Contract or applicable
law.
SECTION
2.06 Cash
Reserve Account.
(a) From
time
to time after the date hereof, the Borrower may enter into one or more Cash
Reserve Account Agreements and open and maintain a segregated trust account
(any
such account, a “Cash
Reserve Account”)
at the
Lender’s Bank, for the receipt of amounts representing any Cash Reserves funded
with respect to any Pool B Contract. The Servicer shall promptly deposit into
the Cash Reserve Account, all Cash Reserves related to Pledged Pool B
Receivables which are in the possession of, or come into the possession of,
the
Servicer or the Originator. Monies received in any Cash Reserve Account shall
be
invested in Permitted Investments at the written direction of the Servicer
or
the Lender (as determined in accordance with the Cash Reserve Account Agreement)
during the term of this Agreement, and any income or other gain realized from
such investment shall be held in such Cash Reserve Account, subject to
disbursement and withdrawal as herein provided. No such Permitted Investment
shall mature later than the Business Day preceding the next following Remittance
Date and shall not be sold or disposed of prior to its maturity. Monies shall
be
subject to withdrawal in accordance with Section 2.06(d)
hereof.
(b) The
Servicer shall provide to the Borrower monthly written confirmation of
investments of funds held in each Cash Reserve Account, describing the Permitted
Investments in which such amounts have been invested. Any funds not so invested
shall be insured by the Federal Deposit Insurance Corporation.
(c) If
any
amounts invested as provided in Section 2.06(a)
hereof
shall be subject to disbursement from a Cash Reserve Account as set forth in
Section 2.06(d)
hereof,
the Servicer shall cause such investments of such Cash Reserve Account to be
sold or otherwise converted to cash to the credit of such Cash Reserve Account.
The Servicer shall not be liable for any investment loss resulting from
investment of money in the Cash Reserve Account in any Permitted Investment
in
accordance with the terms hereof (other than in its capacity as obligor under
any Permitted Investment and other than to the extent such loss results from
the
gross negligence or willful misconduct of the Servicer).
(d) Disbursements
from any Cash Reserve Account shall be made, to the extent funds therefore
are
available, only as follows:
(i) for
deposit in the Collection Account in accordance with the direction of the
Servicer prior to 2:00 p.m. New York time on the Business Day prior to any
Remittance Date to the extent that the Servicer, in accordance with the terms
of
a Pool B Contract, has determined that amounts in respect of a Cash Reserve
shall be
applied as full or partial Recoveries or, in its discretion, as a full or
partial Scheduled Payment under such Pool B Contract;
45
(ii) the
Cash
Reserve with respect to a Pool B Contract shall be paid to or upon the
order of the Servicer at any time that the related Pool B Loan has been
repaid in full and the Pool B Contract with respect to which such Cash
Reserve has been made is no longer a Pledged Receivable, whether through
maturity of such Contract or repurchase by the Servicer, for further disposition
by the Servicer in accordance with the terms of the related Pool B Contract
or
applicable law; and
(iii) any
amounts remaining in the Cash Reserve Account upon the Collection Date shall
be
distributed to or at the direction of the Servicer for further disposition
in
accordance with the terms of the related Pool B Contract or applicable
law.
SECTION
2.07 Payments
and Computations, Etc.
ii)
All
amounts to be deposited or paid by the Borrower or the Servicer to the Lender
hereunder shall be paid or deposited in accordance with the terms hereof no
later than 12:00 noon (New York City time) on the day when due in lawful
money of the United States in immediately available funds to the Collection
Account or such other account as is designated by the Lender. The Borrower
shall, to the extent permitted by law, pay to the Lender interest on all amounts
not paid or deposited when due hereunder (whether owing by the Borrower or
the
Servicer) at the Base Rate, plus 2%, payable on demand; provided,
however,
that
such interest rate shall not at any time exceed the maximum rate permitted
by
applicable law. Such interest shall be for the account of the Lender. Any
Obligation hereunder shall not be reduced by any distribution of any portion
of
Collections with respect to any Pledged Receivable if at any time such
distribution is rescinded or returned by the Lender to the Borrower or any
other
Person for any reason. All computations of interest and all computations of
Breakage Fee and other fees hereunder (including, without limitation, the Fees,
the Active Backup Servicer’s Fee, the Standby Backup Servicer’s Fee, the
Custodian’s Fee and the Servicing Fee) shall be made on the basis of a year of
360 days (or 365 or 366 days for interest calculated at the Base Rate) for
the actual number of days (including the first but excluding the last day)
elapsed.
(b) Whenever
any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest or any fee payable hereunder, as the case may be; provided,
however,
that
with respect to the calculation of interest, such extension of time shall not
be
included in more than one Interest Period.
(c) If
any
Borrowing requested by the Borrower and approved by the Lender pursuant to
Section 2.02
is not
for any reason whatsoever, except as a result of the gross negligence or wilful
misconduct of the Lender or an Affiliate thereof, made or effectuated, as the
case may be, on the date specified therefor, the Borrower shall indemnify the
Lender against any loss, cost or expense incurred by the Lender related thereto
(other than any such loss, cost or expense solely due to the gross negligence
or
willful misconduct of the Lender or an Affiliate thereof), including, without
limitation, any loss (including cost of funds and reasonable out-of-pocket
expenses), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Lender to fund Loans or maintain
Loans during such Interest Period.
46
The
Lender shall provide to the Borrower documentation setting forth the amounts
of
any loss, cost or expense referred to in the previous sentence, such
documentation to be conclusive absent manifest error.
SECTION
2.08 Fees.
iii)
The
Borrower shall pay the Lender certain fees (the “Fees”)
in the
amounts and on the dates set forth in a fee letter (the “Fee
Letter”),
dated
the date hereof, among the Borrower and the Lender.
(b) All
of
the Fees payable pursuant to this Section 2.08
(other
than Fees payable on the date hereof) shall be payable solely from amounts
available for application pursuant to, and subject to the priority of, payment
set forth in, Section 2.04.
SECTION
2.09 Increased
Costs; Capital Adequacy.
iv)
If, due
to either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation (including, without
limitation, any law or regulation resulting in any interest payments paid to
a
Lender under this Agreement being subject to United States withholding tax)
or
(ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the cost to the Lender or any Affiliate, successor
or
assign or participant thereof (each of which shall be an “Affected
Party”)
of
agreeing to make or making, funding or maintaining any Loan (or any reduction
of
the amount of any payment (whether of principal, interest, fee, compensation
or
otherwise) to any Affected Party hereunder), as the case may be, the Borrower
shall, from time to time, within ten days after written demand complying with
Section 2.09(c)
by the
Lender, on behalf of such Affected Party, pay to the Lender, on behalf of such
Affected Party, additional amounts sufficient to compensate such Affected Party
for such increased costs or reduced payments.
(b) If
either
(i) the introduction of or any change in or in the interpretation of any
law, guideline, rule or regulation, directive, request or accounting principle
or (ii) the compliance by any Affected Party with any law, guideline, rule,
regulation, directive, request or accounting principle from any central bank,
other governmental authority, agency or accounting authority (whether or not
having the force of law), including, without limitation, compliance by an
Affected Party with any request or directive regarding capital adequacy, has
or
would have the effect of reducing the rate of return on the capital of any
Affected Party, as a consequence of its obligations hereunder or any related
document or arising in connection herewith or therewith to a level below that
which any such Affected Party could have achieved but for such introduction,
change or compliance (taking into consideration the policies of such Affected
Party with respect to capital adequacy), by an amount deemed by such Affected
Party to be material, then, from time to time, after demand by such Affected
Party (which demand shall be accompanied by a statement setting forth the basis
of such demand), the Lender shall be paid, on behalf of such Affected Party
(from Collections with respect to Pledged Receivables pursuant to, and subject
to the priority of payment set forth in, Section 2.04),
such
additional amounts as will compensate such Affected Party for such
reduction.
(c) In
determining any amount provided for in this Section 2.09,
the
Affected Party may use any reasonable averaging and attribution methods. The
Lender, on behalf of any Affected Party making a claim under this Section 2.09,
shall
submit to the Borrower a certificate setting
47
forth
in
reasonable detail the basis for and the computations of such additional or
increased costs, which certificate shall be conclusive absent demonstrable
error.
(d) If,
as a
result of any event or circumstance similar to those described in Section 2.09(a)
or
2.09(b),
any
Affected Party (that is a Lender) is required to compensate a bank or other
financial institution (including, without limitation, any Affiliate of Xxxxxx
Xxxxxxx) providing liquidity support, credit enhancement or other similar
support to such Affected Party in connection with this Agreement, then, upon
demand by such Affected Party, the Borrower shall pay, in accordance with
Section 2.04,
to such
Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any amounts paid by it, and shall notify
each
Qualified Swap Counterparty of such payment.
SECTION
2.10 Collateral
Assignment of Agreements.
The
Borrower hereby collaterally assigns to the Collateral Agent (and its successors
and assigns) for the benefit of the Secured Parties, all of the Borrower’s right
and title to and interest in, to and under (but not any obligations under)
the
Purchase and Sale Agreement, each Qualifying Interest Rate Swap, the Contract
related to each Pledged Receivable, all other agreements, documents and
instruments evidencing, securing or guarantying any Pledged Receivable and
all
other agreements, documents and instruments related to any of the foregoing
(the
“Assigned
Documents”).
Without limiting any obligation of the Servicer hereunder, the Borrower confirms
and agrees that the Collateral Agent (or any designee thereof, including,
without limitation, the Servicer), following an Event of Default or a Program
Termination Event, shall have the right to enforce the Borrower’s rights and
remedies under each Assigned Document, but without any obligation on the part
of
the Collateral Agent or any of its Affiliates to perform any of the obligations
of the Borrower under any such Assigned Document. In addition, each of the
Servicer and the Borrower confirms and agrees that the Servicer and the Borrower
will, upon receipt of notice or discovery thereof, promptly send to the
Collateral Agent a notice of (i) any breach of any representation,
warranty, agreement or covenant under any such Assigned Document or
(ii) any event or occurrence that, upon notice, or upon the passage of time
or both, would constitute such a breach, in each case, immediately upon learning
thereof. The parties hereto agree that such assignment to the Collateral Agent
shall terminate upon the Collection Date.
SECTION
2.11 Grant
of a Security Interest.
To
secure the prompt and complete payment when due of the Obligations and the
performance by the Borrower of all of the covenants and obligations to be
performed by it pursuant to this Agreement, the Borrower hereby
(i) collaterally assigns and pledges to the Collateral Agent (and its
successors and assigns), for the benefit of the Secured Parties, and
(ii) grants a security interest to the Collateral Agent (and its successors
and assigns), for the benefit of the Secured Parties, in all property of the
Borrower, whether tangible or intangible and whether now owned or existing
or
hereafter arising or acquired and wheresoever located (collectively, the
“Pledged
Assets”),
including, without limitation, all of the Borrower’s right, title and interest
in, to and under:
(a) all
Pool A Receivables and Pool B Receivables purchased by (or otherwise
transferred or pledged pursuant to the terms of the Purchase and Sale Agreement)
to the Borrower under the Purchase and Sale Agreement from time to time (such
Pool A Receivables, the “Pledged
Pool A Receivables”,
and
such Pool B Receivables, the “Pledged
Pool B Receivables”),
all
Other Conveyed Property related to the Pledged Receivables purchased by (or
48
otherwise
transferred or pledged pursuant to the terms of the Purchase and Sale Agreement)
to the Borrower under the Purchase and Sale Agreement, all Related Security
related to the Pledged Receivables, all interest of the Borrower in all Obligor
Collateral related to the Pledged Receivables (together with all security
interests in and insurance proceeds related to such Obligor Collateral and
all
proceeds from the disposition of such Obligor Collateral, whether by sale to
the
related Obligors or otherwise), any Security Deposits or Cash Reserve related
to
such Pledged Receivables, all Collections and other monies due and to become
due
under the Contracts (and, if applicable, Underlying Contracts) related to the
Pledged Receivables received on or after the date such Pledged Receivables
were
purchased by (or purportedly purchased by) the Borrower under the Purchase
and
Sale Agreement;
(b) the
Assigned Documents, including, in each case, without limitation, all monies
due
and to become due to the Borrower under or in connection therewith;
(c) the
Collection Account, the Lockbox, the Lockbox Account, the Security Deposit
Account, each Cash Reserve Account and all other bank and similar accounts
relating to Collections with respect to Pledged Receivables (whether now
existing or hereafter established) and all funds held therein, and all
investments in and all income from the investment of funds in the Collection
Account, the Lockbox Account, the Security Deposit Account, each Cash Reserve
Account and such other accounts;
(d) the
Records relating to any Pledged Receivables;
(e) all
UCC
financing statements filed by the Borrower against the Originator under or
in
connection with the Purchase and Sale Agreement;
(f) [Reserved];
(g) each
Qualifying Interest Rate Swap, any other interest rate protection agreement
entered into with respect to the transactions contemplated under the RLSA and,
in each case, all payments thereunder;
(h) all
Liquidation Proceeds relating to any Pledged Receivables; and
(i) all
proceeds of the foregoing property described in clauses (a) through (g)
above, including interest, dividends, cash, instruments and other property
from
time to time received, receivable or otherwise distributed in respect of or
in
exchange for or on account of the sale or other disposition of any or all of
the
then existing Pledged Receivables.
The
Borrower hereby authorizes the Collateral Agent to file financing statements
describing as the collateral covered thereby as "all of the debtor's personal
property or assets" or words to that effect, notwithstanding that such wording
may be broader in scope than the collateral described in this Agreement.
SECTION
2.12 Evidence
of Debt.
The
Lender shall maintain an account or accounts evidencing the indebtedness of
the
Borrower to the Lender resulting from each Loan owing to the Lender from time
to
time, including the amounts of principal and interest payable and paid
to
49
the
Lender from time to time hereunder. The entries made in such account(s) of
the
Lender shall be conclusive and binding for all purposes, absent manifest
error.
SECTION
2.13 Release
of Pledged Receivables.
v)
Subject
to Section 2.15
hereof,
upon the repayment of any Loan, the Borrower may obtain the release of any
Pledged Receivable and the related Other Conveyed Property or Related Security
securing such Loan (including, without limitation, the release of any security
interest of the Collateral Agent or the Borrower therein) by depositing into
an
account designated by the Lender the Release Price therefor on the date of
such
repayment; provided,
that
the foregoing release shall only be available if, after giving effect thereto
and the application of the proceeds thereof in accordance with the terms hereof,
there shall not be a Borrowing Base Deficiency, Program Termination Event,
Pool A Termination Event or a Pool B Termination Event (and such
Pool B Termination Event is related to such Pledged Receivable), or an
event that but for notice or lapse of time or both would constitute any of
the
foregoing events.
(b) The
Borrower shall notify the Collateral Agent of any Release Price to be paid
pursuant to this Section 2.13
on the
Business Day on which such Release Price shall be paid specifying the Pledged
Receivables to be released and the Release Price.
(c) Promptly
after the Collection Date has occurred, the Collateral Agent shall re-assign
and
transfer to the Borrower, for no consideration but at the sole expense of the
Borrower, their respective remaining interests in the Pledged Assets, free
and
clear of any Adverse Claim resulting solely from an act by the Collateral Agent
but without any other representation or warranty, express or implied, by or
recourse against the Collateral Agent.
SECTION
2.14 Treatment
of Amounts Paid by the Borrower.
Amounts
paid by the Borrower pursuant to Section 2.13
on
account of Pledged Receivables shall be treated as payments on Pledged
Receivables hereunder.
SECTION
2.15 Prepayment;
Certain Indemnification Rights; Termination.
vi)
The
Borrower may prepay, in whole or in part, the outstanding principal amount
of
any Loans advanced hereunder. Any amounts so prepaid shall be applied to repay
the outstanding principal amount of Loans allocated to an Interest Period or
Interest Periods selected by the Lender. Amounts prepaid pursuant to this
Section 2.15(a) may be reborrowed in accordance with the terms of this
Agreement. If the Borrower intends to make an optional prepayment pursuant
to
this Section 2.15(a), the Borrower shall give five (5) Business Days' prior
written notice thereof to the Lender, specifying the intended Prepayment Date,
the intended Prepayment Amount, whether the Loans being prepaid are Pool A
Loans
or Pool B Loans, a calculation of any applicable Breakage Fee and the Pledged
Receivables that the Borrower shall request to have released pursuant to Section
2.13 in connection with such prepayment (and the Discounted Balance thereof).
Any such optional prepayment of the outstanding principal amount of any Loans
advanced hereunder shall be accompanied by all interest accrued with respect
thereto and the Prepayment Premium with respect to the applicable Prepayment
Amount and Prepayment Date. If such notice is given, the principal amount
specified in such notice (together with all interest accrued with respect
thereto and the Prepayment Premium related thereto) shall be due and payable
on
the Prepayment Date specified therein. Notwithstanding the foregoing, any
payment by the Borrower required pursuant to Section 2.04(c)(vii), Section
2.04(d),(e) or (f) or,
50
in
connection with the occurrence of an Event of Default, pursuant to Section
7.01
hereof shall not be considered an optional prepayment and no Prepayment Premium
shall be required to be paid in respect thereof.
(b) Without
limiting any other provision hereof, the Borrower agrees to indemnify the
Lender, the Qualifying Swap Counterparty and any Affiliate thereof and to hold
each such Person harmless from any cost, loss or expense which it may sustain
or
incur as a consequence of (i) the Borrower making any optional prepayment
pursuant to Section 2.15(a) hereof, (ii) any default by the Borrower in making
any optional prepayment pursuant to Section 2.15(a) hereof after notice of
such
prepayment has been given, (iii) any failure by the Borrower to take a Loan
hereunder after notice of such Loan has been given pursuant to this Agreement,
(iv) any acceleration of the maturity of any Loans by the Lender in accordance
with the terms of this Agreement, including, but not limited to, any Breakage
Fees, any cost, loss or expense arising related to the termination (in whole
or
in part) or amendment of any Qualifying Interest Rate Swap and from interest
or
fees payable by the Lender to lenders of funds obtained by it in order to
advance or maintain the Loans hereunder. Indemnification pursuant to this
Section shall survive the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation.
(c) Notwithstanding
any other provision hereof, the Borrower shall not terminate or amend this
Agreement or any other Transaction Document or reduce the Borrowing Limit prior
to the Facility Maturity Date without the Lender’s prior written consent, which
consent may be withheld in the Lender’s sole discretion.
SECTION
2.16 Increase
of Borrowing Limit.
The
Borrower may, upon 30 days’ prior written notice to the Lender (with a
simultaneous copy to the Initial Qualifying Swap Counterparty), request that
the
Borrowing Limit be increased, which request may be granted in the sole
discretion, and with the written consent, of the Lender, it being agreed that
the Borrower shall pay to the Lender the fee related to such increase that
is
required pursuant to the terms of the Fee Letter.
ARTICLE
III.
CONDITIONS
OF LOANS
SECTION
3.01 Conditions
Precedent to Initial Borrowing.
The
initial Borrowing hereunder is subject to the conditions precedent
that:
(a) the
Arrangement Fee (as such term is defined in the Fee Letter) shall have been
paid
in full and all other acts and conditions (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any required
filings, recordings or registrations) required to be done and performed and
to
have happened prior to the execution, delivery and performance of this Agreement
and all related documents and to constitute the same legal, valid and binding
obligations, enforceable in accordance with their respective terms, shall have
been done and performed and shall have happened in due and strict compliance
with all applicable laws; and
51
(b) the
Lender shall have received on or before the date of such Borrowing the items
listed in Schedule I
hereto,
each in form and substance satisfactory to the Lender.
SECTION
3.02 Conditions
Precedent to All Borrowings.
Each
Borrowing (including the initial Borrowing, except as explicitly set forth
below) by the Borrower from the Lender shall be subject to the further
conditions precedent that:
(a) With
respect to any such Borrowing (other than the initial Borrowing), on or prior
to
the date of such Borrowing, the Servicer shall have delivered to the Lender,
in
form and substance satisfactory to the Lender, the most recent Monthly
Remittance Report required by the terms of Section 6.10(b);
(b) After
giving effect to such Borrowing requested by the Borrower the following
statements shall be true (and the Borrower shall be deemed to have certified
that):
(i) the
Facility Amount will not exceed the lesser of the (x) Borrowing Limit and
(y) the Borrowing Base;
(ii) the
Facility Amount, calculated solely with respect to Loans secured by Pool A
Receivables, will not exceed the Pool A Borrowing Base; and
(iii) the
Facility Amount, calculated solely with respect to Loans secured by Pool B
Receivables, will not exceed the Pool B Borrowing Base;
(c) On
the
Borrowing Date of such Borrowing, the following statements shall be true and
correct, and the Borrower by accepting any amount of such Borrowing shall be
deemed to have represented that:
(i) the
representations and warranties contained in Section 4.01
are true
and correct in all material respects, before and after giving effect to the
Borrowing to take place on such Borrowing Date and to the application of
proceeds therefrom, on and as of such day as though made on and as of such
date;
(ii) no
event
has occurred and is continuing, or would result from such Borrowing, which
constitutes a Program Termination Event hereunder or an event that but for
notice or lapse of time or both would constitute a Program Termination
Event;
(iii) with
respect
to any Borrowing of a Pool A Loan, no event has occurred and is continuing,
or would result from such Borrowing, which constitutes a Pool A Termination
Event hereunder or an event that but for notice or lapse of time or both would
constitute a Pool A Termination Event;
(iv) with
respect to any Borrowing of a Pool B Loan, no event has occurred and is
continuing, or would result from such Borrowing, which constitutes a Pool B
Termination Event with respect to the Underlying Originator related to the
Pool B Receivable securing such Pool B Loan or an event that but for
notice or lapse of time or both would constitute such a Pool B Termination
Event;
52
(v) (A) the
principal amount of such Loan being advanced on such Borrowing Date is not
less
than $500,000, (b) on and as of such Borrowing Date, after giving effect to
such Borrowing, the Facility Amount does not exceed the lesser of (A) the
Borrowing Limit and (B) the Borrowing Base, (c) on and as of such
Borrowing Date, after giving effect to such Borrowing, the aggregate Facility
Amount hereunder, calculated solely with respect to Loans secured by Pool A
Receivables, does not exceed the Pool A Borrowing Base, and (d) on and
as of such Borrowing Date, after giving effect to such Borrowing, the aggregate
Facility Amount hereunder, calculated solely with respect to Loans secured
by
Pool B Receivables, does not exceed the Pool B Borrowing
Base;
(vi) (A) the
Borrower has delivered to the Lender a copy of the Notice of Borrowing and
the
related Notice of Pledge (together with the attached Receivables Schedule)
pursuant to Section 2.02,
each
appropriately completed and executed by the Borrower, (B) the Borrower has
delivered or caused to have been delivered to the Custodian the Notice of Pledge
and each item listed in the definition of Receivable File with respect to the
Receivables being Pledged hereunder three (3) or, in the case of the initial
Borrowing Date hereunder, four (4) Business Days prior to such Borrowing Date,
(C) the Contract related to each Receivable being Pledged hereunder on such
Borrowing Date has been duly assigned by the Originator to the Borrower and
duly
assigned by the Borrower to the Collateral Agent and (D) by 2:00 P.M.
(New York City time) on the Business Day immediately preceding such Borrowing
Date, a Collateral Receipt from the Custodian confirming that, inter alia,
the
Receivable Files received on or before such Business Day conform with the
Receivables Schedule delivered to the Custodian and the Lender pursuant to
Section 2.02;
(vii) all
terms
and conditions of the Purchase and Sale Agreement required to be satisfied
in
connection with the assignment of each Receivable being Pledged hereunder on
such Borrowing Date (and the Other Conveyed Property and Related Security
related thereto), including, without limitation, the perfection of the
Borrower’s interests therein (other than with respect to Equipment which has a
value of less than $25,000 and is leased under Dollar Purchase Option Contracts
or $50,000 and is leased under FMV Contracts), shall have been satisfied in
full, and all filings (including, without limitation, UCC filings) required
to
be made by any Person and all actions required to be taken or performed by
any
Person in any jurisdiction to give the Collateral Agent a first priority
perfected security interest in such Receivables, Related Security and the Other
Conveyed Property related thereto and the proceeds thereof shall have been
made,
taken or performed;
(viii) (A) the
initial Servicer shall have taken or caused to be taken all steps necessary
under all applicable law (including the filing of an Obligor Financing
Statement) in order to cause a valid, subsisting and enforceable perfected,
first priority security interest to exist in Originator’s favor in the Obligor
Collateral securing each Receivable being Pledged hereunder on such Borrowing
Date (other than with respect to Equipment which has a value of less than
$25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and
is
leased under
53
FMV Contracts), (B) the Originator shall have assigned the perfected, first
priority security interest in the Obligor Collateral to the Borrower pursuant
to
the Purchase and Sale Agreement and (C) the Borrower shall have assigned the
perfected, first priority security interest in the Obligor Collateral (and
the
proceeds thereof) referred to in clause (A) above to the Collateral Agent,
pursuant to Section 2.11
hereof;
(ix) if
the
Obligor Collateral related to any Receivable (other than a Vehicle Sublimit
Pledged Receivable) securing such Borrowing is a Vehicle, the Borrower shall
have delivered to the applicable Registrar of Titles an application for a
Certificate of Title for such Vehicle which such Certificate of Title shall
indicate the Borrower as the owner of the related Vehicle and indicate “Xxxxxx
Xxxxxxx Bank” as the sole lienholder with respect to such Vehicle;
and
(x) the
Borrower shall have taken all steps necessary under all applicable law in order
to cause to exist in favor of the Collateral Agent a valid, subsisting and
enforceable first priority perfected security interest in the Borrower’s
interest in the Obligor Collateral related to each Receivable being Pledged
hereunder on such Borrowing Date (other than with respect to Underlying
Equipment which has a value of less than $25,000 and is leased under Dollar
Purchase Option Contracts or $50,000 and is leased under FMV
Contracts);
(d) No
law or
regulation shall prohibit, and no order, judgment or decree of any federal,
state or local court or governmental body, agency or instrumentality shall
prohibit or enjoin, the making of such Loans by the Lender in accordance with
the provisions hereof; and
(e) The
Lender shall have received and found to be satisfactory with respect to Pledged
Receivables being Pledged in connection with such Borrowing, which have been
previously pledged to any lender by the Originator, the Borrower or any
Affiliate thereof under any other financing facility, evidence of the release
of
any liens granted in connection with such financing with respect to any such
Pledged Receivables.
(f) Unless
a
credit agreement and/or security agreement, including but not limited to any
such agreement with National City Bank, as agent, related to Receivables being
Pledged by the Borrower in connection with such Borrowing, shall have provided
for an automatic release of the Agent’s or Collateral Agent’s, as applicable,
lien and security interest in such Receivables granted thereunder, the
applicable agent or lender shall have executed and delivered to the Borrower
and
the Collateral Agent a partial release letter and the Borrower shall have duly
filed with the appropriate filing office a UCC-3 partial release evidencing
the
release contained in such release letter, in each case in a form satisfactory
to
the Collateral Agent.
SECTION
3.03 Advances
Do Not Constitute a Waiver.
No
advance of a Loan hereunder shall constitute a waiver of any condition to the
Lender’s obligation to make such an advance unless such waiver is in writing and
executed by the Lender.
54
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES
SECTION
4.01 Representations
and Warranties of the Borrower.
The
Borrower hereby represents and warrants, as of the date hereof, on each
Borrowing Date and on the first day of each Rollover Interest Period, as
follows:
(a) Each
Receivable designated as an Eligible Receivable on any Borrowing Base
Certificate or Monthly Remittance Report is an Eligible Receivable. Each
Receivable included as an Eligible Receivable in any calculation of the
Borrowing Base or the Eligible Receivables Balance is an Eligible
Receivable.
(b) The
Borrower is a limited liability company duly organized, validly existing and
in
good standing under the laws of the jurisdiction of its formation and has the
power and all licenses necessary to own its assets and to transact the business
in which it is engaged and is duly qualified and in good standing under the
laws
of each jurisdiction where the transaction of such business or its ownership
of
the Pledged Receivables requires such qualification.
(c) The
Borrower has the power, authority and legal right to make, deliver and perform
this Agreement and each of the Transaction Documents to which it is a party
and
all of the transactions contemplated hereby and thereby, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and each of the Transaction Documents to which it is a party, and
to
grant to the Collateral Agent a first priority perfected security interest
in
the Pledged Assets on the terms and conditions of this Agreement. This Agreement
and each of the Transaction Documents to which the Borrower is a party
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against it in accordance with their respective terms, except as the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization and other similar laws of general application
affecting creditors’ rights generally and by general principles of equity
(whether such enforceability is considered in a proceeding in equity or at
law).
No consent of any other party and no consent, license, approval or authorization
of, or registration or declaration with, any governmental authority, bureau
or
agency is required in connection with the execution, delivery or performance
by
the Borrower of this Agreement or any Transaction Document to which it is a
party or the validity or enforceability of this Agreement or any such
Transaction Document or the Pledged Receivables, other than such as have been
met or obtained.
(d) The
execution, delivery and performance of this Agreement and all other agreements
and instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto in connection with the Pledge of the Pledged Assets will
not
(i) create any Adverse Claim on the Pledged Assets or (ii) violate any
provision of any existing law or regulation or any order or decree of any court,
regulatory body or administrative agency or the certificate of formation or
limited liability company agreement of the Borrower or any contract or other
agreement to which or the Borrower is a party or by which the Borrower or any
property or assets of the Borrower may be bound.
55
(e) No
litigation or administrative proceeding of or before any court, tribunal or
governmental body is presently pending or, to the knowledge of the Borrower,
threatened against the Borrower or any properties of Borrower or with respect
to
this Agreement, which, if adversely determined, could have a Material Adverse
Effect.
(f) In
selecting the Receivables to be Pledged pursuant to this Agreement, no selection
procedures were employed which are intended to be adverse to the interests
of
the Lender.
(g) The
grant
of the security interest in the Pledged Assets by the Borrower to the Collateral
Agent pursuant to this Agreement, is in the ordinary course of business for
the
Borrower and is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction. No such Pledged Assets
have
been sold, transferred, assigned or pledged by the Borrower to any Person,
other
than the Pledge of such Assets to the Collateral Agent pursuant to the terms
of
this Agreement.
(h) The
Borrower has no Debt or other indebtedness which, in the aggregate, exceeds
$10,000, other than Debt incurred under the terms of the Transaction
Documents.
(i) The
Borrower has been formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and the other Transaction Documents.
(j) No
injunction, writ, restraining order or other order of any nature adversely
affects the Borrower’s performance of its obligations under this Agreement or
any Transaction Document to which the Borrower is a party.
(k) The
Borrower has filed (on a consolidated basis or otherwise) on a timely basis
all
tax returns (including, without limitation, all foreign, federal, state, local
and other tax returns) required to be filed, is not liable for taxes payable
by
any other Person and has paid or made adequate provisions for the payment of
all
taxes, assessments and other governmental charges due from the Borrower except
for those taxes being contested in good faith by appropriate proceedings and
in
respect of which no penalty may be assessed from such contest and it has
established proper reserves on its books. No tax lien or similar adverse claim
has been filed, and no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other governmental
charges payable by the Borrower, as applicable, in connection with the execution
and delivery of this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby have been paid or shall have been
paid if and when due.
(l) The
chief
executive office of the Borrower (and the location of the Borrower’s records
regarding the Pledged Receivables (other than those delivered to the Custodian))
is located at 0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, XX
00000.
(m) The
Borrower’s legal name is as set forth in this Agreement; other than as disclosed
on Schedule II
hereto
(as such schedule may be updated from time to by the Lender upon receipt of
a
notice delivered to the Lender pursuant to Section 6.18),
the
Borrower has not changed its name since its formation; the Borrower does not
have tradenames, fictitious names, assumed names or “doing business as” names
other than as disclosed on Schedule II
hereto
(as such
56
schedule
may be updated from time to by the Lender upon receipt of a notice delivered
to
the Lender pursuant to Section 6.18).
(n) The
Borrower is solvent and will not become insolvent after giving effect to the
transactions contemplated hereby; the Borrower is paying its debts as they
become due; and the Borrower, after giving effect to the transactions
contemplated hereby, will have adequate capital to conduct its
business.
(o) The
Borrower has no subsidiaries.
(p) The
Borrower has given fair consideration and reasonably equivalent value in
exchange for the sale of the Pledged Receivables by the Originator under the
Purchase and Sale Agreement.
(q) No
Monthly Remittance Report or Borrowing Base Certificate (each if prepared by
the
Borrower or to the extent that information contained therein is supplied by
the
Borrower), information, exhibit, financial statement, document, book, record
or
report furnished or to be furnished by the Borrower to the Lender in connection
with this Agreement is or will be inaccurate in any material respect as of
the
date it is or shall be dated or (except as otherwise disclosed in writing to
the
Lender, as the case may be, at such time) as of the date so furnished, and
no
such document contains or will contain any material misstatement of fact or
omits or shall omit to state a material fact or any fact necessary to make
the
statements contained therein not misleading.
(r) No
proceeds of any Loans will be used by the Borrower to acquire any security
in
any transaction, which is subject to Section 13 or 14 of the Securities
Exchange Act of 1934, as amended.
(s) There
are
no agreements in effect adversely affecting the rights of the Borrower to make,
or cause to be made, the grant of the security interest in the Pledged Assets
contemplated by Section 2.10.
(t) The
Borrower is not an “investment company” or an “affiliated person” of or
“promoter” or “principal underwriter” for an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended, nor is the
Borrower otherwise subject to regulation thereunder.
(u) No
Event
of Default or Unmatured Event of Default has occurred and is
continuing.
(v) Each
of
the Pledged Receivables was underwritten and is being serviced in conformance
with Originator’s standard underwriting, credit, collection, operating and
reporting procedures and systems (including, without limitation, the Credit
and
Collection Policy).
(w) The
Borrower is in compliance with ERISA in all material respects. No steps have
been taken to terminate any Borrower Pension Plan which could result in material
liability, and no contribution failure has occurred with respect to any Borrower
Pension Plan sufficient to give rise to a lien under section 302(f) of ERISA.
No
condition exists or event or transaction has
57
occurred
with respect to any Borrower Pension Plan which could result in the Borrower
or
any ERISA Affiliate of Borrower incurring any material liability, fine or
penalty.
(x) There
is
not now, nor will there be at any time in the future, any agreement or
understanding between the Servicer and the Borrower (other than as expressly
set
forth herein), providing for the allocation or sharing of obligations to make
payments or otherwise in respect of any taxes, fees, assessments or other
governmental charges.
SECTION
4.02 Representations
and Warranties of the Servicer.
The
Servicer (so long as the Servicer is not the Backup Servicer as successor
Servicer) hereby represents and warrants, as of the date hereof, on each
Borrowing Date, on each Remittance Date and on the first day of each Rollover
Interest Period, as follows:
(a) Each
Receivable designated as an Eligible Receivable on any Borrowing Base
Certificate or Monthly Remittance Report is an Eligible Receivable. Each
Receivable included as an Eligible Receivable in any calculation of the
Borrowing Base or the Eligible Receivables Balance is an Eligible
Receivable.
(b) The
Servicer is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the power and
all licenses necessary to own its assets and to transact the business in which
it is engaged (which includes servicing Receivables on behalf of third parties
and itself) and is duly qualified and in good standing under the laws of each
jurisdiction where its servicing of the Pledged Receivables requires such
qualification.
(c) The
Servicer has the power, authority and legal right to make, deliver and perform
this Agreement and each of the Transaction Documents to which it is a party
and
all of the transactions contemplated hereby and thereby, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and each of the Transaction Documents to which it is a party. This
Agreement and each of the Transaction Documents to which the Servicer is a
party
constitutes the legal, valid and binding obligation of the Servicer, enforceable
against it in accordance with their respective terms, except as the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization and other similar laws of general application
affecting creditors’ rights generally and by general principles of equity
(whether such enforceability is considered in a proceeding in equity or at
law).
No consent of any other party and no consent, license, approval or authorization
of, or registration or declaration with, any governmental authority, bureau
or
agency is required in connection with the execution, delivery or performance
by
the Servicer of this Agreement or any Transaction Document to which it is a
party or the validity or enforceability of this Agreement or any such
Transaction Document, other than such as have been met or obtained.
(d) The
execution, delivery and performance of this Agreement by the Servicer and all
other agreements and instruments executed and delivered or to be executed and
delivered by the Servicer pursuant hereto or thereto in connection with the
Pledge of the Pledged Assets will not (i) create any Adverse Claim on the
Pledged Assets or (ii) violate any provision of any existing law or
regulation or any order or decree of any court, regulatory body or
administrative agency or the certificate of incorporation or bylaws of the
Servicer or any material contract or other
58
agreement
to which the Servicer is a party or by which the Servicer or any of its property
or assets may be bound.
(e) No
litigation or administrative proceeding of or before any court, tribunal or
governmental body is presently pending or, to the knowledge of the Servicer,
threatened against the Servicer or any properties of the Servicer or with
respect to this Agreement, which, if adversely determined, could have a Material
Adverse Effect.
(f) No
injunction, writ, restraining order or other order of any nature adversely
affects the Servicer’s performance of its obligations under this Agreement or
any Transaction Document to which the Servicer is a party.
(g) The
Servicer has filed (on a consolidated basis or otherwise) on a timely basis
all
tax returns (including, without limitation, all foreign, federal, state, local
and other tax returns) required to be filed, is not liable for taxes payable
by
any other Person and has paid or made adequate provisions for the payment of
all
taxes, assessments and other governmental charges due from the Servicer except
for those taxes being contested in good faith by appropriate proceedings and
in
respect of which it has established proper reserves on its books. No tax lien
or
similar adverse claim has been filed, and no claim is being asserted, with
respect to any such tax, assessment or other governmental charge. Any taxes,
fees and other governmental charges payable by the Servicer in connection with
the execution and delivery of this Agreement and the other Transaction Documents
to which it is a party and the transactions contemplated hereby or thereby
have
been paid or shall have been paid if and when due.
(h) The
chief
executive office of the Servicer (and the location of the Servicer’s records
regarding the Pledged Receivables (other than those delivered to the Custodian))
is located at 0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, XX
00000.
(i) The
Servicer’s legal name is as set forth in this Agreement; other than as disclosed
on Schedule II
hereto
(as such schedule may be updated from time to by the Lender upon receipt of
a
notice delivered to the Lender pursuant to Section 6.18),
the
Servicer has not changed its name since its formation; the Servicer does not
have tradenames, fictitious names, assumed names or “doing business as” names
other than as disclosed on Schedule II
hereto
(as such schedule may be updated from time to by the Lender upon receipt of
a
notice delivered to the Lender pursuant to Section 6.18).
(j) The
Servicer is solvent and will not become insolvent after giving effect to the
transactions contemplated hereby; the Servicer is paying its debts as they
become due; and the Servicer, after giving effect to the transactions
contemplated hereby, will have adequate capital to conduct its
business.
(k) As
of the
date hereof and as of the date of delivery of any Monthly Remittance Report
or
Borrowing Base Certificate, no Monthly Remittance Report or Borrowing Base
Certificate (each if prepared by the Servicer or to the extent that information
contained therein is supplied by the Servicer), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished by
the
Servicer to the Lender in connection with this Agreement is or will be
inaccurate in any material respect, and no such document contains or will
contain any
59
material
misstatement of fact or omits or shall omit to state a material fact or any
fact
necessary to make the statements contained therein not misleading.
(l) The
Servicer is not an “investment company” or an “affiliated person” of or
“promoter” or “principal underwriter” for an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended, nor is the
Servicer otherwise subject to regulation thereunder.
(m) No
Event
of Default or Unmatured Event of Default has occurred and is
continuing.
(n) Each
of
the Pledged Receivables was underwritten and is being serviced in conformance
with Originator’s and the Servicer’s standard underwriting, credit, collection,
operating and reporting procedures and systems (including, without limitation,
the Credit and Collection Policy).
(o) Any
Computer Tape or Listing made available by the Servicer to the Lender was
complete and accurate in all material respects as of the date on which such
Computer Tape or Listing was made available.
(p) The
Servicer is in compliance with ERISA in all material respects. No steps have
been taken to terminate any Servicer Pension Plan which could result in material
liability, and no contribution failure has occurred with respect to any Servicer
Pension Plan sufficient to give rise to a lien under section 302(f) of ERISA.
No
condition exists or event or transaction has occurred with respect to any
Servicer Pension Plan which could result in the Servicer or any ERISA Affiliate
of Servicer incurring any material liability, fine or penalty.
(q) There
is
not now, nor will there be at any time in the future, any agreement or
understanding between the Servicer and the Borrower (other than as expressly
set
forth herein), providing for the allocation or sharing of obligations to make
payments or otherwise in respect of any taxes, fees, assessments or other
governmental charges.
SECTION
4.03 Resale
of Receivables Upon Breach of Covenant or Representation and Warranty by
Borrower.
The
Borrower or the Servicer, as the case may be, shall inform the other parties
to
this Agreement and the Qualifying Swap Counterparty promptly, in writing, upon
the discovery of any breach of the representations, warranties and/or covenants
contained in Section 4.01,
Section 4.02
or
Section 5.01;
provided,
however,
that
the failure to provide any such notice shall not diminish, in any manner
whatsoever, any obligation of the Borrower under this Section 4.03
to sell
any Pledged Receivable. Upon the discovery by or notice to the Borrower of
any
such breach that also constitutes a LEAF Purchase Event under and as defined
in
the Purchase and Sale Agreement, the Borrower shall have an obligation to,
and
the Borrower shall, resell to the Originator pursuant to the Purchase and Sale
Agreement (and the Collateral Agent may enforce such obligation of the Borrower
to sell) any Pledged Receivable adversely affected by any such breach. The
Servicer shall notify the Collateral Agent promptly, in writing, of any failure
by the Borrower to so resell any such Pledged Receivable. In connection with
the
resale of such Pledged Receivable, the Borrower shall remit funds in an amount
equal to the Release Price for such Pledged Receivable to the Collection Account
on the date of such resale. It is understood and agreed that the obligation
of
the Borrower to resell to the Originator, and the
60
obligation
of the Originator to purchase, any Receivables which are adversely effected
by a
LEAF Purchase Event is not intended to, and shall not, constitute a guaranty
of
the collectibility or payment of any Receivable which is not collected, not
paid
or uncollectible on account of the insolvency, bankruptcy, or financial
inability to pay of the related Obligor.
SECTION
4.04 Representations
and Warranties of the Lender.
The
Lender hereby represents and warrants, as of the date hereof, on each Borrowing
Date and on the first day of each Rollover Interest Period, that it is a
“qualified purchaser” within the meaning of Section 3(c)(7) of the Investment
Company Act.
ARTICLE
V.
GENERAL
COVENANTS OF THE BORROWER AND THE SERVICER
SECTION
5.01 General
Covenants.
vii)
The
Borrower will observe all corporate procedures required by its certificate
of
formation, limited liability company agreement and the laws of its jurisdiction
of formation. The Borrower will maintain its limited liability company existence
in good standing under the laws of its jurisdiction of formation and will
promptly obtain and thereafter maintain qualifications to do business as a
foreign limited liability company in any other state in which it does business
and in which it is required to so qualify under applicable law.
(b) The
Borrower will at all times ensure that (i) its members act independently
and in its interests and in the interests of its creditors, (ii) it shall
at all times maintain at least one independent manager who (A) is not
currently and has not been during the five years preceding the date of this
Agreement an officer, director or employee of the Borrower or an Affiliate
thereof (other than acting as independent manager or in a similar capacity)
and
(B) is not a member of the Borrower or an Affiliate thereof (other than a
special independent member of the Borrower or a limited purpose corporation,
business trust, partnership or other entity organized for the purpose of
acquiring, financing or otherwise investing, directly or indirectly, in assets
or receivables originated, owned or serviced by Originator or an Affiliate
of
any of them), (iii) its assets are not commingled with those of Originator
or any other Affiliate of the Borrower, (iv) its members duly authorize all
of its limited liability company actions, (v) it maintains separate and
accurate records and books of account and such books and records are kept
separate from those of Originator and any other Affiliate of the Borrower and
(vi) it maintains minutes of the meetings and other proceedings of the
members. Where necessary, the Borrower will obtain proper authorization from
its
members for limited liability company action.
(c) The
Borrower will pay its operating expenses and liabilities from its own
assets.
(d) The
Borrower will not have any of its indebtedness guaranteed by Originator or
any
Affiliate thereof. Furthermore, the Borrower will not hold itself out, or permit
itself to be held out, as having agreed to pay or as being liable for the debts
of Originator, and the Borrower will not engage in business transactions with
Originator, except on an arm’s-length basis. The Borrower will not hold
Originator out to third parties as other than an entity with assets and
liabilities distinct from the Borrower. The Borrower will cause any of its
financial statements consolidated with those of Originator to state that the
Borrower is a separate corporate entity
61
with
its
own separate creditors who, in any liquidation of the Borrower, will be entitled
to be satisfied out of the Borrower’s assets prior to any value in the Borrower
becoming available to the Borrower’s equity holders. The Borrower will not act
in any other matter that could foreseeably mislead others with respect to the
Borrower’s separate identity.
(e) In
its
capacity as Servicer, LEAF Financial will, to the extent necessary, maintain
separate records on behalf of and for the benefit of the Lender, act in
accordance with instructions and directions, delivered in accordance with the
terms hereof, from the Borrower, and/or the Lender in connection with its
servicing of the Pledged Receivables hereunder, and will ensure that, at all
times when it is dealing with or in connection with the Pledged Receivables
in
its capacity as Servicer, it holds itself out as Servicer, and not in any other
capacity.
(f) The
Servicer (if LEAF Financial or an Affiliate thereof) shall, to the extent
required by applicable law, disclose all material transactions associated with
this transaction in appropriate regulatory filings and public announcements.
The
annual financial statements of Resource America (including any consolidated
financial statements) shall disclose the effects of the transactions
contemplated by the Purchase and Sale Agreement as a sale of Receivables,
Related Security and Other Conveyed Property to the Borrower, and the annual
financial statements of the Borrower shall disclose the effects of the
transactions contemplated by this Agreement as a loan to the extent required
by
and in accordance with GAAP, it being understood that the Loans to the Borrower
under this Agreement will be treated as debt on the consolidated financial
statements of Resource America.
(g) The
Borrower shall take all other actions necessary to maintain the accuracy of
the
factual assumptions set forth in the legal opinions of Xxxxxxx Xxxxxxxx &
Xxxx LLP, as special counsel to the Originator and the Borrower, issued in
connection with the Purchase and Sale Agreement and relating to the issues
of
substantive consolidation and true conveyance of the Pledged
Receivables.
(h) Except
as
otherwise provided herein or in any other Transaction Document, neither the
Borrower nor the Servicer shall sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or (if the Servicer is LEAF Financial or
an
Affiliate thereof) suffer to exist any Adverse Claim upon or with respect to,
any Pledged Receivable, any Collections related thereto or any other Pledged
Assets related thereto, or upon or with respect to any account to which any
Collections of any Receivable are sent, or assign any right to receive income
in
respect thereof. Except as otherwise provided herein or in any other Transaction
Document, the Borrower shall not create or suffer to exist any Adverse Claim
upon or with respect to any of the Borrower’s assets. Except as otherwise
provided herein or in any other Transaction Document, the Servicer shall not
create, or (if the Servicer is LEAF Financial or an Affiliate thereof) permit
any action to be taken by any Person to create, any Adverse Claim upon or with
respect to any of the Borrower’s assets.
(i) The
Borrower will not merge or consolidate with, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired) other than with respect to asset dispositions in connection
with an optional prepayment pursuant to Section 2.15(a)
62
hereof,
or acquire all or substantially all of the assets or capital stock or other
ownership interest of any Person without the prior written consent of the
Lender.
(j) The
Borrower will not account for or treat (whether in financial statements or
otherwise) the transactions contemplated by the Purchase and Sale Agreement
in
any manner other than a sale and absolute assignment of Receivables, Related
Security and Other Conveyed Property by Originator to the Borrower constituting
a “true conveyance” for bankruptcy purposes.
(k) The
Borrower will not amend, modify, waive or terminate any terms or conditions
of
the Purchase and Sale Agreement without the written consent of the Lender,
and
shall perform its obligations thereunder.
(l) The
Borrower will not make any amendment, modification or other change to its
certificate of formation or limited liability company agreement that would
materially and adversely affect the Lender without the Lender’s prior written
consent, and shall notify the Lender prior to making any amendment, modification
or other change to its certificate of formation or limited liability company
agreement prior to the effectiveness thereof.
(m) Neither
the Borrower nor (if the Servicer is LEAF Financial or an Affiliate thereof)
the
Servicer will make or allow to be made any material amendment to the Credit
and
Collection Policy without the prior written consent of the Lender (and the
Lender hereby agrees to take commercially reasonable efforts to respond to
any
request for such consent in a timely manner). Neither the Borrower nor (if
the
Servicer is LEAF Financial or an Affiliate thereof) the Servicer will make
or
allow to be made any non-material amendment to the Credit and Collection Policy
without the prior written consent of the Lender; provided, that if the Lender
has not responded to a written request for such consent within ten (10) Business
Days of receipt thereof, the Lender shall be deemed to have consented to such
request.
(n) If
the
Borrower or the Servicer receives any Collections with respect to any Pledged
Receivable, the Borrower or the Servicer, as applicable, will remit such
Collections to the Collection Account within one (1) Business Day of the
Borrower’s or the Servicer’s identification thereof.
(o) The
Servicer shall cause:
(i) the
Obligor under each Contract to remit all payments owed or otherwise payable
(including, without limitation, amounts payable by the Obligor in its role
as a
servicer of Underlying Contracts sold to the Originator) by such Obligor under
such Contract (or any servicer on its behalf) to the Lockbox or by wire transfer
to the Lockbox Account;
(ii) the
Lockbox Bank to deposit all Collections with respect to any Pledged Receivable
in the Lockbox into the Lockbox Account on each Business Day; and
(iii) the
Lockbox Bank to remit all Collections with respect to any Pledged Receivable
on
deposit in the Lockbox Account (or any sub-account thereof or any related
account) to the Collection Account on each Business Day.
63
(p) The
Borrower shall deliver or cause to be delivered to the Custodian four (4)
Business Days prior to the initial Borrowing Date
hereunder and three (3) Business Days prior to any other Borrowing Date
hereunder a Notice of Pledge and each item listed
in
the definition of Receivable File with respect to the Receivables being Pledged
hereunder on such Borrowing Date.
(q) The
Borrower shall deliver to the Lender on each Purchase Date a copy of the
Assignment delivered to it on such Purchase Date.
(r) Each
of
the Servicer (and, if the Servicer is not LEAF Financial or an Affiliate
thereof, upon the Servicer gaining knowledge thereof) and the Borrower shall
promptly notify the Lender of the occurrence of any Servicer Default, Event
of
Default, Program Termination Event, Pool A Termination Event or Pool B
Termination Event (any event that, if it continues uncured, would, with lapse
of
time or notice or lapse of time and notice, constitute any Servicer Default,
Event of Default, Program Termination Event, Pool A Termination Event or
Pool B Termination Event).
(s) Each
of
the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and
the
Borrower shall take all actions (in the case of Obligor Collateral with an
original cost over $100,000) and all commercially reasonable actions (in the
case of Obligor Collateral with an original cost of $100,000 or less) necessary
to ensure that the Originator is at all times named as loss payee under each
Insurance Policy with respect to Obligor Collateral related to a Pledged
Receivable.
(t) On
each
Borrowing Date, a Qualifying Interest Rate Swap, in form and substance
satisfactory to the Lender, shall be duly executed by the Borrower and a
Qualifying Swap Counterparty, and any amounts required to have been paid
thereunder as of such Remittance Date shall have been paid and any obligations
required to have been performed thereunder as of such Remittance Date shall
have
been performed.
(u) Each
of
the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and
the
Borrower shall take all actions necessary to ensure that each Pool B Contract
purchased by the Borrower under the Purchase and Sale Agreement contains “Seller
Events of Default” or similar events of default (“Parallel
Defaults”)
which
(i) would occur if a Pool B Termination Event with respect to the related
Underlying Originator occurred, (ii) would entitle the Borrower, as assignee
of
the Originator’s rights under such Contract, to deliver, or cause the delivery
of, redirection notices which would require all Underlying Obligors to make
all
payments under Underlying Contracts sold or pledged to the Originator under
such
Contract to the Lockbox Account or an account designated by the Borrower or
such
Servicer and (iii) would entitle the Borrower, as assignee of the Originator’s
rights under the Contract, to receive 100% of all payments under the Underlying
Contracts sold or pledged to the Originator under such Contract in the event
of
such a Parallel Default. If a Parallel Default or any “Seller Events of Default”
or similar events of default under a Pool B Contract related to the financial
condition of the applicable Underlying Originator, the tangible net worth of
the
applicable Underlying Originator or any cross default (a Parallel Default or
any
such “Seller Events of Default” or similar events of default being referred to
herein as “Critical
Defaults”)
shall
occur, then each of the Servicer (if the Servicer is LEAF Financial or an
Affiliate thereof) and the Borrower shall take all actions
64
necessary
to ensure (x) that no such Critical Default is waived and (y) the prompt
delivery to all related Underlying Obligors of a redirection notice which would
require such Underlying Obligors to make all payments under Underlying Contracts
sold or pledged to the Originator under such Contract to the Lockbox Account.
Each of the Servicer and the Borrower shall notify the Lender promptly upon
learning of the occurrence of any “Seller Event of Default” or similar event of
default under any Pool B Contract.
(v) The
Borrower shall not acquire any debt obligation or interest therein if, after
giving effect to such acquisition, more than 40 percent of the debt obligations
or interests therein held by the Borrower (as determined under the rules of
Treasury Regulation 301.7701(i)-1(c)) would consist of real estate mortgages
or
interests therein (as defined in Treasury Regulation
301.7701(i)-1(d)).
ARTICLE
VI.
ADMINISTRATION
AND SERVICING; CERTAIN COVENANTS
SECTION
6.01 Appointment
and Designation of the Servicer.
viii)
The
Borrower and the Lender hereby appoint the Person designated by the Lender
from
time to time, pursuant to this Section 6.01
(the
“Servicer”),
as
their agent to service, administer and collect the Pledged Receivables and
otherwise to enforce their respective rights and interests in and under the
Pledged Receivables and the other Pledged Assets. The Servicer shall collect
such Pledged Receivables under the conditions referred to above by means of
the
collection procedures as set forth in the Credit and Collection Policy, to
the
extent consistent with the provisions of this Article VI.
Unless
otherwise specified by the Borrower, the Servicer’s authorization under this
Agreement shall terminate on the Collection Date. Until the Lender gives notice
to the Borrower of a designation of a new Servicer upon the occurrence and
during the continuance of any Servicer Default, or consents in writing to the
appointment by the Borrower of a new Servicer, LEAF Financial is hereby
designated as, and hereby agrees to perform the duties and obligations of,
the
Servicer, pursuant to the terms hereof at all times until the earlier of the
Lender’s designation of the Backup Servicer or any other Person as the new
Servicer (upon the occurrence and during the continuance of any Servicer
Default), the delivery by the Lender of its written consent to the appointment
by the Borrower of a new Servicer or the Collection Date. Upon the occurrence
and during the continuance of any Servicer Default, the Lender may at any time
designate as Servicer the Backup Servicer, or any other Person with demonstrated
experience in servicing equipment leases and loans, to succeed LEAF Financial
or
any successor Servicer, on the condition in each case that any such Person
so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof. Each of the Borrower and LEAF Financial hereby
grants to any successor Servicer an irrevocable power of attorney to take any
and all steps in the Borrower’s, LEAF Financial’s or the Servicer’s name, as
applicable, and on behalf of the Borrower or LEAF Financial, necessary or
desirable, in the determination of such successor Servicer, to service,
administer or collect any and all Pledged Receivables including, without
limitation, to make withdrawals from the Security Deposit Account pursuant
to
Section 2.05
and any
Cash Reserve Account pursuant to Section 2.06.
(b) The
Servicer is hereby authorized to act for the Borrower and the Lender and, in
such capacity, shall manage, service, administer and arrange collections on
the
Pledged Receivables
65
and
perform the other actions required by the Servicer under this Agreement for
the
benefit of the Lender. The Servicer agrees that its servicing of the Pledged
Receivables shall be carried out in accordance with customary and usual
procedures of institutions which service equipment lease and loan contracts
and
receivables and, to the extent more exacting, the degree of skill and attention
that the Servicer exercises from time to time, with respect to all comparable
equipment lease and loan contracts and receivables that it services for itself
or others in accordance with the Credit and Collection Policy (or if the Backup
Servicer has been appointed as Servicer, the Backup Servicer’s customary
collection policies) and, to the extent more exacting, the requirements of
this
Article VI.
The
Servicer’s duties shall include, without limitation, collecting and posting of
all Collections with respect to any Pledged Receivable, responding to inquiries
of Obligors on the Pledged Receivables, investigating delinquencies, sending
invoices, payment statements or payment books to Obligors, reporting any
required tax information to Obligors, policing the collateral, enforcing the
terms of the Contracts (and any documents related thereto) related to any
Pledged Receivables, complying with the terms of the Lockbox Agreement,
accounting for Collections with respect to any Pledged Receivable, furnishing
monthly and annual statements to the Lender with respect to distributions and
performing the other duties specified herein.
(c) The
Servicer will require each Underlying Originator to (i) service all
Underlying Contracts in a manner consistent with the applicable Underlying
Originator Credit and Collection Policy (which the Servicer has reviewed and
approved in accordance with the Credit and Collection Policy) and
(ii) provide to the Servicer a monthly data feed, which shall be in form
and content satisfactory to the Servicer. The Servicer shall, or shall cause
a
third party servicer appointed by the Servicer and approved by the Lender (such
approval not to be unreasonably withheld) to, provide servicing similar to
the
servicing that the Servicer is obligated to provide hereunder with respect
to
any Underlying Contracts to the extent that the related Underlying Originator
fails to service such Underlying Contracts in a manner consistent with the
applicable Underlying Originator Credit and Collection Policy.
(d) To
the
extent consistent with the standards, policies and procedures otherwise required
hereby, the Servicer shall have full power and authority, acting alone, to
do
any and all things in connection with such managing, servicing, administration
and collection that it may deem necessary or desirable. The Servicer is
authorized to release liens on Obligor Collateral in order to collect insurance
proceeds with respect thereto and to liquidate such Obligor Collateral in
accordance with its customary standards, policies and procedures; provided,
however,
that,
notwithstanding the foregoing, the Servicer shall not, (i) except pursuant
to an order from a court of competent jurisdiction, release an Obligor from
payment of any unpaid amount under any Pledged Receivable or (ii) waive the
right to collect the unpaid balance of any Pledged Receivable from such Obligor,
except that, subject to Section 6.02(a),
the
Servicer may forego collection efforts if the amount which the Servicer, in
its
reasonable judgment, expects to realize in connection with such collection
efforts is determined by the Servicer, in its reasonable judgment, to be less
than the reasonably expected costs of pursuing such collection efforts and
if
the Servicer would forego such collection efforts in accordance with its
customary procedures. The Servicer is hereby authorized to commence, in its
own
name (in its capacity as Servicer), if possible, or in the name of the Borrower
or the Lender (provided
that if
the Servicer is acting in the name of the Borrower or the Lender, the Servicer
shall have obtained the Borrower’s or the Lender’s consent, as the case may be,
which consent shall not be unreasonably withheld), a legal
66
proceeding
to enforce any Pledged Receivable (or any terms or provisions of the related
Contract) or to commence or participate in any other legal proceeding
(including, without limitation, a bankruptcy proceeding) relating to or
involving a Pledged Receivable or any related Contract, Obligor or Obligor
Collateral. If the Servicer commences or participates in such a legal proceeding
in its own name, the Borrower or the Lender, as the case may be, shall thereupon
be deemed to have automatically assigned such Pledged Receivable to the Servicer
solely for purposes of commencing or participating in any such proceeding as
a
party or claimant, and the Servicer is authorized and empowered by the Borrower
or the Lender, as the case may be, to execute and deliver in the Servicer’s name
any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. The Borrower
or
the Lender, as the case may be, shall furnish the Servicer with any powers
of
attorney and other documents which the Servicer may reasonably request in
writing and which the Servicer deems necessary or appropriate and take any
other
steps which the Servicer may deem necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement. If, however, in any suit or legal proceeding it is held that the
Servicer may not prosecute such suit or legal proceeding on the grounds that
it
is not an actual party in interest or a holder entitled to enforce such suit
or
legal proceeding, the Borrower shall take such steps as the Servicer deems
necessary to prosecute such suit or legal proceeding, including bringing suit
in
its name.
SECTION
6.02 Collection
of Receivable Payments; Modification and Amendment of Receivables; Lockbox
Agreements.
ix)
Consistent with and subject to the standards, policies and procedures required
by this Agreement, the Servicer shall collect all payments called for under
the
terms and provisions of the Contracts related to the Pledged Receivables (and
the terms and provisions of any documents related thereto) as and when the
same
shall become due and shall follow such collection procedures with respect to
the
Pledged Receivables and the related Contracts and Insurance Policies as will,
in
the reasonable judgment of the Servicer, maximize the amount to be received
by
the Borrower and the Lender with respect thereto.
(b) The
Servicer shall remit all payments by or on behalf of the Obligors received
directly by the Servicer to the Collection Account, without deposit into any
intervening account as soon as practicable, but in no event later than the
end
of business on the Business Day of identification thereof as payments by or
on
behalf of the Obligors.
SECTION
6.03 Realization
Upon Receivables.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall use its best efforts to repossess (or otherwise
comparably convert the ownership of) and liquidate any Obligor Collateral
securing a Pledged Receivable within a number of days consistent with the Credit
and Collection Policy of an uncured failure of the related Obligor to make
any payment which it is obligated to make under the related Contract or an
earlier date that would be customary under the circumstances involved (as
determined in accordance with the Credit and Collection Policy) and, in any
case, in a manner as will, in the reasonable judgment of the Servicer, maximize
the amount to be received by the Borrower and the Lender with respect thereto;
provided,
however,
that
the Servicer need not repossess (or otherwise comparably convert the ownership
of) and liquidate the Obligor Collateral securing such a Pledged Receivable
if,
in the reasonable opinion of the Servicer, the value of such Obligor Collateral
does not exceed by more than an insignificant amount the cost to repossess
(or
otherwise comparably convert the ownership of) and liquidate
67
such
Obligor Collateral. The Servicer is authorized to follow such customary
practices and procedures as it shall deem necessary or advisable, consistent
with the standard of care required by Section 6.01,
which
practices and procedures may include reasonable efforts to realize upon any
guaranties, selling the related Obligor Collateral at public or private sale,
the submission of claims under an Insurance Policy and other actions by the
Servicer in order to realize upon such Pledged Receivable. The foregoing is
subject to the provision that, in any case in which the Obligor Collateral
shall
have suffered damage, the Servicer shall not expend funds in connection with
any
repair or towards the repossession of such Obligor Collateral, unless it shall
determine in its discretion that such repair and/or repossession shall increase
the proceeds of liquidation of the related Pledged Receivable by an amount
greater than the amount of such expenses. All Liquidation Proceeds shall be
remitted directly by the Servicer to the Collection Account without deposit
into
any intervening account as soon as practicable, but in no event later than
one
(1) Business Day after identification thereof as Liquidation Proceeds. The
Servicer shall pay on behalf of the Borrower any personal property taxes
assessed on repossessed Obligor Collateral, and the Servicer shall be entitled
to reimbursement of any such tax as a Servicer Advance.
SECTION
6.04 Insurance
Regarding Equipment.
x)
At the
time of the Pledge of any Receivable hereunder, the Servicer shall require
each
Obligor to obtain and maintain (or with respect to an Underlying Originator,
cause the Underlying Obligor to obtain and maintain) Insurance Policies in
accordance with the terms of the Credit and Collection Policy and its customary
servicing procedures and shall furnish evidence of such insurance (except if
the
Equipment or Underlying Equipment relating to such Obligor or Underlying
Obligor, as applicable, has an aggregate original cost of $100,000 or less)
to
the Lender.
(b) The
Servicer may, and upon the request of the Lender shall, xxx to enforce or
collect upon the Insurance Policies, in its own name (but in its capacity as
Servicer), if possible, or as agent of the Borrower and the Lender. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Borrower and the Lender under such Insurance Policy to the
Servicer for purposes of collection only. If, however, in any enforcement suit
or legal proceeding it is held that the Servicer may not enforce an Insurance
Policy on the grounds that it is not an actual party in interest or a holder
entitled to enforce the Insurance Policy, the Borrower shall take such steps
as
the Servicer deems necessary to enforce such Insurance Policy, including
bringing suit in its name.
SECTION
6.05 Maintenance
of Security Interests in Obligor Collateral.
xi)
The
initial Servicer and the Borrower shall take all steps necessary, under all
applicable law, in order to (i) cause a valid, subsisting and enforceable
first priority perfected security interest to exist in favor of the Collateral
Agent in the Borrower’s interests in the Obligor Collateral, all Other Conveyed
Property and all Related Security related to each Receivable (and the proceeds
thereof) being Pledged hereunder, to secure a Loan on the Borrowing Date thereof
including (A) the filing of a UCC financing statement in the applicable
jurisdiction adequately describing the Obligor Collateral, Other Conveyed
Property and all Related Security and naming the Borrower as debtor and the
Collateral Agent as the secured party, (B) filing Obligor Financing
Statements against all Obligors purchasing or leasing Obligor Collateral,
(C) other than with respect to an Underlying Lease Contract related to
Equipment which has an original cost of less than $25,000 if such Underlying
Lease Contract is a Dollar Purchase Option Contract or $50,000
68
if
such
Underlying Lease Contract is a FMV Contract, causing the filing of UCC-3
assignment statements in the applicable jurisdictions adequately describing
the
Underlying Originator Loan Collateral being transferred thereunder and naming
the applicable Underlying Originator as the assignor and Originator as the
assignee, and (D) other than with respect to an Underlying Lease Contract
related to Equipment which has an original cost of less than $25,000 if such
Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000 if
such Underlying Lease Contract is a FMV Contract, causing the filing of UCC-3
assignment statements in the applicable jurisdictions adequately describing
the
Underlying Originator Loan Collateral being transferred thereunder and naming
the applicable Underlying Originator as the assignor and Originator as the
assignee (ii) ensure that such security interest is and shall be prior to
all other liens upon and security interests in the Borrower’s interests in such
Obligor Collateral, Other Conveyed Property and Related Security (and the
proceeds thereof) that now exist, or may hereafter arise or be created other
than Permitted Liens, and (iii) ensure that immediately prior to the Pledge
of such Receivable by the Borrower to the Collateral Agent, such Obligor
Collateral, Other Conveyed Property and Related Security is free and clear
of
all Adverse Claims other than Permitted Liens; and
(b) The
initial Servicer shall take all steps, as are necessary (subject to Section 6.05(a)),
to
maintain perfection of the security interest in the Borrower’s interests in the
Obligor Collateral, Other Conveyed Property and Related Security related to
each
Pledged Receivable (and the proceeds thereof) in favor of the Collateral Agent
including but not limited to, obtaining the execution by the Borrower and the
recording, registering, filing, rerecording, refiling, and reregistering of
all
security agreements, financing statements and continuation statements as are
necessary to maintain and/or perfect such security interests granted by the
Borrower and the recordation of the Collateral Agent’s lien on such Obligor
Collateral’s Certificate of Title (if such Obligor Collateral is a Vehicle and
the related Receivable is not a Vehicle Sublimit Pledged Receivable). Without
limiting the generality of the foregoing, the Borrower and the Lender each
hereby authorizes the initial Servicer, and the initial Servicer agrees, to
take
any and all steps necessary (subject to Section 6.05(a))
to
re-perfect the security interest in the Borrower’s interests in any Obligor
Collateral (and the Borrower’s interests therein), Other Conveyed Property and
Related Security related to each Pledged Receivable (and the proceeds thereof)
in favor of the Collateral Agent as may be necessary, due to the relocation
of
such Obligor Collateral or for any other reason.
(c) In
the
event that the combination of the sale of a Receivable by Originator to the
Borrower under the Purchase and Sale Agreement and the Pledge of such Receivable
by the Borrower to the Collateral Agent hereunder are insufficient, without
a
notation on a related Vehicle’s Certificate of Title, or without fulfilling any
additional administrative requirements under the laws of the state in which
such
Vehicle is located, to assign the ownership of such Vehicle to the Borrower
or
to perfect a security interest in such Vehicle (and the proceeds thereof) in
favor of the Collateral Agent, the parties hereto agree that Originator’s
designation, if any, as the owner on the Certificate of Title with respect
to
such Vehicle is in its capacity as agent of the Borrower and the Collateral
Agent as their interests may appear, until such notations are made or additional
administrative requirements are fulfilled, and the Servicer (if the Servicer
is
LEAF Funding) shall take all steps necessary to ensure that the Originator
acts
in such capacity.
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(d) The
initial Servicer shall promptly (or, if the initial Servicer is unable or
refuses to act, the Lender may) take all steps as are necessary to evidence
the
Borrower’s ownership in any Vehicle related to each Pledged Receivable other
than a Vehicle Sublimit Pledged Receivable (which is a lease or secured by
lease
payments) and to create and maintain perfection of the security interest of
the
Collateral Agent in any Vehicle related to each Pledged Receivable other than
a
Vehicle Sublimit Pledged Receivable (and the proceeds of such Vehicle),
including, if required by applicable law, having a notation of the Borrower’s
ownership (in the case of a Vehicle which is subject to a lease), and the
Collateral Agent’s security interest, recorded on such Vehicle’s certificate of
title.
SECTION
6.06 Pledged
Receivable Receipts.
The
Servicer shall make a deposit into the Collection Account in an amount equal
to
the Collections with respect to any Pledged Receivable received, or made by,
or
on behalf of it, within one Business Day of such Collections being received,
or
made by, or on behalf of it.
SECTION
6.07 No
Rights of Withdrawal.
Until
the Collection Date, the Borrower shall have no rights of direction or
withdrawal, with respect to amounts held in the Collection Account or the
Lockbox Account, except with respect to funds not related to any Pledged Assets,
which were incorrectly deposited into any such account.
SECTION
6.08 Permitted
Investments.
The
Borrower shall, pursuant to written instruction, direct the Lender’s Bank (and
if the Borrower fails to do so, the Lender may, pursuant to written instruction,
direct the Lender’s Bank) to invest, or cause the investment of, funds on
deposit in the Collection Account in Permitted Investments, from the date of
this Agreement until the Collection Date. Absent any such written instruction,
the Lender’s Bank shall invest, or cause the investment of, such funds in
Permitted Investments described in clause (v) of the definition thereof. A
Permitted Investment acquired with funds deposited in the Collection Account
shall mature not later than the Business Day immediately preceding any
Remittance Date, and shall not be sold or disposed of prior to its maturity.
All
such Permitted Investments shall be registered in the name of the Securities
Intermediary (as defined in the Securities Account Agreement) or its nominee
for
the benefit of the Lender, and otherwise comply with assumptions of the legal
opinion of Xxxxxxx Xxxxxxxx & Xxxx LLP, delivered in connection with this
Agreement. All income and gain realized from any such investment, as well as
any
interest earned on deposits in the Collection Account, shall be distributed
in
accordance with the provisions of Article II
hereof.
The Borrower shall deposit in the Collection Account, as the case may be (with
respect to investments made hereunder of funds held therein), an amount equal
to
the amount of any actual loss incurred, in respect of any such investment,
immediately upon realization of such loss. None of the Lender’s Bank or the
Lender shall be liable for the amount of any loss incurred, in respect of any
investment, or lack of investment, of funds held in the Collection
Account.
SECTION
6.09 Servicing
Compensation.
As
compensation for its activities hereunder, the Servicer shall be entitled to
be
paid the Servicing Fee from the Collection Account as provided in Section 2.04(c).
The
Servicer shall be required to pay all expenses incurred by it in connection
with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor, except with respect to reasonable expenses of the Servicer incurred
in
connection with the repossession and disposition of any Obligor Collateral
(which the Servicer may retain from the proceeds of
70
the
disposition of such Obligor Collateral) and any Servicer Advances made by the
Servicer pursuant hereto. The Servicing Fee may not be transferred in whole,
or
in part, except in connection with the transfer of all the Servicer’s
responsibilities and obligations under this Agreement. At any time after the
occurrence of a Servicer Default and the appointment of the Backup Servicer
as
the Servicer hereunder, the Backup Servicer shall be entitled to receive an
amount, payable out of Collections on the Pledged Receivables and amounts
applied to the payment of, or treated as payments on, the Pledged Receivables,
equal to expenses incurred by the Backup Servicer, acting in its capacity as
the
Servicer, in connection with its obligations under Sections 6.05(a),
(b)
and
(d)
hereof
(such expenses, the “Active
Backup Servicer’s Indemnified Amounts”).
SECTION
6.10 Reports
to the Lender; Account Statements; Servicing Information.
xii)
The
Borrower will deliver to the Lender and each Qualifying Swap Counterparty,
(i) on the Program Termination Date, a report identifying the Pledged
Receivables (and any information with respect thereto requested by the Lender)
on the day immediately preceding the Program Termination Date, and
(ii) upon the Lender’s reasonable request and upon reasonable notice, on
any other Business Day, a report identifying the Pledged Receivables (and any
information with respect thereto, reasonably requested by the Lender) as of
such
day.
(b) At
least
four (4) Business Days prior to each Remittance Date, the Servicer shall prepare
and deliver, or have delivered to the Lender and each Qualifying Swap
Counterparty, (i) a Monthly Remittance Report and any other information
reasonably requested by the Lender, relating to all Pledged Receivables
(including, if requested, a Computer Tape or Listing), all information in the
Monthly Remittance Report and all other such information to be accurate as
of
the last day of the immediately preceding Collection Period, and (ii) in an
electronic format mutually acceptable to the Servicer and the Lender, all
information reasonably requested by the Lender relating to all Pledged
Receivables. If any Monthly Remittance Report indicates the existence of a
Borrowing Base Deficiency, the Borrower shall, on the date of delivery of such
Monthly Remittance Report, prepay to the Lender, for the account of the Lender,
a portion of the Loans as is necessary to cure such Borrowing Base Deficiency
(or otherwise cure such Borrowing Base Deficiency).
(c) By
no
later than 12:00 noon (New York City time) on the third Business Day immediately
preceding a Borrowing, the Borrower (or the initial Servicer on its behalf)
shall also prepare and deliver to the Lender a Borrowing Base Certificate
containing information accurate as of the date of delivery of such Borrowing
Base Certificate. If any Borrowing Base Certificate indicates the existence
of a
Borrowing Base Deficiency, the Borrower shall on the date of delivery of such
Borrowing Base Certificate prepay to the Lender, for the account of the Lender,
a portion of the Loans or Pledge additional Eligible Receivables, in either
case, to the extent necessary to cure such Borrowing Base
Deficiency.
(d) At
least
four (4) Business Days prior to each Remittance Date (each such day, a
“Backup
Servicer Delivery Date”),
the
Servicer shall prepare and deliver, or have delivered, to the Backup Servicer
(i) a Monthly Remittance Report in respect of the immediately-preceding
Collection Period and (ii) a computer tape or a diskette or any other
electronic transmission in a format acceptable to the Backup Servicer containing
the information with respect to the Pledged
71
Receivables
during such Collection Period which was necessary for preparation of such
Monthly Remittance Report or is reasonably requested by the Backup
Servicer.
(e) The
Borrower shall deliver to the Lender all reports it receives pursuant to the
Purchase and Sale Agreement within one Business Day of the receipt
thereof.
SECTION
6.11 Statements
as to Compliance; Financial Statements.
xiii)
The
Servicer shall deliver to the Backup Servicer, the Borrower and the Lender
on or
before March 31st of each year, beginning with 2007, an Officers’ Certificate
stating, as to each signatory thereof, that (x) a review of the activities
of the Servicer during the preceding calendar year (or the portion of the
preceding calendar year commencing on the date of this Agreement and ending
December 31, 2006 in the case of the first such review) and of its
performance under this Agreement has been made under such officer’s supervision,
and (y) to the best of such officers’ knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such calendar year (or portion thereof, as the case may be) or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof and the action
being taken to cure such default.
(b) The
Servicer (if LEAF Financial or an Affiliate thereof) shall, at its expense,
cause a firm of nationally recognized independent certified public accountants
acceptable to the Lender (the “Independent
Accountants”),
who
may also render other services to the Servicer, the Backup Servicer or to the
Borrower, to deliver to the Borrower and the Lender, on or before March 31st
of
each year, beginning 2007, with respect to the twelve (12) months ended the
immediately preceding December 31, a statement (the “Accountant’s
Report”)
addressed to the Board of Directors of the Servicer and to the Lender, to the
effect that such firm has examined such Borrowing Base Certificates and Monthly
Remittance Reports prepared by the Servicer during the twelve (12) months ended
the immediately preceding December 31 as it deemed necessary in order to
issue the Accountants’ Report and issued its report thereon, and that such
examination was made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records and such other
auditing procedures as such firm considered necessary in the circumstances.
The
Accountants’ Report shall further state that (i) a review in accordance
with agreed upon procedures was made; and (ii) except as disclosed in the
Accountant’s Report, no exceptions or errors in the Borrowing Base Certificates
and Monthly Remittance Reports examined were found except for (A) such
exceptions as the Independent Accountants believe to be immaterial and
(B) such other exceptions as shall be set forth in the Accountants’ Report.
The Accountants’ Report shall also indicate that the firm is independent of the
Borrower and the Servicer within the meaning of the Code of Professional Ethics
of the American Institute of Certified Public Accountants.
(c) As
soon
as available and no later than forty-five (45) days after the end of each
calendar quarter in each fiscal year of the Borrower or Resource America, the
Borrower shall deliver to the Lender two copies of:
(i) a
balance
sheet of the Borrower and Resource America as of the end of such calendar
quarter, setting forth in comparative form the corresponding figures for the
most recent year-end for which an audited balance sheet has been prepared,
which
balance sheet shall be prepared and presented in accordance with,
72
and provide all necessary disclosure required by, GAAP and shall be accompanied
by a certificate signed by the financial vice president, treasurer, chief
financial officer or controller of the Borrower or Resource America, as
applicable, stating that such balance sheet presents fairly the financial
condition of the Borrower or Resource America, as the case may be, and has
been
prepared in accordance with GAAP consistently applied; and
(ii) statements
of
income, stockholders’ equity and cash flow of the Borrower and Resource America
for such calendar quarter setting forth in comparative form the corresponding
figures for the comparable period one year prior thereto (subject to normal
year-end adjustments), which such statements shall be prepared and presented
in
accordance with, and provide all necessary disclosure required by, GAAP and
shall be accompanied by a certificate signed by the financial vice president,
treasurer, chief financial officer or controller of the Borrower or Resource
America, as applicable, stating that such financial statements present fairly
the financial condition and results of operations of the Borrower or Resource
America, as the case may be, and have been prepared in accordance with GAAP
consistently applied.
(d) As
soon
as available and no later than forty-five (45) days after the end of each
calendar quarter in each fiscal year of Resource America, LEAF Financial shall
deliver to the Lender two copies of:
(i) a
consolidated balance sheet of Resource America and its consolidated subsidiaries
(including Originator and Servicer) as of the end of such calendar quarter,
setting forth in comparative form the corresponding figures for the most recent
year-end for which an audited balance sheet has been prepared, which such
balance sheet shall be prepared and presented in accordance with, and provide
all necessary disclosure required by, GAAP and shall be accompanied by a
certificate signed by the financial vice president, treasurer, chief financial
officer or controller of Resource America stating that such balance sheet
presents fairly the financial condition of the companies being reported upon
and
has been prepared in accordance with GAAP consistently applied; and
(ii) consolidated
statements of income, stockholders’ equity and cash flow of Resource America and
its consolidated subsidiaries (including Originator and Servicer) for such
calendar quarter, in each case, setting forth in comparative form the
corresponding figures for the comparable period one year prior thereto (subject
to normal year-end adjustments), which such statements shall be prepared and
presented in accordance with, and provide all necessary disclosure required
by,
GAAP and shall be accompanied by a certificate signed by the financial vice
president, treasurer, chief financial officer or controller of Resource America
stating that such financial statements present fairly the financial condition
and results of operations of the companies being reported upon and have been
prepared in accordance with GAAP consistently applied.
73
(e) As
soon
as available and no later than ninety (90) days after the end of each fiscal
year of the Borrower or Resource America, LEAF Financial shall deliver to the
Lender two copies of:
(i) a
balance
sheet of the Borrower and Resource America as of the end of the fiscal year,
setting forth in comparative form the figures for the previous fiscal year
and
accompanied by an opinion of a firm of independent certified public accountants
of nationally recognized standing acceptable to the Lender stating that such
balance sheet presents fairly the financial condition of the Borrower or
Resource America, as applicable, and has been prepared in accordance with GAAP
consistently applied (except for changes in application in which such
accountants concur); and
(ii) statements
of income, stockholders’ equity and cash flow of the Borrower and Resource
America for such fiscal year, setting forth in comparative form the figures
for
the previous fiscal year and accompanied by an opinion of a firm of independent
certified public accountants of nationally recognized standing acceptable to
the
Lender stating that such financial statements present fairly the financial
condition of the Borrower or Resource America, as applicable, and have been
prepared in accordance with GAAP consistently applied (except for changes in
application in which such accountants concur).
(f) As
soon
as available and no later than ninety (90) days after the end of each fiscal
year of Resource America, LEAF Financial shall deliver to the Lender two copies
of:
(i) a
consolidated and consolidating balance sheet of Resource America and its
consolidated subsidiaries (including Originator and Servicer) as of the end
of
the fiscal year, setting forth in comparative form the figures for the previous
fiscal year and accompanied by an opinion of a firm of independent certified
public accountants of nationally recognized standing acceptable to the Lender
stating that such balance sheet presents fairly the financial condition of
the
companies being reported upon and has been prepared in accordance with GAAP
consistently applied (except for changes in application in which such
accountants concur); and
(ii) consolidated
and consolidating statements of income, stockholders’ equity and cash flow of
Resource America and its consolidated subsidiaries (including Originator) for
such fiscal year; in each case setting forth in comparative form the figures
for
the previous fiscal year and accompanied by an opinion of a firm of independent
certified public accountants of nationally recognized standing acceptable to
the
Lender stating that such financial statements present fairly the financial
condition of the companies being reported upon and have been prepared in
accordance with GAAP consistently applied (except for changes in application
in
which such accountants concur).
SECTION
6.12 Access
to Certain Documentation; Obligors; Background Check.
xiv)
The
Lender (and its agents or professional advisors) shall at the expense of the
Borrower, have the
74
right
under this Agreement, once during each calendar quarter until the first
anniversary of the date hereof, and semi-annually thereafter, to examine and
audit, during business hours or at such other times as might be reasonable
under
applicable circumstances, any and all of the books, records, financial
statements or other information of the Servicer and the Borrower, or held by
another for the Servicer or the Borrower or on its behalf, concerning this
Agreement, provided,
that,
prior to the occurrence of an Event of Default, the Borrower shall not be
responsible for the expenses of the Lender to the extent that such expenses
exceed $25,000 in the aggregate in any calendar year. The Lender (and its agents
or professional advisors) shall, at the expense of the Borrower and as
frequently as the Lender may desire, have the right under this Agreement after
the occurrence and during the continuance of an Event of Default, to examine
and
audit, during business hours or at such other times as might be reasonable
under
applicable circumstances, any and all of the books, records or other information
of the Servicer or the Borrower, or held by another for the Servicer or the
Borrower or on its behalf, concerning this Agreement. The Lender (and its agents
and professional advisors) shall coordinate examinations and audits under this
Section
6.12(a)
in order
to minimize expense and inconvenience to the Borrower. The Lender (and its
agents and professional advisors) shall treat as confidential any information
obtained during the aforementioned examinations which is not already publicly
known or available; provided,
however,
that
the Lender may disclose such information if required to do so by law or by
any
regulatory authority.
(b) The
Lender (and its agents or professional advisors) shall, at its own expense,
have
the right under this Agreement to contact Pool A Obligors and Pool B Obligors
once with respect to any Receivable which is Pledged hereunder to request that
each such Obligor verify and confirm by return letter the existence and amount
of such Receivable, the type of Equipment leased under or securing the related
Contract and such other information as the Lender deems reasonable under the
circumstances (each such return letter to be mailed to a post office box
established by the Lender). The Servicer and the Borrower hereby agree to
cooperate with the Lender (and its agents or professional advisors) in
connection with any attempt thereby to contact any such Obligor and shall
provide to the Lender such information as is needed in order to facilitate
such
contact. The Lender (and its agents and professional advisors) shall treat
as
confidential any information obtained during any such contact with any such
Obligor which is not already publicly known or available; provided, however,
that the Lender (and its agents or professional advisors) may disclose such
information if required to do so by law or by any regulatory
authority.
(c) The
Lender (or its agents and/or third party professional advisors) may, from time
to time, cause comprehensive background checks on newly-hired senior management,
key employees and principals of each of Resource Capital Corp., the initial
Servicer and Originator to be completed by an investigation service acceptable
to the Lender, at the Borrower’s expense.
SECTION
6.13 Backup
Servicer.
If a
Servicer Default shall occur, then the Lender may, by notice to the Servicer,
the Borrower and the Backup Servicer, terminate all of the rights and
obligations of the Servicer under this Agreement. Upon the delivery to the
Servicer of such notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Pledged Assets or otherwise, shall pass
to and be vested in the Backup Servicer pursuant to and under this Section
(unless the Lender shall have appointed a different successor Servicer pursuant
to Section 6.01
hereof
or the Backup Servicer is unable to act as Servicer and a
75
successor
is appointed as provided in the fourth paragraph of this Section 6.13),
and,
without limitation, the Backup Servicer is hereby authorized and empowered
to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such
notice of termination or to perform the duties of the Servicer under this
Agreement including, without limitation, to make withdrawals from the Security
Deposit Account pursuant to Section 2.05
and any
Cash Reserve Account pursuant to Section 2.06.
The
Servicer agrees to cooperate with the Lender and the Backup Servicer in
effecting the termination of the Servicer’s responsibilities and rights
hereunder, including, without limitation, providing notification to the Obligors
of the assignment of the servicing function, providing notification to the
Lender’s Bank of the Backup Servicer’s right to make withdrawals from the
Security Deposit Account pursuant to Section 2.05 and any Cash Reserve Account
pursuant to Section 2.06, providing the Backup Servicer, at the Servicer's
expense, with all records, in electronic or other form, reasonably requested
by
the Backup Servicer, in such form as the Backup Servicer may reasonably request
and at such times as the Backup Servicer may reasonably request, to enable
the
Backup Servicer to assume the servicing functions hereunder and the transfer
to
the Backup Servicer for administration by it of all cash amounts which at the
time should be or should have been deposited by the Servicer in the Collection
Account or thereafter be received by the Servicer with respect to the Pledged
Receivables. Additionally, the Servicer agrees to cooperate in providing, at
the
Servicer’s expense, the Backup Servicer as successor Servicer, with reasonable
access (including at the premises of the Servicer) to Servicer’s employees and
any and all books, records or other information reasonably requested by it
to
enable the Backup Servicer, as successor Servicer, to assume the servicing
functions hereunder. Neither the Lender nor the Backup Servicer shall be deemed
to have breached any obligation hereunder as a result of a failure to make
or
delay in making any distribution as and when required hereunder caused by the
failure of the Servicer to remit any amounts received by it or to deliver any
documents held by it with respect to the Pledged Assets. The Backup Servicer
(including as successor Servicer) undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being understood
by all parties hereto that there are no implied duties or obligations of the
Backup Servicer hereunder.
The
Active Backup Servicer’s Fees and Transition Costs shall be paid out of
Collections with respect to any Pledged Receivable as set forth in Section 2.04(c)
on and
after the date, if any, that the Backup Servicer assumes the responsibilities
of
the Servicer pursuant to this Section. The Standby Backup Servicer’s Fees and
Transition Costs shall be paid out of Collections with respect to any Pledged
Receivable as set forth in Section 2.04(c)
prior to
the date, if any, that the Backup Servicer assumes the responsibilities of
the
Servicer pursuant to this Section.
Any
obligations of LEAF Financial under any Transaction Document other than in
its
capacity as Servicer shall continue in effect notwithstanding LEAF Financial’s
termination as Servicer.
On
and
after the time the Servicer receives a notice of termination pursuant to this
Section 6.13,
the
Backup Servicer shall be (and the Backup Servicer hereby agrees to be) the
successor in all respects to the Servicer in its capacity as Servicer under
this
Agreement and the transactions set forth or provided for herein and shall have
all the rights and powers and be
76
subject
thereafter to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided,
however,
that
any failure to perform such duties or responsibilities caused by the Servicer’s
failure to provide information required by this Section 6.13
shall
not be considered a default by the Backup Servicer hereunder; provided,
further,
however,
that
the Backup Servicer, as successor Servicer, shall have (i) no liability
with respect to any obligation which was required to be performed by the
terminated Servicer prior to the date that the Backup Servicer becomes the
successor to the Servicer or any claim of a third party based on any alleged
action or inaction of the terminated Servicer, (ii) no obligation to
perform any repurchase or advancing obligations, if any, of the Servicer,
(iii) no obligation to pay any taxes required to be paid by the Servicer
(provided that the Backup Servicer shall pay any income taxes for which it
is
liable), (iv) no obligation to pay any of the fees and expenses of any
other party to the transactions contemplated hereby, and (v) no liability
or obligation with respect to any Servicer indemnification obligations of any
prior Servicer, including the original Servicer. The indemnification obligations
of the Backup Servicer, upon becoming a successor Servicer, are expressly
limited to those arising on account of its failure to act in good faith and
with
reasonable care under the circumstances. In addition, the Backup Servicer shall
have no liability relating to the representations and warranties of the Servicer
contained in Article IV.
Notwithstanding the above, the Lender may, or shall, if the Backup Servicer
is
unable to so act, appoint itself, or appoint any other established servicing
institution acceptable to the Lender in its sole discretion, as the successor
to
the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor to the Servicer hereunder, and after the Lender
notifies the Servicer to discontinue performing servicing functions under this
Agreement, the Backup Servicer (or the Lender if there is no Backup Servicer)
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Lender may make such arrangements for the
compensation of such successor out of payments on Pledged Receivables as it
and
such successor shall agree; provided,
however,
that,
except as provided herein, no such compensation shall be in excess of that
permitted the Servicer hereunder, unless (i) agreed to by the Lender and
(ii) such compensation shall be on commercially competitive terms and
rates. The Borrower, the Lender and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The parties hereto agree that in no event will the Backup Servicer
be liable for any special, indirect or consequential damages.
The
Backup Servicer hereby agrees that it shall, and shall take all actions
necessary so that it shall at all times be ready to, assume all the rights
and
powers and all of the responsibilities, obligations and duties of the Servicer
hereunder, within ten (10) Business Days of receiving from the Lender a notice
requesting the Backup Servicer to do so.
Notwithstanding
anything contained in this Agreement to the contrary, absent specific knowledge
by any Lyon Financial Services, Inc. account representative assigned to this
transaction from time to time, or written notice detailing specific Errors
(as
defined below) or other deficiencies, Lyon Financial Services, Inc., as
successor Servicer, is authorized to accept and rely on all accounting records
(including computer records) and work product of the prior Servicer hereunder
relating to the Contracts (collectively, the “Predecessor
Servicer Work Product”)
without any audit or other examination thereof, and Lyon Financial Services,
Inc. shall have no duty, responsibility, obligation or liability for the acts
and omissions of the prior Servicer. If any error, inaccuracy, commission or
incorrect or nonstandard practice or procedure
77
(collectively,
“Errors”)
exists
in any Predecessor Servicer Work Product and such Errors cause Lyon Financial
Services, Inc. to make or continue any errors (collectively, “Continued
Errors”),
Lyon
Financial Services, Inc. shall have no liability for such Continued Errors;
provided,
however,
that
Lyon Financial Services, Inc. agrees to use its best efforts to prevent
Continued Errors. In the event that Lyon Financial Services, Inc. becomes aware
of Errors or Continued Errors, Lyon Financial Services, Inc. shall, with the
prior consent of the Lender, use its best efforts to reconstruct and reconcile
any affected data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. Lyon Financial
Services, Inc. shall be entitled to recover its costs thereby expended as
Servicer Advances in accordance with Section 2.04(c)
hereof.
Within
four (4) Business Days after each Remittance Date, provided that the Backup
Servicer shall have received the information specified in Section 6.10(d)
within
the time specified therein, the Backup Servicer shall compare the information
on
the computer tape or diskette (or other means of electronic transmission
acceptable to the Backup Servicer) most recently delivered to the Backup
Servicer by the Servicer pursuant to Section 6.10(d)
with
respect to such Remittance Date to the corresponding Monthly Remittance Report
delivered to the Backup Servicer by the Servicer pursuant to Section 6.10(d)
and
shall:
(a) confirm
that such Monthly Remittance Report is complete on its face;
(b) confirm
the distributions to be made on such Remittance Date pursuant to Section 2.04(c)
hereof
to the extent the Backup Servicer is able to do so given the information
provided to it by the Servicer (it being hereby agreed that the Backup Servicer
shall promptly notify the Servicer and the Lender if such information is
insufficient and that the Servicer shall promptly provide to the Backup Servicer
any additional information required by the Backup Servicer);
(c) confirm
the mathematical computations of information in such Monthly Remittance Report;
and
(d) confirm
such other information as the Backup Servicer and the Lender may
agree;
In
the
event of any discrepancy between the information set forth in
subparagraphs (b) or (c) above as calculated by the Servicer and that
determined or calculated by the Backup Servicer, the Backup Servicer shall
promptly report such discrepancy to the Servicer and the Lender. In the event
of
a discrepancy as described in the preceding sentence, the Servicer and the
Backup Servicer shall attempt to reconcile such discrepancy within five (5)
Business Days after reporting such discrepancy, but in the absence of a
reconciliation, distributions on the related Remittance Date shall be made
consistent with the information calculated by the Servicer, the Servicer and
the
Backup Servicer shall attempt to reconcile such discrepancy prior to the next
Remittance Date, and the Servicer shall promptly report to the Lender regarding
the progress, if any, which shall have been made in reconciling such
discrepancy. If the Backup Servicer and the Servicer are unable to reconcile
such discrepancy with respect to such Monthly Remittance Report by the next
Remittance Date that falls in April, July, October or January, the Servicer
shall cause independent accountants acceptable to the Lender, at the Servicer’s
expense, to examine such Monthly Remittance Report and attempt to reconcile
such
discrepancy at the earliest possible
78
date
(and
the Servicer shall promptly provide the Lender with a report regarding such
event). The effect, if any, of such reconciliation shall be reflected in the
Monthly Remittance Report for the next succeeding Remittance Date.
Other
than as specifically set forth in this Agreement, the Backup Servicer shall
have
no obligation to supervise, verify, monitor or administer the performance of
the
Servicer and shall have no liability for any action taken or omitted by the
Servicer.
The
Backup Servicer may allow a subservicer to perform any and all of its duties
and
responsibilities hereunder, including but not limited to its duties as successor
Servicer hereunder, should the Backup Servicer become the successor Servicer
pursuant to the terms of this Agreement; provided,
however,
that
the Backup Servicer shall remain liable for the performance of all of its duties
and obligations hereunder to the same extent as if no such subservicing had
occurred.
In
no
event shall the Backup Servicer (either prior to or after its appointment
hereunder as Servicer) be responsible or liable for any failure or delay in
the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including without limitation, acts
of
terrorism, civil or military disturbances, nuclear or natural catastrophes
or
acts of God.
SECTION
6.14 Additional
Remedies of Lender Upon Event of Default.
During
the continuance of any Event of Default, the Lender, in addition to the rights
specified in Section 7.01,
shall
have the right to take all actions now or hereafter existing at law, in equity
or by statute to protect its interests and enforce its rights and remedies
(including the institution and prosecution of all judicial, administrative
and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, each
and
every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right
or
remedy or shall be deemed to be a waiver of any Event of Default.
SECTION
6.15 Waiver
of Defaults.
The
Lender may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall be effective unless it shall be in writing
and
signed by the Lender and no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent expressly
so
waived.
SECTION
6.16 Maintenance
of Certain Insurance.
On the
date hereof the Servicer shall obtain, and at all times thereafter during the
term of its service as Servicer the Servicer shall maintain, in force an “errors
and omissions” insurance policy in an amount not less than $1,000,000 naming the
Lender as loss payee and with an insurance company reasonably acceptable to
the
Lender.
79
The Servicer shall deliver a copy of the insurance policy required under this
Section 6.16 to the Lender on the date hereof together with a certification
from
the applicable insurance company that such policy is in force on the date
hereof.
The
Servicer shall prepare and present, on behalf of itself and the Lender, claims
under any such policy in a timely fashion in accordance with the terms of such
policy, and upon, the filing of any claim on any policy described in this
Section, the Servicer shall promptly notify the Lender of such
claim.
SECTION
6.17 Segregation
of Collections.
The
Servicer shall not commingle funds constituting Collections with respect to
any
Pledged Receivable with any other funds of the Servicer; provided,
that
such commingling may occur in the Lockbox Account so long as the Lockbox
Intercreditor Agreement is in full force and effect.
SECTION
6.18 UCC
Matters; Protection and Perfection of Pledged Assets.
The
Borrower will not change the jurisdiction of its formation, make any change
to
its corporate name or use any tradenames, fictitious names, assumed names,
“doing business as” names or other names (other than those listed on
Schedule II
hereto,
as such schedule may be revised from time to time to reflect name changes and
name usage permitted under the terms of this Section 6.18
after
compliance with all terms and conditions of this Section 6.18
related
thereto) unless, prior to the effective date of any such jurisdiction change,
name change or use, the Borrower notifies the Collateral Agent of such change
in
writing and delivers to the Collateral Agent such executed financing statements
as the Collateral Agent may request to reflect such jurisdiction, name change
or
use, together with such other documents and instruments as the Collateral Agent
may request in connection therewith. The Borrower will not change the location
of its chief executive office or the location of its records regarding the
Pledged Receivables unless, prior to the effective date of any such change
of
location, the Borrower notifies the Collateral Agent of such change of location
in writing and delivers to the Collateral Agent such executed financing
statements as the Collateral Agent may reasonably request to reflect such change
of location, together with such Opinions of Counsel, documents and instruments
as the Collateral Agent may request in connection therewith. The Borrower agrees
that from time to time, at its expense, it will promptly execute and deliver
all
further instruments and documents, and take all further action that the
Collateral Agent may reasonably request in order to perfect, protect or more
fully evidence the Collateral Agent’s interest in the Pledged Assets acquired
hereunder, or to enable the Collateral Agent to exercise or enforce any of
its
respective rights hereunder. Without limiting the generality of the foregoing,
the Borrower will, upon the request of the Collateral Agent: (i) execute
(if necessary) and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may
be
necessary or appropriate or as the Collateral Agent may request, and
(ii) xxxx its master data processing records evidencing such Pledged
Receivables with a legend acceptable to the Collateral Agent, evidencing that
the Collateral Agent has acquired an interest therein as provided in this
Agreement. The Collateral Agent shall be entitled to conclusively rely on the
filings or registrations made by or on behalf of the Borrower without any
independent investigation and the Borrower’s obligation to make such filings as
evidence that such filings have been made. The Borrower hereby authorizes the
Collateral Agent to file one or more financing or continuation statements,
and
amendments thereto and assignments thereof, relative to all or any of the
Pledged Receivables and the Other Conveyed Property and the Related
80
Security
related thereto and the proceeds of the foregoing now existing or hereafter
arising, without the signature of the Borrower where permitted by law. The
Borrower hereby ratifies and authorizes the filing by the Collateral Agent
of
any such financing statement made prior to the date hereof. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Pledged Receivables, or any part thereof, shall be sufficient
as a
financing statement. The Borrower shall, upon the request of the Collateral
Agent at any time after the occurrence of an Event of Default and at the
Borrower’s expense, notify the Obligors obligated to pay any Pledged
Receivables, or any of them, of the security interest of the Collateral Agent
in
the Pledged Assets. If the Borrower fails to perform any of its agreements
or
obligations under this Section 6.18,
the
Collateral Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Borrower upon
the
Collateral Agent’s demand therefor. For purposes of enabling the Collateral
Agent to exercise its rights described in the preceding sentence and elsewhere
in this Article VI,
the
Borrower hereby authorizes the Collateral Agent and its successors and assigns
to take any and all steps in the Borrower’s name and on behalf of the Borrower
necessary or desirable, in the determination of the Collateral Agent, to collect
all amounts due under any and all Pledged Receivables, including, without
limitation, endorsing the Borrower’s name on checks and other instruments
representing Collections with respect to any Pledged Receivable and enforcing
such Pledged Receivables and the related Contracts and, if any, the related
guarantees.
SECTION
6.19 Servicer
Advances.
The
Servicer may, in its sole discretion, make an advance in respect of any payment
due on a Pledged Receivable (other than a Defaulted Receivable) to the extent
such payment has not been received by the Servicer as of its due date and the
Servicer reasonably expects such payment will be ultimately recoverable (a
“Servicer
Advance”).
The
Servicer shall deposit into the Collection Account in immediately available
funds the aggregate of all Servicer Advances to be made during a Fee Period
on
or prior to the Business Day immediately preceding the related Remittance Date.
The Servicer shall be entitled to reimbursement for such Servicer Advances
from
monies in the Collection Account as provided in Section 2.04(c)
hereof.
SECTION
6.20 Repurchase
of Receivables Upon Breach of Covenant or Representation and Warranty by
Servicer.
The
Borrower or the Servicer, as the case may be, shall inform the other parties
to
this Agreement and the Initial Qualifying Swap Counterparty promptly, in
writing, upon the discovery of any breach of the Servicer’s representations,
warranties and/or covenants pursuant to Section 4.02,
Section 6.05
or
Article V;
provided,
however,
that
the failure to provide any such notice shall not diminish, in any manner
whatsoever, any obligation of the Servicer hereunder to repurchase any Pledged
Receivable. Unless such breach shall have been cured by the last day of the
first full calendar month following the discovery by or notice to the Servicer
of such breach (and provided that a Borrowing Base Deficiency exists on such
last day), the Servicer (if LEAF Financial or an Affiliate thereof) shall have
an obligation, and the Borrower shall and the Collateral Agent may, enforce
such
obligation of the Servicer (if LEAF Financial or an Affiliate thereof), to
repurchase any Pledged Receivable materially and adversely affected by such
breach. The Borrower shall notify the Collateral Agent promptly, in writing,
of
any failure by the Servicer to so repurchase any such Pledged Receivable. In
consideration of the repurchase of such Pledged Receivable, the Servicer shall
remit funds in an amount equal to the Release Price for such Pledged Receivable
to the Collection Account on the date of such
81
repurchase.
The obligations of the Servicer under this Section 6.20
are in
addition to, and in no way limit, any obligations of the Servicer in its
individual capacity under the Purchase and Sale Agreement. It is understood
and
agreed that the obligation of the Servicer to purchase any Receivables is not
intended to, and shall not, constitute a guaranty of the collectibility or
payment of any Receivable which is not collected, not paid or uncollectible
on
account of the insolvency, bankruptcy, or financial inability to pay of the
related Obligor.
SECTION
6.21 Compliance
with Applicable Law.
The
Servicer and the Borrower shall at all times comply in all material respects
with all requirements of applicable federal, state and local laws, and
regulations thereunder (including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
the
Federal Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal
Reserve Board’s Regulations “B” and “Z”, the Soldiers’ and Sailors’ Civil Relief
Act of 1940 and state adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code and all other consumer credit laws and equal credit
opportunity and disclosure laws) in the conduct of its business.
SECTION
6.22 Receipt
of Certificates of Title.
Any
Receivable (other than a Vehicle Sublimit Pledged Receivable) with respect
to
which the Obligor Collateral includes a Vehicle and for which the Servicer
shall
not have (i) received a Certificate of Title indicating the Borrower as the
owner of the related Vehicle and “Xxxxxx Xxxxxxx Bank” as the sole lienholder
with respect to such Vehicle from the applicable Registrar of Titles and
(ii) delivered such Certificate of Title to the Custodian within
90 days of the first day of inclusion of such Pledged Receivable in the
calculation of the Eligible Receivables Balance, shall no longer be deemed
to be
an Eligible Receivable and, therefore, shall no longer be included in the
calculation of the Eligible Receivables Balance. In the case of any Receivable
excluded from the calculation of the Eligible Receivables Balance pursuant
to
the previous sentence, the Receivable so excluded from the calculation of the
Eligible Receivables Balance may at a later time be included in the calculation
of the Eligible Receivables Balance, provided,
that
(i) the Custodian shall have received the Certificate of Title described
above with respect to such Receivable from the applicable Registrar of Titles
and delivered such Certificate of Title to the Custodian and (ii) such
Receivable is otherwise an Eligible Receivable at such time.
SECTION
6.23 Lender’s
Bank Limitation of Liability.
xv)
The
Lender’s Bank undertakes to perform only such duties and obligations as are
specifically set forth in this Agreement, it being expressly understood by
the
parties hereto that there are no implied duties or obligations under this
Agreement. Neither the Lender’s Bank nor any of its officers, directors,
employees or agents shall be liable, directly or indirectly, for any damages
or
expenses arising out of the services performed under this Agreement other than
damages which result from the gross negligence or willful misconduct of it
or
them. In no event will the Lender’s Bank or any of its officers, directors,
employees or agents be liable for any consequential, indirect or special
damages.
(b) The
Lender’s Bank shall not be liable for any error of judgment, or for any act done
or step taken or omitted by it, in good faith, or for any mistakes of fact
or
law, or for anything which it may do or refrain from doing in connection
herewith.
82
(c) The
Lender’s Bank may rely on and shall be protected in acting upon any certificate,
instrument, opinion, notice, letter, telegram or other document delivered to
it
by any other Person and which in good faith it believes to be genuine and which
has been signed by the proper party or parties. The Lender’s Bank may rely on
and shall be protected in acting upon the written instructions of any designated
officer of the Borrower, the Servicer or the Lender.
(d) The
Lender’s Bank may consult with counsel reasonably satisfactory to it and the
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion of such counsel.
(e) The
Lender’s Bank shall not be required to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties hereunder,
or
in the exercise of its rights or powers, if the Lender’s Bank believes that
repayment of such funds (repaid in accordance with the terms of this Agreement)
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(f) The
Lender’s Bank shall not be deemed to be a fiduciary of any party
hereto.
(g) The
parties hereto agree that in no event will the Lender’s Bank be liable for
special, indirect or consequential damages.
ARTICLE
VII.
EVENTS
OF DEFAULT
SECTION
7.01 Events
of Default.
If any
of the following events (“Events
of Default”)
shall
occur:
(a) the
occurrence of any Bankruptcy Event with respect to the Borrower, Owner, Resource
America, the Originator or the Servicer; or
(b) any
representation or warranty made or deemed to be made by the Borrower or the
Servicer (or any of its officers) under or in connection with this Agreement
(or
any remittance report or other information or report delivered pursuant hereto)
or any other Transaction Document shall prove to be false or incorrect in any
respect and shall remain false or incorrect for a period fifteen (15) Business
Days after the Servicer or the Borrower become aware, or are notified by the
Lender, the Custodian or any other Person, that such representation or warranty
is false or incorrect; provided,
however,
that if
any breach described above is cured by the repurchase of Receivables pursuant
to
Article VI
of the
Purchase and Sale Agreement or by a repayment hereunder, or repurchase pursuant
to Sections 4.03
or
6.20
hereof,
such breach shall cease to constitute an Event of Default; or
(c) (i) the
Borrower or the Servicer shall fail to perform or observe any term, covenant
or
agreement hereunder or under any other Transaction Document (other than
described in clause (ii) below) in any material respect and such failure
remains unremedied for fifteen (15) Business Days or (ii) either the
Servicer or the Borrower shall fail to make any payment or
83
deposit
to be made by it when due hereunder or under any other Transaction Document
and
such failure remains unremedied for two (2) Business Days; or
(d) the
Borrower, Owner, Resource America or the Servicer shall fail to pay (and such
failure remains unremedied for two (2) Business Days) any principal of or
premium or interest on any Debt in an amount in excess of $10,000,000, when
the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or any other default under
any
agreement or instrument relating to any Debt of the Borrower or the Servicer
or
any other event, shall occur if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or
any
such Debt shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(e) the
Originator, the Borrower or any of their respective subsidiaries shall have
suffered any material adverse change to its business, financial condition or
any
other condition which, in Lender’s sole discretion, constitutes a material
impairment of the Originator or the Borrower’s ability to perform its
Obligations; or
(f) (i) the
Collateral Agent shall at any time fail to have a valid, perfected, first
priority security interest in any of the Pledged Assets (other than Equipment
which has a value of less than (x) $25,000 if such Equipment is leased
under Dollar Purchase Option Contracts or (y) $50,000 if such Equipment is
leased under FMV Contracts) or (ii) any purchase by the Borrower of a
Receivable and the Collections, Related Security and Other Conveyed Property
with respect thereto under the Purchase and Sale Agreement shall, for any
reason, cease to create in favor of the Borrower a perfected ownership interest
in such Receivable and the Collections, Related Security and the Other Conveyed
Property with respect thereto; provided,
however,
that if
an event described in the foregoing clause (i) or (ii) is cured by the
repurchase of Receivables pursuant to Article VI
of the
Purchase and Sale Agreement or by a repayment hereunder or repurchase pursuant
to Sections 4.03
or
6.20
hereof,
within five Business Days, such event shall cease to constitute an Event of
Default; or
(g) the
Borrower or the Servicer shall have suffered any material adverse change to
its
financial condition or operations which would affect the collectibility of
the
Pledged Receivables or the Borrower’s or the Servicer’s ability to conduct its
business or fulfill its obligations hereunder or under any other Transaction
Document; or
(h) the
Servicer’s or the Borrower’s activities are terminated for any reason, including
any termination thereof by a regulatory, tax or accounting body; or
(i) the
occurrence of a Change of Control; or
(j) the
Purchase and Sale Agreement or any other Transaction Document or any material
provision of any of them shall cease to be in full force and effect and
enforceable in accordance with its terms, or the Servicer, the Borrower, or
any
Affiliate of the Servicer or the Borrower shall so assert in writing;
or
(k) the
occurrence of a Servicer Default; or
84
(l) (i) the
Facility Amount exceeds the lesser of (x) the Borrowing Limit and such
event shall remain unremedied for one Business Day or (y) the Borrowing
Base and such event shall remain unremedied for two Business Days; (ii) the
aggregate Facility Amount hereunder, calculated solely with respect to Loans
made with respect to Pool A Receivables, exceeds the Pool A Borrowing
Base and such event shall remain unremedied for two Business Days or
(iii) the aggregate Facility Amount hereunder, calculated solely with
respect to Loans made with respect to Pool B Receivables, exceeds the
Pool B Borrowing Base and such event shall remain unremedied for two
Business Days; or
(m) the
auditor’s opinion accompanying the audited annual financial statements of the
Servicer or the Borrower is qualified in any manner; or
(n) (i) any
Qualifying Interest Rate Swap shall cease to be in full force and effect,
(ii) the Borrower or the Servicer fail to comply with any hedging
requirement hereunder or (iii) the counterparty under any Qualifying
Interest Rate Swap or former or purported Qualifying Interest Rate Swap fails
to
qualify as a Qualifying Swap Counterparty and does not post cash collateral
in a
manner satisfactory to the Lender is not replaced by a Qualifying Swap
Counterparty within 45 days of such counterparty’s failure to so qualify,
(iv) the occurrence of any default by the Borrower or Servicer in the
observance or performance of any of the terms or provisions of any Qualifying
Interest Rate Swap or (v) any interest rate swap agreement represented by
the Borrower or the Servicer to be a Qualifying Interest Rate Swap shall fail
to
be, or cease to be, a Qualifying Interest Rate Swap; or
(o) Resource
America shall, at any time, permit its Tangible Net Worth to be less than the
Minimum Tangible Net Worth; or
(p) either
(i) the provisions of the Transaction Documents relating to the Backup
Servicer or its duties under any of the Transaction Documents cease to be in
full force and effect and enforceable in accordance with their terms, or the
Backup Servicer shall so assert in writing, (ii) Lyon Financial Services,
Inc. or any successor Backup Servicer resigns, is removed by the Lender, or
otherwise ceases to act as the Backup Servicer, and such Backup Servicer is
not
replaced by a new Backup Servicer satisfactory to the Lender within 45 days
of
such resignation, removal or other event;
then
the
Lender may, by notice to the Borrower and each Qualifying Swap Counterparty,
declare the Program Termination Date to have occurred; provided,
that,
in the case of any event described in Section 7.01(a)
above,
the Program Termination Date shall be deemed to have occurred automatically
upon
the occurrence of such event. Upon any such declaration or automatic occurrence,
(i) the Borrower shall cease purchasing Receivables from Originator under
the Purchase and Sale Agreement, (ii) at the option of the Lender in its
sole discretion, the Lender may declare the Loans made to the Borrower hereunder
and all interest and all Fees accrued on such Loans and any other Obligations
to
be immediately due and payable (and the Borrower shall pay such Loans and all
such amounts and Obligations immediately), (iii) the Lender, in its sole
discretion, may direct the Obligors to make all payments under the Pledged
Receivables directly to the Backup Servicer, the Lender or any lockbox or
account established by any of such parties. Any Collections received in any
such
account (or received directly by the Lender) shall be applied to the Obligations
in accordance with the priority of payments set forth
85
in
Section
2.04(c).
In
addition, upon any such declaration or upon any such automatic occurrence,
the
Lender and the Collateral Agent shall have, in addition to all other rights
and
remedies under this Agreement or otherwise, all other rights and remedies
provided under the UCC of the applicable jurisdiction and other applicable
laws,
which rights shall be cumulative. If any Event of Default shall have occurred,
the Interest Rate shall be increased to the Default Funding Rate, effective
as
of the date of the occurrence of such Event of Default, and shall remain at
the
Default Funding Rate.
SECTION
7.02 Additional
Remedies of the Lender.
xvi)
If,
(i) upon the Lender’s declaration that the Loans made to the Borrower
hereunder are immediately due and payable pursuant to Section 7.01
or
(ii) on the Facility Maturity Date, the aggregate outstanding principal
amount of the Loans, all accrued Fees and interest and any other Obligations
are
not immediately paid in full, then the Collateral Agent, in addition to all
other rights specified hereunder, shall have the right to immediately sell
in a
commercially reasonable manner, in a recognized market (if one exists) at such
price or prices as the Collateral Agent may reasonably deem satisfactory, any
or
all Pledged Assets and shall apply the proceeds thereof to the Obligations
in
accordance with the priority of payments set forth in Section
2.04(c).
(b) The
parties recognize that it may not be possible to sell all of the Pledged Assets
on a particular Business Day, or in a transaction with the same purchaser,
or in
the same manner because the market for such Pledged Assets may not be liquid.
Accordingly, the Collateral Agent may elect, in its sole discretion, the time
and manner of liquidating any Pledged Assets, and nothing contained herein
shall
obligate the Collateral Agent to liquidate any Pledged Assets on the date the
Lender declares the Loans made to the Borrower hereunder to be immediately
due
and payable pursuant to Section 7.01
or to
liquidate all Pledged Assets in the same manner or on the same Business
Day.
(c) Any
amounts received from any sale or liquidation of the Pledged Assets pursuant
to
this Section 7.02
in
excess of the Obligations will be returned to the Borrower, its successors
or
assigns, or to whosoever may be lawfully entitled to receive the same, or as
a
court of competent jurisdiction may otherwise direct.
(d) Each
of
the Lender, Collateral Agent and the Initial Qualifying Swap Counterparty shall
have, in addition to all the rights and remedies provided herein and provided
by
applicable federal, state, foreign, and local laws (including, without
limitation, the rights and remedies of a secured party under the Uniform
Commercial Code of any applicable state, to the extent that the Uniform
Commercial Code is applicable, and the right to offset any mutual debt and
claim), all rights and remedies available to such Person at law, in equity
or
under any other agreement between such Person and the Borrower.
(e) Except
as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, each and every remedy shall
be
cumulative and in addition to any other remedy, and no delay or omission to
exercise any right or remedy shall impair any such right or remedy or shall
be
deemed to be a waiver of any Program Termination Event or Event of
Default.
86
ARTICLE
VIII.
INDEMNIFICATION
SECTION
8.01 Indemnities
by the Borrower.
Without
limiting any other rights which the Lender, the Collateral Agent, the Backup
Servicer (whether in its capacity as Backup Servicer or successor Servicer),
the
Lender’s Bank, the Custodian, the Initial Qualifying Swap Counterparty or any of
their respective Affiliates may have hereunder or under applicable law, the
Borrower hereby agrees to indemnify the Lender, the Collateral Agent, the
Custodian, the Backup Servicer, the Lender’s Bank, the Initial Qualifying Swap
Counterparty and each of their respective Affiliates (each, an “Indemnified
Party”
for
purposes of this Article VIII)
from
and against any and all damages, losses, claims, liabilities and related costs
and expenses, including reasonable attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as “Indemnified
Amounts”),
awarded against or incurred by any of them arising out of or as a result of
this
Agreement or in respect of any Pledged Assets, excluding, however, (A)
Indemnified Amounts to the extent resulting solely from gross negligence, bad
faith or willful misconduct on the part of an Indemnified Party, (B) taxes
(including interest and penalties imposed thereon) imposed by the jurisdiction
in which such Indemnified Party’s principal executive office is located, on or
measured by the overall net income of such Indemnified Party or (C) Indemnified
Amounts to the extent that they are or result from lost profits (other than
principal, interest and Fees with respect to the Loans). Without limiting the
foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified
Amounts relating to or resulting from any of the following (to the extent not
resulting solely from gross negligence, bad faith or willful misconduct on
the
part of an Indemnified Party):
(i) any
Pledged Receivable treated as or represented by the Borrower to be an Eligible
Receivable which is not at the applicable time an Eligible
Receivable;
(ii) reliance
on any representation or warranty made or deemed made by the Borrower or any
of
its officers under or in connection with this Agreement, which shall have been
false or incorrect in any material respect when made or deemed made or
delivered;
(iii) the
failure
by the Borrower to comply with any term, provision or covenant contained in
this
Agreement or any agreement executed in connection with this Agreement, or with
any applicable law, rule or regulation with respect to any Pledged Assets,
or
the nonconformity of any Pledged Assets with any such applicable law, rule
or
regulation;
(iv) the
failure to vest and maintain vested in the Collateral Agent or to transfer
to
the Collateral Agent a first priority perfected security interest in the
Receivables which are, or are purported to be, Pledged Receivables, together
with all related Other Conveyed Property, Collections, Related Security and
other Pledged Assets related thereto (including, without limitation, the
Borrower’s interest in and to any and all Obligor Collateral with respect to
such Receivables), free and clear of any Adverse Claim whether existing at
the
time of the related Borrowing or at any time thereafter;
87
(v) the
failure to maintain, as of the close of business on each Business Day prior
to
the Collection Date, a Facility Amount which is less than or equal to the lesser
of (x) the Borrowing Limit on such Business Day and (y) the Borrowing
Base on such Business Day;
(vi) the
failure to maintain, as of the close of business on each Business Day prior
to
the Collection Date, a Facility Amount, calculated solely with respect to Loans
secured by Pool A Receivables, which is less than or equal to the
Pool A Borrowing Base;
(vii) the
failure to maintain, as of the close of business on each Business Day prior
to
the Collection Date, a Facility Amount, calculated solely with respect to Loans
secured by Pool B Receivables, which is less than or equal to the Pool B
Borrowing Base;
(viii) the
failure to file, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Receivables which are, or are purported
to
be, Pledged Receivables or the other Pledged Assets related thereto, whether
at
the time of any Borrowing or at any subsequent time;
(ix) any
dispute, claim, offset or defense (other than the discharge in bankruptcy of
an
Obligor) to the payment of any Receivable which is, or is purported to be,
a
Pledged Receivable (including, without limitation, a defense based on such
Receivable (or the Contract evidencing such Receivable) not being a legal,
valid
and binding obligation of such Obligor enforceable against it in accordance
with
its terms);
(x) any
failure of the Borrower to perform its duties or obligations in accordance
with
the provisions of this Agreement or any other Transaction Document;
(xi) the
failure
of the Borrower to pay when due any taxes payable in connection with the Pledged
Receivables or the Pledged Assets related thereto;
(xii) any
repayment by the Lender of any amount previously distributed in payment of
Loans
or payment of interest or Fees or any other amount due hereunder, in each case
which amount the Lender believes in good faith is required to be
repaid;
(xiii) the
commingling by the Borrower of Collections of Pledged Receivables at any time
with other funds;
(xiv) any
investigation, litigation or proceeding related to this Agreement or the use
of
proceeds of Loans or the Pledged Assets;
(xv) any
failure by the Borrower to give reasonably equivalent value to Originator in
consideration for the transfer by Originator to the Borrower of any
88
Receivable
or any attempt by any
Person to void or otherwise avoid any such transfer under any statutory
provision or
common law or equitable action, including, without limitation, any provision
of
the Bankruptcy Code;
(xvi) [Reserved];
(xvii) any
failure of the Borrower or any of its agents or representatives to remit to
the
Collection Account, Collections of Pledged Receivables remitted to the Borrower
or any such agent or representative;
(xviii) any
failure on the part of the Borrower duly to observe or perform in any material
respect any covenant or agreement under any Qualifying Interest Rate Swap;
and/or
(xix) any
Contract
related to any Pledged Receivable being rejected by an Obligor under
Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has
occurred with respect to such Obligor.
Any
amounts subject to the indemnification provisions of this Section 8.01
shall be
paid by the Borrower to the Lender on behalf of the applicable Indemnified
Party
within two (2) Business Days following the Lender’s written demand therefor on
behalf of the applicable Indemnified Party (and the Lender shall pay such
amounts to the applicable Indemnified Party promptly after the receipt by the
Lender of such amounts). The Lender, on behalf of any Indemnified Party making
a
request for indemnification under this Section 8.01,
shall
submit to the Borrower a certificate setting forth in reasonable detail the
basis for and the computations of the Indemnified Amounts with respect to which
such indemnification is requested, which certificate shall be conclusive absent
demonstrable error.
If
the
Borrower has made any payments in respect of Indemnified Amounts to the Lender,
on behalf of an Indemnified Party pursuant to this Section 8.01
and such
Indemnified Party thereafter collects any of such amounts from others, such
Indemnified Party will promptly repay such amounts collected to the Borrower,
without interest.
SECTION
8.02 Indemnities
by Servicer.
xvii)
Without
limiting any other rights which any Indemnified Party may have hereunder or
under applicable law, the Servicer (if LEAF Financial or one of its Affiliates)
hereby agrees to indemnify each Indemnified Party from and against any and
all
damages, losses, claims, liabilities and related costs and expenses (including
reasonable attorneys’ fees and disbursements) (all of the foregoing being
collectively referred to as “Servicer
Indemnified Amounts”)
suffered or sustained by any Indemnified Party as a consequence of any of the
following, excluding, however, Servicer Indemnified Amounts resulting solely
from (A) any gross negligence, bad faith or willful misconduct of any
Indemnified Party claiming indemnification hereunder, (B) taxes (including
interest and penalties imposed thereon) imposed by the jurisdiction in which
such Indemnified Party’s principal executive office is located, on or measured
by the overall net income of such Indemnified Party; (C) Indemnified Amounts
to
the extent that they are or result from lost profits (other than principal,
interest and Fees with respect to the Loans); and (D) Indemnified Amounts to
the
extent the same includes losses that arise solely due to Receivables being
uncollectible on
89
account
of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor
or would constitute recourse to Servicer for such losses:
(i) the
inclusion, in any computations made by it in connection with any Borrowing
Base
Certificate or Monthly Remittance Report or other report prepared by it
hereunder, of any Pledged Receivables which were not Eligible Receivables as
of
the date of any such computation;
(ii) reliance
on any representation or warranty made by the Servicer (if LEAF Financial or
one
of its Affiliates) or any of its officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect
when
made or delivered;
(iii) the
failure by the Servicer (if LEAF Financial or any of its Affiliates) to comply
with (A) any term, provision or covenant contained in this Agreement, or
any agreement executed in connection with this Agreement, or (B) any
applicable law, rule or regulation applicable to it with respect to any Pledged
Assets;
(iv) any
action or inaction by the Servicer (if LEAF Financial or one of its Affiliates)
that causes the Collateral Agent not to have a first priority perfected security
interest in the Receivables that are, or are purported to be, Pledged
Receivables, together with all related Other Conveyed Property, Collections,
Related Security and other Pledged Assets related thereto (including without
limitation, the Borrower’s interest in and to any and all Obligor Collateral
with respect to such Receivables), free and clear of any Adverse Claim whether
existing at the time of the related Borrowing or any time
thereafter;
(v) the
commingling by the Servicer (if LEAF Financial or one of its Affiliates) of
the
Collections of Pledged Receivables at any time with any other
funds;
(vi) any
failure of the Servicer (if LEAF Financial or one of its Affiliates) or any
of
its agents or representatives (including, without limitation, agents,
representatives and employees of the Servicer acting pursuant to authority
granted under Section 6.01
hereof)
to remit to Collection Account, Collections of Pledged Receivables remitted
to
the Servicer or any such agent or representative;
(vii) the
failure by the Servicer (if LEAF Financial or any of its Affiliates) to perform
any of its duties or obligations in accordance with the provisions of this
Agreement or errors or omissions related to such duties; and/or
(viii) notwithstanding
whether any Pledged Receivable shall have been repurchased by the Servicer
pursuant to Section 6.20,
any of
the events or facts giving rise to a breach of any of the Servicer’s
representations, warranties, agreements and/or covenants set forth in
Article V
or
Article VI.
(b) Any
Servicer Indemnified Amounts shall be paid by the Servicer (if LEAF Financial
or
one of its Affiliates) to the Lender, for the benefit of the applicable
Indemnified Party, within
90
two
(2)
Business Days following receipt by the Servicer of the Lender’s written demand
therefor (and the Lender shall pay such amounts to the applicable Indemnified
Party promptly after the receipt by the Lender of such amounts).
(c) If
the
Servicer has made any indemnity payments to the Lender, on behalf of an
Indemnified Party pursuant to this Section 8.02
and such
Indemnified Party thereafter collects any of such amounts from others, such
Indemnified Party will promptly repay such amounts collected to the Servicer,
without interest.
Each
applicable Indemnified Party shall deliver to the indemnifying party under
Section 8.01
and
Section 8.02,
within
a reasonable time after such Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received by such Indemnified
Party relating to the claim giving rise to the Indemnified Amounts.
ARTICLE
IX.
MISCELLANEOUS
SECTION
9.01 Amendments
and Waivers.
xviii)
Except
as provided in Section 9.01(b),
no
amendment or modification of any provision of this Agreement shall be effective
without the written agreement of the Borrower, the Servicer, the Lender and,
to
the extent any of their rights or obligations hereunder are adversely affected
thereby, the Backup Servicer, the Custodian, the Lender’s Bank, and/or each
Qualifying Swap Counterparty, and no termination or waiver of any provision
of
this Agreement or consent to any departure therefrom by the Borrower or the
Servicer shall be effective without the written concurrence of the Backup
Servicer and the Lender. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Notwithstanding
the provisions of Section 9.01(a),
in the
event that there is more than one Lender, the written consent of each Lender
shall be required for any amendment, modification or waiver (i) reducing
any outstanding Loans, or the interest thereon, (ii) postponing any date
for any payment of any Loan, or the interest thereon, (iii) modifying the
provisions of this Section 9.01,
or
(iv) increasing the Borrowing Base or the Borrowing Limit.
SECTION
9.02 Notices,
Etc.
All
notices and other communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including telex communication, communication
by
facsimile copy or electronic mail) and mailed, telexed, transmitted or
delivered, as to each party hereto, at its address set forth on Schedule
VI
hereto
or specified in such party’s Assignment and Acceptance or at such other address
(including, without limitation, an electronic mail address) as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, upon receipt, or in the
case
of notice by facsimile copy or electronic mail, when verbal communication
of receipt is obtained, except that notices and communications pursuant to
Article II
shall
not be effective until received.
SECTION
9.03 No
Waiver; Remedies.
No
failure on the part of the Lender to exercise, and no delay in exercising,
any
right hereunder shall operate as a waiver thereof; nor shall any
91
single
or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION
9.04 Binding
Effect; Assignability; Multiple Lenders.
xix)
This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Servicer, the Lender, the Backup Servicer, the Custodian, the Lender’s Bank and
their respective successors and permitted assigns. This Agreement and the
Lender’s rights and obligations hereunder and interest herein shall be
assignable in whole or in part (including by way of the sale of participation
interests therein) by the Lender and its successors and assigns. None of the
Borrower, the Servicer or the Backup Servicer may assign any of its rights
and
obligations hereunder or any interest herein without the prior written consent
of the Lender. The parties to each assignment or participation made pursuant
to
this Section 9.04
shall
execute and deliver to the Lender, for its acceptance and recording in its
books
and records, an assignment and acceptance agreement (an “Assignment
and Acceptance”)
or a
participation agreement or other transfer instrument reasonably satisfactory
in
form and substance to the Lender and the Borrower. Each such assignment or
participation shall be effective as of the date specified in the applicable
Assignment and Acceptance or other agreement or instrument only after the
execution, delivery, acceptance and recording thereof as described in the
preceding sentence. The Lender shall notify the Borrower of any assignment
or
participation thereof made pursuant to this Section 9.04.
The
Lender may, in connection with any assignment or participation or any proposed
assignment or participation pursuant to this Section 9.04,
disclose to the assignee or participant or proposed assignee or participant
any
information relating to the Borrower and the Pledged Assets furnished to the
Lender by or on behalf of the Borrower or the Servicer; provided,
however,
that
the Lender shall not disclose any such information until it has obtained an
agreement from such assignee or participant or proposed assignee or participant
that it shall treat as confidential (under terms mutually satisfactory to the
Lender, the Borrower, the Servicer and such assignee or participant or proposed
assignee or participant) any information obtained which is not already publicly
known or available.
(b) Whenever
the term “Lender” is used herein, it shall mean Xxxxxx Xxxxxxx and/or any other
Person which shall have executed an Assignment and Acceptance; provided,
however,
that
each such party shall have a pro rata share of the rights and obligations of
the
Lender hereunder in such percentage amount (the “Commitment
Percentage”)
as
shall be obtained by dividing such party’s commitment to fund Loans hereunder by
the total commitment of all parties to fund Loans hereunder. Unless otherwise
specified herein, any right at any time of the Lender to enforce any remedy,
shall be exercised by the Lender only upon direction by such parties that hold
a
majority of the Commitment Percentages at such time.
(c) Subject
to Section 9.04(a),
each of
the parties hereto hereby agrees to execute any amendment to this Agreement
that
is required in order to facilitate the addition of any new Lender hereunder
as
contemplated by this Section 9.04
and
which does not have any adverse effect on the Borrower, the Originator, the
Servicer or any Affiliate thereof.
SECTION
9.05 Term
of This Agreement.
This
Agreement including, without limitation, the Borrower’s obligation to observe
its covenants set forth in Articles V
and
VI
and the
Servicer’s obligation to observe its covenants set forth in Articles V
and
VI,
shall
remain in full
92
force and effect until the Collection Date; provided,
however,
that
the rights and remedies with respect
to any breach of any representation and warranty made or deemed made by the
Borrower or the Servicer pursuant to Articles III
and
IV
and the
indemnification and payment provisions of Article VIII
and
Article IX
and the
provisions of Section 9.08
and
Section 9.09
shall be
continuing and shall survive any termination of this Agreement.
SECTION
9.06 GOVERNING
LAW; JURY WAIVER; CONSENT TO JURISDICTION.
xx)
THIS
AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT
WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT
TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE LENDER IN
THE
PLEDGED RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED
BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) EACH
OF
THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT
IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREUNDER.
(c) ANY
LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF
THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE
OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
SECTION
9.07 Costs,
Expenses and Taxes.
xxi)
In
addition to the rights of indemnification granted to the Backup Servicer
(whether in its capacity as Backup Servicer or successor Servicer), the
Custodian, the Lender’s Bank, the Lender and its Affiliates under Section 8.01
hereof,
the Borrower agrees to pay on demand all reasonable (and reasonably documented)
costs and expenses of the Backup Servicer, the Custodian, the Lender’s Bank and
the Lender incurred in connection with the preparation, execution or delivery
of, or any waiver or consent issued or amendment prepared in connection with,
this Agreement, the other Transaction Documents and the other documents to
be
delivered hereunder or in connection herewith or therewith or incurred in
connection with any amendment, waiver or modification of this Agreement, any
other
93
Transaction
Document, and any other documents to be delivered hereunder or thereunder or
in
connection herewith or therewith that is necessary or requested (and, with
respect to the Lender, actually entered into) by any of the Borrower, the
Servicer, the Lender or made necessary or desirable as a result of the actions
of any regulatory, tax or accounting body affecting the Lender and its
Affiliates, or which is related to an Event of Default, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Backup Servicer, the Custodian, the Lender’s Bank and the Lender with respect
thereto and with respect to advising the Backup Servicer, the Custodian, the
Lender’s Bank and the Lender as to their respective rights and remedies under
this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Backup Servicer, the Custodian,
the
Lender’s Bank or the Lender in connection with the enforcement of this Agreement
and the other documents to be delivered hereunder or in connection
herewith.
(b) The
Borrower shall pay on demand any and all stamp, sales, excise and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the other documents to be
delivered hereunder or any agreement or other document providing liquidity
support, credit enhancement or other similar support to the Lender which is
specific to this Agreement or the funding or maintenance of Loans
hereunder.
(c) The
Borrower shall pay on demand all other costs, expenses and taxes (excluding
franchise and income taxes) incurred by the Lender or the Initial Qualifying
Swap Counterparty or any shareholder thereof related to this Agreement, any
other Transaction Document or any Qualifying Interest Rate Swap or similar
interest rate cap agreement (“Other
Costs”),
including, without limitation, the reasonable fees and out-of-pocket expenses
of
counsel for the Lender or the Initial Qualifying Swap Counterparty with respect
to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith and (ii) the enforcement of this Agreement and the other documents
to be delivered hereunder or in connection herewith; provided,
however,
that
the Borrower shall have no obligation to pay the fees and out-of-pocket expenses
of counsel to the Initial Qualifying Swap Counterparty related to the initial
negotiation, execution and delivery of any Qualifying Interest Rate
Swap.
(d) Without
limiting any other provision hereof, the Borrower shall pay on demand all costs,
expenses and fees of the Backup Servicer prior to the occurrence of a Servicer
Default and the appointment of the Backup Servicer as Servicer hereunder related
to its duties under this Agreement.
(e) Any
Person making a claim under this Section 9.07
shall
submit to the Borrower a notice setting forth in reasonable detail the basis
for
and the computations of the applicable costs, expenses, taxes or similar
items.
SECTION
9.08 No
Proceedings.
The
Servicer, the Backup Servicer, the Custodian, the Lender and the Lender’s Bank
each hereby agree that it will not institute against, or join any other Person
in instituting against, the Borrower any proceedings of the type referred to
in
the definition of Bankruptcy Event prior to the Collection Date.
94
SECTION
9.09 Recourse
Against Certain Parties.
No
recourse under or with respect to any obligation, covenant or agreement
(including, without limitation, the payment of any fees or any other
obligations) of the Lender as contained in this Agreement or any other
agreement, instrument or document entered into by the Borrower or the Lender
pursuant hereto or in connection herewith shall be had against any administrator
of the Borrower or the Lender or any incorporator, affiliate, stockholder,
officer, employee or director of the Borrower or the Lender or of any such
administrator, as such, by the enforcement of any assessment or by any legal
or
equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood
that the
agreements of each party hereto contained in this Agreement and all of the
other
agreements, instruments and documents entered into by the Borrower or the Lender
pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of such party (and nothing in this Section 9.09
shall be
construed to diminish in any way such corporate obligations of such party),
and
that no personal liability whatsoever shall attach to or be incurred by any
administrator of the Borrower or the Lender or any incorporator, stockholder,
affiliate, officer, employee or director of the Borrower or the Lender or of
any
such administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Borrower or the Lender contained
in
this Agreement or in any other such instruments, documents or agreements, or
which are implied therefrom, and that any and all personal liability of every
such administrator of the Borrower or the Lender and each incorporator,
stockholder, affiliate, officer, employee or director of the Borrower or the
Lender or of any such administrator, or any of them, for breaches by the
Borrower or the Lender of any such obligations, covenants or agreements, which
liability may arise either at common law or in equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and
in
consideration for the execution of this Agreement. The provisions of this
Section 9.09
shall
survive the termination of this Agreement.
SECTION
9.10 Execution
in Counterparts; Severability; Integration.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one
and
the same agreement. Delivery of an executed counterpart of a signature page
to
this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement. In the event that any provision in
or
obligation under this Agreement shall be invalid, illegal or unenforceable
in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings
other than the Fee Letter.
SECTION
9.11 Tax
Characterization.
Notwithstanding any provision of this Agreement, the parties hereto intend
that
the Loans advanced hereunder shall constitute indebtedness of the Borrower
for
federal income tax purposes.
SECTION
9.12 Calculation
of Performance Triggers.
Notwithstanding anything to the contrary herein, Included Repurchased
Receivables shall be treated as Pool Receivables for purposes of each
calculation of the Annualized Default Rate, Annualized Net Loss
Rate,
95
Delinquency
Rate, Pool A Annualized Net Loss Rate and the Pool B Annualized Net Loss Rate
required to be made hereunder (but for no other purpose).
ARTICLE
X.
THE
COLLATERAL AGENT
SECTION
10.01 No
Implied Duties.
The
Collateral Agent shall be obligated to perform only the duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Collateral Agent.
SECTION
10.02 Limits
on Liability.
The
Collateral Agent shall not be liable for any acts, omissions, errors of judgment
or mistakes of fact or law made, taken or omitted to be made or taken by it
in
accordance with this Agreement and the other Transaction Documents (including
acts, omissions, errors or mistakes with respect to the Collateral), except
for
those arising out of or in connection with the Collateral Agent’s gross
negligence or willful misconduct. The Collateral Agent may consult with counsel,
accountants and other experts, and any opinion or advice of any such counsel,
any such accountant and any such other expert shall be full and complete
authorization and protection in respect of any action taken or suffered by
the
Collateral Agent hereunder in accordance therewith. The Collateral Agent shall
have the right at any time to seek instructions concerning the administration
of
the Pledged Assets from any court of competent jurisdiction. The Collateral
Agent may conclusively rely, and shall be fully protected in acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order, bond or other paper or document which it has no
reasonable reason to believe to be other than genuine and to have been signed
or
presented by the proper party or parties or, in the case of cables, telecopies
and telexes, to have been sent by the proper party or parties. Absent its gross
negligence or willful misconduct, the Collateral Agent may conclusively rely,
as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral Agent
and
conforming to the requirements of this Agreement and the other Transaction
Documents, if any.
SECTION
10.03 Acknowledgement.
The
Lender hereby acknowledges and agrees that its rights and obligations as
“Lender” under the Collection Account Agreement, Security Deposit Account
Agreement and each Cash Reserve Account Agreement are being held in its capacity
as Collateral Agent for the benefit of the Secured Parties.
[Signature
page to follow.]
96
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.
THE
BORROWER:
|
RESOURCE
CAPITAL FUNDING II, LLC
By: _____
Name:
Title:
|
THE
SERVICER:
|
LEAF
FINANCIAL CORPORATION
By: _________________________
Name:
Title:
|
THE
LENDER:
|
XXXXXX
XXXXXXX BANK
By: _________________________
Name:
Title:
|
THE
CUSTODIAN AND
THE
LENDER’S BANK:
|
U.S.
BANK NATIONAL ASSOCIATION
By: _________________________
Name:
Title:
|
THE
BACKUP SERVICER
|
LYON
FINANCIAL SERVICES, INC. (D/B/A
U.S.
BANK PORTFOLIO SERVICES)
By: _________________________
Name:
Title:
|
S-1
BACKUP
SERVICER
|
LYON
FINANCIAL SERVICES, INC. (D/B/A
U.S.
BANK PORTFOLIO SERVICES)
By: _________________________
Name:
Title:
|
S-2
SCHEDULE
I
CONDITION
PRECEDENT DOCUMENTS
As
required by Section 3.01
of the
Agreement, each of the following items must be delivered to the Lender prior
to
the date of the initial Borrowing:
(a) A
copy of
this Agreement duly executed by each of the parties hereto;
(b) A
certificate of the Secretary or Assistant Secretary of each of the Borrower,
the
Originator and the Servicer, dated the date of this Agreement, certifying
(i) the names and true signatures of the incumbent officers authorized to
sign on behalf of the such Person each Transaction Document to which it is
a
party (on which certificate the Lender may conclusively rely until such time
as
the Lender shall receive from such Person a revised certificate meeting the
requirements of this paragraph (b)), (ii) that the copy of the
certificate of incorporation or formation of each such Person attached thereto
is a complete and correct copy and that such certificate of incorporation or
formation has not been amended, modified or supplemented and is in full force
and effect, (iii) that the copy of the organizational documents of such
Person attached thereto is a complete and correct copy, and that such
organizational documents have not been amended, modified or supplemented and
is
in full force and effect, and (iv) the resolutions of the board of
directors or members of such Person approving and authorizing the execution,
delivery and performance by such Person of each Transaction Document to which
it
is a party;
(c) Good
standing certificate, dated as of a recent date for each of the Borrower, the
Originator and the Servicer, issued by its jurisdiction of
organization;
(d) Executed,
original copies of proper financing statements (the “Facility
Financing Statements”)
describing the Pledged Receivables, Other Conveyed Property, Related Security
and other Pledged Assets, and (a) filed against Originator in favor of the
Borrower as assignor secured party and naming the Collateral Agent as total
assignee and (b) filed against the Borrower and in favor of the Collateral
Agent, as secured party, and other, similar instruments or documents, as may
be
necessary or, in the opinion of the Collateral Agent, desirable under the UCC
of
all appropriate jurisdictions or any comparable law to perfect the Collateral
Agent’s interests in all Pledged Receivables, Other Conveyed Property, Related
Security and other Pledged Assets;
(e) Executed,
original copies of proper financing statements, if any, necessary to release
all
security interests and other rights of any Person in the Pledged Receivables,
Other Conveyed Property, Related Security and other Pledged Assets previously
granted by Originator or the Borrower;
(f) Certified
copies of requests for information or copies (or a similar UCC search report
certified by a party acceptable to the Lender), dated a date reasonably near
to
the date of the initial Borrowing, listing all effective financing statements
(including the Facility Financing Statements), which name any of the Borrower
or
the Originator (under such party’s present name and any previous name) as debtor
and which are filed in the jurisdictions in which the Facility
Sch.
I-1
Financing
Statements were filed, together with copies of such financing statements (none
of which, other than the Facility Financing Statements, shall cover any Pledged
Assets);
(g) One
or
more favorable Opinions of Counsel, of counsel to the Originator and the
Borrower, with respect to such matters as the Lender may reasonably request
(including an opinion, with respect to the creation, perfection and first
priority of the security interest of the Borrower and the Collateral Agent
in
the property described in such Opinion of Counsel);
(h) One
or
more favorable Opinions of Counsel, of counsel to the Originator and the
Borrower, with respect to the true conveyance of the Receivables under the
Purchase and Sale Agreement, and issues of substantive
consolidation;
(i) One
or
more favorable Opinions of Counsel, of counsel to the Originator, the Borrower,
the Custodian and the Backup Servicer with respect to, among other things,
the
due authorization, execution and delivery of, and enforceability of, this
Agreement and the other Transaction Documents;
(j) A
favorable Opinion of Counsel of counsel to the Borrower, with respect to the
first priority perfected security interest of the Collateral Agent in the
Collection Account, the Security Deposit Account and the Cash Reserve Account
and the funds therein;
(k) Any
necessary third party consents to the closing of the transactions contemplated
hereby;
(l) A
copy of
each of the other Transaction Documents duly executed by the parties
thereto;
(m) A
copy of
the fidelity insurance policy referred to in Section 6.16
hereof
together with a certification from the applicable insurance company that such
policy is in full force and effect on the date hereof; and
(n) The
results of comprehensive background checks (completed by an investigation
service acceptable to the Lender) on the senior management, key employees and
principals of each of Resource America and LEAF Financial.
Sch.
I-2
SCHEDULE
II
PRIOR
NAMES, TRADENAMES, FICTITIOUS NAMES
AND
“DOING BUSINESS AS” NAMES
1. Borrower:
None
2. Servicer:
LEAF Financial Corp.
LEAF
Financial Corporation was previously named Fidelity Leasing Corporation.
Effective February 28, 1996, Fidelity Leasing Corporation changed its name
to
F.L. Partnership Management, Inc. Effective May 1, 2000, F.L. Partnership
Management, Inc. and FL Financial Services, Inc. merged, with F.L. Partnership
Management, Inc. as the surviving entity. Effective December 13, 2001, F.L.
Partnership Management, Inc. changed its name to LEAF Financial Corporation.
Effective June 29, 2004, LEAF Asset Management, Inc. and LEAF Financial Corp.
merged, with LEAF Financial Corp. as the surviving entity. None
Sch.
II-1
SCHEDULE
III-A
REPRESENTATIONS
AND WARRANTIES WITH
RESPECT
TO ELIGIBLE POOL A RECEIVABLES
The
following representations and warranties are made by the Borrower with respect
to the Pool A Contracts related to Pledged Pool A Receivables which
are designated as being Eligible Pool A Receivables on a Borrowing Base
Certificate or a Monthly Remittance Report, or are otherwise represented to
the
Lender as being Eligible Pool A Receivables, or are included as Eligible
Pool A Receivables in any calculation set forth herein.
1. Each
such
Contract represents the genuine, legal, valid, binding and full recourse payment
obligation of the Obligor thereunder, enforceable by the Borrower in accordance
with its terms and the Obligor, with respect to such Contract (and any guarantor
of the Obligor’s obligations thereunder), had full legal capacity to execute and
deliver such Contract and any other documents related thereto.
2. [Intentionally
omitted.]
3. To
the
extent that such Contract consists of a “Term Note (Level Payments)” or “Term
Note (Step Payments)” or similar promissory note, together with the “Master Loan
and Security Agreement” or similar agreement related thereto and incorporated by
reference therein, each other “Term Note (Level Payments)” or “Term Note (Step
Payments)” or similar promissory note related to the same “Master Loan and
Security Agreement” or similar agreement is also a Contract related to a Pledged
Receivable. To the extent that such Contract consists of a “Master Lease
Schedule” or similar agreement together with a “Master Lease Agreement” or
similar agreement which is related to, and incorporated by reference therein,
each other “Master Lease Schedule” or similar agreement related to the same
“Master Lease Agreement” or similar agreement is also a Contract related to a
Pledged Receivable
4. Each
such
Contract, at the time of origination and at all times thereafter, conformed
to
all requirements of the Credit and Collection Policy applicable to such Contract
and, in any case, no such Contract would be required to be written off pursuant
to the Credit and Collection Policy.
5. Each
such
Contract (i) was (a) originated by Originator in the ordinary course of
Originator’s business and Originator had all necessary licenses and permits to
originate Contracts in the State where the related Obligor and the related
Obligor Collateral were located or (b) purchased by Originator, in a transaction
that would constitute a “true sale” for bankruptcy purposes, from a Person (a
“Seller”)
who
originated such Contract in the ordinary course of Seller’s business and who had
all necessary licenses and permits to originate Contracts in the State where the
related Obligor and the related Obligor Collateral were located, (ii) was
sold by Originator to the Borrower under the Purchase and Sale Agreement and
the
Borrower has all necessary licenses and permits to own Receivables and enter
into Contracts in the state where the related Obligor and the related Obligor
Collateral are located, (iii) contains customary and enforceable
provisions, such as to render the rights and remedies of the Borrower (and
any
Sch.III-A-1
assignee
thereof) adequate for realization against the collateral security related
thereto and (iv) provides for level Scheduled Payments during the term of such
Contract or such Contract is a Non-Level Payment Contract.
6. Each
such
Contract was originated by Originator or the Seller without any fraud or
material misrepresentation on the part of the related Obligor or Originator
or
the Seller. Each such Contract was sold by Originator to the Borrower without
any fraud or material misrepresentation on the part of Originator.
7. No
such
Contract is the subject of any litigation, nor is it subject to any right of
rescission, setoff, counterclaim or defense on the part of the Obligor
thereunder.
8. Each
such
Contract has had no provision thereof waived, amended, altered or modified
in
any respect since its origination except in conformity with the Credit and
Collection Policy.
9. The
Obligor, with respect to each such Contract, has a billing address in the United
States and, except as otherwise permitted in writing by the Lender from time
to
time, the Equipment which is the subject of each such Contract and all other
Obligor Collateral with respect thereto is located in the United
States.
10. Each
such
Contract (i) is calculated at a fixed yield, (ii) is fully amortizing
in periodic installments over its remaining term (which may include a Balloon
Payment or Put Payment not in excess of 45% of the Discounted Balance of such
Contract at the time of origination), (iii) has a remaining term of 180
months or less and does not permit renewal or extension, (iv) provides for
acceleration of the Scheduled Payments thereunder if the related Obligor is
in
default under or has otherwise violated or breached any material provision
of
such Contract, (v) prohibits the related Obligor from applying any part of
the Security Deposit or cash collateral paid under such Contract to the
Scheduled Payments due under such Contract (and neither the Originator, the
Servicer, the Borrower or any other Person has applied any part of the Security
Deposit or cash collateral paid under such Contract to any of the Scheduled
Payments due under such Contract) and (vi) has not been assigned by the
related Obligor nor has there been any sub-lease of the Obligor
Collateral.
11. [Intentionally
omitted.]
12. Each
such
Contract (i) is payable by a single Obligor, that is a corporate Person,
or, if the collateral is Equipment used in a business, an individual and
(ii) provides for the financing or lease of Obligor Collateral to be used
in the business of the related Obligor.
13. Each
such
Contract was originated in the United States and is denominated and payable
solely in United States Dollars.
14. Each
such
Contract (i) if a Lease Contract, contains “hell or high water” provisions,
(ii) requires the related Obligor to assume all risk of loss or malfunction
of the related Obligor Collateral; (iii) requires the related Obligor to
pay all maintenance, repair, insurance and taxes, together with all other
ancillary costs and expenses, with respect to the related Obligor
Sch.III-A-2
Collateral;
and (iv) requires the related Obligor to pay, in full, when due, all
Scheduled Payments notwithstanding any casualty, loss or other damage to the
related Obligor Collateral.
15. Each
such
Contract is by its terms an absolute and unconditional obligation of the related
Obligor and is non-cancelable (in the case of a Lease Contract) and
non-cancelable and non-prepayable without the payment in full of principal
and
accrued interest and finance charges prior to the expiration of the term of
such
Contract; such Contract does not provide for the substitution, exchange or
addition of any other items of Obligor Collateral related to such Contract
if
the effect thereof would be to reduce or extend the Scheduled Payments related
thereto; and the rights with respect to such Contract are assignable by
Originator (and its successors and assigns, including the Borrower) without
the
consent of or notice to any Person.
16. Each
such
Contract is in the form of one of the form contracts attached hereto as
Exhibit X-0,
Xxxxxxx X-0
or
Exhibit D-3
or in a
form otherwise approved by the Servicer in compliance with the Credit and
Collection Policy.
17. The
Security Deposit, if any, related to such Contract has been deposited into
the
Security Deposit Account within ten Business Days of the Pledge of the related
Receivable.
18. All
material requirements of applicable federal, state and local laws, and
regulations thereunder in respect of each such Contract, the origination
thereof, and the Obligor Collateral related thereto, have been complied with
in
all respects.
19. The
applicable Obligor (other than a lessee under a Lease Contract that is a “true
lease”) has good and marketable title to the Equipment which is the subject of
each such Contract and such Equipment is free and clear of all Adverse
Claims.
20. Each
such
Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment
Intangible” within the meaning of the UCC.
21. Each
such
Contract contains language by which the related Obligor grants a security
interest to Originator in the Obligor Collateral which is the subject of each
such Contract.
22. (A) The
Originator shall have taken or caused to be taken all steps necessary under
all
applicable law (including the filing of an Obligor Financing Statement with
respect to each such Contract) in order to cause a valid, subsisting and
enforceable perfected, first priority security interest to exist in Originator’s
favor in the Obligor Collateral securing each such Contract (other than with
respect to Equipment which has a value of less than $25,000 if such Equipment
is
leased under Dollar Purchase Option Contracts or $50,000 if such Equipment
is
leased under FMV Contracts), (B) Originator shall have assigned the
perfected, first priority security interest in the Obligor Collateral referred
to in clause (A) above to the Borrower pursuant to the Purchase and Sale
Agreement and (C) the Borrower shall have assigned the perfected, first
priority security interest in the Obligor Collateral referred to in clause
(A)
above to the Collateral Agent pursuant to Section 2.11
hereof.
23. The
Borrower has taken all steps necessary under all applicable law in order to
perfect the security interest of the Collateral Agent in (i) the Borrower’s
interest in the Obligor
Sch.III-A-3
Collateral
related to each such Contract (other than Equipment which has a value of less
than $25,000 if such Equipment is leased under Dollar Purchase Option Contracts
or $50,000 if such Equipment is leased under FMV Contracts) and (ii) each
such Contract and the Receivable, Related Security and Other Conveyed Property
related thereto (and the proceeds thereof), and there exists in favor of the
Collateral Agent as secured party, a valid, subsisting and enforceable first
priority perfected security interest in (i) the Borrower’s interest in such
Obligor Collateral and (ii) such Contract and the Receivable, Related
Security and Other Conveyed Property related thereto (and the proceeds thereof)
and such security interest is and shall be prior to all other liens upon and
security interests in (i) the Borrower’s interest in such Obligor
Collateral and (ii) such Contract and the Receivable, Related Security and
Other Conveyed Property related thereto (and the proceeds thereof) that now
exist or may hereafter arise or be created (other than Permitted
Liens).
24. If
the
Obligor Collateral related to such Contract (other than a Contract related
to a
Vehicle Sublimit Pledged Receivable) includes a Vehicle, the Borrower or the
Servicer shall have delivered to the applicable Registrar of Titles an
application for a Certificate of Title for such Vehicle which such Certificate
of Title shall indicate the Borrower as the owner of the related Vehicle and
indicate “Xxxxxx Xxxxxxx Bank” as the sole lienholder with respect to such
Vehicle.
25. No
such
Contract is a Defaulted Receivable or, at the time of its Pledge hereunder,
a
Delinquent Receivable.
26. Each
such
Contract is payable by an Obligor which is not subject to any bankruptcy,
insolvency, reorganization or similar proceeding.
27. The
information pertaining to each such Contract set forth in the Schedule of
Contracts (as defined in the Purchase and Sale Agreement), the related
Assignment and each Borrowing Base Certificate and Monthly Remittance Report
is
true and correct in all respects.
28. With
respect to each such Contract, by the Borrowing Date on which such Contract
is
Pledged hereunder and on each relevant date thereafter, Originator will have
caused its master computer records relating to such Contract to be clearly
and
unambiguously marked to show that such Contract has been Pledged under this
Agreement.
29. With
respect to each such Contract there exists a Receivable File and such Receivable
File contains each item listed in the definition of Receivable File with respect
to such Contract and such Receivable File has been delivered to the
Custodian.
30. No
such
Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and
the
Obligor Collateral securing such Contract has not been released from the lien
of
the Lender in whole or in part (except for releases of Equipment from a Contract
prior to the date of the Pledge thereof and which releases have been noted
in
the Collateral Receipt related to such document).
31. No
such
Contract was originated in, or is subject to the laws of, any jurisdiction
the
laws of which would make unlawful, void or voidable the sale, transfer, pledge
and/or assignment of such Contract under this Agreement or the Purchase and
Sale
Agreement, and
Sch.III-A-4
Originator
has not entered into any agreement with any Obligor that prohibits, restricts
or
conditions the sale, transfer, pledge and/or assignment of such
Contract.
32. [Intentionally
Omitted].
33. No
such
Contract has been sold, transferred, assigned or pledged by Originator to any
Person other than the Borrower. Borrower has not taken any action to convey
any
right to any Person that would result in such Person having a right to payments
due under any such Contract or payments received under the related Insurance
Policy or otherwise to impair the rights of the Borrower or the Lender in such
Contract, the related Insurance Policy or any proceeds thereof. There is an
Insurance Policy in full force and effect with respect to the Equipment related
to such Contract if such Equipment had an original cost over
$100,000.
34. No
such
Contract is assumable by another Person in a manner which would release the
Obligor thereof from such Obligor’s obligations to Originator or the
Borrower.
35. There
has
been no default, breach, violation or event permitting acceleration under the
terms of any such Contract, and no condition exists or event has occurred and
is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms
of
any such Contract, and there has been no waiver of any of the
foregoing.
36. No
selection procedures adverse to the Borrower or the Lender have been utilized
in
selecting any such Contract from all other similar Contracts originated or
purchased by Originator.
37. The
Obligor Collateral related to any such Contract is not subject to any tax or
mechanic’s lien or any other Adverse Claim.
38. [Intentionally
omitted.]
39. The
Borrower has delivered to the Custodian the sole original counterpart of each
such Contract (or a true and correct copy thereof) and such document constitutes
the entire agreement between the parties thereto in respect of the related
Obligor Collateral.
40. Each
such
Contract is in full force and effect in accordance with its terms and neither
the Borrower nor the Obligor has or will have suspended or reduced any payments
or obligations due or to become due thereunder by reason of a default by any
other party to such Contract; there are no proceedings pending or threatened
asserting insolvency of such Obligor; there are no proceedings pending or
threatened wherein such Obligor, any other obligated party or any governmental
agency has alleged that such Contract is illegal or unenforceable.
41. The
origination and collection practices used by the Servicer with respect to each
such Contract have been in all respects customary in the equipment financing
and
servicing business.
42. The
Obligor Collateral related to each such Contract was properly delivered to
the
Obligor in good repair and is in proper working order. Each Obligor has accepted
the related
Sch.III-A-5
Equipment.
The related Obligor is the end user of the Equipment that is the subject of
any
such Contract and no Obligor has sublet the Equipment to any other
party.
43. The
Obligor with respect to any such Contract is not a merchant with respect to
the
Equipment related to such Contract.
44. Except
with respect to a breach of an Obligor’s right of quiet enjoyment of the related
Equipment, neither the operation of any of the terms of any such Contract nor
the exercise by the Borrower, the Servicer or the Obligor of any right under
any
such Contract will render such Contract unenforceable in whole or in part nor
subject to any right of rescission, setoff, claim, counterclaim or defense,
and
no such right of rescission, set-off, claim, counterclaim or defense, including
a defense arising out of a breach of the Obligor’s right of quiet enjoyment of
the Equipment, has been asserted with respect thereto.
45. The
Borrower and the Servicer have duly fulfilled all obligations on their part
to
be fulfilled under or in connection with the origination, acquisition and
assignment of such Contract, including, without limitation, giving any notices
and obtaining any consents necessary to effect the acquisition of such Contract
by the Borrower, and have done nothing to impair the rights of the Borrower
or
the Lender in the Contract or payments with respect thereto.
46. Originator
and the Servicer have duly fulfilled all obligations on their part to be
fulfilled under or in connection with the origination, acquisition and
assignment of such Contract, and have done nothing to impair the rights of
the
Borrower in such Contract or payments with respect thereto. Originator, the
Servicer and Borrower have duly fulfilled all continuing obligations on their
part to be fulfilled under or in connection with such Contract.
47. [Intentionally
Omitted].
48. The
sale
from the Originator to the Borrower of each such Contract and the Other Conveyed
Property and Related Security related thereto does not violate the terms or
provisions of any agreement to which the Borrower is a party or by which it
is
bound.
49. The
transfer, assignment and conveyance of the Contract and the related Related
Security and Other Conveyed Property from the Originator to the Borrower
pursuant to the Purchase and Sale Agreement is not subject to nor will result
in
any tax, fee or governmental charge payable by the Borrower or any other Person
to any federal, state or local government.
50. No
such
Contract (other than a “true lease”) may be (i) an executory contract or
(ii) in any event, deemed to be an executory contract or unexpired lease
subject to rejection by an Obligor under Section 365 of the Bankruptcy Code
in the event that a Bankruptcy Event has occurred with respect to such
Obligor.
51. Each
such
Contract contains enforceability provisions (i) permitting the acceleration
of the payments thereunder if the Obligor is in default under such Contract
and
(ii) sufficient to enable the Borrower to repossess or foreclose upon the
Obligor Collateral related thereto.
Sch.III-A-6
52. Each
such
Contract generally contains provisions requiring the payment of both interest
and principal (or, in the case of a Lease Contract, lease payments) in each
calendar month or quarter during the term of such Contract.
53. The
promissory note, if any, related to each such Contract (i) was payable to
the Originator immediately prior to its transfer to the Borrower under the
Purchase and Sale Agreement, and (ii) was payable to the Borrower
immediately prior to its Pledge hereunder and has not been endorsed by
Originator to any Person other than the Borrower.
54. The
final
Scheduled Payment required by each such Contract is less than or equal to the
Discounted Balance of such Contract at the time of origination.
55. The
Obligor Collateral related to such Contract is not one or more Vehicles
regularly engaged in the long-haul transportation of goods.
56. The
Obligor with respect to any such Contract which is a lease of, or is secured
by,
Equipment related to the practice of dentistry, medicine or veterinary medicine
is a dentist, doctor or veterinarian.
57. The
vendor of the Equipment relating to such Receivable has received payment in
full
from the Obligor prior to the Pledge of such Receivable hereunder and has no
remaining obligations with respect to such Equipment except for any applicable
warranty.
Sch.III-A-7
SCHEDULE
III-B
REPRESENTATIONS
AND WARRANTIES WITH RESPECT TO
ELIGIBLE
POOL B RECEIVABLES
The
following representations and warranties are made by the Borrower with respect
to the Pool B Contracts related to Pledged Pool B Receivables which
are designated as being Eligible Pool B Receivables on a Borrowing Base
Certificate or a Monthly Remittance Report, or are otherwise represented to
the
Lender as being Eligible Pool B Receivables, or are included as Eligible
Pool B Receivables in any calculation set forth herein.
1. Each
such
Contract represents the genuine, legal, valid, binding and full recourse payment
obligation of the Obligor thereunder, enforceable by the Borrower in accordance
with its terms and the Obligor, with respect to such Contract (and any guarantor
of the Obligor’s obligations thereunder), had full legal capacity to execute and
deliver such Contract and any other documents related thereto.
2. [Intentionally
omitted.]
3. The
Obligor under such Contract has been continuously originating lease or loan
agreements related to equipment with an original cost of less than $100,000
for
at least three (3) complete calendar years unless such Obligor is Pentech
Financial Services, Inc.
4. Each
such
Contract, at the time of origination and at all times thereafter, conformed
to
all requirements of the Credit and Collection Policy applicable to such Contract
and, in any case, no such Contract would be required to be written off pursuant
to the Credit and Collection Policy.
5. Each
such
Contract (i) was originated by Originator in the ordinary course of
Originator’s business and Originator had all necessary licenses and permits to
originate Contracts in the State where the related Obligor and the related
Obligor Collateral were located, (ii) was sold by Originator to the
Borrower under the Purchase and Sale Agreement and the Borrower has all
necessary licenses and permits to own Receivables and enter into Contracts
in
the state where the related Obligor and the related Obligor Collateral are
located, (iii) contains customary and enforceable provisions, such as to
render the rights and remedies of the Borrower (and any assignee thereof)
adequate for realization against the collateral security related thereto and
(iv) provides for level Scheduled Payments during the term of such Contract
or
such Contract is a Non-Level Payment Contract.
6. Each
such
Contract was originated by Originator without any fraud or material
misrepresentation on the part of the related Obligor or Originator. Each such
Contract was sold by Originator to the Borrower without any fraud or material
misrepresentation on the part of Originator.
7. No
such
Contract is the subject of any litigation, nor is it subject to any right of
rescission, setoff, counterclaim or defense on the part of the Obligor
thereunder.
Sch.III-B-1
8. Each
such
Contract has had no provision thereof waived, amended, altered or modified
in
any respect since its origination except in conformity with the Credit and
Collection Policy.
9. The
Obligor with respect to each such Contract has a billing address in the United
States and, except as otherwise permitted in writing by the Lender from time
to
time, all Obligor Collateral with respect thereto is located in the United
States.
10. Each
such
Contract (i) is calculated at a fixed yield, (ii) is fully amortizing
in periodic installments over its remaining term (which amortization may include
a Balloon Payment or Put Payment not in excess of 10% of the aggregate original
cost of the related Underlying Equipment), (iii) has a remaining term of
120 months or less and does not permit renewal or extension, (iv) provides
for acceleration of the Scheduled Payments thereunder if the related Obligor
is
in default under or has otherwise violated or breached any material provision
of
such Contract, (v) prohibits the related Obligor from applying any part of
the Cash Reserve (if any) paid under such Contract to the Scheduled Payments
due
under such Contract (and neither the Originator, the Servicer, the Borrower
or
any other Person has applied any part of the Cash Reserve paid under such
Contract to any of the Scheduled Payments due under such Contract) and
(vi) has not been assigned by the related Obligor nor has there been any
sub-lease of the Obligor Collateral.
11. The
obligations of the Obligor under each such Contract are secured by Underlying
Originator Loan Collateral which includes Eligible Pool B Underlying Lease
Contracts and Eligible Pool B Underlying Loan Contracts with aggregate
Discounted Balances equal to or greater than the Discounted Balance of such
Contract.
12. Each
such
Contract (i) is payable by a single Obligor, that is a corporate Person or,
if the collateral is Equipment used in a business, an individual and
(ii) provides for the financing or lease of Obligor Collateral to be used
in the business of the related Obligor.
13. Each
such
Contract was originated in the United States and is denominated and payable
solely in United States Dollars.
14. [Intentionally
omitted.]
15. Each
such
Contract is by its terms an absolute and unconditional obligation of the related
Obligor and is non-cancelable and non-prepayable without the payment in full
of
principal and accrued interest and finance charges prior to the expiration
of
the term of such Contract; such Contract does not provide for the substitution,
exchange or addition of any other items of Underlying Originator Loan Collateral
related to such Contract if the effect thereof would be to reduce or extend
the
Scheduled Payments related thereto; and the rights with respect to such Contract
are assignable by Originator (and its successors and assigns, including the
Borrower) without the consent of or notice to any Person.
16. Each
such
Contract conforms with the criteria set forth in Exhibit D-4
hereto.
17. The
Cash
Reserve, if any, related to such Contract has been deposited into a Cash Reserve
Account within ten Business Days of the Pledge of the related
Receivable.
Sch.III-B-2
18. All
material requirements of applicable federal, state and local laws, and
regulations thereunder in respect of each such Contract, the origination
thereof, and the Obligor Collateral related thereto, have been complied with
in
all respects.
19. The
applicable Underlying Obligor (other than a lessee under an Underlying Lease
Contract that is a “true lease”) has good and marketable title to Underlying
Originator Loan Collateral related to such Contract and such Underlying
Originator Loan Collateral is free and clear of all Adverse Claims.
20. Each
such
Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment
Intangible” within the meaning of the UCC.
21. Each
such
Contract contains language by which the related Obligor grants a security
interest to Originator in the Obligor Collateral which is the subject of each
such Contract.
22. (A) The
Originator shall have taken or caused to be taken all steps necessary under
all
applicable law (including the filing of an Obligor Financing Statement with
respect to each such Contract) in order to cause a valid, subsisting and
enforceable perfected, first priority security interest to exist in Originator’s
favor in the Obligor Collateral securing each such Contract (other than with
respect to Underlying Equipment relating to such Contract which has an original
value of less than $25,000 if such Underlying Equipment is leased under Dollar
Purchase Option Contracts or $50,000 if such Underlying Equipment is leased
under FMV Contracts), (B) Originator shall have assigned the perfected,
first priority security interest in the Obligor Collateral referred to in
clause (A) above to the Borrower pursuant to the Purchase and Sale
Agreement and (C) the Borrower shall have assigned the perfected, first
priority security interest in the Obligor Collateral referred to in
clause (A) above to the Collateral Agent pursuant to Section 2.13
hereof.
23. The
Borrower has taken all steps necessary under all applicable law in order to
perfect the security interest of the Collateral Agent in (i) the Borrower’s
interest in the Obligor Collateral related to each such Contract (other than
with respect to Underlying Equipment relating to such Contract which has an
original value of less than $25,000 if such Underlying Equipment is leased
under
Dollar Purchase Option Contracts or $50,000 if such Underlying Equipment is
leased under FMV Contracts) and (ii) each such Contract and the Receivable,
Related Security and Other Conveyed Property related thereto (and the proceeds
thereof), and there exists in favor of the Collateral Agent as secured party,
a
valid, subsisting and enforceable first priority perfected security interest
in
(i) the Borrower’s interest in such Obligor Collateral and (ii) such
Contract and the Receivable, Related Security and Other Conveyed Property
related thereto (and the proceeds thereof) and such security interest is and
shall be prior to all other liens upon and security interests in (i) the
Borrower’s interest in such Obligor Collateral and (ii) such Contract and
the Receivable, Related Security and Other Conveyed Property related thereto
(and the proceeds thereof) that now exist or may hereafter arise or be created
(other than Permitted Liens).
24. [Intentionally
omitted.]
Sch.III-B-3
25. No
such
Contract is a Defaulted Receivable or, at the time of its Pledge hereunder,
a
Delinquent Receivable.
26. Each
such
Contract is payable by an Obligor which is not subject to any bankruptcy,
insolvency, reorganization or similar proceeding.
27. The
information pertaining to each such Contract set forth in the Schedule of
Contracts (as defined in the Purchase and Sale Agreement), the related
Assignment and each Borrowing Base Certificate and Monthly Remittance Report
is
true and correct in all respects.
28. With
respect to each such Contract, by the Borrowing Date on which such Contract
is
Pledged hereunder and on each relevant date thereafter, Originator will have
caused its master computer records relating to such Contract to be clearly
and
unambiguously marked to show that such Contract has been Pledged under this
Agreement.
29. With
respect to each such Contract there exists a Receivable File and such Receivable
File contains each item listed in the definition of Receivable File with respect
to such Contract and such Receivable File is in the possession of the
Custodian.
30. No
such
Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and
the
Obligor Collateral securing such Contract has not been released from the lien
of
the Lender in whole or in part.
31. No
such
Contract was originated in, or is subject to the laws of, any jurisdiction
the
laws of which would make unlawful, void or voidable the sale, transfer, pledge
and/or assignment of such Contract under this Agreement or the Purchase and
Sale
Agreement, and the Originator has not entered into any agreement with any
Obligor that prohibits, restricts or conditions the sale, transfer, pledge
and/or assignment of such Contract.
32. [Intentionally
Omitted].
33. No
such
Contract has been sold, transferred, assigned or pledged by the Originator
to
any Person other than the Borrower. Borrower has not taken any action to convey
any right to any Person that would result in such Person having a right to
payments due under any such Contract or payments received under the related
Insurance Policy or otherwise to impair the rights of the Borrower or the Lender
in such Contract, the related Insurance Policy or any proceeds
thereof.
34. No
such
Contract is assumable by another Person in a manner which would release the
Obligor thereof from such Obligor’s obligations to Originator or the
Borrower.
35. There
has
been no default, breach, violation or event permitting acceleration under the
terms of any such Contract, and no condition exists or event has occurred and
is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms
of
any such Contract, and there has been no waiver of any of the
foregoing.
Sch.III-B-4
36. No
selection procedures adverse to the Borrower or the Lender have been utilized
in
selecting any such Contract from all other similar Contracts originated or
purchased by Originator.
37. The
Obligor Collateral related to any such Contract is not subject to any Adverse
Claim.
38. [Intentionally
omitted.]
39. The
Borrower has delivered to the Custodian the sole original counterpart (or a
true
and correct copy) of each such Contract and such document constitutes the entire
agreement between the parties thereto in respect of the related Obligor
Collateral.
40. Each
such
Contract is in full force and effect in accordance with its terms and neither
the Borrower nor the Obligor has or will have suspended or reduced any payments
or obligations due or to become due thereunder by reason of a default by any
other party to such Contract; there are no proceedings pending or threatened
asserting insolvency of such Obligor; there are no proceedings pending or
threatened wherein such Obligor, any other obligated party or any governmental
agency has alleged that such Contract is illegal or unenforceable.
41. The
origination and collection practices used by the Servicer with respect to each
such Contract have been in all respects customary in the equipment financing
and
servicing business.
42. [Intentionally
omitted.]
43. [Intentionally
omitted.]
44. Neither
the operation of any of the terms of any such Contract nor the exercise by
the
Borrower, the Servicer or the Obligor of any right under any such Contract
will
render such Contract unenforceable in whole or in part nor subject to any right
of rescission, setoff, claim, counterclaim or defense, and no such right of
rescission, set-off, claim, counterclaim or defense has been asserted with
respect thereto.
45. The
Borrower and the Servicer have duly fulfilled all obligations on their part
to
be fulfilled under or in connection with the origination, acquisition and
assignment of the Contract, including, without limitation, giving any notices
and obtaining any consents necessary to effect the acquisition of the Contract
by the Borrower, and have done nothing to impair the rights of the Borrower
or
the Lender in the Contract or payments with respect thereto.
46. The
Originator and the Servicer have duly fulfilled all obligations on their part
to
be fulfilled under or in connection with the origination, acquisition and
assignment of the Contract, including, without limitation, giving any notices
and obtaining any consents necessary to effect the acquisition of the Contract
by the Borrower pursuant to the Purchase and Sale Agreement, and have done
nothing to impair the rights of the Borrower in the Contract or payments with
respect thereto. Originator, the Servicer and Borrower have duly fulfilled
all
continuing obligations on their part to be fulfilled under or in connection
with
such Contract.
Sch.III-B-5
47. The
sale
from the Originator to the Borrower of each such Contract and the Other Conveyed
Property and Related Security related thereto does not violate the terms or
provisions of any agreement to which the Borrower is a party or by which it
is
bound.
48. The
transfer, assignment and conveyance of the Contract and the related Related
Security and Other Conveyed Property from Originator to the Borrower pursuant
to
the Purchase and Sale Agreement is not subject to nor will result in any tax,
fee or governmental charge payable by the Borrower or any other Person to any
federal, state or local government.
49. No
such
Contract may be (i) an executory contract or (ii) in any event, deemed
to be an executory contract or unexpired lease subject to rejection by an
Obligor under Section 365 of the Bankruptcy Code in the event that a
Bankruptcy Event has occurred with respect to such Obligor.
50. Each
such
Contract contains enforceability provisions (i) permitting the acceleration
of the payments thereunder if the Obligor is in default under such Contract
and
(ii) sufficient to enable the Borrower to repossess or foreclose upon the
Obligor Collateral related thereto.
51. [Intentionally
omitted.]
52. The
promissory note, if any, related to each such Contract (i) was payable to the
Originator immediately prior to its transfer to the Borrower under the Purchase
and Sale Agreement, and (ii) was payable to the Borrower immediately prior
to its Pledge hereunder and has not been endorsed by Originator to any Person
other than the Borrower.
53. The
final
Scheduled Payment required by each such Contract is less than or equal to the
Discounted Balance of such Contract at the time of origination.
54. [Intentionally
omitted.]
55. [Intentionally
omitted.]
56. Such
Contract contains “Seller Events of Default” or similar events of default which
(i) would occur if a Pool B Termination Event with respect to the related
Underlying Originator occurred, (ii) would entitle the Borrower, as assignee
of
the Originator’s rights under the Contract, to deliver, or cause the delivery
of, a redirection notice which would require all Underlying Obligors to make
all
payments under Underlying Contracts sold or pledged to the Originator under
such
Contract to Lockbox Account or an account designated by the Borrower or the
Servicer and (iii) would entitle the Borrower, as assignee of the Originator’s
rights under the Contract, to receive 100% of all payments under the Underlying
Contracts sold or pledged to the Originator under such Contract.
57. Each
such
Contract shall require all amounts payable thereunder to be paid before the
return to the applicable Obligor of, and without setoff with respect to, the
amount of any loan principal or purchase price which would otherwise have been
advanced by the Originator to the applicable Obligor pursuant to the terms
of
such Contract, but which was held back by the Originator as a liquidity reserve
or similar reserve.
Sch.III-B-6
SCHEDULE
III-C
REPRESENTATIONS
AND WARRANTIES WITH RESPECT TO
ELIGIBLE
POOL B UNDERLYING CONTRACTS
The
following representations and warranties are made by the Borrower with respect
to the Underlying Contracts related to Pledged Pool B Receivables, which
are designated as being Eligible Pool B Receivables on a Borrowing Base
Certificate or a Monthly Remittance Report, or are otherwise represented to the
Lender as being Eligible Pool B Receivables, or are included as Eligible
Pool B Receivables in any calculation set forth herein.
1. Each
such
Underlying Contract represents the genuine, legal, valid, binding and full
recourse payment obligation of the Underlying Obligor thereunder, enforceable
by
the Underlying Originator in accordance with its terms and the Underlying
Obligor, with respect to such Underlying Contract (and any guarantor of the
Underlying Obligor’s obligations thereunder), had full legal capacity to execute
and deliver such Underlying Contract and any other documents related
thereto.
2. [Intentionally
omitted.]
3. [Intentionally
omitted.]
4. Each
such
Underlying Contract at the time of origination and at all times thereafter,
conformed to all requirements of the credit and collection policy of the
applicable Underlying Originator applicable to such Underlying Contract and,
in
any case, no such Underlying Contract would be required to be written off
pursuant to such credit and collection policy.
5. Each
such
Underlying Contract (i) was originated by an Eligible Underlying Originator
in the ordinary course of its business and such Underlying Originator had all
necessary licenses and permits to originate Underlying Contracts in the State
where the related Underlying Obligor and the related Underlying Collateral
were
located, (ii) was pledged by such Underlying Originator to the Originator
under the applicable Pool B Contract and (iii) contains customary and
enforceable provisions, such as to render the rights and remedies of such
Underlying Originator (and any assignee thereof, including, without limitation,
the Borrower) adequate for realization against the collateral security related
thereto.
6. Each
such
Underlying Contract was originated by the applicable Underlying Originator
without any fraud or material misrepresentation on the part of the related
Underlying Obligor or Underlying Originator. Each such Underlying Contract
was
pledged by such Underlying Originator to Originator without any fraud or
material misrepresentation on the part of such Underlying Originator or
Originator, as applicable.
7. No
such
Underlying Contract is the subject of any litigation, nor is it subject to
any
right of rescission, setoff, counterclaim or defense on the part of the
Underlying Obligor thereunder.
Sch.III-C-1
8. Each
such
Underlying Contract has had no provision thereof waived, amended, altered or
modified in any respect since its origination except in conformity with the
credit and collection policy of the applicable Underlying
Originator.
9. The
Underlying Obligor, with respect to each such Underlying Contract, has a billing
address in the United States and, except as otherwise permitted in writing
by
the Lender from time to time, the Underlying Equipment which is the subject
of
each such Underlying Contract and all other Obligor Collateral with respect
thereto is located in the United States.
10. Each
such
Underlying Contract (i) is calculated at a fixed yield, (ii) is fully
amortizing in periodic installments over its remaining term (which may include
a
Balloon Payment or Put Payment not in excess of 10% of the original cost
of the related Underlying Equipment), (iii) has an remaining term of 120
months or less and does not permit renewal or extension, (iv) provides for
acceleration of the Underlying Scheduled Payments thereunder if the related
Underlying Obligor is in default under or has otherwise violated or breached
any
material provision of such Underlying Contract, (v) prohibits the related
Underlying Obligor from applying any part of the Underlying Security Deposit
(if
any) paid under such Underlying Contract to the Underlying Scheduled Payments
due under such Underlying Contract (and neither the Underlying Originator,
the
Originator, the Servicer, the Borrower or any other Person has applied any
part
of the Underlying Security Deposit paid under such Underlying Contract to any
of
the Underlying Scheduled Payments due under such Underlying Contract) and
(vi) has not been assigned by the related Underlying Obligor nor has there
been any sub-lease of the Underlying Obligor Collateral.
11. Such
Underlying Contract has a Discounted Balance of not greater than
$800,000.
12. Each
such
Underlying Contract (i) is payable by a single Underlying Obligor, that is
a corporate Person or, if the collateral is Equipment used in a business, an
individual and (ii) provides for the financing or lease of Underlying
Collateral to be used in the business of the related Underlying
Obligor.
13. Each
such
Underlying Contract was originated in the United States and is denominated
and
payable solely in United States Dollars.
14. Each
such
Underlying Contract (i) if an Underlying Lease Contract, contains “hell or
high water” provisions, (ii) requires the related Underlying Obligor to
assume all risk of loss or malfunction of the related Underlying Collateral;
(iii) requires the related Underlying Obligor to pay all maintenance,
repair, insurance and taxes, together with all other ancillary costs and
expenses, with respect to the related Underlying Collateral; and
(iv) requires the related Underlying Obligor to pay, in full, when due, all
Underlying Scheduled Payments notwithstanding any casualty, loss or other damage
to the related Underlying Collateral.
15. Each
such
Underlying Contract is by its terms an absolute and unconditional obligation
of
the related Underlying Obligor and is non-cancelable (in the case of an
Underlying Lease Contract) and non-cancelable and non-prepayable without the
payment in full of principal and accrued interest and finance charges prior
to
the expiration of the term of such Underlying Contract; such Underlying Contract
does not provide for the substitution, exchange or addition of
Sch.III-C-2
any
other
items of Underlying Collateral related to such Underlying Contract if the effect
thereof would be to reduce or extend the Underlying Scheduled Payments related
thereto; and the rights with respect to such Underlying Contract are assignable
by the applicable Underlying Originator (and its successors and assigns,
including Originator and the Borrower) without the consent of or notice to
any
Person.
16. [Intentionally
omitted.]
17. [Intentionally
omitted.]
18. All
material requirements of applicable federal, state and local laws, and
regulations thereunder in respect of each such Underlying Contract, the
origination thereof, and the Underlying Collateral related thereto, have been
complied with in all respects.
19. The
applicable Underlying Obligor (other than a lessee under an Underlying Lease
Contract that is a “true lease”) has good and marketable title to the Underlying
Equipment which is the subject of each such Underlying Contract and such
Underlying Equipment is free and clear of all Adverse Claims.
20. Each
such
Underlying Contract constitutes either an “Instrument” or “Chattel Paper” or a
“Payment Intangible” within the meaning of the UCC.
21. Each
such
Underlying Contract contains language by which the related Underlying Obligor
grants a security interest to the related Underlying Originator in the
Underlying Collateral which is the subject of each such Underlying
Contract.
22. (A) The
applicable Underlying Originator shall have taken or caused to be taken all
steps necessary under all applicable law (including the filing of a sufficient
UCC-1 Financing Statement with respect to each such Underlying Contract) in
order to cause a valid, subsisting and enforceable perfected, first security
interest to exist in such Underlying Contract’s favor in the Underlying
Collateral securing each such Underlying Contract (other than with respect
to
Equipment which has a value of less than $25,000 and is leased under Dollar
Purchase Option Contracts or $50,000 and is leased under FMV Contracts) and
(B) such Underlying Originator shall have assigned the perfected, first
priority security interest in the Underlying Collateral referred to in
clause (A) above to Originator pursuant to the applicable Pool B
Contract. Such security interest is and shall be prior to all other liens upon
and security interests in (i) the Underlying Originator’s in such
Underlying Collateral and (ii) such Underlying Contract (and the proceeds
thereof) that now exist or may hereafter arise or be created.
23. [Intentionally
omitted.]
24. If
the
Underlying Collateral related to such Underlying Contract (other than an
Underlying Contract related to a Vehicle Sublimit Pledged Receivable) includes
a
Vehicle, the Borrower or the Servicer shall have delivered to the applicable
Registrar of Titles an application for a Certificate of Title for such Vehicle
which such Certificate of Title shall indicate “Xxxxxx Xxxxxxx Bank” as the sole
lienholder with respect to such Vehicle.
25. No
such
Underlying Contract meets any of the following criteria:
Sch.III-C-3
(i)
any
part
of any Underlying Scheduled Payment (or other amount payable under the terms
of
the related Underlying
Contract)
remains unpaid for more than 120 days after the due date therefor set forth
in such Underlying Contract;
(ii) the
first
or second Underlying Scheduled Payment is not paid in full when due under the
related Underlying Contract;
(iii) any
payment or other material terms of the related Underlying Contract have been
modified due to credit related reasons after such Underlying Contract was
acquired by the Originator pursuant to the applicable Pool B
Contract;
(iv) a
Bankruptcy Event has occurred with respect to the related Underlying Obligor
or
such Underlying Contract has been or should otherwise be deemed uncollectible
by
the Underlying Originator in accordance with its credit and collection
policy;
(v) with
respect to such Underlying Contract the Underlying Originator has repossessed
the related Underlying Equipment;
(vi) any
Underlying Scheduled Payment (or other amount payable under the terms of such
Underlying Contract) remains unpaid for more than 30 days but not more than
120 days after the due date therefor set forth in such Underlying
Contract.
26. Each
such
Underlying Contract is payable by an Underlying Obligor which is not subject
to
any bankruptcy, insolvency, reorganization or similar proceeding.
27. The
information pertaining to each such Underlying Contract set forth in the
Schedule of Contracts (as defined in the Purchase and Sale Agreement), the
related Assignment and each Borrowing Base Certificate and Monthly Remittance
Report is true and correct in all respects.
28. With
respect to each such Underlying Contract, by the Borrowing Date on which the
related Pool B Contract is Pledged hereunder and on each relevant date
thereafter, the related Underlying Originator will have caused its master
computer records relating to such Underlying Contract to be clearly and
unambiguously marked to show that such Underlying Contract has been pledged
to
Originator.
29. [Intentionally
omitted.]
30. No
such
Underlying Contract has been repaid, prepaid, satisfied, subordinated or
rescinded, and the Underlying Collateral securing such Underlying Contract
has
not been released from the lien of the related Underlying Originator, in whole
or in part.
31. No
such
Underlying Contract was originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the sale,
transfer, pledge and/or assignment of such Underlying Contract under this
Agreement, the Purchase and Sale Agreement or the related Pool B Contract,
and the related Underlying Originator has not entered
Sch.III-C-4
into
any
agreement with any Underlying Obligor that prohibits, restricts or conditions
the sale, transfer, pledge and/or assignment of such Underlying
Contract.
32. No
such
Underlying Contract has been sold, transferred, assigned or pledged by the
related Underlying Originator to any Person other than Originator. Such
Underlying Originator has not taken any action to convey any right to any Person
that would result in such Person having a right to payments due under any such
Underlying Contract or payments received under any related Underlying Insurance
Policy or otherwise to impair the rights of Originator in such Underlying
Contract, any Underlying Insurance Policy or any proceeds thereof. There is
an
Underlying Insurance Policy in full force and effect with respect to the
Equipment related to such Underlying Contract if such Equipment had an original
cost over $100,000.
33. [Intentionally
omitted.]
34. No
such
Underlying Contract is assumable by another Person in a manner which would
release the Underlying Obligor thereof from such Underlying Obligor’s
obligations to the Underlying Originator.
35. There
has
been no default, breach, violation or event permitting acceleration under the
terms of any such Underlying Contract, and no condition exists or event has
occurred and is continuing that with notice, the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of any such Underlying Contract, and there has been no waiver of
any
of the foregoing.
36. No
selection procedures adverse to Originator have been utilized in selecting
any
such Underlying Contract from all other similar Underlying Contracts originated
or purchased by the related Underlying Originator.
37. The
Underlying Collateral related to any such Underlying Contract is not subject
to
any Adverse Claim.
38. [Intentionally
omitted.]
39. The
related Underlying Originator has delivered to the Originator the sole original
counterpart (or a true and correct copy) of each such Underlying Contract and
such document constitutes the entire agreement of the parties thereto in respect
of the related Underlying Collateral.
40. Each
such
Underlying Contract is in full force and effect in accordance with its terms
and
neither the related Underlying Originator nor the Underlying Obligor has or
will
have suspended or reduced any payments or obligations due or to become due
thereunder by reason of a default by any other party to such Underlying
Contract; there are no proceedings pending or threatened asserting insolvency
of
such Underlying Obligor; there are no proceedings pending or threatened wherein
such Underlying Obligor, any other obligated party or any governmental agency
has alleged that such Underlying Contract is illegal or
unenforceable.
Sch.III-C-5
41. The
origination and collection practices used by the related Underlying Originator
with respect to each such Underlying Contract have been in all respects
customary in the equipment financing and servicing business.
42. The
Underlying Collateral related to each such Underlying Contract was properly
delivered to the Underlying Obligor in good repair and is in proper working
order. Each Underlying Obligor has accepted the related Underlying Equipment.
The related Underlying Obligor is the end user of the Underlying Equipment
that
is the subject of any such Underlying Contract and no Underlying Obligor has
sublet the Underlying Equipment to any other party.
43. The
Underlying Obligor with respect to any such Underlying Contract is not a
merchant with respect to the Underlying Equipment related to such Underlying
Contract and is not a partner, member or Affiliate of the Underlying
Originator.
44. Except
with respect to a breach of an Underlying Obligor’s right of quiet enjoyment of
the related Underlying Equipment, neither the operation of any of the terms
of
any such Underlying Contract nor the exercise by the Underlying Originator,
the
Borrower, the Servicer or the Obligor of any right under any such Underlying
Contract will render such Underlying Contract unenforceable in whole or in
part
nor subject to any right of rescission, setoff, claim, counterclaim or defense,
and no such right of rescission, set-off, claim, counterclaim or defense,
including a defense arising out of a breach of the Underlying Obligor’s right of
quiet enjoyment of the Underlying Equipment, has been asserted with respect
thereto.
45. The
Underlying Originator has duly fulfilled all obligations on its part to be
fulfilled under or in connection with the origination, acquisition and
assignment of the Underlying Contract, including, without limitation, giving
any
notices and obtaining any consents necessary to effect, as applicable, the
acquisition of the Underlying Contract by, or the pledge of the Underlying
Contract to, the Originator, and has done nothing to impair the rights of
Originator in the Underlying Contract or payments with respect thereto. The
Underlying Originator, Originator, the Servicer and Borrower, as applicable,
have duly fulfilled all continuing obligations on their part to be fulfilled
under or in connection with such Underlying Contract.
46. [Intentionally
omitted.]
47. The
sale
from the related Underlying Originator to Originator of each such Underlying
Contract does not violate the terms or provisions of any agreement to which
either of them is a party or by which it is bound.
48. [Intentionally
omitted.]
49. The
pledge of the Underlying Contract from the related Underlying Originator to
Originator pursuant to the related Pool B Contract is not subject to or
will result in any tax, fee or governmental charge payable by Originator or
any
other Person to any federal, state or local government.
50. No
such
Underlying Contract (other than a “true lease”) may be (i) an executory
contract or (ii) in any event, deemed to be an executory contract or
unexpired lease subject to
Sch.III-C-6
rejection
by an Underlying Obligor under Section 365 of the Bankruptcy Code in the
event that a Bankruptcy Event has occurred with respect to such Underlying
Obligor.
51. Each
such
Underlying Contract contains enforceability provisions (i) permitting the
acceleration of the payments thereunder if the Underlying Obligor is in default
under such Underlying Contract and (ii) sufficient to enable the related
Underlying Originator (or any assignee thereof) to repossess or foreclose upon
the Underlying Collateral related thereto.
52. Each
such
Underlying Contract generally contains provisions requiring the payment of
both
interest and principal (or, in the case of an Underlying Lease Contract, lease
payments) in each calendar month or quarter during the term of such Underlying
Contract.
53. The
promissory note, if any, related to each such Underlying Contract (i) was
payable to the related Underlying Originator immediately prior to its transfer
to Originator pursuant to the related Pool B Contract and has not been
endorsed by the related Underlying Originator to any Person other than
Originator.
54. The
final
Underlying Scheduled Payment required by each such Underlying Contract is less
than or equal to the Discounted Balance of such Underlying Contract at the
time
of origination.
55. The
Underlying Collateral related to such Underlying Contract is not one or more
Vehicles regularly engaged in the long-haul transportation of
goods.
56. The
related Underlying Originator is not a guarantor under any Underlying
Contract.
57. The
vendor of the Underlying Equipment relating to such Underlying Contract has
received payment in full from the Underlying Obligor prior to the pledge of
such
Underlying Contract under the related Pool B Contract and has no remaining
obligations with respect to such Underlying Equipment except for any applicable
warranty.
Sch.III-C-7
SCHEDULE
IV
CREDIT
AND COLLECTION POLICY
Attached.
Sch.IV-1
SCHEDULE
V
EQUIPMENT
CATEGORIES
Sch.V-1
SCHEDULE
VI
ADDRESSES
FOR NOTICE
Resource
Capital Funding II, LLC
c/o
Leaf
Funding Inc.
0000
Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxxxxxxxx
Facsimile
No.: (000) 000-0000
Confirmation
No.: (000) 000-0000
LEAF
Financial Corporation
0000
Xxxxxx Xxxxxx, 0xx
Xxxxx,
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxx Xxxxxx
Facsimile
No.: (000) 000-0000
Confirmation
No.: (000) 000-0000
Xxxxxx
Xxxxxxx Capital Services Inc.
Transaction
Management Group
0000
Xxxxxxxx
Xxx
Xxxx,
XX 00000-0000
Attention:
Chief Legal Officer
Facsimile
No.: 000-000-000-0000
Xxxxxx
Xxxxxxx Credit
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Facsimile
No.: (000) 000-0000
E-mail:
xxxxxxxxxxxxxxxx@xxxxxxxxxxxxx.xxx
Xxxxxx
Xxxxxxx Bank
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxx Xxxxxxxxxx
Facsimile
No.: (000) 000-0000
Confirmation
No.: (000) 000-0000
Sch.VI-1
U.S.
Bank
National Association
EP-MN-WS3D
00
Xxxxxxxxxx Xxx.
Xx.
Xxxx,
XX 00000
Attention:
Xxxxx Xxxxxxxx
Facsimile
No.: (000) 000-0000
Confirmation
No.: (000) 000-0000
Lyon
Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services)
U.S.
Bank
Portfolio Services
0000
Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
Xxx Xxxxxxx
Facsimile
No.: (000) 000-0000
Confirmation
No.: (000) 000-0000
Sch.VI-2
EXHIBIT
A
FORM
OF
BORROWING BASE CERTIFICATE
BORROWING
BASE CERTIFICATE
__________,
200__
To:
Xxxxxx
Xxxxxxx Bank
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxxxxx
Ladies
and Gentlemen:
Reference
is made to the Receivables Loan and Security Agreement dated as of October
31,
2006 (the “Loan
Agreement”),
among
Resource Capital Funding II, LLC, (the “Borrower”), Leaf Financial Corporation,
as the Servicer, Xxxxxx Xxxxxxx Bank, as Lender, U.S. Bank National Association,
as the Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (d/b/a
U.S. Bank Portfolio Services) as the Backup Servicer. Capitalized terms used
herein but not defined herein shall have the meanings assigned to such terms
in
the Loan Agreement.
In
accordance with Section
6.10(c)
of the
Loan Agreement, the Borrower hereby certifies that, after giving effect to
the
Borrowing requested to occur on ---__________, 200__:
(1)
|
the
aggregate Facility Amount under the Loan Agreement does not exceed
the
lesser of (A) the Borrowing Limit and (B) the Borrowing Base;
|
(2)
|
if
such Borrowing is to be secured by Pool A Receivables, the aggregate
Facility Amount under the Loan Agreement, calculated solely with
respect
to Loans secured by Pool A Receivables, does not exceed the Pool
A
Borrowing Base;
|
(3)
|
if
such Borrowing is to be secured by Pool B Receivables, the aggregate
Facility Amount under the Loan Agreement, calculated solely with
respect
to Loans secured by Pool B Receivables, does not exceed the Pool
B
Borrowing Base;
|
(4)
|
no
Program Termination Event exists;
|
(5)
|
if
such Borrowing is to be secured by Pool A Receivables, no Pool A
Termination Event exists;
|
(6)
|
if
such Borrowing is to be secured by Pool B Receivables, no Pool B
Termination Event exists; and
|
Exh.A-1
The
Borrower hereby further certifies that attached hereto as Schedule
A
are true
and correct calculations evidencing the accuracy of the statements set forth
in
paragraphs (1) and, as applicable, (2) or (3) above.
Very
truly yours,
RESOURCE
CAPITAL FUNDING II, LLC
By:
Name: Xxxxx
Xxxxxx
Title: Vice
President
Exh.A-2
EXHIBIT
B
FORM
OF
REQUIRED DATA FIELDS
(a) Obligor
lease number;
(b) Obligor
name;
(c) Underlying
Obligor name;
(d) Obligor
Credit risk rating (if available);
(e) Collateral
location (city and state);
(f) Contract
type (pool A or B);
(g) Equipment
category/type;
(h) Non
Level
Payment Contract flag;
(i) Balloon
flag and put payment flag;
(j) Stand
Alone Working Capital Loan Flag;
(k) New/used
flag (if available);
(l) Lease
type (true/installment);
(m) Serial
Number (if available);
(n) SIC
Code
(if available);
(o) Vendor;
(p) Commencement
Date
(q) Maturity
Date;
(r) Date
Next
Due;
(s) Original
Term;
(t) Remaining
Term;
(u) Payment
Frequency;
(v) Original
Receivable Balance;
Exh.
B-1
(w) Current
Receivable Balance;
(x) Original
Equipment Cost;
(y) Amortized
Equipment Cost;
(z) Scheduled
Payment; and
(aa) Discounted
Balance.
Exh.
B-2
EXHIBIT
C
FORM
OF
MONTHLY REMITTANCE REPORT
(See
attached.)
Exh.
C-1
EXHIBIT
D
FORMS
OF
CONTRACT
(See
attached.)
Exh.
D-1
EXHIBIT
E
(Intentionally
Omitted.)
Exh.
E-1
EXHIBIT
F
FORM
OF
NOTICE OF BORROWING
NOTICE
OF BORROWING
__________,
200__
To:
Xxxxxx
Xxxxxxx Bank
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxxxxx
Notice
of
Borrowing No.: [1]
Gentlemen:
Reference
is made to the Receivables Loan and Security Agreement dated as of October
31,
2006 (the “Loan
Agreement”),
among
Resource Capital Funding II, LLC, (the “Borrower”), Leaf Financial Corporation,
as the Servicer, Xxxxxx Xxxxxxx Bank, as Lender, U.S. Bank National Association,
as the Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (d/b/a
U.S. Bank Portfolio Services) as the Backup Servicer. Capitalized terms used
herein but not defined herein shall have the meanings assigned to such terms
in
the Loan Agreement.
In
accordance with Sections
2.02(c) and 6.10(c)
of the
Loan Agreement, the Borrower hereby certifies that, after giving effect to
the
Borrowing requested to occur on __________, 200__:
1. Requested
aggregate amount of Borrowing: $__________
To
be
comprised of
a. Requested
Pool A Loans $__________
and;
b. Requested
Pool B Loans; $__________
2.
|
Requested
date of Borrowing: __________,
200__
|
3.
|
In
connection with this Borrowing we Pledge to you the Eligible Pool
A
Receivables and the Eligible Pool B Receivables set forth on the
Schedule
of Receivables attached hereto.
|
Exh.
F-1
Payments
in connection with this Borrowing should be deposited to the following account:
_________________________.
(Signature
page to follow)
Exh.
F-2
Very
truly yours,
RESOURCE
CAPITAL FUNDING II, LLC
By:
Name: Xxxxx
Xxxxxx
Title: Vice
President
Exh.
F-3
EXHIBIT
G
FORM
OF
ALLONGE
(See
attached.)
Exh.
G-1
TABLE
OF
CONTENTS
SECTION
1.01 Certain
Defined
Terms
1
SECTION 1.02 Other
Terms
37
SECTION
1.03 Computation
of Time Periods 37
ARTICLE
II. THE
RECEIVABLES FACILITY 37
SECTION
2.01 Borrowings 37
SECTION
2.02 The
Initial Borrowing and Subsequent
Borrowings 37
SECTION
2.03 Determination
of Interest Periods and Interest Rates 38
SECTION
2.04 Remittance
Procedures 39
SECTION
2.05 Security
Deposit Account 43
SECTION
2.06 Cash
Reserve Account
44
SECTION
2.07 Payments
and Computations, Etc
45
SECTION
2.08 Fees
46
SECTION
2.09 Increased
Costs; Capital Adequacy
46
SECTION
2.10 Collateral
Assignment of Agreements
47
SECTION
2.11 Grant
of
a Security
Interest
48
SECTION
2.12 Evidence
of
Debt
49
SECTION
2.13 Release
of
Pledged
Receivables
49
SECTION
2.14 Treatment
of
Amounts Paid by the
Borrower
50
SECTION
2.15 Prepayment;
Certain Indemnification Rights;
Termination
50
SECTION
2.16 Increase
of Borrowing
Limit
51
ARTICLE
III. CONDITIONS
OF
LOANS
51
SECTION
3.01 Conditions
Precedent to Initial
Borrowing
51
SECTION
3.02 Conditions
Precedent to All
Borrowings
51
SECTION
3.03 Advances
Do Not Constitute a
Waiver
54
ARTICLE
IV. REPRESENTATIONS
AND WARRANTIES
54
SECTION
4.01 Representations
and Warranties of the
Borrower
54
SECTION
4.02 Representations
and
Warranties of the
Servicer
57
SECTION
4.03 Resale
of
Receivables Upon Breach of Covenant or Representation and Warranty by
Borrower 60
i
SECTION
4.04 Representations
and Warranties of the
Lender 60
ARTICLE
V. GENERAL
COVENANTS OF THE BORROWER AND THE
SERVICER
60
SECTION
5.01 General
Covenants 60
ARTICLE
VI. ADMINISTRATION
AND SERVICING; CERTAIN
COVENANTS
64
SECTION
6.01 Appointment
and Designation of the Servicer
64
SECTION
6.02 Collection
of Receivable Payments; Modification and Amendment of Receivables; Lockbox
Agreements
66
SECTION
6.03 Realization
Upon
Receivables
67
SECTION
6.04 Insurance
Regarding
Equipment
67
SECTION
6.05 Maintenance
of Security Interests in Obligor Collateral
68
SECTION
6.06 Pledged
Receivable
Receipts
69
SECTION
6.07 No
Rights
of
Withdrawal 69
SECTION
6.08 Permitted
Investments
69
SECTION
6.09 Servicing
Compensation
70
SECTION
6.10 Reports
to the Lender; Account Statements; Servicing
Information
70
SECTION
6.11 Statements
as
to Compliance; Financial
Statements 71
SECTION
6.12 Access
to
Certain Documentation; Obligors; Background
Check
74
SECTION
6.13 Backup
Servicer
75
SECTION
6.14 Additional
Remedies of Lender Upon Event of
Default
78
SECTION
6.15 Waiver
of
Defaults
79
SECTION
6.16 Maintenance
of Certain
Insurance 79
SECTION
6.17 Segregation
of
Collections 79
SECTION
6.18 UCC
Matters; Protection and Perfection of Pledged
Assets 79
SECTION
6.19 Servicer
Advances
80
SECTION
6.20 Repurchase
of Receivables Upon Breach of Covenant or Representation and Warranty by
Servicer 80
SECTION
6.21 Compliance
with Applicable
Law
81
SECTION
6.22 Receipt
of Certificates of
Title
81
SECTION
6.23 Lender’s
Bank Limitation of
Liability 81
ii
ARTICLE
VII. EVENTS
OF
DEFAULT 82
SECTION
7.01 Events
of
Default 82
SECTION
7.02 Additional
Remedies of the Lender
85
ARTICLE
VIII. INDEMNIFICATION
86
SECTION
8.01 Indemnities
by the Borrower
86
SECTION
8.02 Indemnities
by Servicer
88
ARTICLE
IX. MISCELLANEOUS
90
SECTION
9.01 Amendments
and Waivers
90
SECTION
9.02 Notices,
Etc
90
SECTION
9.03 No
Waiver; Remedies
91
SECTION
9.04 Binding
Effect; Assignability; Multiple Lenders 91
SECTION
9.05 Term
of
This Agreement
92
SECTION
9.06 GOVERNING
LAW; JURY WAIVER; CONSENT TO JURISDICTION
92
SECTION
9.07 Costs,
Expenses and Taxes 92
SECTION
9.08 No
Proceedings
93
SECTION
9.09 Recourse
Against Certain Parties
94
SECTION
9.10 Execution
in Counterparts; Severability; Integration
94
SECTION
9.11 Tax
Characterization 94
SECTION
9.12 Calculation
of Performance Triggers
95
ARTICLE
X. THE
COLLATERAL AGENT
95
SECTION
10.01 No
Implied Duties
95
SECTION
10.02 Limits
on
Liability
96
SECTION
10.03 Acknowledgment
96
iii
LIST
OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE
I Condition
Precedent Documents
SCHEDULE
II Prior
Names, Tradenames, Fictitious Names and “Doing Business As” Names
SCHEDULE
III Representations
and Warranties with Respect to Eligible Receivables, Eligible Underlying
Contracts and Eligible Underlying Originators
SCHEDULE
IV Credit
and Collection Policy
SCHEDULE
V Equipment
Categories
SCHEDULE
VI Addresses
for Notice
EXHIBITS
EXHIBIT
A Form
of
Borrowing Base Certificate
EXHIBIT
B Form
of
Required Data Fields
EXHIBIT
C Form
of
Monthly Remittance Report
EXHIBIT
D-1(a) Form
of
Master Lease Agreement
EXHIBIT
D-1(b) Form
of
Master Lease Schedule (Dollar Purchase Option)
EXHIBIT
D-1(c) Form
of
Master Lease Schedule (FMV Purchase Option)
EXHIBIT
D-1(d) Form
of
Master Lease Schedule (Put)
EXHIBIT
D-1(e) Form
of
Stand Alone Lease Agreement
EXHIBIT
D-2(a) Form
of
Loan Contract
EXHIBIT
D-2(b) Form
of
Loan Contract
EXHIBIT
D-3 Form
of
Practice Acquisition Loan Contract
EXHIBIT
D-4 Eligibility
Requirements for Pool B Transactions (Documentation Criteria)
EXHIBIT
E [Intentionally
Omitted]
EXHIBIT
F Form
of
Notice of Borrowing
EXHIBIT
G Form
of
Allonge
iv