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INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
MCII HOLDINGS (USA), INC.,
BUSLEASE, INC.,
MCII FUNDING INC.,
MCII FINANCIAL SERVICES II, INC.,
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.,
MCII COACHES, INC.,
MCII FUNDING II, INC.,
SPECIAL PURPOSE ACCOUNTS RECEIVABLE COOPERATIVE CORPORATION,
and
CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent, as Secondary Purchaser and as
Agent for Liquidity Providers
Dated as of May 2, 2000
Aggregate Repayment Obligations of MCII Funding II, Inc. with Respect to
Investment and Guaranteed Yield (each such term as defined herein)
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
Section 1.1 Definitions........................................................................2
ARTICLE II REPRESENTATIONS,
WARRANTIES AND COVENANTS
Section 2.1 Representations and Warranties of the Performance Guarantor, .......................
the Originators, the Servicer, MCII Holdings, MCII Coaches and the Borrower........2
Section 2.2 Affirmative Covenants of the Performance Guarantor, the Originators, ...............
the Servicer, MCII Holdings, MCII Coaches and the Borrower........................10
Section 2.3 Negative Covenants of the Performance Guarantor, the Originators, ..................
the Servicer, MCII Holdings, MCII Coaches and the Borrower........................19
Section 2.4 Affirmative Covenants of the Purchasers...........................................21
Section 2.5 Reporting Requirements of the Purchasers..........................................22
Section 2.6 Negative Covenants of the Purchasers..............................................22
Section 2.7 Representations and Warranties of the Administrative Agent........................24
Section 2.8 Affirmative Covenants of the Administrative Agent.................................25
Section 2.9 Reporting Requirements of the Administrative Agent................................26
Section 2.10 Negative Covenants of the Administrative Agent....................................27
ARTICLE III THE POLICY;
REIMBURSEMENT; INDEMNIFICATION
Section 3.1 Issuance of the Policy............................................................28
Section 3.2 Payment of Fees and Premium.......................................................28
Section 3.3 Reimbursement and Additional Payment Obligation...................................29
Section 3.4 Indemnification...................................................................30
Section 3.5 Payment Procedure.................................................................35
Section 3.6 Subrogation.......................................................................36
Section 3.7 Increased Costs...................................................................36
ARTICLE IV FURTHER AGREEMENTS
Section 4.1 Effective Date; Term of Agreement; Surrender of Policy............................37
Section 4.2 Further Assurances and Corrective Instruments.....................................37
Section 4.3 Obligations Absolute..............................................................37
Section 4.4 Assignments Reinsurance: Third-Party Rights.......................................39
Section 4.5 Liability of Financial Security...................................................40
Section 4.6 Actions under Transaction Documents...............................................40
Section 4.7 Reports...........................................................................42
Section 4.8 Obligations Under this Agreement..................................................42
Section 4.9 Disclosure Document...............................................................43
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ARTICLE V EVENTS OF DEFAULT;
REMEDIES
Section 5.1 Events of Default.................................................................43
Section 5.2 Remedies; Waivers.................................................................46
ARTICLE VI MISCELLANEOUS
Section 6.1 Amendments, Etc...................................................................47
Section 6.2 Notices...........................................................................47
Section 6.3 Payment Procedure.................................................................51
Section 6.4 Severability......................................................................51
Section 6.5 Governing Law.....................................................................52
Section 6.6 Consent to Jurisdiction...........................................................52
Section 6.7 Consent of Financial Security.....................................................53
Section 6.8 Counterparts......................................................................53
Section 6.9 Headings..........................................................................53
Section 6.10 Trial by Jury Waived..............................................................53
Section 6.11 Limited Liability.................................................................53
Section 6.12 Entire Agreement..................................................................54
Section 6.13 Counterparts......................................................................54
Section 6.14 Financial Security as Third Party Beneficiary.....................................54
Section 6.15 Claims against SPARC..............................................................54
APPENDIX I DEFINITIONS
APPENDIX II OPINIONS OF COUNSEL
ANNEX 1 FORM OF FINANCIAL GUARANTY INSURANCE
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INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT, dated as of May 2, 2000, by and
among FINANCIAL SECURITY ASSURANCE INC., as defined below, ("FINANCIAL
SECURITY"), ("MCII HOLDINGS, INC."), MCII Holdings (USA), Inc. ("MCII
Holdings"), BusLease, Inc., as originator and as servicer ("BUSLEASE", and in
its capacity as Servicer, the "SERVICER"), MCII Funding Inc., ("MCF"), MCII
Financial Services II, Inc., ("MCFSII", and together with BUSLEASE and MCF, the
"THE ORIGINATORS"), Motor Coach Industries International, Inc. as performance
guarantor (the "PERFORMANCE GUARANTOR"), MCII Funding II, Inc., as borrower
("BORROWER"), MCII Coaches, Inc., ("MCII COACHES"), Special Purpose Accounts
Receivable Cooperative Corporation, as Initial Purchaser ("SPARC"), and Canadian
Imperial Bank of Commerce, as Administrative Agent for SPARC, as Agent for the
Liquidity Providers and the Secondary Purchaser ("ADMINISTRATIVE AGENT", and in
its capacity as Secondary Purchaser, the "SECONDARY Purchaser" and together with
SPARC, the "PURCHASERS").
INTRODUCTORY STATEMENTS
1. On the initial Purchase Date, MCF transferred all of its
right, title and interest in and to certain Initial Receivables to the Borrower
pursuant to the MCF Transfer Agreement.
2. On the initial Purchase Date, BusLease transferred all of
its right, title and interest in certain Initial Receivables to MCFSII pursuant
to the BusLease Transfer Agreement.
3. On the initial Purchase Date, MCFSII has transferred all of
its right, title and interest in the Initial Receivables to the Borrower
pursuant to the MCFSII Transfer Agreement.
4. On each Purchase Date after the initial Purchase Date,
BusLease will sell all of its right, title and interest in Subsequent
Receivables and certain other property related thereto to MCFSII pursuant to the
BusLease Transfer Agreement.
5. On each Purchase Date after the initial Purchase Date,
MCFSII will sell all of its right, title and interest in Subsequent Receivables
and certain other property related thereto to the Borrower pursuant to the
MCFSII Transfer Agreement.
6. The Borrower, SPARC, the Servicer and BNY Asset Solutions
LLC, as backup servicer (the "BACKUP SERVICER") and the Administrative Agent
have entered into a Receivables Purchase Agreement, dated as of May 2, 2000 (as
amended, supplemented or otherwise modified from time to time the "RECEIVABLES
PURCHASE Agreement") pursuant to which SPARC may, on the terms and conditions
set forth therein, purchase from the Borrower, all of the Borrower's right,
title and interest in and to certain Receivables and such other property related
thereto.
7. The Borrower, the Servicer, the Secondary Purchaser, the
Backup Servicer and the Administrative Agent have entered into a Secondary
Purchase Agreement, dated as of May 2, 2000 (the "SECONDARY PURCHASE
AGREEMENT"), pursuant to which the Secondary Purchaser shall, on the terms and
conditions set forth therein, purchase from the Borrower, all of the Borrower's
right, title and interest in and to certain Receivables and such other property
related thereto.
8. The parties hereto have requested that Financial Security
issue a financial guaranty insurance policy (as defined in Appendix I hereto,
the "Policy") guaranteeing the aggregate repayment obligations of the Borrower
with respect to Investment and Guaranteed Yield (each such term as defined
herein) upon the terms and subject to the conditions provided herein and in the
Policy.
9. The parties hereto desire to specify the conditions
precedent to the issuance of the Policy, the terms of payment of premium in
respect of the Policy, the indemnity and reimbursement to be provided to
Financial Security in respect of amounts paid by Financial Security under the
Policy or otherwise and certain other matters.
In consideration of the premises and of the agreements herein
contained, Financial Security, BusLease, MCFSII, MCII Holdings, MCF, the
Servicer, the Performance Guarantor, the Borrower, MCII Coaches, SPARC, the
Administrative Agent, and the Secondary Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used herein shall
have the meanings provided in Appendix I hereto unless the context otherwise
requires. In addition, capitalized terms used herein but not defined herein or
in Appendix I hereto shall have the meanings assigned thereto in the Receivables
Purchase Agreement unless the context otherwise requires.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE PERFORMANCE
GUARANTOR, THE ORIGINATORS, THE SERVICER, MCII HOLDINGS, MCII COACHES AND THE
BORROWER. The Performance Guarantor represents, warrants and covenants, as of
the date hereof, the Date of Issuance and as of each Purchase Date, with respect
to itself, the Originators, the Servicer, MCF, MCII Holdings, MCII Coaches, the
Borrower as follows, MCII Holdings represents, warrants and covenants, as of the
date hereof, the Date of Issuance and as of each Purchase Date, with respect to
itself, MCII Coaches, the Borrower as follows, each of the Originators
represents, warrants and covenants, as of the date hereof, the Date of Issuance
and as of each Purchase Date, with respect to itself as
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follows, the Servicer represents, warrants and covenants, as of the date
hereof, the Date of Issuance and as of each Purchase Date, with respect to
itself and MCF as follows, MCF represents, warrants and covenants, as of the
date hereof, the Date of Issuance and as of each Purchase Date with respect
to itself as follows, and the Borrower represents, warrants and covenants, as
of the date hereof, the Date of Issuance and as of each Purchase Date, with
respect to itself as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. Each of the
Originators, the Servicer, the Performance Guarantor, MCII Holdings, MCII
Coaches and the Borrower are Delaware corporations, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Originators, the Performance Guarantor, MCII
Holdings, the Servicer, MCII Coaches and the Borrower is duly qualified to do
business, is in good standing and has obtained all necessary licenses, permits,
charters, registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and the performance of its
obligations under the Transaction Documents to which it is party, in each
jurisdiction in which the failure, separately or in the aggregate, to be so
qualified or to obtain such approvals would render any Receivable unenforceable
in any respect or would otherwise have a material adverse effect upon the
Transaction.
(b) POWER AND AUTHORITY. Each of the Originators, the
Performance Guarantor, MCII Holdings, MCII Coaches, the Servicer, and the
Borrower has all necessary power and authority to conduct its business as
currently conducted, to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is party and to
consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of this Agreement and the other Transaction Documents by each of the
Originators, the Servicer, the Performance Guarantor, MCII Holdings, MCII
Coaches and the Borrower have been duly authorized by all necessary action and
do not require any additional approvals or consents or other action by or any
notice to or filing with any Person.
(d) NONCONTRAVENTION. None of the execution and delivery of
the Transaction Documents by the Borrower, the Performance Guarantor, MCII
Holdings, MCII Coaches, the Servicer or by the Originators, the consummation of
the transactions contemplated thereby or the satisfaction of the terms and
conditions of the Transaction Documents,
(i) conflicts with or results in any breach or
violation of any provision of the Certificate of Incorporation or the
Bylaws of the Borrower, the Servicer, the Performance Guarantor, MCII
Holdings, MCII Coaches or of the Originators, respectively, or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to the
Borrower, the Servicer, the Performance Guarantor, MCII Holdings, MCII
Coaches or the Originators, as the case may be, or any of their
respective properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over
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the, the Servicer, Borrower, the Performance Guarantor, MCII Holdings,
MCII Coaches or the Originators, as the case may be,
(ii) constitutes a default by the Borrower, the
Servicer, the Performance Guarantor, MCII Holdings, MCII Coaches or the
Originators, as the case may be, under or a breach of any provision of
any loan agreement, mortgage, indenture or other agreement or
instrument to which the, the Servicer, Borrower, the Performance
Guarantor, MCII Holdings, MCII Coaches or the Originators, as the case
may be, or any of their respective Subsidiaries or Affiliates is a
party or by which it or any of its or their properties is or may be
bound or affected, or
(iii) results in or requires the creation of any Lien
upon or in respect of any of the assets of the Borrower, the Servicer,
the Performance Guarantor, MCII Holdings, MCII Coaches or the
Originators, or any of their respective Subsidiaries or Affiliates
except as otherwise expressly contemplated by the Transaction
Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation, by or before any court, governmental or administrative agency or
arbitrator against or affecting all or any of the Receivables, the Originators,
the Servicer, the Borrower, the Performance Guarantor, MCII Holdings, MCII
Coaches or any of their respective Subsidiaries or Affiliates, or any properties
or rights of the Originators, the Servicer, the Borrower, the Performance
Guarantor, MCII Holdings, MCII Coaches or any of their respective Subsidiaries
or Affiliates, pending or threatened, which, in any case, if decided adversely,
could result in a Material Adverse Effect with respect to the Originators, the
Borrower, the Servicer, the Performance Guarantor, MCII Holdings, MCII Coaches
or any Receivable.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction
Documents to which the Originators, the Servicer, the Performance Guarantor,
MCII Holdings, MCII Coaches or the Borrower is a party when executed and
delivered by the Originators, the Servicer, the Performance Guarantor, MCII
Holdings, MCII Coaches or by the Borrower, as the case may be, will constitute
the legal, valid and binding obligations of such Person, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable principles.
(g) FINANCIAL STATEMENTS. The Financial Statements of the
Performance Guarantor, copies of which have been furnished to Financial
Security, (i) are, as of the dates and for the periods referred to therein,
complete and correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Performance Guarantor as of the dates
and for the periods indicated and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied, except as noted
therein (subject as to interim statements to normal year-end adjustments). Since
the date of the most recent Financial Statements, there has been no Material
Adverse Effect in such financial condition or results of operations. Except as
disclosed in the Financial Statements, the Performance Guarantor is not
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subject to any contingent liabilities or commitments that, individually or in
the aggregate, is reasonably expected to cause a Material Adverse Effect in
respect of the Performance Guarantor.
(h) ERISA. No Accumulated Funding Deficiency, whether or not
waived, has occurred with respect to any Plan. No Plan has been terminated, and
no Commonly Controlled Entity has withdrawn from any Multiemployer Plan which
could result in any liability under ERISA of a Commonly Controlled Entity. No
Reportable Event or other event or condition has occurred which could result in
the termination of any Plan by the PBGC. No Plan has an Underfunding greater
than $100,000. The aggregate amount of Underfunding for all Underfunded Plans
does not exceed $100,000. The liability to which the Commonly Controlled
Entities would become subject under ERISA if they were to withdraw completely
from all Multiemployer Plans as of the most recent valuation date is not in
excess of $100,000. The Multiemployer Plans are neither in Reorganization (as
defined in Section 4241 or ERISA) nor Insolvent (as defined in Section 4245 of
ERISA). Each of the Originators, MCII Coaches, the Servicer, MCII Holdings,, the
Performance Guarantor and the Borrower is in compliance with ERISA and has not
incurred and does not reasonably expect to incur any liabilities to the PBFC
(other than premiums due to the PBGC) in connection with any Plan or
Multiemployer Plan.
(i) ACCURACY OF INFORMATION. None of the Provided Documents
contain any statement of a material fact with respect to the Originators, MCII
Coaches, MCII Holdings, the Performance Guarantor, the Servicer, the Borrower or
the Transaction that was untrue or misleading in any material respect when made
(except insofar as any Provided Document was corrected or superseded by a
subsequent Provided Document and Financial Security has not detrimentally relied
on the original thereof). Since the furnishing of the Provided Documents, there
has been no change, nor any development or event involving a prospective change
known to the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, the Servicer, or to the Borrower, that would render any of the
Provided Documents untrue or misleading in any material respect. There is no
fact known to the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, the Servicer, or to the Borrower which is reasonably expected to
cause a Material Adverse Effect with respect to the Originators, the Borrower,
the Receivables, the related Contracts or the related Vehicles.
(j) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Originators, the Servicer, the Performance Guarantor, MCII
Coaches, MCII Holdings, and of the Borrower contained in the Transaction
Documents is true and correct in all material respects and are hereby set forth
herein in their entirety.
(k) NO CONSENTS. No consent, license, approval or
authorization from, or registration, filing or declaration with, any regulatory
body, administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
nongovernmental person, is required in connection with the execution, delivery
and performance by the Originators, MCII Coaches, MCII Holdings, the Servicer,
the Performance Guarantor or by the Borrower of this Insurance Agreement or of
any other
5
Transaction Document to which such Person is a party, except (in each
case) such as have been obtained and are in full force and effect.
(l) COMPLIANCE WITH LAW, ETC. No practice, procedure or
policy employed or proposed to be employed by the Originators, MCII Coaches,
MCII Holdings, the Performance Guarantor, the Servicer or by the Borrower in the
conduct of their respective businesses violates any law, regulation, judgment,
agreement, order or decree applicable to it which, if enforced, would result in
a Material Adverse Effect with respect to such Person.
(m) SPECIAL PURPOSE ENTITY.
(i) The capital of the Borrower is adequate for the
business and undertakings of the Borrower.
(ii) Other than with respect to the ownership by MCII
Coaches of the stock of the Borrower and the Transactions provided in
the Transaction Documents, the Borrower is not engaged in any business
transactions with MCII Coaches or any of its Affiliates.
(iii) At least two directors of the Borrower shall be
persons who are not, and will not be, directors, officers, employees or
holders of any equity securities of MCII Coaches or any of its
Affiliates.
(iv) The Borrower's funds and assets are not, and will
not be, commingled with the funds of any other Person except as
explicitly permitted under the Transaction Documents.
(v) The articles of incorporation and/or bylaws of
the Borrower require it to maintain (A) correct and complete minute
books and records of account, and (B) minutes of the meetings and other
proceedings of its shareholders and board of directors.
(n) SOLVENCY; FRAUDULENT CONVEYANCE. Each of the Originators,
MCII Coaches, the Servicer, the Performance Guarantor, MCII Holdings and the
Borrower is solvent and will not be rendered insolvent by the Transaction and,
after giving effect to such Transaction, none of the Originators, MCII Coaches,
the Servicer , the Performance Guarantor, MCII Holdings or the Borrower will be
left with an unreasonably small amount of capital with which to engage in its
business. None of the Originators, MCII Coaches, the Servicer, the Performance
Guarantor, MCII Holdings or the Borrower intends to incur, or believes that it
has incurred, debts beyond its ability to pay such debts as they mature. None of
the Originators, MCII Coaches, the Servicer, the Performance Guarantor, MCII
Holdings or the Borrower is contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of the
Originators, MCII Coaches, the Servicer, the Performance Guarantor, MCII
Holdings or the Borrower, as the case may be, or any of their respective assets.
None of the Originators, MCII Coaches, the Servicer, the Performance Guarantor,
MCII Holdings or the
6
Borrower has had a judgment entered against it that has been returned
unsatisfied. The amount of consideration being received by MCF upon the sale
of Receivables and Related Assets by MCF to the Borrower constitutes
reasonably equivalent value and fair consideration to MCF for such
Receivables and Related Assets. The amount of consideration being received by
BusLease upon each sale of Receivables and Related Assets by BusLease to
MCFSII constitutes reasonably equivalent value and fair consideration to
BusLease for such Receivables and Related Assets. The amount of consideration
being received by MCFSII upon each sale of Receivables and Related Assets by
MCFSII to the Borrower constitutes reasonably equivalent value and fair
consideration to MCFSII for such Receivables and Related Assets. The
Originators are not transferring the Receivables and Related Assets to the
Borrower or to MCFSII, as the case may be, as provided in the Transaction
Documents, with any intent to hinder, delay or defraud any of the creditors
of the Originators. The Borrower is not transferring Purchased Assets to
SPARC, as provided in the Transaction Documents, with any intent to hinder,
delay or defraud any of the Borrower's creditors.
(o) INVESTMENT COMPANY ACT COMPLIANCE. None of the
Originators, MCII Coaches, the Servicer or the Borrower is required to be
registered as an "investment company" under the Investment Company Act. None of
the Originators, MCII Holdings or the Borrower is subject to the information
reporting requirements of the Securities Exchange Act.
(p) GOOD TITLE; VALID TRANSFER; ABSENCE OF LIENS; SECURITY
INTEREST.
(i) At the time of the sale of the Initial
Receivables and Related Assets by MCF to the Borrower pursuant to the
MCF Transfer Agreement, MCF was the owner of, and had good and
marketable title to, such Initial Receivables and Related Assets free
and clear of all Liens and Restrictions on Transferability, and had
full right, power and lawful authority to assign, transfer and pledge
such Receivables and Related Assets pursuant to the terms of the MCF
Transfer Agreement. The MCF Transfer Agreement constitutes a valid
sale, transfer and assignment of such Initial Receivables and Related
Assets to the Borrower, enforceable against the creditors of and
purchasers of MCF. In the event that, in contravention of the intention
of the parties, any transfer by MCF of such Initial Receivables and
Related Assets to the Borrower is characterized as other than a sale,
such transfer shall be characterized as a secured financing, and the
Borrower shall have a valid and perfected first priority security
interest in such Initial Receivables and Related Assets free and clear
of all Liens and Restrictions on Transferability.
(ii) At the time of the sale of the Receivables and
Related Assets by BusLease to MCFSII pursuant to the BusLease
Subsequent Transfer Agreement, BusLease was the owner of, and had good
and marketable title to, such Receivables and Related Assets free and
clear of all Liens and Restrictions on Transferability, and had full
right, power and lawful authority to assign, transfer and pledge such
Receivables and Related Assets pursuant to the terms of the BusLease
Subsequent Transfer Agreement.
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The BusLease Subsequent Transfer Agreement constitutes a valid sale,
transfer and assignment of such Receivables and Related Assets to
MCFSII, enforceable against the creditors of and purchasers of
BusLease. In the event that, in contravention of the intention of the
parties, any transfer by BusLease of such Receivables and Related
Assets to MCFSII is characterized as other than a sale, such transfer
shall be characterized as a secured financing, and MCFSII shall have
a valid and perfected first priority security interest in such
Receivables and Related Assets free and clear of all Liens and
Restrictions on Transferability.
(iii) On each Purchase Date, at the time of each sale
of Subsequent Receivables and Related Assets by MCFSII to the Borrower
pursuant to the MCFSII Transfer Agreement, MCFSII was or will have been
the owner of, and had or will have had good and marketable title to,
such Subsequent Receivables and Related Assets, free and clear of all
Liens and Restrictions on Transferability, and had or will have had
full right, power and lawful authority to assign, transfer and pledge
such Subsequent Receivables and Related Assets pursuant to the terms of
the MCFSII Transfer Agreement. The MCFSII Transfer Agreement constitute
a valid sale, transfer and assignment of such Subsequent Receivables
and Related Assets to the Borrower, enforceable against the creditors
of and purchasers of MCFSII. In the event that, in contravention of the
intention of the parties, any transfers by MCFSII of such Subsequent
Receivables to the Borrower is characterized as a secured financing,
and the Borrower shall have a valid and perfected first priority
security interest in such Subsequent Receivables and Related Assets
free and clear of all Liens and Restrictions on Transferability.
(iv) At the time of each sale of the Purchased Assets
by the Borrower to SPARC or the Secondary Purchaser, as the case may
be, pursuant to the applicable Purchase Agreement, the Borrower was or
will have been the owner of, and had or will have had good and
marketable title to, such Purchased Assets free and clear of all Liens
and Restrictions on Transferability, and had or will have had full
right, power and lawful authority to assign, transfer and pledge such
Purchased Assets. The Receivables Purchase Agreement and the Secondary
Purchase Agreement each constitute a valid sale, transfer and
assignment of Purchased Assets to the Purchasers, enforceable against
creditors of and purchasers of the Borrower. In the event that, in
contravention of the intention of the parties, any transfer of
Purchased Assets by the Borrower to the Purchasers is characterized as
other than a sale, such transfer shall be characterized as a secured
financing, and the Administrative Agent, on behalf of the Purchasers
and Financial Security, shall have a valid and perfected first priority
security interest in such Purchased Assets free and clear of all Liens
and Restrictions on Transferability.
(q) PERFECTION OF LIENS AND SECURITY INTEREST. On or prior to
each sale of Receivables and Related Assets pursuant to the Transfer Agreements
or of Purchased Assets pursuant to the applicable Purchase Agreement, the
assignment to or the Lien and security interest in favor of (i) MCFSII with
respect to the Receivables and Related Assets will be perfected by the delivery
of the contract files for the Receivables to the Custodian and the filing
8
of financing statements on Form UCC-1 (to the extent not already filed and in
effect) in each jurisdiction where such recording or filing is necessary for
the perfection thereof, (ii) the Borrower with respect to the Receivables and
Related Assets will be perfected by the delivery of the contract files for
the Receivables to Custodian and the filing of financing statements on Form
UCC-1 (to the extent not already filed and in effect) in each jurisdiction
where such recording or filing is necessary for the perfection thereof, and
(iii) the Administrative Agent on behalf of the Purchasers and Financial
Security, with respect to the Purchased Assets sold or otherwise transferred
thereto will be perfected by the delivery of the contract files for the
receivables to the Custodian and the filing of financing statement on Form
UCC-1 (to the extent not already filed and in effect) in each jurisdiction
where such recording or filing is necessary for the perfection thereof, and
no other filings in any jurisdiction or any other actions (except as
expressly provided herein) are necessary to perfect the Borrower's first
priority Lien on and security interest in the Receivables and Related Assets
as against any third parties or the Administrative Agents' (on behalf of the
Purchasers and Financial Security) first priority Lien on and security
interest in the applicable Purchased Assets as against any third parties.
(r) TAXES. Each member of the MCII Group has filed all
federal and all material state tax returns which are required to be filed and
paid all taxes (other than taxes that are contested in good faith with adequate
reserves on the respective balance sheet), including any assessments received by
it, to the extent that such taxes have become due. Any taxes, fees and other
governmental charges payable by the Borrower, the Originators, the Servicer or
the Performance Guarantor in connection with the Transaction, the execution and
delivery of the Transaction Documents and the issuance of the Securities have
been paid or shall have been paid at or prior to the Date of Issuance.
(s) BORROWER STOCK. MCII Coaches is the legal and beneficial
owner of one hundred percent of all of the issued and outstanding shares of
stock of the Borrower.
Section 2.2 AFFIRMATIVE COVENANTS OF THE PERFORMANCE
GUARANTOR, THE ORIGINATORS, THE SERVICER, MCII HOLDINGS, MCII COACHES AND THE
BORROWER. The Performance Guarantor hereby agrees with respect to itself, the
Servicer, the Borrower and the Originators, MCII Holdings hereby agrees with
respect to itself, MCII Coaches and the Borrower, hereby agrees with respect to
itself and MCII Coaches and the Borrower, each Originator hereby agrees with
respect to itself, the Servicer hereby agrees with respect to itself and the
Borrower hereby agrees with respect to itself, that during the Term of the
Agreement, unless Financial Security shall otherwise expressly consent in
writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. Each of
the Borrower, the Performance Guarantor, MCII Coaches, MCII Holdings, the
Servicer and the Originators shall perform each of its respective obligations
under this Agreement and the other Transaction Documents and any law, rule or
regulation applicable to it or thereto, or with respect to which compliance is
required in connection with its performance under any of the Transaction
Documents.
9
(b) BOOKS AND RECORDS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. Each of the Performance Guarantor, the Originators, MCII Coaches,
MCII Holdings, the Servicer and the Borrower shall keep or cause to be kept in
reasonable detail books and records of account of its assets and business and,
in the case of the Borrower, shall clearly reflect therein the pledge from time
to time of the Receivables, to SPARC or the Secondary Purchaser, as the case may
be. The books and records of the Performance Guarantor, the Originators, MCII
Coaches, MCII Holdings, the Servicer and the Borrower will be maintained at the
respective addresses designated herein for receipt of notices, unless the
Performance Guarantor, the Originators, the Servicer, MCII Coaches, MCII
Holdings, or the Borrower shall otherwise advise the parties hereto in writing.
Each of the Originators, MCII Coaches, the Servicer and the Borrower shall
furnish or cause to be furnished to Financial Security:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as
available, and in any event within 120 days after the close of each
fiscal year of the Performance Guarantor the audited balance sheets of
the Performance Guarantor, as of the end of such fiscal year, and the
audited statements of income, changes in equity and cash flows of the
Performance Guarantor, for such fiscal year, all in reasonable detail
and stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by the certificate of Performance Guarantor's
independent accountants (which shall be, in each case, a nationally
recognized firm or otherwise acceptable to Financial Security) and by
the certificate specified in Section 2.2(d) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 60 days after the close of each of
the first three quarters of each fiscal year of the Performance
Guarantor, the unaudited balance sheets of the Performance Guarantor,
as of the end of such quarter, and the unaudited statements of income,
changes in equity and cash flows of the Performance Guarantor, for the
portion of the fiscal year then ended, all in reasonable detail and
stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles, consistently
applied (subject to normal year-end adjustments), and accompanied by
the certificate specified in Section 2.2(d) hereof if such certificate
is required to be provided pursuant to such Section.
(iii) ACCOUNTANTS' REPORTS. If a Special Event has
occurred, copies of any reports submitted to the Originators, the
Servicer, MCII Coaches and the Borrower by their respective independent
accountants in connection with any examination of the financial
statements of the Originators, the Servicer, MCII Coaches or the
Borrower, promptly upon receipt thereof.
(iv) OTHER INFORMATION. Promptly upon receipt thereof,
copies of all reports, statements, certifications, schedules, or other
similar items delivered to or by the Performance Guarantor, MCII
Holdings, MCII Coaches, the Originators, the Servicer or
10
the Borrower pursuant to the terms of this Agreement and the other
Transaction Documents and, promptly upon request, such other data as
Financial Security may reasonably request.
(v) AGENT INFORMATION. As promptly as possible, and
in any event within one Business Day after delivery thereof to the
Administrative Agent or the applicable Insured Party, all certificates,
reports, statements, notices, demands, and all other information and
communications delivered to the Administrative Agent or to any of the
other Insured Parties pursuant to the Receivables Purchase Agreement or
any of the other Transaction Documents (the Originators, the
Performance Guarantor, MCII Holdings, the Servicer, MCII Coaches and
the Borrower hereby waiving any confidentiality restrictions (whether
contained in a Transaction Document or in any other agreement with the
Administrative Agent) relating to disclosures by the Administrative
Agent to Financial Security of any information which the Administrative
Agent may obtain in connection with the performance of its obligations
under the Transaction Documents), but if Financial Security is informed
by any of such parties that any information so disclosed is subject to
confidentiality restrictions, Financial Security will not disclose such
information to any third party unless Financial Security is compelled
to make such disclosure upon a demand or request of, or as part of any
report, statement or testimony submitted to, any administrative,
judicial, legislative or executive body.
(vi) OTHER INFORMATION. Promptly upon receipt thereof,
copies of all reports, statements, certifications, schedules, or other
similar items delivered to or by the Performance Guarantor, the
Originators, MCII Holdings, the Servicer, MCII Coaches or the Borrower
pursuant to the terms of the Transaction Documents and, promptly upon
request, such other data as Financial Security may reasonably request.
The Performance Guarantor, the Originators, MCII Holdings, the
Servicer, MCII Coaches and the Borrower shall, upon the request of
Financial Security, permit Financial Security or its authorized agents
(A) to inspect the books and records of the Performance Guarantor, the
Originators, MCFSII, the Servicer, MCII Holdings, MCII Coaches and the
Borrower as they may related to the Purchased Assets, the obligations
of the Performance Guarantor, the Originators, the Servicer, MCII
Holdings, MCII Coaches or of the Borrower under the Transaction
Documents, the Transaction and, but only following the occurrence of a
Special Event, the Performance Guarantor's, the Originators', MCFSII's,
the Servicer's, MCII Holdings', MCII Holdings, Inc's, MCII Coaches', or
the Borrower's business; (B) to discuss the affairs, finances and
accounts of the Performance Guarantor, the Originators, the Servicer,
MCII Holdings, MCII Coaches or the Borrower with its respective Chief
Operating Officer and Chief Financial Officer (or an officer with
responsibilities and functions equivalent thereto), no more frequently
than annually, unless a Special Event has occurred; and (C) to discuss
the affairs, finances and accounts of the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower
with its independent accountants, PROVIDED that an officer of the
Performance Guarantor, the Originators, the Servicer, MCII Holdings,
MCII Coaches or the Borrower, as the case may be, shall have the right
to be present during such discussions and will be so notified.
11
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of
the Performance Guarantors, the Originators, the Servicer, MCII
Holdings, MCII Coaches or the Borrower, as the case may be. In
addition, the Performance Guarantor shall promptly (but in no case
more than 30 days following issuance or receipt by a Commonly
Controlled Entity) provide to Financial Security a copy of all
correspondence between a Commonly Controlled Entity and the PBGC,
IRS, Department of Labor or the administrators of a Multiemployer
Plan relating to any Reportable Event or the underfunded status,
termination or possible termination of a Plan or a Multiemployer
Plan. The books and records of the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches and the
Borrower will be maintained at the respective addresses designated
herein for receipt of notices, unless the Performance Guarantor,
Originators, the Servicer, MCII Holdings, MCII Coaches or the
Borrower shall otherwise advise the parties hereto in writing.
(vii) The Performance Guarantor, the Originators, the
Servicer, MCII Holdings, MCII Coaches and the Borrower shall provide or
cause to be provided to Financial Security an executed original copy of
each document executed in connection with the Transaction within 10
days after the Date of Issuance.
(viii) Promptly after the filing or sending thereof,
copies of all proxy statements, financial statements, reports and
registration statements which the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower
files, or delivers to, the Commission, or any other federal, state or
foreign government agency, authority or body which supervises the
issuance of securities by the Originators and the Borrower or any
national securities exchange, and solely with respect to the Borrower,
the IRS.
(c) ERISA. Each of the Originators, Performance Guarantor,
Borrower, MCII Holdings, MCII Coaches and the Servicer is in compliance with
ERISA and has not incurred and does not reasonably expect to incur any
liabilities to the PBGC under ERISA in connection with any Plan or Multiemployer
Plan or to contribute now or in the future in respect of any Plan or
Multiemployer Plan.
(d) COMPLIANCE CERTIFICATE. Each of the Originators, the
Performance Guarantor, MCII Coaches and the Borrower shall deliver to Financial
Security concurrently with the delivery of the financial statements required
pursuant to Section 2.2(b)(i) hereof and concurrently with the delivery of the
financial statements required pursuant to Section 2.2(b)(ii) hereof, a
certificate signed by the Chief Financial Officer (or an officer with
responsibilities and functions equivalent thereto) of each of the Performance
Guarantor, the Originators, the Servicer which shall be accompanied with the
monthly servicing report stating that:
(i) a review of the Performance Guarantor's, the
Originators' and the Borrower's respective performance under the
Transaction Documents during such period has been made under such
officer's supervision;
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(ii) to the best of such individual's knowledge, no
Special Event, Default or Event of Default has occurred, or if a
Special Event, Default or Event of Default has occurred, specifying the
nature thereof and, if the Originators or the Borrower has a right to
cure any such Default or Event of Default pursuant to Section 5.1,
stating in reasonable detail the steps, if any, being taken by the
Performance Guarantor, the Originators or the Borrower, as the case may
be, to cure such Default or Event of Default or to otherwise comply
with the terms of the agreement to which such Default or Event of
Default relates; and
(iii) the attached financial reports submitted in
accordance with Section 2.2(b)(i) or (ii) hereof, as applicable, are
complete and correct in all material respects and present fairly the
financial condition and results of operations of the Originators and
the Borrower, as the case may be, as of the dates and for the periods
indicted, in accordance with generally accepted accounting principles
consistently applied (subject as to interim statements to normal
year-end adjustments).
(e) TAX COMPLIANCE CERTIFICATE. The Performance Guarantor
shall deliver to Financial Security concurrently with the delivery of the
monthly servicing report pursuant to Section 5.05 of the Purchase Agreements, a
certificate signed by the Chief Financial Officer of the Performance Guarantor
stating that no Tax Event has occurred.
(f) NOTICE OF MATERIAL EVENTS. Each of the Performance
Guarantor, the Originators, the Servicer, MCII Holdings, MCII Coaches and the
Borrower shall promptly inform Financial Security in writing of the occurrence
of any of the following:
(i) the submission of any claim or the initiation of
any legal process, litigation or administrative or judicial
investigation (A) against the Performance Guarantor, the Originators,
MCII Coaches, MCII Holdings, the Servicer, or the Borrower pertaining
to the Receivables in general, (B) with respect to a material portion
of the Receivables or (C) in which a request has been made for
certification as a class action (or equivalent relief) that would
involve a material portion of the Receivables;
(ii) any change in the location of the Performance
Guarantor's Originators', MCII Holdings', the Servicer's or the
Borrower's principal office or any change in the location of the
Performance Guarantor's, the Originators', MCII Holdings', the
Servicer's or the Borrower's books and records;
(iii) the occurrence of any Default, Event of Default,
Special Event or a Tax Event; or
(iv) any other event, circumstance or condition that
has resulted, or is reasonably expected to result, in a Material
Adverse Effect in respect of the Performance Guarantor, the
Originators, MCII Holdings, MCII Coaches, the Servicer or the Borrower.
13
(g) FURTHER ASSURANCES. Each of the Performance Guarantor, the
Originators, MCII Coaches, MCII Holdings, the Servicer and the Borrower will
file or cause to be filed all financing statements, assignments or other
instruments, and any amendments or continuation statements relating thereto,
necessary to be kept and filed in such manner and in such places as may be
required by law to preserve and protect fully the Lien of each of the
Administrative Agent, the Purchasers and Financial Security (and their
respective successors and assigns on and first priority security interest in,
and all rights of each of the Administrative Agent, the Purchasers and Financial
Security (and their respective successors and assigns in, the Purchased Assets
sold or otherwise transferred thereto under the Transfer Agreement and the
Purchase Agreements. In addition, each of the Performance Guarantor, the
Originators, MCII Coaches, MCII Holdings, the Servicer and the Borrower shall,
upon the request of Financial Security, from time to time, execute, acknowledge
and delivery, or cause to be executed, acknowledged and delivered, within ten
(10) days of such request, such amendments hereto and such further instruments
and take such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents or to protect
the interests of the Administrative Agent, the Purchasers and Financial Security
(and their respective successors and assigns, respectively, in the applicable
Purchased Assets, free and clear of all Liens and Restrictions on
Transferability except the Lien in favor of the Administrative Agent or the
Purchasers (and their respective successors and assigns), as the case may be,
and the Restrictions on Transferability imposed by the Receivables Purchase
Agreement. In addition, each of the Performance Guarantor, the Originators, MCII
Coaches, MCII Holdings, the Servicer and the Borrower agrees to cooperate with
S&P and Xxxxx'x in connection with any review of the Transaction which may be
undertaken by S&P and Xxxxx'x after the date hereof.
(h) CORPORATE EXISTENCE. Each of the Performance Guarantor,
the Originators, MCII Holdings, the Servicer, MCII Coaches and the Borrower
shall maintain its respective corporate existence and shall at all times
continue to be duly organized under the laws of its jurisdiction of
incorporation or organization and continue to be duly qualified and duly
authorized (as described in Sections 2.1(a), (b) and (c) hereof) and shall
conduct its business in accordance with the terms of its respective certificate
of incorporation and bylaws or other applicable governing documents, except
where the failure to be so duly qualified is not reasonably likely to result in
a Material Adverse Effect.
(i) CERTAIN ADDITIONAL DOCUMENTS. Promptly after the filing or
sending thereof, copies of all proxy statements, financial statements, reports
and registration statements which the Performance Guarantor, the Originators,
MCII Holdings, MCII Coaches, the Servicer or the Borrower files, or delivers to,
the Commission, or any other federal, state or foreign government agency,
authority or body which supervises the issuance of securities by the Performance
Guarantor, the Originators, MCII Coaches, MCII Holdings, the Servicer, and the
Borrower or any national securities exchange, and solely with respect to the
Borrower, the IRS.
(j) COVENANTS IN TRANSACTION DOCUMENTS. Each of the
Performance Guarantor, the Originators, MCII Coaches, MCII Holdings, the
Servicer, and the Borrower agrees
14
that Financial Security shall have all rights of a third-party beneficiary in
respect of the Transaction Documents to which the Performance Guarantor, the
Originators MCII Coaches, MCII Holdings, the Servicer, and/or the Borrower is a
party and hereby incorporates and restates herein, and makes, each of its
respective affirmative covenants and negative covenants as set forth therein to
and for the benefit of Financial Security as if the same were set forth in full
herein.
(k) SPECIAL PURPOSE ENTITY.
(i) The Borrower shall conduct its business solely in
its own name through its duly authorized officers or agents so as not
to mislead others as to the identity of the entity with which those
officers are concerned, and particularly will avoid the appearance of
conducting business on behalf of MCII Coaches or any Affiliate thereof
or that the assets of the Borrower are available to pay the creditors
of MCII Coaches or any Affiliate thereof. Without limiting the
generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts, statements and loan applications, will be made solely in the
name of the Borrower.
(ii) The Borrower shall maintain corporate records and
books of account separate from those of the MCII Coaches and the
Affiliates thereof. The Borrower's books and records shall clearly
reflect the transfer of the Receivables to SPARC or the Secondary
Purchaser as a sale of the Borrower's interest on the Receivables. The
books of account and corporate records of the Borrower will be separate
from those of MCII Coaches and its Affiliates and will be maintained at
the address designated herein for receipt of notices, unless the
Borrower shall otherwise advise the parties hereto in writing.
(iii) The Borrower shall obtain proper authorization
from its board of directors of all corporate actions requiring such
authorization. Meetings of the board of directors will be held at least
once per year and copies of the minutes of each such board meeting
shall be delivered to Financial Security within two weeks of such
meeting.
(iv) The Borrower shall obtain proper authorization
from its shareholders of all corporate action requiring shareholder
approval. Meetings of the shareholders of the Borrower shall be held
not less frequently than one time per annum and copies of each such
authorization and the minutes of each such shareholder meeting shall be
delivered to Financial Security within two weeks of such authorization
or meeting, as the case may be.
(v) Although the organizational expenses of the
Borrower have been paid by MCII Coaches, operating expenses and
liabilities of the Borrower shall be paid from its own funds.
15
(vi) The annual financial statements of the Borrower
shall disclose the effects of the Borrower's transactions in accordance
with generally accepted accounting principles and shall disclose that
the assets of the Borrower are not available to pay creditors of MCII
Coaches or any Affiliate thereof.
(vii) The resolutions, agreements and other instruments
of the Borrower underlying the transactions described in this Agreement
and the other Transaction Documents shall be continuously maintained by
the Borrower as official records of the Borrower separately identified
and held apart from the records of MCII Coaches and each Affiliate
thereof.
(viii) The Borrower shall maintain an arm's-length
relationship with MCII Coaches and the Affiliates thereof and will not
hold itself out as being liable for the debts of MCII Coaches or any
Affiliate thereof.
(ix) The Borrower shall keep its assets and its
liabilities wholly separate from those of all other entities,
including, but not limited to MCII Coaches and the Affiliates thereof.
(l) DISCLOSURE DOCUMENT. Each Offering Document shall clearly
disclose that the Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law. In
addition, each Offering Document which includes financial statements of
Financial Security prepared in accordance with generally accepted accounting
principles shall include the following statement immediately preceding such
financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations.
(i) Each Offering Document delivered subsequent to
the Date of Issuance and which references Financial Security or the
Policy shall be in form and substance satisfactory to Financial
Security in its sole discretion as evidenced by Financial Security's
prior written consent to the use thereof.
(m) MAINTENANCE OF LICENSES. The Originators, MCII Coaches,
the Servicer, and the Borrower shall each maintain all licenses, permits,
charters and registrations which are material to the performance by the
Originators MCII Coaches, the Servicer, and the Borrower, as
16
the case may be, of its business or of its respective obligations under this
Insurance Agreement and each other Transaction Document.
(n) REPURCHASE OF RECEIVABLES.
(i) In the event one of the Originators or the
Servicer becomes obligated to repurchase one or more Initial
Receivables or Subsequent Receivables respectively pursuant to Section
6.1 of the BusLease Transfer Agreement, Section 6.1 of the MCF Transfer
Agreement, Section 6.1 of the BusLease Subsequent Transfer Agreement or
Section 6.1 of the MCFSII Transfer Agreement, as the case may be, the
Originators or the Servicer, as the case may be, shall, on the date on
which it receives notice or demand regarding, or otherwise obtains
actual knowledge of, such obligation, or as soon thereafter as
practicable, and in any event not late than one Business Day prior to
the next succeeding Settlement Date (as defined in the Receivables
Purchase Agreement) or prior to such other date on which such
repurchase shall occur, repurchase such Receivable.
(ii) In the event the Borrower becomes obligated to
repurchase one or more Receivables pursuant to Section 2.03(g) of
either the Receivables Purchase Agreement or the Secondary Purchase
Agreement, the Borrower shall, on the date on which it receives notice
or demand regarding, or otherwise obtains actual knowledge of, such
obligation, or as soon thereafter as practicable, and in any event not
later than one Business Day prior to the next succeeding Settlement
Date (as defined in the Receivables Purchase Agreement or the Secondary
Purchase Agreement, as the case may be) or prior to such other date on
which such repurchase shall occur, demand that the Originators
repurchase such Receivable or Receivables on the next succeeding
Business Day pursuant to Section 6.1 of the applicable Transfer
Agreement.
(o) ACTION AND REMEDIES UNDER THE TRANSACTION DOCUMENTS. Each
of the Originators, MCII Coaches, MCII Holdings, the Servicer, the Performance
Guarantor and the Borrower shall, upon Financial Security's prior written
request and in accordance with such request, take or cause to be taken any
action, or exercise or cause to be exercised any right, remedy, power, or
authority, under and as permitted by and in accordance with the terms of the
Transaction Documents.
(p) NOTICE OF DEFAULT. In the event any notice is delivered
to the Borrower under Section 5.01(d) concerning a failure in the performance or
observance of any covenant or agreement on the part of SPARC, the Secondary
Purchaser, the Originators, the Performance Guarantor, the Servicer, MCII
Holdings, MCII Coaches, the Administrative Agent, the Borrower shall immediately
deliver such notice to SPARC, the Secondary Purchaser, the Originators, the
Performance Guarantor, the Servicer, MCII Holdings, MCII Coaches, or the
Administrative Agent, as applicable.
17
(q) RELEASE OF LIENS. The Servicer shall duly file (or cause
to be filed) on behalf of GE Capital and Redwood no later than the Closing Date
the amendments to and/or terminations of, UCC financing statements evidencing
the release of security interests with respect to the Initial Receivables. The
Servicer shall deliver (or cause to be delivered) to Financial Security a
release letter executed by GE Capital and Redwood in connection with the release
of security interests with respect to such Receivables.
(r) YEAR 2000 SYSTEMS PROTECTION. The Servicer has taken all
actions necessary and appropriate to prevent any material problems in its
computer systems, auto-dialer system or other data processing or information
management systems arising from or in connection with the advent of calendar
year 2000, and will provide Financial Security, with reasonable promptness upon
request, such reports and other information as may be reasonably requested by
Financial Security from time to time evidencing the actions taken or to be taken
pursuant to this Section 2.2(r).
(s) LIABILITY TO SPARC. The Borrower represents and covenants
that (i) it has no liability to SPARC other than the obligations created under
the Receivables Purchase Agreement and (ii) its membership in SPARC is
nonassessable.
Section 2.3 NEGATIVE COVENANTS OF THE PERFORMANCE GUARANTOR,
THE ORIGINATORS, THE SERVICER, MCII HOLDINGS, MCII COACHES AND THE BORROWER. The
Performance Guarantor hereby agrees with respect to itself, the Servicer, the
Borrower and the Originators, MCII Holdings hereby agrees with respect to
itself, MCII Coaches and the Borrower, MCII Coaches hereby agrees with respect
to itself and the Borrower, each Originator hereby agrees with respect to
itself, the Servicer hereby agrees with respect to itself and the Borrower
hereby agrees with respect to itself, that during the Term of the Agreement,
unless Financial Security shall otherwise expressly consent in writing:
(a) RESTRICTIONS ON LIENS. None of the Performance Guarantor,
the Originators, MCII Holdings, MCII Coaches, the Servicer or the Borrower shall
(i) create, incur or suffer to exist, or agree to create, incur or suffer to
exist, or consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any Lien or
Restriction on Transferability on the Purchased Assets (except for the Lien in
favor of the Administrative Agent on behalf of SPARC, the Secondary Purchaser
and Financial Security, and the Restrictions on Transferability imposed by the
Receivables Purchase Agreement,) or (ii) with respect to the Purchased Assets,
sign or file under the Uniform Commercial Code of any jurisdiction any financing
statement which names the Performance Guarantor, the Originators, the Servicer,
MCII Holdings, MCII Coaches or the Borrower as a debtor, or sign any security
agreement authorizing any secured party thereunder to file such financing
statement, except in each case any such instrument solely securing the rights
and preserving the Liens of SPARC, the Secondary Purchaser (and/or the
Administrative Agent on behalf of SPARC, the Secondary Purchaser and Financial
Security), respectively.
18
(b) IMPAIRMENT OF RIGHTS. None of the Performance Guarantor,
the Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower shall
take any action, or fail to take any action, if such action or failure to take
action may (i) interfere with the enforcement of any rights under the
Transaction Documents that are material to the rights, benefits or obligations
of SPARC, the Secondary Purchaser or Financial Security (and their respective
successors and assigns), (ii) result in a Material Adverse Effect in respect of
the Receivables or (iii) impair the ability of the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower to
perform its obligations under this Agreement or any of the other Transaction
Documents, including any consolidation or merger with any Person or any transfer
of all or any material amount of the Performance Guarantor's, the Originators',
MCII Coaches', MCII Holdings', the Servicer's or the Borrower's assets to any
other Person if such consolidation, merger or transfer would materially impair
the net worth of the Performance Guarantor, the Originators, MCII Holdings, MCII
Coaches, the Servicer or the Borrower or any successor Person obligated, after
such event, to perform the Performance Guarantor's, the Originators', the
Servicer's, MCII Holdings', MCII Coaches' or the Borrower's obligations under
this Agreement or any of the other Transaction Documents.
(c) WAIVER, AMENDMENTS, ETC. None of the Performance
Guarantor, the Originators, MCII Coaches, the Servicer, MCII Holdings, or the
Borrower shall waive, modify, amend or terminate, or consent to any waiver,
modification, amendment or termination of, any of the Transaction Documents or
the Performance Guarantor's, the Originators', the Servicer's, MCII Holdings',
MCII Coaches' or the Borrower's certificate of incorporation or bylaws or any of
the provisions thereof unless Financial Security shall have consented thereto in
writing.
(d) GUARANTEES. Without the prior written consent of Financial
Security, the Borrower shall not assume, guarantee, endorse or otherwise be or
become directly or contingently liable for the obligations of any Person by,
among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
(e) ISSUANCE OF STOCK. The Borrower shall not issue or allow
the issuance of any shares of its capital stock or rights, warrants or options
in respect of its capital stock, other than shares of common stock which are and
shall at all times during the Term of This Policy be legally and beneficially
owned by MCII Coaches, free and clear of all Liens and Restrictions on
Transferability.
(f) INSOLVENCY. None of the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower shall
commence with respect to the Borrower any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to the bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
corporation or other relief with respect to it or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or make a general assignment
19
for the benefit of its creditors. None of the Performance Guarantor, the
Originators, the Servicer, MCII Holdings, MCII Coaches or the Borrower shall
take any action in furtherance of, or indicating the consent to, approval of,
or acquiescence in any of the acts set forth above. The Borrower shall not
admit in writing its inability to pay its debts.
(g) ERISA. The Borrower shall not contribute or incur any
obligation to contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan.
(h) DIVIDENDS. Other than as contemplated by the Transaction
Documents, the Borrower shall not enter into any lending relationship with any
of its Affiliates. The Borrower shall not at any time declare any dividends,
repurchase any capital stock, return any capital, or make any other payment or
distribution of cash or other property or assets in respect of the Borrower's
capital stock if, at the time of or after giving effect to any such dividend,
repurchase, return or other payment or distribution, a Servicer Termination
Event shall have occurred and be continuing.
(i) TRANSFER OF RIGHTS AND OBLIGATIONS UNDER TRANSACTION
DOCUMENTS. None of the Originators, the Performance Guarantor, the Servicer,
MCII Holdings, MCII Coaches or the Borrower shall (i) sell, assign, convey,
pledge or otherwise transfer any of its rights or obligations under any
Transaction Document, any agreement, document or instrument related thereto or
any interest therein, other than (x) the sale or other transfer of Receivables
and Related Assets by the Originators to the Borrower pursuant to the BusLease
Transfer Agreement, MCF Transfer Agreement or MCFSII Transfer Agreement,
respectively, (y) the sale or other transfer of Receivables by the Borrower to
SPARC or the Secondary Purchaser pursuant to the applicable Purchase Agreement,
or (ii) in the case of the Borrower, consent to or authorize any such sale,
assignment, conveyance, pledge or transfer by SPARC or the Secondary Purchaser,
or any assignee thereof (other than any authorization expressly granted by the
terms of the applicable Purchase Agreement and not requiring consent or other
action of the Borrower).
(j) CLAIMS AGAINST SPARC. None of the Performance Guarantor,
the Originators, MCII Holdings, MCII Coaches, the Servicer or the Borrower
shall, until one year and one day after the last Note issued by SPARC has
matured, commence or join any action, suit or other legal proceeding against
SPARC and its respective properties and assets.
Section 2.4 AFFIRMATIVE COVENANTS OF THE PURCHASERS. During
the Term of This Policy, each of the Purchasers shall, unless Financial Security
shall otherwise expressly consent in writing:
(a) perform each of its obligations under this Agreement and
the other Transaction Documents and comply with all applicable laws, rules,
regulations and orders with respect to this Agreement and the other Transaction
Documents, its business and properties and all Receivables, related property
with respect thereto, where non-compliance, separately or in the aggregate,
would have a Purchaser Material Adverse Effect;
20
(b) preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation and shall
conduct its business in accordance with the terms of its certificate or articles
of organization and by-laws;
(c) cooperate fully with all reasonable requests of the
Borrower, Financial Security, the Servicer and the Administrative Agent,
regarding any information or documents necessary or desirable to allow each of
the Borrower, Financial Security, the Servicer and the Administrative Agent to
carry out its responsibilities under this Agreement and the other Transaction
Documents; and
(d) keep or cause to be kept in reasonable detail, books and
records of account of its assets and business, including, but not limited to,
books and records relating to the Transaction.
Section 2.5 REPORTING REQUIREMENTS OF THE PURCHASERS. During
the Term of This Policy, each of the Purchasers shall furnish, or cause to be
furnished, at its own expense, to each of the Borrower, the Administrative
Agent, the Servicer and Financial Security:
(a) as promptly as possible, and in any event within three
Business Days, after any of the Purchasers or the Administrative Agent becomes
aware thereof, notice of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, relating to or affecting the Purchasers, this Agreement or
any of the other Transaction Documents, the Transaction or the Receivables;
(b) as promptly as possible, and in any event within one
Business Day after any of the Purchasers or the Administrative Agent becomes
aware of the existence thereof, telephonic, telex or telecopied notice
(confirmed in writing within 3 days) specifying the nature of any Default or
Event of Default, any breach or nonperformance by the Purchasers or any other
Person of this Agreement or any other Transaction Document or any development or
other information which have a Material Adverse Effect on the Purchasers; and
(c) promptly, from time to time, such other information,
documents, records or reports in the possession of the Purchasers (including the
provision of information, documents, records and reports in appropriate
electronic or machine-readable format) respecting the Transaction, that
Financial Security or the Administrative Agent may from time to time reasonably
request.
Section 2.6 NEGATIVE COVENANTS OF THE PURCHASERS. During the
Term of This Policy, each of the Purchasers shall not, without the prior written
consent of Financial Security:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, or assign any right to receive income in respect of any
Receivable, other than as specifically permitted by this Agreement or any other
Transaction Document;
21
(b) extend, amend, forgive, discharge, waive, compromise,
cancel or otherwise modify the terms of this Agreement or any other Transaction
Document;
(c) make any change in the instructions to Obligors regarding
payments to be made to the Borrower or a Lockbox Account;
(d) (i) take any action (unless required by law), or fail to
take any lawful action, if such action or failure to take action may interfere
with the enforcement of any rights under this Agreement or any of the other
Transaction Documents that are material to the rights, benefits or obligations
of the Borrower, the Servicer, the Administrative Agent or Financial Security;
(ii) waive or alter any rights with respect to the Receivables (or any agreement
or instrument relating thereto); or (iii) take any action, or fail to take any
action, if such action or failure to take action may interfere with the
enforcement of any rights with respect to the Receivables;
(e) take or permit to be taken any action which would have the
effect directly or indirectly of subjecting interest on the Notes to withholding
taxation in the hands of, any holders of Notes generally, and will perform all
of its obligations under the Transaction Documents to prevent or cure any
default by the Purchasers which would have the effect, directly or indirectly,
of subjecting interest on the Notes to withholding taxation;
(f) cause, permit, or suffer to exist, or agree to cause,
permit or suffer to exist in the future (upon the happening of a contingency or
otherwise), or consent to or acquiesce in the purchase of any Receivable
pursuant to the Receivables Purchase Agreement unless all of the conditions
precedent set forth in Section 3.02 thereof, or, in the case of the Initial
Purchase, all of the conditions precedent set forth in Section 3.01 thereof have
been satisfied;
(g) notwithstanding anything contained herein to the contrary,
sell, assign or otherwise dispose of, or agree to sell, assign or otherwise
dispose of, any Purchased Asset (or any interest which it may own therein) or
any of its obligations or rights to payment under the Purchase Agreements, to
which it is a party, to any Person, which Person is not created or organized
under the laws of the United States of America, which has not previously
provided to the Administrative Agent duly completed and executed copies of IRS
Form 4224 or 1001, as applicable (or any successor forms or other certificates
or statements which may be required from time to time by the relevant United
States taxing authorities), certifying that such Person may receive payments
under or in connection with the Receivables Purchase Agreement (and any other
related instruments, documents and agreements) without deduction or withholding
of United States Federal income tax; IT BEING UNDERSTOOD AND AGREED by each of
the Purchasers and Financial Security hereunder that any United States Federal
income taxes properly deducted or withheld by the Borrower shall be deemed to be
a payment for the account of such Person in respect of which such deduction or
withholding was made, and such Person shall have no right to reimbursement
thereof or from Financial Security under the Policy; and
22
(h) include or permit the inclusion in any Offering Document
or any loan or liquidity syndication memorandum, correspondence or other
communication relating to the Notes, of any information concerning Financial
Security that is not supplied or consented to in writing by Financial Security
expressly for inclusion therein.
Section 2.7 REPRESENTATIONS AND WARRANTIES OF THE
ADMINISTRATIVE AGENT. The Administrative Agent, represents and warrants as of
the date hereof, as of the Date of Issuance as follows:
(a) The Administrative Agent is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and is duly qualified to do business, and is in good standing, in each
jurisdiction in which the nature of its business requires it to be so qualified
or where the failure to be so qualified, separately or in the aggregate, would
have a Purchaser Material Adverse Effect on the Administrative Agent.
(b) The Administrative Agent has or had the power and
authority to conduct its business as now or currently proposed to be conducted
and to execute and deliver this Agreement, the other Transaction Documents to
which it is a party and to perform the transactions contemplated hereby and
thereby.
(c) The execution, delivery and performance by the
Administrative Agent of this Agreement and the other Transaction Documents to
which it is a party and the transactions contemplated hereby and thereby (i)
have been duly authorized by all necessary corporate or other action on the part
of the Administrative Agent and (ii) do not contravene or cause the
Administrative Agent to be in default under (A) the Administrative Agent's
certificate or articles of organization or by-laws, (B) to the knowledge of the
Administrative Agent, any material contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement, bond,
note, or other agreement or instrument binding on or affecting the
Administrative Agent or its property (C) any law, rule, regulation or regulation
applicable to, binding on or affecting the Administrative Agent or its property,
or (D) to the knowledge of the Administrative Agent, any order, license
requirement, writ, judgment, award, injunction, or decree applicable to, binding
on or affecting the Administrative Agent or its property.
(d) This Agreement and the other Transaction Documents to
which the Administrative Agent is a party have each been duly executed and
delivered by the Administrative Agent.
(e) No approval of, consent of, notice to, filing with or
permits, qualifications or other action by any Governmental Authority or any
other party is required (i) for the due execution, delivery and performance by
the Administrative Agent of this Agreement or any of the other Transaction
Documents to which it is a party (ii) for the perfection of or the exercise by
Financial Security, the Purchasers, the Administrative Agent of any of its
rights or remedies thereunder, in each case other than consents, notices,
filings, permits, qualifications and other
23
actions which have been obtained or made and complete copies of which have
been provided to Financial Security.
(f) This Agreement and the other Transaction Documents to
which the Administrative Agent is a party are the legal, valid and binding
obligations of the Administrative Agent enforceable against the Administrative
Agent in accordance with their terms, subject to (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforceability of creditors' rights
generally and (ii) general equitable principles, whether applied in a proceeding
at law or in equity.
(g) Each of the representations and warranties of the
Administrative Agent contained in this Agreement and the other Transaction
Documents to which it is a party is true and correct in all material respects.
Section 2.8 AFFIRMATIVE COVENANTS OF THE ADMINISTRATIVE
AGENT. The Administrative Agent shall, unless Financial Security shall expressly
otherwise consent in writing:
(a) perform each of its obligations under this Agreement and
each of the other Transaction Documents and comply with all applicable laws,
rules, regulations and orders with respect to this Agreement and each of the
other Transaction Documents and all Receivables, and the related property with
respect thereto, where non-compliance, separately or in the aggregate, would
have a Purchaser Material Adverse Effect on the Administrative Agent;
(b) preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation and shall
conduct its business in accordance with the terms of its certificate or articles
of organization and by-laws, except in cases in which the failure to preserve or
maintain the foregoing would not have a Purchaser Material Adverse Effect on the
Administrative Agent;
(c) cooperate fully with all reasonable requests of Financial
Security regarding any information or documents with respect to the
Administrative Agent, acting in its capacity as Agent, necessary or desirable to
allow Financial Security to carry out its responsibilities under the Transaction
Documents;
(d) cooperate with S&P and Moody's in connection with any
review undertaken by S&P or Moody's after the date hereof with respect to the
Transaction;
(e) maintain all licenses, permits, charters and registrations
which are related to the conduct of its business and the Transaction except in
cases in which the failure to maintain the foregoing would not have a Purchaser
Material Adverse Effect on the Administrative Agent; and
24
(f) keep or cause to be kept in reasonable detail, books and
records of account relating to the Transaction.
Section 2.9 REPORTING REQUIREMENTS OF THE ADMINISTRATIVE
AGENT. The Administrative Agent shall furnish, or cause to be furnished, at its
own expense, to the Borrower, the Purchasers and Financial Security:
(a) within one Business Day of the occurrence of (A) any
Servicer Termination Event of Termination under (and as defined in) the Purchase
Agreements or (B) the Facility Termination Date (as defined in the Purchase
Agreement), notice of such event, and immediately after receiving any
certificate, report, statement, notice or other communication from the Borrower
or the Performance Guarantor relating to any such event, a copy of any such
communication;
(b) in the case of the Administrative Agent, promptly upon
receipt thereof, copies of all reports, statements, certifications, schedules,
notices, confirmations and other information and communications delivered to or
by the Administrative Agent in connection with the Transaction Documents;
(c) upon Financial Security's request therefor (to the extent
not previously delivered to Financial Security by the Borrower or the Servicer
within two Business Days after the date required to be delivered by the Borrower
or the Servicer to Financial Security pursuant to Section 2.2 above), any
information received by the Administrative Agent, as the case may be, pursuant
to the Purchase Agreements respecting the business, properties or the condition
or operations, financial or otherwise, of the Borrower or the Servicer;
(d) as promptly as possible, and in any event within three
Business Days after the commencement thereof, notice of all actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, relating to or affecting
this Agreement or any of the other Transaction Documents, the Transaction, or
the Receivables;
(e) as promptly as possible, and in any event within one
Business Day after the Administrative Agent becomes aware of the existence
thereof, telephonic, telex or telecopied notice (confirmed in writing within 3
days) specifying the nature of any Default or Event of Default, any breach or
nonperformance by the Administrative Agent or any other Person of this Agreement
or any the other Transaction Documents or any development or other information
which could have a Purchaser Material Adverse Effect on the Administrative
Agent; and
(f) promptly, from time to time, such other information,
documents, records or reports in the possession of the Administrative Agent
(including information, documents, records and reports in appropriate electronic
or machine-readable format) respecting the Receivables, the Servicer, the
Borrower, the Purchase Agreements, or the Transactions as the Purchasers or
Financial Security may, from time to time, reasonably request.
25
Section 2.10 NEGATIVE COVENANTS OF THE ADMINISTRATIVE AGENT.
The Administrative Agent shall not, without the prior written consent of
Financial Security:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, or assign any right to receive income (other than with respect
to the Administrative Agent's fees) in respect of any Receivables, other than as
specifically permitted by this Agreement or any of the other Transaction
Documents;
(b) extend, amend, forgive, discharge, waive, compromise,
cancel or otherwise modify the terms of any Transaction Document;
(c) make any change in the instructions to Obligors regarding
payments to be made to the Borrower or to a Lockbox Account;
(d) (i) take any action (unless required by law), or fail to
take any lawful action, if such action or failure to take action may interfere
with the enforcement of any rights under this Agreement or any of the other
Transaction Documents that are material to the rights, benefits or obligations
of the Borrower, the Servicer or Financial Security; (ii) waive or alter any
rights with respect to the Receivables (or any agreement or instrument relating
thereto); or (iii) take any action, or fail to take any action, if such action
or failure to take action may interfere with the enforcement of any rights with
respect to the Receivables;
(e) take or permit to be taken any action which would have the
effect directly or indirectly of subjecting interest on the Notes to withholding
taxation in the hands of any holders of Notes generally, and will perform all of
its obligations under the Transaction Documents to prevent or cure any default
by the Administrative Agent which would have the effect, directly or indirectly,
of subjecting interest on the Notes or the Notes to withholding taxation;
(f) cause, permit, or suffer to exist, or agree to cause,
permit or suffer to exist in the future (upon the happening of a contingency or
otherwise), or consent to or acquiesce in the purchase of any Receivable
pursuant to the Receivables Purchase Agreement unless all of the conditions
precedent set forth in Section 3.02 thereof, or, in the case of the Initial
Purchase, all of the conditions precedent set forth in Section 3.01 thereof have
been satisfied;
(g) sell, assign or otherwise dispose of, or agree to sell,
assign or otherwise dispose of, any Purchased Asset (or any interest which it
may own therein) or any of its obligations or rights to payment under the
Purchase Agreements, to which it is a party, to any Person, which Person is not
created or organized under the laws of the United States of America, which has
not previously provided to the Administrative Agent duly completed and executed
copies of IRS Form 4224 or 1001, as applicable (or any successor forms or other
certificates or statements which may be required from time to time by the
relevant United States taxing
26
authorities), certifying that such Person may receive payments under or in
connection with the Receivables Purchase Agreement (and any other related
instruments, documents and agreements) without deduction or withholding of
United States Federal income tax; IT BEING UNDERSTOOD AND AGREED by the
Administrative Agent and Financial Security hereunder that any United States
Federal income taxes properly deducted or withheld by the Borrower shall be
deemed to be a payment for the account of such Person in respect of which
such deduction or withholding was made, and such Person shall have no right
to reimbursement thereof or from Financial Security under the Policy. The
Administrative Agent shall, promptly upon its receipt thereof, deliver to
Financial Security copies of any such forms or certificates described in the
immediately preceding sentence which are delivered to the Administrative
Agent in accordance herewith;
(h) shall not deliver a L/C Reduction Notice or a termination
notice pursuant to paragraph 1 of the Transaction Letter of Credit or take any
other action to terminate or reduce the L/C Amount; and
(i) resign as Agent under the other Transaction Documents
unless immediately replaced by an affiliate of the Administrative Agent
previously approved in writing by Financial Security.
ARTICLE III
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.1 ISSUANCE OF THE POLICY. Financial Security agrees
to issue the Policy subject to satisfaction of the conditions precedent set
forth in Appendix II hereto.
Section 3.2 PAYMENT OF FEES AND PREMIUM.
(a) LEGAL FEES. On the Date of Issuance or thereafter on
demand, the Borrower shall pay or cause to be paid legal fees and disbursements
incurred by Financial Security in connection with the issuance of the Policy as
set forth in the Premium Letter.
(b) RATING AGENCY FEES. The initial fees of S&P and Moody's
with respect to the Transaction and the Transaction Documents shall be paid or
caused to be paid by the Borrower in full on the Date of Issuance. All periodic
and subsequent fees of S&P or Moody's with respect to, and directly allocable
to, the Transaction shall be for the account of, and shall be billed to, the
Borrower. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating, unless such other agency is a substitute
for S&P or Moody's in the event that S&P or Xxxxx'x is no longer shadow rating
Financial Security's credit risk exposure in connection with the Transaction, in
which case the cost for such agency shall be paid by the Borrower.
(c) PREMIUM. In consideration of the issuance by Financial
Security of the Policy, Financial Security shall be entitled to receive the
Premium as and when due in
27
acordance with the terms of the Premium Letter (i) in the case of Premium
due on or before the Date of Issuance, directly from the Borrower, (ii) in
the case of Premium due after the Date of Issuance, from monies available for
such payment in accordance with Section 2.03 of the Receivables Purchase
Agreement or the Secondary Purchase Agreement, as the case may be, and (iii)
in the case of Unpaid Premium (as defined in the Premium Letter), directly
from FIRST, the Borrower and SECOND, to the extent funds are insufficient,
the Performance Guarantor. The Premium paid hereunder or under the
Receivables Purchase Agreement shall be nonrefundable without regard to
whether Financial Security makes any payment under the Policy or any other
circumstances relating to the Transaction or provision being made for payment
of Investment, Guaranteed Yield, or any other applicable payment obligations
under the Transaction Documents or otherwise. Although the Premium is fully
earned by Financial Security as of the Closing Date, the Premium shall be
payable in periodic installments as provided in the Premium Letter. Anything
herein or in any of the Transaction Documents notwithstanding, upon the
occurrence of an Event of Default, the entire outstanding balance of further
installments of the Premium shall be immediately due and payable. All
payments of Premium and Unpaid Premium shall be made by wire transfer to an
account designated from time to time by Financial Security by written notice
to the Borrower and the Performance Guarantor.
Section 3.3 REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.
The Borrower agrees to pay to Financial Security the following amounts as and
when incurred:
(a) a sum equal to the total of all amounts paid by Financial
Security under the Policy;
(b) any and all out-of-pocket charges, fees, costs and
expenses which Financial Security may reasonably pay or incur, including, but
not limited to, attorneys' and accountants' fees and expenses, in connection
with (i) in the event of payments under the Policy, any accounts established to
facilitate payments under the Policy, to the extent Financial Security has not
been immediately reimbursed on the date that any amount is paid by Financial
Security under the Policy, or other administrative expenses relating to such
payments under the Policy, (ii) the administration, enforcement, defense or
preservation of any rights in respect of any of the Transaction Documents,
including defending, monitoring or participating in any litigation or proceeding
(including any insolvency or bankruptcy proceeding in respect of any Transaction
participant or any Affiliate thereof) relating to any of the Transaction
Documents, any party to any of the Transaction Documents or the Transaction,
(iii) any amendment, waiver or other action with respect to, or related to, any
Transaction Document whether or not executed or completed, (iv) any review or
investigation made by Financial Security in those circumstances where its
approval or consent is sought under any of the Transaction Documents and (v) the
foreclosure against, sale or other disposition of any collateral securing any
obligations under any of the Transaction Documents or otherwise in the
discretion of Financial Security, or pursuit of any other remedies under any of
the Transaction Documents, to the extent such costs and expenses are not
recovered from such foreclosure, sale or other disposition;
28
(c) interest on any and all amounts described in this Section
3.3 from the date payable or paid by Financial Security until payment thereof in
full and interest on any and all amounts described in Sections 3.2, 3.4 and 3.7
from the date due until payment thereof in full, in each case, payable to
Financial Security at the Late Payment Rate per annum; and
(d) any payments made by Financial Security on behalf of, or
advanced to, the Borrower or to the Purchasers or the Administrative Agent
including, without limitation, any amounts payable by the Borrower pursuant to
any other Transaction Documents; and any payments made by Financial Security as,
or in lieu of, servicing, management, trustee, custodial or administrative fees
payable, in the sole discretion of Financial Security, to third parties in
connection with the Transaction.
All such amounts are to be immediately due and payable without
demand.
In addition to, and not in limitation of the foregoing, the
Borrower and the Performance Guarantor each agrees that in the event that
Financial Security seeks to enforce any of its rights hereunder or under any
other Transaction Document (whether through negotiations, legal proceedings or
otherwise), the Borrower or the Performance Guarantor, as the case may be,
against whom enforcement is sought, shall immediately remit to Financial
Security all reasonable out-of-pocket costs, expenses and disbursements,
including attorney's fees and expenses and other costs and expenses incurred by
Financial Security in connection with the enforcement of such rights. Such
amounts are due and payable immediately, without demand.
Section 3.4 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE PERFORMANCE GUARANTOR. In addition
to any and all rights of reimbursement, indemnification, subrogation and any
other rights pursuant hereto or under law or in equity, the Performance
Guarantor agrees to pay, and to protect, indemnify and save harmless, Financial
Security and its officers, directors, shareholders, employees, agents and each
Person, if any, who controls Financial Security within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act
from and against any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses (including,
without limitation, fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or relating to
the transactions contemplated by the Transaction Documents by reason of:
(i) any statement, omission or action by the
Performance Guarantor in connection with the sale, remarketing or
delivery of the Purchased Assets;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director, officer,
employee or agent of the Performance Guarantor;
29
(iii) the breach by the Performance Guarantor of any
representation, warranty or covenant under any of the Transaction
Documents resulting in an "event of default" or "event of termination"
or like event (however denominated) under the Transaction Documents or
any event which, with the giving of notice or the lapse of time or
both, would constitute any "event of default" or "event of termination"
or like event (however denominated) under the Transaction Documents;
(iv) the violation by the Performance Guarantor of any
federal, state or foreign law, rule or regulation, or any judgment,
order or decree applicable to it; or
(v) any untrue statement or alleged untrue statement
of a material fact provided by the Performance Guarantor for use in any
Offering Document or any omission by the Performance Guarantor or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such claims arise out of or are based upon any untrue
statement or omission in the information furnished by Financial
Security in writing expressly for use therein (all such information so
furnished being referred to herein as "Financial Security
Information").
(b) INDEMNIFICATION BY MCII HOLDINGS, MCII COACHES, BUSLEASE,
MCF, MCFSII AND THE SERVICER. In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant hereto
or under law or in equity, each of MCII Holdings, MCII Coaches, BusLease, MCF,
MCFSII, and the Servicer agrees severally and not jointly, and solely with
respect to itself and its own representations, warranties, covenants and actions
under the Transaction Documents, to pay, and to protect, indemnify and save
harmless, Financial Security and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls Financial Security
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) of
any nature arising out of or relating to the transactions contemplated by the
Transaction Documents by reason of:
(i) any statement, omission or action by the
Performance Guarantor, MCII Holdings, MCII Coaches, BusLease, MCF,
MCFSII or the Servicer (other than that of Financial Security), as
applicable, in connection with the sale, remarketing or delivery of the
Purchased Assets;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director, officer,
employee or agent of Performance Guarantor, MCII Holdings, MCII
Coaches, BusLease, MCF, MCFSII or the Servicer, as applicable;
30
(iii) the breach by the Performance Guarantor, MCII
Holdings, MCII Coaches, BusLease, MCF, MCFSII or the Servicer, as
applicable, of any representation, warranty or covenant made by it
under any of the Transaction Documents resulting in an "event of
default" or "event of termination" or like event (however denominated)
under the Transaction Documents or any event which, with the giving of
notice or the lapse of time or both, would constitute any "event of
default" or "event of termination" or like event (however denominated)
under the Transaction Documents;
(iv) the violation by the Performance Guarantor, MCII
Holdings, MCII Coaches, any Originator or the Servicer, as applicable,
of any federal, state or foreign law, rule or regulation, or any
judgment, order or decree applicable to it; or
(v) any untrue statement or alleged untrue statement
of a material fact provided by any of the Performance Guarantor, MCII
Holdings, MCII Coaches, any Originator or the Servicer for use in any
Offering Document or any omission by any such Person or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such claims arise out of or are based upon any untrue
statement or omission in the information furnished by Financial
Security in writing expressly for use therein (all such information so
furnished being referred to herein as "Financial Security
Information").
(c) INDEMNIFICATION BY THE BORROWER. In addition to any and
all rights of reimbursement, indemnification, subrogation and any other rights
pursuant hereto or under law or in equity, the Borrower agrees to pay, and to
protect, indemnify and save harmless, Financial Security and its officers,
directors, shareholders, employees, agents and each Person, if any, who controls
Financial Security within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act from and against any and all
claims, losses, liabilities (including penalties), actions, suits, judgments,
demands, damages, costs or expenses (including, without limitation, fees and
expenses of attorneys, consultants and auditors and reasonable costs of
investigations) of any nature arising out of or relating to the transactions
contemplated by the Transaction Documents (excluding uncollectible Receivables
for credit reasons) by reason of:
(i) any statement, omission or action by the Borrower
(other than that of Financial Security) in connection with the
offering, issuance, sale, remarketing or delivery of the Purchased
Assets;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director, officer,
employee or agent of the Borrower;
(iii) the breach by the Borrower of any representation,
warranty or covenant under any of the Transaction Documents or the
occurrence under any of the Transaction Documents of any "event of
default" or "event of termination" or like event (however denominated)
or any event which, with the giving of notice or the lapse of time
31
or both, would constitute any "event of default" or "event of
termination" or like event (however denominated);
(iv) the violation by the Borrower of any federal,
state or foreign law, rule or regulation, or any judgment, order or
decree applicable to it; or
(v) any untrue statement or alleged untrue statement
of a material fact contained in any Offering Document or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such claims arise out of or are based
upon any untrue statement or omission in the Financial Security
Information.
(d) INDEMNIFICATION BY THE PURCHASERS AND ADMINISTRATIVE
AGENT. In addition to any and all rights of reimbursement, indemnification,
subrogation and any other rights pursuant hereto or under law or in equity, the
Purchasers and the Administrative Agent, solely in respect of any actions or
omissions by it or its directors, officers, employees, agents, or controlling
Persons, for any of the following reasons (each of the Purchasers and the
Administrative Agent, an "Indemnifying Party") agrees to pay, and to protect,
indemnify and save harmless, Financial Security and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls Financial
Security within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, fees and expenses of
attorneys, consultants and auditors and costs of investigations) of any nature
arising out of or relating to the transactions contemplated by this Agreement
and the other Transaction Documents by reason of:
(i) the gross negligence, bad faith, willful
misconduct, misfeasance, malfeasance or theft committed by any
director, officer, employee or agent of such Indemnifying Party in
connection with any transaction arising from or relating to this
Agreement or any of the other Transaction Documents;
(ii) the violation by such Indemnifying Party of any
domestic or foreign law, rule or regulation, or judgment, order or
decree applicable to it that would have a Purchaser Material Adverse
Effect;
(iii) the breach by such Indemnifying Party of any
representation, warranty or covenant under this Agreement or any of the
other Transaction Documents or the occurrence under this Agreement or
any of the other Transaction Documents of any "event of default" or any
event which, with the giving of notice or lapse of time or both, would
constitute any "event of default", in each case with respect to such
Indemnifying Party; or
(iv) any untrue statement or alleged untrue statement
of a material fact contained in any Offering Document in connection
with the offering, issuance, sale,
32
remarketing or delivery, of the Notes or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such claims arise out of or are based upon any
untrue statement or omission in information included in any Offering
Document and furnished by Financial Security in writing expressly
for use therein.
(e) CONDUCT OF ACTIONS OR PROCEEDINGS. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against Financial Security, any officer, director, shareholder,
employee or agent of Financial Security or any Person controlling Financial
Security (individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which indemnity may be sought from an
Indemnifying Party hereunder, Financial Security shall promptly notify such
Indemnifying Party in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel satisfactory to Financial
Security and the payment of all expenses. An Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof at the expense of such Indemnified Party; PROVIDED, HOWEVER,
that the fees and expenses of such separate counsel shall be at the expense of
such Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to assume the
defense of such action or proceeding and employ counsel satisfactory to
Financial Security in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Party and such Indemnifying Party, and the Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party (in which case, if the Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that such Indemnifying Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
the Indemnified Parties, which firm shall be designated in writing by Financial
Security). Such Indemnifying Party shall not be liable for any settlement of any
such action or proceeding effected without its written consent to the extent
that any such settlement shall be prejudicial to such Indemnifying Party, but,
if settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding with respect to which the
Indemnifying Party shall have received notice in accordance with this subsection
(b), the Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such settlement or
judgment.
(f) CONTRIBUTION. To provide for just and equitable
contribution if the indemnification provided by any Indemnifying Party is
determined to be unavailable for any Indemnified Party (other than due to
application of this Section), each Indemnifying Party shall contribute to the
losses incurred by the Indemnified Party on the basis of the relative fault of
the Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand.
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(g) TRANSFER OF PAYMENTS. Each of the Performance Guarantor,
the Servicer, the Originators, MCII Holdings and MCII Coaches agrees to remit to
Financial Security, promptly upon receipt thereof by such Persons from the
Borrower or any other Person, any amount so received in respect of any of the
following: all out-of-pocket costs, expenses and disbursements, including
attorneys' fees and expenses and other costs and expenses, incurred by Financial
Security in connection with the negotiation, preparation, execution, delivery,
administration, modification, amendment, termination and waiver of, and
obtaining legal advice in respect of rights and responsibilities under, this
Agreement, each of the other Transaction Documents to which it is a party and
any other agreement, document or instrument related to the foregoing.
Section 3.5 PAYMENT PROCEDURE. In the event of any payment by
Financial Security, the Borrower, the Performance Guarantor, the Originators,
MCII Holdings, MCII Coaches, the Purchasers, the Servicer and the Administrative
Agent each agrees to accept the receipt or other evidence of payment as prima
facie evidence of the propriety thereof and the liability therefor to Financial
Security. All payments to be made to Financial Security under this Agreement
shall be made to Financial Security in lawful currency of the United States of
America in immediately available funds to the account number provided in the
Premium Letter before 1:00 p.m. (New York, New York time) on the date when due
or as Financial Security shall otherwise direct by written notice to the other
parties hereto. In the event that the date of any payment to Financial Security
or the expiration of any time period hereunder occurs on a day which is not a
Business Day, then such payment or expiration of time period shall be made or
occur on the next succeeding Business Day with the same force and effect as if
such payment was made or time period expired on the scheduled date of payment or
expiration date. Payments to be made to Financial Security under this Agreement
shall bear interest at the Late Payment Rate from the date when due to the date
paid.
Section 3.6 SUBROGATION. The parties hereto acknowledge that,
to the extent of any payment made by Financial Security to the Administrative
Agent pursuant to the Policy, Financial Security is to be fully subrogated to
the extent of such payment and any additional interest due on any late payment,
to the rights of the Performance Guarantor, the Borrower, the Servicer, the
Purchasers the Originators, MCII Holdings, MCII Coaches or the Administrative
Agent for the benefit of SPARC or the Secondary Purchaser, as the case may be,
to any moneys paid or payable in respect of the Receivables under the
Transaction Documents or otherwise, subject, however to the priority of payments
set forth in Section 2.03(c) of the Receivables Purchase Agreement and the
Secondary Purchase Agreement. The parties hereto agree to such subrogation and,
further, agree to execute such instruments and to take such actions as, in the
sole judgment of Financial Security, are necessary to evidence such subrogation
and to perfect the rights of Financial Security to receive any moneys paid or
payable in respect of the Receivables under this Agreement or any of the other
Transaction Documents or otherwise.
Section 3.7 INCREASED COSTS. If Financial Security determines
at any time that any applicable law or governmental or rating agency rule,
regulation, order or request (whether or
34
not having the force of law) concerning capital adequacy, reserve or similar
requirement, or any change in interpretation or administration thereof, will
have the effect of increasing the amount of capital, reserve or similar
requirement required or expected to be maintained by Financial Security based
on its obligations under the Policy, then the Borrower, shall pay to
Financial Security, upon its written demand therefor, such additional amounts
as shall be required to compensate Financial Security for the increased cost
to Financial Security as a result of such increased capital, reserve or
similar requirement, and the Borrower shall also be obligated to compensate
Financial Security for such increased costs, and shall pay such amounts to
Financial Security if and to the extent that sufficient funds are not
available for the payment thereof. In determining such additional amounts,
Financial Security will act in good faith, provided that Financial Security's
determination of compensation owing under this Section 3.7 shall, absent
manifest error, be final and conclusive and binding on all the parties
hereto. Financial Security, upon determining that any additional amounts will
be payable pursuant to this Section 3.7, will give prompt written notice
thereof to the Borrower, which notice shall show the basis for the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any obligations of the Borrower to pay
additional amounts pursuant to this Section 3.7.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.1 EFFECTIVE DATE; TERM OF AGREEMENT; SURRENDER OF
POLICY. This Agreement shall take effect on the Date of Issuance and shall
remain in effect until the later of (a) such time as Financial Security is no
longer subject to a claim under the Policy and the Policy shall have been
surrendered to Financial Security for cancellation and (b) all amounts payable
to Financial Security and the Insured Parties by the Transaction Documents have
been paid in full; PROVIDED, HOWEVER, that the provisions of Sections 3.2, 3.3,
3.4 and 3.7 hereof shall survive any termination of this Agreement.
Notwithstanding the foregoing, the Insured Parties may terminate the Policy upon
(a) payment in immediately available funds of all amounts due and owing to
Financial Security (including any premiums due hereunder and in accordance with
the Premium Letter) and (b) surrendering the Policy to Financial Security for
cancellation. The Insured Parties shall give notice to the Rating Agencies of
such termination of the Policy.
Section 4.2 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. To
the extent permitted by law, the Borrower, the Originators, MCII Coaches, MCII
Holdings, the Purchasers, the Administrative Agent, the Performance Guarantor
and the Servicer each agrees that it will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as Financial Security may
request and as may be required in Financial Security's judgment to facilitate
the performance of this Agreement.
Section 4.3 OBLIGATIONS ABSOLUTE. The obligations of the
Borrower, the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, and the Servicer,
35
hereunder shall be absolute and unconditional, and shall be paid or performed
strictly in accordance with this Agreement under all circumstances
irrespective of:
(i) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver with respect to this
Agreement or any of the other Transaction Documents, the Notes, the
Liquidity Obligations or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense,
reduction, abatement or other right which the Borrower, the Purchasers,
the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, the Servicer or the Administrative Agent may have at any
time against Financial Security or any other Person;
(iv) any document presented in connection with the
Policy proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by Financial Security under the
Policy against presentation of a certificate or other document which
does not strictly comply with terms of the Policy;
(vi) any failure of SPARC or the Administrative Agent
to receive the proceeds from the sale of the Notes;
(vii) any breach by the Borrower, SPARC, the Secondary
Purchaser, the Originators, MCII Coaches, MCII Holdings, the
Performance Guarantor, the Servicer, or the Administrative Agent of any
representation, warranty or covenant contained in this Agreement or any
of the other Transaction Documents; or
(viii) any other circumstances, other than payment in
full, which might otherwise constitute a defense available to, or
discharge of, the Borrower, SPARC, the Secondary Purchaser, the
Servicer or the Administrative Agent in respect of this Agreement or
any of the other Transaction Documents.
(b) The Borrower, the Originators, MCII Coaches, MCII
Holdings, the Performance Guarantor, the Servicer, and any and all others who
are now or may become liable for all or part of the obligations thereof under
this Agreement each agree to be bound by this Agreement and (i) to the extent
permitted by law, waive and renounce any and all redemption and exemption
rights and the benefit of all valuation and appraisement privileges against
the indebtedness and obligations evidenced by this Agreement or any other
Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in
connection with the delivery and acceptance hereof and all other notices in
connection with the
36
performance, default or enforcement of any payment hereunder except as
required by this Agreement and the other Transaction Documents; (iv) waive
all rights of abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment arising
out of any breach under this Agreement or any of the other Transaction
Documents, by any party thereto or any beneficiary thereof, or out of any
obligation at any time owing to the Borrower, SPARC, the Secondary Purchaser,
the Originators, MCII Coaches, MCII Holdings, the Performance Guarantor, the
Servicer, or the Administrative Agent; (v) agree that its liabilities
hereunder shall, except as otherwise expressly provided in this Section 4.3,
be unconditional and without regard to any setoff, counterclaim or the
liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall
operate only for such event and not for any subsequent event; (vii) consent
to any and all extensions of time that may be granted by Financial Security
with respect to any payment hereunder or other provisions hereof and to the
release of any security at any time given for any payment hereunder, or any
part thereof, with or without substitution, and to the release of any Person
or entity liable for any such payment; and (viii) consent to the addition of
any and all other makers, endorsers, Performance Guarantors and other
obligors for any payment hereunder, and to the acceptance of any and all
other security for any payment hereunder, and agree that the addition of any
such obligors or security shall not affect the liability of the parties
hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the
Borrower, SPARC, the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, the Servicer, or the Administrative Agent, as the case may be, from
pursuing any rights or remedies it may have against any other Person in a
separate legal proceeding.
Section 4.4 ASSIGNMENTS REINSURANCE: THIRD-PARTY RIGHTS. This
Agreement shall be a continuing obligation of the parties hereto and shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. None of the Borrower, SPARC, the Secondary
Purchaser, the Originators, MCII Coaches, MCII Holdings, the Performance
Guarantor, the Servicer, or the Administrative Agent may assign its rights or
obligations under this Agreement, or delegate any of its duties hereunder (other
than from SPARC or the Secondary Purchaser to the Administrative Agent pursuant
to the Transaction Documents), without the prior written consent of Financial
Security. Any assignment made in violation of this Agreement shall be null and
void.
(a) Financial Security shall have the right to give
participation in its rights under this Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
Financial Security may in its discretion determine; PROVIDED, HOWEVER, that no
such participation or reinsurance agreement or arrangement shall relieve
Financial Security of any of its obligations hereunder or under the Policy.
(b) In addition, Financial Security shall be entitled to
assign or pledge to any bank or other lender providing liquidity or credit with
respect to the Transaction or the obligations of Financial Security in
connection therewith any rights of Financial Security under
37
this Agreement and the other Transaction Documents or with respect to any
real or personal property or other interests pledged to Financial Security,
or in which Financial Security has a security interest, in connection with
the Transaction.
(c) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person other than Financial Security, against the
Borrower, SPARC, the Secondary Purchaser, the Originators, MCII Coaches, MCII
Holdings, the Performance Guarantor, the Servicer, or the Administrative Agent,
and all the terms, covenants, conditions, promises and agreements contained
herein shall be for the sole and exclusive benefit of the parties hereto and
their successors and permitted assigns. None of the Borrower, SPARC, the
Secondary Purchaser, the Originators, MCII Coaches, MCII Holdings, the
Performance Guarantor, the Servicer or the Administrative Agent shall have any
right to payment from any premiums paid or payable hereunder or from any other
amounts paid by the Borrower, the Originators, MCII Coaches, MCII Holdings, the
Performance Guarantor and the Servicer, pursuant Section 3.2, 3.3 or any other
provision hereof.
Section 4.5 LIABILITY OF FINANCIAL SECURITY. Neither
Financial Security nor any of its officers, directors, employees or agents shall
be liable or responsible for: (a) the use which may be made of the Policy by the
Borrower, SPARC, the Secondary Purchaser, the Originators, MCII Coaches, MCII
Holdings, the Performance Guarantor, the Servicer, or the Administrative Agent
or for any acts or omissions of the Borrower, the Performance Guarantor, MCII
Holdings, MCII Coaches, the Originators, the Servicer, SPARC or the
Administrative Agent in connection therewith; or (b) the validity, sufficiency,
accuracy or genuineness of documents delivered to Financial Security (or its
Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
Financial Security shall have actual knowledge thereof). In furtherance and not
in limitation of the foregoing, Financial Security (or its Fiscal Agent) may
accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.6 ACTIONS UNDER TRANSACTION DOCUMENTS. So long as
no Financial Security Default has occurred and is continuing, the Administrative
Agent, SPARC and the Secondary Purchaser each hereby agrees as follows:
(a) The Administrative Agent, SPARC and the Secondary
Purchaser shall each comply with the instruction of Financial Security to take
any action or refrain from taking any action, or to exercise or refrain from
exercising any right, power or authority, in each case under the Transaction
Documents and all agreements, documents and instruments relating thereto.
Without limiting the generality of the preceding sentence, each of the
Administrative Agent, SPARC and the Secondary Purchaser agrees that it will upon
Financial Security's prior written request or direction following the occurrence
of the respective events or conditions described below, take, or cause to be
taken, the following actions:
38
(i) subject to the limitations set forth in the
applicable Purchase Agreement, designate a Person selected by Financial
Security as the successor Servicer under such Purchase Agreement;
(ii) declare the Termination upon the occurrence of a
Servicer Termination Event under either Purchase Agreement; and
(iii) direct the Administrative Agent to take or
cause to be taken any action, or to exercise or cause to be exercised
any right, power, or authority (subject in each case to the proviso
clauses in the preceding sentence) under the Transaction Documents
and the agreements, documents and instruments relating thereto.
(b) None of the Administrative Agent, SPARC or the Secondary
Purchaser shall take any action or exercise any right, power or authority under
the Transaction Documents or the agreements, documents and instruments relating
thereto, including, without limitation, any action with respect to the Purchased
Assets, any Blocked Account other than at the written request and direction or
with the prior written consent of Financial Security; PROVIDED, HOWEVER, that
unless otherwise notified by Financial Security, Financial Security hereby
consents to all actions of each of the Administrative Agent, SPARC and the
Secondary Purchaser under the Transaction Documents which are necessary or
required by, such Person in order to meet its obligations thereunder; PROVIDED,
HOWEVER, that any action referenced in the immediately preceding proviso (x)
shall be in accordance with and not contrary to the specific provisions of any
of the Transaction Documents, such agreements, documents and instruments
relating thereto and applicable law, and (y) shall not direct the execution of
an amendment to any of the Transaction Documents without the prior written
consent of Financial Security; and PROVIDED FURTHER that in no event shall the
Administrative Agent, SPARC or the Secondary Purchaser, as applicable, without
the prior written consent of Financial Security:
(i) designate or permit the designation of any Person
to succeed to any rights or obligations of, or otherwise replace or
terminate, or permit the replacement or termination of, BusLease in its
capacity as servicer or CIBC in its capacity as Administrative Agent or
other agent under any Transaction Document, or enter into an agreement
providing for or permitting the same, whether upon the occurrence of a
contingent event or otherwise;
(ii) terminate or designate, or consent to the
termination or designation of, any successor thereto, or terminate or
consent to the termination of any LockBox Agreement, or direct or
consent to any assignment or transfer of any rights or obligations of
any Blocked Account Bank;
(iii) direct or make a request of the Borrower or
Servicer, or notify any Lockbox Bank, or any Obligor (as defined in the
Receivables Purchase Agreement), to remit or to cause to be remitted
directly to a Lockbox Account any Collections; or
39
(iv) take any action, or fail to take any action, if
such action or failure to take action may reasonably be expected to (x)
interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of
SPARC, the Secondary Purchaser or Financial Security, (y) result in a
Material Adverse Effect in respect of the Receivables or (z) impair the
ability of any Person to perform its obligations under the Transaction
Documents to which it is a party.
(c) Subject to the limitations set forth in Sections 4.6(a)
and (b) above and without expanding the rights of the Insured Parties under the
Purchase Agreements, each Insured Party and the Administrative Agent hereby
irrevocably makes, designates, constitutes and appoints Financial Security as
its attorney-in-fact, with power in the name of such Insured Party or, the
Administrative Agent to:
(i) direct the Servicer to commence or settle any
legal action to enforce collection of any Purchased Receivable or to
enforce, foreclose upon or repossess any Related Security;
(ii) exercise or direct the Administrative Agent to
exercise (in which case the Administrative Agent agrees to exercise),
the right to deliver notices to the Blocked Account Banks (or any of
them) which terminates the authority of the Servicer to direct the
transfer of funds from one or more Blocked Accounts and/or to notify
any or all of the Obligors (as defined in the Receivables Purchase
Agreement) of SPARC's, the Secondary Purchaser's, and/or Financial
Security's, as applicable, ownership interest in the Purchased
Receivables; and
PROVIDED, HOWEVER, that Financial Security agrees to take the actions described
in such clauses (i) and (ii) of this Section 4.6(c) in full compliance with the
applicable provisions of the Purchase Agreements, the Transaction Documents and
the other agreements, documents and instruments relating to any of the foregoing
and with applicable law.
Section 4.7 REPORTS. The Administrative Agent hereby agrees
to furnish to Financial Security, upon Financial Security's request (but only to
the extent not previously delivered to Financial Security by the Performance
Guarantor or the Borrower within two Business Days after the date required or
requested to be delivered by the Performance Guarantor or the Borrower to
Financial Security pursuant to Section 2.2), a copy of each certificate, report,
statement, notice, demand or other communication received by the Administrative
Agent from the Performance Guarantor, the Borrower, and/or any other Person
under or in connection with any of the Transaction Documents.
Section 4.8 OBLIGATIONS UNDER THIS AGREEMENT. Each of the
Originators, the Servicer, the Performance Guarantor, the Borrower, MCII
Coaches, MCII Holdings and the Administrative Agent agrees that nothing in the
Receivables Purchase Agreement, shall derogate from or in any way diminish the
obligations and liabilities of the Servicer, the Borrower, the Performance
Guarantor, the Administrative Agent, and the other parties hereto, or the
rights,
40
powers and privileges of Financial Security, set forth in or by reference in
the Insurance Agreement.
Section 4.9 DISCLOSURE DOCUMENT. The Insured Parties and the
Administrative Agent, with respect to any Offering Document that it participates
in preparing, each hereby agrees as follows:
(a) PROPERTY/CASUALTY INSURANCE: GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES. Each such Offering Document delivered with respect to the
Receivables, the Notes, the Transaction or any Other Transaction and which
references Financial Security or the Policy shall clearly disclose that the
Policy is not covered by the property/casualty insurance security fund specified
in Article 76 of the New York Insurance Law. In addition, each such Offering
Document delivered with respect to the Receivables, the Notes or the Transaction
which includes financial statements of Financial Security prepared in accordance
with generally accepted accounting principles shall include the following
statement immediately preceding such financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations.
(b) FORM OF DOCUMENT: PRIOR CONSENT. If an Offering Document
delivered with respect to the Receivables or the Transaction contains references
to Financial Security or the Policy, the sections of such Offering Document
which relate to or contain information concerning Financial Security or the
Policy shall be in form and substance satisfactory to Financial Security in its
sole discretion as evidenced by Financial Security's prior written consent to
the use thereof, except, upon prior notice to Financial Security, as required by
law, rule or regulation or judicial or administrative process.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.1 EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under the Policy;
41
(b) any representation or warranty made by the Borrower, the
Performance Guarantor, the Originators, the Servicer, MCII Coaches or MCII
Holdings under any of the Transaction Documents, or in any certificate or report
furnished under any of the Transaction Documents, shall prove to be untrue or
incorrect in any material respect; PROVIDED, HOWEVER, that if the Borrower, the
Performance Guarantor, the Originators, the Servicer, MCII Coaches or MCII
Holdings effectively cures any such defect in any representation or warranty
under any Transaction Document or in any certificate or report furnished under
any Transaction Document within 30 days after such defect arose, such defect
shall not in and of itself constitute an Event of Default hereunder;
(c) (i) the Borrower, the Servicer, MCII Holdings, or the
Performance Guarantor shall fail to pay when due any amount payable by the
Borrower, the Servicer, MCII Holdings, or the Performance Guarantor, as
applicable, under any of the Transaction Documents; (ii) the Borrower, the
Servicer, the Originators, the Performance Guarantor, MCII Coaches, MCII
Holdings, the Purchasers, the Administrative Agent shall have asserted that any
of the Transaction Documents to which it is a party is not valid and binding on
the parties thereto; or (iii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Documents or any
property thereof shall find or rule that any material provision of any of the
Transaction Documents is not valid and binding on the parties thereto;
(d) the Borrower, the Performance Guarantor, the Servicer, the
Originators, MCII Coaches, MCII Holdings, the Administrative Agent or the
Purchasers shall fail to perform or observe any other covenant or agreement
contained in this Agreement or any of the other Transaction Documents (except
for the obligations described under clauses (b) or (c) above) and such failure
shall continue for a period of 30 days after written notice given to the
Borrower;
(e) the Borrower, the Performance Guarantor, MCII Holdings,
MCII Coaches, the Servicer, the Originators, the Administrative Agent or the
Purchasers shall fail to pay its debts generally as they come due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute any
proceeding seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, custodian,
liquidator, conservator, trustee or other similar official for it or for any
substantial part of its property, or the Borrower, the Performance Guarantor,
MCII Holdings, MCII Coaches, the Servicer, the Originators, the Administrative
Agent or the Purchasers shall take advantage of any insolvency act, or shall
commence a case or other proceeding naming it as debtor under the United States
Bankruptcy Code or similar law, domestic or foreign, or a case or other
proceeding shall be commenced against it under the United States Bankruptcy Code
or similar law, domestic or foreign, or any proceeding shall be instituted
against the Borrower or the Performance Guarantor seeking liquidation of its
assets and the Borrower, the Performance Guarantor, MCII Holdings, MCII Coaches,
the Servicer, the Originators, the Administrative Agent or the Purchasers shall
fail to take appropriate action resulting in the withdrawal or dismissal of such
proceeding within 30 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, custodian,
42
liquidator, conservator, trustee or other similar official for, it or for any
substantial part of its property) shall occur, or the Borrower, the
Performance Guarantor, MCII Holdings, MCII Coaches, the Servicer, the
Originators, the Administrative Agent or the Purchasers shall consent to, or
acquiesce in, the appointment of a receiver, custodian, liquidator,
conservator, trustee or similar official in respect thereof or the whole or
any substantial part of its properties or assets, or the Borrower, the
Performance Guarantor, MCII Holdings, MCII Coaches, the Servicer, the
Originators, the Administrative Agent or the Purchasers shall take any
corporate action in furtherance of any of the foregoing;
(f) the occurrence of a Servicer Termination Event under the
Receivables Purchase Agreement or the Secondary Purchase Agreement;
(g) the occurrence of an "Event of Default" under any of the
other Transaction Documents;
(h) S&P's long-term issuer rating or Xxxxx'x issuer rating of
the Performance Guarantor or similar indication of the long-term, unsecured and
unsubordinated indebtedness of the Performance Guarantor, shall have been
withdrawn or downgraded below "B" or "B2" by S&P or Xxxxx'x, as the case may be;
(i) the Four-Month Delinquency Ratio is greater than [**]%;
(j) the Four-Month Default Ratio is greater than [**]%;
(k) the Four-Month Net Default Ratio is greater than [**]%;
(l) the Average Recovery Rate is less than [**]%;
(m) the occurrence of an "Event of Default" under and as
defined in any Insurance and Indemnity Agreement or similar agreement among
Financial Security, and/or the Performance Guarantor and/or any Affiliate of
Performance Guarantor and/or any Affiliate of the Borrower and the other party
or parties thereto, if any; or
(n) a notice of termination with respect to any LockBox
Agreement shall have been delivered, or a termination of any Blocked Account
shall have otherwise occurred, and a replacement Blocked Account Bank acceptable
to Financial Security shall not have executed a LockBox Agreement in form and
substance satisfactory to Financial Security within 30 days of such notice.
Section 5.2 REMEDIES; WAIVERS. (a) At any time, upon at least
five (5) Business Days' notice to the Borrower (unless Financial Security
determines in its sole direction that it would be reasonably impractical or
inadvisable to give such notice five (5) Business Days in advance, in which case
notice shall be given on the date any action described in clauses (i) through
(iv) below is taken), provided that the failure to give any such notice shall
not prohibit
43
Financial Security from taking any such action reasonably in its sole
discretion, following the occurrence of an Insurance Agreement Event of
Default, Financial Security may:
(i) declare all indebtedness of every type or
description owed by the Borrower, the Performance Guarantor, the
Servicer or the Administrative Agent to Financial Security to be
immediately due and payable, and the same shall thereupon be
immediately due and payable;
(ii) declare the Premium Supplement to be immediately
due and payable, and the same shall thereupon be immediately due and
payable, whether or not Financial Security shall have declared an
"Event of Default" or shall have exercised, or be entitled to exercise,
any other rights or remedies hereunder;
(iii) exercise any rights and remedies available
under this Agreement and the other Transaction Documents in its own
capacity or through the Purchasers or the Administrative Agent pursuant
to Section 4.06 hereof; or
(iv) take whatever action at law or in equity as may
appear necessary or desirable in its judgment to collect the amounts
then due and thereafter to become due under this Agreement and the
Transaction Documents or to enforce performance of any obligation of
the Borrower, the Purchasers, the Performance Guarantor, the Servicer
or the Administrative Agent under this Agreement and the other
Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under this Agreement and the other Transaction Documents or
existing at law or in equity. No delay or failure to exercise any right or power
accruing under this Agreement or any other Transaction Document upon the
occurrence of any Event of Default or otherwise shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle Financial Security to exercise any remedy reserved to Financial
Security in this Article, it shall not be necessary to give any notice, other
than such notice as may be required in this Article.
(c) If any proceeding has been commenced to enforce any right
or remedy under this Agreement, and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to Financial
Security, then and in every such case the parties hereto shall, subject to any
determination in such proceeding, be restored to their respective former
positions hereunder, and, thereafter, all rights and remedies of Financial
Security shall continue as though no such proceeding had been instituted.
(d) Financial Security shall have the right, to be exercised
in its complete discretion, to waive any covenant, Default or Event of Default
by a writing setting forth the terms, conditions and extent of such waiver
signed by Financial Security and delivered to the
44
other parties hereto. Any such waiver may only be effected in writing duly
executed by Financial Security, and no other course of conduct shall
constitute a waiver of any provision hereof. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence so waived and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.1 AMENDMENTS, ETC. This Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto and notice of such amendment, modification or termination
shall be given to the Rating Agencies. No act or course of dealing shall be
deemed to constitute an amendment, modification or termination hereof.
Section 6.2 NOTICES. All demands, notices and other
communications to be given hereunder shall be in writing (except as otherwise
specifically provided herein) and shall be mailed by registered mail, overnight
courier, personally delivered or telecopied to the recipient as follows:
(a) To Financial Security: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Transaction Oversight
Department;
Re: MCII Funding II Inc.
Confirmation: 212) 826-0100
Telecopy Nos.: (000) 000-0000
(000) 000-0000
(in each case in which
notice or other
communication to Financial
Security refers to an Event
of Default, a claim on the
Policy or with respect to
which failure on the part
of Financial Security to
respond shall be deemed to
constitute consent or
acceptance, then a copy of
such notice or other
communication should also
be sent to the attention of
each of the General Counsel
and the Head--Financial
Guaranty Group and shall
45
be marked to indicate
"URGENT MATERIAL
ENCLOSED.")
(b) To the Borrower: MCII Funding II Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(c) After August 2000: MCII Funding II Inc.
Xxxxx 000
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(d) To the Administrative Agent: Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Asset Securitization Group
Tel.: ]
Fax: (000) 000-0000
(e) To SPARC: Special Purpose Accounts Receivable
Corporation
c/o Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Tel.: [ ]
Fax: (000) 000-0000
(f) To the Secondary Purchaser: Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Asset Securitization Group
Tel.: [ ]
46
Fax: (000) 000-0000
(g) To MCFSII: MCII Financial Services II Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(h) After August 2000: MCII Financial Services II Inc.
Xxxxx 000
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(i) To the Performance Guarantor: Motor Coach Industries International, Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(j) After August 2000: Motor Coach Industries International, Inc.
Xxxxx 000
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(k) To MCII Coaches, Inc.: MCII Coaches, Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(l) After August 2000: MCII Coaches, Inc.
47
Suite 300
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(m) To MCII Holdings (USA), Inc.: MCII Holdings (USA), Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(n) After August 2000: MCII Holdings (USA), Inc.
Xxxxx 000
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(o) To BusLease, Inc.: BusLease, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Tel.: [ ]
Fax: [ ]
(p) To MCII Funding Inc: MCII Funding Inc.
00 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
Tel.: 000-000-0000
Fax: 000-000-0000
(q) After August 2000: MCII Funding Inc.
Xxxxx 000
0000 X. Xxxx Xx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
48
Tel.: 000-000-0000
Fax: 000-000-0000
(r) To the Servicer: BusLease, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Tel.: [ ]
Fax: [ ]
A party may specify an additional or different address or
addresses by writing mailed or delivered to the other parties as aforesaid. All
such notices and other communications shall be effective upon receipt.
Section 6.3 PAYMENT PROCEDURE. In the event of any payment by
Financial Security for which it is entitled to be reimbursed or indemnified as
provided above, the Borrower agrees to accept the voucher or other evidence of
payment as prima facie evidence of the propriety thereof and the liability
therefor to Financial Security. All payments to be made to Financial Security
under this Agreement shall be made to Financial Security in lawful currency of
the United States of America in immediately available funds to the account
number provided in the Premium Letter before 1:00 p.m. (New York, New York time)
on the date when due or as Financial Security shall otherwise direct by written
notice to the Borrower. In the event that the date of any payment to Financial
Security or the expiration of any time period hereunder occurs on a day which is
not a Business Day, then such payment or expiration of time period shall be made
or occur on the next succeeding Business Day with the same force and effect as
if such payment was made or time period expired on the scheduled date of payment
or expiration date. Payments to be made to Financial Security under this
Agreement shall bear interest at the Late Payment Rate from the date due to the
date paid.
Section 6.4 SEVERABILITY. In the event that any provision of
this Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.6 CONSENT TO JURISDICTION. VII THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE
49
STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THE
TRANSACTION DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN
OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties
hereto shall not seek and hereby waive the right to any review of the judgment
of any such court by any court of any other nation or jurisdiction which may be
called upon to grant an enforcement of such judgment.
(c) The Borrower, the Performance Guarantor, the Servicer, the
Originators, MCII Holdings and MCII Coaches each hereby irrevocably appoints and
designates CT Corporation System, whose address is 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. The Borrower, the Performance Guarantor,
the Servicer, the Originators, MCII Holdings and MCII Coaches each agrees that
service of such process upon such Person shall constitute personal service of
such process upon it.
(d) Nothing contained in the Agreement shall limit or affect
Financial Security's right to serve process in any other manner permitted by law
or to start legal proceedings relating to this Agreement or any of the other
Transaction Documents against the Borrower or its property or any of the
Purchasers, the Originators, the Servicer, MCII Holdings, MCII Coaches, the
Performance Guarantor or the Administrative Agent or their respective property
in the courts of any jurisdiction.
Section 6.7 CONSENT OF FINANCIAL SECURITY. In the event that
Financial Security's consent is required under this Agreement or any other
Transaction Document, the determination whether to grant or withhold such
consent shall be made by Financial Security in
50
its sole discretion without any implied duty towards any other Person, except
as otherwise expressly provided therein.
Section 6.8 COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.9 HEADINGS. The headings of articles and sections
and the table of contents contained in this Agreement are provided for
convenience only. They form no part of this Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references to
articles and sections in this Agreement refer to the corresponding articles and
sections of this Agreement.
Section 6.10 TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT 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 OTHER TRANSACTION DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREUNDER. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER
THINGS, THIS WAIVER.
Section 6.11 LIMITED LIABILITY. No recourse under this
Agreement or any of the other Transaction Documents shall be had against, and no
personal liability shall attach to, any officer, employee, director, Affiliate
or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect of this Agreement or any of the Transaction Documents,
Purchased Assets or the Policy, it being expressly agreed and understood that
each Transaction Document and the Policy is solely a corporate obligation of
each party thereto, and that any and all personal liability, either at common
law or in equity, or by statute or constitution, of every such officer,
employee, director, affiliate or shareholder for breaches by any party hereto of
any obligations under this Agreement or any other Transaction Documents is
hereby expressly waived as a condition of and in consideration for the execution
and delivery of this Agreement.
Section 6.12 ENTIRE AGREEMENT. This Agreement and the Policy
set forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
51
Section 6.13 COUNTERPARTS. This Insurance Agreement may be
executed in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
Section 6.14 FINANCIAL SECURITY AS THIRD PARTY BENEFICIARY. By
its execution hereof, each of the Borrower, MCII Holdings, MCII Coaches, the
Originators, the Performance Guarantor, the Administrative Agent, SPARC and the
Secondary Purchaser hereby acknowledges and agrees that Financial Security shall
be an intended third-party beneficiary of each of the Transaction Documents and
the other instruments, documents and agreements related thereto, and as such,
shall be entitled to rely on all of the representations, warranties and
covenants thereunder to the same extent as the Administrative Agent, as if
Financial Security were expressly named therein. The terms of this Section 6.14
shall survive the termination of this Agreement, the Policy and each of the
Purchase Agreement.
Section 6.15 CLAIMS AGAINST SPARC. Financial Security shall
not, until one year and one day after the last Note issued by SPARC has matured,
commence or join any action, suit or other legal proceeding against SPARC and
its respective properties and assets.
52
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------------
Authorized Officer
MCII FUNDING II INC.
By:
------------------------------------------
Title:
BUSLEASE, INC.
individually and in its capacity as
Servicer under the Transaction Documents
By:
------------------------------------------
Title:
MCII FINANCIAL SERVICES II, INC.
By:
------------------------------------------
Title:
SPECIAL PURPOSE ACCOUNTS RECEIVABLE
COOPERATIVE CORPORATION
By:
------------------------------------------
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Secondary
Purchaser and as
Administrative Agent under
the Transaction Documents
53
By:
------------------------------------------
Title:
MCII FINANCIAL SERVICES II, INC.
By:
------------------------------------------
Title:
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
By:
------------------------------------------
Title:
MCII COACHES, INC.
By:
------------------------------------------
Title:
MCII FUNDING II, INC.
By:
------------------------------------------
Title:
MCII HOLDINGS (USA), INC.
By:
------------------------------------------
Title:
54
APPENDIX I
DEFINITIONS
"Accumulated Funding Deficiency" shall have the meaning
provided in Section 412 of the Code and Section 302 of ERISA, whether or not
waived.
"Administrative Agent" means CIBC, in its capacity as agent
under the Receivables Purchase Agreement, the Secondary Purchase Agreement and
the Liquidity Loan Agreement and pursuant to the other Transaction Documents to
which it is a party in such capacity, and its successors and assigns as such
capacity.
"Agent Agreement" has the meaning provided in Section 6.15.
"Adverse Claim" means any claim of ownership or any lien,
security interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the security interest[s] created under
the Receivables Purchase Agreement and the Secondary Purchase Agreement.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15 of the
Securities Act.
"Blocked Accounts" has the meaning provided in the Receivables
Purchase Agreement.
"Borrower" means MCII Funding II Inc., a Delaware corporation,
and its permitted successors and assigns.
"Business Day" means any day other than (a) a Saturday or
Sunday or (b) a day on which banking institutions in the City of New York, New
York are authorized or obligated by law or executive order to be closed.
"BusLease" means BusLease, Inc., a Delaware corporation.
"BusLease Transfer Agreement" means the Receivables Sale
Agreement, dated as of May 2, 2000, between BusLease and MCFSII, as the same may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof, provided that for purposes of the Insurance
Agreement any such amendment or other modification shall only be effective if
Financial Security has provided its written consent thereto.
"CIBC" means Canadian Imperial Bank of Commerce, a Canadian
chartered bank.
"Closing Date" means May 10, 2000.
A-I-1
"Code" means the Internal Revenue Code of 1986, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Commonly Controlled Entity", with respect to any Person,
means such Person and each entity, whether or not incorporated, which is
affiliated with such Person pursuant to Section 414(b), (c), (m) or (o) of the
Code.
"Credit and Collection Policy" has the meaning provided in the
Receivables Purchase Agreement and the Secondary Purchase Agreement.
"Custodian" means The Bank of New York.
"Date of Issuance" means the date on which the Policy is
issued as specified in the Policy.
"Dealer Agreement" means any dealer agreement entered into by
the Purchasers for the distribution of its Notes.
"Default" means any event which results, or which with the
giving of notice or the lapse of time or both would result, in an Event of
Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.
"Event of Default" means any event of default specified in
Section 5.1 of the Insurance Agreement.
"Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Financial Security" means Financial Security Assurance Inc.,
a New York stock insurance company, its successors and assigns.
"Financial Security Default" shall mean any one of the
following events shall have occurred and be continuing:
(i) Financial Security fails to make a payment
required under the Policy in accordance with its terms;
(ii) Financial Security (i) files any petition or
commences any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) makes a general assignment for the benefit of its
A-I-2
creditors, or (iii) has an order for relief entered against it under
the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for Financial Security or for all
or any material portion of its property or (ii) authorizing the taking
of possession by a custodian, trustee, agent or receiver of Financial
Security (or the taking of possession of all or any material portion of
the property of Financial Security).
"Finance Lease" has the meaning set forth in the Receivables
Purchase Agreement.
"Financial Security Information" has the meaning set forth in
Section 3.4(a)(v).
"Financial Statements" means, with respect to the Performance
Guarantor, the balance sheets as of December 31, 1999, and December 31, 1998,
and the statements of income, retained earnings and cash flows for the 12-month
period then ended and the notes thereto and the balance sheets as of September
30, 1999 and September 30, 1998 and the statements of income, retained earnings
and cash flows for the nine months then ended and the notes thereto.
"Fiscal Agent" means the Fiscal Agent, if any, designated
pursuant to the terms of the Policy.
"Four-Month Default Ratio" has the meaning set forth in the
Receivables Purchase Agreement.
"Four-Month Delinquency Ratio" has the meaning set forth in
the Receivables Purchase Agreement.
"Four-Month Net Default Ratio" has the meaning set forth in
the Receivables Purchase Agreement.
"GAAP" means generally accepted accounting principles as in
effect in the United States, consistently applied, as of the date of such
application.
"GE Capital" means General Electric Capital Corporation, a New
York corporation.
"Governmental Authority" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
A-I-3
"Guaranteed Yield" has the meaning set forth in the Policy.
"Initial Receivables" means the Receivables transferred by
MCFSII and MCF to the Borrower on the Closing Date.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of May 2, 2000, among Financial Security, the Borrower, the
Performance Guarantor, the Servicer, the Administrative Agent, the Originators,
MCII Coaches, MCII Holdings, the Administrative Agent and the Purchasers, as the
same may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof.
"Insured Parties" has the meaning provided in the Policy.
"Investment Company Act" means the Investment Company Act of
1940, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.
"IRS" means the Internal Revenue Service.
"Late Payment Rate" means the lesser of (a) the greater of (i)
the per annum rate of interest, publicly announced from time to time by The
Chase Manhattan Bank at its principal office in the City of New York, as its
prime or base lending rate (any change in such rate of interest to be effective
on the date such change is announced by The Chase Manhattan Bank) plus [**]%,
and (ii) the then applicable highest rate of interest on the Notes or the
Revolving Loans and (b) the maximum rate permissible under applicable usury or
similar laws limiting interest rates. The Late Payment Rate shall be computed on
the basis of the actual number of days elapsed over a year of 360 days.
"L/C Amount" has the meaning set forth in the Transaction
Letter of Credit.
"L/C Reduction Notice" has the meaning set forth on the
Transaction Letter of Credit.
"Lease Receivable" has the meaning set forth in the
Receivables Purchase Agreement.
"Lien" means, as applied to the property or assets (or the
income or profits therefrom) of any Person, in each case whether the same is
consensual or nonconsensual or arises by contract, operation of law, legal
process or otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind; or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of
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subjecting or making available the same for the payment of debt or
performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person.
"Liquidity Loan Agreement" means the Liquidity Loan Agreement
dated as of May 2, 2000 among SPARC, CIBC, and the Liquidity Providers, as the
same may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof..
"Liquidity Obligations" has the meaning set forth in the
Liquidity Loan Agreement.
"Liquidity Providers" means the financial institutions from
time to time party to the Liquidity Loan Agreement.
"Lockbox Agreement" means any of the agreements among the
Borrower, CIBC, the SPARC and any Lockbox Bank (as such term is defined in the
Receivables Purchase Agreement), as the same may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, provided that for purposes of the Insurance Agreement any such
amendment, supplement, restatement or other modification shall only be effective
if Financial Security has provided its written consent thereto.
"Material Adverse Effect" means, with respect to any event or
circumstance and any Person, a material adverse effect on:
(i) the business, financial condition, results of
operations or properties of such Person or of any of its Subsidiaries;
(ii) the ability of such Person to perform its
obligations under this Agreement or any other Transaction Document to
which it is a party;
(iii) the validity or enforceability of, or
collectibility of amounts payable under this Agreement or any other
Transaction Document;
(iv) the status, existence, perfection, or first
priority of the interest of SPARC or the Secondary Purchaser, as the
case may be, in such Receivables and related property thereto, or the
Purchased Assets generally, taken as a whole free of any other Lien;
(v) the validity, enforceability or collectibility of
the Receivables and the related property thereto;
(vi) the ability of the SPARC, the Secondary
Purchaser, the Administrative Agent, or Financial Security to
liquidate, or foreclose against, the Receivables;
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(vii) the practical realization by Financial Security
of any benefits or security afforded under this Agreement or any other
Transaction Document; or
(viii) the shadow rating assigned by either Rating
Agency to the credit risk exposure of Financial Security, if such
adverse effect on the shadow rating is notified to the Borrower or the
Originators by Financial Security.
"MCII Holdings" means MCII Holdings (USA), Inc., a Delaware
corporation.
"MCF" means MCII Funding Inc., a Delaware corporation
"MCF Transfer Agreement" means the Receivables Sale Agreement,
dated as of May 2, 2000 between MCF and the Borrower, as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof, provided that for purposes of the Insurance
Agreement any such amendment or other modification shall only be effective if
Financial Security has provided its written consent thereto.
"MCII Group" means the Borrower, the Servicer, BusLease, the
Performance Guarantor, MCII Holdings, MCFSII, MCF, MCII Coaches and any members
of the consolidated tax group under any federal and local tax laws.
"MCFSII Transfer Agreement" means the Receivables Sale
Agreement, dated as of May 2, 2000 between MCFSII and the Borrower, as the same
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms thereof, provided that for purposes of the
Insurance Agreement any such amendment or other modification shall only be
effective if Financial Security has provided its written consent thereto.
"Moody's" means Xxxxx'x Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by Financial Security.
"Multiemployer Plan" means a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) in respect of which a Commonly
Controlled Entity makes contributions or has liability.
"Notes" means the short-term promissory notes issued by SPARC
in the commercial paper market, or other debt instruments issued by SPARC, in
either case, the proceeds of which are used by SPARC to fund their acquisition
of receivables and related property (or any interests therein) in connection
with the Transaction or any other transaction.
"Notice of Claim" means a Notice of Claim and Certificate in
the form attached as Exhibit A to Endorsement No. 1 to the Policy.
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"Offering Document" means any information memorandum,
syndication memorandum or offering document, and any amendment or supplement
thereto in respect of the Notes, the Receivables, the Transaction or any other
Transaction that makes reference to Financial Security or the Policy, but shall
not include any memorandum, document or other informational material prepared by
an Insured Party for internal use only.
"Originators" mean BusLease, MCF and MCFSII.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency, corporation or instrumentality of the United States to which
the duties and powers of the Pension Benefit Guaranty Corporation are
transferred.
"Performance Guarantor" means Motor Coach Industries
International, Inc., a Delaware corporation.
"Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
partnership, limited liability company, limited liability partnership or other
organization or entity (whether governmental or private).
"Plan" means any pension plan (other than a Multiemployer
Plan) covered by Title IV of ERISA, which is maintained by a Commonly Controlled
Entity or in respect of which a Commonly Controlled Entity has liability.
"Policy" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security, substantially
in the form attached as Annex 1 to the Insurance Agreement.
"Premium" means the premium, and any Unpaid Premium or portion
thereof, payable in accordance with Section 3.2 of the Insurance Agreement, and
the Premium Supplement, if any.
"Premium Letter" means the side letter among Financial
Security, the Borrower, the Performance Guarantor, SPARC, and the Administrative
Agent dated the date hereof in respect of the premium payable by the Borrower in
consideration of the issuance of the Policy.
"Premium Supplement" means a non-refundable premium, in
addition to the premium and the Unpaid Premium payable in accordance with
Section 3.2 of the Insurance Agreement, accruing to Financial Security in
monthly installments commencing on the Premium Supplement Commencement Date and
on each monthly anniversary thereof in accordance with the terms set forth in
the Premium Letter and payable upon and in accordance with a declaration under
Section 5.2(a)(ii) of the Insurance Agreement.
"Premium Supplement Commencement Date" means the date of
occurrence of the Event of Default in whether or not an Event of Default shall
have been declared.
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"Premium Supplement Termination Date" means the date on which
all Events of Default under the Insurance Agreement shall have been remedied to
the satisfaction of Financial Security or shall have been waived by Financial
Security.
"Proceeds" means, with respect to any Receivable, whatever is
receivable or received when such Receivable, is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment, including returned premiums, with respect to any
insurance relating to such Receivable.
"Provided Documents" means the Transaction Documents and any
documents, agreements, schedules, certificates, statements, cash flow schedules,
number runs or other writings or data furnished to Financial Security by or on
behalf of the Performance Guarantor, the Originators, the Servicer, or the
Borrower, in each case solely with respect to itself, its Subsidiaries or
Affiliates or the Transaction.
"Purchase" has the meaning set forth in the Receivables
Purchase Agreement.
"Purchase Agreements" means the Receivables Purchase Agreement
and the Secondary Purchase Agreement.
"Purchased Assets" means Receivables purchased by SPARC or the
Secondary Purchaser, as the case may be, pursuant to (as applicable) the
Receivables Purchase Agreement and the applicable Secondary Purchaser Agreement
and other proceeds of, such Receivables.
"Purchase Date" means any date on which a Purchase is made
pursuant to the Receivables Purchase Agreement or the Secondary Purchase
Agreement.
"Purchaser Material Adverse Effect" means, with respect to any
event or circumstance and any Person, a material adverse effect on:
(i) the ability of such Person to perform its
obligations under this Agreement or any other Transaction Document to
which it is a party;
(ii) the validity or enforceability of, or
collectibility of amounts payable under, this Agreement or any other
Transaction Document;
(iii) the status, existence, perfection, or first
priority of the interest of the Administrative Agent, for the benefit
of SPARC or the Secondary Purchaser, as the case may be, in the
Receivables and related property thereto, or the Purchased Assets
generally, taken as a whole free of any other Lien;
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(iv) the ability of the SPARC, the Secondary
Purchaser, the Administrative Agent, or Financial Security to
liquidate, or foreclose against, the Receivables;
(v) the practical realization by such Person of any
benefits or security afforded under this Agreement or any other
Transaction Document; or
(vi) the shadow rating assigned by either Rating
Agency to the credit risk exposure of Financial Security, if such
adverse effect on the shadow rating is notified to the Borrower or the
Originators by Financial Security.
"Rating Agencies" means S&P and Moody's.
"Receivables" has the meaning set forth in the Receivables
Purchase Agreement.
"Receivables Purchase Agreement" has the meaning provided in
the Introductory Statements to this Insurance Agreement.
"Redwood" means Redwood Receivables Corporation, a Delaware
corporation.
"Related Assets" means all assets related to any Receivable,
other than such Receivable itself, constituting "Purchased Assets" as such term
is defined herein.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"Restrictions on Transferability" means , as applied to the
property or assets (or the income or profits therefrom) of any Person, in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise, any material condition to, or
restriction on, the ability of such Person or any transferee thereof to sell,
assign, transfer or otherwise liquidate such property or assets in a
commercially reasonable time and manner or which would otherwise materially
deprive the holder or any assignee of the holder of the benefits of ownership of
such property or assets.
"Secondary Purchase Agreement" means the Secondary Purchase
Agreement among CIBC, as Administrative Agent and the Secondary Purchaser, the
Servicer, and the Borrower.
"Securities Act" means the Securities Act of 1933, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Securities Exchange Act" means the Securities Exchange Act of
1934, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.
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"Servicer" means BusLease, Inc., a Delaware corporation, or
its permitted successors and assignors.
"Servicer Termination Side Letter" means the letter dated as
of May 2, 2000 from Financial Security to BusLease relating to BusLease's term
as Servicer under the Receivables Purchase Agreement.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized rating agency
designated by Financial Security.
"SPARC" means Special Purpose Accounts Receivable Cooperative
Corporation, a California cooperative corporation.
"Special Event" means the occurrence of any one of the
following: (a) an Event of Default under the Insurance Agreement has occurred
and is continuing, (b) any legal proceeding or binding arbitration is instituted
with respect to the Transaction or (c) any governmental or administrative
investigation, action or proceeding is instituted that would, if adversely
decided, result in an Material Adverse Effect in respect of (x) the Borrower or
(y) the Receivables.
"Stock Pledge Agreement" means the Stock Pledge and Receivable
Agency Agreement, dated as of May 2, 2000, among Financial Security, the
Borrower and MCII Coaches, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof.
"Subsequent Receivables" means the Receivables transferred by
MCFSII to the Borrower on any Purchase Date.
"Subsidiary" means, with respect to any Person, any
corporation of which a majority of the outstanding shares of capital stock
having ordinary voting power for the election of directors is at the time owned
by such Person directly or through one or more Subsidiaries.
"Tax Event" shall mean (i) the receipt by the Borrower or any
of its Affiliates from the Internal Revenue Service of a "thirty-day letter"
proposing a material adjustment of its federal income taxes or the federal
income taxes of any member of the consolidated group of which the Borrower is a
member (and the receipt of the equivalent notice from any taxing authority with
respect to any state or local taxes which could result in a lien for such taxes
on any Receivable) or (ii) the assessment by the IRS (or any other governmental
authority) of a tax liability which may give rise to a lien for such taxes on
any Receivable.
"Term of the Agreement" shall be determined as provided in
Section 4.01 of the Insurance Agreement.
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"Term of This Policy" has the meaning provided in the Policy.
"Termination Event" means any event of default under any of
the Transaction Documents.
"Transaction" means the transactions contemplated by the
Insurance Agreement and the other Transaction Documents.
"Transaction Letter of Credit" has the meaning set forth in
the Receivables Purchase Agreement.
"Transaction Documents" means the Insurance Agreement, the
Policy, the Premium Letter, the Stock Pledge Agreement, the Receivables Purchase
Agreement, the Secondary Purchase Agreement, the Blocked Accounts Agreement,
Servicer Termination Side Letter, Liquidity Loan Agreement, Security Agreement
and all additional agreements, instruments, certificates, financing statements
or other documents delivered or required to be delivered hereunder or
thereunder.
"Transfer Agreements" means, collectively, the BusLease
Transfer Agreement, the MCF Transfer Agreement, and the MCFSII Transfer
Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"UCC" means, for any jurisdiction, the Uniform Commercial Code
as from time to time in effect in such jurisdiction.
"Underfunded Plan" means any Plan that has an Underfunding.
"Underfunding" means, with respect to any Plan, the excess, if
any, of (a) the present value of all benefits under the Plan (based on the
assumptions used to fund the Plan pursuant to Section 412 of the Code) as of the
most recent valuation date over (b) the fair market value of the assets of such
Plan as of such valuation date.
"Unpaid Premium" has the meaning provided in Section 3.2(d)
hereof.
"Yield" has the meaning provided in the Receivables Purchase
Agreement and the Secondary Purchase Agreement.
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APPENDIX II
CONDITIONS PRECEDENT TO ISSUING TO POLICY
(a) PAYMENT OF INITIAL PREMIUM AND EXPENSES; PREMIUM LETTER.
Financial Security shall have been paid, by or on behalf of the Borrower, a
nonrefundable Premium and reimbursed for other fees and expenses identified in
Section 3.2 hereof as payable at closing and Financial Security shall have
received a fully executed copy of the Premium Letter.
(b) TRANSACTION DOCUMENTS. Financial Security shall have
received a copy of this Agreement and each of the other Transaction Documents,
in form and substance satisfactory to Financial Security, duly authorized,
executed and delivered by each party thereto. Without limiting the foregoing,
the provisions of the Receivables Purchase Agreement and the Secondary Purchase
Agreement relating to the payment to Financial Security of Premium due to the
Policy and the reimbursement to Financial Security of amounts paid under the
Policy shall be in form and substance acceptable to Financial Security in its
sole discretion.
(c) INCUMBENCY CERTIFICATE. Financial Security shall have
received a certificate of the Secretary or an Assistant Secretary of the
Borrower, MCII Holdings, MCII Coaches, the Performance Guarantor, the
Originators, SPARC, the Secondary Purchaser, the Administrative Agent and the
Servicer certifying the name and signatures of the officers of such Person
authorized to execute and deliver the Transaction Documents to which such Person
is a party and that shareholder consent to the execution and delivery of such
documents is not necessary.
(d) REPRESENTATIONS AND WARRANTIES; CERTIFICATES. The
representations and warranties of the Borrower, MCII Holdings, MCII Coaches, the
Performance Guarantor, the Originators, SPARC, the Administrative Agent and the
Servicer in this Agreement (including any such representations and warranties
incorporated by reference) shall be true and correct as of the Date of Issuance
as if made on the Date of Issuance and Financial Security shall have received a
certificate of appropriate officers of the Borrower, MCII Holdings, MCII
Coaches, the Performance Guarantor, the Originators, SPARC, the Administrative
Agent and the Servicer to that effect, and Financial Security shall have
received a solvency certificate from the chief financial officer of each of the
Borrower and the Servicer in form and substance satisfactory to Financial
Security.
(e) OPINIONS OF COUNSEL. Financial Security shall have
received opinions of counsel addressed to Financial Security, Moody's and S&P in
respect of the Borrower, MCII Holdings, MCII Coaches, the Performance Guarantor,
the Originators, SPARC, the Administrative Agent, the Servicer and the other
parties to the Transaction Documents and the Transaction in form and substance
satisfactory to Financial Security, addressing such matters as Financial
Security may request, including those items set forth in Appendix A hereto, and
the counsel providing each such opinion shall have been instructed by its client
to deliver such opinion to the addressees thereof.
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(f) APPROVALS, ETC. Financial Security shall have received
true and correct copies of all approvals, licenses and consents, if any,
including, without limitation, the approval of the shareholder of the Borrower
required in connection with the Transaction.
(g) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation, or injunction or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or any of the other Transaction Documents or the
consummation of the Transaction.
(h) LEGALITY. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated by
this Agreement or any of the other Transaction Documents illegal or otherwise
prevent the consummation thereof.
(i) ISSUANCE OF RATINGS. Financial Security shall have
received confirmation that the risk secured by the Policy constitutes an
investment grade risk by S&P and an insurable risk by Moody's.
(j) FILINGS AND RECORDING. Financial Security shall have
received evidence satisfactory to it of the delivery of the Receivables and the
filing and/or recording in all applicable jurisdictions (or such filing and/or
recording having been provided for in a manner satisfactory to Financial
Security) of all documents, including, without limitation, duly executed and
delivered copies of the Transfer Agreements, financing statements, termination
statements and other appropriate instruments, in form and substance satisfactory
to Financial Security, as may be necessary in the opinion of Financial Security
to perfect the Liens or other interests created by the Transfer Agreements, and
all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing shall have been paid. The Borrower shall have
delivered to the Purchasers, the Initial Receivables and shall be, as of the
Date of Issuance, in compliance with the terms of the Transfer Agreements.
(k) NO DEFAULT. No Default or Event of Default shall have
occurred.
(l) RELEASE DOCUMENTATION. (i) Financial Security shall have
received a release letter executed by General Electric Capital Corporation ("GE
Capital") and Redwood Receivables Corporation ("Redwood") in connection with the
release by GE Capital and Redwood of their respective Liens and security
interests and/or ownership interest in certain Receivables and such other
related property under certain warehouse financing agreements, and (ii)
Financial Security shall have received signed copies of the UCC financing
statements referred to in Section 2.2(q) of the Insurance Agreement, in form and
substance satisfactory to Financial Security in its sole discretion.
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(m) ADDITIONAL ITEMS. Financial Security shall have received
such other documents, instruments, approvals or opinions requested by Financial
Security as may be necessary to effect the Transaction, including but not
limited to evidence satisfactory to Financial Security that the conditions
precedent in this Agreement and the other Transaction Documents have been
satisfied.
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APPENDIX A
OPINIONS OF COUNSEL
There shall be delivered to Financial Security, Moody's and
S&P opinions of counsel satisfactory in form and substance to Financial Security
and its counsel, including, without limitation, opinions as follows:
(i) opinions to the effect that each of the
Receivables Purchase Agreement, the Secondary Purchase Agreement, the
Receivable Sale Agreements, the Custodial Agreement, Liquidity Loan
Agreement, the Backup Servicing Agreement, the Lockbox Agreements, the
Performance Indemnities, the Insurance Agreement and any other
Transaction Document have been duly executed and delivered, and
constitutes legal, valid and binding obligations, enforceable in
accordance with its respective terms;
(ii) opinions as to compliance with applicable
securities laws, including, but not limited to, opinions to the effect
that:
(A) no filing or registration with or notice to or
consent, approval, authorization or order of any court or
governmental authority or agency is required for the
consummation of the Transaction, other than the filing of
financing statements under the Uniform Commercial Code); and
(B) none of MCII Holdings, MCFSII, MCI International,
MCFS, BusLease or the Borrower is required to be registered
under the Investment Company Act;
(iii) an opinion to the effect that (a) The
Administrative Agent has a first priority perfected security interest
in the Receivables and the proceeds thereof; (b) the Receivables would
not be included as part of the estate of MCF in the event of any
receivership or insolvency proceedings in respect thereof and the
transfer of Receivables from MCF to the Borrower would be characterized
by a court of competent jurisdiction as a sale of such Receivables and
not as a borrowing by MCF or a relationship of joint ownership,
partnership, joint venture or similar arrangement; (c) the Receivables
would not be included as part of the estate of BusLease in the event of
any receivership or insolvency proceedings in respect thereof and the
transfer of the Receivables from BusLease to MCFSII would be
characterized by a court of competent jurisdiction as a sale of such
Receivables and not as a borrowing by BusLease or a relationship of
joint ownership, partnership, joint venture or similar arrangement; (d)
the Receivables would not be included as part of the estate of MCFS II
in the event of any receivership or insolvency proceedings in respect
thereof and the transfer of the Receivables from MCFSII to the Borrower
would be characterized by a court of competent jurisdiction as a sale
of such Receivables and not as a borrowing by MCFSII or a relationship
of joint ownership, partnership, joint venture or similar arrangement
and (e) the assets and
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liabilities of the Borrower would not be substantially consolidated
with those of MCII Holdings or MCII Coaches in the event of any
receivership or insolvency proceedings in respect of MCII Holdings
or MCII Coaches, respectively;
(iv) in the event that the transfer of the Receivables
to MCFSII is not characterized as a sale by a court of competent
jurisdiction, such court would characterize such transfer as a grant of
a security interest to MCFSII on the Receivables, which security
interest has been perfected as a first priority security interest;
(v) in the event that the transfer of Receivables to
the Borrower by MCFSII is not characterized as a sale by a court of
competent jurisdiction, such court would characterize such transfer as
a grant of security interest to the Borrower in the Receivables, which
security interest has been perfected as a first priority security
interest;
(vi) in the event that the transfer of Receivables to
the Borrower by MCF is not characterized as a sale by a court of
competent jurisdiction, such court would characterize such transfer as
a grant of security interest to the Borrower in the Receivables, which
security interest has been perfected as a first priority security
interest;
(vii) general corporate and enforceability opinions
with respect to the Borrower, MCII Holdings, MCFSII, MCI International,
MCFS, the Administrative Agent, the Purchasers, and BusLease;
(viii) opinions covering the characterization of the
form of motor vehicle installment sale contracts constituting the
Receivables as chattel paper; and
(ix) such other opinions as Financial Security shall
request.
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ANNEX I
TO
INSURANCE AND INDEMNITY AGREEMENT
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
