EXECUTION VERSION
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EXHIBIT 10.6
BANKERS TRUST COMPANY,
Custodian and Servicer,
and
XXXXXXXX CAPITAL PARTNERS, L.P.,
Servicing Advisor and Owner,
and
FRANCHISE FINANCE CORP.,
Lender
SERVICING AND CUSTODIAL AGREEMENT
Dated as of January 8, 1997
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THIS SERVICING AND CUSTODIAL AGREEMENT, dated as of January 8, 1997
(this "Agreement"), is hereby executed by and between XXXXXXXX CAPITAL PARTNERS,
L.P., a California limited partnership, in its capacity as owner of the
Collateral Loans defined below (the "Owner") and in its capacity as servicing
advisor (the "Servicing Advisor"), BANKERS TRUST COMPANY, a New York banking
corporation, in its capacity as custodian, acting either directly or through an
agent (the "Custodian"), and in its capacity as servicer (the "Servicer"), and
FRANCHISE FINANCE CORP., a Delaware corporation, in its capacity as a lender to
the Owner and, if applicable, in its capacity as agent for lenders to the Owner
(the "Lender").
PRELIMINARY STATEMENT
A. The Owner will originate, purchase or finance Collateral Loans (as
defined herein) using, in part, funds borrowed from the Lender pursuant to a
Warehouse Credit Agreement dated the date hereof (as such agreement may be
amended, modified or supplemented from time to time, the "Credit Agreement"),
between the Owner and the Lender.
B. The Collateral Loans will be pledged to the Lender to secure the
Owner's obligations under the Credit Agreement.
C. The Owner and the Lender wish to engage (1) the Custodian to hold
custody of the Collateral Loans and the Servicer to service the Collateral Loans
on behalf of the Owner and the Lender as specified herein and (2) the Servicing
Advisor to provide servicing advice with respect to the Collateral Loans as
specified herein.
AGREEMENT:
In consideration of the mutual agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by the parties hereto, the Servicer, the Custodian, the Servicing
Advisor, the Owner and the Lender agree as follows:
Section 1. Definitions. The following terms shall have the
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respective meanings specified below.
"Additional Servicing Advisor Standards and Procedures": The
additional standards and procedures of the Servicing Advisor, as set forth in
Exhibit B and incorporated and made a part of this Agreement as though set forth
herein.
"Agreement" is defined in the preamble hereto.
"Applicable Servicing Fee Rate" is defined in Section 6 hereof.
"Approved Concepts" shall mean those concepts specified in Exhibit C
hereto and such additional concepts as are approved in writing by the Owner and
the Lender.
"Business Day" means any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banks are authorized or required by law
to close in San Francisco, California, Wichita, Kansas, or New York, New York.
"Cash Equivalent Investments" means, at any time:
(a) any evidence of direct indebtedness, maturing not more than
one year after such time, issued or guaranteed by the United States
government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by a corporation organized under the
laws of any state of the United States and rated at least A-1/P-1 (or
the equivalent) by at least two rating agencies;
(c) any certificate of deposit or bankers acceptance, maturing
not more than one year after such time, which is issued by (i) a
commercial banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of
not less than $500,000,000 that has a long-term debt rating of at
least A+ (or the equivalent) by at least one rating agency, or (ii) a
commercial banking institution that is organized in a jurisdiction
outside the United States and has a combined capital and surplus and
undivided profits of not less than $500,000,000 that has a long-term
debt rating of at least A+ (or the equivalent) by at least one rating
agency; or
(d) any money market fund having a rating from a rating agency in
the highest investment category granted thereby at the time of the
purchase of such money market fund, including any funds for which the
Servicer may be a manager.
"Collateral" is defined in the Collateral Loan Agreement relating to
each Collateral Loan.
"Collateral Borrower" means the borrowers to whom Collateral Loans are
made.
"Collateral Loan" means those loans originated, purchased or financed
by Xxxxxxxx Capital Partners, L.P. or The Xxxxxxxx Group Incorporated that are
serviced pursuant to this Agreement.
"Collateral Loan Agreement" means the loan agreement between a
Collateral Borrower and the Originator relating to a Collateral Loan.
"Collateral Loan Documentation" means, with respect to each Collateral
Loan:
(1) the original Note (as defined in the Collateral
Loan
Agreement) executed by the Collateral Borrower and endorsed
to the Owner and endorsed "Pay to the order of
___________________, without recourse" and signed by the Owner;
(2) an executed original of the Collateral Loan
Agreement;
(3) an executed original of the Security Agreement (as
defined in the Collateral Loan Agreement);
(4) the original Mortgage, if applicable, with evidence
of recording thereon, or a duplicate original Mortgage, if
applicable, together with a certificate of an officer of the
settlement agent stating that such Mortgage will be dispatched to
the appropriate public recording office for recordation and that
the original Mortgage, with evidence of recording thereon, will
be promptly delivered to the Custodian upon receipt thereof by
the settlement agent;
(5) the original Leasehold Mortgage, if applicable, in
appropriate form for recording (with the possible exception of
the obtaining of a landlord signature) or with evidence of
recording thereon;
(6) an executed original Guaranty, if applicable;
(7) the UCC-1 Financing Statement, with evidence of
filing thereon, or a copy of the original UCC-1 Financing
Statement, together with a certificate of an officer of the
settlement agent or the Originator stating that such UCC-1
Financing Statement will be dispatched to the appropriate public
filing office and that the original UCC-1 Financing Statement,
with evidence of filing thereon, will be promptly delivered to
the Custodian upon receipt thereof by the settlement agent;
(8) one or more UCC-2 or UCC-3 Assignments assigning
the UCC-1 to the Owner and then executed by the Owner in blank
but otherwise in form and substance acceptable for filing;
(9) an executed original of each landlord, mortgagee or
prior lien or estoppel, if applicable;
(10) an executed original of a Franchisor Intercreditor
Agreement, if applicable;
(11) an executed original of a Franchisor Subordination
of Lessor's Lien, if applicable;
(12) the original title insurance policy, if
applicable;
(13) copies of the insurance policies indicated in the
Collateral Loan Documentation Checklist;
(14) the environmental indemnity, if applicable;
(15) an assignment of Mortgage, if applicable;
(16) a general assignment of the Collateral Loan
Documentation to the Owner and then in blank by the Owner (the
"Loan Assignment"), assigning all of the grantor's right, title
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and interest in the Collateral Loan, including but not limited
to, the Collateral Loan Agreement, the Note, the Security
Agreement, the Mortgage, the Leasehold Mortgage, the Franchisor
Intercreditor Agreement, the Franchisor Subordination of Lessor's
Lien, the origination escrow agreement and the Guaranty, as
applicable; and
(17) any other credit or security document, if any,
necessary for the documentation and enforcement of such
Collateral Loan.
"Collateral Loan Event of Default": With respect to any Collateral
Loan, an "Event of Default" as defined in the related Collateral Loan Agreement.
"Collateral Loan Documentation Checklist" is defined in Section 4(c).
"Collection Account" means a segregated account maintained by the
Servicer for the benefit of and in the name of Franchise Finance Corp., as
Lender, which shall be an Eligible Account.
"Condemnation": Any condemnation or other taking or temporary or
permanent requisition of a Mortgaged Property, any interest therein or right
appurtenant thereto, or any change of grade affecting the Mortgaged Property as
a result of the exercise of any right of condemnation or eminent domain. A
transfer in lieu or anticipation of condemnation shall be deemed to be a
Condemnation.
"Condemnation Proceeds": All compensation, awards and proceeds
received by or on behalf of a Collateral Borrower as a result of condemnation
(which term shall include any damage
or taking by any governmental or quasi-governmental authority and any transfer
by private sale in lieu thereof).
"Default Rate" is the Default Rate as defined in the Collateral Loan
Agreement relating to each Collateral Loan.
"Delinquent Collateral Loan" means any Collateral Loan with respect to
which any payment of principal or interest is overdue as of the relevant
Distribution Date.
"Determination Date" means the eighth day of each month, or if such
day is not a Business Day, the next succeeding Business Day.
"Distribution Date" means the twelfth day of each month, or if such
day is not a Business Day, the next succeeding Business Day.
"Eligible Account": One or more accounts that are maintained with a
depository institution (i) whose long-term debt obligations (or, in the case of
a depository institution which is part of a holding company structure, the long-
term debt obligations of such holding company) at the time of deposit therein
are rated at least "AA" (or the equivalent) by Duff & Xxxxxx or, if Duff &
Xxxxxx does not rate such obligations of such Person, by at least two other
rating agencies or (ii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity subject to regulations relating to
fiduciary funds on deposit substantially similar to those set forth in 12 C.F.R.
' 9.10(b).
"Escrow Account" is defined in Section 3(b) of the Servicing Standards
and Procedures.
"Escrow Payments": All payments that a Collateral Borrower may be
required to pay into escrow pursuant to a Mortgage or a Leasehold Mortgage.
"Franchisor Intercreditor Agreement" means, with respect to certain
Collateral Loan Agreements, a related intercreditor or similar agreement among a
Franchisor, the Originator and the Collateral Borrower, as such agreement may be
amended, supplemented or otherwise modified from time to time.
"Franchisor Subordination of Lessor's Lien" means, with respect to
certain Collateral Loan Agreements, the related subordination of lessor's lien
or similar agreement between a Franchisor and the Originator, as such agreement
may be amended, supplemented or otherwise modified from time to time.
"Franchisor" shall mean any franchisor of an Approved Concept.
"Guaranty" means, with respect to a Collateral Loan, the related
guaranty, if any, as such guaranty may be amended, supplemented or otherwise
modified from time to time.
"Hazardous Substances": Any hazardous or toxic substance or waste
that is regulated as such or may form the basis of liability under any present
or future law or regulation including, but not limited to, any substance or
waste: (a) defined as a "hazardous substance" under Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, and (b) petroleum or any by-products or fractions
thereof, any form of natural gas, asbestos and asbestos-containing materials,
PCBs and PCB-containing equipment, radon, mutagenic or etiologic agents,
pesticides, defoliants, explosives and flammables.
"Independent": When used with respect to any specified Person, such
Person who (a) is not an Affiliate of or controlled by and is in fact
independent of each of the Lender, the Servicer, the Custodian, the Servicing
Advisor, the Owner and any Collateral Borrower with respect to any Collateral
Loan, (b) does not have any direct financial interest or any material indirect
financial interest in the Lender, the Servicer, the Custodian, the Servicing
Advisor, the Owner, any Collateral Borrower with respect to any Collateral Loan,
or an Affiliate thereof, and (c) is not connected with the Lender, the Servicer,
the Custodian, the Servicing Advisor, the Owner or any Collateral Borrower with
respect to any of the Collateral Loans as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.
"Insurance Policy: Any insurance policy required to be maintained by
a Collateral Borrower with respect to a Collateral Loan.
"Insurance Proceeds": With respect to a Collateral Loan, any amounts
received upon settlement of a claim filed under an Insurance Policy.
"Leasehold Mortgage": With respect to a Collateral Loan, the related
leasehold mortgage or deed of trust (in recordable form, with the possible
exception of the obtaining of a landlord signature) from the related Collateral
Borrower to the Originator that has been executed and delivered in connection
with the Note evidencing such Collateral Loan, if any, as such leasehold
mortgage or deed of trust may be amended, supplemented or otherwise modified
from time to time.
"Liquidated Collateral Loan": Any Collateral Loan as to which the
Servicer has determined in accordance with customary servicing practices that
all amounts expected by the Servicer to be recovered from or on account of such
Collateral Loan, whether from scheduled loan payments, Condemnation Proceeds,
Insurance Proceeds, Liquidation Proceeds or otherwise, following final
liquidation of such Collateral Loan and the disposition of the Collateral, have
been
recovered. The determination by the Servicer that a Collateral Loan has
become a Liquidated Collateral Loan shall be evidenced by a Responsible
Officer's Certificate of the Servicer delivered to the Owner, the Lender and the
Servicing Advisor, detailing the reasons for such determination and the
aggregate amount of Liquidation Proceeds, Liquidation Expenses and Net
Liquidation Proceeds with respect to such Liquidated Collateral Loan, and
specifying any Realized Loss with respect thereto.
"Liquidation Expenses": Reasonable out-of-pocket expenses incurred by
the Servicer in connection with the liquidation of any Collateral Loan with
respect to which a Collateral Loan Event of Default has occurred, Collateral, or
other property acquired in respect thereof (including, without limitation,
reasonable legal fees and expenses).
"Liquidation Proceeds": Amounts received by the Servicer or the
Servicing Advisor in connection with the liquidation of a Collateral Loan with
respect to which a Collateral Loan Event of Default has occurred, Collateral or
other property acquired in respect thereof, whether through foreclosure, sale or
otherwise, including Net Condemnation Proceeds, Net Insurance Proceeds and
payments in connection with such Collateral Loan received from the related
Collateral Borrower (other than amounts required to be paid to such Collateral
Borrower pursuant to the terms of the applicable Collateral Loan Agreement or to
be applied otherwise pursuant to law) or from any Person pursuant to a related
Guaranty and net proceeds realized from the operation of any Collateral by the
Servicer or the Servicing Advisor during the period of ownership of such
Collateral by the Originator or the Owner.
"Mortgage": With respect to a Collateral Loan, the related fee
mortgage or deed of trust from the related Collateral Borrower to the Originator
securing the Note evidencing such Collateral Loan, if any, as such fee mortgage
or deed of trust may be amended, supplemented or otherwise modified from time to
time.
"Mortgaged Property": The real property subject to a Mortgage or
Leasehold Mortgage, as the case may be.
"Net Condemnation Proceeds": With respect to a Collateral Loan,
Condemnation Proceeds in respect of such Collateral Loan net of out-of-pocket
costs and disbursements reasonably and customarily incurred in connection with
the collection thereof, which are not used to restore or repair the related
Mortgaged Property or released to the Collateral Borrower in accordance with the
Collateral Loan Agreement.
"Net Insurance Proceeds": With respect to a Collateral Loan,
Insurance Proceeds in respect of such Collateral Loan net of out-of-pocket costs
and disbursements reasonably and customarily incurred in connection with the
collection thereof which are not used to restore or repair
the related Mortgaged Property or released to the Collateral Borrower in
accordance with the Collateral Loan Agreement.
"Net Liquidation Proceeds": With respect to any Liquidated Collateral
Loan, Liquidation Proceeds net of Liquidation Expenses.
"Notice Response Period": With respect to any Servicer
Recommendation, a period of time equal to fifteen (15) Business Days following
the delivery of such Servicer Recommendation to the Lender, or such lesser
period of time as shall be specified in such Servicer Recommendation if, in the
good faith judgment of the Servicer or the Servicing Advisor, as the case may
be, such lesser period of time is necessary in order to preserve and protect the
rights, remedies and interests of the Owner or the Lender in respect of the
Collateral Loan Documentation relating to the Collateral Loans or the
Collateral.
"Origination Escrow": Any amount held back and deposited in an Escrow
Account at the origination of the related Collateral Loan from the loan proceeds
pursuant to the related Collateral Loan Agreement or any other Collateral Loan
Documentation, the amount and terms of which shall be indicated in writing to
the Servicer by the Originator of such Collateral Loan upon its origination.
"Originator" means Xxxxxxxx Capital Partners, L.P., a California
limited partnership, or The Xxxxxxxx Group Incorporated, a California
corporation, as applicable, in each case in its capacity as the originator of a
Collateral Loan.
"Owner" has the meaning set forth in the preamble hereto.
"Permitted Liens", if any, shall mean the liens permitted by the
Collateral Loan Agreement relating to any Collateral Loan.
"Person" means and includes an individual, a partnership, a
corporation, a business trust, a joint stock company, an unincorporated
association, a joint venture, a limited liability company, a governmental
authority, a trust or any other legal entity.
"Prepayments": With respect to any Collateral Loan, any prepayment of
principal and accrued interest with respect to such Collateral Loan made in
accordance with the related Collateral Loan Agreement (whether by acceleration
or otherwise), including any required Yield Maintenance Payment, and the
application of any Net Insurance Proceeds, Net Condemnation Proceeds and Net
Liquidation Proceeds in accordance with the Collateral Loan Agreement.
"Realized Loss": With respect to a Liquidated Collateral Loan, and
the date of
determination thereof, the excess of (a) the then outstanding principal balance
of such Liquidated Collateral Loan, plus all accrued and unpaid interest thereon
to such date of determination over (b) the Net Liquidation Proceeds in respect
of such Liquidated Collateral Loan. For the purposes of calculating Realized
Loss, the amounts withdrawn from each REO Account and deposited into the
Collection Account with respect to each Distribution Date shall be applied as if
the related Collateral Loan had remained outstanding, first, to accrued and
unpaid interest on the related Collateral Loan, second, to the unpaid principal
balance of such related Collateral Loan, and third, to the Yield Maintenance
Payment due with respect to such related Collateral Loan (based on the
acceleration thereof).
"Record Holder" shall mean, with respect to any Collateral Loan,
either the Lender or the Owner, as applicable, as the record holder of such
Collateral Loan.
"REO Account" is defined in Section 8(b) of the Servicing Standards
and Procedures.
"REO Property": Any Mortgaged Property or other Collateral acquired
by the Servicer in foreclosure, by deed in lieu of foreclosure or otherwise.
"Request for Release": A Request for Release in the form of Schedule
2 hereto.
"Responsible Officer": When used with respect to the Servicer, any
officer within the corporate trust office of the Servicer, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary or
any other officer of the Servicer customarily performing functions similar to
those performed by any of the above-designated officers of the Servicer and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Servicing Advisor, the
President or the Executive Vice President.
"Responsible Officer's Certificate": A certificate signed by a
Responsible Officer.
"Servicer Recommendation": A written notice delivered by a
Responsible Officer of the Servicer or the Servicing Advisor, as the case may
be, to the Lender, with a copy to the Owner, that shall (i) recommend a course
of action predicated on the servicing standards set forth in Section 1(a) the
Servicing Standards and Procedures, (ii) state in such notice that the Lender
must consent in writing to such course of action during the Notice Response
Period and that absent such consent in writing, the Servicer or the Servicing
Advisor, as the case may be, shall not take the course of action stated in the
notice, and (iii) set forth a brief description of why the lesser period of time
is necessary if the Notice Response Period indicated in such Servicer
Recommendation is less than fifteen (15) Business Days. Each Servicer
Recommendation, regardless of the Notice Response Period, shall be delivered to
the Lender, with a copy to the Owner, by facsimile transmission if
commercially reasonable, followed by hard copy thereof delivered by overnight
delivery service.
"Servicing Standards and Procedures": The standards and procedures
for the servicing and administration of the Collateral Loans and the related
Collateral Loan Documentation, as set forth in Exhibit A and incorporated and
made a part of this Agreement as though set forth herein.
"Servicing Advisor Fee Rate" is defined in Section 6 hereof.
"Store": A Restaurant or Store, if any, as defined in the Collateral
Loan Agreement relating to certain Collateral Loans.
Section 2. Representations and Warranties. Each of the
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Servicer and the Servicing Advisor hereby represents, warrants and covenants to
each other and to the Owner and the Lender that as of the date of execution of
this Agreement:
(i) In the case of the Servicing Advisor, it is a limited
partnership duly formed and validly existing under the laws of the State of
California, and in the case of the Servicer, it is a banking corporation
duly formed and validly existing under the laws of the State of New York;
(ii) The execution and delivery of this Agreement by it, and its
performance and compliance with the terms of this Agreement will not
violate its certificate of limited partnership and partnership agreement or
its corporate charter and by-laws, as applicable, or constitute a default
(or an event, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract,
agreement or other instrument to which it is a party or which may be
applicable to it or any of its assets;
(iii) This Agreement has been duly authorized, executed and delivered
by it and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes its valid, legal and binding obligation,
enforceable against it in accordance with the terms hereof, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(iv) It is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect its condition (financial or other) or
operations or its properties or might have consequences that would
affect its performance hereunder;
(v) No litigation is pending or, to the best of its knowledge,
threatened against it which would prohibit its entering into this Agreement
or performing its obligations under this Agreement; and
(vi) No consent, approval, authorization, or order of, registration
or filing with, or notice to, any governmental authority or court or any
other Person is required under the laws of the United States of America,
the laws of the State of New York and, with respect to the Servicing
Advisor, the laws of the State of California, for the execution, delivery
and performance by it of, or compliance by it with, this Agreement.
Section 3. Administration and Servicing of Collateral Loans. The
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Servicer and the Servicing Advisor, pursuant to this Agreement shall service the
Collateral Loans as provided in the Servicing Standards and Procedures and the
Additional Servicing Advisor Standards and Procedures. All funds paid by the
Collateral Borrowers in respect of the Collateral Loans shall be deposited by
the Servicer into the Collection Account within one (1) Business Day of receipt
thereof. The Servicer shall keep a record of all amounts received by it.
Section 4. Custodial Duties.
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(a) Custody of Loan Documentation. The Custodian shall take
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possession of the Collateral Loan Documentation relating to the Collateral Loans
as the custodian for, and bailee of, the Lender in accordance with the terms and
conditions of this Agreement. The Custodian shall hold the Collateral Loans in
trust for the benefit of the Lender.
(b) List of Loans. The Custodian shall maintain a complete list of
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the Collateral Loans serviced hereunder, as such list may be amended from time
to time, and provide copies of such list to the Lender, the Owner, the Servicer
and the Servicing Advisor upon request.
(c) Certification. Upon delivery to the Custodian of any Collateral
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Loan Documentation, together with a Collateral Submission Summary in the form of
Schedule 1 hereto, the Custodian shall review the same and provide to the Owner
and the Lender, within three (3) Business Days, the certification specified in
Schedule 1 hereto indicating that (i) all the documents required to be
delivered, as specified in a checklist included in such Schedule 1 hereto
certified by an officer of the Originator (the "Collateral Loan Documentation
Checklist"), have been delivered, or a list of the exceptions to the documents
required to be delivered, and (ii) the Custodian holds such documents on behalf
of the Lender pursuant to this Agreement.
(d) Obligation to Lender. Subject to the terms of this Agreement,
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the Custodian,
either directly or by acting through an agent, shall hold all documents relating
to any Collateral Loan that come into its possession for the exclusive use and
benefit of the Lender and shall make disposition thereof only in accordance with
the written instructions furnished by the Lender in the form of Schedule 3
hereto. The Custodian shall segregate and maintain continuous custody of all
such documents received by it in secure facilities in accordance with customary
standards for such custody and shall not release such documents or transfer such
documents to any other party, including any subcustodian, without the express
written consent of the Lender.
(e) Fees Paid by Servicer. The fees of the Custodian shall be deemed
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to be included in the fees paid to the Servicer pursuant to Section 6(b). The
Servicer shall be responsible for any fees of any Custodian, subcustodian or
agent.
Section 5. Distributions.
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(a) On the Business Day following each Determination Date, the
Servicer shall prepare and send by facsimile to the Servicing Advisor, the Owner
and the Lender a statement (the "Distribution Statement") specifying the
distributions to be made from the Collection Account on the following
Distribution Date, including, without limitation, the servicing compensation
specified in Section 6 hereof and any other reasonable and necessary out-of-
pocket expenses, including legal fees and expenses, incurred by the Servicer or
any of its agents in connection with the servicing of the Collateral Loans or by
the Custodian in connection with its activities as Custodian hereunder. The
Servicing Advisor shall approve or correct such Distribution Statement as soon
as practicable, but in no event later than the Business Day preceding the
Distribution Date; provided that if the Servicer does not receive the Servicing
Advisor's response by 12:00 noon, California time, on such Business Day, such
Distribution Statement shall be deemed approved, subject to adjustment at a
later date, if necessary. The Servicer shall provide to the Servicing Advisor
such additional information as the Servicing Advisor may reasonably request
relating to the Distribution Statement.
(b) On each Distribution Date, the Servicer shall make payments from
the Collection Account in accordance with the Distribution Statement in the
following order of priority:
(i) to the Servicer, the compensation specified in Section 6(b)
and any accrued but unpaid compensation payable pursuant to
Section 6(b);
(ii) to the Servicing Advisor, the compensation specified in
Section 6(a) and any accrued but unpaid compensation
payable pursuant to Section 6(a);
(iii) to the Servicer and/or the Custodian, any out-of-pocket
expenses required to be reimbursed by the Owner;
(iv) to the Servicing Advisor, any out-of-pocket expenses
required to be reimbursed by the Owner, as approved in
writing by the Owner; and
(v) to the Lender, the amount of interest and principal payable
under the Credit Agreement; and
(vi) to the Owner, any remaining amounts in the Collection
Account.
(c) Funds in the Collection Account shall be invested by the Servicer
upon the written direction of the Owner in Cash Equivalent Investments, provided
that such investments shall mature not later than the Business Day preceding the
next Distribution Date. In the absence of written directions from the Owner,
funds in the Collection Account will be invested in investments described in
clause (d) of the definition of Cash Equivalent Investments. Any interest
earned on the funds in the Collection Account in excess of the amounts required
to pay each of items (i) through (v) in paragraph (b) above shall be distributed
to the Owner on each Distribution Date.
Section 6. Servicing Compensation. (a) The Owner shall pay the
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Servicing Advisor, as compensation for its activities hereunder, on each
Distribution Date an amount, with respect to each Collateral Loan serviced
hereunder, equal to the product of (i) ***/1/ per annum (the "Servicing Advisor
Fee Rate") multiplied by (ii) a fraction, the numerator of which shall be the
number of days since the immediately prior Distribution Date for such Collateral
Loan, or in the case of the first Distribution Date for such Collateral Loan,
the number of days since such loan became a Collateral Loan, and the denominator
of which shall be 360, multiplied by (iii) the outstanding principal balance of
such Collateral Loan. The Owner hereby directs the Servicer to deduct the
amount of the compensation payable to the Servicing Advisor pursuant to this
Section 6(a), as specified in the Distribution Statement, and remit such
compensation directly to the Servicing Advisor on each Distribution Date. The
Servicing Advisor shall be responsible for its own out-of-pocket costs and
expenses incurred in connection with its services hereunder, to the extent not
reimbursed by any Collateral Borrower, except for such reasonable and necessary
out-of-pocket costs and expenses incurred with respect to (A) a Collateral Loan
as to which a default has occurred, (B) the liquidation or foreclosure of a
Collateral Loan, (C) the condemnation of a Mortgaged Property or (D) the
collection of Insurance Proceeds.
(b) The Owner shall pay the Servicer, as compensation for its
activities hereunder, on each Distribution Date an amount equal to the product
of (i) the Applicable Servicing Fee Rate (as defined below) multiplied by (ii) a
fraction, the numerator of which shall be the number of days
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/1/ Certain information has been deleted from this document where denoted
by asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
since the immediately prior Distribution Date for such Collateral Loan, or in
the case of the first Distribution Date for such Collateral Loan, the number of
days since such loan became a Collateral Loan, and the denominator of which
shall be 360, multiplied by (iii) the outstanding principal balance of such
Collateral Loan. The "Applicable Servicing Fee Rate" with respect to any such
Collateral Loan and any such Distribution Date shall be ***/2/ per annum. The
Owner hereby directs the Servicer to deduct the amount of the servicing
compensation payable to the Servicer pursuant to this Section 6(b), as specified
in the Distribution Statement, and remit such servicing compensation directly to
the Servicer on each Distribution Date.
Section 7. Reports to the Lender and the Owner; Account Statements.
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No later than three (3) Business Days prior to each Distribution Date, the
Servicer shall deliver to the Servicing Advisor, the Owner and the Lender a
statement setting forth the status of each Collateral Loan (including whether it
is a Delinquent Collateral Loan) as of the close of business on the
Determination Date preceding such Distribution Date showing, for the period
covered beginning on the day following the immediately prior Determination Date
and ending at the close of business on such Determination Date, the payments
received on each such Collateral Loan during such period, the payments scheduled
to be made with respect to such Collateral Loan for such period and such other
information as may reasonably be requested by the Lender, the Owner or the
Servicing Advisor.
Section 8. Resignation and Termination.
---------------------------
(a) At any time, upon sixty (60) days' prior written notice, the
Servicer or the Custodian may resign as Servicer or Custodian, or the Owner or
the Lender may terminate the appointment of the Servicer or the Custodian under
this Agreement; provided, that neither the resignation nor the termination of
--------
the Servicer or the Custodian shall be effective until a successor thereto has
been appointed by the Owner and approved by the Lender.
(b) The Servicing Advisor may not resign as servicing advisor and
neither the Owner nor the Lender may terminate the appointment of the Servicing
Advisor under this Agreement; provided, however, that in the event the Servicing
Advisor has breached its duties and obligations under this Agreement, the Lender
may terminate the appointment of the Servicing Advisor under this Agreement upon
sixty (60) days' prior written notice to the other parties. Any such
termination shall not be effective until a successor has been appointed by the
Lender.
(c) If the Servicer, the Custodian or the Servicing Advisor gives
notice of its
-------------------
/2/ Certain information has been deleted from this document where denoted by
asterisks, and has been filed separately with the Commission. The Company has
requested confidential treatment for such omitted information.
resignation (with respect to the Servicer or the Custodian) or has
received notice of its termination pursuant to this Section 8 and by the
twentieth day before the expiration of such sixty day notice period a successor
has not been appointed by the Owner and approved by the Lender or, in the case
of the Servicing Advisor, appointed by the Lender, such Servicer, Custodian or
Servicing Advisor, as the case may be, may itself, following consultation with
the Owner and the Lender as may be practicable under the circumstances, appoint
as its successor an entity that (i) is experienced in servicing commercial loans
and loans to franchisees, taking into account such experience of the Servicer,
the Custodian and the Servicing Advisor, as applicable, and, with respect to the
Servicer, (ii) has a net worth of at least $100,000,000.
(d) Upon acceptance of any appointment as Servicer, Custodian or
Servicing Advisor hereunder by a successor thereto, such successor shall be
entitled to receive from the retiring Servicer, Custodian or Servicing Advisor,
as applicable, such documents of transfer and assignment as such successor may
reasonably request, and shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Servicer, Custodian or
Servicing Advisor, and the retiring Servicer, Custodian or Servicing Advisor
shall be discharged from its duties and obligations under this Agreement and
shall not be liable for the acts or omissions of any such successor.
(e) Any payments with respect to Collateral Loans received by the
Servicer or the Custodian or the Servicing Advisor subsequent to (or with
respect to any period subsequent to) the termination or resignation of such
Servicer, Custodian or Servicing Advisor hereunder shall be promptly remitted by
it to the Owner. Each of the Servicer, the Custodian and the Servicing Advisor
shall cooperate fully with the Owner in effectuating the termination of its
responsibilities and rights hereunder and shall promptly provide all documents
and records reasonably necessary to enable its successor to assume its functions
hereunder.
Section 9. Duration. Unless otherwise terminated pursuant to Section
--------
8 hereof, this Agreement shall terminate on December 31, 1999, unless extended
by the written consent of the Owner, the Lender, the Servicing Advisor, the
Custodian and the Servicer; provided, however, that Sections 8(d), 8(e), 10 and
11 shall survive termination of this Agreement.
Section 10. Limitation on Liability of the Servicing Advisor, the
-----------------------------------------------------
Servicer and the Custodian.
--------------------------
(a) None of the Servicing Advisor, the Servicer, the Custodian or any
of their respective shareholders, directors, officers, employees or agents shall
be under any liability to each other or to the Owner or the Lender for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement or any Collateral Loan Documentation, or for errors
in judgment; provided, however, that this provision shall not protect the
-------- -------
Servicing Advisor, the
Servicer, the Custodian or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of such Person's duties or by reason of a breach of such
Person's obligations and duties hereunder. Each of the Servicing Advisor, the
Servicer, the Custodian and any of its directors, officers or employees, may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
(b) The Owner shall indemnify and hold harmless each of the Servicing
Advisor, the Servicer, the Custodian and each of its shareholders, directors,
officers, employees or agents (each, an "Indemnified Party") against any claims,
losses, penalties, fines, forfeitures, legal fees and expenses, judgments and
any other costs, fees and expenses ("Damages") incurred in connection with any
legal action relating to this Agreement, or any Collateral Loan Documentation,
other than any Damages incurred by the Indemnified Party which relate to or are
the result of the willful misfeasance, bad faith or negligence in the
performance of the Indemnified Party's duties hereunder or by reason of a breach
of the Indemnified Party's obligations and duties hereunder. The Owner shall
not indemnify the Servicer, the Servicing Advisor or the Custodian for Damages
which relate to or are the result of the willful misfeasance, bad faith or
negligence of the officers, directors, employees or agents of such party.
The rights, duties and obligations of each party pursuant to this
Section 10 shall survive any termination of this Agreement.
Section 11. Indemnification; Third Party Claims. Each of the
-----------------------------------
Servicing Advisor, the Servicer and the Custodian shall indemnify and hold
harmless each other, the Owner and the Lender and each of their respective
shareholders, directors, officers, employees or agents against any and all
Damages incurred by the party seeking indemnification due to the failure of the
Servicing Advisor, the Servicer or the Custodian to perform its obligations in
accordance with the terms of this Agreement; provided that in connection with
the events giving rise to such claim for indemnification, the party seeking
indemnification and the officers, directors, employees or agents of such party
shall not have engaged in any willful misfeasance, bad faith or negligence.
The rights, duties and obligations of each party pursuant to this
Section 11 shall survive any termination of this Agreement.
Section 12. Governing Law; Jurisdiction. This Agreement shall be
---------------------------
construed in accordance with the laws of the State of New York (without regard
to conflicts of laws principles), and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws. Each of
the Servicer, the Custodian, the Owner, the Lender and the Servicing Advisor
hereby irrevocably and unconditionally submits for itself and its property in
any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the state of New York, the courts of the United
States of America for the Southern District of New York and appellate courts
from any jurisdiction thereof.
Section 13. Modifications. This Agreement may not be altered or
-------------
modified without the express written consent of the parties hereto. No course
of conduct shall constitute a waiver of any of the terms or conditions of this
Agreement, unless such waiver is specified in writing, and then only to the
extent so specified. A waiver of any of the terms of this Agreement on one
occasion shall not constitute a waiver of the other terms of this Agreement, or
of such terms and conditions, on any other occasion.
Section 14. Incorporation by Reference. Exhibit A, Exhibit B and
--------------------------
Exhibit C to this Agreement are hereby incorporated by reference herein, and
shall be an integral part of this Agreement, with the same force and effect as
if set forth herein.
Section 15. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by facsimile or certified or registered mail,
return receipt requested, to the following addresses:
Servicer and Bankers Trust Company
Custodian: Corporate Trust and Agency Group
Four Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: 212/000-0000
Facsimile: 212/250-6151
Servicing Advisor Xxxxxxxx Capital Partners, L.P.
and Owner: 0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxxx
Telephone: 415/000-0000
Facsimile: 415/827-7950
Lender: Franchise Finance Corp.
0000 Xxxx 00xx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: 316/000-0000
Facsimile: 316/828-4081
Any demand, notice or communication given pursuant to this Agreement shall not
be effective until received.
Notwithstanding the foregoing, during any period in which a Person is
required hereunder to make demands, notices or communications to itself in
another capacity under this Agreement or another agreement contemplated hereby,
no such demands, notices or communications need be made or delivered.
Section 16. Counterpart Signatures. This Agreement may be executed
----------------------
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 17. Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the Servicer, the Servicing
Advisor, the Custodian, the Owner and the Lender and their respective successors
and assigns including, but not limited to, successors in interest in and to the
Collateral Loans; provided, however, that the Servicer, the Servicing Advisor
and the Custodian may not assign their duties hereunder without the written
consent of the Owner and the Lender.
Section 18. Confidentiality. The Servicer and the Custodian hereby
---------------
agree not to use or provide any information relating to the Collateral Loans or
the Collateral Loan Documentation other than for the purpose of fulfilling their
duties and obligations hereunder. Notwithstanding anything herein to the
contrary, the foregoing shall not be construed to prohibit (i) disclosure of any
and all information that is or becomes publicly known (other than as a result of
the actions of the Servicer or the Custodian), or information obtained by the
Servicer or the Custodian from sources other than the Owner, the Lender, the
Servicing Advisor or a third party actually known by a Responsible Officer of
the Servicer or Custodian to be bound by an obligation of confidentiality to the
Owner or Servicing Advisor, (ii) disclosure of any and all information (A) if
required to do so by an applicable statute, law, rule or regulation, (B) if
required to do so by any government agency or regulatory body having or claiming
authority to regulate or oversee any aspects of the Servicer's or the
Custodian's business or that of its affiliates, (C) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Servicer or the Custodian or
an affiliate or an officer, director, employer or shareholder
thereof is a party, and (D) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Servicer or the Custodian having a need to
know the same, provided that in each of (A), (B), (C) and (D) above, the
Servicer or the Custodian advises such recipient of the confidential nature of
the information being disclosed, or (iii) any other disclosure authorized in
writing by the Owner or the Lender, as applicable.
IN WITNESS WHEREOF, the Servicer, the Custodian, the Owner, the Lender
and the Servicing Advisor have caused their names to be signed hereto by their
respective officers thereunto duly authorized all as of the date specified in
the preamble of this document.
BANKERS TRUST COMPANY,
as the Custodian and the Servicer
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
XXXXXXXX CAPITAL PARTNERS, L.P.,
as the Owner and the Servicing Advisor
By: The Xxxxxxxx Group Incorporated,
its General Partner
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
FRANCHISE FINANCE CORP.
as the Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
