Exhibit 10.19
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Surety Provider
FINANCIAL PACIFIC LEASING, LLC
as Originator and as Servicer
FINANCIAL PACIFIC FUNDING, LLC
as Borrower
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Standby Servicer and Collateral Agent
RECEIVABLES CAPITAL CORPORATION,
as Lender
THE FINANCIAL INSTITUTIONS FROM
TIME TO TIME PARTY HERETO,
as Parallel Lenders
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent and Bank Agent
INSURANCE AND INDEMNITY AGREEMENT
Financial Pacific Funding, LLC Warehouse Facility
Dated as of February 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................................................................ 2
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representation and Warranties of the Servicer, the Originator and the Borrower........... 5
Section 2.02. Affirmative Covenants of the Servicer, the Originator and the Borrower................... 8
Section 2.03. Negative Covenants of the Servicer, the Originator and the Borrower...................... 13
Section 2.04. Representations, Warranties and Covenants of the Collateral Agent and Standby Servicer... 14
ARTICLE III
APPOINTMENT OF THE COLLATERAL AGENT
Section 3.01. Appointment of the Collateral Agent...................................................... 16
ARTICLE IV
THE SURETY BOND; REIMBURSEMENT
Section 4.01. Issuance of the Surety Bond.............................................................. 17
Section 4.02. Payment of Fees and Premium.............................................................. 19
Section 4.03. Reimbursement and Additional Payment Obligation.......................................... 19
Section 4.04. Indemnification; Limitation of Liability................................................. 21
Section 4.05. Payment Procedure........................................................................ 22
ARTICLE V
FURTHER AGREEMENTS
Section 5.01. Effective Date; Term of the Insurance Agreement.......................................... 23
Section 5.02. Further Assurances and Corrective Instruments............................................ 23
Section 5.03. Obligations Absolute..................................................................... 24
Section 5.04. Assignments; Reinsurance; Third-party Rights............................................. 25
Section 5.05. Liability of the Surety Provider......................................................... 26
Section 5.06. Parties Will Not Institute Insolvency Proceedings........................................ 26
Section 5.07. Administrative Agent, Collateral Agent, Lender, Standby Servicer, Borrower,
Originator and Servicer To Join in Enforcement Action.................................... 27
Section 5.08. Subrogation.............................................................................. 27
ARTICLE VI
DEFAULTS; REMEDIES
Section 6.01. Defaults................................................................................. 27
Section 6.02. Remedies; No Remedy Exclusive............................................................ 28
Section 6.03. Waivers.................................................................................. 29
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc.......................................................................... 29
Section 7.02. Notices.................................................................................. 30
Section 7.03. Severability............................................................................. 31
Section 7.04. Governing Law............................................................................ 32
Section 7.05. Consent to Jurisdiction.................................................................. 32
Section 7.06. Consent of the Surety Provider........................................................... 32
Section 7.07. Counterparts............................................................................. 33
Section 7.08. Headings................................................................................. 33
Section 7.09. Trial by Jury Waived..................................................................... 33
Section 7.10. Limited Liability........................................................................ 33
Section 7.11. Entire Agreement......................................................................... 33
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INSURANCE AGREEMENT
This INSURANCE AND INDEMNITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Insurance Agreement"), dated as of
February 1, 1999 is by and among MBIA INSURANCE CORPORATION, as Surety Provider
(the "Surety Provider"), FINANCIAL PACIFIC LEASING, LLC, as Originator (the
"Originator") and as Servicer (the "Servicer"), FINANCIAL PACIFIC FUNDING, LLC,
as Borrower (the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Standby Servicer and as Collateral Agent (the "Collateral Agent"), Receivables
Capital Corporation, the Lender (the "Lender"), THE FINANCIAL INSTITUTIONS FROM
TIME TO TIME PARTY HERETO, as Parallel Lenders (the "Parallel Lenders") and Bank
of America National TRUST and Savings Association, as Administrative Agent and
Bank Agent (the "Administrative Agent").
WHEREAS, the Borrower, the Servicer, the Collateral Agent, the Standby
Servicer, the Lender, the Parallel Lenders and the Administrative Agent have
entered into a Warehouse Loan Agreement (as defined herein) dated as of December
30, 1998, pursuant to which, among other things, the Borrower has granted a
security interest in the Collateral to the Collateral Agent for the benefit of
the Secured Parties (as defined in the Warehouse Loan Agreement) including the
Surety Provider, to secure payments under the Notes, the Warehouse Loan
Agreement, this Insurance Agreement and under the other Transaction Documents
(as defined herein).
WHEREAS, the Borrower and the Servicer have requested that the Surety
Provider issue its Surety Bond (the "Surety Bond") to guarantee payment of
Insured Amounts (as defined in Surety Bond) with respect to the Notes, upon such
terms and conditions as were mutually agreed upon by the parties and subject to
the terms and conditions of the Surety Bond.
WHEREAS, the parties hereto desire to specify the conditions precedent
to the issuance of the Surety Bond by the Surety Provider, the indemnity and
reimbursement to be provided by the Borrower and the Servicer in respect of
amounts paid by the Surety Provider under the Surety Bond and to provide for
certain other matters.
WHEREAS, the Surety Provider shall be paid an insurance premium in
accordance with the payment priorities set forth in the Warehouse Loan
Agreement, and the details of such premium are set forth herein; and
WHEREAS, the Borrower, the Servicer, the Originator, the Collateral
Agent and the Standby Servicer have undertaken certain obligations in
consideration for the Surety Provider's issuance of the Surety Bond;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined in this Article I shall have the meanings assigned to them in
the Warehouse Loan Agreement. All words used herein shall be construed to be of
such gender or number as the circumstances require. The words "herein,"
"hereby," "hereof," "hereto," "hereinabove" and "hereinbelow," and words of
similar import, refer to this Insurance Agreement as a whole and not to any
particular paragraph, clause or other subdivision hereof, unless otherwise
specifically noted.
"Administrative Agent Fee Letter" shall mean the fee letter dated as of
December 30, 1998 between the Administrative Agent and the Borrower, which
letter has been consented to by the Surety Provider.
"Business Day" shall have the meaning set forth in the Warehouse Loan
Agreement.
"Collateral" shall have the meaning set forth in the Warehouse Loan
Agreement.
"Collateral Agent" means Norwest Bank Minnesota, National Association,
a national banking association, as Collateral Agent under the Warehouse Loan
Agreement, and any successor to the Collateral Agent under the Warehouse Loan
Agreement.
"Collateral Agent Fee Letter" shall mean the fee letter dated as of
November 4, 1998 between the Collateral Agent and the Borrower.
"Commission" means the Securities and Exchange Commission.
"Credit Policy" shall have the meaning set forth in the Warehouse Loan
Agreement.
"Date of Issuance" means the date on which the Surety Bond is issued as
specified therein.
"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.
"Event of Default" means any event of default specified in Section 6.01
hereof.
"Financial Statements" means, with respect to the Borrower, the
Originator and the Servicer, the balance sheets and the statements of income,
retained earnings and cash flows and the notes thereto which have been provided
to the Surety Provider.
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"First Tier Purchase Agreement" shall mean the First Tier Purchase
Agreement dated as of December 30, 1998 between the Originator and the Borrower,
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to
the terms of the Surety Bond.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"Late Payment Rate" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days, calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Lenders" means, collectively, the Lender and the Parallel Lenders
pursuant to the Notes.
"Liabilities" shall have the meaning ascribed to such term in Section
4.04(a) hereof.
"Losses" means (a) any actual out-of-pocket loss paid by the Surety
Provider or its respective parents, subsidiaries and affiliates or any
shareholder, director, officer, employee, agent or any "controlling person" (as
such term is used in the Securities Act) of any of the foregoing, and (b) any
actual out-of-pocket costs and expenses paid by such party, including reasonable
fees and expenses of its counsel, to the extent not paid, satisfied or
reimbursed from funds provided by any other Person (provided that the foregoing
shall not create or imply any obligation to pursue recourse against any such
other Person).
"Lock-Box Agreement" shall have the meaning set forth in the Warehouse
Loan Agreement.
"Lock-Box Bank" shall have the meaning set forth in the Warehouse Loan
Agreement.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (a) the business, financial condition, results of operations
or properties of such Person or (b) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"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 the Surety Provider.
"Obligor" means the original obligor under each Receivable, including
any guarantor of such obligor and their respective successors.
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"Opinion Facts and Assumptions" means the facts and assumptions
contained in the insolvency opinion dated December, 30, 1998 by Xxxxxxx & Xxxxx
under the heading "Facts and Assumptions" insofar as they relate to the
Originator and the Borrower.
"Organizational Documents" means (i) with respect to a corporation, the
articles of incorporation and the bylaws thereof and (ii) with respect to a
limited liability company, the certificate of formation and limited liability
company agreement thereof.
"Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
limited liability company, partnership or other organization or entity (whether
governmental or private).
"Premium" means the premium payable in accordance with Section 4.02
hereof.
"Premium Letter" means the premium letter from the Surety Provider to
the Borrower and the Originator dated February 1, 1999.
"Premium Percentage" shall have the meaning ascribed to such term in
Section 4.02 hereof.
"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.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., 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 the Surety Provider.
"Term of the Insurance Agreement" shall be determined as provided in
Section 5.01 hereof.
"Transaction" means the transactions contemplated by the Transaction
Documents.
"Transaction Documents" means this Insurance Agreement, the Premium
Letter, the Notes, the Warehouse Loan Agreement, the First Tier Purchase
Agreement, the Lock-Box Agreement (if any), the Hedging Agreement, the Liquidity
Asset Purchase Agreement, the Administrative Agent Fee Letter and the Collateral
Agent Fee Letter.
"Warehouse Loan Agreement" shall mean the Warehouse Loan and Security
Agreement dated as of December 30, 1998 among the Servicer, the Borrower, the
Standby Servicer, the Collateral Agent and the Administrative Agent, as the same
may be amended or supplemented from time to time in accordance with the terms
thereof.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01. REPRESENTATION AND WARRANTIES OF THE SERVICER, THE
ORIGINATOR AND THE BORROWER. The Servicer, the Originator and the Borrower
represent, warrant and covenant as of the Date of Issuance, each as to those
matters relating to itself, as follows:
(a) Due Organization and Qualification. The Servicer, the
Originator and the Borrower are each a limited liability company duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. Each of the Servicer, the
Originator and the Borrower is duly qualified to do business, is in
good standing and has obtained all 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 in each jurisdiction in
which the failure to be so qualified or to obtain such approvals would
render any Transaction Document unenforceable in any respect or would
have a material adverse effect upon the Transaction or the Surety
Provider.
(b) Power and Authority. Each of the Servicer, the
Originator and the Borrower has all necessary limited liability company
power and authority to conduct its business as currently conducted and
to execute, deliver and perform its obligations under the Transaction
Documents and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by each of the Servicer, the
Originator and the Borrower have been duly authorized by all necessary
limited liability company action and do not require any additional
approvals or consents of, or other action by or any notice to or filing
with (except such future filings (e.g. filings under the UCC) as may be
required under the Transaction Documents), any Person, including,
without limitation, any governmental entity or the Servicer's, the
Originator's or the Borrower's stockholders, which have not previously
been obtained or given by the Servicer, the Originator or the Borrower.
(d) Noncontravention. Neither the execution and delivery
of the Transaction Documents by the Servicer, the Originator or the
Borrower, 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 Organizational Documents of
the Servicer, the Originator or the Borrower or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Servicer, the Originator or the Borrower
or any of their material properties, including regulations
issued by an administrative agency or other governmental
authority having supervisory powers over the Servicer, the
Originator or the Borrower;
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(ii) constitutes a default by the Servicer, the
Originator or the Borrower under or a breach of any provision
of any loan agreement, mortgage, indenture or other agreement
or instrument to which the Servicer, the Originator or the
Borrower is a party or by which any of its or their respective
properties, which are individually or in the aggregate
material to the Servicer, the Originator or the Borrower, is
or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Servicer, the
Originator or the Borrower, except as 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 the Servicer, the Originator,
the Borrower or any of its or their subsidiaries, or any properties or
rights of the Servicer, the Originator, the Borrower or any of its or
their subsidiaries, pending or, to the Servicer's, the Originator's or
the Borrower's knowledge after reasonable inquiry, threatened, which in
any case could reasonably be expected to result in a Material Adverse
Change with respect to the Servicer, the Originator or the Borrower.
(f) Valid and Binding Obligations. The Notes, when
executed, authenticated and issued in accordance with the Warehouse
Loan Agreement, and the Transaction Documents (other than the Notes),
when executed and delivered by the Servicer, the Originator and the
Borrower, will constitute the legal, valid and binding obligations of
the Servicer, the Originator, and the Borrower, as applicable,
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 and public policy
considerations as to rights of indemnification for violations of
federal securities laws. None of the Servicer, the Originator or the
Borrower will at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Servicer, the Originator or the Borrower, as applicable.
(g) Financial Statements. The Financial Statements of the
Originator, copies of which have been furnished to the Surety Provider,
(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 position and results of operations of the Servicer and the
Originator 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 Change in respect of the Servicer or the Originator. Except as
disclosed in the Financial Statements, the Servicer and the Originator
are not subject to any contingent liabilities or commitments that,
individually or in the aggregate are probable to cause or have a
reasonable possibility of causing a Material Adverse Change in respect
of the Servicer or the Originator.
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(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Servicer, the
Originator or the Borrower in the conduct of its business violates any
law, regulation, judgment, agreement, order or decree applicable to any
of them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Servicer, the Originator or
the Borrower. The Servicer, the Originator and the Borrower are not in
breach of or in default under any applicable law or administrative
regulation of its respective jurisdiction of incorporation, or any
department, division, agency or instrumentality thereof or of the
United States or any applicable judgment or decree or any loan
agreement, note, resolution, certificate, agreement or other instrument
to which the Servicer, the Originator or the Borrower is a party or is
otherwise subject which, if enforced, would have a material adverse
effect on the ability of the Servicer, the Originator or the Borrower,
as the case may be, to perform its respective obligations under the
Transaction Documents.
(i) Taxes. The Servicer, the Originator and the Borrower
and the Servicer's, the Originator's and the Borrower's parent company
or companies have filed prior to the date hereof all federal and state
tax returns that are required to be filed and paid all taxes, including
any assessments received by them that are not being contested in good
faith, to the extent that such taxes have become due, except for any
failures to file or pay that, individually or in the aggregate, would
not result in a Material Adverse Change with respect to the Servicer,
the Originator or the Borrower.
(j) Accuracy of Information. Neither the Transaction
Documents nor other information relating to the Receivables, the
operations of the Servicer, the Originator or the Borrower (including
servicing or origination of leases) or the financial condition of the
Servicer, the Originator or the Borrower (collectively, the
"Documents"), as amended, supplemented or superseded, furnished to the
Surety Provider by the Servicer, the Originator or the Borrower
contains any statement of a material fact by the Servicer, the
Originator or the Borrower which was untrue or misleading in any
material adverse respect when made. None of the Servicer, the
Originator or the Borrower has any knowledge of circumstances that
could reasonably be expected to cause a Material Adverse Change with
respect to the Servicer, the Originator or the Borrower. Since the
furnishing of the Documents, there has been no change or any
development or event involving a prospective change known to the
Servicer, the Originator or the Borrower that would render any of the
Documents untrue or misleading in any material respect.
(k) [RESERVED]
(l) Transaction Documents. Each of the representations
and warranties of the Servicer, the Originator and the Borrower
contained in the Transaction Documents is true and correct in all
material respects, and the Servicer, the Originator and the Borrower
hereby make each such representation and warranty to, and for the
benefit of, the Surety Provider as if the same were set forth in full
herein.
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(m) Solvency; Fraudulent Conveyance. The Servicer, the
Originator and the Borrower are solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the
Transaction, none of the Servicer, the Originator or the Borrower will
be left with an unreasonably small amount of capital with which to
engage in its business, nor does the Servicer, the Originator or the
Borrower intend to incur, or believe that it has incurred, debts beyond
its ability to pay as they mature. None of the Servicer, the Originator
or the Borrower contemplates 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 Servicer, the Originator or the Borrower or any of their
assets.
(n) Principal Place of Business. The principal place of
business of each of the Originator, the Servicer and the Borrower is
located in Tacoma, Washington.
(o) Opinion Facts and Assumptions. The Opinion Facts and
Assumptions insofar as they relate to the Originator and the Borrower
are true and correct as of the Date of Issuance.
SECTION 2.02. AFFIRMATIVE COVENANTS OF THE SERVICER, THE ORIGINATOR AND
THE BORROWER For as long as Financial Pacific Leasing, LLC, or any Affiliate
thereof, is the Servicer, the Servicer, the Originator and the Borrower hereby
agree that during the Term of the Insurance Agreement, unless the Surety
Provider shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Servicer, the Originator and the Borrower shall not be in default under
the Transaction Documents and shall comply with all material
requirements of any law, rule or regulation applicable to it. None of
the Servicer, the Originator or the Borrower shall agree to any
amendment to or modification of the terms of any Transaction Documents
unless the Surety Provider shall have given its prior written consent
or is a party to such amendment or modification.
(b) Continued Existence. Each of the Servicer, its
successors and assigns (except in the case that the Standby Servicer
becomes the Servicer), the Originator, its successors and assigns and
the Borrower and its successors and assigns, shall maintain its
existence as a limited liability company and shall at all times
continue to be duly organized as limited liability companies under the
laws of their respective jurisdictions of organization and duly
qualified and duly authorized (as described in section 2.01(a), (b) and
(c) hereof) and shall conduct its business in accordance with the terms
of its Organizational Documents.
(c) Financial Statements; Accountants' Reports; Other
Information. The Servicer, the Originator and the Borrower shall keep
or cause to be kept in reasonable detail books and records of account
of their assets and business, including, but not limited to, books and
records relating to the Transaction. The Servicer, the Originator and
the Borrower shall furnish or cause to be furnished to the Surety
Provider:
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(i) Financial Statements. The Financial
Statements set forth in Section 9.2(a) and (b) of the
Warehouse Loan Agreement.
(ii) Initial and Continuing Reports. On or before
the Closing Date, the Servicer will provide the Surety
Provider a copy of the magnetic tape to be delivered to the
Collateral Agent on the Closing Date, setting forth, as to
each Receivable, the information required under the definition
of "Schedule of Receivables" at Section 1.01 of the Warehouse
Loan Agreement. Thereafter, the Servicer shall deliver to the
Surety Provider the report required by Section 3.15 of the
Warehouse Loan Agreement in the manner and time set forth
therein.
(iii) Computer Diskette. Beginning in April, 1999,
the Servicer will deliver to the Surety Provider on a
quarterly basis in electronic form reasonably acceptable to
the Surety Provider a quarterly summary of the information
provided to the Surety Provider pursuant to the second
sentence of clause (ii) of this Section 2.02(c) and also
containing the information provided in the Schedule of
Receivables delivered to the Collateral Agent pursuant to the
Warehouse Loan Agreement and described in Schedule A of each
Funding Request with respect to the preceding calendar
quarterly period.
(iv) Certain Information. Upon the reasonable
request of the Surety Provider, the Servicer, the Originator
and the Borrower shall promptly provide copies of any
requested proxy statements, financial statements, reports and
registration statements which the Servicer, the Originator or
the Borrower files with, or delivers to, the Commission or any
national securities exchange.
(v) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Servicer, the
Originator or the Borrower pursuant to the terms of the
Warehouse Loan Agreement and, promptly upon request, such
other data as the Surety Provider may reasonably request.
The Surety Provider agrees that it and its agents, accountants
and attorneys shall keep confidential all financial statements, reports
and other information delivered by the Servicer, the Originator or the
Borrower pursuant to this Section 2.02(c) to the extent provided in
Section 2.02(f) hereof.
(d) Quarterly Audits. The Borrower, the Servicer and the
Originator shall permit, at the Servicer's and the Originator's
expense, the Surety Provider or a third party designated by or
acceptable to the Surety Provider to perform quarterly audits
consisting of, but not limited to (i) a review of the Scheduled
Payments and verification of such information against the actual check
and the computer generated list of Receivables by name and number; (ii)
a review of a sample of the Receivable Files and of the Servicer's
collection and administration of the Receivables to assess compliance
of the portfolio of Receivables with the Collection Policy and the
Transaction Documents; and (iii) a review
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of a sample of the Originator's contract files to assess compliance
with the Credit Policy. Such audits shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Borrower, the Originator or the Servicer.
(e) Compliance Certificate. The Servicer shall deliver to
the Surety Provider, concurrently with the delivery of the financial
statements required pursuant to Section 9.2 of the Warehouse Loan
Agreement, one or more certificates signed by an officer of the
Servicer, an officer of the Originator, and/or an officer of the
Borrower as applicable authorized to execute such certificates on
behalf of the Servicer, the Originator and the Borrower, respectively,
stating that:
(i) a review of the Servicer's performance under
the Transaction Documents during such period has been made
under such officer's supervision;
(ii) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred or, if a Default or Event of Default has
occurred, specifying the nature thereof and, if the Servicer
has a right to cure pursuant to Section 10.1 of the Warehouse
Loan Agreement, stating in reasonable detail (including, if
applicable, any supporting calculations) the steps, if any,
being taken by the Servicer 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;
(iii) in the case of the financial statements
delivered pursuant to Section 9.2(a) of the Warehouse Loan
Agreement, such financial statements are complete and correct
in all material respects and present fairly the financial
position and results of operations of the Servicer, the
Originator and the Borrower as of the dates and for the
periods indicated, in accordance with generally accepted
accounting principles consistently applied;
(iv) the Servicer has in full force and effect an
insurance policy in accordance with the terms and requirements
of Section 3.16 of the Warehouse Loan Agreement; and
(v) the Financial Covenants set forth in Section
9.1(e) of the Warehouse Loan Agreement are currently being
complied with, or, if there is not such compliance, stating
the particulars of such non-compliance.
(f) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Servicer, the Originator and the Borrower shall,
upon the reasonable request of the Surety Provider, permit the Surety
Provider or its authorized agents:
(i) to inspect the books and records of the
Servicer, the Originator and the Borrower as they may relate
to the Notes, the obligations of the Servicer, the
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Originator or the Borrower under the Transaction Documents,
and the Transaction;
(ii) to discuss the affairs, finances and
accounts of the Servicer, the Originator or the Borrower with
the chief operating officer and the chief financial officer of
the Servicer, the Originator or the Borrower, as the case may
be; and
(iii) with the Servicer's, the Originator's or the
Borrower's consent, as applicable, which consent shall not be
unreasonably withheld, to discuss the affairs, finances and
accounts of the Servicer, the Originator or the Borrower with
the Servicer's, the Originator's or the Borrower's independent
accountants, provided that an officer of the Servicer, the
Originator or the Borrower shall have the right to be present
during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Servicer, the Originator or the Borrower. The books and records of the
Servicer shall be maintained at the address of the Servicer designated
herein for receipt of notices, unless the Servicer shall otherwise
advise the parties hereto in writing. The books and records of the
Originator shall be maintained at the address of the Originator
designated herein for receipt of notices, unless the Originator shall
otherwise advise the parties hereto in writing. The books and records
of the Borrower shall be maintained at the address of the Borrower
designated herein for receipt of notices, unless the Borrower shall
otherwise advise the parties hereto in writing.
The Surety Provider agrees that it and its shareholders,
directors, agents, accountants and attorneys shall keep confidential
any matter of which it becomes aware through such inspections or
discussions (unless readily available from public sources), except as
may be otherwise required by regulation, law or court order or
requested by appropriate governmental authorities or as necessary to
preserve its rights or security under or to enforce the Transaction
Documents, provided that the foregoing shall not limit the right of the
Surety Provider to make such information available to its regulators,
securities rating agencies, reinsurers, credit and liquidity providers,
counsel and accountants.
(g) Notice of Material Events. The Servicer, the
Originator and the Borrower shall be obligated (which obligation shall
be satisfied as to each if performed by the Servicer, the Originator or
the Borrower) promptly to inform the Surety Provider in writing of the
occurrence of any of the following to the extent any of the following
relate to it:
(i) the submission of any claim or the
initiation or threat of any legal process, litigation or
administrative or judicial investigation or rule making or
disciplinary proceeding by or against the Servicer, the
Originator or the Borrower that (A) could be required to be
disclosed to the Commission or to the Servicer's, the
Originator's or the Borrower's shareholders or (B) could
result in a Material
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Adverse Change with respect to the Servicer, the Originator or
the Borrower, or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to the Servicer, the Originator or
the Borrower;
(ii) the submission of any claim or the
initiation or threat of any legal process, litigation or
administrative or judicial investigation in any federal, state
or local court or before any arbitration board, or any such
proceeding threatened by any government agency, which, if
adversely determined, would have a material adverse effect on
the Lenders or the Surety Provider;
(iii) any change in the location of the
Servicer's, the Originator's or the Borrower's principal
office or any change in the location of the Servicer's, the
Originator's or the Borrower's books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or
against the Servicer, the Originator or the Borrower under any
applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for the Servicer,
the Originator or the Borrower or any of its or their assets;
or
(vi) the receipt of notice that (A) the Servicer,
the Originator or the Borrower is being placed under
regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the
Servicer's, the Originator's or the Borrower's business is to
be or may be suspended or revoked, or (C) the Servicer, the
Originator or the Borrower is to cease and desist any
practice, procedure or policy employed by the Servicer, the
Originator or the Borrower in the conduct of its business, and
such cessation may result in a Material Adverse Change with
respect to the Servicer, the Originator or the Borrower.
(h) Financing Statements and Further Assurances. The
Servicer, the Originator and the Borrower will cause to be filed all
necessary financing statements 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 interest of the Collateral Agent in the
Collateral to the extent required by the Warehouse Loan Agreement. The
Servicer, the Originator and the Borrower shall, upon the request of
the Surety Provider, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, within 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
12
provisions of the Transaction Documents. In addition, each of the
Servicer, the Originator and the Borrower agrees to cooperate with S&P
and Xxxxx'x in connection with any review of the Transaction that may
be undertaken by S&P and Xxxxx'x after the date hereof and to provide
all information reasonably requested by S&P or Xxxxx'x.
(i) Maintenance of Licenses. The Servicer, the Originator
and the Borrower, respectively, or any successors thereof shall
maintain or cause to be maintained all licenses, permits, charters and
registrations which are material to the conduct of its business.
(j) Redemption of the Notes. The Servicer, the Originator
and the Borrower shall instruct the Collateral Agent, upon redemption
or payment of the Notes pursuant to the Warehouse Loan Agreement or
otherwise, to furnish to the Surety Provider a notice of such
redemption and, upon a redemption or other payment of the Notes, to
surrender the Surety Bond to the Surety Provider for cancellation.
(k) Servicing of Receivables. The Servicer shall perform
such actions with respect to the Receivables as are required by or
provided in the Warehouse Loan Agreement. The Servicer will provide the
Surety Provider with written notice of any proposed change or amendment
to any Transaction Document as currently in effect, if the Surety
Provider will not be a party to such change or amendment.
(l) Maintenance of Collateral. The Servicer shall provide
the Surety Provider with the annual opinion of counsel required by
Section 15.2(g) of the Warehouse Loan Agreement. Each of the Servicer,
the Originator and the Borrower will use its best efforts to cause any
necessary recordings or filings to be made with respect to the
Collateral.
SECTION 2.03. NEGATIVE COVENANTS OF THE SERVICER, THE ORIGINATOR AND
THE BORROWER. The Servicer, the Originator and the Borrower hereby agree that
during the Term of the Insurance Agreement, unless the Surety Provider shall
otherwise expressly consent in writing:
(a) Impairment of Rights. None of the Servicer, the
Originator or the Borrower shall take any action, or fail to take any
action, if such action or failure to take action may result in a
material adverse change as described in clause (b) of the definition of
Material Adverse Change with respect to the Servicer, the Originator or
the Borrower, or may interfere with the enforcement of any rights of
the Surety Provider under or with respect to the Transaction Documents.
The Servicer, the Originator or the Borrower shall give the Surety
Provider written notice of any such action or failure to act promptly
upon becoming aware of such action or failure to act. The Servicer, the
Originator and the Borrower shall furnish to the Surety Provider all
information requested by it that is reasonably necessary to determine
compliance with this Section (a).
(b) Adverse Selection Procedure. The Servicer, the
Originator and the Borrower shall not knowingly use any adverse
selection procedure in selecting
13
Receivables to be pledged to the Collateral Agent from the outstanding
Receivables that qualify under the Warehouse Loan Agreement for
inclusion in the Collateral.
(c) Waiver, Amendments, Etc. Neither the Servicer, the
Originator or the Borrower shall waive, modify or amend, or consent to
any waiver, modification or amendment of, any of the terms, provisions
or conditions of any of the Transaction Documents without the prior
written consent of the Surety Provider.
(d) Receivable Agreements; Charge-off Policy. Except as
otherwise permitted in the Warehouse Loan Agreement, the Servicer, the
Originator and the Borrower shall not alter or amend any Receivable,
their respective collection policies or their respective charge-off
policies in a manner that materially adversely affects the Surety
Provider unless the Surety Provider shall have previously given its
consent, which consent shall not be withheld unreasonably.
SECTION 2.04. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COLLATERAL AGENT AND STANDBY SERVICER. The Collateral Agent and the Standby
Servicer represent and warrant to, as of the Date of Issuance, and covenant with
the other parties hereto, each as to those matters relating to itself, as
follows:
(a) Due Organization and Qualification. The Collateral
Agent and the Standby Servicer are each a national banking association
or a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation. Each of
the Collateral Agent, and the Standby Servicer is duly qualified to do
business, is in good standing and has obtained all 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 in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction,
the Lenders or the Surety Provider.
(b) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Collateral Agent and
the Standby Servicer have been duly authorized by all necessary
corporate action and do not require any additional approvals or
consents of, or other action by or any notice to or filing with, any
Person, including, without limitation, any governmental entity or the
Collateral Agent's or the Standby Servicer's stockholders, which have
not previously been obtained or given by the Collateral Agent or the
Standby Servicer, as applicable.
(c) Noncontravention. Neither the execution and delivery
of the Transaction Documents by the the Collateral Agent or the Standby
Servicer, the consummation of the transactions contemplated thereby nor
the satisfaction of the terms and conditions of the Transaction
Documents:
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(i) conflicts with or results in any breach or
violation of any provision of the Organizational Documents of
the Collateral Agent or the Standby Servicer or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Collateral Agent or the Standby Servicer
or any of their respective material properties, including
regulations issued by an administrative agency or other
governmental authority having supervisory powers over the
Collateral Agent or the Standby Servicer;
(ii) constitutes a default by the Collateral
Agent or the Standby Servicer under or a breach of any
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Collateral Agent or the
Standby Servicer is a party or by which any of their
respective properties, which are individually or in the
aggregate material to the Collateral Agent or the Standby
Servicer, is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Collateral Agent
or the Standby Servicer, except as contemplated by the
Transaction Documents.
(d) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Collateral Agent, the
Standby Servicer or any of their subsidiaries, or any properties or
rights of the Collateral Agent, the Standby Servicer or any of their
subsidiaries, pending or, to the Collateral Agent's or the Standby
Servicer's knowledge after reasonable inquiry, threatened, which in any
case could reasonably be expected to result in a Material Adverse
Change with respect to Collateral Agent or the Standby Servicer.
(e) Valid and Binding Obligations. The Transaction
Documents to which they are parties, when executed and delivered by the
Collateral Agent and the Standby Servicer, will constitute the legal,
valid and binding obligations of the Collateral Agent and the Standby
Servicer, as applicable, 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. None of the Collateral Agent or the Standby Servicer will
at any time in the future deny that the Transaction Documents
constitute the legal, valid and binding obligations of the Collateral
Agent and the Standby Servicer, as applicable.
(f) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Collateral Agent or
the Standby Servicer in the conduct of their business violates any law,
regulation, judgment, agreement, order or decree applicable to the
Collateral Agent or the Standby Servicer that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Collateral Agent or the Standby Servicer. None of the
Collateral Agent or the Standby Servicer is in breach of or in default
under any applicable law or administrative regulation
15
of its respective jurisdiction of organization, or any department,
division, agency or instrumentality thereof or of the United States or
any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Collateral Agent or the Standby Servicer is a party or is otherwise
subject which, if enforced, would have a material adverse effect on the
ability of the Collateral Agent or the Standby Servicer, as the case
may be, to perform its respective obligations under the Transaction
Documents.
(g) Transaction Documents. Each of the representations
and warranties of the Collateral Agent and the Standby Servicer
contained in the Transaction Documents is true and correct in all
material respects, and the Collateral Agent and the Standby Servicer
hereby make each such representation and warranty to, and for the
benefit of, the Surety Provider as if the same were set forth in full
herein.
(h) Compliance and Amendments. The Collateral Agent and
the Standby Servicer shall comply in all material respects with the
terms and conditions of the Transaction Documents to which it is a
party and the Collateral Agent and the Standby Servicer shall not agree
to any amendment to or modification of the terms of any of the
Transaction Documents to which it is a party unless the Surety Provider
shall otherwise give its prior written consent.
ARTICLE III
APPOINTMENT OF THE COLLATERAL AGENT
SECTION 3.01. APPOINTMENT OF THE COLLATERAL AGENT. The Surety Provider
hereby appoints Norwest Bank Minnesota, National Association as its agent and
bailee to act on the Surety Provider's behalf as a Secured Party in accordance
with the terms of the Warehouse Loan Agreement and the other Transaction
Documents with respect to its interest in the Collateral. Norwest Bank
Minnesota, National Association hereby accepts and acknowledges such
appointment.
ARTICLE IV
THE SURETY BOND; REIMBURSEMENT
SECTION 4.01. ISSUANCE OF THE SURETY BOND. The Surety Provider agrees
to issue the Surety Bond on the Closing Date subject to satisfaction of the
conditions precedent set forth below:
(a) Payment of Initial Premium and Expenses. The
Servicer, the Originator and the Borrower shall agree to reimburse the
Surety Provider for or pay directly all fees and expenses identified in
Section 4.02 hereof as payable.
16
(b) Transaction Documents. The Surety Provider shall have
received a fully executed copy of the Premium Letter and a copy of each
of the Transaction Documents, in form and substance satisfactory to the
Surety Provider, duly authorized, executed and delivered by each party
thereto.
(c) Certified Documents and Resolutions. The Surety
Provider shall have received a copy of (i) the Organizational Documents
of the Servicer, the Originator, and the Borrower, (ii) the resolutions
of the Servicer's, the Originator's and the Borrower's Board of
Managers authorizing the sale and pledge, as applicable, of the
Receivables and the execution, delivery and performance by the
Servicer, the Originator and the Borrower of the Transaction Documents
and the transactions contemplated thereby, certified by the Secretary
or an Assistant Secretary of the Servicer, the Originator and the
Borrower (which certificate shall state that such Organizational
Documents and resolutions are in full force and effect without
modification on the Date of Issuance).
(d) Incumbency Certificate. The Surety Provider shall
have received a certificate of the Secretary or an Assistant Secretary
of the Servicer, the Originator and the Borrower certifying the names
and signatures of the officers of the Servicer, the Originator and the
Borrower authorized to execute and deliver the Transaction Documents
and that shareholder consent to the execution and delivery of such
documents is not necessary.
(e) Representations and Warranties; Certificate. The
representations and warranties of the Servicer, the Originator and the
Borrower set forth or incorporated by reference in this Insurance
Agreement shall be true and correct as of the Date of Issuance as if
made on the Date of Issuance, and the Surety Provider shall have
received a certificate of appropriate officers of the Servicer, the
Originator and the Borrower to that effect.
(f) Opinions of Counsel.
(i) Counsel to the Servicer, the Originator and
the Borrower shall have issued its favorable opinion, in form
and substance acceptable to the Surety Provider and its
counsel, regarding the limited liability company existence and
authority of the Servicer, the Originator and the Borrower and
the validity and enforceability of the Transaction Documents
against such parties.
(ii) Counsel to the Standby Servicer and
Collateral Agent shall have issued its favorable opinion, in
form and substance acceptable to the Surety Provider and its
counsel, regarding the corporate existence and authority of
the Standby Servicer and Collateral Agent and the validity and
enforceability of the Transaction Documents against such
party.
(iii) Counsel acceptable to the Surety Provider
shall have furnished its opinions, in form and substance
acceptable to the Surety Provider and its counsel,
17
regarding the sale of the Collateral, certain bankruptcy
issues and the tax treatment of the Notes under federal tax
laws.
(iv) Counsel acceptable to the Surety Provider
shall have issued its favorable opinions, in form and
substance acceptable to the Surety and its counsel, regarding
the perfection of the Collateral Agent's interest in the
Collateral.
(v) The Surety Provider shall have received such
other opinions of counsel, in form and substance acceptable to
the Surety Provider and its counsel, addressing such other
matters as the Surety Provider may reasonably request. Each
opinion of counsel delivered in connection with the
Transaction shall be addressed to and delivered to the Surety
Provider.
(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 the 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 that would make the
transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(i) Issuance of Ratings. The Surety Provider shall have
received confirmation that the risk secured by the Surety Bond
constitutes at least an investment grade risk by S&P and Xxxxx'x.
(j) No Default. No Default or Event of Default shall have
occurred.
(k) Additional Items. The Surety Provider shall have
received such other documents, instruments, approvals or opinions
requested by the Surety Provider or its counsel as may be reasonably
necessary to effect the Transaction, including, but not limited to,
evidence satisfactory to the Surety Provider and its counsel that the
conditions precedent, if any, in the Transaction Documents have been
satisfied.
(l) Conform to Documents. The Surety Provider and its
counsel shall have determined that all documents, certificates and
opinions to be delivered in connection with the Notes conform to the
terms of the Transaction Documents.
(m) Compliance With Premium Letter. All other terms,
conditions and requirements of the Premium Letter shall have been
satisfied.
SECTION 4.02. PAYMENT OF FEES AND PREMIUM.
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(a) Legal and Accounting Fees. The Servicer, the
Originator and the Borrower shall pay or cause to be paid, on the Date
of Issuance, legal fees, disbursements and all out of pocket expenses
incurred by the Surety Provider or agents of the Surety Provider in
connection with the issuance of the Surety Bond and any fees of the
Surety Provider's auditors in accordance with the terms of the Premium
Letter.
(b) Premium. In consideration of the issuance by the
Surety Provider of the Surety Bond, the Surety Provider shall be
entitled to receive the Premium as and when due in accordance with the
terms of the Premium Letter, first, pursuant to the Warehouse Loan
Agreement, and second, to the extent the amounts in subclause first are
not sufficient, directly from the Originator. For purposes of the
Warehouse Loan Agreement, the term "Premium Percentage" shall have the
meaning set forth in the Premium Letter. The Premium paid hereunder or
under the Warehouse Loan Agreement shall be nonrefundable without
regard to whether the Surety Provider makes any payment under the
Surety Bond or any other circumstances relating to the Notes or
provision being made for payment of the Notes prior to maturity. The
Servicer, the Borrower, the Originator and the Collateral Agent shall
make all payments of Premium to be made by them by wire transfer to an
account designated from time to time by the Surety Provider by written
notice to the Servicer, the Borrower, the Originator and the Collateral
Agent.
SECTION 4.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.
(a) In accordance with the priorities established in
Section 4.6(b) of the Warehouse Loan Agreement, the Surety Provider
shall be entitled to reimbursement for any payment made by the Surety
Provider under the Surety Bond, which reimbursement shall be due and
payable on the date that any amount is to be paid pursuant to a Notice
(as defined in the Surety Bond), in an amount equal to the amount to be
so paid and all amounts previously paid that remain unreimbursed,
together with interest on any and all amounts remaining unreimbursed
(to the extent permitted by law, if in respect of any unreimbursed
amounts representing interest) from the date such amounts became due
until paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate.
(b) Notwithstanding anything in Section 4.03(a) to the
contrary, the initial Servicer, the Borrower and the Originator agree
to reimburse the Surety Provider as follows: (i) from the Originator,
for payments made under the Surety Bond arising as a result of the
Originator's failure to repurchase any Receivable required to be
repurchased pursuant to Section 2.7 or Section 2.10 of the Warehouse
Loan Agreement or Section 6.2 of the First Tier Purchase Agreement,
together with interest on any and all amounts remaining unreimbursed
(to the extent permitted by law, if in respect of any unreimbursed
amounts representing interest) from the date such amounts became due
until paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate, and (ii) from the initial
Servicer, for payments made under the Surety Bond, arising as a result
of (A) the Servicer's failure to deposit into the Collection Account
any amount required to be so deposited pursuant to the Warehouse Loan
Agreement or (B) the initial
19
Servicer's failure to repurchase any Receivable required to be
repurchased under Section 3.2 or Section 3.7 of the Warehouse Loan
Agreement, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect to any
unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate.
(c) The initial Servicer, the Borrower and the Originator
agree to pay to the Surety Provider as follows: any and all charges,
fees, costs and out of pocket expenses as may be reasonably paid or
incurred by the Surety Provider or agent of the Surety Provider,
including, but not limited to, reasonable attorneys' and accountants'
fees and expenses, in connection with (i) any accounts established to
facilitate payments under the Surety Bond to the extent the Surety
Provider has not been immediately reimbursed on the date that any
amount is paid by the Surety Provider under the Surety Bond, (ii) the
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, in its capacity as such
a party, or the Transaction, or (iii) any amendment, waiver or other
action with respect to, or related to, any Transaction Document,
whether or not executed or completed; costs and expenses shall include
a reasonable allocation of compensation and overhead attributable to
the time of employees of the Surety Provider spent in connection with
the actions described in clause (ii) above, and the Surety Provider
reserves the right to charge a reasonable fee as a condition to
executing any waiver or consent proposed in respect of any of the
Transaction Documents.
(d) The initial Servicer, the Borrower and the Originator
agree to pay to the Surety Provider as follows: interest on any and all
amounts described in subsections (b), (c), (e) and (f) of this Section
4.03 from the date payable or paid by such party until payment thereof
in full, and interest on any and all amounts described in Section 4.02
hereof from the date due until payment thereof in full, in each case
payable to the Surety Provider at the Late Payment Rate per annum.
(e) The initial Servicer, the Borrower and the Originator
agree to pay to the Surety Provider as follows: any payments made by
the Surety Provider on behalf of, or advanced to the Servicer, the
Originator or the Borrower, respectively, including, without
limitation, any amounts payable by the Servicer, the Originator or the
Borrower pursuant to the Notes or any other Transaction Documents.
(f) Following termination of the Warehouse Loan Agreement
pursuant to Section 14.1 thereof, the Borrower agrees to reimburse the
Surety Provider for any Insured Payments required to be made pursuant
to the Surety Bond subsequent to the date of such termination.
20
All such amounts are to be immediately due and payable without demand.
SECTION 4.04. INDEMNIFICATION; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification
or any other rights of the Surety Provider pursuant hereto or under law
or equity, the Borrower, the initial Servicer, the Originator and any
successors thereto (other than the Standby Servicer) agree to pay, and
to protect, indemnify and save harmless, the Surety Provider and its
officers, directors, shareholders, employees, agents and each person,
if any, who controls the Surety Provider 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 reasonable expenses (including, without limitation, reasonable
fees and expenses of attorneys, consultants and auditors and reasonable
costs of investigations) or obligations whatsoever paid by the Surety
Provider (herein collectively referred to as "Liabilities") of any
nature arising out of or relating to the transactions contemplated by
the Transaction Documents by reason of:
(i) any act or omission of the Borrower, the
Servicer or the Originator, or the allegation thereof, in
connection with the offering, issuance, sale or delivery of
the Notes;
(ii) the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer,
employee or agent of the Servicer, the Originator or the
Borrower;
(iii) the violation by the Borrower, the Servicer
or the Originator of any federal or state trust, banking or
antitrust laws, rules or regulations in connection with the
issuance, offer and sale of the Notes or the transactions
contemplated by the Transaction Documents;
(iv) the violation by the Borrower, the Servicer,
or the Originator of any federal or state laws, rules or
regulations relating to the Transaction, including without
limitation the maximum amount of interest permitted to be
received on account of any loan of money or with respect to
the Receivables;
(v) the breach by the Servicer, the Originator
or the Borrower of any of its obligations under this Insurance
Agreement or any of the other Transaction Documents; and
(vi) the breach by the Servicer, the Originator
or the Borrower of any representation or warranty on the part
of the Servicer, the Originator or the Borrower contained in
the Transaction Documents or in any certificate or report
furnished or delivered to the Surety Provider thereunder.
21
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(b) Any party which proposes to assert the right to be
indemnified under this Section 4.04 will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against the Servicer,
the Originator or the Borrower under this Section 4.04, notify the
Servicer, the Originator or the Borrower of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. In
case any action, suit or proceeding shall be brought against any
indemnified party and it shall notify the Servicer, the Originator or
the Borrower of the commencement thereof, the Servicer, the Originator
or the Borrower shall be entitled to participate in, and, to the extent
that it shall wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
Servicer, the Originator or the Borrower to such indemnified party of
its election so to assume the defense thereof, the Servicer, the
Originator or the Borrower shall not be liable to such indemnified
party for any legal or other expenses other than reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action the defense of which
is assumed by the Servicer, the Originator or the Borrower in
accordance with the terms of this subsection (c), but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless the employment of counsel by such indemnified party has
been authorized by the Servicer, the Originator or the Borrower. The
Servicer, the Originator or the Borrower shall not be liable for any
settlement of any action or claim effected without its consent.
SECTION 4.05. PAYMENT PROCEDURE. In the event of any payment by the
Surety Provider, the Collateral Agent, the Servicer, the Originator and the
Borrower agree to accept the voucher or other evidence of payment as prima facie
evidence of the propriety thereof and the liability therefor to the Surety
Provider. All payments to be made to the Surety Provider under this Insurance
Agreement shall be made to the Surety Provider in lawful currency of the United
States of America in immediately available funds at the notice address for the
Surety Provider as specified in Section 7.02 hereof on the date when due or as
the Surety Provider shall otherwise direct by written notice to the other
parties hereto. In the event that the date of any payment to the Surety Provider
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 the Surety Provider under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.
ARTICLE V
FURTHER AGREEMENTS
22
SECTION 5.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Surety Provider is no longer
subject to a claim under the Surety Bond and the Surety Bond shall have been
surrendered to the Surety Provider for cancellation and (b) all amounts payable
to the Surety Provider by the Servicer, the Originator, the Administrative
Agent, the Collateral Agent, the Lender, the Standby Servicer, or the Borrower
or from any other source under the Transaction Documents and all amounts payable
under the Notes have been paid in full; provided, however, that the provisions
of Sections 4.02, 4.03, 4.04 and 5.06 hereof and this Section 5.01 shall survive
any termination of this Insurance Agreement.
SECTION 5.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
(a) Excepting at such times as a default in payment under
the Surety Bond shall exist, none of the Servicer, the Originator, the
Administrative Agent, the Collateral Agent, the Lender, the Standby
Servicer or the Borrower shall grant any waiver of rights under any of
the Transaction Documents to which any of them is a party without the
prior written consent of the Surety Provider, and any such waiver
without the prior written consent of the Surety Provider shall be null
and void and of no force or effect.
(b) To the extent permitted by law, the Servicer, the
Originator, the Administrative Agent, the Collateral Agent, the Lender,
the Standby Servicer and the Borrower agree that they 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 the Surety Provider may reasonably request and as may be
reasonably required in the Surety Provider's judgment to effectuate the
intention of or facilitate the performance of this Insurance Agreement.
23
SECTION 5.03. OBLIGATIONS ABSOLUTE.
(a) The obligations of the Servicer, the Originator, the
Collateral Agent, the Standby Servicer and the Borrower hereunder shall
be absolute and unconditional and shall be paid or performed strictly
in accordance with this Insurance 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 any of the Transaction Documents, the Notes or the
Surety Bond;
(ii) any exchange or release of any other
obligations hereunder;
(iii) the existence of any claim, setoff, defense,
reduction, abatement or other right that the Servicer, the
Originator, the Administrative Agent, the Collateral Agent,
the Lender, the Standby Servicer or the Borrower may have at
any time against the Surety Provider or any other Person;
(iv) any document presented in connection with
the Surety Bond 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 the Surety Provider under the
Surety Bond against presentation of a certificate or other
document that does not strictly comply with the terms of the
Surety Bond; or
(vi) any breach by the Servicer, the Originator,
the Administrative Agent, the Collateral Agent, the Lender,
the Standby Servicer or the Borrower of any representation,
warranty or covenant contained in any of the Transaction
Documents.
(b) The Servicer, the Originator, the Collateral Agent,
the Standby Servicer, the Borrower and any and all others who are now
or may become liable for all or part of the obligations of the
Servicer, the Originator, the Collateral Agent, the Standby Servicer or
the Borrower under this Insurance Agreement agree to be bound by this
Insurance 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 any 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
performance, default or enforcement of any payment hereunder, except as
required by the Transaction Documents; (iv) waive all rights of
abatement, diminution, postponement or deduction, or any defense other
than
24
payment, or any right of setoff or recoupment arising out of any breach
under any of the Transaction Documents by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to the
Servicer, the Originator, the Administrative Agent, the Collateral
Agent, the Lender, the Standby Servicer or the Borrower; (v) agree that
its liabilities hereunder shall, except as otherwise expressly provided
in this Section 5.03, 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 the Surety Provider 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, 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
Servicer, the Originator, the Administrative Agent, the Collateral
Agent, the Lender, the Standby Servicer or the Borrower from pursuing
any rights or remedies it may have against any other Person in a
separate legal proceeding.
SECTION 5.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Insurance 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 Servicer, the Originator, the
Administrative Agent, the Collateral Agent, the Standby Servicer or the
Borrower may assign its rights under this Insurance Agreement, or
delegate any of its duties hereunder, without the prior written consent
of the Surety Provider. Any assignment made in violation of this
Insurance Agreement shall be null and void.
(b) The Surety Provider shall have the right to give
participations in its rights under this Insurance Agreement and to
enter into contracts of reinsurance with respect to the Surety Bond
upon such terms and conditions as the Surety Provider may in its
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Surety Provider
of any of its obligations hereunder or under the Surety Bond.
(c) In addition, the Surety Provider 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 the Surety
Provider in connection therewith any rights of the Surety Provider
under the Transaction Documents or with respect to any real or personal
25
property or other interests pledged to the Surety Provider, or in which
the Surety Provider has a security interest, in connection with the
Transaction.
(d) Except as provided herein with respect to
participants and reinsurers, nothing in this Insurance Agreement shall
confer any right, remedy or claim, express or implied, upon any Person,
including, particularly, any of the Lenders, other than the Surety
Provider, against the Servicer, the Originator, the Administrative
Agent, Collateral Agent, the Lender, the Standby Servicer or the
Borrower, 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.
Neither the Collateral Agent nor any Lenders shall have any right to
payment from any Premium paid or payable hereunder or under the
Warehouse Loan Agreement or from any other amounts paid by the
Servicer, the Originator, the Collateral Agent, the Standby Servicer or
the Borrower pursuant to Section 4.02, 4.03 or 4.04 hereof.
(e) The Servicer, the Originator, the Borrower, the
Collateral Agent, the Lender, the Standby Servicer and the
Administrative Agent agree that the Surety Provider shall have all
rights of a third-party beneficiary in respect of the Warehouse Loan
Agreement and each other Transaction Document to which it is not a
signing party and hereby incorporate and restate their representations,
warranties and covenants, if any, as set forth therein for the benefit
of the Surety Provider.
SECTION 5.05. LIABILITY OF THE SURETY PROVIDER. Neither the Surety
Provider nor any of its officers, directors or employees shall be liable or
responsible for (a) the use that may be made of the Surety Bond by the
Administrative Agent or for any acts or omissions of the Administrative Agent in
connection therewith or (b) the validity, sufficiency, accuracy or genuineness
of documents delivered to the Surety Provider (or its Fiscal Agent) in
connection with any claim under the Surety Bond, 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 the Surety Provider
shall have actual knowledge thereof). In furtherance and not in limitation of
the foregoing, the Surety Provider (or its Fiscal Agent) may accept documents
that appear on their face to be in order, without responsibility for further
investigation.
SECTION 5.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS.
(a) So long as this Agreement is in effect, and for one
year and one day following its termination, none of the parties hereto
will file any involuntary petition or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy
or similar law against the Borrower.
(b) So long as this Agreement is in effect, and for one
year and one day following the date on which the latest maturing
commercial paper note issued by the Lender is paid, none of the parties
hereto will file any involuntary petition or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation
26
proceeding or other proceedings under any federal or state bankruptcy
or similar law against the Lender.
SECTION 5.07. ADMINISTRATIVE AGENT, COLLATERAL AGENT, LENDER, STANDBY
SERVICER, BORROWER, ORIGINATOR AND SERVICER TO JOIN IN ENFORCEMENT ACTION. To
the extent necessary to enforce any right of the Surety Provider in or remedy of
the Surety Provider under any Receivable, the Administrative Agent, the
Collateral Agent, the Lender, the Borrower, the Servicer and the Originator
agree to join in any action initiated by the Collateral Agent or the Surety
Provider for the protection of such right or exercise of such remedy.
SECTION 5.08. SUBROGATION. To the extent of any payments under the
Surety Bond, but subject to the priorities set forth in Section 4.6 of the
Warehouse Loan Agreement, the Surety Provider shall be fully subrogated to any
remedies against the Borrower, the Servicer or the Originator or in respect of
the Receivables available to the Lenders (or the Administrative Agent on behalf
of the Lenders) under the Warehouse Loan Agreement. The Collateral Agent
acknowledges such subrogation and, further, agrees to execute such instruments
prepared by the Surety Provider and to take such reasonable actions as, in the
sole judgment of the Surety Provider, are necessary to evidence such subrogation
and to perfect the rights of the Surety Provider to receive any moneys paid or
payable under the Warehouse Loan Agreement.
ARTICLE VI
DEFAULTS; REMEDIES
SECTION 6.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) any representation or warranty made by the Servicer,
the Originator, the Collateral Agent, the Standby Servicer or the
Borrower hereunder or under the Transaction Documents, or in any
certificate furnished hereunder or under the Transaction Documents,
shall prove to be untrue or incomplete in any material respect;
(b) (i) the Servicer, the Originator, the Collateral
Agent, the Standby Servicer or the Borrower shall fail to pay when due
any amount payable by the Servicer, the Originator, the Collateral
Agent, the Standby Servicer or the Borrower hereunder or (ii) a
legislative body has enacted any law that declares or a court of
competent jurisdiction shall find or rule that any Transaction Document
is not valid and binding on the Servicer, the Originator, the
Collateral Agent, the Standby Servicer or the Borrower;
(c) the occurrence of an "Event of Default" under the
Warehouse Loan Agreement (as defined therein);
(d) any failure on the part of the Servicer, the
Originator, the Collateral Agent, the Standby Servicer or the Borrower
duly to observe or perform in any material respect any other of the
covenants or agreements on the part of the Servicer, the Originator,
the
27
Collateral Agent, the Standby Servicer or the Borrower contained in
this Insurance Agreement or in any other Transaction Document which
continues unremedied for a period of 30 days with respect to this
Insurance Agreement, or, with respect to any other Transaction
Document, beyond any cure period provided for therein, after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer, the Originator, the
Collateral Agent, the Standby Servicer or the Borrower, as applicable,
by the Surety Provider (with a copy to the Collateral Agent and the
Administrative Agent) or by the Collateral Agent (with a copy to the
Surety Provider and the Administrative Agent);
(e) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer, the Originator or the Borrower and such
decree or order shall have remained in force undischarged or unstayed
for a period of 90 consecutive days;
(f) the Servicer, the Originator or the Borrower shall
consent to the appointment of a conservator or receiver or liquidator
or other similar official in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer, the Originator or the Borrower or of or
relating to all or substantially all of the property of either;
(g) the Servicer, the Originator or the Borrower shall
admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(h) the failure of the Borrower and the Originator to
comply with, or maintain the accuracy of, the Opinion Facts and
Assumptions.
SECTION 6.02. REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the
Surety Provider may exercise any one or more of the rights and remedies
set forth below:
(i) exercise any rights and remedies under the
Transaction Documents in accordance with the terms of the
Transaction Documents or direct the Collateral Agent to
exercise such remedies in accordance with the terms of the
Transaction Documents; or
28
(ii) take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect
the amounts then due under the Transaction Documents or to
enforce performance and observance of any obligation,
agreement or covenant of the Servicer, the Originator, the
Collateral Agent, the Standby Servicer or the Borrower under
the 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 the Transaction Documents or
existing at law or in equity. No delay or omission to exercise any
right or power accruing under the Transaction Documents upon the
happening of any event set forth in Section 6.01 hereof 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 the Surety
Provider to exercise any remedy reserved to the Surety Provider in this
Article, it shall not be necessary to give any notice other than such
notice as may be required in this Article VI.
SECTION 6.03. WAIVERS.
(a) No failure by the Surety Provider to exercise, and no
delay by the Surety Provider in exercising, any right hereunder shall
operate as a waiver thereof. The exercise by the Surety Provider of any
right hereunder shall not preclude the exercise of any other right, and
the remedies provided herein to the Surety Provider are declared in
every case to be cumulative and not exclusive of any remedies provided
by law or equity.
(b) The Surety Provider shall have the right, to be
exercised in its complete discretion, to waive any Event of Default
hereunder, by a writing setting forth the terms, conditions and extent
of such waiver signed by the Surety Provider and delivered to the
Servicer, the Originator, the Administrative Agent, the Collateral
Agent, the Lender, the Standby Servicer and the Borrower. Unless such
writing expressly provides to the contrary, any waiver so granted shall
extend only to the specific event or occurrence which gave rise to the
Event of Default so waived and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. No act or course of dealing shall be deemed to constitute
an amendment, modification or termination hereof.
29
SECTION 7.02. 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 or personally delivered
or telecopied to the recipient as follows:
(a) To the Surety Provider:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio Management-Structured
Finance
(IPM-SF) (Financial Pacific Funding Corp.
Warehouse Facility)
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(in each case in which notice or other communication
to the Surety Provider refers to an Event of Default,
a claim on the Surety Bond or with respect to which
failure on the part of the Surety Provider 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 Surety Provider and shall be
marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Borrower:
Financial Pacific Funding, LLC
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Winter
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(c) To the Servicer and the Originator:
Financial Pacific Leasing, LLC
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Winter
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
30
(d) To the Administrative Agent:
Bank of America National Trust and Savings
Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx XX, 00000
Attention: Global Asset-Backed Securitization Group
NationsBanc Xxxxxxxxxx Securities, LLC
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(e) To the Standby Servicer and Collateral Agent
Norwest Bank Minnesota, National Association
Sixth and Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Department, Asset-Backed
Securities
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
(f) To the Lender
Receivables Capital Corporation
c/o Merrill Xxxxx Money Markets Inc.
World Financial Center - North Tower
000 Xxxxx Xxxxxx -00xx Xxxxx
Xxx Xxxx, XX 00000-0000
With a copy to:
Bank of America National Trust and Savings
Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx XX, 00000
Attention: Global Asset-Backed Securitization Group
NationaBanc Xxxxxxxxxx Securities, LLC
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
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 7.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto
31
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 7.04. GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CHOICE OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
SECTION 7.05. CONSENT TO JURISDICTION.
(a) 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 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 any of the 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 related 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) Except as provided in Section 5.06 herein, nothing
contained in this Insurance Agreement shall limit or affect the Surety
Provider's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Transaction
Documents against any party hereto or its or their property in the
courts of any jurisdiction.
SECTION 7.06. CONSENT OF THE SURETY PROVIDER. In the event that the
consent of the Surety Provider is required under any of the Transaction
Documents, the determination whether to grant or withhold such consent shall be
made by the Surety Provider in its sole discretion without any
32
implied duty towards any other Person except in those instances where
this Agreement or such other Transaction Document expressly requires
reasonable discretion.
SECTION 7.07. 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 7.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
SECTION 7.09. 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 any of the 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 7.10. LIMITED LIABILITY. No recourse under any Transaction
Document 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 any of the
Transaction Documents, the Notes or the Surety Bond, it being expressly agreed
and understood that each Transaction Document is solely a corporate obligation
or limited liability company obligation, as applicable, of each party hereto,
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 any
Transaction Document is hereby expressly waived as a condition of and in
consideration for the execution and delivery of this Insurance Agreement.
SECTION 7.11. ENTIRE AGREEMENT. The Transaction Documents and the
Surety Bond set forth the entire agreement between the parties with respect to
the subject matter thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of the subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
33
IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By /s/ MBIA INSURANCE CORPORATION
----------------------------------
Title
-------------------------------
FINANCIAL PACIFIC LEASING, LLC, as
Originator and as Servicer
By /s/ Xxxx X. Winter
----------------------------------
Title Chief Financial Officer
FINANCIAL PACIFIC FUNDING, LLC, as
Borrower
By /s/ Xxxx X. Winter
----------------------------------
Title Chief Financial Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Standby Servicer and
Collateral Agent
By /s/ Xxxxxxx X. Xxxxx
----------------------------------
Title Assistant Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent and Bank Agent
By /s/ BANK OF AMERICA NATIONAL TRUST
----------------------------------
AND SAVINGS ASSOCIATION
-------------------------------------
Title
-------------------------------
RECEIVABLES CAPITAL CORPORATION, as
Lender
By /s/ RECEIVABLES CAPITAL CORPORATION
-----------------------------------
Title
--------------------------------
