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EXHIBIT 10.48
CREDIT AGREEMENT
By and Between
NCOP CAPITAL, Inc.
as Borrower
and
CFSC CAPITAL CORP. XXXIV
as Lender
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Dated as of November 26, 2002
CREDIT AGREEMENT
This Credit Agreement (this "Agreement") is made as of November 26,
2002, by and between NCOP CAPITAL, Inc., a Nevada corporation (the "Borrower")
and CFSC CAPITAL CORP. XXXIV, a Delaware corporation (the "Lender").
Recitals
WHEREAS, the Borrower may from time to time wish to purchase a pool or
pools of assets, which assets include consumer finance receivables.
WHEREAS, the Borrower has requested that the Lender consider making
loans to the Borrower from time to time to finance a portion of the purchase
price to be paid by the Borrower for such pools of accounts.
WHEREAS, the Lender has agreed to consider making such financing
available to the Borrower pursuant to the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Lender and the Borrower
hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in the preamble hereto have the meanings therein
assigned to them;
(b) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP; and
(d) all accounting terms, unless otherwise specified, shall be deemed
to refer to Persons and their subsidiaries on a consolidated basis in
accordance with GAAP.
"Accepted Borrowing Request" shall have the meaning set forth in
Section 2.1(b).
"Account" means an obligation of an Obligor to pay money, whether under
a consumer finance receivable, open account balance, installment sales or
payment agreement, deferred payment contract or any other arrangement
whatsoever, or a check, as set forth and described in a Purchase Agreement, and
all unpaid balances due from the Obligors with respect to such obligations,
together with all documents evidencing such Obligors' agreement to make payment
of such unpaid balances, including without limitation each agreement, and each
promissory note, loan agreement, receivable, chattel paper, check, instrument,
payment agreement, contract, installment sales agreement or other obligation or
promise to pay of an Obligor, all as described and referred to in a Purchase
Agreement.
"Adequate Security" means security acceptable to the Lender in the
exercise of its reasonable discretion in light of all circumstances in
connection with the tender of such security, whether in the nature of payment,
documentation, indemnity or a combination thereof.
"Affiliate Subordinated Loan" shall have the meaning set forth in
Section 2.9.
"Affiliated Party" means a Person which is (a) related (by blood or
marriage) to, controlling or controlled by, or under common control with, or
common ownership of, the Borrower, the Servicer or the Parent or (b) any member
or equity holder of the Borrower, the Servicer or the Parent which holds fifty
percent (50%) or more of the membership or other equity interests in the
Borrower, the Servicer or the Parent; provided, however, an Excluded Affiliate
shall not be deemed an "Affiliated Party".
"Agreement" means this Credit Agreement and all exhibits, amendments
and supplements hereto.
"Asset" shall mean, with respect to an Asset Pool, each Account and any
property or other right obtained by the Borrower in connection with collection
of any such Account or in substitution therefor, all of which constituting a
part of the Asset Pool into which such Account was initially delivered.
"Asset Pool" shall mean all Accounts and other Assets described in a
Borrowing Request or an Accepted Borrowing Request, as the context may require,
together with (a) each and every Asset obtained in replacement or satisfaction
of or substitution for, any such Account so purchased, (b) each and every item
of property obtained by the Borrower as a result of its collection activities
with respect to any such Account, (c) each and every item of collateral or
security, including all security interests, liens, guarantees and other
interests securing payment of any Account, and all other rights and interests of
the Borrower with respect to each Account, (d) each judgment rendered against an
Obligor in respect of an Account, together with all lien rights related thereto,
(e) Asset Pool Proceeds derived from or paid or payable with respect thereto,
together with any and all earnings thereon and (f) each and every other right,
claim and interest associated therewith.
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"Asset Pool Equity Contribution" shall mean, with respect to each Asset
Pool (or the applicable portion of an Asset Pool in connection with a Forward
Flow Purchase Agreement), that portion of the Total Cost of an Asset Pool (or
the applicable portion of an Asset Pool in connection with a Forward Flow
Purchase Agreement) not funded with proceeds of a Loan, which, unless otherwise
approved by the Lender in an Approved Borrowing Request, shall be ten percent
(10%) of such Total Cost.
"Asset Pool Proceeds" shall mean, with respect to an Asset Pool, any
and all payments, revenues, income, receipts, collections, recoveries and other
proceeds or assets received with respect to such Asset Pool, including (without
limitation) (a) payments of principal, interest, fees, late charges,
insufficient funds charges, guaranty payments and any interest thereon, credit
insurance payments and other cash receipts on account of any Asset in such Asset
Pool, (b) payments of interest and principal paid to the Borrower in connection
with an Affiliate Subordinated Loan pursuant to the NCOP Lakes Credit Agreement,
(c) interest on the Collateral Account or any other account created in
connection herewith, (d) legal fees, credit insurance costs, guaranty fees and
other amounts recovered on account of any Asset in such Asset Pool, to the
extent the obligation giving rise thereto has previously been paid or is
otherwise not due and payable with any such receipts, (e) settlements,
compromises, liquidations, foreclosure proceeds, dispositions, sales, transfers
or other proceeds, whether cash or otherwise, received as a result of or in any
way in connection with collection activities related to any Asset or in
connection with the sale, transfer or disposition of any Asset constituting a
part of such Asset Pool and (f) payments, fees, rebates, refunds, commissions,
kickbacks, rakeoffs, discounts, deductions, whether cash or otherwise, received
by Borrower, or any Affiliated Party, as a result of or in any way in connection
with collection activities related to any Asset or in connection with the sale,
disposition or transfer of any Asset constituting a part of such Asset Pool.
"Asset Pool Seller" shall mean, with respect to an Asset Pool, the
party described in a Borrowing Request which has agreed to sell a specified
Asset Pool to the Borrower pursuant to the terms and conditions of a Purchase
Agreement; provided, that, in connection with an assignment of a Purchase
Agreement to the Borrower from the Parent or a Purchase Affiliate, as
applicable, in connection with Section 2.1(g) hereof, the Asset Pool Seller
shall be deemed to be the Person (who shall not be an Affiliated Party)
initially selling such Asset Pool to the Parent or Purchase Affiliate, as
applicable.
"Asset Pool Shortfall Amount" shall have the meaning set forth in
Section 2.9.
"Base Rate" shall mean the rate of interest published from time to time
as the "prime rate" in The Wall Street Journal under the heading "Money Rates",
with each change in the base rate becoming effective on the corresponding day
any change in such "prime rate" is so published; provided, however, that (i) if
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more that one such "prime rate" is published therein, the base rate shall be the
highest such rate and (ii) if the "prime rate" is no longer published therein,
the base rate shall be a substantially comparable index selected by the Lender
in its reasonable discretion.
"Borrower" shall have the meaning specified in the preamble.
"Borrowing Date" shall have the meaning specified in Section 2.1(d).
"Borrowing Request" shall have the meaning set forth in Section 2.1(a).
"Business Day" shall mean any day other than (a) a Saturday or Sunday
and (b) a day on which banking institutions in the States of Minnesota, Nevada
and Pennsylvania are authorized or obligated by law, executive order or
governmental decree to be closed.
"Change of Control" shall mean:
(a) any event, circumstance or occurrence that results in (i) the
Parent holding and owning, directly or indirectly, less than one hundred
percent (100%) of the issued and outstanding equity interests in the
Borrower, free and clear of all liens, security interests and other
encumbrances; or (ii) NCO Group, Inc. holding and owning less than fifty
percent (50%) of the issued and outstanding equity interests in either the
Borrower or the Servicer, free and clear of all liens, security interests
and other encumbrances;
(b) the filing of a petition under the United States Bankruptcy Code
naming the Borrower or the Parent as debtor; or
(c) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall no longer be President and Chief Executive
Officer of the Parent.
"Collateral Account" shall have the meaning set forth in Section 2.7.
"Collateral Account Agreement" shall mean the Collateral Account
Agreement by and among the Borrower, the Servicer, the Lender and the Collateral
Agent as to the deposit of Asset Pool Proceeds to one or more Collateral
Accounts.
"Collateral Agent" shall initially mean Citizens Bank, N.A. and if
thereafter replaced, shall mean any replacement or permitted successor or
assignee thereof pursuant to the Collateral Account Agreement.
"Collection Period" shall mean, with respect to an Asset Pool, a period
commencing on the initial Borrowing Date for such Asset Pool and continuing
through and including Sunday of that week and thereafter each period commencing
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on Monday of each week and continuing through the following Sunday (unless
otherwise agreed to in writing by the Lender and the Borrower) until all Assets
constituting a part of such Asset Pool have been collected, sold, abandoned or
otherwise disposed of to the satisfaction of the Borrower and the Lender.
"Contingent Payment" shall mean, with respect to each Asset Pool, a
payment in an amount equal to the amount determined by multiplying the
Contingent Payment Percentage and the amount of all remaining Asset Pool
Proceeds generated from Assets in such Asset Pool after the payments
contemplated in Section 2.8(a) through (i) have been made with respect to such
Asset Pool.
"Contingent Payment Percentage" shall mean, with respect to each Asset
Pool, forty percent (40%), or such other amount as may be set forth in the
applicable Accepted Borrowing Request.
"Default" shall mean an event that, with giving of notice or passage of
the grace period (if any) or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 2.3(b).
"Distribution Date" shall mean, with respect to an Asset Pool,
Wednesday of each week (unless otherwise agreed in writing by the Lender and the
Borrower) commencing on the first such specified day following a Borrowing Date
and continuing thereafter until all Assets constituting a part of such Asset
Pool have been collected, sold, abandoned or otherwise disposed of to the
satisfaction of the Borrower and the Lender; provided, however, that if on the
last day of any Collection Period Asset Pool Proceeds then on deposit in the
Collateral Account are less than $20,000 the Wednesday following such Collection
Period shall not constitute a Distribution Date hereunder unless such Wednesday
is the last Wednesday of the month, in which event such Wednesday shall
constitute a Distribution Date hereunder regardless of the amount of Asset Pool
Proceeds then on deposit in the Collateral Account.
"Distribution Report" shall have the meaning set forth in Section 2.7.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" shall have the meaning specified in Section
8.1.
"Excluded Party" means (a) Inovision-Medclr-NCOP-F, L.L.C.; (b)
Inovision-Medclr-NCOP-NF, LLC; (c) Inovision-Medclr-NCOP Ventures, LLC; (d)
Inovision-Medclr Portfolio Group, LLC.; (e) NCOP/▇▇▇▇▇▇, Inc.; and (f) any other
joint venture by NCO Group, Inc. and ▇▇▇▇▇▇, Inc.
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"Exclusivity Agreement" means that certain letter agreement, dated
August 19, 2002, among the Lender, NCOP Lakes, the Servicer, and certain other
related parties as therein described, as to the Lender's exclusive right to
finance Assets acquired by such parties and other Affiliated Parties as
described therein.
"Facility Termination Date" shall mean (i) the date upon which the
Borrower has completed full performance of the Obligations, or (ii) after the
occurrence of an Event of Default, the date so declared by the Lender after the
Lender has fully exercised all of its rights and remedies hereunder.
"Floating Rate" shall mean, with respect to a Loan, an annual rate of
interest equal to the Base Rate plus three and one quarter percent (3.25%).
"Forward Flow Purchase Agreement" shall have the meaning specified in
Section 2.1(c).
"Funding Termination Date" shall mean (i) the earlier of (a) November
26, 2006, or (b) the date the Lender demands payment of the Obligations pursuant
to Section 8.2, or (ii) the date upon which a Change of Control is effective,
upon written declaration of the Lender to the Borrower that it will no longer
consider Borrowing Requests, or (iii) the date upon which the Lender delivers a
written declaration to the Borrower that it will no longer consider Borrowing
Requests pursuant to Section 8.2.
"GAAP" shall mean generally accepted accounting principles.
"Indemnitees" shall have the meaning specified in Section 9.6.
"Lender" shall have the meaning specified in the preamble.
"Lender Affiliate" shall mean any Person directly or indirectly
controlling or controlled by or under direct or common control with the Lender,
or any Person that has purchased undivided participating interests in a Note
pursuant to a participation interest sale agreement. For purposes of this
definition, "control" when used with respect to any specified Person, means
ownership of a majority of the voting ownership interests of the Person
controlled.
"Loan" shall mean, with respect to an Asset Pool, the loan made by the
Lender to the Borrower pursuant to Section 2.1.
"Loan Collateral" shall have the meaning set forth in Section 3.1.
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"Loan Costs" shall mean those out-of-pocket payments, costs and
expenses paid or incurred by the Lender pursuant to Section 9.5.
"Loan Documents" shall mean this Agreement, the Security Agreement, the
Collateral Account Agreement, the Servicing Agreement, the Exclusivity
Agreement, and, as and when issued, each Note and any other instrument, document
or agreement entered into by the Borrower or the Servicer for the benefit of the
Lender to evidence or secure any Loan, in each case as amended, supplemented or
modified with the consent of the Lender from time to time.
"Loan Maturity Date" shall mean, with respect to a Loan, (i) the final
maturity date specified in the Note evidencing the Borrower's obligation to
repay such Loan, which shall be twenty-four (24) months after the initial
funding date of such Loan or, (ii) in the event of a Loan related to a Forward
Flow Purchase Agreement, the final maturity date specified in the Note
evidencing the Borrower's obligation to repay such Loan, which shall be the sum
of (a) twenty-four (24) months after the initial funding date of such Loan and
(b) one-half of the commitment period under such Forward Flow Purchase
Agreement, in no event, however, to exceed thirty (30) months.
"NCOP Lakes" means NCOP Lakes, Inc., a Nevada corporation.
"NCOP Lakes Credit Agreement" shall mean that certain credit agreement
by and between NCOP Lakes and the Lender dated August 19, 2002.
"Note" shall mean, with respect to an Asset Pool, the promissory note
of the Borrower payable to the order of the Lender, as described in Section 2.2,
evidencing a Loan made by the Lender with respect to such Asset Pool pursuant to
Section 2.1, including all replacements, extensions, restatements and
substitutions therefor.
"Obligations" shall mean (i) all advances made under this Agreement,
whether or not evidenced by a Note, (ii) all indebtedness evidenced by each
Note, including interest thereon and any extensions, renewals or replacements
thereof, (iii) any Contingent Payments and (iv) each and every other debt,
liability and obligation of every type and description which the Borrower may
now or at any time hereafter owe to the Lender pursuant to this Agreement or any
other Loan Document, whether such debt, liability or obligation now exists or is
hereafter created or incurred and whether it is or may be direct or indirect,
due or to become due, absolute or contingent, primary or secondary, liquidated
or unliquidated, or sole, joint, several or joint and several.
"Obligor" shall mean the customer, obligor, maker, borrower or other
party primarily obligated to pay an Account.
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"Parent" shall mean NCO Portfolio Management, Inc., a Delaware
corporation.
"Permitted Lien" shall mean
(i) a lien for a tax, assessment or other governmental charge not yet
due and payable, or which is being contested in good faith by appropriate
proceedings, which, during the pendency thereof prevents (a) the collection
of, or realization on the lien, tax, assessment or other governmental
charge so contested, (b) the sale, forfeiture or loss of any Asset or any
part thereof, and (c) any interference with the collection or use of any
Asset or any portion thereof, and for which the Borrower has made adequate
reserves therefor in accordance with GAAP, and has given the Lender such
security therefor as may be demanded by the Lender;
(ii) a lien for which the Borrower, within ten (10) days of its
attachment, has provided evidence reasonably satisfactory to the Lender
that the same shall have been satisfied and terminated; and
(iii) a lien for the benefit of the Lender.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" shall mean an employee benefit plan or other plan maintained for
employees and covered by Title IV of ERISA.
"Projected Accrual Schedule" shall have the meaning set forth in
Section 2.1(a).
"Purchase Affiliate" shall mean any Person other than the Parent,
Borrower or Servicer, directly or indirectly controlling or controlled by or
under direct or indirect common control with the Parent.
"Purchase Agreement" shall mean the asset or account purchase and sale
agreement by and between the Borrower and an Asset Pool Seller pursuant to which
such Asset Pool Seller agrees to sell a specified Asset Pool to the Borrower for
a specified purchase price; provided, that, in connection with an assignment to
the Borrower of a Purchase Agreement from the Parent or a Purchase Affiliate, as
applicable, in connection with Section 2.1(g) hereof, the Purchase Agreement
shall be deemed to be the asset or account purchase and sale agreement by and
between the Parent or Purchase Affiliate, as applicable, and the seller named
therein, as the same shall have been assigned to the Borrower in accordance with
Section 2.1(g) and the Exclusivity Agreement.
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"Purchase Expenses" shall mean, with respect to an Asset Pool (or the
applicable portion of an Asset Pool in connection with a Forward Flow Purchase
Agreement), the lesser of (a) the maximum estimated expenses to be incurred in
connection with the purchase of an Asset Pool (or the applicable portion of an
Asset Pool in connection with a Forward Flow Purchase Agreement), as set forth
in the related Borrowing Request, or (b) the sum of (i) any brokers' fees
incurred in connection with acquisition of an Asset Pool (or the applicable
portion of an Asset Pool in connection with a Forward Flow Purchase Agreement),
not to exceed one percent (1%) of the proposed purchase price for such Asset
Pool (or the applicable portion of an Asset Pool in connection with a Forward
Flow Purchase Agreement) and (ii) the out-of-pocket legal costs and expenses
incurred by the Borrower and the Lender in connection with the negotiation,
preparation and consummation of the related Purchase Agreement, the closing of
the purchase by the Borrower of such Asset Pool (or the applicable portion of an
Asset Pool in connection with a Forward Flow Purchase Agreement) and the making
of the Loan or Loans secured by such Asset Pool (or the applicable portion of an
Asset Pool in connection with a Forward Flow Purchase Agreement) and (iii)
out-of-pocket costs and expenses incurred by the Borrower in connection with its
due diligence investigation of the Asset Pool (or the applicable portion of an
Asset Pool in connection with a Forward Flow Purchase Agreement), but only to
the extent such costs and expenses have been included in a due diligence budget
submitted to and approved by the Lender in advance.
"Response Period" shall have the meaning specified in Section 2.1(a).
"Security Agreement" shall mean the Security Agreement from the
Borrower to the Lender pursuant to which the Borrower grants to the Lender a
security interest in, among other things, all Loan Collateral to secure payment
of the Obligations.
"Servicer" shall initially mean NCO Financial Systems, Inc., a
Pennsylvania corporation, and, if thereafter replaced, shall mean any
replacement or permitted successor or assign thereof pursuant to the terms and
conditions of the Servicing Agreement.
"Servicing Agreement" shall have the meaning set forth in Section 3.3.
"Servicer Default" shall mean an "Event of Default" as defined in the
Servicing Agreement.
"Servicing Fee" shall mean, with respect to an Asset Pool, the fee
calculated in accordance with the Servicing Agreement, unless otherwise agreed
by the Lender, the Servicer and the Borrower in an Accepted Borrowing Request
"Total Cost" shall mean, with respect to an Asset Pool (or the
applicable portion of an Asset Pool in connection with a Forward Flow Purchase
Agreement), an amount equal to the price actually paid by the Borrower to
purchase such Asset Pool (or the applicable portion of an Asset Pool in
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connection with a Forward Flow Purchase Agreement) pursuant to the related
Purchase Agreement (or related Forward Flow Purchase Agreement) (which in no
event shall be greater than the purchase price (and closing adjustments) with
respect thereto approved by the Lender in the Accepted Borrowing Request for
such Asset Pool).
"UCC" means the Uniform Commercial Code as in effect from time to time
in Minnesota or in any state whose laws are held to govern the creation,
perfection or foreclosure of any security interest granted pursuant to the
Security Agreement.
ARTICLE II
LOAN FACILITIES
Section 2.1 Loans to Purchase Asset Pools.
(a) Requests for Borrowing. From time to time during the period from
the date hereof to and including the Funding Termination Date, the Borrower
may present to the Lender written information describing a particular Asset
Pool (i) with respect to which the Borrower intends to submit an offer to
purchase and (ii) requesting that the Lender make a Loan to the Borrower to
finance up to ninety percent (90%) of the Total Cost of such Asset Pool.
Each such request for a Loan hereunder shall be in substantially the form
of Exhibit A hereto (each a "Borrowing Request"), and shall be accompanied
by the relevant bid package (including, if available, the proposed Purchase
Agreement (or Forward Flow Purchase Agreement, if applicable and available)
to be entered into if the Borrower is the successful bidder for such Asset
Pool (or in the case of a Purchase Agreement assigned by the Parent or a
Purchase Affiliate, as applicable, in connection with Section 2.1(g), the
Purchase Agreement so assigned), all relevant information known to the
Borrower regarding the Accounts comprising such Asset Pool, the proposed
Servicing Fee for collection of such Accounts, projections of the
Borrower's anticipated recoveries, cash flows and net returns to be
obtained upon collection of such Accounts, a projection of the combined
interest and Contingent Payments to be paid to the Lender over the expected
term of such Asset Pool as contemplated in Treasury Regulation ss.
1.1275-4(b), which projection shall constitute the accrual for federal
income tax purposes, of the Borrower's interest deductions and the Lender's
interest income with respect to such Asset Pool (the "Projected Accrual
Schedule") and such other information as the Lender may reasonably request.
The Lender shall accept or reject a Borrowing Request within five (5)
Business Days (the "Response Period"), after receipt thereof from the
Borrower. The Lender's failure to accept a Borrowing Request within the
Response Period shall be deemed a rejection of the Borrowing Request by the
Lender. Notwithstanding anything in the foregoing to the contrary, the
Lender's decision to accept or reject a Borrowing Request shall be in the
Lender's sole and absolute discretion and the Lender may decline any
Borrowing Request for any reason (or no reason), without notification,
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justification or explanation, and without regard to whether or not the
Lender has given any prior indication of interest or oral approval with
respect to the specified Asset Pool.
(b) Acceptance of Borrowing Request. Any acceptance of a Borrowing
Request shall be evidenced by the Lender's execution and return to the
Borrower of such Borrowing Request, and shall be subject to all terms and
conditions of this Agreement and in the Borrowing Request so accepted (each
an "Accepted Borrowing Request"). An Accepted Borrowing Request delivered
to the Borrower by the Lender shall constitute the Lender's commitment,
subject to satisfaction of all applicable terms and conditions of this
Agreement, to make a Loan to the Borrower to fund up to ninety percent
(90%) of the Total Cost of the Asset Pool, as set forth in such Accepted
Borrowing Request; provided, however, that the Lender's commitment to make
a Loan to the Borrower to finance the purchase of an Asset Pool shall not
constitute a revolving commitment and the Borrower shall have no right to
reborrow any amounts repaid to the Lender pursuant to an Accepted Borrowing
Request. An Accepted Borrowing Request shall expire and shall have no
further force or effect if (i) the Borrower is not the successful bidder
for the specified Asset Pool at a purchase price which is not in excess of
the anticipated purchase price described in such Borrowing Request, (ii)
the Borrower does not consummate its purchase of such Asset Pool pursuant
to the terms and conditions of the related Purchase Agreement and as
contemplated in the related Accepted Borrowing Request within thirty (30)
calendar days following issuance of the Accepted Borrowing Request by the
Lender (unless (A) such period of time is extended in writing by the Lender
or (B) the Asset Pool Seller has unilaterally extended the closing date for
purchase of an Asset Pool and the Borrower is unable to contest any such
extension) or (iii) a Default or Event of Default shall occur and shall be
continuing under this Agreement.
(c) Additional Provisions Relating to Accounts and other Assets
Purchased under Forward Flow Purchase Agreements. The Borrower and the
Lender contemplate that certain of the Purchase Agreements will provide for
the purchase by the Borrower from an Asset Pool Seller of Accounts and
other Assets on a periodic basis for a specified period of time (for
example, the monthly purchase of Accounts and other Assets during a
specified period of time) (each such Purchase Agreement is herein called a
"Forward Flow Purchase Agreement"). All Accounts and other Assets purchased
by the Borrower during a period of twelve (12) months (or such shorter
period as the Lender shall agree to in writing) under a Forward Flow
Purchase Agreement shall constitute a single Asset Pool for all purposes of
this Agreement and the other Loan Documents. The Loan made by the Lender
with respect to an Asset Pool purchased by the Borrower under a Forward
Flow Purchase Agreement shall be made in multiple advances, with each such
advance of the Loan occurring on the date that the Borrower makes one of
the periodic purchases of the Accounts and other Assets under such Forward
Flow Purchase Agreement; provided, that, advances shall be made no more
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often than once per month for any Asset Pool. In addition to the items
required by Section 2.1(a), a Borrowing Request related to a Forward Flow
Purchase Agreement shall contain the Borrower's good faith estimate of the
total amount of all Accounts and other Assets to be purchased under the
Forward Flow Purchase Agreement for a period not to exceed twelve (12)
months (or such shorter period as the Lender shall agree to in writing)
(regardless of the duration of the purchasing period under the Forward Flow
Purchase Agreement) and the Borrower's good faith estimate of the Total
Cost of all Accounts and other Assets to be purchased under the Forward
Flow Purchase Agreement for a period not to exceed twelve (12) months (or
such shorter period as the Lender shall agree to in writing) (regardless of
the duration of the purchasing period under the Forward Flow Purchase
Agreement). The Lender shall accept or reject a Borrowing Request related
to a period of twelve (12) months (or such shorter period as the Lender
shall agree to in writing) under a Forward Flow Purchase Agreement in
accordance with the provisions of Sections 2.1(a) and (b); provided,
however, an Accepted Borrowing Request related to a Forward Flow Purchase
Agreement shall only constitute the Lender's commitment to make a Loan to
fund ninety percent (90%) of the Total Cost of the Asset Pool being
purchased under such Forward Flow Purchase Agreement for such period of
twelve (12) months (or such shorter period as the Lender shall agree to in
writing) as estimated by the Borrower in the Accepted Borrowing Request
related to such Forward Flow Purchase Agreement. In the event that the
Borrower determines that the actual Total Cost of the Asset Pool being
purchased under a Forward Flow Purchase Agreement during such period of
twelve (12) months (or such shorter period as the Lender shall agree to in
writing) will exceed the estimated Total Cost of the Asset Pool as
specified in the Accepted Borrowing Request or if the Borrower wishes the
Lender to continue financing its purchase of Accounts and other Assets
after the expiration of the currently approved period of twelve (12) months
(or such shorter period as the Lender shall agree to in writing), the
Borrower shall submit to the Lender a supplemental Borrowing Request, and
the Lender may accept or reject such supplemental Borrowing Request in
accordance with the provisions of Sections 2.1(a) and (b). Upon the
Lender's rejection of such supplemental Borrowing Request, the Lender shall
have no obligation to provide any funding to the Borrower in excess of that
agreed to in any Accepted Borrowing Request in connection with the
applicable Forward Flow Purchase Agreement and the Borrower shall be
permitted to seek financing from a third party in connection with the
amount of accounts and assets to be purchased under such Forward Flow
Purchase Agreement which exceed that set forth in any Accepted Borrowing
Request in connection therewith and such excess shall not be considered an
Asset or Asset Pool subject to this Agreement.
(d) General Funding Procedures. The Borrower shall provide the Lender
with not less than three (3) Business Days prior written notice of the
scheduled closing date for purchase of an Asset Pool described in an
Accepted Borrowing Request and shall request funding of the related Loan on
such date (each a "Borrowing Date"). On the Business Day immediately
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preceding a Borrowing Date, the Borrower shall transfer to the Lender the
Borrower's Asset Pool Equity Contribution for the related Asset Pool, net
of all Purchase Expenses paid or incurred by the Borrower. Upon receipt by
the Lender of such funds from the Borrower and upon satisfaction of all
applicable conditions set forth in Article IV and elsewhere in this
Agreement, the Lender shall make the Loan to the Borrower as specified in
the related Accepted Borrowing Request by transferring the amount of the
Loan, together with that portion of the Borrower's Asset Pool Equity
Contribution received by the Lender, to the Asset Pool Seller (or in whole
or in part to the Parent or a Purchase Affiliate, as applicable, in
connection with an assignment under Section 2.1(g), but only as specified
in an Accepted Borrowing Request) in purchase of the related Asset Pool on
(or immediately prior to) the closing date for purchase of such Asset Pool.
(e) Special Funding Procedures in connection with Forward Flow Purchase
Agreements. In connection with a periodic purchase of a portion of an Asset
Pool under a Forward Flow Purchase Agreement, the Borrower shall provide
the Lender with not less than three (3) Business Days prior written notice
of the Borrowing Date for the purchase of such portion of an Asset Pool
under such Forward Flow Purchase Agreement, the Total Cost of such portion
of the Asset Pool to be purchased on the Borrowing Date and the amount of
the advance of the Loan which the Borrower requests the Lender to fund on
the Borrowing Date in connection with such portion of the Asset Pool to be
purchased on the Borrowing Date. On the Business Day immediately preceding
a Borrowing Date for the purchase of a portion of an Asset Pool under a
Forward Flow Purchase Agreement, the Borrower shall transfer to the Lender
the Borrower's Asset Pool Equity Contribution for such portion of the Asset
Pool to be purchased on such Borrowing Date net of all Purchase Expenses
paid or incurred by the Borrower with respect to such portion of the Asset
Pool to be purchased on such Borrowing Date. Upon receipt by the Lender of
such funds from the Borrower and upon satisfaction of all applicable
conditions set forth in Article IV and elsewhere in this Agreement, the
Lender shall make the applicable advance of the Loan to the Borrower by
transferring the amount of such advance of the Loan, together with that
portion of the Borrower's Asset Pool Equity contribution received by the
Lender, to the Asset Pool Seller (or in whole or in part to the Parent or a
Purchase Affiliate, as applicable, in connection with an assignment under
Section 2.1(g), but only as specified in an Accepted Borrowing Request) in
purchase of that portion of the related Asset Pool on (or immediately prior
to) the closing date for the purchase of such portion of such Asset Pool.
(f) Combination of Asset Pools upon Mutual Written Consent of Borrower
and Lender. Notwithstanding anything to the contrary contained in this
Agreement, upon the mutual written consent of the Borrower and the Lender,
two (2) or more Asset Pools may be combined into a single Asset Pool
subject to such terms and conditions as the Borrower and the Lender shall
specify in writing.
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(g) Asset Pools Purchased by Borrower From Parent or Purchase
Affiliate. The Borrower may from time to time purchase an Asset Pool from
the Parent or a Purchase Affiliate if: (i) the Parent or Purchase
Affiliate, as applicable, has complied with the applicable provisions
therefor contained in the Exclusivity Agreement, (ii) the Borrower has
submitted a Borrowing Request to the Lender in connection therewith in
accordance with this Section 2.1, which Borrowing Request shall detail the
assignment of a Purchase Agreement and/or other security documents to the
Borrower in connection with the Parent's or Purchase Affiliate's, as
applicable, purchase of the accounts or other assets constituting such
Asset Pool from another Person (who shall not be an Affiliated Party) and
such other information as the Lender shall require, and (iii) such
Borrowing Request has been accepted by the Lender in accordance with this
Section 2.1.
Section 2.2 Obligation to Repay Loans; Issuance of Notes. Each Loan
made by the Lender with respect to an Asset Pool under Section 2.1 shall be
evidenced by a separate promissory note of the Borrower payable to the order of
the Lender in the amount determined in accordance with the related Accepted
Borrowing Request, dated as of the Borrowing Date and otherwise in substantially
the form of Exhibit B-1 (each a "Note"). With respect to a Loan made by the
Lender to the Borrower in connection with an Asset Pool purchased under a
Forward Flow Purchase Agreement, the initial advance of such Loan shall be
evidenced by a Note, dated as of the Borrowing Date for such initial advance, in
the amount of such initial advance and otherwise in substantially the form of
Exhibit B-1. The second and each subsequent advance of a Loan made in connection
with an Asset Pool purchased under a Forward Flow Purchase Agreement shall be
evidenced by a replacement Note, dated as of the Borrowing Date for such second
or subsequent advance, as applicable, in the aggregate amount of all advances
made of the Loan (without reflecting any repayments of such Loan) and otherwise
in substantially the form of Exhibit B-2. Each such replacement Note issued in
connection with a Loan made in connection with an Asset Pool purchased under a
Forward Flow Purchase Agreement shall be issued in replacement of and
substitution for, but not in payment of, the previous Note related to such Loan.
Upon the Lender's receipt of a written request to return to the Borrower a
replaced note following the Borrower's execution and delivery to the Lender of a
replacement Note acceptable to the Lender, the Lender shall return the replaced
Note to the Borrower marked "Replaced by Substitution Note". The aggregate
unpaid principal amount of each Note shall bear interest, be payable and be
secured as provided therein and herein.
Section 2.3 Interest on Loans. The Borrower hereby agrees to pay
interest on the unpaid principal balance of each Loan with respect to an Asset
Pool for the period commencing on the Borrowing Date for such Loan and
continuing thereafter until the Loan is paid in full, in accordance with the
following:
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(a) Prior to the occurrence of an Event of Default, the outstanding
principal balance of each Loan shall bear interest at an annual rate at all
times equal to the Floating Rate applicable to such Loan
(b) From and after the occurrence of an Event of Default and continuing
thereafter until such Event of Default shall be remedied to the written
satisfaction of the Lender, the outstanding principal balance of each Loan
shall bear interest at an annual rate at all times equal to the sum of (i)
the Floating Rate applicable to such Loan and (ii) two percent (2%) (the
"Default Rate").
(c) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, all agreements with respect to
interest in this Agreement and the other Loan Documents between the
Borrower and the Lender are hereby limited so that in no contingency or
event whatsoever shall the total liability for payments in the nature of
interest exceed the applicable limits imposed by any applicable usury laws.
If any payments in the nature of interest made under this Agreement or any
other Loan Document are held to be in excess of the limits imposed by any
applicable usury laws, it is agreed that any such amount held to be in
excess shall be considered payment of principal in respect of the
applicable Loan, and the aggregate indebtedness under this Agreement and
the other Loan Documents shall be reduced by such amount so that the total
liability for payments in the nature of interest shall not exceed the
applicable limits imposed by any applicable usury laws, in compliance with
the desires of the Borrower and the Lender.
Section 2.4 Computation of Interest. Interest accruing on each Loan, on
each Asset Pool Equity Contribution and on each Affiliate Subordinated Loan, as
applicable, shall be computed on the basis of the actual number of days elapsed
in a year of three hundred and sixty (360) days and shall accrue on the
outstanding principal balance of each Loan, on each Asset Pool Equity
Contribution and on each Affiliate Subordinated Loan, as applicable, on a daily
basis. Interest accrued on each Loan, on each Asset Pool Equity Contribution and
on each Affiliate Subordinated Loan shall be capitalized on each Distribution
Date if funds are not available for payment thereof on such Distribution Date.
Section 2.5 Payment of Principal and Interest on Loans. All interest on
a Loan which has accrued, but is unpaid as of the day preceding a Distribution
Date for a related Asset Pool, shall be due and payable on such Distribution
Date, but only to the extent available in accordance with Section 2.8. If not
paid in full on a Distribution Date, all accrued and unpaid interest shall be
capitalized as of such date in accordance with Section 2.4. Principal of each
Loan shall be finally due and payable on the Loan Maturity Date for such Loan,
as specified in the Note evidencing payment of such Loan. In addition, each Loan
shall be subject to mandatory prepayment on each Distribution Date for the
related Asset Pool in an amount equal to the Asset Pool Proceeds available for
such prepayment on such date, as provided in Section 2.8. The Borrower may
prepay any Loan, in whole or in part, at any time and from time to time, without
premium or penalty; provided, however, that (i) no such prepayment shall
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terminate or satisfy the Borrower's obligation to pay Contingent Payments with
respect to the related Asset Pool for any such Loan, and (ii) any such
prepayment can only be made from Asset Pool Proceeds received with respect to
the Asset Pool for such Loan and not with any other proceeds or funds from any
other source, unless otherwise approved in writing by the Lender.
Section 2.6 Contingent Payments. The Borrower agrees to pay to the
Lender a Contingent Payment with respect to each Asset Pool, payable on each
Distribution Date for such Asset Pool in an amount equal to that portion of the
Asset Pool Proceeds available for payment thereof as provided in Section 2.8(j).
Payment in full of any Loan made in respect of an Asset Pool shall in no way
affect the obligation of the Borrower to pay to the Lender the Contingent
Payments with respect to such Asset Pool as provided herein. The Borrower and
the Lender agree that all Contingent Payments with respect to an Asset Pool will
be treated as interest for United States federal income tax purposes and that
the Borrower's interest deductions and the Lender's interest income with respect
thereto shall accrue in accordance with the Projected Accrual Schedule for such
Asset Pool delivered by the Borrower pursuant to Section 2.1(a) and accepted by
the Lender pursuant to Section 2.1, as required and determined in accordance
with the non-contingent bond method described in Treasury Regulation
1.1275-4(b).
Section 2.7 Collection and Deposit of Asset Pool Proceeds. Except as
otherwise provided in Section 2.9, each Loan shall be paid out of Asset Pool
Proceeds collected with respect to the related Asset Pool. All Asset Pool
Proceeds received by the Servicer or the Borrower will be deposited not later
than the next Business Day following receipt thereof, to a collection account
maintained by the Servicer, and not later than two (2) Business Days thereafter
(or earlier if checks in such collection account clear earlier), shall be
transferred to a separate Collateral Account for the Asset Pools opened and
maintained by the Collateral Agent, in the name of the Lender, pursuant to the
Collateral Account Agreement (the "Collateral Account"). Except for the days on
which Asset Pool Proceeds are on deposit in the Servicer's collection account,
neither the Servicer nor the Borrower shall commingle any Asset Pool Proceeds
collected with respect to the Asset Pools with any moneys or other funds which
are not Asset Pool Proceeds. The Collateral Account shall be an interest bearing
account and all interest earned on amounts on deposit therein shall constitute,
and be treated as, Asset Pool Proceeds collected with respect to the Asset
Pools. All Asset Pool Proceeds shall be held in the Collateral Account until the
next occurring Distribution Date. Not later than 3:00 p.m., Minneapolis,
Minnesota time, on the Business Day preceding each Distribution Date, the
Servicer shall deliver to the Lender a report for the preceding Collection
Period setting forth, by Asset Pool, the Asset Pool Proceeds, Servicing Fees,
outstanding balances of Loans and other relevant information to determine the
use and application of the Asset Pool Proceeds deposited to the Collateral
Account during the Collection Period ending on the Sunday immediately preceding
such Distribution Date (each, a "Distribution Report") and the Lender will make
distributions in accordance with Section 2.8 on each Distribution Date. In no
event shall any Asset Pool Proceeds be withdrawn from the Collateral Account
without the prior written consent of the Lender as to each such withdrawal or
transfer.
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Section 2.8 Distribution of Asset Pool Proceeds. Upon delivery to the
Collateral Agent of the Lender's written authorization for distributions to be
made from the Collateral Account as contemplated in Section 2.7, Asset Pool
Proceeds on deposit in the Collateral Account with respect to an Asset Pool
shall be distributed on the next succeeding Distribution Date for such Asset
Pool, in accordance with the following:
(a) first, in connection with all Asset Pool acquisitions, to the
Lender or the Borrower, an amount equal to all unpaid Loan Costs and
Purchase Expenses paid or incurred by the Lender or the Borrower with
respect to the making or collection of a Loan secured by such Asset Pool,
except for the expenses of the Borrower in connection with the preparation,
execution and delivery of the Loan Documents;
(b) second, to the Collateral Agent, an amount equal to all fees and
expenses due and owing to the Collateral Agent with respect to such Asset
Pool;
(c) third, to the Servicer, an amount equal to the Servicing Fee, if
any, payable to the Servicer with respect to such Asset Pool Proceeds;
(d) fourth, to the Lender, an amount equal to all accrued and unpaid
interest on the related Loan for such Asset Pool;
(e) fifth, to the Servicer, an amount equal to all accrued and unpaid
Deferred Servicing Fees, as defined in the Servicing Agreement, but only to
the extent no Asset Pool Shortfall then exists with respect to such Asset
Pool;
(f) sixth, to the Lender, an amount equal to the outstanding principal
of the related Loan for such Asset Pool, until such Loan shall have been
paid in full;
(g) seventh, to the Lender, an amount equal to any Asset Pool Shortfall
Amount then outstanding, for application to payment of such Asset Pool
Shortfall Amount;
(h) eighth, to the Borrower, an amount equal to all accrued and unpaid
interest on (i) the Borrower's Asset Pool Equity Contribution with respect
to such Asset Pool and (ii) any Affiliate Subordinated Loan, which interest
shall be at the Floating Rate and shall be calculated in accordance with
Section 2.4 hereof;
(i) ninth, to the Borrower, an amount equal to (i) the Asset Pool
Equity Contribution made by the Borrower with respect to such Asset Pool
and (ii) the principal amount of any Affiliate Subordinated Loan, until
such Asset Pool Equity Contribution and all such Affiliate Subordinated
Loans shall have been repaid in full;
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(j) tenth, to the Lender, its Contingent Payment for such Asset Pool;
and
(k) eleventh, to the Borrower, the remainder of the Asset Pool Proceeds
for such Asset Pool.
Section 2.9 Asset Pool Shortfalls. If, (a)(i) as of any date on or
after six months following the Borrowing Date with respect to an Asset Pool, the
Asset Pool Proceeds received through such date with respect to an Asset Pool are
less than eighty percent (80%) of the projected Asset Pool Proceeds to be
received through such date (as set forth in the bid package submitted by the
Borrower as a part of the Borrowing Request for such Asset Pool), and the Lender
determines that, in its reasonable judgment, the remaining Asset Pool Proceeds
projected to be received and applied to the related Loan will be insufficient to
repay the related Loan and all accrued interest thereon on the applicable Loan
Maturity Date or (ii) as of any date, an Event of Default has occurred and is
continuing, or (b) in connection with the NCOP Lakes Credit Agreement (i) as of
any date on or after six months following the Borrowing Date under the NCOP
Lakes Credit Agreement with respect to an asset pool financed under the NCOP
Lakes Credit Agreement, the Asset Pool Proceeds (as defined in the NCOP Lakes
Credit Agreement) received through such date with respect to an asset pool
financed under the NCOP Lakes Credit Agreement are less than eighty percent
(80%) of the projected Asset Pool Proceeds (as defined in the NCOP Lakes Credit
Agreement) to be received through such date (as set forth in the bid package
submitted by NCOP Lakes as a part of the Borrowing Request under the NCOP Lakes
Credit Agreement) for such asset pool), and the Lender determines that, in its
reasonable judgment, the remaining Asset Pool Proceeds (as defined in the NCOP
Lakes Credit Agreement) projected to be received and applied to the related Loan
issued with respect thereto under the NCOP Lakes Credit Agreement will be
insufficient to repay the related Loan issued with respect thereto under the
NCOP Lakes Credit Agreement and all accrued interest thereon on the applicable
Loan Maturity Date (as defined in the NCOP Lakes Credit Agreement) or (ii) as of
any date, an Event of Default under the NCOP Lakes Credit Agreement has occurred
and is continuing, then the amount of such estimated deficiency (herein, the
"Asset Pool Shortfall Amount") shall be paid from:
(a) Asset Pool Proceeds collected with respect to (i) other Asset Pools
as provided in Section 2.8(g) of this Agreement and (ii) other Asset Pools under
the NCOP Lakes Credit Agreement as provided in Section 2.8(g) of the NCOP Lakes
Credit Agreement, which amounts so paid shall constitute a subordinated loan
from NCOP Lakes to the Borrower and shall bear interest and be repaid only as
provided in Section 2.8(k) and (l) hereof (each, an "Affiliate Subordinated
Loan"); and
(b) the Borrower's own funds (and not from borrowed money) and any
amount so paid shall be treated hereunder as an Asset Pool Equity Contribution
on behalf of the Borrower for the Asset Pool for which such payment was made
(with interest accruing in accordance with Section 2.4 only from the date of
such payment).
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ARTICLE III
COLLATERAL FOR LOANS;
CUSTODY, SERVICING AND COLLECTIONS
Section 3.1 Pledge of Asset Pool Collateral. To secure the due and
prompt payment of each Loan, together with all interest thereon and Contingent
Payments payable in connection therewith, and all other Obligations hereunder,
the Borrower shall grant to the Lender a first and prior security interest in,
lien on and pledge of all assets of the Borrower (subject only to Permitted
Liens), including all right, title, claim and interest of the Borrower in and to
all Assets of or related to each and every Asset Pool, of any kind, nature or
description, whether now owned or hereafter acquired, wherever located,
howsoever arising or created and whether now existing or hereafter arising,
including without limitation each and every Account and any and all liens,
claims and property securing payment of the indebtedness evidenced by such
Account (if any), and all property realized, collected or obtained in connection
with or as a result of collections made on account of any Account, and any and
all Asset Pool Proceeds paid or received with respect to any Asset Pool, whether
deposited to or held in the Collateral Account or otherwise, and all rights of
the Borrower under each and every Purchase Agreement (or Forward Flow Purchase
Agreement) related to an Asset Pool, together with such additional property of
the Borrower as is set forth and described in the Security Agreement, as the
same may be amended and supplemented from time to time by the Borrower as
additional Asset Pools are purchased by the Borrower (herein the "Loan
Collateral").
Section 3.2 Perfection of Security Interests in Personal Property
Collateral. The Borrower agrees to deliver to the Lender (or its designated
custodial agent), at any time upon the Lender's request, each original Account
file of or relating to any Account and each promissory note, chattel paper,
installment sales agreement or other instrument with respect to which perfection
may be obtained by possession, and shall authorize or execute such financing
statements, together with any and all other instruments, assignments or
documents and take such other actions as may be required, to perfect and to
continue the perfection of the Lender's security interest in all Loan
Collateral.
Section 3.3 Servicing of Asset Pools. The Borrower, the Servicer and
the Lender shall enter into a Servicing Agreement, in form and content
acceptable to the Lender, to provide for the servicing and collection of all
Assets (the "Servicing Agreement"). Immediately upon the occurrence of a
Servicer Default as defined in the Servicing Agreement, the Lender may terminate
the Servicer then acting in such capacity under the Servicing Agreement and may
appoint a replacement servicer, and enter into a replacement servicing
agreement, reasonably acceptable to the Borrower and the Lender.
Section 3.4 Authority to Settle or Sell Loan Collateral. The Borrower
shall be authorized to finally compromise, settle, sell, liquidate, collect or
write-down the balance of, any Asset in its discretion; provided, however, that
in no event will any such compromise, settlement, sale, liquidation, collection
or write-down reduce the remaining unpaid principal balance thereof, together
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with accrued and unpaid interest thereon, to an aggregate amount less than three
hundred percent (300%) of the allocated purchase price paid by the Borrower to
acquire such Asset, without first obtaining the prior consent of the Lender. The
Borrower shall not, without first obtaining the Lender's prior written consent,
agree to any sale, assignment or other bulk transfer of Accounts (whether in one
or more Asset Pools). In the event the Lender consents to a bulk transfer of
Accounts, the Servicer will be paid a sales fee not to exceed the lesser of (a)
the actual out-of-pocket expenses incurred by the Servicer (and approved by the
Lender) in connection with such bulk sale and (b) five percent (5%) of the net
proceeds realized upon such bulk sale, in lieu of the applicable Servicing Fee,
unless the Lender and the Borrower shall otherwise agree in writing.
Section 3.5 Exchange of Assets with Asset Pool Sellers. In the event
that the Borrower shall exchange or return Assets with any Asset Pool Seller,
the Borrower shall promptly notify the Lender of such exchange or return and
shall provide such information with respect to such exchange or return as Lender
shall reasonably require. The Servicer shall not be entitled to any Servicing
Fee with respect to any such exchange or return.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to the Initial Loan. The obligation of
the Lender to make the initial Loan to the Borrower is subject to satisfaction
by the Borrower of the conditions precedent set forth in Sections 4.2 and 4.3
with respect to such Loan and the further condition precedent that the Lender
shall have received each of the following, dated such date and in form and
substance satisfactory to the Lender:
(a) This Credit Agreement properly executed on behalf of the Borrower.
(b) The Security Agreement, properly executed on behalf of the
Borrower.
(c) The Collateral Account Agreement, properly executed on behalf of
the Collateral Agent, the Borrower, the Servicer and the Lender.
(d) The Servicing Agreement, properly executed on behalf of the
Servicer, the Borrower and the Lender.
(e) A letter of even date herewith, regarding the Borrower's status as
an Affiliated Party for purposes of the Exclusivity Agreement, properly
executed on behalf of the Borrower.
(f) Current searches of appropriate filing offices showing that (i) no
state or federal tax liens have been filed and remain in effect against the
Borrower or the Servicer and (ii) no financing statements or other
notifications or filings have been filed and remain in effect against the
Borrower, other than those for which the Lender has received an appropriate
release, termination or satisfaction or those permitted in accordance with
Section 7.1.
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(g) Certified copies of resolutions of the manager(s) and members, or
board of directors, as appropriate, of the Borrower, evidencing approval of
all Loan Documents to which the Borrower is a party and the other matters
contemplated thereby.
(h) Certified copies of resolutions of the of the board of directors of
the Servicer, evidencing approval of all Loan Documents to which the
Servicer is a party and the other matters contemplated thereby.
(i) Copies of the Articles of Incorporation, Bylaws and Certificates of
Formation of the Borrower, the Parent and the Servicer, as appropriate,
certified by an appropriate officer of each as being a true and correct
copy thereof.
(j) Certificates of good standing of the Borrower and the Servicer,
respectively, dated not more than sixty (60) days prior to the date hereof.
(k) Acknowledgment copies of effective financing statements filed on or
prior to the date of the initial Loan, naming the Lender as secured party
and the Borrower, as debtor, or such other similar instruments or documents
as may be necessary or, in the opinion of the Lender, desirable under the
UCC or any comparable law of all appropriate jurisdictions.
(l) A signed copy of a certificate of the secretary or assistant
secretary of the Borrower, which shall certify the names of the officers of
the Borrower authorized to sign the Loan Documents and the other documents
or certificates to be delivered pursuant to this Agreement by the Borrower,
including Borrowing Requests, together with the true signatures of such
officers. The Lender may rely conclusively on such certificate until it
shall receive a further certificate of the secretary or assistant secretary
of the Borrower canceling or amending the prior certificate and submitting
the signatures of the officers named in such further certificate.
(m) A signed copy of a certificate of the secretary or assistant
secretary of the Servicer which shall certify the names of the officers of
the Servicer authorized to sign the Servicing Agreement and the other
documents or certificates to be delivered pursuant thereto by the Servicer
or any of its officers, together with true signatures of such officers. The
Lender may rely conclusively on such certificate until it shall receive a
further certificate of the secretary or assistant secretary of the Servicer
canceling or amending the prior certificate and submitting the signatures
of the officers named in such further certificate.
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(n) A signed copy of an opinion of counsel for the Borrower and the
Servicer, addressed to the Lender.
(o) Evidence of all insurance required to be maintained by the Servicer
under the provisions of the Servicing Agreement.
(p) Such other items as shall be reasonably requested by the Lender.
Section 4.2 Conditions Precedent to Each Loan. The obligation of the
Lender to make each Loan (or each advance of a Loan in the case of a Forward
Flow Purchase Agreement) shall be subject to the further conditions precedent
that the Lender shall have issued an Accepted Borrowing Request with respect
thereto and shall have received, on or before the date of such Loan (or such
advance of such Loan in the case of a Forward Flow Purchase Agreement), each of
the following with respect to such Loan, dated such date and in form and
substance satisfactory to the Lender:
(a) A copy of the Purchase Agreement (or Forward Flow Purchase
Agreement, if applicable) for the related Asset Pool, properly executed on
behalf of the Borrower and the Asset Pool Seller, pursuant to which the
Asset Pool Seller shall have agreed to transfer all Assets constituting a
part of such Asset Pool to the Borrower, effective as of the Borrowing
Date, free and clear of all liens, claims and encumbrances except Permitted
Liens and those disclosed in the related Purchase Agreement, together with
copies of the UCC-1 Financing Statement naming the Asset Pool Seller, as
seller/debtor, in favor of the Borrower, as purchaser/secured party, with
an adequate description of the Assets contained in the Asset Pool being
acquired (or of the Assets contained in the portion of the Asset Pool being
acquired in the case of a Forward Flow Contract) and such other items as
may be required by the Lender; provided, however, in the case of a purchase
of a portion of an Asset Pool under a Forward Flow Purchase Agreement, such
copy of the UCC-1 Financing Statement may be provided not later than five
(5) Business Days after the date of the advance of the Loan to purchase
such portion of the Asset Pool.
(b) A Note in the principal amount of the related Loan, properly
completed and executed on behalf of the Borrower.
(c) Evidence of receipt by the Lender of the Borrower's Asset Pool
Equity Contribution with respect to the related Asset Pool, net of any
Purchase Expenses paid or incurred by the Borrower in connection with
consummation of its purchase of such Asset Pool.
(d) A duplicate copy of the computer disk (or other medium reasonably
acceptable to the Lender) showing all relevant information as to the
Accounts being purchased by the Borrower, as provided by the Asset Pool
Seller pursuant to the Purchase Agreement; provided, however, in the case
of a purchase of a portion of an Asset Pool under a Forward Flow Purchase
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Agreement, such duplicate copy of the computer disk (or other medium
reasonably acceptable to the Lender) may be provided not later than five
(5) Business Days after the date of the advance of the Loan to purchase
such portion of such Asset Pool.
(e) A certificate of a responsible officer of the Servicer in favor of
the Lender and the Borrower stating that, to the Servicer's best knowledge,
no Servicer Default has occurred and is continuing.
(f) Such other information as the Lender may request to verify the
Total Cost of the Asset Pool, the nature or amount of the Accounts to
constitute a part thereof or any other matter related thereto.
Section 4.3 Representations and Warranties Upon Making a Loan. The
obligation of the Lender to make each Loan (or each advance of a Loan in the
case of a Forward Flow Purchase Agreement) to finance the purchase of an Asset
Pool (or the applicable portion of an Asset Pool in the case of a Forward Flow
Purchase Agreement) shall be subject to the further condition precedent that on
the date for funding of such Loan (or such advance of a Loan in the case of a
Forward Flow Purchase Agreement) the following statements shall be true and
accurate in all material respects and the Borrower, by requesting such Loan (or
such advance of a Loan in the case of a Forward Flow Purchase Agreement) shall
be deemed to have represented and certified that:
(a) The representations, warranties and covenants of the Borrower set
forth in Article V are true and correct on and as of such date as though
made on such date and shall be deemed to have been made on such date,
except to the extent that any such representations, warranties and
covenants relate solely to an earlier date.
(b) No event has occurred and is continuing, or would result from the
making of such Loan, which constitutes a Default or an Event of Default,
and, to the Borrower's actual knowledge, no Servicer Default has occurred
and is continuing.
(c) In the case of a Loan made in connection with a purchase under
Section 2.1(g), that all conditions therefor contained in such Section
2.1(g) and in the Exclusivity Agreement have been fully satisfied.
(d) Upon payment of the purchase price specified in the related
Purchase Agreement to the Asset Pool Seller (or in whole or in part to the
Parent or a Purchase Affiliate, as applicable, in connection with an
assignment under Section 2.1(g), but only as specified in an Accepted
Borrowing Request) and consummation of the purchase contemplated in such
Purchase Agreement (or, as applicable the assignment by the Parent or
Purchase Affiliate, as applicable, to the Borrower), the Borrower will have
good title to all Accounts being transferred thereunder free and clear of
all liens, claims and other interests other than the liens granted to the
Lender as contemplated herein and Permitted Liens.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as of the date
hereof and as of each Borrowing Date as follows:
Section 5.1 Existence and Power; Name; Chief Executive Office. The
Borrower is duly incorporated, validly existing and in good standing under the
laws of the Nevada, and is or has undertaken all reasonable steps to become duly
licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary and where
failure to obtain such licensing or qualification would have a material adverse
effect on the Borrower. The Borrower has all requisite power and authority, to
conduct its business, to own its properties and to execute and deliver, and to
perform the Obligations. Within the last twelve (12) months, the Borrower has
done business only under its name as specified herein. The chief executive
office and principal place of business of the Borrower are located at the
address set forth in Section 9.4, and all of the Borrower's records relating to
its businesses are kept at that location.
Section 5.2 Authorization for Borrowings; No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrower of the Loan
Documents, and Loans from time to time obtained hereunder, have been duly
authorized by all necessary legal action and do not and will not (a) require any
consent or approval which has not been obtained prior to the date hereof, (b)
require any authorization, consent or approval by, or registration, declaration
or filing with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorization, consent, approval, registration, declaration, filing
or notice as has been obtained, accomplished or given prior to the date hereof,
(c) violate any provision of any material law, rule or regulation or of any
order, writ, injunction or decree presently in effect having applicability to
the Borrower or of the articles of incorporation or bylaws of the Borrower, (d)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other material agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected, or (e) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower, other than those granted to the
Lender as contemplated herein.
Section 5.3 Legal Agreements. The Loan Documents constitute, and the
Notes, when and as executed and delivered, will constitute, the legal, valid and
binding obligations and agreements of the Borrower, enforceable against the
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Borrower in accordance with their respective terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
Section 5.4 Subsidiaries. The Borrower has no subsidiaries.
Section 5.5 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or the properties of the Borrower before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to the Borrower, could have a material
adverse effect on the financial condition, properties or operations of the
Borrower, except as set forth and described in Schedule 5.5.
Section 5.6 Taxes. The Borrower has paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by it (other than those being properly contested in accordance with the
procedures set forth in part (i) of the definition of Permitted Liens). The
Borrower has filed all federal, state and local tax returns which to the
knowledge of the officers of the Borrower, are required to be filed, and the
Borrower has paid or caused to be paid to the respective taxing authorities all
taxes as shown on said returns or on any assessment received by it to the extent
such taxes have become due (other than those being properly contested in
accordance with the procedures set forth in part (i) of the definition of
Permitted Liens).
Section 5.7 Title and Liens. The Borrower has good and marketable title
to all Loan Collateral (or will have good and marketable title to all Loan
Collateral on the date of purchase of such Loan Collateral), free and clear of
all mortgages, security interests, liens and encumbrances, except for Permitted
Liens. In addition, no financing statement naming the Borrower as debtor is on
file in any office except to perfect only security interests permitted by
Section 7.1.
Section 5.8 Plans. The Borrower does not maintain and has not in the
past maintained any Plan.
Section 5.9 Default. The Borrower is in compliance with all provisions
of all agreements, instruments, decrees and orders to which it is a party or by
which it or its property is bound or affected, the breach or default of which
could have a material adverse effect on the financial condition, properties or
operations of the Borrower.
Section 5.10 Submissions to Lender. All financial and other information
provided to the Lender (including, but not limited to the completed background
questionnaires) by or on behalf of the Borrower in connection with the
Borrower's request for any Loan and the credit facilities contemplated hereby is
true and correct in all material respects and, as to projections, valuations or
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financial statements, present a good faith opinion as to such projections,
valuations and proforma condition and results. The information provided to the
Lender contains no omissions which would cause such information to be materially
misleading.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as any Note, Contingent Payment or other Obligation shall
remain unpaid or outstanding, the Borrower will comply with the following
requirements, unless the Lender shall otherwise consent in writing:
Section 6.1 Reporting Requirements. The Borrower will deliver, or cause
to be delivered, to the Lender each of the following, which shall be in form and
detail reasonably acceptable to the Lender:
(a) As soon as available, and in any event within one hundred fifty
(150) days after the end of each fiscal year of each of the Borrower and
the Parent, a copy of the annual audit report of the Parent with the
unqualified opinion of their respective certified public accountants, which
annual reports shall include the consolidated and consolidating balance
sheet of each entity (including the results of operations the Borrower), as
at the end of such fiscal year and the related statements of earnings,
shareholders' or members' equity and cash flows for the fiscal year then
ended, all in reasonable detail and all prepared in accordance with GAAP,
applied on a consistent basis, together with a certificate of the chief
financial officer of each of the Borrower and the Parent, respectively,
stating that such financial statements are true and accurate in all
material respects; provided, however, that as to the Parent, all such
reports shall be made available in the form filed by the Parent with the
Securities and Exchange Commission.
(b) As soon as available and in any event within forty-five (45) days
after the end of each fiscal quarter of each of the Borrower and the
Parent, a copy of the consolidated and consolidating balance sheets of each
such entity as at the end of such quarter and related statements of
earnings to-date, in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous fiscal year,
all prepared in accordance with GAAP (subject to year-end adjustments and
without footnotes), applied on a consistent basis, together with a
certificate of the chief financial officer of each of the Borrower and the
Parent, respectively, stating that such financial statements, subject to
year-end audit adjustments, are true and accurate in all material respects;
provided, however, that as to the Parent, all such reports shall be made
available in the form filed by the Parent with the Securities and Exchange
Commission.
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(c) As promptly as practicable (but in any event not later than five
(5) Business Days) after an officer of the Borrower obtains knowledge of
the occurrence of any default by the Borrower in the performance of any of
its Obligations or by the Servicer in the performance of any of its
obligations under the Servicing Agreement, notice of such occurrence,
together with a detailed statement by a responsible officer of the Borrower
of the steps being taken by the Borrower to cure the effect of such event.
(d) As promptly as practicable, a copy of each compliance report the
Borrower or Parent delivers to the Federal Trade Commission and, upon
receipt, copies of any notices, decrees, orders or correspondence from the
Federal Trade Commission relating to FDCPA violations.
(e) Such other information respecting each Asset Pool or the financial
condition of each of the Borrower and the Parent as the Lender may from
time to time reasonably request.
Section 6.2 Books and Records; Inspection and Examination; Verification
of Collection Activity. The Borrower will keep, and will cause the Parent to
keep, accurate books of record and account for itself pertaining to the Asset
Pools and the business and financial condition of the Borrower or the Parent, as
applicable, and such other matters as the Lender may from time to time request
in which true and complete entries will be made in accordance with GAAP
consistently applied (subject to year-end adjustments and without footnotes)
and, upon request of and reasonable notice by the Lender, will permit any
officer, employee, attorney or accountant for the Lender to audit, review, make
extracts from or copy any and all corporate and financial books and records of
the Borrower, or the Parent at all reasonable times during ordinary business
hours, to discuss the affairs of the Borrower and the Parent including the
purchase, servicing, collection or liquidation of assets, with any of its
members, employees or agents and to conduct a review of the Borrower's and
Parent's respective books and records with respect to the purchase, servicing,
collection and disposition of Loan Collateral.
Section 6.3 Licenses; Evidence of Qualification to Conduct Business.
The Borrower will be duly licensed or qualified to own the Assets and otherwise
to transact business in all jurisdictions where the character of the property
owned or leased or the nature of the business transacted by the Borrower make
such licensing or qualification necessary.
Section 6.4 Compliance with Laws. The Borrower will (a) comply with the
requirements of applicable laws and regulations, the non-compliance with which
would materially and adversely affect its business or its financial condition,
(b) comply with all applicable debt collection laws, regulations, ordinances and
requirements and will obtain any and all licenses, permits and similar approvals
required for the collection or servicing of any Account constituting a part of
an Asset Pool and (c) use and keep its assets, and will require that others use
and keep its assets, only for lawful purposes, without violation of any federal,
state or local law, statute or ordinance.
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Section 6.5 Payment of Taxes and Other Claims. The Borrower will pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, upon any properties belonging
to it prior to the date on which forfeiture of any such property may occur, (b)
all federal, state and local taxes required to be withheld by it, and (c) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon any properties of the Borrower; provided, that the
Borrower shall not be required to pay any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 6.6 Preservation of Legal Existence. The Borrower will preserve
and maintain its legal existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.
Section 6.7 Special Purpose Entity. The Borrower will (a) own no
assets, and not engage in any business, other than the assets and transactions
specifically contemplated by the Loan Documents, (b) not incur any indebtedness
or obligation, secured or unsecured, direct or indirect, absolute or contingent,
other than as contemplated hereby and in connection with an Affiliate
Subordinated Loan pursuant to the NCOP Lakes Credit Agreement, (c) not make any
loans or advances to any third party (other than Assets), and shall not acquire
obligations or securities of any Affiliated Party or Excluded Party, (d) pay its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) only from its own assets, (e) do all things necessary under applicable
law and its organizational documents to observe organizational formalities and
to preserve its existence, and will not amend, modify or otherwise change its
articles of incorporation or bylaws, or suffer the same to be amended, modified
or otherwise changed, without the prior written consent of the Lender, (f)
maintain all of its books, records, financial statements and bank accounts
separate from those of any Affiliated Parties or Excluded Parties, (g) be, and
at all times will hold itself out to the public as, a legal entity separate and
distinct from any other entity (including any Affiliated Party and any Excluded
Party), correct any known misunderstanding regarding its status as a separate
entity, conduct business in its own name, not identify itself, any Affiliated
Party or any Excluded Party as a division or part of the other and maintain and
utilize separate stationary, invoices and checks, (h) maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations, (i) not engage
in or suffer any dissolution, winding-up, liquidation, consolidation or merger
in whole or in part, (j) not commingle its funds or other assets with those of
any Affiliated Party, any Excluded Party or any other Person (provided that the
Servicer may commingle Asset Pool Proceeds to the extent permitted in the
Servicing Agreement), (k) maintain its assets in such a manner that it will not
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be costly or difficult to segregate, ascertain or identify its individual assets
from those of any Affiliated Party, any Excluded Party or any other Person, (l)
not and will not hold itself out to be responsible for the debts or obligations
of any other Person and (m) be formed and organized solely for the purpose of
acquiring, collecting and holding, directly or indirectly, the Assets and not
hold or own any assets other than the Assets, Asset Proceeds and assets related
thereto.
Section 6.8 Arms-Length Transactions. The Borrower will use its best
efforts to have all collection activities and all sales, transfers and
dispositions relating to the Assets conducted on an arms-length basis, so as to
cause all collections and all consideration received upon the sale, transfer or
disposition of an Asset to (a) become and constitute Asset Pool Proceeds, and
(b) be distributed as Asset Pool Proceeds in accordance with Article II of this
Agreement.
Section 6.9 Purchase Agreements. The Borrower will comply with each of
its obligations under each of its Purchase Agreements.
Section 6.10 Provision of Copies of Computer Disks in Connection with
Forward Flow Purchase Agreements. The Borrower will provide to the Lender a
duplicate copy of the computer disk (or other medium reasonably acceptable to
the Lender) showing all relevant information as to the Accounts being purchased
by the Borrower in connection with the acquisition of the Assets contained in a
portion of an Asset Pool under a Forward Flow Purchase Agreement not later than
five (5) Business Days after the advance of the applicable Loan is made to
purchase the Assets contained in such portion of such Asset Pool.
Section 6.11 Right of Lender to Place a Sampling of Assets with
Independent Servicer. At any time and from time to time, upon request of the
Lender, the Borrower will permit the Lender to select certain Assets for
placement for servicing with an independent third-party servicer, in accordance
with the terms and conditions set forth and described in Section 3.3(g) of the
Servicing Agreement.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Note, Contingent Payment or other Obligation shall
remain unpaid or outstanding, the Borrower will comply with the following
requirements, unless the Lender shall otherwise consent in writing:
Section 7.1 Liens. Except as permitted in Section 6.11, the Borrower
will not create, incur or suffer to exist any pledge, lien, security interest,
assignment or transfer upon or of any Loan Collateral, now owned or hereafter
acquired, or assign or otherwise convey any right to receive collections or
other income with respect thereto, except for the liens and security interests
created in favor of the Lender under the Security Agreement and Permitted Liens.
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Section 7.2 Sale or Transfer of Assets; Suspension of Business
Operations. Except as otherwise permitted in accordance with Section 3.4, the
Borrower will not sell, lease, assign, transfer or otherwise dispose of all or a
substantial part of its assets (whether in one transaction or in a series of
transactions) to any other Person, and will not liquidate, dissolve or suspend
its business operations.
Section 7.3 Consolidation and Merger; Asset Acquisitions. The Borrower
will not consolidate with or merge into any Person, or permit any other Person
to merge into it, or acquire (in a transaction analogous in purpose or effect to
a consolidation or merger) all or substantially all the assets of any other
Person.
Section 7.4 Accounting. The Borrower will not adopt, or permit the
Parent to adopt, any change in its fiscal year or any material change in
accounting principles other than as required by generally accepted accounting
principles.
Section 7.5 Modification or Termination of Agreements. The Borrower
will not terminate, amend or modify any of the Loan Documents without the prior
written consent of the Lender.
Section 7.6 No Commissions or Rebates on Dispositions or Collections.
The Borrower will not accept or receive or agree to accept or receive any
rebate, refund, commission, fee, kickback or rakeoff, whether cash or otherwise
and whether paid by or originating with the Obligor or any other party
(including but not limited to brokers and agents), as a result of or in any way
in connection with collection activities related to any asset or in connection
with the sale, disposition, transfer or servicing of any Asset constituting a
part of an Asset Pool.
ARTICLE VIII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 8.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events:
(a) default in the payment of any interest on or principal of any Note
when it becomes due and payable, unless capitalized as provided in Sections
2.4, 2.5 and 2.8; or
(b) default in the payment of any Contingent Payment or any other fees,
costs or expenses required to be paid by the Borrower under this Agreement
as provided in Section 2.8 or any other Loan Document; or
(c) a material default in the performance, or material breach
(provided, that, any failure to provide a report required under Section 6.1
for a period of five (5) days after the same is due shall be considered
"material"), of any covenant or agreement of the Borrower in this Agreement
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(other than a covenant or agreement a default in whose performance or whose
breach is elsewhere in this Section 8.1 specifically dealt with), and the
continuance of such default or breach for a period of ten (10) calendar
days after there has been given to the Borrower a written notice specifying
such default or breach and requiring it to be remedied; or
(d) the Borrower or the Parent shall be or become insolvent, or admit
in writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or the Borrower or the Parent
shall apply for or consent to the appointment of any receiver, trustee, or
similar officer for it or for all or any substantial part of its property;
or such receiver, trustee or similar officer shall be appointed without the
application or consent of the Borrower, or the Parent; or the Borrower, or
the Parent shall institute (by petition, application, answer, consent or
otherwise) any insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding relating to it under
the laws of any jurisdiction; or any such proceeding shall be instituted
(by petition, application or otherwise) against the Borrower or the Parent;
(e) a petition naming the Borrower or the Parent as debtor is filed
under the United States Bankruptcy Code; or
(f) any representation or warranty made by the Borrower in this
Agreement or by the Borrower (or any of its officers) in any Borrowing
Request, or in any other certificate, instrument, or statement contemplated
by or made or delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect in any material respect when made; or
(g) the rendering against the Borrower of a final judgment, decree,
order, writ, warrant of attachment or execution or similar process for the
payment of money in excess of $250,000 and the Borrower fails within ten
(10) days thereafter to provide evidence reasonably acceptable to the
Lender that the same has been satisfied in full; or
(h) a default under the Security Agreement or the Servicing Agreement,
and the expiration of the applicable period of grace, if any, specified in
such agreement; or
(i) any Affiliated Party shall purchase any Consumer Obligation (as
defined in the Exclusivity Agreement) in violation of the terms of the
Exclusivity Agreement; or
(j) the Borrower or the Parent shall liquidate, dissolve, terminate or
suspend its business operations or otherwise fail to operate its business
in the ordinary course, or shall sell all or substantially all of its
assets (excepting those permitted by Section 3.4), without the prior
written consent of the Lender; or
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(k) the Borrower shall fail to pay, withhold, collect or remit any tax
or tax deficiency when assessed or due (other than any tax deficiency which
is being contested in the manner set forth therefor in part (i) of the
definition of Permitted Liens) or notice of any state or federal tax liens
shall be filed or issued; or
(l) a default under any note, agreement or other evidence of
indebtedness or similar obligation of the Borrower or Parent (other than a
default whose breach is elsewhere in this Section 8.1 specifically dealt
with) or under any instrument under which such evidence of indebtedness or
similar obligation has been issued or by which it is governed and the
expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness or other instrument; or
(m) a Change of Control shall occur; or
(n) the actual Asset Pool Proceeds received as of any Distribution Date
for all Asset Pools (on a cumulative and combined basis, provided, that,
any individual Asset Pool shall not be included in such calculation until
six (6) months after the Borrowing Date with respect to such Asset Pool) is
less than eighty percent (80%) of the Asset Pool Proceeds projected to be
collected by the Borrower for such Asset Pools (on a cumulative and
combined basis, provided, that, any individual Asset Pool shall not be
included in such calculation until six (6) months after the Borrowing Date
with respect to such Asset Pool) as of such date in the bid packages
submitted by the Borrower as a part of the Accepted Borrowing Requests for
such Asset Pools; or
(o) failure to comply with Section 6.3 hereof; or
(p) failure by the Borrower or the Servicer (or any subservicer) to
comply with any decree, order or other Federal Trade Commission
requirements which, in the Lender's sole discretion, has a material adverse
effect on the value or enforceability of the Assets or on the Servicer's
ability to service the Assets; or
(q) a court order shall be entered which enjoins, restrains or in any
way prevents the Borrower from conducting all or any material part of its
business affairs in the ordinary course of business; or the withdrawal or
suspension of any license required for the conduct of any material part of
the business of the Borrower; or any asset of the Borrower shall become
subject to an order or writ granting a motion or action to replevy,
sequester, garnish, attach or levy against such asset and the Borrower
shall fail, within ten (10) days thereafter, to provide evidence reasonably
acceptable to the Lender that the same shall have been satisfied or
dismissed; or
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(r) an Event of Default shall occur under the NCOP Lakes Credit
Agreement.
Section 8.2 Rights and Remedies Upon the Occurrence of an Event of
Default. Upon the occurrence of an Event of Default or at any time thereafter
until such Event of Default is cured or waived to the written satisfaction of
the Lender, the Lender may exercise any or all of the following rights and
remedies with respect to outstanding Loans:
(a) by notice to the Borrower, (i) declare that the Lender will no
longer consider Borrowing Requests and (ii) declare the entire unpaid
principal amount of all Notes, or any of them, all interest accrued and
unpaid thereon, and all other Obligations under this Agreement to be
forthwith due and payable whereupon such Note or Notes, as the case may be,
all such accrued interest, all such Obligations (including, but not limited
to and all Contingent Payments to the extent funds are available therefor
in accordance with Section 2.6) shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower;
(b) terminate the existing Servicing Agreement and enter into a new
servicing agreement with a replacement servicer to service and collect all
Loan Collateral, with such replacement servicer acting in its own name, but
on behalf of the Borrower or the Lender and taking direction solely and
exclusively from the Lender;
(c) direct the Servicer then in place to take all steps necessary to
collect or otherwise liquidate the Loan Collateral in accordance with such
procedures and for such sale prices as the Lender shall specify and apply
all Asset Pool Proceeds resulting therefrom in accordance with Section 2.8,
provided that each Asset Pool shall be deemed to have an Asset Pool
Shortfall Amount in an amount equal to the unpaid principal balance of, and
all accrued interest on, the related Loan therefor; and
(d) exercise and enforce any and all rights and remedies available to
the Lender under any Loan Document (or otherwise by law or agreement),
including, without limitation, against any or all Loan Collateral securing
payment of outstanding Loans;
provided, however that (i) no Servicing Fee shall be payable with respect to any
Asset Pool Proceeds received as a result of any actions specified above if the
Lender effects collection thereof without the assistance of the Servicer and
(ii) no Asset Pool Proceeds shall be paid to the Borrower pursuant to Section
2.8(h), (i) or (k) with respect to any Asset Pool until all outstanding Loans,
together with all interest thereon, shall have been paid in full, whereupon all
remaining Asset Pool Proceeds for each Asset Pool shall be distributed in
accordance with Section 2.8. Notwithstanding the foregoing, upon the occurrence
of an Event of Default described in Section 8.1(e), the entire unpaid principal
amount of all Notes, all interest accrued and unpaid thereon, and all other
Obligations under this Agreement (including, but not limited to, Contingent
Payments) shall be immediately due and payable without presentment, demand,
protest or notice of any kind.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of the Lender in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
Section 9.2 Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be effective unless the
same shall be in writing and signed by the Lender. Any waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
Section 9.3 Severability Clause. Any part, provision representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by this
Agreement, the parties shall negotiate in good faith to develop a structure the
economic effect of which is as nearly as possible the same as the economic
effect of this Agreement without regard to such invalidity.
Section 9.4 Notices. Any notices, consents, directions, demands or
other communications given under this Agreement (unless otherwise specified
herein) shall be in writing and shall be deemed to have been duly given when
delivered in person or by overnight delivery at, or telecopied to the respective
addresses or telecopy numbers, as the case may be, set forth below (or to such
other address or telecopy numbers as either party shall give notice to the other
party pursuant to this Section 9.4):
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If to the Borrower:
NCOP Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender:
CFSC Capital Corp. XXXIV
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.5 Reimbursement of the Lender's Costs and Expenses. The
Borrower and the Lender agree that (a) all out-of-pocket costs and expenses
incurred by the Lender in connection with the preparation, execution and
delivery of the Loan Documents (including without limitation reasonable legal
fees and expenses of counsel), UCC searches, recording fees, and other similar
expenses paid or incurred by the Lender in connection with obtaining, perfecting
or maintaining its security interest or lien on or priority in any Loan
Collateral shall constitute Purchase Expenses with respect to an Asset Pool and
the Lender and the Borrower shall be payable as such from Asset Pool Proceeds in
accordance with Section 2.8, provided, however, that in the event (i) any such
costs and expenses are incurred by the Lender with respect to an Asset Pool that
the Lender has committed to finance pursuant to an Accepted Borrowing Request,
but which is not financed with proceeds of a Loan, or which is not purchased by
the Borrower, the Borrower will reimburse the Lender for all such costs and
expenses, and (ii) the Borrower does not submit any Borrowing Requests to the
Lender during the first six (6) months following the execution of this Agreement
or all of the Borrowing Requests submitted by the Borrower during the first six
(6) months following the execution of this Agreement are rejected by the Lender,
then the Lender and the Borrower will reimburse each other for fifty percent
(50%) of such other party's legal fees incurred in the preparation, execution
and delivery of this Agreement; (b) all out-of-pocket costs and expenses
incurred by the Lender in connection with the administration, amendment,
documentation, recording, filing, insuring, or enforcing any Loan Document or
any Loan Collateral, or perfecting or maintaining the priority of any lien on or
security interest in any Loan Collateral, incurred after funding of the related
Loan shall constitute Loan Costs with respect to the related Asset Pool for
which they were incurred (or pro rata among all Asset Pools if not attributable
to one such Asset Pool) and shall be payable as such as Asset Pool Proceeds in
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accordance with Section 2.8; and (c) the Borrower shall reimburse the Lender,
from Asset Pool Proceeds for any and all reasonable out-of-pocket costs and
expenses incurred by the Lender in connection with the enforcement by the Lender
of any of the rights or remedies available to the Lender hereunder or under any
of the Loan Documents or under applicable law, whether or not suit is filed with
respect thereto.
Section 9.6 Indemnity. In addition to the payment of expenses pursuant
to Section 9.5, the Borrower agrees to indemnify, defend and hold harmless the
Lender and each of its respective participants, parent corporations, subsidiary
corporations, affiliated corporations, successor corporations, and all present
and future officers, directors, employees and agents (the "Indemnitees"), from
and against (a) any and all transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement and the other Loan Documents or the making of any
Loans (except for income or franchise taxes based on the Lender's income) and
(b) any and all liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses of any kind or nature whatsoever (including, without
limitations, the reasonable fees and disbursements of counsel) in connection
with any investigative, administrative or judicial proceedings, whether or not
such Indemnitee shall be designated a party thereto, which may be imposed on,
incurred by or asserted against such Indemnitee, in any manner relating to or
arising out of or in connection with, the making of any Loans or entering into
this Agreement or any other Loan Documents or the use or intended use of the
proceeds of the Loans or the collection of Assets, excepting, however, from the
foregoing any such liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses resulting from collection actions undertaken by the
Lender, or by a replacement servicer appointed by the Lender, or the unlawful
conduct, willful misconduct or gross negligence of an Indemnitee. If any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon request of such Indemnitee,
the Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrower's sole cost and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrower shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities contemplated hereby which is permissible under applicable law. The
obligations of the Borrower under this Section 9.6 shall survive termination of
this Agreement.
Section 9.7 Execution in Counterparts. This Agreement and other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
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Section 9.8 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) Governing Law. Except as otherwise provided in the Security
Agreement, the Loan Documents shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.
(b) Jurisdiction. The Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of any federal court sitting in Minneapolis or
St. ▇▇▇▇, Minnesota, in any action or proceeding arising out of or relating
to this Agreement or any of the other Loan Documents, and the Borrower
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such federal court. The Borrower
hereby irrevocably waives, to the fullest extent it may effectively do so,
the defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrower irrevocably consents to the service of copies of
the summons and complaint and any other process which may be served in any
such action or proceeding by the mailing of copies of such process, by
certified mail, return receipt requested, to the Borrower at its addresses
specified in Section 9.4 above. The Borrower agrees that a final judgment
in any such action 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. Nothing in this Section 9.8(b) shall affect the right of either
party to serve legal process in any other manner permitted by law or affect
the right of either party to bring any action or proceeding against the
other party or its property in the courts of other jurisdictions.
(c) WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY
INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 9.9 Integration. This Agreement comprises the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to such subject matter, superseding all prior oral
or written understandings.
Section 9.10 Agreement Effectiveness. This Agreement shall become
effective upon delivery of fully executed counterparts hereof to each of the
parties hereto.
Section 9.11 Headings Descriptive. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 9.12 Assignment. This Agreement shall be binding upon the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower may not transfer or assign any or all of its rights or obligations
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hereunder without the prior written consent of the Lender. The Lender may sell,
transfer, assign and convey any Note or any portion thereof and any or all of
its rights or obligations under this Agreement or with respect to any Loan or
Note, including without limitation the right to sell undivided participating
interests in any Loan or Note (provided that such sales of participating
interests shall not provide for a transfer or change of decision-making control
with respect to the administration and enforcement of this Agreement except in
the event of a default by the Lender under the related participation interest
sale agreement), to any Lender Affiliate without any prior notice to or consent
of the Borrower. So long as no default has occurred pursuant to the Exclusivity
Agreement, the Lender shall not make any such assignment to any Person who is
not a Lender Affiliate without the prior written consent of the Borrower.
Section 9.13 Advice from Independent Counsel. Each party hereto
understands that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and that it is satisfied with its legal counsel
and the advice received from it.
Section 9.14 Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any person by reason of the rule
of construction that a document is to be construed more strictly against the
person who itself or through its agent prepared the same, it being agreed that
all parties hereto have participated in the preparation of this Agreement.
Section 9.15 Use of Lender's Name. The Borrower hereby agrees that
neither the Borrower nor the Servicer shall refer to or use the name "CFSC
Capital Corp. XXXIV," "▇▇▇▇▇▇▇ Financial Services Corporation," "CFSC",
"▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇" or "▇▇▇▇▇▇▇", or any such name in any manner in any
collection or enforcement activities with respect to any Asset or in any
advertising, printed material, electronic medium or other medium, without first
obtaining the Lender's prior written consent. The Lender shall have no
obligation to give any such written consent and may withhold the same in its
sole and absolute discretion.
Section 9.16 Confidentiality of Information. Each of the Lender and the
Borrower hereby acknowledges that it will use the Confidential Information
(defined below) solely for the purposes of evaluating, administering and
enforcing the transactions contemplated by this Agreement and making any
necessary business judgments with respect thereto and, in particular,
determining whether or not to make or obtain, as applicable, a Loan with respect
to an Asset Pool. In addition, neither the Lender nor the Borrower will disclose
any Confidential Information without the prior consent of the other, other than
to the directors, employees, auditors, counsel or affiliates of the Lender and
the Borrower, as applicable, each of whom shall be informed of the confidential
nature of the Confidential Information; provided, however, that the Lender and
the Borrower may disclose any such Confidential Information (i) to any party
contemplated in this Agreement or any other Loan Document for the purposes
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contemplated hereunder or thereunder (including to any permitted assignee of a
Loan), (ii) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such party, (iii)
in order to comply with any law, order, regulation, regulatory request or ruling
applicable to such party or (iv) in the event any such party is legally
compelled (by interrogatories, requests for information or copies, subpoena,
civil investigative demand or similar process) to disclose any such Confidential
Information. For purposes of this Section 9.16, "Confidential Information" shall
include: (a) all information regarding one or more Asset Pools in connection
with a Borrowing Request (including, but not limited to the Borrower's, any
Excluded Party's or any Affiliated Party's pricing, bidding, collections,
returns and profitability) (the "Borrower Confidential Information"), and (b)
all information pertaining to the relationship between the Borrower and the
Lender evidenced by this Agreement and the other Loan Documents (the "Lender
Confidential Information"). This Section 9.16 shall be inoperative as to (A) the
Borrower, with respect to the Borrower Confidential Information, (B) the Lender,
with respect to the Lender Confidential Information, and (C) those portions of
the Confidential Information which are or become generally available to the
public, the Lender or the Borrower on a non-confidential basis from a source
other than the other party or an affiliate of the other party or were known to
the Lender or the Borrower on a non-confidential basis prior to its disclosure
by the other party.
Section 9.17 Full Recourse Obligations; Non-Recourse as to Certain
Parties. All Obligations are full recourse obligations of the Borrower and as to
all Assets. No Affiliated Party or Excluded Party (other than the Borrower and,
as applicable, the Servicer) shall have liability to the Lender under this
Agreement or otherwise for performance of the Obligations or in connection with
the transactions contemplated hereby; provided, however, that nothing in the
foregoing shall relieve any Affiliated Party or any Excluded Party from
liability to the Lender under the Exclusivity Agreement or for any
misapplication or misappropriation of any Asset Pool Proceeds or
misappropriation of any Loan Collateral, or for any act of fraud or any knowing
and intentional misrepresentation by or on behalf of the Borrower, the Servicer
or any such Affiliated Party or Excluded Party.
Section 9.18 Effective Date and Termination. This Agreement shall
become effective upon execution and shall remain in force until the Facility
Termination Date.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
NCOP CAPITAL, Inc.
By__________________________________________
Its___________________________________
CFSC CAPITAL CORP. XXXIV
By__________________________________________
Its___________________________________
Signature Page to Credit Agreement
EXHIBIT A
BORROWING REQUEST AND ACCEPTANCE
____________________, ____
CFSC Capital Corp. XXXIV
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ____________________
Re: Request for Loan under our Credit Agreement with you dated as of November
26, 2002 (the "Credit Agreement")
Ladies and Gentlemen:
Unless otherwise expressly indicated, all capitalized terms used herein
but not otherwise herein defined shall have the respective meanings ascribed to
them in the Credit Agreement. On _________________, we intend to submit an offer
to purchase a pool or pools of assets (the "Asset Pool"), which Asset Pool
includes consumer finance receivables and/or other delinquent or deficiency
consumer obligations (the "Assets") from _______________________________________
(the "Asset Pool Seller") for a purchase price not to exceed $ _______ (the
"Purchase Price"), such purchase to be effected pursuant to the terms and
conditions of a purchase agreement which, if available, is in substantially the
form attached hereto as Annex I (the "Purchase Agreement"). We anticipate that
the Total Cost of the Asset Pool will be $__________.
Pursuant to Section 2.1 of the Credit Agreement, we hereby request that
you make a Loan in the amount of $ ______________, which amount is [ninety
percent (90%)] of the Total Cost of the Asset Pool. Our Asset Pool Equity
Contribution with respect to the Asset Pool will be $______________, which is
[ten percent (10%)] of the Total Cost of the Asset Pool.
To induce you to make the Loans requested above, we hereby represent
and warrant to you the following:
(a) No Event of Default has occurred and is continuing, or will result
from the making of this Borrowing Request or the transactions contemplated
hereby;
(b) The conditions precedent set forth in Section 4.2 of the Credit
Agreement are fully satisfied as of the date of the Borrowing Request; and
(c) The representations, warranties and covenants of the undersigned
set forth in Article V and Section 4.3 of the Credit Agreement are true and
correct as of the date of the Borrowing Request.
Pursuant to Section 2.1 of the Credit Agreement, included with this
Borrowing Request is the following pertinent information and documentation
relating to the Asset Pool:
(a) Attached hereto as Annex II is the related bid package as provided
by the Asset Pool Seller; and
(b) Attached hereto as Annex III is all relevant additional information
regarding the Assets, including without limitation, the aggregate number of
Accounts included in the Asset Pool, projections of Contingent Payments and
projections of Asset Pool Proceeds, Purchase Expenses incurred to date, an
estimate of future Purchase Expenses, a budget for the anticipated costs of
collection to be incurred in collecting the Assets and all related cash
flow models in sufficient detail to accurately describe the anticipated
internal rate of return for the Assets, a projected payment schedule over
the expected term of the Asset Pool as contemplated in Treasury Regulation
ss. 1.12175-4(b) and other information material to our economic assumptions
with respect to the Assets.
We will use our best efforts to promptly supply such additional pertinent
information and documentation as you may request.
In accordance with Section 2.1 of the Credit Agreement, your failure to
accept this Borrowing Request within the Response Period shall be deemed a
rejection of this Borrowing Request by you.
Very truly yours,
NCOP CAPITAL, Inc.
By___________________________________
Its____________________________
Accepted, Agreed and Acknowledged this
__ day of __________, 20__:
CFSC CAPITAL CORP. XXXIV
By ________________________________
Its ______________________________
Exhibit A-2
ANNEX I
[Purchase Agreement]
ANNEX II
[Bid Package]
ANNEX III
[Asset Pool Information]
EXHIBIT B-1
Pool Reference
____________ ___ -
________________
PROMISSORY NOTE
$___________ Minnetonka, Minnesota
_____________, ____
For value received, the undersigned, NCOP CAPITAL, Inc., a Nevada
corporation (the "Borrower"), hereby promises to pay to the order of CFSC
CAPITAL CORP. XXXIV, a Delaware corporation (the "Lender"), at its main office
in Minnetonka, Minnesota, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of _____________________________
________________________________________ dollars and __/100 ($__________),
together with interest on the principal amount hereunder remaining unpaid from
the date hereof until this Note is fully paid, at the interest rate in effect
from time to time under the Credit Agreement (defined below) computed in
accordance with the Credit Agreement, and all Contingent Payments computed in
accordance with the provisions of the Credit Agreement.
The principal hereof and interest accruing thereon shall be due and
payable as provided in the Credit Agreement, but in any event will be due and
payable in full on ___________, _______ (the "Loan Maturity Date"). This Note
may be prepaid only in accordance with the Credit Agreement.
The "Credit Agreement," as referred to herein, shall mean that certain
Credit Agreement dated as of November 26, 2002, by and among the undersigned and
the Lender. This Note is issued in connection with the acquisition by the
Borrower of a portfolio of assets from ________________ on (or about) the date
hereof and such portfolio is described and referred to in the Lender's records
as ________________. This Note is subject to and is payable in accordance with
the Credit Agreement and is one of the Notes referred to therein.
This Note is secured, among other things, pursuant to the Security
Agreement (as defined in the Credit Agreement) and the other Loan Documents (as
defined in the Credit Agreement), and may now or hereafter be secured by one or
more other security agreements, pledges, assignments, agreements or other
instruments.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses, in the event this Note is not paid when due,
whether or not legal proceedings are commenced. Presentment or other demand for
payment, notice of dishonor and protest are expressly waived.
NCOP CAPITAL, Inc.
By_______________________________
Its________________________
Exhibit B-1
EXHIBIT B-2
Pool Reference
____________ ___ -
________________
PROMISSORY NOTE
$___________ Minnetonka, Minnesota
_____________, ____
For value received, the undersigned, NCOP CAPITAL, Inc., a Nevada
corporation (the "Borrower"), hereby promises to pay to the order of CFSC
CAPITAL CORP. XXXIV, a Delaware corporation (the "Lender"), at its main office
in Minnetonka, Minnesota, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of ____________________________
_________ _______________________________ dollars and __/100 ($__________),
together with interest on the principal amount hereunder remaining unpaid from
the date hereof until this Note is fully paid, at the interest rate in effect
from time to time under the Credit Agreement (defined below) computed in
accordance with the Credit Agreement, and all Contingent Payments computed in
accordance with the provisions of the Credit Agreement.
The principal hereof and interest accruing thereon shall be due and
payable as provided in the Credit Agreement, but in any event will be due and
payable in full on ___________, _______ (the "Loan Maturity Date"). This Note
may be prepaid only in accordance with the Credit Agreement.
The "Credit Agreement," as referred to herein, shall mean that certain
Credit Agreement dated as of November 26, 2002, by and among the undersigned and
the Lender. This Note is issued in connection with the acquisition by the
Borrower of a portfolio of assets from ________________ on (or about) the date
hereof and such portfolio is described and referred to in the Lender's records
as ________________. This Note is subject to and is payable in accordance with
the Credit Agreement and is one of the Notes referred to therein.
This Note is issued in replacement of, and substitution for, but not in
payment of, the undersigned's Promissory Note dated _________________, ____,
payable to the order of the Lender in the original principal amount of
$_____________.
This Note is secured, among other things, pursuant to the Security
Agreement (as defined in the Credit Agreement) and the other Loan Documents (as
defined in the Credit Agreement), and may now or hereafter be secured by one or
more other security agreements, pledges, assignments, agreements or other
instruments.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses, in the event this Note is not paid when due,
whether or not legal proceedings are commenced. Presentment or other demand for
payment, notice of dishonor and protest are expressly waived.
NCOP CAPITAL, Inc.
By____________________________________
Its_____________________________
Exhibit B-2
SCHEDULE 5.5
Material Litigation of the Borrower
NONE
