Exhibit 10.10
FINANCIAL PACIFIC FUNDING, LLC
Borrower
and
FINANCIAL PACIFIC LEASING, LLC
Servicer
and
FINANCIAL PACIFIC COMPANY
solely for the purposes set forth in Section 9.5
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Collateral Agent and Standby Servicer
and
RECEIVABLES CAPITAL CORPORATION
Lender
and
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO
Parallel Lenders
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Administrative Agent and Bank Agent
WAREHOUSE LOAN AND SECURITY AGREEMENT
Dated as of December 30, 1998
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions............................................................ 1
SECTION 1.2. Usage of Terms......................................................... 22
SECTION 1.3. Section References..................................................... 22
SECTION 1.4. Parties................................................................ 22
ARTICLE II
FACILITY
SECTION 2.1. Fundings............................................................... 22
SECTION 2.2. Receivables............................................................ 24
SECTION 2.3. Interest............................................................... 24
SECTION 2.4. Repayments of Fundings................................................. 24
SECTION 2.5. Notes.................................................................. 24
SECTION 2.6. Grant of Security Interest............................................. 25
SECTION 2.7. Warehouse Take-Outs.................................................... 26
SECTION 2.8. Release of Receivables................................................. 26
SECTION 2.9. Representations and Warranties of Borrower............................. 27
SECTION 2.10. Repurchase Upon Breach................................................. 36
SECTION 2.11. Delivery of Receivable Files; Appointment of Collateral Agent.......... 37
SECTION 2.12. Acceptance, Review and Custody of Receivable Files..................... 38
SECTION 2.13. Access to Receivable Files............................................. 39
SECTION 2.14. Funding Termination Date............................................... 39
SECTION 2.15. Collateral Agent's Certificate......................................... 40
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1. Duties of Servicer..................................................... 41
SECTION 3.2. Collection and Allocation of Receivable Payments....................... 42
SECTION 3.3. Realization Upon Receivables........................................... 42
SECTION 3.4. Physical Damage Insurance; Other Insurance............................. 43
SECTION 3.5. Maintenance of Security Interests in Equipment......................... 43
SECTION 3.6. Additional Covenants of Servicer....................................... 43
SECTION 3.7. Purchase of Receivables Upon Breach.................................... 44
SECTION 3.8. Servicing Fee.......................................................... 44
SECTION 3.9. Servicer's Certificate................................................. 44
SECTION 3.10. Annual Statement as to Compliance; Notice of Default................... 45
SECTION 3.11. Annual Independent Certified Public Accountant's Report................ 45
SECTION 3.12. Servicer Expenses...................................................... 45
SECTION 3.13. Retention and Termination of Servicer.................................. 46
SECTION 3.14. Access to Certain Documentation and Information Regarding Receivables.. 46
SECTION 3.15. Data Report............................................................ 46
SECTION 3.16. Employee Dishonesty Policy............................................. 47
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SECTION 3.17. Sub-Servicer............................................. 47
ARTICLE IV
DISTRIBUTIONS
SECTION 4.1. Accounts................................................. 47
SECTION 4.2. Collections.............................................. 48
SECTION 4.3. Application of Collections............................... 50
SECTION 4.4. Servicer Advances........................................ 50
SECTION 4.5. Additional Deposits...................................... 50
SECTION 4.6. Distributions............................................ 50
SECTION 4.7. Reliance on Information from the Servicer................ 52
ARTICLE V
FEES AND YIELD PROTECTION
SECTION 5.1. Fees..................................................... 52
SECTION 5.2. Overdue Interest......................................... 53
SECTION 5.3. Yield Protection......................................... 53
SECTION 5.4. Costs, Expenses and Taxes................................ 55
SECTION 5.5. Funding Losses........................................... 56
ARTICLE VI
CONDITIONS PRECEDENT TO FUNDINGS
SECTION 6.1. Conditions Precedent to Initial Funding.................. 56
SECTION 6.2. Conditions Precedent to All Fundings..................... 58
ARTICLE VII
THE BORROWER
SECTION 7.1. Representations of Borrower.............................. 60
SECTION 7.2. Indemnity by Borrower.................................... 63
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations of Servicer.............................. 65
SECTION 8.2. Indemnities of Servicer.................................. 67
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer........... 68
SECTION 8.4. Servicer and Standby Servicer Not to Resign.............. 68
SECTION 8.5. Representations and Warranties of Standby Servicer....... 69
ARTICLE IX
GENERAL COVENANTS OF BORROWER, SERVICER AND FINANCIAL PACIFIC COMPANY
SECTION 9.1. Affirmative Covenants of Borrower and Servicer........... 69
SECTION 9.2. Reporting Requirements................................... 71
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SECTION 9.3. Negative Covenants of Borrower and Servicer............... 73
SECTION 9.4. Separate Existence........................................ 74
SECTION 9.5. Covenants of Financial Pacific Company.................... 76
ARTICLE X
DEFAULT
SECTION 10.1. Events of Default......................................... 77
SECTION 10.2. Remedies.................................................. 80
SECTION 10.3. Termination of Servicer................................... 80
SECTION 10.4. Appointment of Successor Servicer......................... 81
SECTION 10.5. Repayment of Servicer Advances............................ 82
SECTION 10.6. Action Upon Certain Failures of the Servicer.............. 82
SECTION 10.7. Waiver of Past Defaults................................... 82
ARTICLE XI
THE COLLATERAL AGENT
SECTION 11.1. Duties of Collateral Agent................................ 82
SECTION 11.2. Certain Matters Affecting Collateral Agent................ 84
SECTION 11.3. Collateral Agent Not Liable for Agreement or Receivables.. 86
SECTION 11.4. Other Transactions........................................ 86
SECTION 11.5. Eligibility Requirements for Collateral Agent............. 86
SECTION 11.6. Resignation or Removal of Collateral Agent................ 87
SECTION 11.7. Successor Collateral Agent................................ 88
SECTION 11.8. Merger or Consolidation of Collateral Agent............... 88
SECTION 11.9. Co-Collateral Agent....................................... 88
SECTION 11.10. Representations and Warranties of Collateral Agent........ 90
SECTION 11.11. Release of Repurchased Receivables........................ 90
ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1. Authorization and Action.................................. 90
SECTION 12.2. Administrative Agent's Reliance, Etc...................... 90
SECTION 12.3. BofA and Affiliates....................................... 91
ARTICLE XIII
ASSIGNMENT OF LENDER'S INTEREST
SECTION 13.1. Restrictions on Assignments............................... 91
SECTION 13.2. Participations............................................ 93
SECTION 13.3. Rights of Assignee........................................ 94
SECTION 13.4. Evidence of Assignment.................................... 94
ARTICLE XIV
TERMINATION
SECTION 14.1. Termination............................................... 94
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ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1. Amendment, Etc........................................... 94
SECTION 15.2. Protection of Title to Collateral........................ 95
SECTION 15.3. Execution in Counterparts................................ 96
SECTION 15.4. Governing Law............................................ 96
SECTION 15.5. Notices.................................................. 96
SECTION 15.6. Severability of Provisions............................... 97
SECTION 15.7. Assignment............................................... 97
SECTION 15.8. Nonpetition Covenants.................................... 97
SECTION 15.9. Third Party Beneficiaries................................ 97
SECTION 15.10. Agent for Service........................................ 97
SECTION 15.11. Confidentiality of Borrower Information.................. 98
SECTION 15.12. Confidentiality of Program Information................... 100
SECTION 15.13. WAIVER OF JURY TRIAL..................................... 101
SECTION 15.14. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES............ 101
SECTION 15.15. No Recourse Against Other Parties........................ 102
SECTION 15.16. Payments................................................. 102
SCHEDULES
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WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as of December 30, 1998
(as amended, supplemented or otherwise modified from time to time, this
"Agreement"), among FINANCIAL PACIFIC FUNDING, LLC, a Delaware limited liability
company, as borrower ("Borrower"), FINANCIAL PACIFIC LEASING, LLC, a Washington
limited liability company ("Financial Pacific"), as servicer, FINANCIAL PACIFIC
COMPANY, solely for the purposes set forth in Section 9.5, NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as collateral
agent (in such capacity, the "Collateral Agent"), and as standby servicer (in
such capacity, the "Standby Servicer"), RECEIVABLES CAPITAL CORPORATION, a
Delaware corporation, as lender (the "Lender"), the financial institutions from
time to time party hereto, as parallel lenders (the "Parallel Lenders"), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as
administrative agent for the Lender (the "Administrative Agent") and as agent
for the Parallel Lenders (in such capacity, the "Bank Agent").
In consideration of the mutual agreements herein contained, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"31 to 60 Day Delinquency Ratio" means, with respect to a Collection
Period, the fraction, expressed as a percentage, equal to (a) the aggregate
Gross Balance of Delinquent Receivables that are 31 days or greater and 60 days
or fewer days past due as of the due date of each Receivable's Scheduled Payment
during the related Collection Period divided by (b) the aggregate Gross Balance
of all Receivables as of the last day of such Collection Period (the Gross
Balance for each Receivable shall be as of the due date of the related
Receivable's Scheduled Payment in such Collection Period).
"61 to 90 Day Delinquency Ratio" means, with respect to a Collection
Period, the fraction, expressed as a percentage, equal to (a) the aggregate
Gross Balance of Delinquent Receivables that are 61 days or greater and 90 days
or fewer days past due as of the due date of each Receivable's Scheduled Payment
during the related Collection Period divided by (b) the aggregate Gross Balance
of all Receivables as of the last day of such Collection Period (the Gross
Balance for each Receivable shall be as of the due date of the related
Receivable's Scheduled Payment in such Collection Period).
"Acknowledgment and Receipt" means an Acknowledgment and Receipt, in
the form of Exhibit J, executed by a creditor of Financial Pacific.
"Administrative Agent" has the meaning set forth in the preamble.
"Administrative Agent's Fee Letter" means the letter dated as of
December 30, 1998 between the Administrative Agent, the Originator and Borrower,
which letter has been consented to by the Surety Provider.
"Administrative Agent's Office" means the office of the Administrative
Agent at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Asset
Securitization Group, or such other address as shall be designated by the
Administrative Agent in writing to Borrower, Surety Provider and the Servicer.
"Advance Percentage" means the least of (i) 76%, (ii) the resultant,
expressed as a percentage, of 1 minus the product of (x) the Weighted Average
Life of the facility, times (y) the most recent three-month (or, if shorter, the
number of months from the Closing Date to the date of determination) rolling
average Annualized Charge Off Ratio, times (z) 2.5 and (iii) the result,
expressed as a percentage, equal to (x)(I) the Pool Balance (after giving effect
to the Funding to be made on the Funding Date on which the applicable
determination is being made) minus (II) the Minimum Overcollateralization Amount
divided by (y) the Pool Balance (after giving effect to the Funding to be made
on the Funding Date).
"Affected Party" means each of the Lender, the Collateral Agent, the
Standby Servicer, each Program Support Provider, each Parallel Lender, any
assignee or participant of the Lender, any Program Support Provider or any
Parallel Lender, BofA, any successor to BofA as Administrative Agent or Bank
Agent, Bank America Corporation, any holding company of BofA, the Surety
Provider and any sub-agent of the Administrative Agent or Bank Agent.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by or is under common control with such person. For
purposes of this definition of "Affiliate," the term "control" (including the
terms "controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause a direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently announced by BofA
at its principal office, as its reference rate; and
(b) the Federal Funds Rate most recently determined by
BofA plus 1.0% per annum.
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The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by BofA in connection with extensions of credit.
"Annualized Charge Off Ratio" means, with respect to any Collection
Period, the fraction, expressed as a percentage, equal to twelve times (a) the
aggregate Principal Balance (without giving effect to the proviso in the
definition of "Principal Balance") of Receivables that became Defaulted
Receivables during such Collection Period, minus the Recoveries collected in
such Collection Period divided by (b) the Pool Balance as of the last day of the
previous Collection Period.
"Assignment" means an Originator Assignment.
"Assumption Date" has the meaning set forth in Section 10.4.
"Bank Agent" has the meaning set forth in the preamble.
"Bank Funded Portion" means, for any Yield Period (or portion thereof),
that portion of the Outstanding Principal which has been funded pursuant to a
Program Support Agreement (and not by the issuance of Commercial Paper Notes)
during such Yield Period (or such portion).
"Bank Rate" means (i)(x) for any Yield Period on or prior to the first
day of which the Lender, any Parallel Lender or any Program Support Provider
shall have notified the Administrative Agent that (A) the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for such Person to fund the Bank Funded Portion or the Parallel Lender Funding,
as the case may be, at the Eurodollar Rate (Reserve Adjusted), or (B) due to
market conditions affecting the London interbank market, funds are not
reasonably available to such Person in such market in order to enable it to fund
the Bank Funded Portion or the Parallel Lender Funding, as the case may be, at
the Eurodollar Rate (Reserve Adjusted) (and in the case of subclause (A) or (B),
such Person shall not have subsequently notified the Administrative Agent that
such circumstances no longer exist), or (y) for any Yield Period as to which the
Administrative Agent does not receive notice or determine, by no later than
12:00 noon (New York City time) on the third Business Day preceding the first
day of such Yield Period, that the Bank Funded Portion will be funded pursuant
to a Program Support Agreement and not by the issuance of Commercial Paper
Notes, the Alternate Base Rate in effect on each day during such Yield Period;
and (ii) in the case of any other Yield Period, the sum of (A) the Eurodollar
Rate (Reserve Adjusted) for such Yield Period, plus (B) the Liquidity Premium
Percentage.
"BofA" has the meaning set forth in the preamble.
"Borrower" has the meaning set forth in the preamble.
"Borrower Information" has the meaning set forth in Section 15.11.
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"Borrower Party" means each of Financial Pacific (individually and as
Servicer), the Borrower and the Originator.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which (i) banking institutions in New York, New York, the State in which the
Collateral Agent's Office is located, the State in which the executive offices
of the Servicer are located or the State in which the principal place of
business of the Administrative Agent is located shall be authorized or obligated
by law, executive order, or governmental decree to be closed or (ii) the Surety
Provider is authorized or obligated to be closed for business at its office in
Armonk, New York.
"Change in Control" means any of the following:
(a) Financial Pacific fails to own at least 100% of the
membership interests in Borrower; or
(b) (i) Financial Pacific Company fails to own at least
100% of the membership interests in Financial Pacific; or
(ii) any two of Xxxx X. Winter, Xxxxx X. Xxxxxxxx or Xxxxx
X. Xxxxxx shall die, become incompetent, become unable to work for a
period of three or more consecutive months, be terminated or cease to
be included in the management of Financial Pacific for any other
reason, and a replacement consented to by the Surety Provider and the
Administrative Agent (which consent shall not be unreasonably withheld
or delayed) has not been appointed within 30 days of such event; or
(c) Windward Capital Associates, L.P., or limited
partnerships of which it is the general partner, fail to own at least
51% of the issued and outstanding shares of the capital stock of
Financial Pacific Company having the ordinary voting power to elect a
majority of the directors of Financial Pacific Company.
"Closing Date" means December 30, 1998.
"Collateral" has the meaning set forth in Section 2.6.
"Collateral Agent" has the meaning set forth in the preamble.
"Collateral Agent Officer" means any officer within the corporate trust
department of the Collateral Agent including any vice president, assistant vice
president, secretary, assistant secretary, treasurer, assistant treasurer, trust
officer or any other officer of the Collateral Agent (a) who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and (b) who shall have direct responsibility for the
administration of this Agreement.
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"Collateral Agent/Standby Servicer Fee Letter" means the letter dated
as of November 4, 1998, between Norwest Bank Minnesota, National Association,
and Borrower.
"Collateral Agent's Certificate" means a certificate completed and
executed by the Collateral Agent pursuant to Section 2.15, substantially in the
form of, in the case of an assignment to the Originator, Exhibit B-1, and in the
case of an assignment to the Servicer, Exhibit B-2.
"Collateral Agent's Fee" means the compensation and expenses payable by
the initial Servicer (including the reasonable expenses of the Collateral
Agent's outside attorneys and agents) payable to the Collateral Agent for
services rendered in such capacity hereunder as set forth in the Collateral
Agent/Standby Servicer Fee Letter.
"Collateral Agent's Office" means the office of the Collateral Agent at
which its corporate trust business is principally administered, which office at
the date of this Agreement is located at the address set forth for the
Collateral Agent on Schedule 15.5.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Collection Account Bank" means the Eligible Institution where the
Collection Account is located.
"Collection Period" means a period from, but excluding, a Settlement
Cutoff Date to, and including, the next succeeding Settlement Cutoff Date. Any
amount stated "as of the close of business on the last day of a Collection
Period" or "as of the end of a Collection Period" shall give effect to the
following calculations as determined as of the end of the day on the Settlement
Cutoff Date that is the last day of such Collection Period: 1) all applications
of Collections, 2) all Servicer Advances made by the Servicer and reductions of
Outstanding Servicer Advances and 3) all distributions.
"Collection Policy" means the collection policies and practices of the
Servicer attached hereto as Exhibit G, as modified without violating this
Agreement or the First Tier Purchase Agreement.
"Collections" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) all
collections of Scheduled Payments (including all excess payments made by any
Obligor that represent early payment of any scheduled payment on any Receivable)
received during such Collection Period; (ii) all Servicer Advances made by the
Servicer with respect to delinquent Scheduled Payments due in such Collection
Period; (iii) all Recoveries received during such Collection Period; (iv) the
Repurchase Amount of each Receivable that became a Repurchased Receivable during
such Collection Period; (v) any Residual Proceeds and Insurance Proceeds
received during such Collection Period; and (vi) proceeds from the Hedging
Agreement, if any, received during such Collection Period; provided, however,
that in calculating the Collections the following shall be excluded:
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(A) collections received on Receivables and the Repurchase Amount in respect of
Receivables to the extent that the Servicer has previously made an unreimbursed
Servicer Advance with respect to such Receivable; (B) Liquidation Proceeds and
Recoveries with respect to a particular Receivable to the extent of any
unreimbursed Servicer Advances with respect to such Receivable; and (C) any
Residual Proceeds and Insurance Proceeds in respect of a particular Receivable
to the extent that the Servicer has previously made an unreimbursed Servicer
Advance with respect to such Receivable.
"Commercial Paper Notes" means short-term promissory notes issued or to
be issued by Lender to fund its investments in accounts receivable or other
financial assets.
"Commercial Paper Rate" means for any Yield Period, a per annum
interest rate, determined by the Administrative Agent, equal to the sum of (i)
the rate or, if more than one rate, the weighted average of the rates,
determined by converting to an interest-bearing equivalent rate per annum the
discount rate (or rates) at which Commercial Paper Notes on each day during such
Yield Period have been sold by the commercial paper placement agents selected by
the Administrative Agent, plus (ii) the commissions and charges charged by such
commercial paper placement agents with respect to such Commercial Paper Notes,
which shall not be greater than .05%, expressed as a percentage of such face
amount and converted to an interest-bearing equivalent rate per annum
(calculated for the actual days elapsed on the basis of a 360 day year).
"Commitment" means, with respect to any Parallel Lender, the commitment
of such Parallel Lender to fund its Parallel Percentage of any Funding not
funded by the Lender pursuant to Section 2.1.
"CP-Funded Portion" means for any Yield Period (or portion thereof),
that portion of the Outstanding Principal which has been funded by the issuance
of Commercial Paper Notes (and not pursuant to a Program Support Agreement)
during such Yield Period (or such portion).
"Credit Policy" means the credit origination policies of Financial
Pacific attached hereto as Exhibit H, as modified without violating this
Agreement or the First Tier Purchase Agreement.
"Cutoff Date" means, with respect to each Funding, the date designated
by Borrower as the Cutoff Date in the applicable Funding Notice.
"Data Report" has the meaning set forth in Section 3.15.
"Default" means any event which, with the giving of notice or lapse of
time, or both, would (unless cured or waived) become an Event of Default.
"Default Premium" means, for any Yield Period, or portion thereof,
during which an Event of Default was continuing, the excess of (i) the interest
on the Outstanding Principal that accrued at the Alternate Base Rate in effect
from time to time plus 2% per annum during such Yield Period, or portion
thereof, over (ii) the interest that would have accrued on the Outstanding
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Principal during such Yield Period, or portion thereof, at the Interest Rate
(without giving effect to clause (B) of the definition thereof).
"Defaulted Receivable" means any Receivable (without duplication) as to
which any of the following has occurred: (a) all or any portion of a Scheduled
Payment under the Receivable becoming 180 days or more delinquent, or (b) the
Equipment securing, or that is the subject of, such Receivable is repossessed by
the Servicer or its agent, or (c) the Servicer determines in its good faith
discretion and in accordance with the Collection Policy that the remaining
Scheduled Payments due under such Receivable are uncollectible and such
Receivable is written off or (d) the related Obligor becomes the subject of
voluntary or involuntary proceedings under the bankruptcy code, or (e) there
exists a past due payment with respect to which a Servicer Advance has not been
made.
"Delinquent Receivable" means any Receivable with respect to which the
Obligor has failed to pay all, or any portion in excess of 50%, of any Scheduled
Payment when due which failure continues for 31 days or more, and which is not a
Defaulted Receivable.
"Determination Date" means, for purposes of determining compliance with
the Performance Ratios set forth in Section 10.1(x) hereof, the last day of a
Collection Period.
"Discount Rate" means, as of any date, the sum of (i) the Strike Price,
plus (ii) the Program Fee Rate, plus (iii) the Servicing Rate, plus (iv) the
annualized rate used to determine the MBIA Premium, plus (v) the Standby
Servicing Fee Rate, plus (vi) the Liquidity Premium Percentage, plus (vii)
0.05%.
"Distribution Account" means the account designated as such,
established with the Collateral Agent and maintained pursuant to Section 4.1.
"Distribution Date" means, for each Collection Period, the fifteenth
day of the calendar month, or, if such day is not a Business Day, the next
succeeding Business Day, following the Settlement Cutoff Day for such Collection
Period.
"Distribution Period" means (a) the period commencing on, and
including, the Closing Date and ending on, but excluding, the next following
Distribution Date, and (b) each subsequent period commencing on, and including,
a Distribution Date and ending on, but excluding, the next following
Distribution Date.
"Dollars" means dollars in lawful money of the United States of
America.
"Downgraded Liquidity Bank" means a Liquidity Bank which has been the
subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means that the
short-term securities of such Person shall have been assigned a rating lower
than the Required Short-Term Ratings or shall no longer be rated by either of
the Rating Agencies.
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"Eligible Assignee" means any Eligible Institution whose short-term
debt is rated not lower than (i) the lower of (A) A-1+ by S&P and P-1 by Moody's
and (B) the respective current ratings assigned by the Rating Agencies to the
Notes or (ii) if a written statement is obtained by the Issuer from each of the
Rating Agencies that the rating of the Notes will not be downgraded or withdrawn
solely as a result of the assignment of rights and obligations under this
Agreement to such Eligible Institution.
"Eligible Assigns" means any Liquidity Bank (or the Liquidity Agent on
behalf of the Liquidity Banks), any other Program Support Provider and any other
Person consented to by the Surety Provider, which consent shall not be
unreasonably withheld.
"Eligible Institution" means a commercial bank having a combined
capital and surplus of at least $250,000,000.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to the full and timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any State thereof (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have the
Required Short-Term Ratings;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, the Required
Short-Term Ratings;
(d) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(e) freely redeemable shares in money market mutual funds
registered under the Investment Company Act of 1940, as amended, which
invest only in obligations of the types described in clauses (a)
through (d) above (without regard to any limitations on the maturity of
such obligations but including any limitation on the credit ratings and
other qualifications of the issuers of such obligations) and which are
rated AAAm-G, AAAm or Aam by S&P; and
(f) any other investment as may be acceptable to the
Notice Parties, as evidenced by a writing to that effect, as may from
time to time be confirmed in writing to
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the Servicer and the Collateral Agent by the Notice Parties, provided,
that the Rating Agencies have been notified of such investment.
Any Eligible Investments may be purchased by or through the Collateral
Agent or any of its Affiliates.
"Equipment" means each item of equipment and each vehicle leased to an
Obligor under a Receivable, or securing an Obligor's obligations under a
Receivable.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any Yield
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to (a) the Eurodollar Rate for such Yield Period divided by (b) one
minus the Eurodollar Reserve Percentage for such Yield Period; where:
"Eurodollar Rate" means, with respect to any Yield Period, the rate per annum at
which Dollar deposits in immediately available funds are offered to the
Eurodollar Office of BofA two Eurodollar Business Days prior to the beginning of
such period by prime banks in the interbank eurodollar market at or about 11:00
a.m., New York City time, for delivery on the first day of such Yield Period,
for the number of days comprised therein and in an amount equal or comparable to
the Bank Funded Portion or Parallel Lender Funding, as the case may be for such
Yield Period; "Eurodollar Business Day" means a day of the year on which
dealings are carried on in the London interbank market and banks are open for
business in London and are not required or authorized to close in New York City
or Chicago; and "Eurodollar Reserve Percentage" means, with respect to any Yield
Period, the then-applicable percentage (expressed as a decimal) prescribed by
the Federal Reserve Board for determining reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
(a) a case or other proceeding shall be commenced,
without the application or consent of such Person, in any court,
seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of
its assets, or any similar action with respect to such Person under any
law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
-9-
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Event of Default" means an event specified in Section 10.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of Chicago; or
(b) if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by BofA from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
"Final Payout Date" means the date following the Funding Termination
Date which is the earlier of (i) the date on which the Outstanding Principal and
the Parallel Loan Balance shall have been reduced to zero and all Obligations
shall have been paid in full and (ii) the date on which all of the Receivables
have become Defaulted Receivables and the Equipment has been repossessed and
disposed of, and the proceeds thereof have been distributed in accordance with
this Agreement, or the Servicer has determined in good faith and in accordance
with the Collection Policy that such Equipment is not recoverable.
"Final Receivable Payment Date" means the date on which the final
Scheduled Payment with respect to the last maturing Receivable that is part of
the Collateral is scheduled to be paid.
"Final Scheduled Distribution Date" means the Distribution Date falling
on or next following the sixth anniversary of the Funding Termination Date.
"Financial Pacific" has the meaning set forth in the preamble.
"Financial Pacific Company" means Financial Pacific Company, a
Washington corporation.
-10-
"First Tier Purchase Agreement" means the First Tier Purchase Agreement
dated as of the date hereof by and between Borrower and the Originator, as
amended, modified or supplemented from time to time pursuant to the terms
thereof, relating to the purchase and sale of the Receivables by the Originator
to Borrower.
"Funding" means a Lender Funding or a Parallel Lender Funding.
"Funding Date" means, in relation to any Receivable, the date of the
first Funding on which such Receivable was included in the Collateral.
"Funding Notice" means, with respect to any Funding pursuant to Section
2.1, a notice, in the form of Exhibit I which shall be given to the Bank Agent,
the Administrative Agent, the Collateral Agent and the Surety Provider not less
than five Business Days prior to the related Funding Date, of the Receivables to
be added to the Collateral on such Funding Date, the aggregate Principal Balance
of such new Receivables and the applicable Cutoff Date and the requested Funding
Date with respect to such Funding.
"Funding Period" means the period from and including the Closing Date
to but excluding the Funding Termination Date.
"Funding Termination Date" has the meaning set forth in Section 2.14.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Gross Balance" means, as of any date with respect to a Receivable, the
then remaining aggregate Scheduled Payments to be made by the Obligor under such
Receivable; provided that the Gross Balance of any Defaulted Receivable shall be
deemed to be zero.
"Hedge Provider" means BofA or any other financial institution
acceptable to the Surety Provider which shall be party to a Hedging Agreement.
"Hedging Agreement" means an ISDA Interest Rate and Currency Exchange
Agreement between the Borrower and the Hedge Provider, as supplemented by each
interest rate cap confirmation from time to time executed thereunder in
connection with this Agreement.
"Indemnified Amounts" has the meaning set forth in Section 7.2.
"Indemnified Party" has the meaning set forth in Section 7.2.
"Independent Manager" has the meaning set forth in Section 9.4(b).
-11-
"Initial Cutoff Date" means December 31, 1998.
"Initial Receivables" means the Receivables included in the Collateral
on the date of the initial Funding hereunder.
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of February 1, 1999, among Financial Pacific, Borrower, and the Surety
Provider, as the same may be amended, supplemented or otherwise modified from
time to time.
"Insurance Proceeds" means all amounts realized from claims under
casualty, physical damage or residual value insurance policies with respect to
any Equipment.
"Interest" means, for any Yield Period, the interest on the Outstanding
Principal during such Yield Period at the Interest Rate in effect during such
Yield Period.
"Interest Rate" means, (A) for any Yield Period, or portion thereof,
during which no Event of Default is continuing, for any portion of the
Outstanding Principal which is funded by the issuance of Commercial Paper Notes,
the Commercial Paper Rate for such Yield Period, and for any portion of such
Outstanding Principal which is funded under a Program Support Agreement or
funded by the Parallel Lenders, the Bank Rate for such Yield Period and (B) for
any Yield Period, or portion thereof, during which an Event of Default is
continuing, the Alternate Base Rate in effect from time to time, plus the
Default Premium.
"Lender" has the meaning set forth in the preamble.
"Lender Funding" means a loan made or to be made by the Lender to
Borrower pursuant to Section 2.1.
"Lender Note" means a promissory note substantially in the form of
Exhibit E hereto payable to the Lender executed or to be executed by the
Borrower in accordance with Section 2.5.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind.
"Liquidity Agent" means BofA, as agent for the Liquidity Banks under
the Liquidity Agreement, or any successor to BofA in such capacity.
"Liquidity Agreement" means and includes (a) the Liquidity Asset
Purchase Agreement, dated as of the date hereof, among the Lender, BofA, as
Liquidity Agent, and certain other financial institutions, and (b) any other
agreement hereafter entered into by Lender providing for the making of loans,
purchases from or other extensions of credit to the Lender secured by a direct
or indirect security interest in Lender's interest in the Collateral (or any
portion thereof), to support all or part of the Lender's payment obligations
under the Commercial Paper Notes or to provide an alternate means of funding the
Lender's investments in accounts receivable or other
-12-
financial assets, and under which the amount available from such extensions of
credit is limited to an amount calculated by reference to the value or eligible
unpaid balance of such accounts receivable or other financial assets or any
portion thereof and/or the level of transaction-specific credit enhancement
available with respect thereto, as such Liquidity Agreement or other agreement
may be amended, supplemented, restated or otherwise modified from time to time.
"Liquidity Bank" means any one of, and "Liquidity Banks" means all of,
BofA and the other commercial lending institutions that are at any time parties
to the Liquidity Agreement.
"Liquidity Premium Percentage" means 0.125%.
"Lock-Box Account" has the meaning set forth in Section 4.2(b).
"Lock-Box Agreement" has the meaning set forth in Section 4.2(b).
"Lock-Box Bank" has the meaning set forth in Section 4.2(b).
"Material Adverse Effect" with respect to any event or circumstance,
means a material adverse effect on:
(i) the business, assets, financial condition or
operations of any Borrower Party;
(ii) the ability of any Borrower Party to perform in all
material respects its obligations under this Agreement or any other
Related Document;
(iii) the validity or enforceability of this Agreement, any
other Related Document or the Receivables or the collectibility of
Receivables representing a principal balance of 5% or more of the Pool
Balance; provided, however, that a Material Adverse Effect shall not be
deemed to occur solely because any particular level of delinquencies or
losses is reached with respect to the Receivables; or
(iv) the status, existence, perfection, priority or
enforceability of the Collateral Agent's interest, for the benefit of
the Secured Parties, in any of the Collateral.
"Maturity Date" means the sixth anniversary of the Funding Termination
Date.
"MBIA Premium" has the meaning set forth in the Insurance Agreement.
"Minimum Overcollateralization Amount" at any time means the greater of
(i) $2,500,000 and (ii) 25% of the highest previous Overcollateralization Amount
at such time.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor.
"Notice of Release" has the meaning set forth in Section 2.8.
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"Notice Parties" means the Administrative Agent, the Bank Agent and the
Surety Provider.
"Notes" means the Lender Note and the Parallel Note.
"NPA Ratio" means, with respect to a Collection Period, the fraction,
expressed as a percentage, equal to (a) the sum of (i) the aggregate Gross
Balance, plus (ii) booked residuals, less (iii) unearned income applicable
thereto of Receivables that are 90 days or more past due as of the date of each
Receivable's Scheduled Payment during the related Collection Period but have not
been determined to be Defaulted Receivables, divided by (b) the aggregate Gross
Balance of all Receivables as of the last day of such Collection Period (the
Gross Balance for each Receivable shall be as of the date of the related
Receivable's Scheduled Payment in such Collection Period).
"Obligations" means all obligations of the Borrower, the Servicer and
the Originator to any of the Secured Parties under the Related Documents
including without limitation (i) all obligations of the Borrower to pay the
principal amount of and accrued interest on the Fundings, (ii) the Borrower's,
the Originator's and the Servicer's repurchase obligations and (iii) all
obligations of the Borrower, the Servicer and the Originator in respect of fees,
expenses and indemnification.
"Obligor" on a Receivable means the purchaser or lessee of the related
Equipment, and guarantor(s) or any other Person who owes payments under such
Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant vice president, any assistant
treasurer or any assistant controller of Borrower, the Originator or the
Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel, which counsel
may, but need not, be counsel to the Borrower or Servicer, and shall be
reasonably acceptable in form and substance to the Collateral Agent and the
Notice Parties and which opinion shall be addressed to the Collateral Agent and
the Notice Parties.
"Originator" means Financial Pacific, in its capacity as an Originator
under the First Tier Purchase Agreement.
"Originator Assignment" means an instrument of assignment executed by
the Originator pursuant to the First Tier Purchase Agreement.
"Outstanding Principal" at any time, means the aggregate outstanding
principal amount of all of the Fundings made hereunder.
"Outstanding Servicer Advances" on a Receivable means the sum, as of
the close of business on the last day of a Collection Period, of all Servicer
Advances made by Financial
-14-
Pacific as Servicer (or by any successor Servicer that has agreed to make
Servicer Advances) with respect to such Receivable as reduced by payments made
by or on behalf of the Obligor pursuant to Section 4.4 with respect to such
Receivable.
"Overcollateralization Amount" means, as of any date of determination,
the excess, if any, of the Pool Balance over the Outstanding Principal.
"Parallel Lender Assignment" has the meaning set forth in Section
13.1(c).
"Parallel Lender Funding" means a loan made or to be made by the
Parallel Lenders to Borrower pursuant to Section 2.1.
"Parallel Lenders" has the meaning set forth in the preamble.
"Parallel Loan Balance" at any time means the then outstanding
principal balance of the Parallel Lender Fundings made hereunder.
"Parallel Note" means a promissory note substantially in the form of
Exhibit E hereto payable to the order of the Bank Agent, for the pro rata
account of the Parallel Lenders, executed in accordance with Section 2.5.
"Parallel Percentage" with respect to any Parallel Lender means the
percentage of Parallel Lender Fundings that such Parallel Lender has agreed to
fund hereunder, as set forth below its signature hereto or in the Parallel
Lender Assignment pursuant to which it became a Parallel Lender, as such
percentage may be modified in connection with any subsequent assignment.
"Payments Account" shall have the meaning specified in Section 4.2
hereof.
"Payments Account Bank" has the meaning specified in Section 4.2
hereof.
"Permitted Lien" means any tax lien (if such taxes are not at the time
due and payable) or non-material mechanics' lien on an item of Equipment
provided the same does not extend to the related Receivable.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
limited liability company or government or any agency or political subdivision
thereof.
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables.
"Principal Balance," as of the close of business on the last day of a
Collection Period, of a Receivable means the present value of the Scheduled
Payments thereof (which Scheduled Payments shall reflect any reductions or
reduction due to Servicer Advances, partial prepayments
-15-
or payaheads), discounted at the Discount Rate to such last day; provided,
however, that the Principal Balance of each Defaulted Receivable shall be deemed
to be zero.
"Program Fee" has the meaning set forth in Section 5.1(a).
"Program Fee Rate" has the meaning set forth in the Administrative
Agent's Fee Letter.
"Program Information" has the meaning set forth in Section 15.12.
"Program Support Agreement" means and includes the Liquidity Agreement
and any other agreement hereafter entered into by any Program Support Provider
providing for the issuance of one or more letters of credit for the account of
the Lender, the sale by the Lender to any Program Support Provider of undivided
interests (or portions thereof) in Lender Fundings and/or the making of loans
and/or other extensions of credit to the Lender in connection with the Lender's
securitization program, together with any letter of credit or other instrument
issued thereunder (but excluding any discretionary advance facility provided by
Administrative Agent).
"Program Support Provider" means and includes BofA, the Liquidity Banks
and any other or additional Person (other than any customer of Lender) now or
hereafter extending credit or having a commitment to extend credit to or for the
account of Lender or issuing a letter of credit or other instrument to support
any obligations arising under or in connection with the Lender's securitization
program.
"Qualifying Liquidity Bank" means a Liquidity Bank having the Required
Short-Term Ratings.
"Rating Agency" means each of S&P and Moody's. If either such
organization (or its successor) is no longer in existence, "Rating Agency" shall
be such nationally recognized statistical rating organization or other
comparable Person designated by the Administrative Agent and approved by the
Surety Provider, notice of which designation shall be given to the Collateral
Agent and the Servicer.
"RCC Parties" means, collectively, each of the Lender, the
Administrative Agent, each other Affected Party (other than the Surety Provider)
and each other Indemnified Party (other than the Surety Provider).
"Receivable" means any lease or installment sale contract purchased or
otherwise originated by the Originator in connection with the sale or lease of
equipment or vehicles which shall appear on any Schedule of Receivables, other
than Repurchased Receivables.
"Receivable Files" means the documents specified in clauses (i) through
(viii) of Section 2.11(a).
"Recoveries" means the monies collected from whatever source, after the
respective Collection Period in which a Receivable became a Defaulted
Receivable, on such Defaulted
-16-
Receivable, net of (a) the reasonable costs of liquidation (including reasonable
repossession and disposition costs and expenses), and (b) any amounts required
by law to be remitted to the Obligor; provided, however, that the Recovery for
any Receivable shall not be less than zero.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party
(a) any change after the date hereof in (or the adoption,
implementation, change in phase-in or commencement of effectiveness of
after the date hereof) any
(i) United States federal or state law or
foreign law applicable to such Affected Party;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of
law) applicable to such Affected Party of (A) any court,
government authority charged with the interpretation or
administration of any law referred to in clause (a)(i) or of
(B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Affected
Party and affecting the application to such Affected Party of
any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or
(b) any change after the date hereof in the application
to such Affected Party of any existing law, regulation, interpretation,
directive, requirement, request or accounting principles referred to in
clause (a)(i), (a)(ii) or (a)(iii) above.
"Related Documents" means this Agreement, the First Tier Purchase
Agreement, the Originator Assignments, the Hedging Agreement, the Lock-Box
Agreements, the Notes, the Surety Bond, the Insurance Agreement, the
Administrative Agent's Fee Letter, the Collateral Agent Fee Letter, the
Liquidity Asset Purchase Agreement and the other agreements, instruments and
other documents executed and delivered from time to time in connection herewith
and therewith and all amendments thereto and modifications thereof.
"Reporting Date" means the fifth Business Day prior to each
Distribution Date.
"Repurchase Amount" with respect to any Receivable means the amount,
calculated as of the close of business on the last day of a Collection Period,
equal to the sum of (without duplication) (i) the Principal Balance of such
Receivable, plus (ii) all unreimbursed Outstanding
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Servicer Advances relating to such Receivable, plus (iii) interest on the
foregoing amounts for thirty days at the Interest Rate.
"Repurchased Receivables" means a Receivable (i) purchased as of the
close of business on the last day of a Collection Period by the Servicer
pursuant to Section 3.2 or Section 3.7 or by the Originator pursuant to Section
2.10, Section 2.12 or the First Tier Purchase Agreement or (ii) transferred in
connection with a Warehouse Take-Out in accordance with Section 2.7.
"Required Parallel Lenders" means Parallel Lenders having in the
aggregate Parallel Percentages in excess of 50%.
"Required Short-Term Ratings" means commercial paper ratings or short
term deposit ratings of at least A-1+ and P-1 by S&P and Moody's, respectively.
"Residual Proceeds" means proceeds received from the disposition of the
Equipment after all Scheduled Payments with respect thereto have been made or
deducted, net of any reasonable costs and expenses incurred in connection with
such disposition.
"S&P" means Standard & Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies, Inc., or any successor.
"Schedule of Receivables" means the Schedule of Receivables attached as
Schedule A to the initial Funding Notice, as supplemented by the Schedule of
Receivables attached as Schedule A to each subsequent Funding Notice.
"Scheduled Payment" on a Receivable means each periodic scheduled
payment due from the Obligor thereunder, excluding any amounts related to
insurance, maintenance or taxes.
"Secured Parties" means the RCC Parties and the Surety Provider.
"Servicer" means Financial Pacific as the servicer of the Receivables
which were contributed to or purchased by the Borrower, and each successor to
Financial Pacific (in the same capacity) pursuant to the terms of this
Agreement.
"Servicer Advance" means the amount of any advance by the Servicer on
the respective Receivables pursuant to Section 4.4.
"Servicer Files" means any and all documents other than the Receivables
Files that the Servicer or the Borrower shall keep on file, in accordance with
its customary procedures, relating to a Receivable, an Obligor or the Equipment.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer pursuant to Section 3.9, substantially in the form of
Exhibit C.
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"Servicer's Office" means the office of Financial Pacific where it
keeps its documents and records relating to Receivables, which office as of the
date hereof is located at the address of Financial Pacific indicated on Schedule
15.5.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered to the Collateral Agent and the Notice Parties, as
the same may be amended from time to time upon notice to the Collateral Agent
and the Notice Parties.
"Servicing Rate" means 1.00% per annum; provided that from and after
the date that the Standby Servicer is appointed as the Servicer, the Servicing
Rate will be the current market rate for servicing similar Receivables, as
agreed among the Standby Servicer and the Administrative Agent with the consent
of the Surety Provider.
"Settlement Cutoff Date" means the last calendar day of each calendar
month.
"Standby Fee" means the compensation payable to the Standby Servicer
which shall be equal to the greater of (i) one-twelfth of the Standby Servicing
Fee Rate times the Outstanding Principal and (ii) $2000 per month.
"Standby Servicer" means Norwest Bank Minnesota, National Association
or another financial institution acceptable to the Notice Parties, in its
capacity as Standby Servicer pursuant to the terms of the Servicing Assumption
Agreement or such Person as shall have been appointed Standby Servicer pursuant
to the terms of this Agreement. From and after the Standby Servicer's
appointment as Servicer hereunder, the Standby Servicer shall be deemed to be
the Servicer hereunder and under the other Related Documents.
"Standby Servicing Fee Rate" means 0.05%.
"State" means any State of the United States of America, or the
District of Columbia.
"Strike Price" has the meaning set forth in the Hedging Agreement.
"Subsidiary" means a corporation of which Financial Pacific and/or its
other Subsidiaries own, directly or indirectly, such number of outstanding
shares as have more than 50% of the ordinary voting power for the election of
directors.
"Surety Bond" means the Surety Bond No. 28196, dated February 1, 1999,
issued by the Surety Provider to BofA, as Bank Agent and Administrative Agent,
as amended, supplemented or modified from time to time.
"Surety Expiration Date" means 180 days after the Maturity Date.
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"Surety Provider" means MBIA Insurance Corporation or any successor
thereof.
"Tangible Net Worth" means, with respect to any Person on any date of
determination, the difference between:
1. the tangible assets of such Person and its Affiliates
calculated in accordance with GAAP; provided, however, that :
(A) in no event shall there be included in the above
calculation trade names, copyrights, licenses, goodwill,
organizational costs, advances or loans to, or receivables
from, Directors, officers, employees or affiliates (excluding
amounts owing to the initial Servicer by Financial Pacific
Company arising from the formation of Servicer, and amounts
due to Servicer from Borrower), amounts relating to covenants
not to compete, pension assets, deferred charges (excluding
unamortized lease origination costs and debt acquisition
costs), or treasury stock or any securities unless the same
are readily marketable in the United States of America or
entitled to be used as a credit against federal income tax
liabilities; (B) securities included in such tangible assets
shall be taken into account at their current market price or
cost, whichever is lower; and (C) any write-up in the book
value of any assets shall not be taken into account; and
2. all indebtedness, including subordinated debt of such Person
and its Subsidiaries and Affiliates.
"Transfer Taxes" has the meaning set forth in Section 2.9(xlii).
"Transition Costs" means any documented expenses and allocated cost of
personnel reasonably incurred by the Standby Servicer in connection with a
transfer of servicing from the Servicer to the Standby Servicer as the successor
Servicer.
"Trust Receipt" has the meaning set forth in Section 2.13.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Unused Fee" has the meaning set forth in Section 5.1(c).
"Warehouse Facility" means the option of the Lender, and the agreement
of the Parallel Lenders, to make Fundings available to Borrower in accordance
with Section 2.1.
"Warehouse Purchase Price" has the meaning set forth in Section 2.7.
"Warehouse Take-Out" has the meaning set forth in Section 2.7.
"Weighted Average Life" means, at any time, a term equal to:
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n
3(P(k) x T(k))
k = 1
--------------
PB
where:
3 = The mathematical symbol for summation. The summation
is computed from 1 to n, where n is the number of
periods in months, for which there are remaining
Scheduled Payments at the time of calculation;
P(k) = The sum of the amounts that are applicable to the
principal of all kth Scheduled Payments;
T(k) = The remaining period in months, from the time of
calculation until the scheduled due date of such kth
Scheduled Payment; and
PB = The Pool Balance at the time of calculation,
which term is then divided by 12 and rounded to the nearest 1/100th.
"Weighted Average Remaining Term to Maturity" means, at any time, a
term equal to:
n
3(G(k) x T(k))
k = 1
------------------
GB
where:
3 = The mathematical symbol for summation. The summation
is computed from 1 to n, where n is the number of
Receivables in the facility at the time of
calculation;
G(k) = The Gross Balance of the related Receivable at the
time of calculation;
T(k) = The remaining period, in months, from the time of
calculation until the scheduled termination of the
related Receivable; and
GB = The aggregate Gross Balance of all Receivables at the
time of calculation.
"Yield Period" means, for purposes of calculating interest on the
Outstanding Principal, each period (1) initially commencing on and including (A)
in relation to the CP-Funded Portion or any Parallel Lender Funding, the date of
any increase in the CP-Funded Portion or Parallel
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Lender Funding, as the case may be, and (B) in relation to any Bank Funded
Portion, the date of any drawing under a Program Support Agreement, as
applicable, and (ii) ending on, but excluding, the next following Distribution
Date, and (2) thereafter commencing on and including a Distribution Date and
ending on, but excluding, the next following Distribution Date.
SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.3. Section References. All section references shall be to
Sections in this Agreement unless otherwise indicated.
SECTION 1.4. Parties. Each reference to any Person in any capacity
shall include any successor or permitted assignee of such Person and any
successor to such Person in such capacity as permitted hereunder and under the
Related Documents.
ARTICLE II
Facility
SECTION 2.1. Fundings. (a) Subject to the terms and conditions set
forth herein, including without limitation Article VI, the Lender may, in its
sole discretion, from time to time on any Business Day prior to the Funding
Termination Date, make loans or, if Lender declines to make such loans, the
Parallel Lenders shall make loans to Borrower, on a recourse basis, in amounts
as provided in subsection (b), which loans, together with interest and the
Program Fee thereon and all other Obligations hereunder, including the MBIA
Premium, shall be secured by the Receivables and other Collateral in accordance
with Section 2.6. Each such loan is herein called a "Funding".
(b) Principal Amount. The principal amount of each Funding shall
be an amount equal to the least of:
(i) the amount requested by the Borrower in the relevant
Funding Notice;
(ii) the excess of (x) $75,000,000 over (y) the
Outstanding Principal (before giving effect to such Funding), ("Funding
Limit"); and
(iii) the excess of (x) the Advance Percentage multiplied
by the Pool Balance, including Receivables to be added on such date,
over (y) the Outstanding Principal (before giving effect to such
Funding);
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provided, however, no Funding shall be made if the initial principal amount
thereof would be less than $1,000,000.
(c) Number of Fundings. No more than one Funding will be permitted
in any one Collection Period.
(d) Procedures for Parallel Lender Fundings. On the date of each
Parallel Lender Funding, upon satisfaction of the applicable conditions set
forth in Section 6.2, each Parallel Lender shall make available to the Bank
Agent at the Bank Agent's office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000 such Parallel Lender's Parallel Percentage of the principal amount of such
Parallel Lender Funding in same day funds, and after receipt by the Bank Agent
of such funds, the Bank Agent will make such funds immediately available to
Borrower. Each Parallel Lender's obligation hereunder shall be several, such
that the failure of any Parallel Lender to make payment to the Bank Agent
hereunder shall not relieve any other Parallel Lender of its obligation
hereunder to fund its portion of the Parallel Lender Funding. Further, in the
event any Parallel Lender fails to satisfy its obligation to fund its Parallel
Percentage of the Parallel Lender Fundings as required hereunder, upon receipt
of notice of such failure from the Bank Agent, subject to satisfaction of the
applicable conditions set forth in Section 6.2, the non-defaulting Parallel
Lenders shall make additional loans pro rata in proportion to their relative
Parallel Percentages (determined without regard to the defaulting Parallel
Lender's Parallel Percentage which, for purposes of this sentence, shall ratably
increase the other Parallel Lenders' Parallel Percentages in order to cover the
defaulting Parallel Lender's Parallel Percentage), but in no event shall any
Parallel Lender be required to fund an amount in excess of the amount of its
Commitment. Unless the Bank Agent shall have received notice from a Parallel
Lender prior to 11:00 a.m. (Chicago time) on the date of any proposed Parallel
Lender Funding, that such Parallel Lender will not make available to the Bank
Agent the amount of that Parallel Lender's Parallel Percentage, the Bank Agent
may assume that each Parallel Lender has made such amount available to the Bank
Agent on the Funding Date and the Bank Agent may (but shall not be required to),
in reliance on such assumption, make such amount available to the Borrower on
such date. If and to the extent any Parallel Lender shall not have made its full
amount available to the Bank Agent, and the Bank Agent in such circumstances has
made available to the Borrower the corresponding amount, such Parallel Lender
shall on the next Business Day following the date of such Parallel Lender
Funding make such amount available to the Bank Agent, together with interest
thereon at the Federal Funds Rate for such period. A certificate of the Bank
Agent submitted to any Parallel Lender with respect to amounts owing under this
Section 2.1(d) shall be conclusive, absent manifest error. If such amount is so
made available, such payment to the Bank Agent shall constitute such Parallel
Lender's funding on the Funding Date for all purposes of this Agreement. If such
amount is not made available to the Bank Agent on the next Business Day
following the date of such Parallel Lender Funding, the Bank Agent shall notify
the Borrower of such failure to fund and, upon demand by the Bank Agent, the
Borrower shall pay such amount to the Bank Agent for the Bank Agent's account,
together with interest thereon for each day elapsed since the date of such
Parallel Lender Funding, at a rate per annum equal to the Federal Funds Rate.
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SECTION 2.2. Receivables. Fundings shall be used by the Borrower to
fund the acquisition of, and the assumption and payment (in whole or part) by
the Borrower of indebtedness relating to, Receivables sold by the Originator to
the Borrower from time to time pursuant to the First Tier Purchase Agreement.
Together with each Funding Notice, the Servicer or the Borrower shall deliver to
the Administrative Agent, the Bank Agent and the Collateral Agent, with a copy
to the Surety Provider, a Schedule of Receivables identifying all new
Receivables to be included in the Collateral in connection with the related
Funding.
SECTION 2.3. Interest. The Borrower shall pay interest on the
Outstanding Principal at a rate per annum equal to the Interest Rate, calculated
on the basis of a year of 360 days for the actual number of days elapsed. Such
interest shall be payable on each Distribution Date, for the Distribution Period
then ending, and each other date when the principal amount of any Funding is
payable under Section 2.4, in each case, out of Collections distributed on such
date under Section 4.6 to the extent available and in the priority set forth
therein.
SECTION 2.4. Repayments of Fundings. (a) The Borrower shall repay each
Funding on the Maturity Date, together with interest thereon accrued to the
Maturity Date and all other amounts in respect thereof.
(b) The Borrower shall otherwise repay Fundings, without
duplication, as follows:
(i) on the date of any distribution of Collections
allocated to reduction of the Outstanding Principal in accordance with
Section 4.6, in the amount of such distribution; and
(ii) on the date of any Warehouse Take-Out, in an amount
equal to the sum of (A) the excess of (x) the Outstanding Principal
(prior to giving effect to such repayment) over (y) the product of the
Advance Percentage times the Pool Balance (after giving effect to the
release of the Receivables that are the subject of such Warehouse
Take-Out), plus (B) 30 days' Interest on the Outstanding Principal,
plus (C) all other amounts owed by the Borrower in respect thereof,
including any amounts owed to the Surety Provider with respect to the
Insurance Agreement.
(c) The Borrower may prepay the Fundings in full (but not in part,
except as provided in Sections 2.7 and 2.8) on any Distribution Date, together
with interest thereon accrued to the date of prepayment and all other amounts
owed by the Borrower in respect thereof, including any amounts owed to the
Surety Provider, upon not less than ten (10) Business Days' prior written notice
to the Notice Parties which notice shall be irrevocable.
SECTION 2.5. Notes. The Borrower's obligations to pay the principal
amount of and interest on the Fundings shall be evidenced by the Lender Note
payable to the order of the Lender, and the Parallel Note payable, to the order
of the Bank Agent, for the pro rata benefit of the Parallel Lenders. The
Borrower hereby irrevocably authorizes the Administrative Agent (and the
Administrative Agent hereby agrees to accept such designation and to make the
notations to
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the grid attached to the Lender Note as described below) or the Bank Agent (and
the Bank Agent hereby agrees to accept such designation and to make the
notations to the grid attached to the Parallel Note as described below), as the
case may be, to make (or cause to be made) appropriate notations on the grid
attached to the Lender Note or the Parallel Note, as applicable (or on a
continuation of such grid attached to each Note, and made a part thereof), or
(at the Administrative Agent's or Bank Agent's, as the case may be, option) in
the records of the Administrative Agent or the Bank Agent, as the case may be,
which notations shall evidence, inter alia, the date and the original principal
amount of each Funding, the amount of each payment made on account of such
principal amount and the principal amount of each Note remaining outstanding.
The notations on such grids (and on each such continuation) or in such records,
as the case may be, indicating the outstanding principal amount of the Fundings
shall, in the absence of manifest error, be conclusive evidence of the
outstanding principal amount thereof (and the Surety Provider may rely on the
same), but the failure to record any such amount on such grid (or on such
continuation) or in such records shall not limit or otherwise affect the
obligations of the Borrower hereunder or under the Notes to make payment of the
principal amount of or interest on the Fundings in accordance herewith or to
take any other action with respect thereto in accordance with this Agreement and
such failure to record such amounts shall not increase the liability of the
Surety Provider, it being understood that the Surety Provider shall not, at any
time, be liable for principal payments under the Surety Bond in an amount
greater than the current Outstanding Principal.
SECTION 2.6. Grant of Security Interest. (a) In consideration of the
Lender's and the Parallel Lenders' making of the Fundings hereunder, and the
Surety Provider's issuance of the Surety Bond, and as collateral security for
the prompt and complete payment when due of the principal of and interest on the
Fundings, all amounts due to the Surety Provider pursuant to any of the Related
Documents and all other Obligations from time to time outstanding, the Borrower
does hereby pledge, assign, transfer, set over and otherwise convey to the
Collateral Agent, for the benefit of the Secured Parties, and hereby grants to
the Collateral Agent, for the benefit of the Secured Parties, a first priority
perfected security interest in, all of the following types or items of property,
whether existing at the time of any Funding or thereafter arising or acquired,
wherever located (the "Collateral"):
(i) all right, title and interest of the Borrower in and
to the Receivables and all monies due or to become due thereon after
the relevant Cutoff Date (but excluding Scheduled Payments and
principal prepayments relating to such Scheduled Payments received by
the Borrower, the Servicer or the Originator before the Cutoff Date)
and all Recoveries, Insurance Proceeds and Residual Proceeds received
with respect to such Receivables;
(ii) all right, title and interest of the Borrower in and
to the Equipment related to the Receivables;
(iii) all right, title and interest of the Borrower in and
to any proceeds from claims on any physical damage insurance relating
to the Equipment;
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(iv) all right, title and interest of the Borrower in and
to the First Tier Purchase Agreement and any Originator Assignment
covering Receivables, including a direct right to cause the Originator
to repurchase Receivables from the Borrower under certain
circumstances;
(v) the Receivable File and the Servicer File related to
each Receivable;
(vi) all amounts and property from time to time held in or
credited to the Collection Account and the Distribution Account (except
for the Borrower's right to receive distributions from such accounts in
accordance with this Agreement); and
(vii) the income and proceeds of any and all of the
foregoing.
SECTION 2.7. Warehouse Take-Outs. From time to time (subject to the
provisions of this Section 2.7) on a Distribution Date prior to the Funding
Termination Date, the Borrower may, upon not less than ten (10) Business Days'
prior written notice to the Notice Parties and the Collateral Agent and, unless
such Warehouse Take-Out relates to all of the Receivables, with the consent of
the Notice Parties (which consent shall not be unreasonably withheld), sell and
assign to any Person any or all of the Receivables and related Collateral then
owned by the Borrower, without recourse, representation or warranty or any
indemnity (other than a representation and warranty that Borrower has or will
convey good title to such Receivables and related Collateral, free and clear of
all Liens created by the Borrower or the Secured Parties), for a net purchase
price (after deducting all reasonable expenses incurred by the Borrower in
connection with such sale) not less than an amount equal to the sum of (i) the
amount required to be paid under Section 2.4(b)(ii), plus (ii) any Outstanding
Servicer Advances related to such Receivables (the "Warehouse Purchase Price");
provided, however, that the Borrower remits the Warehouse Purchase Price to the
Collateral Agent for application in accordance with this Agreement; provided,
further, that (i) such Warehouse Take-Out shall not cause, or result in the
occurrence of, any Event of Default or Default; and (ii) prior to the completion
of such transaction, an authorized officer of the Borrower certifies to the
Lender, the Parallel Lenders and the Notice Parties that such transaction
complies with the applicable requirements set forth in this Section. Each such
transaction is herein called a "Warehouse Take-Out".
SECTION 2.8. Release of Receivables. (a) Partial Release. From time to
time, the Borrower may request the release of any or all of the Receivables,
subject to the consent of the Notice Parties set forth in Section 2.7 hereof,
and related Collateral then owned by the Borrower by delivering to the Notice
Parties and the Collateral Agent a notice (a "Notice of Release"), which Notice
of Release shall state that the Borrower plans to sell such Receivables and
related Collateral in connection with a Warehouse Take-Out and that such sale or
other disposition is permitted by the terms of this Agreement. Concurrently with
the consummation of such Warehouse Take-Out and repayment of the Fundings in
accordance with Sections 2.4 and 2.7, the Collateral Agent and each Secured
Party shall execute and deliver to the Borrower such documents, if any, as shall
be necessary or appropriate to release such Receivables and related
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Collateral from the liens or security interest evidenced by this Agreement,
which documents shall be prepared by the Borrower or at the Borrower's expense
but shall be in form and substance reasonably satisfactory to the Collateral
Agent, the Administrative Agent and the Surety Provider.
(b) Full Release. Subject to subsection (a), the Collateral
Agent's and each Secured Party's right, title and interest in all the
Receivables and related Collateral and other Collateral shall be released
effective on the Final Payout Date. Upon such release and at the cost and
expense of the Borrower, its successors or assigns, the Collateral Agent and
each Secured Party shall execute such UCC-3 financing statements or such other
instruments (if any) as are necessary or desirable to terminate and remove of
record any documents constituting public notice of the security interest granted
under this Article II, and shall assign and transfer, or cause to be assigned
and transferred, and shall deliver or cause to be delivered to the Borrower, all
property, including all moneys, instruments and securities, of the Borrower then
held by the Collateral Agent or such Secured Party related to the Receivables
and related Collateral.
(c) Effect of Release. When the release of any of the Receivables
and related Collateral is effective in accordance with subsection (a) or (b),
all right, title and interest of the Collateral Agent and each Secured Party in,
to and under such Receivables and related Collateral, and in the case of
subsection (b) in all other Collateral, shall terminate and shall revert to the
Borrower, its successors and assigns, and the right, title and interest of the
Collateral Agent and each Secured Party therein shall thereupon cease, terminate
and become void.
SECTION 2.9. Representations and Warranties of Borrower. The Borrower
makes the following representations and warranties as to the Receivables to the
Collateral Agent, for the benefit of the Secured Parties, on which the Lender
and the Parallel Lenders rely in making their respective Fundings hereunder and
the Administrative Agent and the Bank Agent relies in causing such actions to be
taken on behalf of the Lender and the Parallel Lenders and on which the Surety
Provider relies in connection with the issuance of the Surety Bond. Such
representations and warranties speak as of the first Funding Date (with respect
to the Initial Receivables) and as of each subsequent Funding Date (with respect
to the Receivables that are listed on the Schedule of Receivables for such
Funding Date), but shall survive the grant of a security interest in the
Receivables to the Collateral Agent, on behalf of the Secured Parties.
(i) Characteristics of Receivables. Each Receivable (1)
has been originated or purchased in the United States of America by the
Originator in the ordinary course of the Originator's business and none
of the Borrower, the Originator or the Servicer is actually aware of
any fraud or material misrepresentation on the part of the Originator
or the Obligor in regard to such origination, (2) is evidenced by an
installment sales contract or lease which has been fully and properly
executed by the parties thereto, and has been originated or purchased
by the Originator in connection with the sale or lease of Equipment by
the Originator, (3) contains customary and enforceable provisions such
that the rights and remedies of the holder or assignee thereof shall be
adequate for realization against the collateral of the benefits of the
security, (4) is denominated and
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payable only in Dollars in the United States of America, (5) provides
for, in the event that such contract is prepaid, a prepayment that
fully pays the Principal Balance, and (6) provides for payments on a
monthly basis.
(ii) Schedule of Receivables. The information with respect
to the Receivables set forth in the Schedule of Receivables is true and
correct in all material respects as of the close of business on each
applicable Cutoff Date, and the Receivables satisfy the eligibility
criteria specified in Section 3.2(b) of the First Tier Purchase
Agreement.
(iii) Compliance with Law. Each Receivable complies in all
material respects with all requirements of applicable Federal, State,
and local laws, and regulations thereunder including, without
limitation, to the extent applicable, usury laws, the Federal
Truth-in-Lending Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Equal Credit Opportunity Act, the Federal
Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal
Reserve Board's Regulations M, B and Z and other credit laws and equal
credit opportunity and disclosure laws and no party to the contract
evidencing such Receivable is in violation of any such law, rule or
regulation in any material respect if such violation would impair the
collectibility of such Receivable.
(iv) Binding Obligation. Each Receivable represents the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder or assignee thereof in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforceability of creditors' rights generally and by
general equitable principles as such laws apply to the Obligor. All
parties to the contract evidencing such Receivable had full legal
capacity to execute and deliver such contract and all other documents
related thereto and to grant the security interest purported to be
granted thereby.
(v) No Government Obligor. None of the Receivables are
due from the United States of America, any State or any municipality or
from any agency, department or instrumentality of the United States of
America, any State or any municipality.
(vi) Interest in Equipment. Immediately prior to the grant
of a security interest therein under this Agreement, either (i) each
Receivable shall be a true lease, and the Originator owned the related
Equipment, which Equipment has been validly transferred to the Borrower
and to which the Borrower has acquired good title, and the Borrower has
granted a first priority perfected security interest therein to the
Collateral Agent for the benefit of the Secured Parties or (ii) each
Receivable shall be secured by a validly existing first priority
perfected security interest in the Equipment in favor of the Originator
(as original lien holder or assignee) as secured party, and such
security interest is or shall be prior to all other Liens upon and
security interests in such Equipment, other than Permitted Liens, which
now exist or may hereafter arise or be created and such security
interest has been assigned by the Originator to the Borrower and by the
Borrower
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to the Collateral Agent, for the benefit of the Secured Parties.
Immediately after the transfers and conveyances to the Borrower as
contemplated in the First Tier Purchase Agreement, all necessary action
will have been taken by the Originator to validly convey to the
Borrower (A) all right, title and interest of the Originator in and to
each Receivable and all Scheduled Payments to become due thereunder and
(B) all right, title and interest of the Originator in and to the
related Equipment.
(vii) Receivables in Force. The Obligor of each Receivable
has made at least the first three Scheduled Payments with respect
thereto. No Obligor has been released in whole or in part from any of
its obligations in respect of any such Receivable. No Receivable has
been satisfied, canceled, subordinated, in whole or in part, or
rescinded. No Equipment has been released from the Lien granted by the
related Receivable in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, release,
cancellation, subordination or rescission. Neither the Originator nor
any other obligated party has or will be suspended or has reduced or
will reduce any Scheduled Payments or obligations due or to become due
thereunder by reason of a default by the other party to such
Receivable.
(viii) No Modification. No Receivable has been extended,
rewritten or is subject to any waiver, amendment, payment plans,
forbearance agreements or other alternative payment arrangements of any
kind whatsoever, except in accordance with the Collection Policy. As of
the time of each sale, assignment, and transfer or the pledge and grant
of a security interest herein contemplated, no Receivable has been
amended, altered or modified in any way which would individually or in
the aggregate materially adversely affect the Borrower's or the
Collateral Agent's right thereunder or would prohibit payment by the
Obligor, and no provision of any Receivable will have been waived,
except in writing, and copies of all such writings will be included in
the related Receivables Files.
(ix) No Defenses. As of the Closing Date or the relevant
Funding Date, as applicable, no right of rescission, setoff,
counterclaim or defense, including the defense of usury, exists or has
been asserted or, to the Borrower's knowledge, threatened with respect
to any Receivable. The operation of the terms of any Receivable or the
exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense, including a defense
arising out of the Obligor's right of quiet enjoyment of the Equipment.
(x) No Liens. As of the relevant Cutoff Date, there are
no Liens, other than Permitted Liens, or claims existing or which have
been filed for work, labor, storage or materials relating to the
Equipment that shall be Liens prior to, or equal or coordinate with,
the security interest in the Equipment granted by the Receivable.
(xi) No Default; Repossession. (A) As of the relevant
Cutoff Date, no Receivable is more than 30 days past due with respect
to all, or 50% or more, of any
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Scheduled Payment thereof; provided, however, that as of the Initial
Cutoff Date an amount not to exceed 5% of the aggregate Principal
Balance of all Receivables may relate to Receivables with respect to
which all, or 50% or more, of any Scheduled Payment thereof is 31 to 60
days past due, (B) no Receivable has been more than sixty days
delinquent with respect to all, or 50% or more, of any Scheduled
Payment thereof more than two times since the origination of such
Receivable; (C) as of the time of each sale, assignment, and transfer
of the Receivables and the Equipment pursuant to the terms of the First
Tier Purchase Agreements, the Originator will not be in the process of
terminating any Receivable or repossessing the Equipment subject
thereto or making any plans for any such termination or repossession;
(D) no default, breach, charge-off, violation or event permitting
acceleration under the terms of any Receivable has occurred and is
continuing, and (E) no continuing condition that with notice or the
lapse of time would constitute such a default, breach, violation or
event permitting acceleration under the terms of any Receivable has
arisen; and the Borrower has not waived any of the foregoing; and no
Equipment shall have been repossessed as of the applicable Cutoff Date.
No Receivable is reflected on the Originator's or the Servicer's
computer records as having been referred to counsel. No Receivable is a
Defaulted Receivable nor has any Receivable been a Defaulted
Receivable.
(xii) Insurance. The Servicer, in accordance with its
customary procedures, has confirmed that at the time of origination the
Equipment was covered by a policy of insurance, insuring against loss
and damage due to fire, theft, collision and, in the case of Equipment
that is a titled vehicle, against other risks generally covered by
liability coverage, and that each Receivable requires the Obligor to
maintain the applicable insurance naming the Originator and its
successors and assigns as a loss payee. Such insurance requires the
related insurer to notify the Originator prior to cancellation.
(xiii) Title. Each pledge of and grant of a security
interest in Receivables and related Collateral pursuant to this
Agreement constitutes a valid pledge to the Collateral Agent, for the
benefit of the Secured Parties, of all the Borrower's right, title and
interest in and to such Receivables and related Collateral, free and
clear of all Liens (other than Permitted Liens), and constitutes the
grant of a first priority perfected security interest (subject to
Permitted Liens) in such property to secure payment of all amounts
payable or distributable to the Secured Parties hereunder and under the
Related Documents. No Receivable has been sold, transferred, assigned,
or pledged by the Borrower to any Person other than the Collateral
Agent, for the benefit of the Secured Parties. Each Receivable has been
contributed or sold by the Originator to the Borrower pursuant to the
First Tier Purchase Agreement. Immediately prior to the sale,
assignment and transfer or the pledge and grant of a security interest
herein contemplated, the Borrower had good and marketable title to each
Receivable, and was the sole owner thereof, free and clear of all
Liens, claims, encumbrances, security interests, and rights of others
and, immediately upon such pledge and grant of a security interest the
Collateral Agent, for the benefit of the Secured Parties, shall have
good and marketable title to each such Receivable, and the Collateral
Agent, for the benefit of the Secured Parties, shall have a valid first
priority
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perfected security interest in such Receivable, in each case free and
clear of all Liens, encumbrances, security interests and rights of
others, and such sale, assignment and transfer or such pledge and grant
of a security interest has been perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated
in any jurisdiction under which the pledge and grant of a security
interest in such Receivable under this Agreement or in accordance with
Article XIII hereof, or any Warehouse Take-Out, shall be unlawful,
void, or voidable. The Borrower has not entered into any agreement with
any account debtor that prohibits, restricts or conditions the
assignment of any portion of the Receivables.
(xv) All Filings Made. Subject to the following sentence,
all filings (including, without limitation, UCC filings) necessary in
any jurisdiction to perfect the Collateral Agent's interest in the
Collateral have been filed in the appropriate filing office and are in
full force and effect. With respect to each Receivable for which the
related Equipment is a titled vehicle, the Collateral Agent shall have
received the original certificate of title reflecting the Collateral
Agent's Lien thereon (or, in the case of a true lease, the Borrower's
ownership of such vehicle and the Collateral Agent's Lien thereon)
within 120 days of the related Funding Date. All applicable filings
specified on Schedule 2.9 hereto have been made.
(xvi) Receivable File and Servicer File; One Original.
Financial Pacific has delivered to the Collateral Agent a complete
Receivable File with respect to each Receivable. There is only one
manually executed original of each Receivable. The Servicer is in
possession of a complete Servicer File with respect to each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC.
(xviii) Tax Liens. As of the applicable Cutoff Date, there is
no Lien against the related Equipment for delinquent taxes.
(xix) Characteristics of Obligors. As of the applicable
Cutoff Date, no Obligor on any Receivable was noted in the related
records of the Servicer as being currently the subject of a bankruptcy
proceeding, or has any other loan outstanding to the Originator with
respect to which all, or 50% or more, of any scheduled payment is more
than 60 days past due. Each Obligor is domiciled in the United States
of America and is not an Affiliate of Financial Pacific. None of the
Originator, the Servicer or the Borrower has knowledge that any Obligor
is the subject of any bankruptcy proceeding. To the knowledge of the
Borrower and of the Servicer, no Obligor is a business that is using
the Equipment for personal purposes. None of the Originator, the
Servicer or the Borrower has knowledge that any Obligor under any
Receivable is a Person in the business of selling equipment of the same
type as the Equipment subject to such Receivable. The aggregate
Principal Balance of Receivables with respect to Obligors that have
been in
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business for less than two years does not exceed 35% of the aggregate
Principal Balance of all Receivables.
(xx) Maturity. Each Receivable has a final scheduled
payment date which is not later than 60 months after the Closing Date
(in the case of Initial Receivables) or the relevant Funding Date, and
the addition of such Receivable will not cause the Weighted Average
Remaining Term to Maturity of the Receivables to exceed 40 months.
(xxi) Equipment Cost. Each Receivable relates to Equipment
having an initial cost of not more than $125,000 (unless otherwise
approved by the Surety Provider).
(xxii) Origination of Receivables. The Obligor of each
Receivable has been approved by the Originator in the ordinary course
of its business based on the Credit Policy, and such Receivable
satisfies all applicable requirements of the Credit Policy, with such
occasional exceptions as may be customary in the industry and in the
ordinary course in the Originator's business that do not result in a
Material Adverse Effect. The origination and collection practices used
by the Originator with respect to each Receivable have been in all
respects legal and in all material respects in accordance with the
Credit Policy and the Collection Policy.
(xxiii) No Violation. The transfer, assignment and
contributions to the Borrower of the Receivables and the Originator's
right, title and interest in and to any item of Equipment will not
violate the terms or provisions of any such Receivable or any other
agreement to which the Originator then is a party or by which it is
bound.
(xxiv) Condition of Equipment. At the time that any item of
the Equipment is assigned, transferred and contributed pursuant to the
terms of the First Tier Purchase Agreement, the Originator has no
knowledge that such Equipment has suffered any loss or damage except
for such Equipment that has been restored to its original value,
ordinary wear and tear excepted, and each Receivable requires the
Obligor thereunder to maintain insurance on the Equipment subject
thereto in an amount at least equal to the replacement value thereof
and, upon the occurrence of a casualty, to pay any difference between
the proceeds of such insurance and the implicit principal balance of
such Receivable.
(xxv) Ordinary Course of Business. Each Receivable has or
will have been entered into or purchased by the Originator in the
ordinary course of its business in accordance with the Originator's
regular credit approval process and not contravene any laws, rules or
regulations applicable thereto or contract between the Originator and
the Borrower. No Receivable has or will have been knowingly selected on
any basis which would have any adverse effect on any Secured Party or
the Surety Provider.
(xxvi) Additional Characteristics of Receivables. As of the
time of each sale, assignment, and transfer or the pledge and grant of
a security interest herein contemplated
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(and based upon the aggregate Principal Balances of the Receivables as
of the related Cutoff Date), (i) the sum of the aggregate Principal
Balance of all Receivables in any one state will not exceed 10% (or 25%
in the case of each of California and Washington, or 12.5% in the case
of Texas) of the aggregate Principal Balances of all Receivables; (ii)
the sum of the aggregate Principal Balances of all Receivables with
respect to which the related Equipment is a single equipment type shall
not exceed 10% of the aggregate Principal Balances of all Receivables;
provided, however that the sum of the aggregate Principal Balances of
the Receivables with respect to which the related Equipment is
industrial, vehicles and trailers (which is considered one equipment
type), food service or data processing shall not exceed 25%, 27.5%, 20%
or 15% respectively of the aggregate Principal Balances of all
Receivables; (iii) the sum of the aggregate Principal Balances of all
Receivables that were originated by a single broker will not exceed
7.5% of the sum of the aggregate Principal Balances of all Receivables;
(iv) each Receivable that was originated by a broker was originated by
a broker that has been doing business with the Originator no less than
three months prior to the related Funding Date and (v) each Receivable
that was originated by a broker was purchased as a result of arm's
length negotiations and there exists no broker recourse and no vendor
recourse against the Originator in connection with such purchase.
(xxvii) Payment Obligations. The obligation of each Obligor
to make Scheduled Payments under each Receivable throughout the term
thereof is and will be absolute and unconditional, without any right of
setoff by such Obligor and without regard to any event affecting the
Equipment subject thereto, the obsolescence of such Equipment, any
claim of such Obligor against the Borrower, the Originator or the
Servicer or any change in circumstances of such Obligor or any other
circumstances whatsoever except to the extent that, in the event of a
casualty of any item of Equipment or early termination of any
Receivable, the Obligor is obligated to pay, in lieu of all future
Scheduled Payments with respect to such item, an amount which equals
the amount required to be prepaid with respect to the related
Receivable in accordance with the contract between the Obligor and the
Originator. Each Receivable requires that the Obligor shall, at the
Obligor's sole cost and expense and in addition to the Scheduled
Payments due under the Receivable or schedule thereto, promptly pay all
taxes, assessments, license fees, permit fees, registration fees,
fines, interest, penalties and all other governmental charges
(including, without limitation, gross receipts, sales, use, excise,
personal property, ad valorem, stamp, documentary and other taxes),
whether levied, assessed or imposed on the Obligor, the Originator, the
Equipment or otherwise, relating to the Equipment or the delivery,
leasing, operations, ownership, possession, purchase, xxxxxxxxxxxx,
xxxxxx, sales or use thereof during the term of the Receivable or
schedule thereto, or the interest of the Obligor in the Equipment or
under the Receivable or schedule thereto, or the rental or other
payments thereunder or earnings arising therefrom (excepting only taxes
on the Originator's net income). Each Receivable is noncancelable by
the Obligor during the term of such Receivable. The Originator has no
knowledge that the obligations of any Obligor under any Receivable will
not be paid in full.
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(xxviii) Master Lease. No Receivable consists of a master
lease.
(xxix) Installation of Equipment. Each Receivable provides
that the Originator has no obligation to assemble, install, test,
adjust or service the Equipment related to a Receivable. Each
Receivable provides that the Obligor, at its sole expense, at all times
during the term of the Receivable and until return of the Equipment,
will maintain the Equipment in good operating order, repair, condition
and appearance and protect the Equipment from deterioration and provide
all accessories, upgrades, repairs, replacement parts and service
required therefor.
(xxx) Relocation of Equipment. To the knowledge of the
Borrower, no item of Equipment has been relocated from the jurisdiction
set forth in the Receivable or, if the Borrower has knowledge of any
such relocation, all UCC filings necessary to continue the first
priority perfected security interest in such Equipment have been made.
(xxxi) Performance of Obligations. The Originator has duly
performed all material obligations on its part required to be performed
by it under or in connection with each Receivable, including, without
limitation, giving any notices or consents necessary to effect the
contribution, assignment, transfer and conveyance of the Receivable
from the Originator to the Borrower and has done nothing to materially
impair the rights of the Borrower, the Collateral Agent, the Secured
Parties or the Surety Provider in the Receivables or the payments due
thereunder.
(xxxii) No Custodial Agreements. Immediately prior to the
Closing Date, the Originator will have possession of and the right to
convey each original Receivable, and, immediately prior to the
Originator's execution and delivery of the First Tier Purchase
Agreement, there will be no custodial agreements in effect and
adversely affecting the rights of the Originator to make, or cause to
be made, any delivery required hereunder.
(xxxiii) Single Obligor. As of the Cutoff Date, the sum of the
aggregate Principal Balances of Receivables originated by any one
Obligor (including any Affiliate or related party of the Obligor) does
not exceed 0.50% of the sum of the aggregate Principal Balances of all
of the Receivables.
(xxxiv) Parties to the Receivable. As of the Cutoff Date, the
parties to each Receivable are the Originator and the Obligor of the
related Equipment.
(xxxv) No Conveyances. The Originator has not taken any
action to convey to any Person any right to payments received under the
Receivables, the insurance policies insuring the related Equipment, the
Originator's interest in the Equipment, or any other property being
conveyed by the Originator pursuant to the First Tier Purchase
Agreement and the Borrower will have all of the right, title and
interest in and to the Receivables and the Equipment previously held by
the Originator free and clear of all liens and encumbrances and any
interest of the Originator or its successors, except for the
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lien of the Collateral Agent. The Borrower has the right under each
Receivable to exercise appropriate remedies with respect to the related
Equipment without obtaining the consent of any third parties.
(xxxvi) Marked Records. The Originator and the Servicer will
cause their respective records to be marked to reflect the transfer of
the Receivables to the Borrower.
(xxxvii) Risk of Loss. Each Receivable is net to the lessor of
any maintenance, taxes, insurance or other expenses and contains
provisions requiring the Obligor to assume all risk of loss or
malfunction of the related Equipment.
(xxxviii) Identical in Form. Each Receivable being acquired by
the Borrower is identical in form to one of the forms of Receivables
attached to the First Tier Purchase Agreement as Exhibit B and to this
Agreement as Exhibit F, except for immaterial modifications or
deviations from the form of Receivables which will not have a material
adverse effect on any of the Secured Parties and will not reduce the
Scheduled Payments or other payments due under the Receivables.
(xxxix) Security Deposit. Each Receivable obligates the
related Obligor to make all Scheduled Payments thereunder in full
notwithstanding the collection by the lessor of a security deposit with
respect thereto. The calculation of the implicit principal balance of
each Receivable does not include any security deposits or advance
payments collected by or on behalf of the lessor which are applied to
Scheduled Payments.
(xl) Obligations Fulfilled. The Originator has duly
fulfilled all obligations on the lessor's part to be fulfilled under or
in connection with the origination, acquisition and assignment of the
Receivables and the Originator's interest in the Equipment, including,
without limitation, giving any required notices or consents.
(xli) Purchase of Equipment. Either (A) the Originator
purchased each item of Equipment from either (1) the manufacturer or
other supplier following receipt of an invoice from such manufacturer
or supplier, or (2) an Obligor following confirmation that such item of
Equipment was on such Obligor's premises, or (B) solely in the case of
Receivables purchased at a discount from lessors, the Originator
purchased the related lessor's interest in the Equipment. Prior to the
time of each sale, assignment, and transfer or the pledge and grant of
a security interest herein contemplated, the manufacturer or supplier
or Obligor, as the case may be, shall have received in full the
purchase price and any related charges in connection with the
acquisition of such Equipment.
(xlii) Transfer Taxes. The sale, transfer, assignment and
conveyance contemplated by the First Tier Purchase Agreement are not
subject to and will not result in any tax, fee or governmental charge
payable by the Originator to any federal, state or local government
("Transfer Taxes") other than Transfer Taxes which have been or will be
paid by the Originator as due. In the event that the Borrower receives
actual notices of
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any Transfer Taxes arising out of such transfer, assignment and
conveyance, on written demand by the Borrower, or upon the Originator's
otherwise being given notice thereof, the Originator shall pay, and
otherwise indemnify and hold the Borrower, the Collateral Agent and the
Surety Provider harmless, on an after-tax basis, from and against any
and all such Transfer Taxes (it being understood that the Secured
Parties, the Collateral Agent and the Surety Provider shall have no
obligation to pay such Transfer Taxes).
(xliii) Consumer Credit Contracts. As of the Cutoff Date,
none of the Receivables are either "consumer credit contracts" or
"purchase money loans" as such terms as defined in 6 C.F.R. Section
433.1.
(xliv) Assignment of Leases. Each Receivable that is a lease
is assignable without the consent of the related Obligor.
SECTION 2.10. Repurchase Upon Breach. The Borrower, the Servicer, the
Administrative Agent, the Surety Provider or the Collateral Agent, as the case
may be, shall inform the other parties of this Agreement and the Surety Provider
promptly, in writing upon the discovery of any material breach of the Borrower's
representations and warranties made pursuant to Section 2.9 (without regard to
any limitation therein as to knowledge). Unless the breach shall have been cured
by the last day of the first Collection Period commencing after the Borrower's
receipt of written notice of the discovery thereof by the Collateral Agent or
any Notice Party or receipt by the Collateral Agent and the Notice Parties of
notice from the Borrower or the Servicer of such breach, the Borrower shall
cause the Originator to purchase any related Receivable if the interests of any
Secured Party in such Receivable are materially and adversely affected by the
breach as of the last day of such first Collection Period pursuant to the First
Tier Purchase Agreement. In consideration of the purchase of the Receivable, the
Borrower, pursuant to the First Tier Purchase Agreement, shall cause the
Originator to remit the Repurchase Amount, in the manner specified in Section
4.5. Notwithstanding anything to the contrary in this Agreement or any other
Related Document, the sole remedy of the Collateral Agent, the Lender, the
Parallel Lenders, the Surety Provider, the Bank Agent and the Administrative
Agent with respect to a breach of representations and warranties pursuant to
Section 2.9 shall be to enforce the Originator's obligation to purchase such
Receivables pursuant to the First Tier Purchase Agreement; provided, however,
that, pursuant to the First Tier Purchase Agreement, the Borrower shall cause
the Originator to indemnify the Collateral Agent, the Notice Parties, the
Parallel Lenders and the Lender against all reasonable costs, reasonable
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
such breach by the Originator. Upon deposit of the Repurchase Amount in the
Collection Account and receipt of written instructions from the Servicer, the
Lender and the Parallel Lenders (or the Administrative Agent and the Bank Agent
on their behalf) shall direct the Collateral Agent to, and the Collateral Agent,
on behalf of itself and the Secured Parties, upon receipt of such direction
shall, release to the Originator or its designee the related Receivables File,
and the Collateral Agent and each Secured Party shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse (except for a
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representation and warranty by each Secured Party that upon such transfer or
assignment such Receivable is free of any Lien created by such Secured Party),
as are prepared by the Borrower and delivered to the Collateral Agent or such
Secured Party and necessary to vest in the Originator or such designee title to
the Receivable and related collateral.
SECTION 2.11. Delivery of Receivable Files; Appointment of Collateral
Agent. (a) Three Business Days prior to the relevant Funding Date, the Borrower
shall transfer and deliver to the Collateral Agent, with respect to each
Receivable financed by the Borrower hereunder, a list of the Receivables in an
electronic format acceptable to the Collateral Agent (which list shall include
notations indicating those Receivables that relate to titled vehicles) and the
following:
(i) The only manually executed original of the
Receivable, and copies of all lease documents, schedules and addenda,
if any;
(ii) The original or a facsimile copy of the credit
application;
(iii) A certificate of the Originator reflecting that the
related Obligor confirmed, in a telephone call, delivery and acceptance
of the related Equipment which certificate shall be in substantially
the form of Exhibit A hereto;
(iv) Obligor's corporate resolutions, if any;
(v) All related personal guaranties, if any;
(vi) Copies of, or, in the case of electronic filings,
acknowledgments of, all UCC financing statements filed with respect to
the Equipment or the Receivable;
(vii) With respect to a Receivable relating to a titled
vehicle, a copy of the application for a certificate of title; and
(viii) (A) With respect to a Receivable that is a finance
lease or an installment sales contract and relates to a titled vehicle,
the original certificate of title, reflecting the Collateral Agent's
Lien thereon or (B) with respect to a Receivable that is a true lease
and relates to a titled vehicle, the original certificate of title,
reflecting the Borrower's ownership thereof and the Collateral Agent's
Lien thereon, within 120 days after the related Funding Date.
The Servicer shall retain the Servicer's File in its possession which file may
include copies of the items described in clauses (i) through (viii) above.
(b) The Lender, and the Administrative Agent, as agent for the
Lender, the Parallel Lenders and the Bank Agent, as agent for the Parallel
Lenders, each hereby appoints the Collateral Agent as agent, bailee and
Collateral Agent for the Secured Parties for the purpose of (i) accepting,
holding and delivering Receivables Files and other Collateral for and on behalf
of
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the Secured Parties pursuant to this Agreement and (ii) releasing Liens as
provided in this Agreement and performing the other duties specified to be
performed by it in this Agreement. The Collateral Agent hereby accepts such
appointment.
(c) The Collateral Agent may, with the prior written consent of
the Notice Parties, appoint a co-agent to act as the custodian and bailee with
respect to the documents described in paragraph (b) above.
SECTION 2.12. Acceptance, Review and Custody of Receivable Files. (a)
The Collateral Agent acknowledges receipt for the benefit of the Secured Parties
of files which the Borrower or the Originator has represented are the Receivable
Files. The Collateral Agent declares that it holds and will continue to hold
such files and any amendments, replacements or supplements thereto and all other
Collateral in trust for the use and benefit of the Secured Parties and the
Borrower (subject to the Collateral Agent's security interest as set forth in
this Agreement). The Collateral Agent agrees to review each file delivered to it
no later than 60 days after the Closing Date with respect to the Initial
Receivables and 15 days after the relevant Funding Date with respect to
Receivables financed after the Closing Date, as applicable, to ascertain whether
it has received a file for each Receivable identified in Schedule A to the
relevant Assignment AND, THE COLLATERAL AGENT SHALL CONFIRM TO THE SECURED
PARTIES AND THE NOTICE PARTIES THAT IT HAS RECEIVED EACH OF THE DOCUMENTS LISTED
IN SECTION 2.11(a)(i), (ii), (iii) AND, IF APPLICABLE, (vii) WITH RESPECT TO
EACH RECEIVABLE IDENTIFIED IN SUCH SCHEDULE A. If the Collateral Agent has found
or finds that a Receivable File for a Receivable has not been received, or that
a Receivable File is unrelated to the Receivables identified in Schedule A to
the relevant Assignment or that any of the documents referred to in Section
2.11(a)(i), (ii), (iii) and (vii) are not contained in a Receivable File or are
mutilated, the Collateral Agent shall inform Financial Pacific and the Notice
Parties promptly, in writing, of the failure to receive a file with respect to
such Receivable (or of the failure of any of the aforementioned documents to be
included in the Receivable File) or shall return to Financial Pacific as the
Borrower's designee any file unrelated to a Receivable identified in Schedule A
to the relevant Assignment (it being understood that the Collateral Agent's
obligation to review the contents of any Receivable File shall be limited as set
forth in the preceding sentence).
(b) With respect to Receivables relating to titled vehicles, the
Collateral Agent shall track the receipt of titles for all such vehicles and
shall review all such titles upon receipt. On or before the 125th day following
the Closing Date or related subsequent Funding Date, as applicable, the
Collateral Agent shall create a report listing any titles that are due but have
not been delivered and provide such report to the Borrower and the Notice
Parties.
(c) Unless such failure to deliver the documents specified in
Section 2.12(a) or the mutilation of any such documents with respect to a
Receivable shall have been cured by the last day of the first Collection Period
commencing after the Borrower has been notified of such failure or received the
report described in Section 2.12(b), as applicable, the Borrower shall cause the
Originator to purchase such Receivable as of such last day pursuant to the First
Tier
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Purchase Agreement. In consideration of the purchase of the Receivable, the
Borrower, pursuant to the First Tier Purchase Agreement, shall cause the
Originator to remit the Repurchase Amount, in the manner specified in Section
4.5. Notwithstanding anything to the contrary in this Agreement or any other
Related Document, the sole remedy of the Collateral Agent, any Notice Party or
any Secured Party with respect to a breach pursuant to this Section 2.12 shall
be to require the Originator to purchase the Receivables pursuant to this
Section 2.12. Upon deposit of the Repurchase Amount into the Collection Account
and receipt of written instructions from the Servicer, the Collateral Agent
shall release to the Originator or its designee the related Receivables File and
the Collateral Agent and such Secured Party shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse (except for a
representation and warranty by each Secured Party that upon such transfer or
assignment such Receivable is free of any Lien created by such Secured Party),
as are prepared by the Originator and delivered to the Collateral Agent or such
Secured Party and are necessary to vest in the Originator or such designee title
to the Receivable and the related collateral.
SECTION 2.13. Access to Receivable Files. The Collateral Agent shall
permit the Servicer and the Notice Parties access to the Receivable Files at all
reasonable times during the Collateral Agent's normal business hours. The
Collateral Agent shall, at the request of the Servicer or any Notice Party,
execute such documents and instruments as are prepared by the Servicer or any
Notice Party and delivered to the Collateral Agent, as the Servicer or any
Notice Party deems necessary to permit the Servicer, in accordance with its
customary servicing procedures, to enforce the Receivable and any related
insurance policies covering the Obligor, the Receivable or Equipment on behalf
of the Borrower and the Secured Parties. The Collateral Agent shall not release
any document from any Receivable File unless it receives a trust receipt signed
by a Servicing Officer in the form of Exhibit D-1 hereto (the "Trust Receipt").
Such Trust Receipt shall obligate the Servicer to return such document(s) to the
Collateral Agent when the need therefor no longer exists unless the Receivable
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer substantially in the form of Exhibit D-2 hereto to the effect that all
amounts required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Collateral Agent to the Servicer.
SECTION 2.14. Funding Termination Date. The Lender's option and the
Parallel Lenders' obligation to make Fundings hereunder shall terminate upon the
earliest to occur of the following (the "Funding Termination Date"):
(a) December 30, 1999;
(b) the Surety Expiration Date;
(c) a date upon which an Event of Default has occurred
and (i) the Administrative Agent, the Bank Agent or the Surety Provider
declares a Funding Termination Date in a written notice to the
Borrower, the Administrative Agent, the Bank Agent and the Surety
Provider in accordance with the terms of Section 10.2, or
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(ii) becomes a Funding Termination Date automatically in accordance
with the terms of Section 10.2;
(d) the date of termination (whether by scheduled
expiration, termination on default or otherwise) of either the
Liquidity Banks' commitments under the Liquidity Agreement;
(e) the Lender fails to obtain a Liquidity Agreement in
substitution for the then existing Liquidity Agreement on or before 30
days prior to the expiration of the commitments of the Liquidity Banks
thereunder or early termination of the Liquidity Agreement;
(f) (i) a Downgrading Event with respect to a Liquidity
Bank shall have occurred and been continuing for not less than 45 days,
(ii) the Downgraded Liquidity Bank shall not have been replaced by a
Qualifying Liquidity Bank pursuant to a Liquidity Agreement in form and
substance reasonably acceptable to Lender and the Administrative Agent,
and (iii) the commitment of such Downgraded Liquidity Bank under the
Liquidity Agreement shall not have been funded or collateralized in
such a manner that such Downgrading Event will not result in a
reduction or withdrawal of the credit rating applied to the Commercial
Paper Notes by any of the rating agencies then rating the Commercial
Paper Notes;
(g) the Lender or the Borrower shall become an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended; and
(h) the claims paying ability of the Surety Provider is
rated less than AA- by S&P or Aa3 by Xxxxx'x or the Surety Bond is not
renewed, or the Surety Provider has failed to pay any amount when due
under the Surety Bond or is the subject of an Event of Bankruptcy.
The Lender, the Parallel Lenders and the Surety Provider may, in their
sole discretion, at the request of the Borrower, extend the Funding Period;
provided that, the Funding Period shall not be extended without the prior
written consent of the Surety Provider, the Lender and the Parallel Lenders.
From and after the Funding Termination Date, no further Fundings shall be made
and the Outstanding Principal shall be repaid in accordance with Section 2.4,
provided that, absent an Event of Default, the Outstanding Principal shall not
be accelerated; provided further that the Funding Period may not be extended
beyond the fourth anniversary of the Closing Date without the prior written
consent of each Rating Agency.
SECTION 2.15. Collateral Agent's Certificate. On or as soon as
practicable after each Distribution Date on which Receivables shall be assigned
to the Originator or the Servicer, as applicable, pursuant to this Agreement,
based on a list prepared by the Servicer identifying the Collateral to be
released, the Collateral Agent shall execute a Collateral Agent's Certificate
(in the form of Exhibit B-1 or Exhibit B-2, as applicable), and shall deliver
such Collateral Agent's
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Certificate, accompanied by a copy of the Servicer's Certificate for such
Collection Period, to the Originator or the Servicer, as the case may be, with a
copy to the Notice Parties. The Collateral Agent's Certificate submitted with
respect to such Distribution Date shall operate, as of such Distribution Date,
as a release of all the Collateral Agent's right, title, and interest in and to
such Repurchased Receivable, and all security and documents relating thereto,
such assignment being an assignment outright and not for security.
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer (on behalf of the
Borrower, the Lender, the Parallel Lenders, the Surety Provider, the Bank Agent
and the Administrative Agent (to the extent provided herein)) shall manage,
service, administer and make collections on the Receivables with reasonable care
and diligence in accordance with applicable laws, rules and regulations and with
the Collection Policy, using that degree of skill and attention that the
Servicer exercises with respect to all comparable equipment leases that it
services for itself or others. The Servicer's duties shall include, without
limitation, collection and posting of all payments, responding to inquiries of
Obligors on such Receivables, investigating delinquencies, sending payment
invoices to Obligors, reporting tax information to Obligors, accounting for
collections, furnishing monthly and annual statements to the Lender and the
Parallel Lenders with respect to distributions, and making Servicer Advances, if
required, pursuant to Section 4.4. Subject to the foregoing provisions of this
Section 3.1, the Servicer shall follow its currently employed standards,
policies and procedures or such other standards, policies and procedures as the
Servicer employs in the future consistent with the business practice of other
servicers in the industry servicing similar receivables, in performing its
duties as Servicer. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Lender, the Parallel Lenders, the Surety
Provider, the Bank Agent and the Administrative Agent to execute and deliver, on
behalf of itself, the Lender, the Parallel Lenders, the Surety Provider, the
Bank Agent and the Administrative Agent or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Receivables or to the
Equipment securing, or otherwise subject to, such Receivables. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Borrower shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce such Receivable, unless the Lender and the Parallel Lenders (or the
Administrative Agent and the Bank Agent on their behalf), with the consent of
the Surety Provider (which consent shall not be unreasonably withheld), shall
waive the enforcement of such Receivable by the Servicer, then the Borrower
shall, at the Servicer's expense and direction, and subject to obtaining such
indemnity as the Surety Provider, the Collateral Agent, the Lender, the Parallel
Lenders, the Bank Agent or the Administrative Agent (or the Borrower, as
applicable) may reasonably require, take steps to enforce such Receivable,
including bringing suit in its own name. The
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Servicer shall prepare and furnish and the Borrower shall execute, any powers of
attorney and other documents reasonably necessary or appropriate from time to
time to enable the Servicer to carry out its servicing and administrative duties
hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments. The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and, subject to Section 3.1, shall follow such collection procedures as it
follows with respect to all comparable equipment leases that it services for
itself or others. The Servicer will be responsible for identifying payments
received from the Obligors and transferring such payments to the Collection
Account within two Business Days of receipt or into any Lock-Box Account of
collected funds as described in Section 4.2. The Servicer, for so long as
Financial Pacific is the Servicer, may grant extensions on a Receivable;
provided that such extensions are consistent with the Collection Policy; and
provided, further, that, if the Servicer extends the date for final payment by
the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Final Scheduled Distribution Date, it shall promptly purchase the
Receivable from the Collateral Agent in accordance with the terms of Section 3.7
hereof (and for purposes thereof, the interest of each Secured Party in such
Receivable shall be deemed to be materially and adversely affected). If the
Servicer is not Financial Pacific, the Servicer may not make any extension on a
Receivable without the prior written consent of the Notice Parties. The Servicer
may in its discretion waive any late payment charge or any other fees that may
be collected in the ordinary course of servicing a Receivable, consistent with
the Collection Policy. The Servicer shall not agree to any reduction of the
interest rate on any Receivable (except as required by law if the related
Obligor is the subject of an Event of Bankruptcy) or of the amount of any
Scheduled Payment on Receivables, or reduce the Principal Balance of any
Receivable (except for actual payments of principal received.
SECTION 3.3. Realization Upon Receivables. The Servicer (on behalf of
the Borrower, the Lender, the Parallel Lenders, the Surety Provider, the Bank
Agent and the Administrative Agent (to the extent provided herein)) shall use
all reasonable efforts, consistent with its customary servicing procedures and
to the extent permissible in accordance with the Receivables and under
Applicable Law, to repossess or otherwise convert the ownership of the Equipment
securing, or that is the subject of, any Receivable that is in default as to
which the Servicer shall have determined eventual payment in full is unlikely.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of equipment lease
receivables that are in default, which may include selling the Equipment at
public or private sale. The foregoing shall be subject to the provision that, in
any case in which the Equipment shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Equipment unless it shall determine in its reasonable discretion that such
repair and/or repossession will increase the proceeds ultimately recoverable
with respect to such Receivable by an amount greater than the amount of such
expenses. To the extent provided in this Agreement, the Servicer shall be
entitled to net its reasonable and customary costs and expenses incurred in
connection with the repossession and disposition of Equipment from the
liquidation proceeds related thereto.
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SECTION 3.4. Physical Damage Insurance; Other Insurance. (a) The
initial Servicer, in accordance with its customary servicing procedures, shall
verify that each item of Equipment continues to be covered by a policy of
insurance insuring against loss and damage due to fire, theft, collision and, in
the case of Equipment that is a titled vehicle, against other risks generally
covered by liability coverage.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 3.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Lender and the
Parallel Lenders, shall take all such reasonable action as shall be necessary to
permit recovery under any of the foregoing insurance policies. Any amounts
collected by the Servicer under any of the foregoing insurance policies, shall
be deposited in the Collection Account pursuant to Section 4.2. The parties
hereto acknowledge that the Servicer shall not be required to force place any
insurance coverage. In addition to such insurance maintained by the Obligors
with respect to the Equipment, the initial Servicer shall maintain, among other
policies, a general liability insurance policy in the aggregate amount of
$2,000,000 and an excess liability insurance policy in umbrella form in the
aggregate amount of $4,000,000 for a total of $6,000,000 of liability insurance.
Each of such policies shall be maintained by the initial Servicer in full force
and effect and shall cover all Equipment. All premiums in respect of such
policies shall be paid by the initial Servicer from its own funds. The
Collateral Agent, the Secured Parties, and the Borrower shall be named as
additional insureds on such liability policies.
SECTION 3.5. Maintenance of Security Interests in Equipment. The
Servicer and the Borrower shall take such steps as are required by applicable
law to maintain perfection of (i) the security interest created by each
Receivable in the related Equipment and (ii) the interest of the Collateral
Agent, for the benefit of the Secured Parties, in the Collateral created by this
Agreement, including but not limited to obtaining the execution by the Obligors
and the recording, registering, filing, re-recording, re-registering and
refiling of all security agreements, financing statements and continuation
statements or instruments as are necessary to maintain the security interest
granted by Obligors under the respective Receivables, the Originator under the
First Tier Purchase Agreement and the Borrower hereunder. The Collateral Agent,
the Lender, the Parallel Lenders, the Borrower, the Bank Agent and the
Administrative Agent hereby authorize the Servicer to take such steps as are
necessary to re-perfect or continue the perfection of such security interest of
the Originator on behalf of the Collateral Agent and the Secured Parties in the
event of the relocation of a Equipment or the Originator or for any other
reason.
SECTION 3.6. Additional Covenants of Servicer. The Servicer shall not
release the Equipment securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Collateral Agent, for the benefit of the Secured Parties, in
such Receivables, nor shall the Servicer amend a Receivable, except that
extensions may be granted in accordance with Section 3.2.
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SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer or the
Collateral Agent shall inform the other such party and the Notice Parties
promptly, in writing, upon the discovery (or, in the case of the Collateral
Agent, upon the actual knowledge of any Collateral Agent Officer) of any
material breach pursuant to Section 3.4, 3.5 or 3.6 or of any requirement to
purchase a Receivable pursuant to the third sentence of Section 3.2. With
respect to breaches pursuant to Section 3.4, 3.5 or 3.6, unless such breach
shall have been cured by the last day of the first Collection Period commencing
after the Servicer's receipt of written notice of such discovery or the
Servicer's actual knowledge of such breach, whichever is earlier (or, at the
Servicer's election, the last day of the current Collection Period), the initial
Servicer shall purchase any Receivable with respect to which the interest of any
Secured Party is materially and adversely affected by such breach on such last
day of such first Collection Period. Each Receivable that is required to be
repurchased pursuant to the third sentence of Section 3.2 shall be purchased by
the initial Servicer on the last day of the Collection Period in which the
applicable extension was granted. In consideration of the purchase of a
Receivable pursuant to this Section, the initial Servicer shall remit the
Repurchase Amount in the manner specified in Section 4.5. For purposes of this
Section 3.7, the Repurchase Amount with respect to a Receivable shall consist in
part of a release by the Servicer of all rights of reimbursement with respect to
Outstanding Servicer Advances on the Receivable. Notwithstanding anything to the
contrary in this Agreement or any other Related Document, the sole remedy of the
Collateral Agent, the Administrative Agent, the Surety Provider, the Parallel
Lenders, the Bank Agent or the Lender with respect to a breach pursuant to
Section 3.4, 3.5 or 3.6 shall be to require the initial Servicer to repurchase
Receivables pursuant to this Section 3.7.
SECTION 3.8. Servicing Fee. The Servicing Fee for the initial
Distribution Date shall equal the product of (a) one-twelfth of the Servicing
Rate and (b) the Pool Balance as of the close of business on the Initial Cutoff
Date. Thereafter, the Servicing Fee for a Distribution Date shall equal the
product of (i) one-twelfth of the Servicing Rate and (ii) the Pool Balance as of
the opening of business on the first day of the related Collection Period. The
Servicing Fee shall also include all late fees, prepayment charges and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables collected (from whatever source) by the Servicer on the Receivables.
SECTION 3.9. Servicer's Certificate. On each Reporting Date, the
Servicer shall deliver to the Collateral Agent, the Notice Parties, the Rating
Agencies and the Borrower a Servicer's Certificate containing all information
necessary to make the distributions pursuant to Section 4.6 (including
information regarding the amount of all Servicer Advances for the Collection
Period preceding the date of such Servicer's Certificate) and the other
information specified in Exhibit C. Receivables to be purchased by the Servicer
or to be purchased by the Originator shall be identified by the Servicer by
account number and by Obligor's name with respect to such Receivable (as
specified in Schedule A to the relevant Assignment). No later than 30 calendar
days following the delivery of each of the first three Servicer's Certificates
delivered hereunder, the Servicer shall provide to the Notice Parties a
confirmation of such Servicer's Certificate from independent auditors reasonably
acceptable to the Notice Parties.
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SECTION 3.10. Annual Statement as to Compliance; Notice of Default. (a)
The initial Servicer shall deliver to the Collateral Agent and the Notice
Parties, on or before April 30 of each year beginning April 30, 1999, an
Officer's Certificate, dated as of December 31 of the preceding fiscal year,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or, in the case of the first such certificate, the period from
the Initial Cutoff Date to December 31, 1998) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement in all material respects throughout such
year (or, in the case of the first such certificate, such shorter period), or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) The Servicer shall deliver to the Collateral Agent and the
Notice Parties, promptly after having obtained knowledge thereof, but in no
event later than five (5) Business Days after obtaining such knowledge, written
notice in an Officer's Certificate of any Default or an Event of Default under
Section 10.1.
SECTION 3.11. Annual Independent Certified Public Accountant's Report.
The initial Servicer shall cause a firm of nationally-recognized certified
public accountants (which shall be one of the "Big 5" accounting firms), who may
also render other services to the initial Servicer or to the Borrower, to
deliver to the Collateral Agent and the Notice Parties on or before April 30 of
each year as of December 31 of the preceding fiscal year, beginning April 30,
2000, (1) a report addressed to the Board of Directors of Financial Pacific
Company, to the effect that such firm has examined the consolidated financial
statements of Financial Pacific Company, which financial statements include
consolidating schedules related to the initial Servicer, and issued its report
therefor and that such examination was made in accordance with generally
accepted auditing standards (except as otherwise noted therein), and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; and (2) a report
verifying the information, including the accuracy of the calculations, on the
Servicer's Certificates delivered by the initial Servicer during the prior year
and tying such information to the initial Servicer's books and records.
The reports described in clauses (1) and (2) above, except in the case
of the report prepared by the initial Servicer for the period ending December
31, 1998, shall also indicate that the firm is independent of the initial
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. Servicer Expenses. The initial Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, the Collateral
Agent and the Standby Servicer (to the extent that the fees of the Collateral
Agent and Standby Servicer shall not be fully paid from distributions made
pursuant to Section 4.6(b), taxes imposed on the Servicer, and expenses incurred
in connection with distributions and reports made by the Servicer to the Notice
Parties and the Secured Parties.
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SECTION 3.13. Retention and Termination of Servicer. Subject to Section
8.4, the Servicer hereby covenants and agrees to act as such under this
Agreement until the Final Payout Date unless terminated as specified in a
writing delivered by (i) the Surety Provider or (ii) the Administrative Agent or
the Bank Agent, with the consent of the Surety Provider, prior to the expiration
of such term to the Servicer and the Collateral Agent upon the occurrence or
during the continuance of a Event of Default.
SECTION 3.14. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Collateral
Agent, the Standby Servicer and the Notice Parties reasonable access to
documentation and computer systems and information regarding the Receivables. In
each case, such access shall be afforded without charge but only upon at least
two Business Days' prior written notice (unless an Event of Default has
occurred, in which case no notice shall be required) and during normal business
hours. Without limiting the rights of the Collateral Agent, the Standby Servicer
and the Notice Parties under this Section 3.14, it is expressly understood that
the Collateral Agent, the Standby Servicer and the Notice Parties may, at their
option, inspect documentation and computer systems and information regarding the
Receivables three months after the Closing Date and semi-annually until the
Final Termination Date upon at least two Business Days' prior written notice
(unless an Event of Default has occurred, in which no notice shall be required)
and during normal business hours. Nothing in this Section 3.14 shall derogate
from the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access as provided in this Section 3.14 as a result of such
obligation shall not constitute a breach of this Section 3.14.
SECTION 3.15. Data Report. On each Reporting Date, the Servicer will
transmit or deliver to the Standby Servicer, the Notice Parties and the
Collateral Agent a data report in the form of magnetic tape or diskette or
computer modem transmission, in a format reasonably acceptable to the Notice
Parties, the Standby Servicer and the Collateral Agent, containing such
information as the Notice Parties, the Standby Servicer or the Collateral Agent
may reasonably require with respect to the Receivables as of the close of
business on the last day of the preceding Collection Period, including without
limitation the information necessary for preparation of the Servicer's
Certificate (a "Data Report"). The Servicer shall also transmit to the Notice
Parties, the Standby Servicer and the Collateral Agent a Data Report
concurrently with the delivery of any Funding Notice, containing information
with respect to any new Receivables to be added to the Collateral on or before
the Funding Date and the Receivables included in the Collateral after giving
effect to such Funding. The Standby Servicer shall verify that each Data Report
is in a readable and usable form and covers all information necessary to service
the Receivables, including, but not limited to, Principal Balances as to the
total portfolio, Collections, Delinquency Rates, Defaulted Receivables,
Recoveries, prepayments and bankruptcies. The Standby Servicer shall use each
such monthly Data Report to confirm that the Servicer's Certificate delivered by
the Servicer for the related Collection Period is correct with respect to the
following information: beginning and ending Pool Balance; beginning and ending
Outstanding Principal; the aggregate Principal Balance of Receivables that are
31-60, 61-90 and 91 or more days delinquent; the 31 to 60 Day Delinquency Ratio;
the 61 to 90 Day Delinquency
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Ratio; the sum of the Principal Balance of Defaulted Receivables for the related
Collection Period; and confirmation of concentrations by Obligor, broker, type
of Equipment and geographic territory as of the end of the related Collection
Period. The Standby Servicer shall notify the Servicer, and the Notice Parties
of any material discrepancies on or before the third Business Day following the
Reporting Date. The Standby Servicer shall provide, before the end of the
related calendar month, written certification to the Notice Parties that the
information verified pursuant to the second preceding sentence above appears
complete and correct (except with respect to any discrepancies described above).
In the event that the Standby Servicer reports any material discrepancies, the
Servicer and the Standby Servicer shall attempt to reconcile such discrepancies
prior to the Business Day prior to the related Distribution Date, but in the
absence of a reconciliation, the Servicer's Certificate shall control for the
purpose of calculations and distributions with respect to the related
Distribution Date. In the event that the Standby Servicer and the Servicer are
unable to reconcile discrepancies with respect to a Servicer's Certificate by
the related Distribution Date, the Servicer shall cause a firm of
nationally-recognized independent certified public accountants acceptable to the
Surety Provider, at the Servicer's expense, to audit the Servicer's Certificate
and, prior to the fifth calendar day of the following month, reconcile the
discrepancies. The effect, if any, of such reconciliation shall be reflected in
the Servicer's Certificate for such next succeeding Reporting Date. Other than
the duties specifically set forth in this Agreement, the Standby Servicer shall
have no obligations hereunder, including, without limitation, to supervise,
verify, monitor or administer the performance of the Servicer. The Standby
Servicer shall have no liability for any actions taken or omitted by the
Servicer.
SECTION 3.16. Employee Dishonesty Policy. The Servicer shall maintain
such insurance policy as it has in place as of the Closing Date that insures
against employee dishonesty.
SECTION 3.17. Sub-Servicer. With the prior written consent of the
Surety Provider, the Servicer may appoint any of its Affiliates as sub-servicer
with respect to all or part of the Collateral, provided that the Servicer shall
remain responsible for the performance of the Servicer's duties hereunder and
that such sub-servicing arrangement may, with the prior written consent of the
Surety Provider, be terminated upon the occurrence of an Event of Default. The
Standby Servicer may sub-contract its duties hereunder in its role as Standby
Servicer or if the Standby Servicer becomes successor Servicer.
ARTICLE IV
Distributions
SECTION 4.1. Accounts. (a) The Servicer shall establish (i) with either
the Collateral Agent or another Eligible Institution (the designation of which
shall be delivered to the Surety Provider prior to the establishment), the
Collection Account and (ii) with the Collateral Agent, the Distribution Account,
each in the name of the Collateral Agent for the benefit of the Secured Parties.
Each of the Collection Account and the Distribution Account shall be a
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segregated trust account held with the corporate trust department of either the
Collateral Agent, or, in the case of the Collection Account, another Eligible
Institution.
(b) All amounts held in the Collection Account and the
Distribution Account shall be invested by the Collection Account Bank and the
Collateral Agent, respectively, at the written direction of the Servicer in
Eligible Investments selected by the Servicer in the name of the Collateral
Agent and shall mature no later than the next Business Day immediately preceding
the Distribution Date next succeeding the date of such investment. Such written
direction shall certify that any such investment is authorized by this Section.
If no such written directions are given by the Servicer, the Collection Account
Bank or the Collateral Agent, as applicable, shall invest such amounts in a
demand deposit instrument described in clause (b) or shares in money market
funds described in clause (e) of the definition of "Eligible Investments". No
investment may be sold prior to its maturity unless consented to by the
Administrative Agent, the Bank Agent and the Surety Provider. Earnings on
investments of funds in the Collection Account and the Distribution Account
shall be paid to the Servicer monthly as additional servicing fees so long as no
Event of Default is continuing.
SECTION 4.2. Collections. (a) As soon as practicable after the Closing
Date, but in no event later than 90 days after the Closing Date the Servicer
shall cause the post office box to which the Obligors are instructed to mail
payments on the Receivables to be put into the name of the Collateral Agent on
behalf of the Secured Parties and the Borrower. The Collateral Agent hereby
authorizes the Servicer to cause such payments to be deposited in the Payments
Accounts (as defined below). The Servicer shall remit all payments by or on
behalf of the Obligors, which are received in such post office box or otherwise
received by the Servicer with respect to the Receivables (other than Repurchased
Receivables), including all Insurance Proceeds, Residual Proceeds and
Recoveries, no later than the Business Day following receipt thereof in such
post office box or otherwise by the Servicer directly to one or more trust
accounts (the "Payments Account(s)") held at BofA or another bank or other
financial institution reasonably acceptable to the Notice Parties (the "Payments
Account Bank") in the name of the Collateral Agent, into which payments on the
retail installment sales contracts and leases for which Financial Pacific acts
as servicer will be deposited. Within two Business Days after deposit in the
Payments Account, the Servicer will identify the funds attributable to payments
on the Receivables that constitute Collections and instruct the Payments Account
Bank to transfer such collected funds into the Collection Account. The
Collateral Agent, the Borrower, and the Secured Parties each hereby authorizes
the Servicer to direct the Payments Account Bank to transfer such other funds
not attributable to payments on the Receivables or that do not constitute
Collections to such accounts or other persons as it may deem necessary in
accordance with its other servicing responsibilities.
(b) The parties acknowledge that after the date hereof the
Servicer may enter into arrangements with one or more banks or other financial
institutions reasonably acceptable to the Notice Parties (each a "Lock-Box
Bank") for the receipt and processing by the Lock-Box Banks of payments on
Receivables sent by Obligors to post office boxes controlled by the Lock-Box
Banks. The Servicer and the Borrower shall give the Notice Parties and the
Collateral Agent
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reasonable prior written notice of the effectiveness of any such arrangement,
the names and addresses of the Lock-Box Banks and the account number of each
account maintained by such Lock-Box Bank and into which collections on
Receivables will be deposited (each a "Lock-Box Account"), and shall provide the
Notice Parties and the Collateral Agent with copies of any agreements relating
to the Lock-Box Accounts (which agreements shall be in form and substance
reasonably acceptable to the Notice Parties and the Collateral Agent) and such
other information as they may reasonably request with respect to such
arrangements. Unless each Lock-Box Account and the related lock-box is in the
name of and under the control of the Collateral Agent pursuant to arrangements
reasonably satisfactory to the Notice Parties, the Borrower and the Servicer
shall execute and deliver and shall require each Lock-Box Bank to execute and
deliver, before any collections on Receivables are deposited in any Lock-Box
Account maintained by such Lock-Box Bank, an agreement among such parties, the
Collateral Agent, the Bank Agent and the Administrative Agent in form and
substance reasonably satisfactory to the Notice Parties and the Collateral Agent
(each a "Lock-Box Agreement"), covering each such Lock-Box Account. Each
Lock-Box Agreement shall include a provision pursuant to which the Servicer will
irrevocably instruct the Lock-Box Bank that, upon and after notice by the
Administrative Agent or the Bank Agent, with the prior written consent of the
Surety Provider, or the Surety Provider to the Lock-Box Bank to the effect that
an Event of Default has occurred and is continuing, the Lock-Box Bank will not
withdraw or transfer any funds from such Lock-Box Account unless and until,
prior thereto or concurrently therewith, the Collateral Agent shall have
identified the portion of the funds in such Lock-Box Account which constitute
Collateral and such portion shall have been transferred to the Collection
Account. Each of the Administrative Agent, the Bank Agent and the Surety
Provider agrees to give such notice, if at all, only after the occurrence of an
Event of Default. Within two Business Days after deposit of any funds in any
Lock-Box Account, the Servicer will identify the funds attributable to payments
on the Receivables that constitute Collections and instruct the Lock-Box Bank to
transfer such collected funds into the Collection Account. The Administrative
Agent, the Parallel Lenders, the Bank Agent and the Lender each hereby grant the
Servicer authorization (which authorization may be revoked if an Event of
Default has occurred and is continuing) to direct the Lock-Box Bank to transfer
any other funds not attributable to payments on the Receivables that constitute
Collections to such accounts or other persons as it may deem necessary in
accordance with its other servicing responsibilities.
(c) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent, the Bank Agent or the Surety Provider may
direct or require the Servicer to direct the Obligors to make all payments on
Receivables to an account designated by the Administrative Agent, the Bank Agent
or the Surety Provider. In the event of conflicting instructions from the
Administrative Agent, the Bank Agent and the Surety Provider, the instructions
of the Surety Provider shall control unless the Surety Provider has defaulted in
its obligations under the Surety Bond and such default continues.
(d) On the fifth Business Day following the last day of a
Collection Period, the Servicer shall direct in writing the Collection Account
Bank to transfer all Collections with respect to such Collection Period from the
Collection Account to the Distribution Account via
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wire transfer of immediately available funds. The Servicer's written direction
shall include the amount of funds to be transferred.
SECTION 4.3. Application of Collections. All collections on a
Receivable for each Collection Period shall be applied by the Servicer as
follows: first, to any late charges related to such Receivable, second, to any
Scheduled Payment, or portion thereof that is past due, third, to the Scheduled
Payment then due, fourth, to taxes owed or advanced by Servicer with respect to
such Receivable, fifth, to insurance premiums owed or advanced by Servicer with
respect to such Receivable, sixth, to other administrative fees and similar
charges, and seventh, any excess remaining thereafter shall be applied to prepay
such Receivable.
SECTION 4.4. Servicer Advances. If the payments by or on behalf of the
Obligor on a Receivable on the payment due date for such Receivable in any
Collection Period are less than the Scheduled Payment the Servicer shall advance
two Business Days prior to the Distribution Date into the Distribution Account
any shortfall (such amount a "Servicer Advance"), to the extent that the
Servicer, in its sole discretion, shall determine that the Servicer Advance
shall be recoverable from the Obligor, the Repurchase Amount, Recoveries or
proceeds of any other Receivables. Each Servicer Advance with respect to a
Receivable shall increase Outstanding Servicer Advances. Outstanding Servicer
Advances with respect to a Receivable shall be reimbursed first from, and may be
retained by Servicer from, subsequent payments by or on behalf of the related
Obligor, Recoveries in respect of the related Receivable, or payments of the
Repurchase Amount of the related Receivable. In no event, including in the event
that Standby Servicer should become successor Servicer, shall the Standby
Servicer be required to make Servicer Advances. The ratios set forth in Section
10.1 shall be calculated without taking Servicer Advances into account.
If the Servicer shall determine that an Outstanding Servicer Advance
with respect to any Receivable shall not be recoverable as aforesaid, the
Servicer shall be reimbursed in accordance with Section 4.6(a)(i) from any
collections made on unrelated Receivables included in the Collateral, and
Outstanding Servicer Advances with respect to such Receivable shall be reduced
accordingly.
SECTION 4.5. Additional Deposits. The Servicer shall deposit in the
Distribution Account the aggregate Servicer Advances pursuant to Section 4.4.
The Servicer or the Originator, as the case may be, shall deposit or cause to be
deposited in the Distribution Account the aggregate Repurchase Amount with
respect to Repurchased Receivables. All such deposits shall be made, in
immediately available funds, on the second Business Day preceding the
Distribution Date.
SECTION 4.6. Distributions. (a) On each Distribution Date, the
Collateral Agent shall cause the following transfers and distributions to be
made from the Distribution Account, in immediately available funds, based solely
on the amounts as set forth in the Servicer's Certificate for the related
Reporting Date:
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(i) From the Distribution Account to the Servicer,
amounts in respect of Outstanding Servicer Advances to the extent that
the Servicer is entitled to reimbursement in respect thereof in
accordance with Section 4.4 and to the extent such amounts have not
already been retained by the Servicer from funds that are excluded from
the definition of "Collections".
(ii) From the Distribution Account to the Persons and
accounts specified in paragraph (b) below those funds that were
deposited in the Distribution Account for the Collection Period related
to such Distribution Date (after payments to the Servicer pursuant to
clause (i) above).
(b) On each Distribution Date, the amount remaining in the
Distribution Account after the payment referred to in clause (i) of paragraph
(a) above shall be distributed by the Collateral Agent (based solely on the
amounts set forth in the Servicer's Certificate for the related Reporting Date)
in the following order of priority:
first, if Financial Pacific is not the Servicer, to the
Servicer in payment of the Servicing Fee for the related Collection
Period plus any Transition Costs, if any, in an aggregate amount not in
excess $50,000 until the Maturity Date;
second, to the Standby Servicer in payment of the Standby Fee
for the related Collection Period;
third, to the Administrative Agent in payment of the Program
Fee for the related Distribution Period;
fourth, on a pro rata basis, to the Lender and the Parallel
Lenders in payment of Interest on the Outstanding Principal in an
amount equal to the sum of (i) the accrued and unpaid Interest for such
Distribution Date plus (ii) any Interest accrued as of any previous
Distribution Date and not yet paid, excluding, in each case, the
Default Premium;
fifth, to the Surety Provider, in payment of the MBIA Premium,
in an amount equal to the sum of (x) the MBIA Premium payable on such
Distribution Date; plus (y) any MBIA Premium accrued as of any previous
Distribution Date and not yet paid plus interest on any unpaid MBIA
Premium as set forth in the Insurance Agreement;
sixth, (a) before an Event of Default, on a pro rata basis to
the Lender and the Parallel Lenders, in reduction of the Outstanding
Principal, in an amount equal to the excess of the Outstanding
Principal (before giving effect to such distribution) over the Advance
Percentage times the Pool Balance and (b) after an Event of Default has
occurred and is continuing, on a pro rata basis to the Lender and the
Parallel Lenders, until the Outstanding Principal is reduced to zero;
seventh, to the Surety Provider in payment of any unreimbursed
draw on the Surety Bond, plus all other amounts due to the Surety
Provider under the Insurance
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Agreement, together with interest on the foregoing as set forth in the
Insurance Agreement;
eighth, on a pro rata basis to the Lender and the Parallel in
payment of interest on the Outstanding Principal in an amount equal to
the sum of (i) the accrued and unpaid Default Premium for the related
Yield Period, plus (ii) any Default Premium accrued during any prior
Yield Period and not yet paid;
ninth, to the Administrative Agent in payment of the Unused
Fee for the related Distribution Period;
tenth, to the Servicer, in an amount equal to the Servicing
Fee, if any, for the related Collection Period that was not paid
pursuant to clause first above;
eleventh, to the Administrative Agent for the account of the
RCC Parties as their interests appear, in the amount of any Obligations
not theretofore paid by the Borrower, the Servicer or the Originator;
twelfth, to the Standby Servicer in payment of Transition
Costs in excess of $50,000, if any, not paid pursuant to clause first;
and
thirteenth, to the Borrower.
SECTION 4.7. Reliance on Information from the Servicer. Notwithstanding
anything to the contrary contained in this Agreement, all distributions from any
of the accounts described in this Article IV and any transfer of amounts between
such accounts, and all releases of Receivables shall be made by the Collateral
Agent and the Collection Account Bank in reliance on information provided to the
Collateral Agent or the Collection Account Bank, as the case may be, by the
Servicer in writing, whether by way of a Servicer's Certificate or otherwise.
ARTICLE V
Fees and Yield Protection
SECTION 5.1. Fees.
(a) Program Fee. From the Closing Date until the Final Payout
Date, on each Distribution Date, for the Distribution Period then ending, the
Borrower shall pay (i) to the Lender a program fee equal to the product of (x)
the weighted daily average of the Lender's portion of the Outstanding Principal
during such Distribution Period (or, if applicable, during the shorter period
described in clause (z) below), times (y) the Program Fee Rate, times (z) a
fraction the numerator of which is the actual number of days in such
Distribution Period and the denominator of which is 360 and (ii) to the Parallel
Lenders, on a pro rata basis, a program fee equal to the product of (x) the
weighted daily average of the Parallel Loan Balance during such Distribution
Period (or, if applicable, during the shorter period described in clause (z)
below),
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times (y) the Program Fee Rate, times (z) a fraction the numerator of which is
the actual number of days in such Distribution Period and the denominator of
which is 360 (together with the program fee described in clause (i), the
"Program Fee"). Such Program Fee shall be paid in arrears on each Distribution
Date, out of funds distributable under Section 4.6 to the extent available for
such payment, and otherwise out of other funds of the Borrower.
(b) Structuring Fee. The Borrower shall pay to the Administrative
Agent on the Closing Date a structuring fee in the amount set forth in the
Administrative Agent's Fee Letter.
(c) Unused Fee. From the Distribution Date occurring in March 1999
until the Funding Termination Date, on each Distribution Date, for the
Distribution Period then ending, the Borrower shall pay to the Administrative
Agent an unused fee (the "Unused Fee") equal to (i) the Liquidity Commitment
Amount (as defined in the Liquidity Agreement), minus the Outstanding Principal
at the close of business on the first day of such Distribution Period, times (y)
the rate set forth in the Administrative Agent's Fee Letter, times (z) a
fraction the numerator of which is the actual number of days in such
Distribution Period and the denominator of which is 360. Such Unused Fee shall
be payable on each Distribution Date in arrears out of funds distributable on
such date pursuant to Section 4.6 to the extent available for such payment, and
otherwise out of other funds of the Borrower.
SECTION 5.2. Overdue Interest. If the Borrower or the Servicer fails to
pay or deposit any amount hereunder when due to the Lender or to the Parallel
Lenders, then the Borrower or the Servicer, as applicable, shall pay to the
Administrative Agent or the Bank Agent, as applicable, for the account of the
Lender or the Parallel Lenders, as applicable, to the extent permitted by
applicable law, interest on such overdue amount, from the date when due until
paid or deposited, at a rate per annum equal to the Alternate Base Rate plus 2%,
calculated on the basis of a year of 360 days and the actual number of days
elapsed.
SECTION 5.3. Yield Protection.
(a) If any Regulatory Change occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or
other charge with respect to any Collateral owned by or funded by it,
or any obligations or right to make Fundings, or shall change the basis
of taxation of payments to the Affected Party of any principal or
interest owned by, owed to or funded in whole or in part by it or any
other amounts due under this Agreement or any other Related Document in
respect of the Collateral owned by or funded by it or its obligations
or rights, if any, to make Fundings (except for changes in the rate of
tax on the overall net income of such Affected Party imposed by the
United States of America, by the jurisdiction in which such Affected
Party's principal executive office is located and, if such Affected
Party's principal executive office is not in the United States of
America, by the jurisdiction where such Affected Party's principal
office in the United States is located); or
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(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but excluding any reserve included in the determination
of the Interest Rate), special deposit or similar requirement against
assets of any Affected Party, deposits or obligations with or for the
account of any Affected Party or with or for the account of any
Affiliate (or entity deemed by the Federal Reserve Board to be an
Affiliate) of any Affected Party, or credit extended by any Affected
Party; or
(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Affected
Party;
(D) shall impose any other condition affecting any
Collateral owned or funded in whole or in part by any Affected Party,
or its obligations or rights, if any, to make Fundings or to provide
funding therefor; or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor thereto)
assesses, deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be
(x) to increase the cost to or to impose a cost on (I) an
Affected Party funding or making or maintaining any Fundings, any
purchases, reinvestments, or loans or other extensions of credit under
any Program Support Agreement, or any commitment of such Affected Party
with respect to any of the foregoing, or (II) the Administrative Agent
for continuing its or the Borrower's relationship with Lender,
(y) to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement, any Program
Support Agreement or any other Related Document, or
(z) in the sole determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth in reasonable detail the basis of
such demand), the Borrower shall pay to the Administrative Agent for the account
of such Affected Party solely from amounts received by the Borrower pursuant to
clause thirteenth of Section 4.6(b) such additional amount or amounts as will
compensate such Affected Party for such additional or increased cost or such
reduction.
(b) Each Affected Party will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge which will entitle
such Affected Party to
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compensation pursuant to this Section 5.3; provided, however, no failure to give
or delay in giving such notification shall adversely affect the rights of any
Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 5.3, an Affected Party may use any reasonable averaging and attribution
methods that it (in its sole discretion) shall deem applicable. Any Affected
Party when making a claim under this Section 5.3 shall submit to the Borrower a
statement as to such increased cost or reduced return (including a calculation
thereof in reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon the Borrower.
(d) If any of the events requiring payments of additional amounts
by the Borrower under paragraph (a) above occurs, the applicable Affected Party
shall take such steps as may be reasonable (consistent with its internal policy
and legal and regulatory restrictions) to change the jurisdiction of its funding
office if such change would avoid Borrower being required to pay any additional
amounts and would not increase any cost to such Affected Party or be otherwise
disadvantageous to such Affected Party, and shall consult with the Borrower in
good faith with a view to agreeing to alternative arrangements whereby any such
requirement can be avoided or mitigated.
SECTION 5.4. Costs, Expenses and Taxes. In addition to its obligations
under Section 7.2, the Borrower agrees to pay on demand solely from amounts
received by it pursuant to clause thirteenth of Section 4.6(b):
(a) all reasonable costs and expenses (including
reasonable attorneys' fees and expenses incurred at or before any trial
or on appeal or otherwise) incurred by the Administrative Agent, the
Surety Provider, the Standby Servicer, the Liquidity Agent, the
Collateral Agent, each Program Support Provider, the Lender and each
Parallel Lender and their respective Affiliates in connection with (1)
any actual or proposed amendment or waiver of, or consent under, this
Agreement or any Related Document, whether or not consummated requested
by the Borrower or the Servicer, (2) any actual or proposed assignment
of, sale of participation interests on, or increase in the amount of,
the commitments of the Liquidity Banks under the Liquidity Agreement,
whether or not consummated, or (3) the enforcement of, or any breach
of, this Agreement and the other Related Documents, including, without
limitation (i) the reasonable fees and expenses of outside counsel to
any of such Persons incurred (A) in connection with any of the
foregoing or (B) in advising such Persons as to their respective rights
and remedies under any of the Related Documents, and (ii) all
reasonable out-of-pocket expenses (including reasonable fees and
expenses of independent accountants), incurred in connection with any
review of the Borrower's book and records in connection with the
enforcement of, or any breach of, this Agreement or the other Related
Documents; and
(b) all stamp and other taxes and fees payable or
determined to be payable in connection with any filing and recording of
this Agreement or the other Related
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Documents which is determined to be necessary or advisable, and agrees
to indemnify each Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay
such taxes and fees.
SECTION 5.5. Funding Losses. In the event that any Program Support
Provider shall incur any loss or expense (including any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Program Support Provider to make or maintain any loan, advance or
disbursement under a Program Support Agreement as reasonably determined by such
Affected Party) as a result of (i) any distribution with respect to the
Outstanding Principal not being made when required hereunder or being made on
any day other than a Distribution Date, or (ii) any Funding not being made in
accordance with a request therefor by the Borrower, then, upon written notice
from the Administrative Agent (accompanied by a statement setting forth in
reasonable detail the basis for the calculation and the amount claimed) to the
Borrower and the Servicer, the Borrower shall pay to the Administrative Agent
for the account of such Program Support Provider solely from amounts received by
the Borrower pursuant to clause thirteenth of Section 4.6(b) the amount of such
net loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding upon the Borrower and the Servicer.
ARTICLE VI
Conditions Precedent to Fundings
SECTION 6.1. Conditions Precedent to Initial Funding. The initial
Funding hereunder is subject to the condition precedent that the Notice Parties
shall have received, on or before the date of such Funding, the following, each
(unless otherwise indicated) dated such date and in form and substance
reasonably satisfactory to the Notice Parties:
(a) This Agreement, duly executed by each of the parties
hereto;
(b) The First Tier Purchase Agreement, duly executed by
the Originator and the Borrower, together with each of the closing
documents required to be delivered thereunder;
(c) A copy of the member consents of each Borrower Party
approving this Agreement and the other Related Documents to be
delivered by it hereunder and the transactions contemplated hereby and
thereby, certified by its Secretary or Assistant Secretary;
(d) Good standing certificates for each Borrower Party
issued by the Secretaries of State of each State where each such
Borrower Party is organized or has its principal place of business;
(e) A certificate of the Secretary or Assistant Secretary
of each Borrower Party certifying the names and true signatures of the
officers authorized on its behalf to
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sign this Agreement and the other Related Documents to be delivered by
it hereunder (on which certificate the Notice Parties, the Lender and
each Parallel Lender may conclusively rely until such time as the
Administrative Agent, the Bank Agent and the Surety Provider shall
receive from such Borrower Party a revised certificate meeting the
requirements of this subsection (e));
(f) Constituent documents of each Borrower Party, duly
certified by the Secretary of State of the State in which each such
Borrower Party is organized, as of a recent date acceptable to the
Notice Parties, together with a copy of the by-laws or operating
agreement of each Borrower Party, duly certified by the Secretary or an
Assistant Secretary of such Borrower Party;
(g) Acknowledgment copies or file-stamped copies of, or
other evidence reasonably satisfactory to the Notice Parties of the
filing of, (i) proper financing statements (Form UCC-1), filed on or
prior to the date of the initial Funding in such jurisdictions as any
Notice Party may reasonably request, (A) naming the Originator as the
debtor and transferor of Receivables and related Collateral, the
Borrower as the secured party and transferee and the Collateral Agent,
for the benefit of the Secured Parties, as assignee, and (B) naming the
Borrower as the debtor and the Collateral Agent, for the benefit of the
Secured Parties, as the secured party, and (ii) such other, similar
instruments or documents, if any, as may be necessary or, in the
reasonable opinion of any Notice Party, desirable under the UCC or any
comparable law of all appropriate jurisdictions to perfect the
Collateral Agent's interests, for the benefit of the Secured Parties,
in the Receivables and related Collateral under the UCC;
(h) Search reports provided in writing to the
Administrative Agent and the Surety Provider, listing all effective
financing statements that name the Originator or the Borrower as debtor
and that are filed in the jurisdictions in which filings are required
to be made pursuant to subsection (g) above and in such other
jurisdictions that any Notice Party shall reasonably request, together
with copies of such financing statements (none of which shall cover any
Receivables or related Collateral);
(i) Such documentation relating to the bank accounts
referred to in this Agreement as any Notice Party shall have reasonably
requested, including without limitation (A) a copy of each account
agreement relating to the Payments Accounts, and (B) evidence of
establishment of the Collection Account;
(j) Favorable opinions of counsel for the Borrower
Parties as to such matters as any Notice Party shall have reasonably
requested;
(k) An opinion or opinions of Xxxxxxx & Xxxxx, as special
counsel for the Borrower Parties, with respect to certain bankruptcy,
true sale, security interest and tax matters and as to such other
matters as any Notice Party shall have reasonably requested;
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(l) An opinion of counsel to the Collateral Agent and
Standby Servicer as to such matters as any Notice Party shall have
reasonably requested;
(m) The Hedging Agreement, duly executed by the parties
thereto;
(n) A Data Report, prepared in respect of the proposed
initial Funding, as of the Initial Cutoff Date, together with a
certificate of the Servicer as to the information (or certain
information, reasonably satisfactory to the Notice Parties) set forth
in such Data Report;
(o) The Surety Bond, duly executed by the Surety
Provider;
(p) An opinion of counsel to the Surety Provider as to
such matters as the Administrative Agent shall have reasonably
requested;
(q) S&P shall have confirmed the shadow rating provided
to the Surety Provider after giving effect to such initial Funding; and
(r) Such other agreements, instruments, certificates,
opinions and other documents as any Notice Party reasonably requested.
SECTION 6.2. Conditions Precedent to All Fundings. Each Funding
(including the initial Funding) hereunder shall be subject to the further
conditions precedent that on the date of such Funding the following statements
shall be true (and the Borrower by accepting the proceeds of the Funding shall
be deemed to have certified that):
(a) the representations and warranties contained in
Section 2.9 and Articles VII and VIII are correct in all material
respects on and as of such day as though made on and as of such day
(unless they relate to an earlier date, in which case they were correct
in all material respects as of such earlier date) and shall be deemed
to have been made on such day;
(b) no event has occurred or would result from such
Funding, that constitutes a Default or Event of Default that has not
been waived in writing by the Notice Parties;
(c) after giving effect to such proposed Funding, the sum
of the Outstanding Principal will not exceed $75,000,000;
(d) the Funding Termination Date shall not have occurred;
(e) the Borrower shall have provided the Notice Parties,
the Collateral Agent and the Standby Servicer with the following no
later than three (3) (or, in the case of the first Funding only, two
(2)) Business Days prior to such proposed Funding: (i) a Funding
Notice, (ii) a Data Report containing information with respect to the
Receivables included in the Collateral after giving effect to the
proposed Funding and (iii) any other
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information reasonably requested by any Notice Party with respect to
the Receivables included in the Collateral;
(f) the Borrower shall have delivered to the Collateral
Agent, the Surety Provider and the Bank Agent a duly executed
Originator Assignment from the Originator in substantially the form of
Exhibit A to the First Tier Purchase Agreement which shall include a
schedule listing the Receivables included in the Collateral;
(g) no later than three (3) Business Days prior to such
proposed Funding, the Borrower shall have delivered to the Collateral
Agent the Receivable Files relating to the Receivables included in the
Collateral and the Collateral Agent shall have delivered to the
Borrower, the Surety Provider and the Administrative Agent an
acknowledgment of receipt of such Receivable Files;
(h) the Borrower shall have deposited in the Collection
Account all Collections received since the relevant Cutoff Date in
respect of the Receivables included in the Collateral;
(i) neither the Originator nor the Borrower was insolvent
nor will any of them have been made insolvent by such transfer nor is
any of them aware of any pending insolvency;
(j) the Borrower, the Servicer and the Originator shall
have taken any action necessary, or, if requested by the Administrative
Agent, the Bank Agent or the Surety Provider, advisable to maintain the
first perfected security interest of the Collateral Agent, for the
benefit of the Secured Party, in the Receivables, including, without
limitation, the filing of additional UCC financing statements
identifying the Receivables included in the Collateral and obtaining,
to the extent necessary, an Acknowledgment and Receipt releasing any
Receivables from the interest of any third party;
(k) no selection procedures reasonably believed by the
Borrower or the Servicer to be materially adverse to the interests of
any Secured Party shall have been utilized in selecting the
Receivables; and
(l) the Borrower shall have delivered to the Collateral
Agent, the Surety Provider and the Bank Agent within three Business
Days prior to such Funding an executed confirmation to the Hedging
Agreement with an amortization schedule acceptable to the Surety
Provider and the Bank Agent which shall provide (in conjunction with
other schedules) an aggregate notional amount at least equal to the
Outstanding Principal after giving effect to the proposed Funding.
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ARTICLE VII
The Borrower
SECTION 7.1. Representations of Borrower. The Borrower makes the
following representations to the Lender, each Parallel Lender, the Notice
Parties and the Collateral Agent, on which the Lender and each Parallel Lender
rely in making Fundings, the Administrative Agent and the Bank Agent relies in
causing such actions to be taken on behalf of the Lender and the Parallel
Lenders and the Surety Provider relies in issuing the Surety Bond. The
representations speak as of the execution and delivery of this Agreement, the
Closing Date and the date of each Funding Date and shall survive the granting of
a security interest in the Receivables to the Collateral Agent, for the benefit
of the Secured Parties.
(i) Organization and Good Standing. The Borrower has been
duly organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware, with power
and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power,
authority, and legal right to acquire and own the Receivables.
(ii) Due Qualification. The Borrower is duly qualified to
do business as a foreign limited liability company in good standing,
and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business shall require such qualifications and where the
failure to so qualify could be reasonably expected to have a Material
Adverse Effect.
(iii) Power and Authority. The Borrower has the power and
authority to execute and deliver this Agreement and the other Related
Documents to which it is a party and to carry out their respective
terms; the Borrower has full power and authority to grant a security
interest in the Collateral to the Collateral Agent, for the benefit of
the Secured Parties, and has duly authorized such grant by all
necessary action; and the execution, delivery and performance of this
Agreement and the other Related Documents to which it is a party have
been duly authorized by the Borrower by all necessary action.
(iv) Binding Obligation. This Agreement and each other
Related Document to which Borrower is a party constitutes the legal,
valid and binding obligation of the Borrower enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforceability of creditors' rights generally and by
general equitable principles.
(v) No Violation. The execution, delivery and performance
by the Borrower of this Agreement and the other Related Documents and
the consummation of the transactions contemplated hereby and thereby
and the fulfillment by the Borrower of the
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terms hereof and thereof do not (A) conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of formation
or operating agreement of the Borrower; (B) conflict with, result in
any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under any indenture,
agreement, mortgage, deed of trust, or other instrument to which the
Borrower is a party or by which it is bound or any of its properties
are subject; (C) result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument (other than
this Agreement and the other Related Documents); or (D) violate any
law, order, rule, or regulation applicable to the Borrower of any court
or of any Federal or State regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the
Borrower or its properties, which, in the case of clause (B), (C) or
(D), could reasonably be expected to result in a Material Adverse
Effect.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Borrower's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Borrower or its properties: (A) asserting the invalidity of this
Agreement or the other Related Documents to which the Borrower is a
party, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the other Related
Documents, (C) seeking any determination or ruling that could
materially and adversely affect the performance by the Borrower of its
obligations under, or the validity or enforceability of, this
Agreement, or the other Related Documents, or (D) which, if adversely
determined, would be reasonably likely to have a Material Adverse
Effect.
(vii) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person or other organization, or of any
court, governmental agency or body or official, required to be obtained
by the Borrower in connection with the execution and delivery of this
Agreement and the other Related Documents have been or will be taken or
obtained, and will be in full force and effect, on or prior to the
Closing Date where the failure to take or obtain the same could be
reasonably likely to result in a Material Adverse Effect.
(viii) Accurate Reports. No Servicer's Certificate, Schedule
of Receivables, Data Report or other information, exhibit, financial
statement, document, book, record or report furnished or to be
furnished, in each case in writing, by or on behalf of the Borrower to
the Administrative Agent, the Bank Agent or the Surety Provider in
connection with this Agreement, in each case as of the date it was
dated or certified, was inaccurate in any material respect, or
contained any material misstatement of a material fact or omitted to
state any material fact necessary to make the statements contained
therein, in the context in which they are made, not materially
misleading.
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(ix) Ownership. On and after the date of the initial
Funding hereunder, all the membership interests of the Borrower are
owned directly by Financial Pacific, free and clear of all Liens.
(x) Margin Regulations. The use of all funds obtained by
the Borrower under this Agreement will not conflict with or contravene
any of Regulations T, U and X promulgated by the Board of Governors of
the Federal Reserve System from time to time.
(xi) Offices. The principal place of business and chief
executive office of the Borrower is located at the address set forth on
Schedule 15.5, or such other address with respect to which the
requirements of Section 15.2(b) have been met. The Borrower's books and
records evidencing or relating to the Receivables and other Collateral
are located at such address.
(xii) Legal Names. Since the date of their formation, (i)
neither the Borrower nor the Originator has (i) been known by any legal
name other than its limited liability company name as of the date
hereof, or (ii) been the subject of any merger or other corporate
reorganization that resulted in a change of name, identity or its
structure. The Borrower uses no trade names other than its actual
limited liability company name.
(xiii) Investment Company Act. The Borrower is not, and is
not controlled by, an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or a
"holding company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(xiv) Insolvency. The Borrower is not insolvent, and will
not be made insolvent after giving effect to the transactions
contemplated by this Agreement.
(xv) Servicing Programs. No license or approval is
required for the Borrower's use of any program used by the Servicer in
the servicing of the Receivables, other than those which have been
obtained and are in full force and effect.
(xvi) Taxes. The Borrower has filed all tax returns and
reports required by law to have been filed by it and has paid all taxes
and governmental charges thereby shown to be owing, except any such
taxes or charges that are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP have been set aside on its books.
(xvii) Financial Position. The balance sheets of Borrower as
at the date hereof, certified by an authorized officer of the Borrower,
copies of which have been furnished to the Notice Parties, fairly
present in all material respects the financial position, assets and
liabilities of the Borrower as at such date, all in accordance with
GAAP consistently
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applied. Since the date of the Borrower's formation, there has been no
material adverse change in the Borrower's financial position, business
or operations.
SECTION 7.2. Indemnity by Borrower.
(a) General Indemnity. Without limiting any other rights which any
such Person may have hereunder, under any Related Document or under applicable
law, the Borrower hereby agrees, to indemnify each of the Administrative Agent,
the Lender, the Parallel Lenders, the Bank Agent, the Program Support Providers,
the Liquidity Agent, the Surety Provider, the Collateral Agent, the Standby
Servicer, the Collection Account Bank, each of their respective Affiliates, and
all successors, transferees, participants and assigns and all officers,
directors, shareholders, controlling persons, employees and agents of any of the
foregoing (each an "Indemnified Party"), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or relating to the Related Documents or
the ownership or funding of the Collateral or in respect of any Receivable or
any Contract, excluding, however, (a) Indemnified Amounts resulting from gross
negligence or willful misconduct on the part of any Indemnified Party or its
agents (other than Borrower) or subcontractors, (b) recourse for Defaulted
Receivables, and (c) any tax upon or measured by net income of any Indemnified
Party. Without limiting the foregoing, but subject to the foregoing exclusions,
the Borrower shall indemnify each Indemnified Party for Indemnified Amounts
arising out of or relating to:
(i) the transfer by the Borrower of any interest in any
Receivable other than the transfer of Collateral to the Collateral
Agent, for the benefit of the Secured Parties, pursuant to this
Agreement, the resale of Receivables to the Originator pursuant to the
terms of the First Tier Purchase Agreement and the transfer of
Receivables as permitted hereby;
(ii) any representation or warranty made by the Borrower
(or any of its officers) under or in connection with any Related
Document, any Servicer's Certificate, Schedule of Receivables or Data
Report or any other information or report delivered by or on behalf of
the Borrower pursuant hereto, which shall have been false, incorrect or
misleading in any material respect when made or deemed made;
(iii) the failure by the Borrower to comply with any
applicable law, rule or regulation with respect to any Receivable or
the related Collateral, or the nonconformity of any Receivable or the
related Collateral with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the
Collateral Agent, for the benefit of the Secured Parties, a security
interest in the Receivables and other Collateral, free and clear of any
Lien, other than any Permitted Lien and any Lien arising solely as a
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result of an act of a Secured Party or its successors or assigns
whether existing at the time of any Funding with respect to such
Collateral or at any time thereafter;
(v) the failure to file, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables, whether at the time of any Funding or at
any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of an Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting
from the sale of the merchandise or services related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
(vii) any failure of the Borrower, to perform its duties or
obligations in accordance with this Agreement;
(viii) any litigation, proceedings or investigation against
any Borrower Party; or
(ix) any tax or governmental fee or charge, including any
sales, gross receipts, general corporation, tangible or intangible
personal property, privilege or license taxes (but not including taxes
upon or measured by net income), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending
against the same, which may arise by reason of the purchase or
ownership of or security interest in any Collateral, or any other
interest in the Receivables or in any goods or equipment which secure
any such Receivables; or
(x) any interest rate hedging mismatches.
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified
Party shall have notice of any attempt to impose or collect any tax or
governmental fee or charge for which indemnification will be sought from the
Borrower under Section 7.2(a)(ix), such Indemnified Party shall give prompt and
timely notice of such attempt to the Borrower and the Borrower shall have the
right, at its expense, to participate in any proceedings resisting or objecting
to the imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the payment of any of the aforesaid taxes and the receipt
of the indemnity provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax or refund on the amount
of tax measured by net income or profits which is or was payable by the
Indemnified Party.
(c) Survival. The provisions of this Section 7.2 shall survive the
termination of this Agreement and the other Related Documents, and the
resignation or removal of the Collateral
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Agent, and shall include reasonable fees and expenses of outside counsel and
expenses of litigation.
ARTICLE VIII
The Servicer
SECTION 8.1. Representations of Servicer. The initial Servicer makes
the following representations to the Lender, each Parallel Lender, the Notice
Parties and the Collateral Agent, on which the Lender and each Parallel Lender
rely in making the Fundings, the Administrative Agent and the Bank Agent relies
in causing such actions to be taken on behalf of the Lender and the Parallel
Lenders and the Surety Provider relies in issuing the Surety Bond. The
representations speak as of the execution and delivery of this Agreement, the
Closing Date and each Funding Date and shall survive the funding of the
Receivables by the Lender and/or the Parallel Lenders.
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a limited liability company
in good standing under the laws of the State of Washington, with power
and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power,
authority, and legal right to service the Receivables as provided
herein.
(ii) Due Qualification. The Servicer is duly qualified to
do business as a foreign limited liability company in good standing,
and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Receivables as
required by this Agreement) shall require such qualifications and where
the failure to so qualify could reasonably be expected to result in a
Material Adverse Effect.
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery, and performance of this Agreement
has been duly authorized by the Servicer by all necessary action.
(iv) Binding Obligation. This Agreement and each other
Related Document to which the Servicer is a party constitutes a legal,
valid and binding obligation of the Servicer enforceable in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforceability of creditors' rights generally, and
by general equitable principles.
(v) No Violation. The execution, delivery and performance
by the Servicer of this Agreement and the consummation of the
transactions contemplated hereby and the
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fulfillment of the terms hereof do not (A) conflict with, result in any
material breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the
certificate of formation or operating agreement of the Servicer; (B)
conflict with, result in any material breach of any of the terms and
provisions of, or constitute a default under any indenture, agreement,
mortgage, deed of trust, or other instrument to which the Servicer is a
party or by which it is bound or any of its properties are subject; (C)
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any indenture, agreement, mortgage,
deed of trust, or other instrument; or (D) violate any law, order,
rule, or regulation applicable to the Servicer of any court or of any
Federal or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or
its properties, which, in the case of clause (D), could reasonably be
expected to result in a Material Adverse Effect.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Servicer or its properties: (A) asserting the invalidity of this
Agreement or the other Related Documents, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement
or the other Related Documents, or (C) which, if adversely determined,
would be reasonably likely to have a Material Adverse Effect.
(vii) Approvals. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required to be obtained by the Servicer in connection with the
execution and delivery of this Agreement have been or will be taken or
obtained, and will be in full force and effect, on or prior to the
Closing Date where the failure to take or obtain the same could be
reasonably likely to have a Material Adverse Effect.
(viii) Financial Position. (A) The consolidated balance
sheets of Financial Pacific Company as at December 31, 1997, and the
related consolidating statements of income and shareholders' equity of
Financial Pacific Company and its consolidated subsidiaries for the
fiscal year then ended, certified by Deloitte and Touche, independent
certified public accountants, and the unaudited consolidating balance
sheets of the initial Servicer and its consolidated subsidiaries as at
March 31, 1998, June 30, 1998, and September 30, 1998 and the related
consolidating statements of income and shareholders' equity of
Financial Pacific Company and its consolidated subsidiaries for the
fiscal quarters then ended, copies of which have been furnished to the
Notice Parties, fairly present in all material respects the
consolidated financial position of Financial Pacific Company and its
consolidated subsidiaries as at such dates and the consolidated results
of the operations of Financial Pacific and its consolidated
subsidiaries for the periods ended on such dates, all in accordance
with GAAP consistently applied, and (B) since December 31, 1997 there
has been no material adverse change in any such financial position,
business or operations.
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(ix) Accurate Reports. No Servicer's Certificate, Data
Report or other information, exhibit, financial statement, document,
book, record or report furnished or to be furnished, in each case in
writing, by or on behalf of the Servicer to the Lender, the Parallel
Lenders, the Administrative Agent, the Bank Agent or the Surety
Provider pursuant to this Agreement was inaccurate in any material
respect as of the date it was dated or as of the date so furnished, or
contained any material misstatement of fact or omitted to state a
material fact necessary to make the statements contained therein not
materially misleading in light of the circumstances made or presented.
SECTION 8.2. Indemnities of Servicer.
(a) General Indemnity. Without limiting any other rights which any
such Person may have hereunder, under any other Related Document or under
applicable law, the Servicer hereby agrees to indemnify each Indemnified Party,
forthwith on demand, from and against any and all Indemnified Amounts awarded
against or incurred by any of them arising out of or resulting from (i) any
representation or warranty made by the Servicer under or in connection with any
Related Document, any Servicer's Certificate or Data Report or any other written
information or report delivered by or on behalf of the Servicer pursuant hereto,
which shall have been false, incorrect or misleading in any material respect
when made or deemed made, or (ii) the failure by the Servicer to comply with any
applicable law, rule or regulation with respect to any Receivables or the
related Collateral, or (iii) the failure of the Servicer to perform its duties
or obligations in accordance with this Agreement, excluding, however, (a)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party, (b) recourse for Defaulted
Receivables and (c) any tax upon or measured by net income of any Indemnified
Party.
(b) Collateral Agent. The initial Servicer shall indemnify,
defend, and hold harmless the Collateral Agent from and against all reasonable
costs, reasonable expenses, losses, claims, damages, and liabilities arising out
of or incurred in connection with the acceptance or performance of its duties
contained in this Agreement and the other Related Documents except to the extent
that such loss, liability, fee, disbursement, or expense shall have been
incurred by reason of the Collateral Agent's willful misfeasance or gross
negligence.
(c) Termination of Servicer. For purposes of this Section, in the
event of the termination of the rights and obligations of a Servicer (or any
successor thereto pursuant to Section 8.3) as Servicer pursuant to Section 3.13
or Section 10.2, or a resignation by such Servicer pursuant to this Agreement,
such Servicer shall be deemed to be the Servicer pending the assumption by a
successor Servicer of the Servicer's duties pursuant to Section 10.4. The
provisions of this Section 8.2(c) shall in no way affect the survival pursuant
to Section 8.2(d) of the indemnification by the Servicer provided under this
Section 8.2.
(d) Survival. The provisions of this Section 8.2 shall survive the
termination of this Agreement and the other Related Documents, and the
resignation or removal of the Collateral
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Agent, and shall include reasonable fees and expenses of outside counsel and
expenses of litigation.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer. (a) The initial Servicer shall not
merge or consolidate with or into, or (except for transfers of receivables and
related assets in the ordinary course of its business), in one transaction or a
series of transactions, sell, assign or otherwise transfer all or substantially
all of its assets or controlling membership interests to, any other Person,
unless (i) either (A) such transaction is a merger or consolidation and the
Servicer is the surviving corporation or (B) on or prior to the effectiveness of
such transaction, the surviving corporation or transferee shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
which agreement shall be satisfactory in form and substance to the Notice
Parties, (ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing or would reasonably be
expected to occur as a result of such transaction, (iii) the Servicer shall have
delivered to the Notice Parties an Officer's Certificate stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 8.3 and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with, (iv) the Surety
Provider shall have received confirmation from each Rating Agency that such
action will not result in a reduction of the shadow rating of this transaction,
and (v) the Servicer shall have delivered to the Notice Parties an Opinion of
Counsel stating that such agreement of assumption is legal, valid, binding and
enforceable in accordance with its terms and either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed and all other actions have
been taken which are necessary fully to preserve and continue the validity,
perfection and priority of the Collateral Agent's interest in the Receivables
and reciting the details of such filings and other actions, or (B) stating that,
in the opinion of such counsel, no such filing or other action shall be
necessary to preserve and continue the validity, perfection and priority of such
interest. Nothing in this Section 8.3 shall be deemed to release the Servicer
from any of its obligations as such.
(b) Any Person (i) into which the Standby Servicer may be merged
or consolidated, (ii) which may result from any merger or consolidation to which
the Standby Servicer shall be a party, or (iii) which may succeed to the
properties and assets of the Standby Servicer substantially as a whole, shall be
the successor to the Standby Servicer under this Agreement without further act
on the part of any of the parties to this Agreement; provided, however, that
nothing herein shall be deemed to release the Standby Servicer from any
obligation.
SECTION 8.4. Servicer and Standby Servicer Not to Resign. Subject to
the provisions of Section 8.3, neither the Servicer nor the Standby Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Standby Servicer, as the case may be, under this Agreement (i) except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or the Standby Servicer, as the case may be, and the Notice
Parties do not elect to waive
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the obligations of the Servicer or the Standby Servicer, as the case may be, to
perform the duties which render it legally unable to act or do not elect to
delegate those duties to another Person or (ii) except, in the case of the
Standby Servicer, the Standby Servicer shall have determined in its sole
discretion to resign and gives sixty days prior written notice to the Notice
Parties. Notice of any resignation (including, if applicable, the determination
referred to in clause (i) above) of the Servicer or the Standby Servicer, as the
case may be, shall be communicated to the Collateral Agent, and the Notice
Parties at the earliest practicable time (and, if such communication is not in
writing, shall be confirmed in writing at the earliest practicable time) and any
determination under clause (i) above shall be evidenced by an Opinion of Counsel
to such effect delivered to and reasonably satisfactory to the Collateral Agent,
and the Notice Parties concurrently with or promptly after such notice. No
resignation of the Servicer shall become effective until a successor servicer
acceptable to the Surety Provider shall have assumed the responsibilities and
obligations of such Servicer in accordance with Section 10.4 and the Servicing
Assumption Agreement, if applicable. No resignation of the Standby Servicer
shall become effective until an entity reasonably acceptable to the Notice
Parties shall have assumed the responsibilities and obligations of the Standby
Servicer; provided, however, that if no such entity shall have assumed such
responsibilities and obligations of the Standby Servicer within 30 days of the
resignation of the Standby Servicer, the Standby Servicer may petition a court
of competent jurisdiction for the appointment of a successor to the Standby
Servicer acceptable to the Surety Provider.
SECTION 8.5. Representations and Warranties of Standby Servicer. The
Standby Servicer makes the following representations and warranties on which the
Borrower, the Notice Parties, the Parallel Lenders and Lender shall rely:
(i) The Standby Servicer is a banking corporation duly
organized, validly existing and in good standing under the laws of its
place of incorporation.
(ii) The Standby Servicer has full corporate power,
authority and legal right to execute, deliver and perform this
Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.
(iii) This Agreement has been duly executed and delivered
by the Standby Servicer and constitutes a legal, valid and binding
obligation of the Standby Servicer in accordance with its terms.
ARTICLE IX
General Covenants of Borrower, Servicer and Financial Pacific Company
SECTION 9.1. Affirmative Covenants of Borrower and Servicer. From the
date hereof until the Final Payout Date, the Borrower and Servicer each
severally agrees on behalf of itself that it will, unless the Notice Parties
shall otherwise consent in writing:
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(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to the
Receivables and related Collateral where the failure to so comply could
reasonably be expected to have a Material Adverse Effect.
(b) Preservation of Corporate Existence. Preserve and maintain its
limited liability company existence, rights, franchises, licenses, permits and
privileges in the jurisdiction of its organization, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification could have a Material Adverse Effect.
(c) Audits. (i) At any time and from time to time during regular
business hours, upon at least two (2) Business Days prior written notice (unless
a Default or an Event of Default shall have occurred and be continuing , in
which case no notice shall be required), permit each Notice Party or the Standby
Servicer or any of their respective agents or representatives, at the Borrower's
cost and expense, (A) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of such party relating to the
Receivables and other Collateral, and (B) to visit the offices and properties of
such party for the purpose of examining such materials described in clause
(i)(A) next above, and to discuss matters relating to Receivables or any such
party's performance hereunder with any of the officers or employees of such
party having knowledge of such matters; and (ii) without limiting the provisions
of clause (i) next above, from time to time on request of any Notice Party
permit certified public accountants or other auditors acceptable to the Notice
Parties to conduct, at the Borrower's expense, a review of such books and
records with respect to the Receivables and other Collateral.
(d) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material provisions,
covenants and other promises, if any, required to be observed by it under the
Receivables.
(e) Financial Covenants. The following financial covenants shall
be complied with and shall be measured on a quarterly basis:
(i) The initial Servicer and its consolidated
subsidiaries shall maintain Tangible Net Worth,
calculated at the end of each calendar quarter,
beginning with the quarter ending December 31, 1998,
of not less than $13.5 million, plus 50% of net
income since September 30, 1998.
(ii) The initial Servicer and its consolidated
subsidiaries shall maintain a minimum level of
adjusted earnings (before interest, income taxes,
depreciation and amortization) to interest coverage
of 1.4 on a rolling four quarter basis calculated at
December 31, 1998, and quarterly thereafter through
September 30, 1999; 1.5 on a rolling four quarter
basis calculated at December 31, 1999, and quarterly
thereafter through September 30, 2000; and 1.6 for
rolling four quarter periods thereafter. In
calculating
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interest coverage, interest expense shall include
interest of the initial Servicer and its consolidated
subsidiaries, as well as, interest accruing on the
subordinated debt of Financial Pacific Company.
Amortization shall not include amortization of
capitalized initial direct costs incurred in
originating leases.
(iii) The initial Servicer and its consolidated
subsidiaries shall maintain a ratio, on a
consolidated basis, of adjusted total debt to
adjusted consolidated Tangible Net Worth not to
exceed 13 to 1 calculated quarterly beginning
December 31, 1998. Adjusted total debt shall include
only consolidated interest-bearing debt, plus (a) 50%
of Financial Pacific Company's subordinated debt
having a maturity of five years or more, and (b) 100%
of Financial Pacific Company's subordinated debt
having a maturity of less than five years. Adjusted
consolidated Tangible Net Worth shall include the
consolidated Tangible Net Worth, less (a) 50% of
Financial Pacific Company's subordinated debt having
a maturity of five years or more, and (b) 100% of
Financial Pacific Company's subordinated debt having
a maturity of less than five years.
(iv) The initial Servicer shall not incur a net loss in
excess of $100,000 for any quarterly period.
(v) The initial Servicer shall maintain a minimum level
of available debt under its non-Surety Provider
credit facilities of $12.5 million, provided, however
that this provision shall become effective at the
time that Fundings under this Agreement shall equal
at least $12.5 million.
(f) Necessary Licenses. Each of the Servicer and the Borrower
shall obtain and maintain all necessary licenses, permits and charters required
to be obtained by the Servicer and the Borrower, respectively, which failure to
obtain would render any portion of the Related Documents unenforceable and would
have a material adverse effect on any of the Secured Parties.
(g) Year 2000 Program. Each of the Servicer and the Borrower has
taken, or will by June 30, 1999 have taken, all steps necessary and appropriate
to prevent any problems in its computer and information systems arising from or
in connection with the information processing challenges associated with the
Year 2000, and will provide to the Notice Parties such information and reports
as any Notice Party may reasonably request from time to time with respect to
such steps as have or will be taken with respect thereto.
SECTION 9.2. Reporting Requirements. From the date hereof until the
Final Payout Date, the Borrower and the initial Servicer will furnish, or cause
to be furnished, to the Notice Parties and the Standby Servicer:
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(a) Quarterly Financial Statements. As soon as available and in
any event within 60 days after the end of each of the first three quarters of
each fiscal year of Financial Pacific Company, (i) copies of Financial Pacific
Company's quarterly financial reports prepared in accordance with GAAP, and (ii)
a calculation of the financial tests set forth in Section 9.1(e) demonstrating
that there is no breach of such Section, all certified by the chief financial
officer or chief accounting officer of Financial Pacific Company;
(b) Annual Financial Statements of Financial Pacific Company. As
soon as available and in any event within 120 days after the end of each fiscal
year of Financial Pacific Company, a copy of Financial Pacific Company's
consolidated annual financial statements as reported on by nationally recognized
independent certified public accountants (which shall be a "Big-5" accounting
firm), along with consolidating schedules of the initial Servicer and the
Borrower;
(c) Compliance Certificate. Concurrently with the delivery of the
financial statements required pursuant to Section 9.2(a) and (b) hereof, one or
more certificates signed by an officer of each of the initial Servicer and
Financial Pacific Company authorized to execute such certificates on behalf of
the initial Servicer or Financial Pacific Company, as the case may be, stating
that:
(i) a review of the initial Servicer's performance under
the Related Documents during such period has been made under such
officer's supervision;
(ii) to the best of such officer's knowledge following
reasonable inquiry, no Default of Event of Default has occurred, or if
a Default or Event of Default has occurred, specifying the nature
thereof and, if the initial Servicer has a right to cure pursuant to
Section 10.1 hereof, stating in reasonable detail (including, if
applicable, any supporting calculations) the steps, if any, being taken
by the initial Servicer to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such Default
or Event of Default relates;
(iii) in the case of financial statements submitted in
accordance with Section 9.2(a) hereof, such financial statements are
complete and correct in all material respects and present fairly the
financial condition and results of operations of Financial Pacific
Company, the initial Servicer, the Originator and the Borrower as of
the dates for the periods indicated, in accordance with GAAP
consistently applied; and
(iv) the initial Servicer has in full force and effect an
employee dishonesty insurance policy in accordance with the terms and
requirement of Section 3.16 hereof.
(d) ERISA. Promptly after the filing or receiving thereof, copies
of all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Borrower or the Servicer files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or which the Borrower or the Servicer receives from the
Pension Benefit Guaranty Corporation;
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(e) Events of Default. As soon as possible and in any event within
three Business Days after obtaining knowledge of the occurrence of each Default
and each Event of Default, a written statement of the chief financial officer or
chief accounting officer of the Borrower and the Servicer setting forth details
of such event and the action that the Borrower or the Servicer propose to take
with respect thereto;
(f) Litigation. As soon as possible and in any event within three
Business Days of the Borrower's or the Servicer's knowledge thereof, notice of
(i) any litigation, investigation or proceeding which may exist at any time
which could have a Material Adverse Effect and (ii) any material adverse
development in previously disclosed litigation; and
(g) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition or
operations, financial or otherwise, of the Borrower or the Servicer as any
Notice Party or the Standby Servicer may from time to time reasonably request in
order to protect the interests of the Collateral Agent or any Secured Party
under or as contemplated by this Agreement.
SECTION 9.3. Negative Covenants of Borrower and Servicer. From the date
hereof until the Final Payout Date, the Borrower and the Servicer each agrees
that it will not, without the prior written consent of the Notice Parties:
(a) Sales, Liens, Etc. (i) In the case of the Borrower, except
pursuant hereto or in accordance with Section 2.7, 2.10, 2.12, 3.2 or 3.7, and
otherwise as contemplated by the Related Documents, sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Lien (other than Permitted Liens) upon or with respect to, any Receivable or
related Collateral, or any interest therein, or any right to receive income or
proceeds from or in respect of any of the foregoing, and (ii) in the case of the
Servicer, assert any interest in the Receivables, except as Servicer.
(b) [RESERVED.]
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business, or make any material adverse change in
the Credit Policy or Collection Policy if such change would be reasonably likely
to have a Material Adverse Effect without the prior written consent of the
Notice Parties.
(d) Mergers, Acquisitions, Sales, etc. In the case of the
Borrower, be a party to any merger or consolidation, or purchase or otherwise
acquire all or substantially all of the assets or any stock of any class of, or
any partnership or joint venture interest in, any other Person, or sell,
transfer, convey or lease all or any substantial part of its assets, or sell or
assign with or without recourse any Receivables or any interest therein (other
than, in each case, pursuant hereto or in accordance with this Agreement and the
other Related Documents).
(e) Restricted Payments. In the case of the Borrower, (i) purchase
any membership interests in the Borrower, (ii) declare or make any distributions
to its members except out of its
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earnings and profits and otherwise in accordance with applicable law, or (iii)
issue or transfer any of the Borrower's limited liability company interests to
any Person other than Financial Pacific.
(f) Incurrence of Indebtedness. In the case of the Borrower, incur
or permit to exist, any indebtedness or liability on account of deposits or
advances or for borrowed money or for the deferred purchase price of any
property or services, except (i) indebtedness pursuant to this Agreement and the
other Related Documents, (ii) current accounts payable arising under the Related
Documents and not overdue, (iii) other current accounts payable arising in the
ordinary course of the Borrower's business, which the Borrower has the ability
to pay promptly and (iv) non-recourse subordinated debt to the Borrower's sole
equity member for the purpose of funding certain transaction costs and expenses,
provided that such debt is expressly non-recourse and subordinate to the
Obligations and is payable solely from amounts, if any, that the Borrower
receives distributions pursuant to clause thirteenth of Section 4.6(b).
(g) Investments, etc. In the case of the Borrower, (i) make, incur
or suffer to exist an investment in or equity contribution to, any Person; (ii)
make any loan or advance to any Person; or (iii) create any direct or indirect
Subsidiary or otherwise acquire direct or indirect ownership of any equity
interests in any other Person.
(h) Amendment of Certificate of Formation; Change in Borrower's
Business. In the case of the Borrower, amend its certificate of formation or
operating agreement, or engage in any business other than as contemplated by the
Related Documents.
(i) Negative Pledges. Enter into or assume any agreement (other
than this Agreement and the other Related Documents) prohibiting the creation or
assumption of any Lien upon any Receivables or Collateral, as contemplated by
the Related Documents, or otherwise prohibiting or restricting any transaction
contemplated hereby or by the other Related Documents.
(j) Changes to Certain Documents. Enter into any amendment, waiver
or modification of or supplement to any of the other Related Documents to which
it is a party.
SECTION 9.4. Separate Existence. Each of the Borrower and Financial
Pacific hereby acknowledges that the Lender, the Parallel Lenders and the Notice
Parties, are entering into the transactions contemplated by this Agreement and
the other Related Documents in reliance upon the Borrower's identity as a legal
entity separate from Financial Pacific and its Affiliates. Therefore, from and
after the date hereof, each of the Borrower and Financial Pacific shall take all
steps specifically required by this Agreement to continue the Borrower's
identity as a separate legal entity and to make it apparent to third Persons
that the Borrower is an entity with assets and liabilities distinct from those
of each of Financial Pacific and any other Person, and is not a division of,
Financial Pacific or any other Person. Without limiting the generality of the
foregoing and in addition to and consistent with the other covenants set forth
herein, each of the Borrower and Financial Pacific shall take such actions as
shall be required in order that:
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(a) The Borrower will be a limited purpose limited liability
company whose primary activities are restricted to purchasing or otherwise
acquiring from the Originator, owning, holding, granting security interests, or
selling interests, in Receivables, entering into agreements for the selling,
financing and servicing of the Receivables, and conducting such other activities
as it deems necessary or appropriate to carry out its primary activities;
(b) Subject to Section 9(c) of the Borrower's limited liability
agreement, not less than two managers (or directors, if so provided in the
organizational documents of the Borrower) of the Borrower (the "Independent
Managers") shall be individuals who are not direct, indirect or beneficial
members, officers, directors, employees, affiliates, associates or suppliers of
Financial Pacific Company or any of its Affiliates (other than the Borrower);
provided that any Independent Manager may also serve as an independent manager
of any other special purpose entity of Financial Pacific Company or any of its
Affiliates and still qualify as an Independent Manager of the Borrower. The
certificate of formation of the Borrower shall provide that (i) neither the
Borrower's managers or members shall approve, or take any other action to cause
the filing of, a voluntary bankruptcy petition with respect to the Borrower
unless the Independent Managers shall approve the taking of such action in
writing prior to the taking of such action and (ii) such provision cannot be
amended without the prior written consent of the Independent Managers;
(c) No Independent Manager shall at any time serve as a trustee in
bankruptcy for the Borrower, Financial Pacific or any Affiliate thereof;
(d) Any consultant or agent of the Borrower will be compensated
from the Borrower's funds for services provided to the Borrower. The Borrower
will not engage any agents other than its attorneys, auditors and other
professionals, and a servicer and any other agent contemplated by the Related
Documents for the Receivables, which servicer will be fully compensated for its
services by payment of the Servicing Fee;
(e) The Borrower will contract with the Servicer to perform for
the Borrower all operations required on a daily basis to service the
Receivables. The Borrower will pay the Servicer the Servicing Fee pursuant
hereto. To the extent, if any, that the Borrower shares items of expenses not
reflected in the Servicing Fee, such as legal, auditing and other professional
services and insurance, such expenses will be allocated to the extent practical
on the basis of actual use or the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value of services rendered; it
being understood, however, that certain organizational expenses of the Borrower
and certain fees and expenses relating to the preparation, negotiation,
execution and delivery of the Related Documents may be paid by Financial
Pacific;
(f) The Borrower's operating expenses will not be paid by
Financial Pacific or any other Affiliate thereof;
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(g) The Borrower's books and records will be maintained separately
from those of Financial Pacific and any other Affiliate thereof;
(h) All financial statements of Financial Pacific or any Affiliate
thereof that are consolidated to include the Borrower will contain notations
clearly noting (i) all of the Borrower's assets are owned by the Borrower and
(ii) the Borrower is a separate entity with creditors who have received
ownership and/or security interests in the Borrower's assets;
(i) The Borrower's assets will be maintained in a manner that
facilitates their identification and segregation from those of Financial Pacific
or any Affiliate thereof, including marking all reports, records, files and any
information system pertaining to Borrower's assets to reflect ownership interest
of the Borrower;
(j) The Borrower will strictly observe limited liability company
formalities in its dealings with Financial Pacific or any Affiliate thereof, and
funds or other assets of the Borrower will not be commingled with those of
Financial Pacific or any Affiliate thereof except as contemplated by this
Agreement and the Related Documents. The Borrower shall not maintain joint bank
accounts or other depository accounts to which Financial Pacific or any
Affiliate thereof (other than Financial Pacific in its capacity as Servicer) has
independent access. The Borrower will pay to the appropriate affiliate the
marginal increase or, in the absence of such increase, the market amount of its
portion of the premium payable with respect to any insurance policy that covers
the Borrower and such affiliate, but Borrower shall not, directly or indirectly,
be named as a direct or contingent beneficiary or loss payee under any insurance
policy with respect to any amounts payable due to occurrences or events related
to Financial Pacific or any Affiliate thereof; and
(k) The Borrower will maintain arm's-length relationships with
Financial Pacific (and any Affiliate thereof). Any Person that renders or
otherwise furnishes services to the Borrower will be compensated by the Borrower
at market rates for such services it renders or otherwise furnishes to the
Borrower. Except as contemplated in the Related Documents the Borrower and
Financial Pacific will not be nor will hold itself out to be responsible for the
debts of the other or the decisions or actions respecting the daily business and
affairs of the other. Financial Pacific and the Borrower will immediately
correct any known misrepresentation with respect to the foregoing, and they will
not operate or purport to operate as an integrated single economic unit with
respect to each other or in their dealing with any other entity.
SECTION 9.5. Covenants of Financial Pacific Company. The following
financial covenants shall be complied with and, in the case of paragraph (a),
shall be measured on a quarterly basis:
(a) Financial Pacific Company and its consolidated subsidiaries
(the initial Servicer and Borrower) shall maintain a ratio, on a consolidated
basis, of total debt to Tangible Net Worth not to exceed 24 to 1, calculated on
a quarterly basis beginning December 31, 1998. Total debt shall include only
interest-bearing debt.
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(b) Financial Pacific Company shall obtain the prior written
consent of Surety Provider, which consent shall not be unreasonably withheld,
for (a) any amendment, restatements, modifications or prepayments to any of its
subordinated debt agreements, (b) incurring indebtedness for borrowed money,
other than that provided for in its currently outstanding subordinated note
agreement, (c) purchasing or establishing any subsidiary directly owned by
Financial Pacific Company, other than the initial Servicer and Borrower, or (d)
making any material change in the character of its business.
ARTICLE X
Default
SECTION 10.1. Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:
(i) Any failure by the Servicer or the Borrower to
deliver to the Collateral Agent for distribution to the Secured Parties
or deposit in the Collection Account any proceeds or payment required
to be so delivered under the terms of this Agreement, or any failure by
any Borrower Party to pay any Obligations when due and payable by it
hereunder or under any other Related Document; or any certificate or
report required by Section 3.9 or 3.15 shall not have been delivered
within three (3) Business Days after the date such certificates or
statements or reports, as the case may be, are required to be
delivered; or
(ii) (1) Failure to comply with Section 8.3 or (2) failure
on the part of any Borrower Party duly to observe or to perform in all
material respects any other covenant or agreement of such Borrower
Party (as the case may be) set forth in this Agreement or any Related
Document, which failure, in the case of this clause (2), shall continue
unremedied for a period of ten (10) Business Days after the earlier of
(A) the date on which written notice of such failure, requiring the
same to be remedied, shall have been given such Borrower Party by any
Notice Party, any Parallel Lender or the Lender, or (B) the date on
which an officer of such Borrower Party has actual knowledge of such
failure; or
(iii) Failure of any representation or warranty made or
deemed made by any Borrower Party in this Agreement or any Related
Document (other than any breach of a representation and warranty as to
Receivables set forth in Section 2.9 or in Section 3.2(b) of the First
Tier Purchase Agreement, as applicable, for which the sole remedy is
repurchase of such Receivable) to be true and correct in all material
respects when made or deemed made, which failure (if in the reasonable
judgment of any Notice Party such failure is capable of being cured)
shall continue unremedied for a period of 30 days after the earlier of
(x) the date on which written notice of such failure, requiring the
same to be remedied, shall have been given such Borrower Party by any
Notice Party, any Parallel
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Lender or the Lender, or (y) the date on which an officer of such
Borrower Party has actual knowledge of such failure; or
(iv) A default shall have occurred and be continuing under
any instrument or agreement evidencing, securing or providing for the
issuance of indebtedness for borrowed money in excess of $250,000 of,
or guaranteed by, any Borrower Party which default (A) is a default in
payment of any principal or interest on such indebtedness when due or,
if later, within any applicable grace period, or (B) such default shall
have resulted in acceleration of the maturity of such indebtedness or
such default; or
(v) An Event of Bankruptcy shall have occurred and remain
continuing with respect to any Borrower Party; or
(vi) (A) Any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by the Borrower Parties to the
Notice Parties, the Parallel Lenders and the Lender prior to the date
of execution and delivery of this Agreement is pending against any
Borrower Party or any Affiliate thereof, which, in the reasonable
opinion of any Notice Party, if adversely determined, would have a
Material Adverse Effect, or (B) any material development not so
disclosed has occurred in any litigation (including, without
limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, which, in the reasonable opinion
of any Notice Party, would have a reasonable probability of causing a
Material Adverse Effect; or
(vii) The Borrower, for any reason, shall fail to grant to
the Collateral Agent, for the benefit of the Secured Parties, and to
maintain in favor of the Collateral Agent, for the benefit of the
Secured Parties, a valid and perfected first priority security interest
in the Receivables and other Collateral pledged by it hereunder; or
(viii) A Change in Control shall occur; provided that a
Change in Control with respect to Financial Pacific Company shall not
constitute an Event of Default if the Lender, the Parallel Lenders and
the Notice Parties shall have given their prior written consent to such
Change in Control; or
(ix) The Internal Revenue Service shall file notice of a
lien pursuant to Section 6323 of the Internal Revenue Code with regard
to any of the assets of the Borrower Parties, or the Pension Benefit
Guaranty Corporation shall file notice of a lien pursuant to Section
4068 of the Employee Retirement Income Security Act of 1974 with regard
to any of the assets of the Borrower Parties, and such lien shall not
have been released within five (5) Business Days, unless such lien is
being contested by a Borrower Party in good faith pursuant to
appropriate proceedings; or
(x) As of the Determination Date in any Collection
Period:
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(A) the 31 to 60 Day Delinquency Ratio exceeds
7.0% for such Collection Period or the
average of the 31 to 60 Day Delinquency
Ratios for the three most recently ended
Collection Periods exceeds 6.5%;
(B) the 61 to 90 Day Delinquency Ratio exceeds
3.0% for such Collection Period or the
average of the 61 to 90 Day Delinquency
Ratios for the three most recently ended
Collection Periods exceeds 2.5%;
(C) the average of the Annualized Charge Off
Ratios for the two most recently ended
Collection Periods exceeds 7.5% or the
average of the Annualized Charge Off Ratios
for the three most recently ended Collection
Periods exceeds 6.5%;
(D) the NPA Ratio exceeds 1.0% for such
Collection Period or the average of the NPA
Ratios for the three most recently ended
Collection Periods exceeds 0.7%;
(xi) A breach of any financial covenant set forth in
Section 9.1(e) or 9.5.
(xii) Any notice for payment is made under the Surety Bond;
or
(xiii) Any judgments against, or settlements by, Financial
Pacific or the Borrower for damages in excess of $250,000 are rendered
or made, unless such amount is covered by valid insurance with respect
to which the insurer has admitted liability or, in the case of a
judgment, such judgment shall not have been discharged or stayed within
sixty days of its entry; or
(xiv) Except as otherwise permitted pursuant to Section
15.7, the Borrower or the Servicer assigns, or attempts to assign, any
of its rights as obligations under any Related Document; or
(xv) The occurrence of an Event of Default under the
Insurance Agreement;
(xvi) The Outstanding Principal exceeds the aggregate
notional balances of all outstanding Hedging Agreements;
(xvii) The Outstanding Principal exceeds the product of the
Advance Percentage and the Pool Balance; or
(xviii) The Hedge Provider's rating falls below AA- by S&P or
Aa3 by Xxxxx'x and the Hedge Provider has not been replaced by a Hedge
Provider acceptable to the Surety Provider within 15 Business Days of
such downgrade.
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SECTION 10.2. Remedies. If any Event of Default shall have occurred and
be continuing, then (i) the Surety Provider or the Administrative Agent on
behalf of the Lender (with the consent of the Surety Provider) or the Bank Agent
on behalf of the Parallel Lenders (with the consent of the Surety Provider), by
notice given in writing to the Servicer (a copy of which notice shall be given
to the Collateral Agent and the Standby Servicer and, if given by the Surety
Provider, to the Administrative Agent and the Bank Agent and, if given by the
Administrative Agent or the Bank Agent, to the Surety Provider) may terminate
all of the rights and obligations of the Servicer under this Agreement, (ii)
(other than an Event of Default described in clause (v) of Section 10.1), the
Administrative Agent shall, at the request, or may with the consent, of the
Lender, or the Surety Provider may by notice to the Borrower and, if given by
the Surety Provider, to the Administrative Agent and the Bank Agent declare the
Funding Termination Date to have occurred, (iii) in the case of an Event of
Default described in clause (v) of Section 10.1, the Funding Termination Date
shall occur automatically, and (iv) in the case of any Event of Default, the
Collateral Agent, on behalf of the Secured Parties shall be entitled to exercise
all other rights and remedies provided under this Agreement and the other
Related Documents, as well as all other rights and remedies provided under the
UCC of each applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
SECTION 10.3. Termination of Servicer. A Servicer terminated in
accordance with Section 10.2 or who resigns pursuant to this Section 10.3 shall
be entitled to its pro rata share of the Servicing Fee for the number of days in
the Collection Period prior to the effective date of its termination or
resignation. On or after the receipt by the Servicer of such written notice
delivered pursuant to Section 10.2, all authority and power of the Servicer
under this Agreement, whether with respect to the Receivables or otherwise,
shall, without further action and as directed by the Surety Provider, pass to
and be vested in (i) the Standby Servicer or (ii) such successor Servicer as may
be appointed under Section 8.3 or 10.4; provided, however, that the successor
Servicer shall have no liability with respect to any obligation which was
required to be performed by the predecessor Servicer prior to the date the
successor Servicer becomes the Servicer or any claim of a third party based on
any alleged action or inaction of the predecessor Servicer; and, without
limitation, the Collateral Agent, the Parallel Lenders (or the Bank Agent on
behalf of the Parallel Lenders) and the Lender (or the Administrative Agent on
behalf of the Lender) are hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer, the Lender, the Parallel Lenders, the
Administrative Agent, the Bank Agent, the Surety Provider and the Collateral
Agent in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held or should have been held by the predecessor Servicer for
deposit, or shall thereafter be received with respect to a Receivable and the
delivery to the successor Servicer of all files and records concerning the
Receivables and a computer tape in readable form containing all information
necessary to enable the successor Servicer to service the Receivables and the
other
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property of the Borrower. All reasonable out-of-pocket costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 10.3 shall be paid
by the predecessor Servicer upon demand. The predecessor Servicer shall grant
the Collateral Agent, the Standby Servicer and the Notice Parties reasonable
access to the predecessor Servicer's premises during normal business hours at
the predecessor Servicer's expense. The Standby Servicer or successor Servicer
shall direct the Obligors to make all payments under the Receivables directly to
the successor Servicer at the predecessor Servicer's expense (in which event the
successor Servicer shall process such payments directly).
SECTION 10.4. Appointment of Successor Servicer. (a) Upon the
Servicer's receipt of notice of termination pursuant to Section 10.2, or the
Servicer's resignation in accordance with the terms of this Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer under
this Agreement, in the case of termination, only until the date specified in
such termination notice or, if no such date is specified in a notice of
termination, until a successor Servicer acceptable to the Surety Provider, the
Administrative Agent and the Bank Agent has assumed the obligations of the
Servicer hereunder and, in the case of resignation, until the later of (x) the
date that a successor Servicer acceptable to the Surety Provider, the
Administrative Agent and the Bank Agent has assumed the obligations of the
Servicer hereunder in accordance with the terms of this Agreement and (y) the
date upon which the predecessor Servicer shall become unable to act as Servicer,
as specified in the notice of resignation and accompanying Opinion of Counsel.
In the event of termination of the Servicer, Norwest Bank Minnesota, National
Association, as Standby Servicer, shall assume the obligations of Servicer
hereunder on the date specified in such written notice (the "Assumption Date")
pursuant to the Servicing Assumption Agreement or, in the event that the Surety
Provider shall have determined that a Person other than the Standby Servicer
shall be the successor Servicer, on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer.
Notwithstanding the Standby Servicer's assumption of, and its agreement to
perform and observe, all duties, responsibilities and obligations of Financial
Pacific as Servicer under this Agreement arising on and after the Assumption
Date, the Standby Servicer shall not be deemed to have assumed or to become
liable for, or otherwise have any liability for, any duties, responsibilities,
obligations or liabilities of Financial Pacific, as Servicer, or any predecessor
Servicer arising on or before the Assumption Date, whether provided for by the
terms of this Agreement, arising by operation of law or otherwise, including,
without limitation, any liability for, any duties, responsibilities, obligations
or liabilities of Financial Pacific or any predecessor Servicer arising on or
before the Assumption Date under Section 3.7, 4.4 or 8.2 of this Agreement.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be subject to
all the responsibilities (except as set forth in the last sentence of paragraph
(a) above), duties, and liabilities arising thereafter relating thereto placed
on the predecessor Servicer, and shall be entitled to the Servicing Fee and all
of the rights granted to the predecessor Servicer, by the terms and provisions
of this Agreement.
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(c) The Administrative Agent and the Bank Agent (in either case,
with the prior written consent of the Surety Provider) and the Surety Provider
may exercise at any time their right to appoint as Standby Servicer, and the
Surety Provider may exercise at any time its right to appoint as successor
Servicer, a Person other than the Person serving as Standby Servicer at the
time, and shall have no liability to the Collateral Agent, Financial Pacific,
the Borrower, the Person then serving as Standby Servicer or any other Person if
they do so. Subject to Section 8.4, no provision of this Agreement shall be
construed as relieving the Standby Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section 10.2
or resignation of the Servicer pursuant to Section 8.4. If upon any such
resignation or termination, the Surety Provider appoints a successor Servicer
other than the Standby Servicer, the Standby Servicer shall be relieved of its
duties as Standby Servicer hereunder.
SECTION 10.5. Repayment of Servicer Advances. If Financial Pacific
shall no longer be the Servicer, Financial Pacific shall be entitled to receive
reimbursement for Outstanding Servicer Advances pursuant to Sections 4.3 and 4.4
with respect to all Servicer Advances made by it.
SECTION 10.6. Action Upon Certain Failures of the Servicer. In the
event that the Collateral Agent shall have knowledge of any Event of Default or
event which, with notice or lapse of time or both, would, unless cured or
waived, become an Event of Default, the Collateral Agent shall give notice
thereof to the Servicer, each Rating Agency and the Notice Parties. For all
purposes of this Agreement, in the absence of actual knowledge by a Collateral
Agent Officer, the Collateral Agent shall not be deemed to have knowledge of any
such Event of Default or other event unless notified thereof in writing by the
Servicer, any Notice Party, any Parallel Lender or the Lender. The Collateral
Agent shall be under no duty or obligation to investigate or inquire as to any
potential Event of Default.
SECTION 10.7. Waiver of Past Defaults. The Administrative Agent may,
subject to any contrary direction by the Lender or the Bank Agent may, subject
to any contrary direction by the Required Parallel Lenders but, in any case only
with the prior written consent of the Surety Provider, or the Surety Provider
may, waive any Default or Event of Default hereunder and its consequences. Upon
any such waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly waived.
ARTICLE XI
The Collateral Agent
SECTION 11.1. Duties of Collateral Agent. The Collateral Agent shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. The Collateral Agent is specifically authorized to (i)
establish and maintain one or more bank accounts in a financial institution for
the deposit of payments, (ii) designate persons authorized
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to sign with respect to such accounts, (iii) negotiate and deposit into such
accounts checks made payable to the Originator or the Borrower, and (iv) act as
bailee with respect to the Receivable Files.
The Collateral Agent, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Collateral Agent that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement, but need not confirm
or investigate the accuracy of mathematical calculations or other facts stated
therein.
The Collateral Agent shall take and maintain custody of the Receivable
Files (except as otherwise provided herein) and the Schedule of Receivables
included as an exhibit to each Originator Assignment and Funding Notice and
shall retain copies of all Servicer's Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its breach of its representations,
warranties or covenants set forth in this Agreement or any other Related
Document; its own grossly negligent action (or negligent action in the handling
of funds), its own grossly negligent failure to act (or negligent failure to act
in the handling of funds), or its own bad faith; provided, however, that:
(i) The duties and obligations of the Collateral Agent
shall be determined solely by the express provisions of this Agreement,
the Collateral Agent shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Collateral Agent and, in the absence of bad faith
on the part of the Collateral Agent, the Collateral Agent may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions furnished to the
Collateral Agent and conforming to the requirements of this Agreement;
(ii) The Collateral Agent shall not be liable for an error
of judgment made in good faith by a Collateral Agent Officer, unless it
shall be proved that the Collateral Agent shall have been negligent in
ascertaining the pertinent facts;
(iii) The Collateral Agent shall not be liable with respect
to any action taken, suffered, or omitted to be taken in good faith in
accordance with this Agreement or at the direction of any Notice Party,
the Parallel Lenders or the Lender pursuant to the terms of this
Agreement in performing any of its duties under this Agreement;
(iv) The Collateral Agent shall not be charged with
knowledge of any Event of Default, unless a Collateral Agent Officer
assigned to the Collateral Agent's Office receives written notice of
such Event of Default from the Servicer, the Borrower, the Originator,
any Notice Party, the Parallel Lenders or the Lender (which notice
shall constitute actual knowledge of an Event of Default by the
Collateral Agent); and
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(v) The Collateral Agent shall not be liable for any
action taken, suffered or omitted by it in good faith and reasonably
believed by it to be authorized or within the rights or duties
conferred upon it by this Agreement.
The Collateral Agent shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder if there shall be reasonable grounds for believing that the
repayment of such funds or adequate indemnity against such risk or liability
shall not be reasonably assured to it, and none of the provisions contained in
this Agreement shall in any event require the Collateral Agent to perform, or be
responsible for the manner of performance of, any of the obligations of any of
the Borrower Parties under this Agreement or any other Related Documents except
during such time, if any, as the Collateral Agent shall be the successor to, and
be vested with the rights, duties, powers, and privileges of, the Servicer in
accordance with the terms of this Agreement, and then only to the extent of such
rights, duties, powers and privileges of the Servicer.
Except for actions expressly authorized by this Agreement, the
Collateral Agent shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Equipment or to impair the
value of any Receivable or Equipment.
All information obtained by the Collateral Agent regarding the Obligors
and the Receivables, whether upon the exercise of its rights under this
Agreement or otherwise, shall be maintained by the Collateral Agent in
confidence and shall not be disclosed to any Person other than the parties to
this Agreement, unless such disclosure is required by this Agreement or any
applicable law or regulation.
In no event shall the Collateral Agent be liable for special, indirect
or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
SECTION 11.2. Certain Matters Affecting Collateral Agent. Except as
otherwise provided in Section 11.1:
(i) The Collateral Agent may rely and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, Servicer's Certificate, Data Report, certificate of
auditors, or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond, or other
paper or document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties.
(ii) The Collateral Agent may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
under this Agreement in good faith and in accordance with such Opinion
of Counsel.
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(iii) The Collateral Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct, or defend any litigation under this Agreement or
in relation to this Agreement, at the request, order or direction of
the Lender, the Parallel Lenders or any Notice Party pursuant to the
provisions of this Agreement, unless the Lender, the Parallel Lenders
or a Notice Party shall have offered to the Collateral Agent reasonable
security or indemnity against the costs, expenses, and liabilities that
may be incurred therein or thereby.
(iv) The Collateral Agent shall not be bound to make any
investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document (other than
for its duties pursuant to Section 2.12), unless requested in writing
to do so by any Notice Party, the Parallel Lenders or the Lender;
provided, however, that if the payment within a reasonable time to the
Collateral Agent of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation shall be, in the
opinion of the Collateral Agent, not reasonably assured to the
Collateral Agent by the security afforded to it by the terms of this
Agreement, the Collateral Agent may require reasonable indemnity
against such cost, expense, or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the Person making such request or, if paid by the Collateral
Agent, shall be reimbursed by the Person making such request upon
demand. Nothing in this clause (iv) shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors.
(v) Other than its duties pursuant to Section 2.12, the
Collateral Agent may perform any duties under this Agreement either
directly or by or through agents or attorneys or a sub-Collateral Agent
and other experts and professionals.
(vi) Except as may be required by Sections 2.12 and 11.1,
the Collateral Agent shall have no duty of independent inquiry and the
Collateral Agent may rely upon the representations and warranties and
covenants of the Borrower and the Servicer contained in this Agreement
with respect to the Receivables and the Receivable Files.
(vii) The Collateral Agent may rely, as to factual matters
relating to the Borrower or the Servicer, on an Officer's Certificate
of the Borrower or Servicer, respectively.
(viii) The Collateral Agent shall not be required to take
any action or refrain from taking any action under this Agreement or
any Related Documents, nor shall any provision of this Agreement or any
Related Document be deemed to impose a duty on the Collateral Agent to
take action, if the Collateral Agent shall have been advised by counsel
in an Opinion of Counsel that such action is contrary to (i) the terms
of this Agreement, (ii) any such Related Document or (iii) law.
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SECTION 11.3. Collateral Agent Not Liable for Agreement or Receivables.
The recitals contained herein shall be taken as the statements of the Borrower
or the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for the correctness thereof. The Collateral Agent shall make no
representations as to the validity or sufficiency of this Agreement or of any
Receivable or related document. The Collateral Agent shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Equipment or any Receivable, or
the perfection and priority of such a security interest or the maintenance of
any such perfection and priority, or for or with respect to the efficacy of the
Servicer or its ability to generate the payments to be distributed to the Lender
under this Agreement, including, without limitation: the existence, condition,
location, and ownership of any Equipment; the existence and enforceability of
any physical damage insurance thereon; except as required by Section 2.12, the
existence, contents and completeness of any Receivable or any Receivable File or
any computer or other record thereof; except as required by Section 2.12, the
performance or enforcement of any Receivable; the compliance by the Borrower or
the Servicer with any warranty or representation made under this Agreement or in
any related document and the accuracy of any such warranty or representation
prior to the Collateral Agent's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof; any investment of monies by or at
the direction of the Servicer or the Administrative Agent or any loss resulting
therefrom (it being understood that the Collateral Agent shall remain
responsible for any Collateral that it may hold and it shall remain responsible
if it is an obligor on any such investment); the acts or omissions of the
Borrower, the Servicer or any Obligor; any action of the Servicer taken in the
name of the Collateral Agent; or any action by the Collateral Agent taken at the
instruction of the Servicer pursuant to the terms of this Agreement; provided,
however, that the foregoing shall not relieve the Collateral Agent of its
obligation to perform its duties under this Agreement. Except with respect to a
claim based on the failure of the Collateral Agent to perform its duties under
this Agreement or based on the Collateral Agent's negligence or willful
misconduct, no recourse shall be had for any claim based on any provision of
this Agreement, or any Receivable or security interest therein against the
Collateral Agent in its individual capacity, the Collateral Agent shall not have
any personal obligation, liability, or fiduciary duty whatsoever to the Lender
or any other Person with respect to any such claim, and any such claim shall be
asserted solely against the Borrower or the Servicer or any indemnitor who shall
furnish indemnity as provided in this Agreement. The Collateral Agent shall not
be accountable for the use or application by the Borrower or the Servicer of any
funds paid to the Borrower or the Servicer in respect of the Receivables.
SECTION 11.4. Other Transactions. The Collateral Agent in its
individual or any other capacity may deal with the Borrower and the Servicer in
banking transactions and other financial transactions with the same rights as it
would have if it were not Collateral Agent.
SECTION 11.5. Eligibility Requirements for Collateral Agent. The
Collateral Agent under this Agreement shall at all times be organized and doing
business under the laws of the United States of America any State thereof or the
District of Columbia; authorized under such laws to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by Federal or State authorities; approved
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in writing by the Surety Provider, the Administrative Agent, the Bank Agent and,
unless an Event of Default has occurred and is continuing, the Borrower
(provided that Norwest Bank Minnesota, National Association, is acceptable to
the Surety Provider as the initial Collateral Agent; and having a rating, both
with respect to long-term and short-term unsecured obligations, of not less than
investment grade by the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 11.5, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Collateral Agent shall
cease to be eligible in accordance with the provisions of this Section 11.5, the
Collateral Agent shall resign immediately in the manner and with the effect
specified in Section 11.6.
SECTION 11.6. Resignation or Removal of Collateral Agent. The
Collateral Agent may at any time resign and be discharged from the trusts hereby
created by giving 30 days' prior written notice thereof to the Servicer, and the
Notice Parties. Upon receiving such notice of resignation, with the prior
written consent of the Notice Parties, the Servicer shall promptly appoint a
successor Collateral Agent (approved by the Surety Provider in writing) by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Collateral Agent and one copy to the successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Collateral Agent may petition any court of competent
jurisdiction for the appointment of a successor Collateral Agent acceptable to
the Surety Provider.
If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 11.5 and shall fail to resign after
written request therefor by the Servicer, the Administrative Agent or the Bank
Agent with the prior written consent of the Surety Provider, or the Surety
Provider, or if at any time the Collateral Agent shall be legally unable to act,
or shall be adjudged bankrupt or insolvent, or a receiver, conservator or
liquidator of the Collateral Agent or of its property shall be appointed, or any
public officer shall take charge or control of the Collateral Agent or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the Collateral Agent breaches any of its representations,
warranties or covenants hereunder, then the Administrative Agent, the Bank Agent
or the Servicer, with the consent of the Notice Parties, may or shall, at the
direction of the Surety Provider, remove the Collateral Agent. If the
Administrative Agent, the Bank Agent or the Servicer shall remove the Collateral
Agent under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a successor Collateral Agent (approved by the Surety
Provider in writing) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Collateral Agent so removed and one copy to
the successor Collateral Agent, and pay all fees owed to the outgoing Collateral
Agent.
Any resignation or removal of the Collateral Agent and appointment of a
successor Collateral Agent pursuant to any of the provisions of this Section
11.6 shall not become effective
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until acceptance of appointment by the successor Collateral Agent pursuant to
Section 11.7 and payment of all fees and expenses owed to the outgoing
Collateral Agent.
SECTION 11.7. Successor Collateral Agent. Any successor Collateral
Agent appointed pursuant to Section 11.6 shall execute, acknowledge, and deliver
to the Servicer, the Notice Parties and to its predecessor Collateral Agent an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Collateral Agent shall become
effective and such successor Collateral Agent, without any further act, deed or
conveyance, shall become fully vested with all the rights, duties, and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Collateral Agent. The predecessor Collateral Agent shall
upon payment of its fees and expenses deliver to the successor Collateral Agent
all documents and statements and monies held by it under this Agreement; and the
Servicer and the predecessor Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Collateral Agent all such
rights, duties, and obligations.
No successor Collateral Agent shall accept appointment as provided in
this Section 11.7 unless at the time of such acceptance such successor
Collateral Agent shall be eligible pursuant to Section 11.5.
SECTION 11.8. Merger or Consolidation of Collateral Agent. Any
corporation into which the Collateral Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Collateral Agent shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder, provided such corporation shall be eligible pursuant to Section 11.5,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Collateral Agent shall mail notice of such merger or
consolidation to the Rating Agencies and the Notice Parties.
SECTION 11.9. Co-Collateral Agent. Notwithstanding any other provisions
of this Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Collateral or any
Equipment may at the time be located or to otherwise facilitate the transactions
contemplated thereby, the Servicer, the Administrative Agent, the Surety
Provider and the Collateral Agent acting jointly shall execute and deliver all
instruments to appoint one or more persons approved by the Collateral Agent and
the Surety Provider to act as co-Collateral Agent, jointly with the Collateral
Agent, or separate Collateral Agent, with respect to all or any part of the
Collateral, and to vest in such Person, in such capacity and for the benefit of
the Secured Parties, such rights, duties and obligations, as the Servicer, the
Administrative Agent, the Surety Provider and the Collateral Agent may consider
necessary or desirable. If the Servicer and the Administrative Agent shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in the case an Event of Default shall have occurred and be
continuing, the Collateral Agent, with the prior written consent of the Surety
Provider, alone shall have the power to make such appointment. No co-
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Collateral Agent or separate Collateral Agent under this Agreement shall be
required to meet the terms of eligibility as a successor collateral agent
pursuant to Section 11.5.
Each separate Collateral Agent and co-Collateral Agent shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, duties and obligations conferred or
imposed upon the Collateral Agent shall be conferred upon and exercised
or performed by the Collateral Agent and such separate Collateral Agent
or co-Collateral Agent jointly (it being understood that such separate
Collateral Agent or co-Collateral Agent is not authorized to act
separately without the Collateral Agent joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Collateral Agent
under this Agreement or as successor to the Servicer under this
Agreement), the Collateral Agent shall be incompetent or unqualified to
perform such act or acts, in which event such rights, duties, and
obligations shall be exercised and performed singly by such separate
Collateral Agent or co-Collateral Agent, but solely at the direction of
the Collateral Agent;
(ii) No Collateral Agent under this Agreement shall be
personally liable by reason of any act or omission of any other
co-Collateral Agent under this Agreement; and
(iii) The Administrative Agent, the Surety Provider and the
Collateral Agent acting jointly may, at any time accept the resignation
of or remove any separate Collateral Agent or co-Collateral Agent.
Any notice, request or other writing given to the Collateral Agent
shall be deemed to have been given to each of the other then separate Collateral
Agent and co-Collateral Agent, as effectively as if given to each of them. Every
instrument appointing any separate Collateral Agent or co-Collateral Agent shall
refer to this Agreement and the conditions of this Article XI. Each separate
Collateral Agent and co-Collateral Agent, upon its acceptance of the rights,
duties and obligations specified in its instrument of appointment, shall be
vested with such rights, duties and obligations, either jointly with the
Collateral Agent or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Collateral Agent. Each such instrument shall be filed with
the Collateral Agent and a copy thereof given to the Servicer and the Surety
Provider.
Any separate Collateral Agent or co-Collateral Agent may at any time
appoint the Collateral Agent its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate
Collateral Agent or co-Collateral Agent shall become incapable of acting, resign
or be removed, all of its rights, and duties shall vest in and be exercised by
the Collateral Agent, to the extent permitted by law, without the appointment of
a new or successor Collateral Agent.
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SECTION 11.10. Representations and Warranties of Collateral Agent. The
Collateral Agent makes the following representations and warranties on which the
Borrower, the Notice Parties, the Parallel Lenders and Lender shall rely:
(i) The Collateral Agent is a banking corporation duly
organized, validly existing and in good standing under the laws of its
place of incorporation.
(ii) The Collateral Agent has full corporate power,
authority and legal right to execute, deliver and perform this
Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.
(iii) This Agreement has been duly executed and delivered
by the Collateral Agent and constitutes a legal, valid and binding
obligation of the Collateral Agent in accordance with its terms.
SECTION 11.11. Release of Repurchased Receivables. Each of the Secured
Parties hereby authorizes the Collateral Agent to release its Lien on each
Repurchased Receivable pursuant to this Agreement.
ARTICLE XII
The Administrative Agent
SECTION 12.1. Authorization and Action. Pursuant to separate agreements
with the Administrative Agent, the Lender has appointed and authorized the
Administrative Agent to take such actions as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto.
SECTION 12.2. Administrative Agent's Reliance, Etc. The Administrative
Agent and its directors, officers, agents or employees shall not be liable for
any action taken or omitted to be taken by it or them under or in connection
with the Related Documents (including, without limitation, the servicing,
administering or collecting Receivables as Servicer pursuant to Section 8.1),
except for its or their own gross negligence (or negligence solely with respect
to making notations on the grids attached to the Notes or in the records of the
Administrative Agent) or willful misconduct. Without limiting the generality of
the foregoing, the Administrative Agent: (a) may consult with legal counsel
(including counsel for Borrower), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to the
Lender, the Parallel Lenders, the Surety Provider or any other holder of any
interest in Receivables and shall not be responsible to the Lender, the Parallel
Lenders or any such other holder for any statements, warranties or
representations made by any Borrower Party in or in connection with any Related
Document; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of
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the terms, covenants or conditions of any Related Document on the part of any
Borrower Party or to inspect the property (including the books and records) of
any Borrower Party; (d) shall not be responsible to the Lender, the Parallel
Lenders, the Surety Provider or any other holder of any interest in Receivables
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Related Document; and (e) shall incur no liability
under or in respect of this Agreement by acting upon any notice (including
notice by telephone), consent, certificate or other instrument or writing (which
may be by facsimile or telex) believed by it to be genuine and signed or sent by
the proper party or parties.
SECTION 12.3. BofA and Affiliates. BofA and any of its Affiliates may
generally engage in any kind of business with any Borrower Party or any Obligor,
any of their respective Affiliates and any Person who may do business with or
own securities of any Borrower Party or any Obligor or any of their respective
Affiliates, all as if BofA were not the Administrative Agent and without any
duty to account therefor to the Lender, the Parallel Lenders, the Surety
Provider or any other holder of an interest in Receivables.
ARTICLE XIII
Assignment of Lender's Interest
SECTION 13.1. Restrictions on Assignments.
(a) Each of the Borrower and the Servicer (except as otherwise
provided in this Agreement) may not assign its rights, or delegate its duties
hereunder or any interest herein without the prior written consent of the
Administrative Agent, the Parallel Lenders, the Lender and the Surety Provider.
The Lender may not assign any of its rights hereunder or under the Lender Note
or any of its rights in the Collateral (or any portion thereof) to any Person
without the prior written consent of the Borrower and the Surety Provider, which
consent shall not be unreasonably withheld; provided, however, that
(i) The Lender may assign all, or any portion, of its
rights and interests in the Related Documents, together with all its
interest in the Collateral, to BofA or any Affiliate of BofA, or to any
"bankruptcy remote" special purpose entity the business of which is
administered by BofA, or any Affiliate of BofA (which assignee shall
then be subject to this Article XIII); and
(ii) The Lender may assign and grant a security interest
in all of its rights in the Related Documents, together with all of its
rights and interest in the Collateral, to any Program Support Provider.
(b) The Borrower agrees to advise the Administrative Agent and the
Surety Provider within five Business Days after notice to the Borrower of any
proposed assignment by the Lender of any of its rights hereunder or under the
Lender Note or any of its rights in the Collateral (or any portion thereof), not
otherwise permitted under subsection (a), of the
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Borrower's consent or non-consent to such assignment, and if it does not
consent, the reasons therefor. If the Borrower does not consent to such
assignment, Lender may immediately assign its rights hereunder and under the
Lender Note and such Collateral (or any portion thereof) to BofA or any
Affiliate of BofA. All of the aforementioned assignments shall be upon such
terms and conditions as the Lender and the assignee may mutually agree.
(c) This Agreement and each Parallel Lender's rights and
obligations herein shall be assignable, in whole or in part, by such Parallel
Lender and its successors and assigns and any assignee shall become a party
hereto and shall become a Parallel Lender hereunder upon (i) satisfaction of the
conditions set forth in this Section 13.1(c), (ii) acceptance and recording of
an assignment in the form of Exhibit 13.1(c) hereto (a "Parallel Lender
Assignment") by the Bank Agent in a register (the "Register") maintained by the
Bank Agent for the recordation of the names and addresses of the Parallel
Lenders, their respective Commitments, Parallel Percentages, Parallel Lender
Fundings and effective dates and (iii) the occurrence of the effective date of
such Parallel Lender's Commitment (as set forth in such Assignment) and subject
to the approval of such Parallel Lender by the Bank Agent.
Each Parallel Lender may (with, if an Event of Default has not
occurred, the consent of the Borrower (which consent shall not be unreasonably
withheld)) assign to any Eligible Assignee all or a portion of its rights and
obligations under this Agreement; provided, however that:
(i) each such assignment shall be of a constant, and not
a varying, percentage of the aggregate rights and obligations of the
assigning Parallel Lender under this Agreement (including, without
limitation, its Commitment, its Parallel Percentage and any Parallel
Lender Fundings owned by it),
(ii) the amount of the assigning Parallel Lender's
Commitment being assigned pursuant to such assignment shall in no event
be less than $10,000,000 and shall be in an integral multiple of
$1,000,000, and, unless such assigning Parallel Lender is assigning its
entire Commitment, such assigning Parallel Lender's retained Commitment
after giving effect to such assignment shall in no event be less than
$5,000,000, and
(iii) the parties to each such assignment shall execute and
deliver an Assignment to the Bank Agent (with a copy to the Surety
Provider), for its acceptance and recording in the Register.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in the Assignment, (x) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to this Agreement, have the rights and obligations
of a Parallel Lender hereunder and (y) the Parallel Lender which is the assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to this Agreement, relinquish its rights (other than the
right to receive payments which accrued in favor of such Parallel Lender prior
to such assignment) and be released from its
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obligations under this Agreement (and, if such Assignment provides for an
assignment of all such assigning Parallel Lender's Commitment, such Parallel
Lender shall cease to be a party hereto).
Upon receipt by the Bank Agent of an Assignment executed by an
assigning Parallel Lender and by an assignee who is an Eligible Assignee and the
satisfaction of the other conditions set forth in this Section 13.1(c), the Bank
Agent shall (i) accept such Assignment, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
The assigning Parallel Lender shall pay to the Bank Agent an assigning fee equal
to $2,500 for each assignment hereunder. Each assigning Parallel Lender may, in
connection with the assignment, disclose to the assignee any information
relating to the Borrower, Financial Pacific or the Receivables furnished to such
assignor by or on behalf of the Borrower, Financial Pacific, any Parallel
Lender, the Bank Agent or the Administrative Agent.
This Agreement and the rights and obligations of the Bank Agent
hereunder shall be assignable, in whole or in part, by the Bank Agent and its
successors and assigns.
Without limiting any other rights that may be available under
applicable law, the rights of each Parallel Lender may be enforced through it or
by its agents.
SECTION 13.2. Participations. Any Parallel Lender may sell
participations with the prior written consent of the Bank Agent to one or more
banks or financial institutions in or to all or a portion of its rights and
obligations under this Agreement; provided, however, that
(a) such Parallel Lender's obligations under this
Agreement shall remain unchanged;
(b) such Parallel Lender shall remain solely responsible
to the other parties hereto (but only to the extent expressly provided
in this Agreement) for the performance of such obligations;
(c) the Borrower, the Servicer, the Administrative Agent,
the Lender, the Bank Agent and the other Parallel Lenders shall
continue to deal solely and directly with such Parallel Lender in
connection with such Parallel Lender's rights and obligations under
this Agreement; and
(d) no participant or group of participants shall have
any right to require such Parallel Lender to take or omit to take any
action under this Agreement, except actions requiring consent of all
Parallel Lenders under Section 15.1.
Each Parallel Lender agrees to incorporate the requirements set forth above and
an express agreement to abide by Sections 15.11 and 15.12, into each
participation agreement which such Parallel Lender enters into with any
participant.
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SECTION 13.3. Rights of Assignee. Upon any assignment by the Lender or
any Parallel Lender in accordance with this Article XIII, the assignee receiving
such assignment shall have all of the rights of the Lender or such Parallel
Lender with respect to the Related Documents and the Collateral (or such portion
thereof as has been assigned).
SECTION 13.4. Evidence of Assignment. Any assignment of the Lender's or
any Parallel Lender's rights or interest in the Notes and the Collateral (or any
portion thereof) to any Person may be evidenced by such instrument(s) or
document(s) as may be reasonably satisfactory to the Lender or such Parallel
Lender, the Administrative Agent, the Borrower, the Bank Agent and the assignee
and a copy of such instrument or document shall be mailed or delivered to the
Surety Provider.
ARTICLE XIV
Termination
SECTION 14.1. Termination. The respective obligations and
responsibilities of the Borrower, the Servicer, and the Collateral Agent created
hereby shall terminate upon the payment to the Secured Parties of all amounts
required to be paid to them pursuant to this Agreement and the Related Documents
(including all amounts required to reduce the Outstanding Principal to zero),
payment in full of all Obligations, and the expiration of the longest of any
preference period related to any of the foregoing. The Servicer shall promptly
notify the Collateral Agent and the Notice Parties of any prospective
termination pursuant to this Section 14.1.
ARTICLE XV
Miscellaneous Provisions
SECTION 15.1. Amendment, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Borrower or the Servicer
therefrom shall in any event be effective unless the same shall be in writing,
consented to in writing by the Surety Provider and signed by (a) the Borrower,
Financial Pacific, the Administrative Agent, the Bank Agent, the Collateral
Agent, the Standby Servicer, the Lender and the Required Parallel Lenders (with
respect to any amendment); provided, that without the consent of the Lender and
each Parallel Lender, no such amendment or waiver shall (i) reduce the amount
of, or change the date of payment of, any principal of, or interest on, any
Funding, (ii) extend the Funding Termination Date, (iii) change the definition
of Required Parallel Lenders or this provision, (iv) increase any Parallel
Lender's Commitment or (v) release any interest in the Collateral except as
expressly set forth herein; or (b) the party or parties granting any waiver or
consent or the Borrower or the Servicer (with respect to a waiver or consent by
it), as the case may be, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. The
parties acknowledge that, before entering into such an amendment or granting
such a waiver or consent, the Lender may also be required to obtain the approval
of
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some or all of the Program Support Providers or to obtain confirmation from
certain Rating Agencies that such amendment, waiver or consent will not result
in a withdrawal or reduction of the ratings of the Commercial Paper Notes or the
shadow rating of the transaction. No amendment or waiver of any provision of any
Related Document shall in any event be effective unless the same shall be
consented to in writing by the Surety Provider.
SECTION 15.2. Protection of Title to Collateral. (a) Each of the
Borrower and Servicer shall not change its name, identity, or corporate
structure without the prior written consent of the Surety Provider, and unless
it shall give the Administrative Agent, the Bank Agent and the Surety Provider
at least thirty (30) days prior written notice of such change and shall promptly
file appropriate amendments to all previously filed financing statements or
continuation statements and take such actions as any Notice Party may reasonably
require to maintain the perfection of the Collateral Agent's interests in the
Receivables and the other Collateral.
(b) Each of the Borrower and Servicer shall not change the address
of its chief executive office unless it shall give the Administrative Agent, the
Bank Agent and the Surety Provider at least thirty (30) days prior written
notice thereof, and if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement or similar instrument, or the taking of any other action to maintain
the perfection of the Collateral Agent's interests in the Receivables, then the
Borrower or Servicer, as applicable, shall, before the effectiveness of such
change, file any such amendment or new financing statement or take such other
action.
(c) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(d) The Servicer shall maintain its computer systems so that, from
and after the time of pledge under this Agreement of the Receivables to the
Collateral Agent, for the benefit of the Secured Parties, the Servicer's master
computer records (including any back-up archives) that refer to a Receivable
shall indicate clearly the interest of the Collateral Agent in such Receivable
and that such Receivable is owned by the Borrower and pledged to the Collateral
Agent on behalf of the Secured Parties. Indication of the Collateral Agent's
security interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, such Receivable shall have been
paid in full or repurchased pursuant to the terms of this Agreement.
(e) If at any time the Borrower or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in lease
receivables to any prospective purchaser,
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lender, or other transferee, the Servicer shall give to such prospective
purchaser, lender, or other transferee computer tapes, records, or printouts
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Receivable, shall indicate clearly that such Receivable
is pledged to, the Collateral Agent, for the benefit of the Secured Parties.
(f) Upon request the Servicer shall furnish to the Collateral
Agent, the Surety Provider, the Standby Servicer, the Bank Agent or to the
Administrative Agent, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Collateral,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Collateral.
(g) The Servicer shall deliver to the Collateral Agent and the
Notice Parties, annually on September 30 of each year after the execution and
delivery of this Agreement, an Opinion of Counsel either (A) stating that, in
the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Collateral Agent, for the benefit of the Secured
Parties, in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (A) or (B) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 15.3. Execution in Counterparts. For the purpose of
facilitating the execution of this Agreement and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 15.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 15.5. Notices. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth on
Schedule 15.5 or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto and to
the
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Surety Provider. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
SECTION 15.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 15.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.3 and 13.1 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Borrower or the Servicer without the
prior written consent of the Collateral Agent acting at the direction of the
Surety Provider, the Notice Parties, the Parallel Lenders and the Lender.
SECTION 15.8. Nonpetition Covenants. (a) Each of the Borrower,
Servicer, Financial Pacific, the Collateral Agent, each Parallel Lender and the
Standby Servicer shall not petition or otherwise invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Lender under any Federal or State bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Lender or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Lender, for at least one year and one day after the latest commercial paper note
issued by the Lender is paid.
(b) Each of the Servicer, the Lender, the Standby Servicer, each
Notice Party, the Collateral Agent, each Parallel Lender and Financial Pacific
shall not petition or otherwise invoke the process of commencing or sustaining a
case against the Borrower under any Federal or State bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Borrower or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Borrower, for at least one year and one day after the Final Payout Date.
SECTION 15.9. Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to the Surety Provider (which is an
express third party beneficiary of this Agreement entitled to enforce the terms
hereof as if it were a party hereto), Indemnified Parties and Affected Parties,
the parties to this Agreement hereby manifest their intent that no third party
shall be deemed a third party beneficiary of this Agreement, and specifically
that the Obligors are not third party beneficiaries of this Agreement.
SECTION 15.10. Agent for Service. The Borrower hereby designates CT
Corporation System, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ((000)-000-0000) as
agent for service of process in all matters pertaining to the Borrower in New
York.
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SECTION 15.11. Confidentiality of Borrower Information.
(a) Confidential Borrower Information. Each party hereto (other
than the Borrower) acknowledges that certain of the information provided to such
party by or on behalf of the Borrower Parties in connection with this Agreement
and the transactions contemplated hereby is or may be confidential, and each
such party severally agrees that, unless the Borrower and the Servicer shall
otherwise agree in writing, and except as provided in subsection (b), such party
will not disclose to any other person or entity:
(i) any information regarding, or copies of, any
non-public financial statements, reports and other information
furnished by any Borrower Party to the Lender, the Parallel Lenders,
the Administrative Agent, the Bank Agent or the Collateral Agent
pursuant hereto, or
(ii) any other information regarding any Borrower Party
which is designated by the Borrower or the Servicer to such party in
writing or otherwise as confidential
(the information referred to in clauses (i) and (ii) above, whether furnished by
any Borrower Party or any attorney for or other representative of such Borrower
Party, is collectively referred to as the "Borrower Information"; provided,
however, "Borrower Information" shall not include any information which is or
becomes generally available to the general public or to such party on a
nonconfidential basis from a source other than any Borrower Party or its
representative, or which was known to such party on a nonconfidential basis
prior to its disclosure by any Borrower Party or its representative.
(b) Disclosure. Notwithstanding subsection (a), each party may
disclose any Borrower Information:
(i) to any of such party's independent attorneys,
consultants and auditors, and to each Program Support Provider, the
Surety Provider, any dealer or placement agent for the Lender's
commercial paper, and any actual or potential assignees of, or
participants in, any of the rights or obligations of the Lender, the
Parallel Lenders, any Program Support Provider, the Bank Agent or the
Administrative Agent under or in connection with this Agreement, who
(A) in the good faith belief of such party, have a need to know such
Borrower Information, (B) are informed by such party of the
confidential nature of the Borrower Information and the terms of this
Section 15.11, and (C) are subject to confidentiality restrictions
generally consistent with this Section 15.11,
(ii) to any rating agency that maintains a rating for the
Lender's commercial paper or is considering the issuance of such a
rating, for the purposes of reviewing the credit of the Lender in
connection with such rating,
(iii) to any other party to this Agreement, for the
purposes contemplated hereby,
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(iv) in the case of information regarding the nature of
this Agreement and the Related Documents, the basic terms hereof and
thereof (including without limitation the amount and nature of the
Outstanding Principal with respect to the Collateral and of the credit
enhancement provided to the Lender hereunder), the nature, amount and
status of the Receivables, the current and/or historical 31 to 60 Day
and 61 to 90 Day Delinquency Ratios or similar data with respect to the
Receivables, and such other information as may be required to be
disclosed, in the Administrative Agent's reasonable judgement, under
securities laws applicable to the Lender, to any actual or prospective
Lenders or holders of commercial paper or other securities issued by
the Lender.
(v) as may be required by any municipal, state, federal
or other regulatory body having or claiming to have jurisdiction over
such party, in order to comply with any law, order, regulation,
regulatory request or ruling applicable to such party, or
(vi) subject to subsection (c), in the event such party is
legally compelled (by interrogatories, requests for information or
copies, subpoena, civil investigative demand or similar process) to
disclose such Borrower Information.
(c) Legal Compulsion. In the event that any party hereto (other
than the Borrower or the Servicer) or any of its representatives is requested or
becomes legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any of the Borrower Information, such party will (or will cause its
representative to)
(i) provide the Borrower and the Servicer with prompt
written notice so that (A) any Borrower Party may seek a protective
order or other appropriate remedy, or (B) the Borrower and/or the
Servicer may, if they so choose, agree that such party (or its
representatives) may disclose such Borrower Information pursuant to
such request or legal compulsion; and
(ii) unless the Borrower or the Servicer agrees that such
Borrower Information may be disclosed, make a timely objection to the
request or compulsion to provide such Borrower Information on the basis
that such Borrower Information is confidential and subject to the
agreements contained in this Section 15.11.
In the event such protective order or remedy is not obtained, or the Borrower or
the Servicer waives compliance with the provisions of this Section 15.11, such
party will furnish only that portion of the Borrower Information which (in such
party's good faith judgment) is legally required to be furnished and will
exercise reasonable efforts to obtain reliable assurance that confidential
treatment will be afforded the Borrower Information.
(d) This Section 15.11 shall survive termination of this
Agreement.
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SECTION 15.12. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that
BofA regards the structure of the transactions contemplated by this Agreement to
be proprietary, and each such party severally agrees that:
(i) it will not disclose without the prior consent of
BofA (other than to the directors, employees, auditors, counsel or
affiliates (collectively, "representatives")) of such party, each of
whom shall be informed by such party of the confidential nature of the
Program Information (as defined below) and of the terms of this Section
15.12, (A) any information regarding the pricing in, or copies of, this
Agreement or any Related Document or any transaction contemplated
hereby or thereby, (B) any information regarding the organization,
business or operations of the Lender generally or the services
performed by the Administrative Agent for the Lender, or (C) any
information which is furnished by BofA to such party and which is
designated by BofA to such party in writing or otherwise as
confidential or not otherwise available to the general public (the
information referred to in clauses (A), (B) and (C) is collectively
referred to as the "Program Information"); provided, however, that such
party may disclose any such Program Information (I) to any other party
to this Agreement for the purposes contemplated hereby or thereby, (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) subject to subsection (c), in
the event such party is legally compelled (by interrogatories, requests
for information or copies, subpoena, civil investigative demand or
similar process) to disclose any such Program Information;
(ii) it will use the Program Information 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
(iii) it will, upon demand, return (and cause each of its
representatives to return) to BofA, all documents or other written
material received from BofA, in connection with (a)(i)(B) or (C) above
and all copies thereof made by such party which contain the Program
Information.
(b) Availability of Confidential Information. This Section 15.12
shall be inoperative as to such portions of the Program Information which are or
become generally available to the public or such party on a nonconfidential
basis from a source other than BofA or were known to such party on a
nonconfidential basis prior to its disclosure by BofA.
(c) Legal Compulsion to Disclose. In the event that any party or
anyone to whom such party or its representatives transmits the Program
Information is requested or becomes legally compelled (by interrogatories,
requests for information or documents, subpoena, civil
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investigative demand or similar process) to disclose any of the Program
Information, such party will
(i) provide BofA with prompt written notice so that BofA
may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 15.12; and
(ii) unless BofA waives compliance by such party with the
provisions of this Section 15.12, make a timely objection to the
request or confirmation to provide such Program Information on the
basis that such Program Information is confidential and subject to the
agreements contained in this Section 15.12.
In the event that such protective order or other remedy is not obtained, or BofA
waives compliance with the provisions of this Section 15.12, such party will
furnish only that portion of the Program Information which (in such party's good
faith judgment) is legally required to be furnished and will exercise reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded the Program Information.
(d) Survival. This Section 15.12 shall survive termination of this
Agreement.
SECTION 15.13. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND FINANCIAL
PACIFIC HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
RELATED DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR
WHICH MAY BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER RELATED DOCUMENTS AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
NOT BE TRIED BEFORE A JURY.
SECTION 15.14. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH OF
THE BORROWER AND FINANCIAL PACIFIC HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION,
FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL
JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER
CASE SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY
IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND
(III) WAIVES, TO THE FULLEST EXTENT IT MAY
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EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
SECTION 15.15. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of the Lender or any other party hereto
contained in this Agreement shall be had against any stockholder, employee,
officer, director, or incorporator of the Lender or such other party, provided,
however, that nothing in this Section 15.15 shall relieve any of the foregoing
Persons from any liability which such Person may otherwise have for his/her or
its intentional misrepresentation or willful misconduct. All payment obligations
by the Borrower hereunder, including without limitation (i) all obligations of
the Borrower under Article V and Section 7.2 and (ii) all obligations of the
Borrower to repay principal and interest on all Fundings, shall be solely the
limited liability company obligations of the Borrower and no recourse shall be
had with respect to such obligations of Borrower against Financial Pacific (as
Servicer or otherwise) or any of Borrower's or Financial Pacific's Affiliates
(other than the Borrower), members, employees, officers, directors, agents or
incorporators.
SECTION 15.16. Payments. All payments by Borrower hereunder that are
made with the proceeds of Collections shall be subject to the priorities set
forth in Section 4.6. Borrower may pay its Obligations from other funds of the
Borrower, provided that such payment shall not cause an Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this Warehouse Loan
and Security Agreement to be duly executed by their respective officers as of
the day and year first above written.
FINANCIAL PACIFIC FUNDING, LLC
as Borrower
By: /s/ Xxxx X. Winter
------------------------------------
Name: Xxxx X. Winter
Title: Chief Financial Officer
FINANCIAL PACIFIC LEASING, LLC
as Servicer
By: /s/ Xxxx X. Winter
--------------------------------
Name: Xxxx X. Winter
Title: Chief Financial Officer
FINANCIAL PACIFIC COMPANY, solely
for the purposes set forth in
Section 9.5
By: /s/ Xxxx X. Winter
--------------------------------
Name: Xxxx X. Winter
Title: Chief Financial Officer
S-1 WAREHOUSE LOAN AND
SECURITY AGREEMENT
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Collateral Agent and as Standby
Servicer
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
S-2 WAREHOUSE LOAN AND
SECURITY AGREEMENT
RECEIVABLES CAPITAL CORPORATION,
as Lender
By: /s/ RECEIVABLES CAPITAL CORPORATION
Name: _____________________________
Title:_____________________________
S-3 WAREHOUSE LOAN AND
SECURITY AGREEMENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and as
Bank Agent
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: as Attorney-in-Fact
Commitment: BANK OF AMERICA NATIONAL TRUST
Parallel Percentage: 100% AND SAVINGS ASSOCIATION,
as a Parallel Lender
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: as Attorney-in-Fact
S-4 WAREHOUSE LOAN AND
SECURITY AGREEMENT
