Exhibit 10.99(a)
EXECUTION COPY
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SECURITY AGREEMENT
among
FIRST INVESTORS RESIDUAL FUNDING LP
as Debtor,
FIRST UNION SECURITIES, INC.,
as Deal Agent and Collateral Agent
and
FIRST INVESTORS FINANCIAL SERVICES, INC.
as Seller
Dated as of December 6, 2001
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TABLE OF CONTENTS
PAGE
Article I Definitions and Incorporation by Reference......................................1
SECTION 1.1 DEFINITIONS................................................................1
SECTION 1.2 OTHER TERMS...............................................................12
SECTION 1.3 COMPUTATION OF TIME PERIODS...............................................12
SECTION 1.4 INTERPRETATION............................................................12
Article II Grant of Security Interest and Certain Payments...............................13
SECTION 2.1 GRANT OF SECURITY INTEREST................................................13
SECTION 2.2 RELEASE OF COLLATERAL.....................................................13
SECTION 2.3 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.............................14
SECTION 2.4 TAXES.....................................................................15
SECTION 2.5 FEES......................................................................16
Article III Covenants....................................................................16
SECTION 3.1 DISTRIBUTIONS.............................................................16
SECTION 3.2 FUTURE SECURITIZATIONS....................................................17
SECTION 3.3 MONEY FOR PAYMENTS TO BE HELD IN TRUST....................................17
SECTION 3.4 EXISTENCE.................................................................19
SECTION 3.5 PROTECTION OF COLLATERAL..................................................19
SECTION 3.6 OPINIONS AS TO COLLATERAL.................................................20
SECTION 3.7 PERFORMANCE OF OBLIGATIONS................................................20
SECTION 3.8 HEDGE REQUIREMENTS........................................................21
SECTION 3.9 NEGATIVE COVENANTS........................................................21
SECTION 3.10 ANNUAL STATEMENT AS TO COMPLIANCE.........................................22
SECTION 3.11 DEBTOR MAY NOT CONSOLIDATE................................................22
SECTION 3.12 AMENDMENT TO PARTNERSHIP AGREEMENT........................................22
SECTION 3.13 NO OTHER BUSINESS.........................................................23
SECTION 3.14 NO BORROWING..............................................................23
SECTION 3.15 REPURCHASE OF COLLATERAL..................................................23
SECTION 3.16 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.........................23
SECTION 3.17 CAPITAL EXPENDITURES......................................................23
SECTION 3.18 COMPLIANCE WITH LAWS......................................................23
SECTION 3.19 RESTRICTED PAYMENTS.......................................................23
SECTION 3.20 NOTICE OF TERMINATION EVENTS..............................................24
SECTION 3.21 FURTHER INSTRUMENTS AND ACTS..............................................24
SECTION 3.22 AMENDMENTS TO SALE AGREEMENT..............................................24
SECTION 3.23 INCOME TAX CHARACTERIZATION...............................................24
SECTION 3.24 TRANSACTIONS WITH AFFILIATES..............................................24
SECTION 3.25 LOCATION OF OFFICES; CORPORATE NAME.......................................24
SECTION 3.26 [RESERVED]................................................................25
SECTION 3.27 MAINTENANCE OF BOOKS AND RECORDS; INSPECTIONS.............................25
SECTION 3.28 NO COMMINGLING............................................................25
Article IV [Reserved]....................................................................27
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Article V Termination Events and Remedies................................................27
SECTION 5.1 TERMINATION EVENTS........................................................27
SECTION 5.2 REMEDIES..................................................................29
SECTION 5.3 [RESERVED]................................................................29
SECTION 5.4 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY COLLATERAL AGENT..30
SECTION 5.5 [RESERVED]................................................................32
SECTION 5.6 [RESERVED]................................................................32
SECTION 5.7 [RESERVED]................................................................32
SECTION 5.8 LIMITATION OF SUITS.......................................................32
SECTION 5.9 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST.....32
SECTION 5.10 RESTORATION OF RIGHTS AND REMEDIES........................................33
SECTION 5.11 RIGHTS AND REMEDIES CUMULATIVE............................................33
SECTION 5.12 DELAY OR OMISSION NOT A WAIVER............................................33
SECTION 5.13 [RESERVED]................................................................33
SECTION 5.14 WAIVER OF PAST DEFAULTS...................................................33
SECTION 5.15 UNDERTAKING FOR COSTS.....................................................34
SECTION 5.16 WAIVER OF STAY OR EXTENSION LAWS..........................................34
SECTION 5.17 ACTION ON NOTES...........................................................34
SECTION 5.18 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS........................34
Article VI The Collateral Agent..........................................................35
SECTION 6.1 DUTIES OF THE COLLATERAL AGENT............................................35
SECTION 6.2 COMPENSATION AND INDEMNIFICATION OF COLLATERAL AGENT......................36
SECTION 6.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COLLATERAL AGENT.........36
SECTION 6.4 LIABILITY OF THE COLLATERAL AGENT.........................................37
SECTION 6.5 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE
COLLATERAL AGENT.......................................................................39
SECTION 6.6 LIMITATION ON LIABILITY OF THE COLLATERAL AGENT AND OTHERS................39
SECTION 6.7 INDEMNIFICATION OF THE SECURED PARTIES....................................40
Article VII [Reserved]...................................................................40
Article VIII Disbursements and Releases..................................................40
SECTION 8.1 COLLECTION OF MONEY........................................................40
SECTION 8.2 RELEASE OF COLLATERAL......................................................40
SECTION 8.3 OPINION OF COUNSEL.........................................................41
Article IX [Reserved]....................................................................41
Article X [Reserved].....................................................................41
Article XI Miscellaneous.................................................................41
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.................................41
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO COLLATERAL AGENT...........................42
SECTION 11.3 ACTS OF NOTEHOLDERS.......................................................43
SECTION 11.4 NOTICES, ETC. TO COLLATERAL AGENT AND DEBTOR..............................44
SECTION 11.5 NOTICES TO NOTEHOLDERS; WAIVER............................................44
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE PROVISIONS...................................45
SECTION 11.7 [RESERVED]................................................................45
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS..................................45
SECTION 11.9 SUCCESSORS AND ASSIGNS....................................................45
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SECTION 11.10 [RESERVED]...............................................................45
SECTION 11.11 BENEFITS OF THE AGREEMENT................................................45
SECTION 11.12 LEGAL HOLIDAYS...........................................................45
SECTION 11.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE.....45
SECTION 11.14 WAIVER OF JURY TRIAL.....................................................46
SECTION 11.15 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.....................46
SECTION 11.16 RECORDING OF AGREEMENT...................................................46
SECTION 11.17 NO RECOURSE..............................................................46
SECTION 11.18 NO PETITION..............................................................47
SECTION 11.19 INSPECTION...............................................................47
EXHIBITS
Exhibit A Partnership Agreement of Debtor
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SECURITY AGREEMENT (this "AGREEMENT") dated as of December 6, 2001 between
FIRST INVESTORS RESIDUAL FUNDING LP, a Delaware limited partnership, as debtor
(the "DEBTOR") and FIRST UNION SECURITIES, INC., a Delaware corporation
("FUSI"), individually and as deal agent and collateral agent (in such
capacities, the "DEAL AGENT" and the "COLLATERAL AGENT", respectively) and FIRST
INVESTORS FINANCIAL SERVICES, INC., a Texas corporation, as seller (the
"SELLER").
WHEREAS, subject to the terms and conditions of this Agreement, the Debtor
desires to grant a security interest in and to the Collateral and the related
property;
WHEREAS, pursuant to the Note Purchase Agreement, the Debtor has issued the
Note to the Deal Agent for the account of VFCC and the Liquidity Banks and will
be obligated to the holder of the Note to pay the principal of and interest on
the Note in accordance with the terms thereof;
WHEREAS, the Debtor is granting a security interest in the Collateral to
the Collateral Agent, for the benefit of the Secured Parties, to secure the
payment and performance of the Debtor of its obligations under this Agreement,
the Note and the Note Purchase Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
Except as otherwise specified herein, the following terms have the
respective meanings set forth below for all purposes of this Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Sale Agreement, the Asset Purchase Agreement or
the Note Purchase Agreement, as the case may be.
ACCOUNT COLLATERAL: All right, title and interest of the Debtor in and to each
of the Collection Account, the Reserve Account and all other bank accounts and
securities accounts at any time and from time to time owned by the Debtor or in
which the Debtor has or acquires an interest.
ACCRUAL PERIOD: For any Payment Date, the period from and including the Payment
Date immediately preceding such Payment Date to but excluding such Payment Date;
PROVIDED that the initial Accrual Period will be the period from and including
the Closing Date to but excluding such Payment Date.
ACT: As defined in SECTION 11.3(a).
ADDITIONAL AMOUNT: As defined in SECTION 2.4(a).
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ADJUSTED LIBOR RATE: For any Accrual Period, an interest rate per annum equal to
a fraction, expressed as a percentage and rounded upwards (if necessary), to the
nearest 1/100 of 1%, (i) the numerator of which is equal to LIBOR for such
Accrual Period and (ii) the denominator of which is equal to 100% MINUS the
Eurodollar Reserve Percentage for such Accrual Period.
ADVANCE RATE: The Advance Rate shall equal (i) 84% prior to the Paydown Date and
(ii) 70% on and after the Paydown Date; PROVIDED, however, upon the occurrence
of an Overcollateralization Increase Event, the Advance Rate shall be 50%.
AFFECTED PARTY: Each of the Note Investors, each Liquidity Bank, any assignee or
participant of any Note Investor or Liquidity Bank, FUSI, any successor to FUSI
as the Deal Agent, any sub-agent of the Deal Agent, First Union and any
successor to First Union as the Liquidity Agent.
AFFILIATE: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person, or is a director or officer of such Person. For purposes of this
definition, "control" (including the terms "controlling," "controlled by" and
"under common control with") when used with respect to any specified Person
means the possession, direct or indirect, of the power to vote 5% or more of the
voting securities of such Person or to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
AGREEMENT: As defined in the Preamble.
AGREEMENT COLLATERAL: The Asset Purchase Agreement, the Sale Agreement and all
of the rights of the Debtor thereunder, but none of the duties or obligations of
the Debtor thereunder.
ALTERNATIVE RATE: An interest rate per annum equal to the Adjusted LIBOR Rate;
PROVIDED, HOWEVER, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs.
APPLICABLE LAW: For any Person, all existing and future applicable laws, rules,
regulations (including proposed, temporary and final income tax regulations),
statutes, treaties, codes ordinances, permits, certificates, orders and licenses
of and interpretations by any Governmental Authority (including, without
limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System, the
Securities Act and the Exchange Act), and applicable judgments, decrees,
injunctions, writs, orders, or other action of any Court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction.
ASSET PURCHASE AGREEMENT: That certain Asset Purchase Agreement, dated as of
December 6, 2001, among, the Seller, FAFC, FIAIC and FIARC.
BASE RATE: On any date, a fluctuating interest rate per annum equal to the
higher of (i) the Prime Rate or (ii) the Federal Funds Rate plus 2.0%.
BORROWING BASE: The sum of (i) the Principal Overcollateralization and (ii) the
Securitization Facilities Reserve Account Amount.
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BREAKAGE COSTS: Any amount or amounts as shall compensate a Noteholder for any
loss, cost or expense incurred by such Noteholder (as determined by such
Noteholder (and by the Deal Agent on behalf of VFCC) in such Person's sole
discretion) as a result of a prepayment by the Debtor of the Note Interest or
the Outstanding Amount.
BUSINESS DAY: Any day other than a Saturday or Sunday on which (i) banks are not
required or authorized to be closed in Charlotte, North Carolina or Houston,
Texas, and (ii) if the term "Business Day" is used in connection with the
determination of the LIBOR Rate, dealings in United States dollar deposits are
carried on in the London interbank market.
CASH FLOW EVENT: The occurrence of a "Reserve Account Increase Event", an "Event
of Default", "Insurance Agreement Event of Default", "Trigger Event" or some
other event resulting in the trapping of some or all of the excess cash flow
under a Securitization to increase the amount on deposit in any spread account,
reserve account or any similar account thereunder; it being understood that on
the date that the Project Brave Amendment and the FIACC Amendment are executed,
the occurrence of any of the events described above in the related
Securitization, solely as a result of the execution of the Project Brave
Amendment or the FIACC Amendment as applicable, shall not cause a Cash Flow
Event to occur hereunder.
CASH FLOW RATIO: On any date of determination, the percentage equivalent of a
fraction the numerator of which is twelve (12) times the aggregate amount of
funds remitted to the Collection Account for a Collection Period and the
denominator of which is the Net Investment as of the first day of such
Collection Period.
CLOSING DATE: December 6, 2001.
CODE: The Internal Revenue Code of 1986 and Treasury Regulations promulgated
thereunder.
COLLATERAL: As defined in the SECTION 2.1 of this Agreement.
COLLATERAL AGENT: As defined in the Preamble.
COLLECTION ACCOUNT: An account established by the Collateral Agent pursuant to
SECTION 3A.1, for the benefit of the Secured Parties.
COLLECTION PERIOD: For any Payment Date, the calendar month immediately
preceding such Payment Date; PROVIDED that the initial Collection Period will be
the period from the Closing Date to and including December 31, 2001.
COLLECTIONS: All amounts paid with respect to the Collateral.
COMMERCIAL PAPER NOTES: On any day, any short-term promissory notes issued by a
Note Investor.
CP RATE: For any day during any Accrual Period, the per annum rate equivalent to
the weighted average of the per annum rates paid or payable by the Note Investor
from time to time as interest on or otherwise (by means of interest rate xxxxxx
or otherwise taking into consideration any incremental carrying costs associated
with short-term promissory notes issued by such Note Investor maturing on dates
other than those certain dates on which such Note Investor is to receive
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funds) in respect of the promissory notes issued by such Note Investor that are
allocated, in whole or in part, by the Deal Agent (on behalf of such Note
Investor) to fund or maintain the Outstanding Amount during such period, as
determined by the Deal Agent (on behalf of such Note Investor) and reported to
the Debtor, which rates shall reflect and give effect to (i) the commissions of
placement agents and dealers in respect of such promissory notes, to the extent
such commissions are allocated, in whole or in part, to such promissory notes by
the Deal Agent (on behalf of such Note Investor) and (ii) other borrowings by
such Note Investor, including, without limitation, borrowings to fund small or
odd dollar amounts that are not easily accommodated in the commercial paper
market; PROVIDED, HOWEVER, that if any component of such rate is a discount
rate, in calculating the CP Rate, the Deal Agent shall for such component use
the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum.
CUMULATIVE NET LOSS RATIO: With respect to the Servicer's (and its
subsidiaries') portfolio and the group of receivables originated for each
calendar quarter, the ratio expressed as a percentage of (i) the sum of the
outstanding balance of the receivables that were charged-off in accordance with
the related servicer's "Credit and Collection Policy" during the period for the
quarter of origination through the end of the most recent Collection Period
reduced by the amount of all recoveries received by the related servicer during
such period to (ii) the aggregate principal balance of such group of receivables
at origination.
DEBTOR: As defined in the preamble.
DERIVATIVE: Any exchange-traded or over-the-counter (i) forward, future, option,
swap, cap, collar, floor or foreign exchange contract or any combination
thereof, whether for physical delivery or cash settlement, relating to any
interest rate, interest rate index, currency, currency exchange rate, currency
exchange rate index, debt instrument, debt price, debt index, depository
instrument, depository price, depository index, equity instrument, equity price,
equity index, commodity, commodity price or commodity index, (ii) any similar
transaction, contract, instrument, undertaking or security, or (iii) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.
ELIGIBLE BANK: Any depositary institution (which shall initially be First Union)
acceptable to the Deal Agent, organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), which is subject to
supervision and examination by federal or state banking authorities and which at
all times (i) has a net worth in excess of $50,000,000 and (ii) has either (A) a
rating of P-1 from Moody's and A-1 from S&P with respect to short-term deposit
obligations, or (B) if such institution has issued long-term unsecured debt
obligations, a rating of A2 or higher from Moody's and A or higher from S&P with
respect to long-term unsecured debt obligations. Such depositary institution
shall have been approved in writing by the Deal Agent, acting in its discretion.
ELIGIBLE DEPOSIT ACCOUNT: Either (i) a segregated account with an Eligible Bank
or (ii) a segregated trust account with the corporate trust department of a
depositary institution with corporate trust powers organized under the laws of
the United States of America or any state thereof or the District of Columbia
(or any United States branch or agency of a foreign bank) and whose deposits are
insured by the FDIC, provided that such institution also must have a rating of
Baa3 or higher from Moody's and a rating of BBB- or higher from S&P with respect
to long-term
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deposit obligations and must be acceptable to the Deal Agent. Such Eligible Bank
depositary institution (other than the Collateral Agent) shall have been
approved in writing by the Deal Agent, acting in its discretion.
ELIGIBLE INVESTMENTS: Any one or more of the following types of investments:
(i) marketable obligations of the United States, the full and timely
payment of which are backed by the full faith and credit of the United
States and which have a maturity of not more than 270 days from the date of
acquisition;
(ii) marketable obligations, the full and timely payment of which are
directly and fully guaranteed by the full faith and credit of the United
States and which have a maturity of not more than 270 days from the date of
acquisition;
(iii) bankers' acceptances and certificates of deposit and other
interest-bearing obligations (in each case having a maturity of not more
than 270 days from the date of acquisition) denominated in dollars and
issued by any bank with capital, surplus and undivided profits aggregating
at least $100,000,000, the short-term obligations of which are rated A-1 by
S&P and P-1 by Moody's;
(iv) repurchase obligations with a term of not more than ten days for
underlying securities of the types described in CLAUSES (i), (ii) and (iii)
above entered into with any bank of the type described in CLAUSE (iii)
above;
(v) commercial paper rated at least A-1 by S&P and P-1 by Moody's;
and,
(vi) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States or any
state thereof (or domestic branches of any foreign bank) and subject to
supervision and examination by federal or state banking or depositary
institution authorities; PROVIDED, HOWEVER that at the time such
investment, or the commitment to make such investment, is entered into, the
short-term debt rating of such depositary institution or trust company
shall be at least A-1 by S&P and P-1 by Moody's.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from time to time,
together with the rules and regulations in effect from time to time thereunder.
EURODOLLAR DISRUPTION EVENT: The occurrence of any of the following: (i) a
determination by a Note Investor that it would be contrary to law or to the
directive of any central bank or other governmental authority (whether or not
having the force of law) to obtain United States dollars in the London interbank
market to maintain any Note, (ii) the failure of one or more of the reference
banks to furnish timely information for purposes of determining the Adjusted
LIBOR Rate, (iii) a determination by a Note Investor that the rate at which
deposits of United States dollars are being offered to such Note Investor in the
London interbank market does not accurately reflect the cost to such Note
Investor of maintaining any Note or (iv) the inability of a Note Investor to
obtain United States dollars in the London interbank market to maintain any
Note.
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EURODOLLAR RESERVE PERCENTAGE: Of any reference bank for any period, means the
percentage applicable during such period (or, if more than one such percentage
shall be so applicable, the daily average of such percentages for those days in
such period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such reference bank with respect to
liabilities or assets consisting of or including eurocurrency liabilities having
a term of one month.
FACILITY FEE: As defined in the Fee Letter.
FACILITY OVERCOLLATERALIZATION: (i) For any Securitization other than the FIAIC
Securitization, and the Project Brave Securitization, the excess of the
"Eligible Receivables Balance" (as such term or similar term referring to
outstanding balance as reduced for purposes of such facility (it being
understood that such amount is also reduced for defaults under such facility) is
defined in the related Securitization), calculated as of the most recently
reported cut-off date (or other similar date) for each such Securitization over
the amounts outstanding for such Securitization, calculated as of the most
recently reported cut-off date (or other similar date) for such Securitization
(it being understood that from and after the Amortization Date, the Allocated
Principal Amount of the Approved Sub Note shall be included in the calculation
of the Facility Overcollateralization and such Allocated Principal Amount shall
not be used to determine the amount outstanding for such Securitization), (ii)
for the FIAIC Securitization, 80% of the excess of the "Eligible Receivables
Balance" (as such term or similar term referring to outstanding balance as
reduced for purposes of such facility is defined in the FIAIC Securitization),
calculated as of the most recently reported cut-off date (or other similar date)
for the FIAIC Securitization over the amounts outstanding for the FIAIC
Securitization, and (iii) for the Project Brave Securitization (which shall
include FIACC), solely for purposes of calculating the Principal
Overcollateralization, 70% of the excess of the "Eligible Receivables Balance"
(as such term or similar term referring to outstanding balance as reduced for
purposes of such facility is defined in the Project Brave Securitization),
calculated as of the most recently reported cut-off date (or other similar date)
for the Project Brave Securitization over the amounts outstanding for the
Project Brave Securitization and for all other purposes, the excess of the
"Eligible Receivables Balance" (as such term or similar term referring to
outstanding balance as reduced for purposes of such facility is defined in the
Project Brave Securitization), calculated as of the most recently reported
cut-off date (or other similar date) for the Project Brave Securitization over
the amounts outstanding for the Project Brave Securitization.
FDIC: The Federal Deposit Insurance Corporation.
FEDERAL FUNDS RATE: For any period, a fluctuating interest rate per annum equal
for each day during such period to the weighted average of the federal funds
rates as quoted by First Union and confirmed in Federal Reserve Board
Statistical Release H.15 (519) or any successor or substitute publication
selected by First Union (or, if such day is not a Business Day, for the next
preceding Business Day), or if for any reason such rate is not available on any
day, the rate determined, in the sole opinion of First Union, to be the rate at
which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. Charlotte, North Carolina time.
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FEE LETTER: The letter agreement dated as of the date hereof between the Debtor,
the Deal Agent and the Note Investor.
FIAIC: First Investors Auto Investment Corp., a Delaware corporation.
FIACC AMENDMENT: The Sixth Amendment to
Security Agreement, dated as of December
6, 2001, by and among FIACC, as debtor, FUSI, as deal agent and as collateral
agent, and FIFS as seller.
FIAIC FACILITY DOCUMENTS: The meaning ascribed to the term "Transaction
Documents" in the Indenture (as amended supplemented or otherwise modified and
in effect from time to time), dated as of January 1, 2000, between First
Investors Auto Owner Trust 2000-A, as issuer, the Seller, as seller, and Norwest
Bank Minnesota, National Association, as indenture trustee.
FIAIC SECURITIZATION: The securitization of the Receivables owned by First
Investors Auto Owner Trust 2000-A through the issuance of asset-backed
Securities pursuant to the FIAIC Facility Documents.
FIALAC HOLDINGS: FIALAC Holdings, Inc., a Delaware corporation.
FIFS: First Investors Financial Services, Inc., a Texas corporation.
FIRC: F.I.R.C., Inc., a Delaware corporation.
First Union: First Union National Bank.
GOVERNMENTAL AUTHORITY: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
GRANT: Mortgage, pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, xxxxx x xxxx upon and a security interest in
and right of set-off against, deposit, set over and confirm pursuant to this
Agreement. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Collateral and all other moneys payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
HEDGE BREAKAGE COSTS: For any Hedge Transaction, any amount payable by the
Debtor for the early termination of that Hedge Transaction or any portion
thereof.
HEDGE COUNTERPARTY: Any entity that (i) on the date of entering into any Hedge
Transaction (A) is an interest rate cap dealer that is either a Note Investor or
an Affiliate of a Note Investor, or has been approved in writing by the Deal
Agent (which approval shall not unreasonably be withheld), and (B) has a
long-term unsecured debt rating of not less than "A" by S&P and not less than
"A2"
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by Xxxxx'x ("LONG-TERM RATING REQUIREMENT") and a short-term unsecured debt
rating of not less than "A-1" by S&P and not less than "P-1" by Xxxxx'x
("SHORT-TERM RATING REQUIREMENT"), and (ii) in a Hedging Agreement (A) consents
to the assignment of the Debtor's rights under the Hedging Agreement to the Deal
Agent pursuant to SECTION 3.8 and (B) agrees that in the event that Xxxxx'x or
S&P reduces its long-term unsecured debt rating below the Long-term Rating
Requirement, or reduces its short-term unsecured debt rating below the
Short-term Rating Requirement, it shall transfer its rights and obligations
under each Hedge Transaction to another entity that meets the requirements of
CLAUSES (i) and (ii) hereof and has entered into a Hedging Agreement with the
Debtor on or prior to the date of such transfer.
HEDGE TRANSACTION: Any interest rate cap or interest rate swap transactions
between the Debtor and a Hedge Counterparty with a notional amount equal to the
Required Notional Amount and with strike rates equal to the Required Strike Rate
that is entered into pursuant to SECTION 3.8 and is governed by a Hedging
Agreement.
HEDGING AGREEMENT: Each agreement between the Debtor and a Hedge Counterparty
that governs one or more Hedge Transactions entered into pursuant to SECTION
3.8, which agreement shall consist of a "Master Agreement" in a form published
by the International Swaps and Derivatives Association, Inc., together with a
"Schedule" thereto in a form the Deal Agent shall approve in writing, and each
"Confirmation" thereunder confirming the specific terms of each such Hedge
Transaction.
HOLDER or NOTEHOLDER: The Person in whose name a Note is registered on the Note
Register.
INCREASED COSTS: Any amounts required to be paid by the Debtor to an Affected
Party pursuant to SECTION 2.3.
INDEBTEDNESS: With respect to any Person at any date, (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current liabilities incurred in the ordinary course of
business and payable in accordance with customary trade practices) or that is
evidenced by a note, bond, debenture or similar instrument, (ii) all obligations
of such Person under leases that shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases, (iii)
all obligations of such Person in respect of acceptances issued or created for
the account of such Person, (iv) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, (v) all indebtedness,
obligations or liabilities of that Person in respect of Derivatives, and (vi)
all obligations under direct or indirect guaranties in respect of obligations
(contingent or otherwise) to purchase or otherwise acquire, or to otherwise
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kind referred to in CLAUSES (i) through (v) above.
INITIAL NOTEHOLDER: VFCC.
LIBOR: For any day during any Accrual Period, an interest rate per annum equal
to:
(i) the posted rate for 30-day deposits in United States Dollars
appearing on Telerate page 3750 as of 11:00 a.m. (London time) on the
Business Day which is the
8
second Business Day immediately preceding the first day of the applicable
Accrual Period; or
(ii) if no such rate appears on Telerate page 3750 at such time and
day, then LIBOR shall be determined by First Union at its principal office
in Charlotte, North Carolina as its rate (each such determination, absent
manifest error, to be conclusive and binding on all parties hereto and
their assignees) at which 30-day deposits in United States Dollars are
being, have been, or would be offered or quoted by First Union to major
banks in the applicable interbank market for Eurodollar deposits at or
about 11:00 a.m. (Charlotte, North Carolina time) on such day.
LIQUIDITY AGENT: First Union.
LIQUIDITY AGREEMENT: The Liquidity Purchase Agreement, dated as of the date
hereof among VFCC, as borrower, the investors named therein, FUSI, as deal agent
and documentation agent, and First Union, as liquidity agent.
LIQUIDITY BANK: Each liquidity bank that is a party to the Liquidity Agreement.
MAXIMUM NET INVESTMENT: The lesser of (a) the product of (i) the Borrowing Base
and (ii) the Advance Rate and (b) the Facility Limit.
MONTHLY PAYDOWN AMOUNT: For each Payment Date on or before the Paydown Date, all
payments received during the related Collection Period on the Approved Sub Note
and all cash distributions received in conjunction with the Project Brave
Assets.
MONTHLY PRINCIPAL PAYMENT AMOUNT: With respect to any Payment Date, the amount,
if any, necessary to reduce the Net Investment calculated as of the prior
Payment Date, to the Maximum Net Investment calculated as of the last day of the
related Collection Period.
NET INVESTMENT: The aggregate amount paid to the Debtor from time to time, minus
the aggregate amount of Collections applied to reduce the Net Investment.
NOTE: As defined in the Note Purchase Agreement.
NOTEHOLDER: The registered owner of a Note.
NOTE INTEREST: For any Accrual Period with respect to each of the Notes, the sum
of the products (for each day during such Accrual Period) of:
NIR x P x 1/360
where:
NIR = the Note Interest Rate; and
P = the outstanding principal amount of such Note on such day.
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NOTE INTEREST RATE: With respect to the Notes, on any day, (i) for the portion
of the Outstanding Amount that the Note Investor funds on such day through the
issuance of commercial paper, the CP Rate and (ii) for the portion of the
Outstanding Amount that the Note Investor does not fund on such day through the
issuance of commercial paper, the Alternative Rate; PROVIDED, HOWEVER, after the
occurrence of a Termination Event, the Note Interest Rate shall be the greater
of (i) the Adjusted LIBOR Rate plus 5.00% per annum and (ii) the Prime Rate plus
2.00% per annum.
NOTE INVESTOR: VFCC and its successors and assigns.
NOTE PURCHASE AGREEMENT: The Note Purchase Agreement dated as of the date hereof
by and between the Note Investor, the Deal Agent, the Liquidity Agent, the
liquidity banks named therein and the Debtor.
OFFICER'S CERTIFICATE: A certificate signed by any Responsible Officer of the
Debtor, under the circumstances described in, and otherwise complying with, the
applicable requirements of SECTION 11.1, and delivered to the Collateral Agent.
OPINION OF COUNSEL: One or more written opinions of counsel who may, except as
otherwise expressly provided in this Agreement, be employees of or counsel to
the Debtor and who shall be satisfactory to the Collateral Agent and which shall
comply with any applicable requirements of SECTION 11.1, and shall be in form
and substance satisfactory to the Collateral Agent.
ORIGINAL NET INVESTMENT: The amount advanced on the Closing Date, which amount
shall be $13,500,000.
OUTSTANDING AMOUNT: The aggregate principal amount of all Notes that is
outstanding on any date of determination.
OVERCOLLATERALIZATION INCREASE EVENT: On any date of determination, (i) the Cash
Flow Ratio is less than 25%, (ii) the amount on deposit in the Reserve Account
is less than the Required Reserve Account Amount or (iii) a Cash Flow Event
occurs that is not waived.
PAYING AGENT: The Collateral Agent acting in such capacity.
PAYMENT DATE: The twenty-second (22nd) day of each calendar month, or if, such
day is not a Business Day, the immediately following Business Day.
PRIME RATE: The rate announced by First Union from time to time as its prime
rate in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by First Union in connection with extensions of credit to debtors.
PRINCIPAL OVERCOLLATERALIZATION: The aggregate of the Facility
Overcollateralization for all Securitizations; PROVIDED, however, that no
Facility Overcollateralization related to any Securitization entered into on or
after the Closing Date shall be included in Principal Overcollateralization
unless the Deal Agent, in its sole discretion, has given its prior written
consent to such inclusion.
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PROCEEDING: Any suit in equity, action at law or other judicial or
administrative proceeding.
PROGRAM FEE: As defined in the Fee Letter.
PROJECT BRAVE: Project Brave Limited Partnership, a Delaware limited
partnership.
PROJECT BRAVE AMENDMENT: The Supplemental Indenture No. 3, dated as of December
6, 2001, by and among Project Brave Limited Partnership, as issuer, First Union,
as paying agent and Xxxxx Fargo Bank Minnesota, National Association, as
indenture trustee.
PROJECT BRAVE SECURITIZATION: The securitization of the Receivables owned by
FIFS Acquisition Funding Company, L.L.C. through the issuance of asset-backed
Securities pursuant to the Project Brave Securitization Facility Documents.
RATING AGENCY: Each of Xxxxx'x and S&P and any other rating agency that has been
requested to issue a rating with respect to the commercial paper notes issued by
any Note Investor.
REPORTING DATE: The twentieth (20th) day of each calendar month, or if, such day
is not a Business Day, the immediately following Business Day; PROVIDED,
however, the Reporting Date shall in no event be less than one (1) Business Day
prior to the Payment Date.
REPURCHASE AMOUNT: The portion of the Outstanding Amount related to the
Collateral being repurchased pursuant to SECTION 3.15, plus any accrued and
unpaid interest thereon.
REQUIRED NOTIONAL AMOUNT: The aggregate of the notional amounts of all Hedge
Transactions shall be (a) prior to the Paydown Date, $13,500,000 and (b) from
and after the Paydown Date, $9,000,000.
REQUIRED RESERVE ACCOUNT AMOUNT: $1,000,000.
REQUIRED STRIKE RATE: 7.50%.
RESERVE ACCOUNT: A segregated account established by the Collateral Agent
pursuant to SECTION 3A .2 for the benefit of the Secured Parties.
RESERVE ACCOUNT WITHDRAWAL: As defined in SECTION 3.1(c).
RESPONSIBLE OFFICER: With respect to any Person, the president, any vice
president or assistant vice president or the controller of such Person, or any
other officer or employee having similar functions.
REVOLVING PERIOD: The period commencing on the Closing Date and ending on the
Termination Date.
SALE AGREEMENT: The Sale and Servicing Agreement, dated as of the date hereof,
by and among the Debtor, the Seller and the Deal Agent.
SECURED PARTIES: The Note Investor and each Hedge Counterparty.
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SECURITIES ACT: The Securities Act of 1933, as amended from time to time,
together with the rules and regulations in effect from time to time thereunder.
SECURITIZATION COLLATERAL: The Residual Assets and, from and after the
Amortization Date, the Approved Sub Note.
SECURITIZATION FACILITIES RESERVE ACCOUNT AMOUNT: The aggregate amount of cash
reserves (excluding all prefunding accounts and related yield supplement
accounts) maintained in all of the Securitizations; PROVIDED, however, that no
such cash reserves related to any Securitization entered into on or after the
Closing Date shall be included in the Securitization Facilities Reserve Account
Amount unless the Deal Agent, in its sole discretion, has given its prior
written consent to such inclusion; PROVIDED, further that for purposes of
determining such amount relating to (i) the FIAIC Securitization, an amount
equal to 80% of the cash reserves (excluding all prefunding accounts and related
yield supplement accounts) shall be used and (ii) the Project Brave
Securitization (which shall include FIACC), an amount equal to 70% of the cash
reserves (excluding all prefunding accounts and related yield supplement
accounts) shall be used.
SELLER: As defined in the preamble.
SERVICER ADVANCE: Any advance made by FIFS, as Servicer pursuant to
SECTION 3.1(b).
SERVICER EVENT OF DEFAULT: The occurrence of a "Servicer Event of Default" (as
such term or similar term referring to an event of default relating to the
Servicer for purposes of such facility is defined in the related
Securitization).
STATE: Any one of the 50 states of the United States of America or the District
of Columbia.
TAX: Any present or future taxes, levies, imposts, duties, charges, assessments
or fees of any nature (including interest, penalties, and additions thereto)
that are imposed by any Governmental Authority.
TERMINATION DATE: The earliest of (i) the day on which a Termination Event
occurs, (ii) December 5, 2002 or such later date to which the Termination Date
may be extended, if extended, in the sole discretion of each Noteholder or (iii)
the Business Day specified in a written notice from the Debtor to the Deal Agent
and the Collateral Agent.
TERMINATION EVENT: As defined in SECTION 5.1.
TRANSACTION DOCUMENTS: This Agreement, the Note Purchase Agreement, the Sale
Agreement, the Asset Purchase Agreement, the Notes, the Fee Letter and each
other document and certificate delivered in connection therewith.
UCC: Unless the context otherwise requires, the Uniform Commercial Code, as in
effect in the relevant jurisdiction.
UNMATURED TERMINATION EVENT: Any occurrence that is, or with notice or the lapse
of time or both would become, a Termination Event.
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VFCC: Variable Funding Capital Corporation.
SECTION 1.2 OTHER TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC and
used but not specifically defined herein, are used herein as defined in such
Article 9 of the UCC as in effect in the relevant jurisdiction.
SECTION 1.3 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation of a period
of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding."
SECTION 1.4 INTERPRETATION.
In each Transaction Document, unless a contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by the
Transaction Documents;
(c) reference to any gender includes each other gender;
(d) reference to any agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Transaction Documents,
and reference to any promissory note includes any promissory note that is an
extension or renewal thereof or a substitute or replacement therefor; and
(e) reference to any Applicable Law means such Applicable Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such SECTION or other provision.
ARTICLE II
GRANT OF SECURITY INTEREST AND CERTAIN PAYMENTS
SECTION 2.1 GRANT OF SECURITY INTEREST.
As security for the prompt and complete payment of the Note and the
performance of all of the Debtor's obligations under the Note, the Note Purchase
Agreement, this Agreement and the other Transaction Documents, the Debtor hereby
grants to the Collateral Agent, for the benefit of
13
the Secured Parties, a security interest in all of the Debtor's right, title and
interest in and to the following, whether now owned or hereafter acquired
(collectively, the "COLLATERAL"):
(a) the Securitization Collateral;
(b) The Dividend Assets;
(c) the Agreement Collateral and all rights of the Debtor thereunder;
(d) the Hedge Transactions;
(e) the Account Collateral;
(f) all amounts and property from time to time held or credited to the
Collection Account and the Reserve Account from amounts received in connection
with the foregoing items in this clause; and
(g) all present and future claims, demands, causes and chooses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing items in this Granting Clause.
SECTION 2.2 RELEASE OF COLLATERAL.
The Collateral Agent shall, on or after the date on which the Notes have
been paid in full, release any remaining portion of the Collateral from the lien
created by this Agreement. The Collateral Agent shall release property from the
lien created by this Agreement pursuant to this SECTION 2.2 only upon receipt of
a request by the Debtor accompanied by an Officer's Certificate meeting the
applicable requirements of SECTION 11.1.
SECTION 2.3 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
(a) If either (i) the introduction of, any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in, or any change in the interpretation of, any law or regulation or (ii) the
compliance by an Affected Party with any guideline or request, from any central
bank or other Governmental Authority (whether or not having the force of law),
shall (A) subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to the
Agreement or the Notes, or on any payment made hereunder, (B) impose, modify or
deem applicable any reserve requirement (including, without limitation, any
reserve requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any reserve requirement, if any, included in the
determination of Note Interest), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Affected Party or (C) impose any other condition affecting a Note Investor's
rights hereunder, the result of which is to increase the
14
cost to any Affected Party or to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement, then within ten (10) days
after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth the basis for such demand), the Debtor shall pay
directly to such Affected Party such additional amount or amounts as will
compensate such Affected Party for such additional or increased cost incurred or
such reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such introduction, change or compliance
(taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material,
then from time to time, within ten (10) days after demand by such Affected Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Debtor shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
reduction.
(c) If as a result of any event or circumstance similar to those described
in CLAUSES (a) or (b) of this SECTION, any Affected Party is required to
compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in connection
with this Agreement or the funding or maintenance of the Notes hereunder, then
within ten (10) days after demand by such Affected Party, the Debtor shall pay
to such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any amounts payable or paid by it.
(d) In determining any amount provided for in this section, the Affected
Party may use any reasonable averaging and attribution methods. Any Affected
Party making a claim under this section shall submit to the Debtor a written
description as to such additional or increased cost or reduction and the
calculation thereof, which written description shall be conclusive absent
demonstrable error.
(e) If a Note Investor shall notify the Deal Agent that a Eurodollar
Disruption Event as described in CLAUSE (i) of the definition of "Eurodollar
Disruption Event" has occurred, the Deal Agent shall in turn so notify the
Debtor, whereupon the Outstanding Amount in respect of which interest accrues at
the Adjusted LIBOR Rate shall immediately accrue at the Base Rate.
SECTION 2.4 TAXES.
(a) All payments made by the Debtor under this Agreement will be made free
and clear of and without deduction or withholding for or on account of any
Taxes. If any Taxes are required to be withheld from any amounts payable to the
Deal Agent, the Liquidity Agent or any Secured Party, then the amount payable to
such Person will be increased (such increase, the "ADDITIONAL
15
AMOUNT") such that every net payment made under this Agreement after withholding
for or on account of any Taxes (including, without limitation, any Taxes on such
increase) is not less than the amount that would have been paid had no such
deduction or withholding been deducted or withheld. The foregoing obligation to
pay Additional Amounts, however, will not apply with respect to net income or
franchise taxes imposed on a Note Investor or the Deal Agent, respectively, with
respect to payments required to be made by the Debtor under this Agreement, by a
taxing jurisdiction in which such Note Investor or the Deal Agent is organized,
conducts business or is paying taxes as of the Closing Date (as the case
may be).
(b) The Debtor will indemnify each Affected Party for the full amount of
Taxes payable by such Person in addition to Additional Amounts and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. All payments in respect of this indemnification shall be made within
ten days from the date a written invoice therefor is delivered to the Debtor.
(c) Within thirty (30) days after the date of any payment by the Debtor of
any Taxes in connection with a deduction or withholding described in SUBSECTION
(a) above, the Debtor will furnish to the Deal Agent, at its address set forth
under its name on the signature pages hereof, appropriate evidence of payment
thereof.
(d) If a Note Investor is not created or organized under the laws of the
United States or a political subdivision thereof, such Note Investor shall
deliver to the Debtor, with a copy to the Deal Agent, (i) within fifteen (15)
days after the date hereof, or, if such Note Investor becomes a Note Investor
after the Closing Date, the date on which such Note Investor becomes a Note
Investor hereunder, two (2) (or such other number as may from time to time be
prescribed by Applicable Law) duly completed copies of IRS Form W-8BEN or Form
W-8ECI (or any successor forms or other certificates or statements that may be
required from time to time by the relevant United States taxing authorities or
Applicable Law), as appropriate, to permit the Debtor to make payments hereunder
for the account of such Note Investor, as the case may be, without deduction or
withholding of United States federal income or similar Taxes and (ii) upon the
obsolescence of or after the occurrence of any event requiring a change in, any
form or certificate previously delivered pursuant to this SECTION 2.4(d), copies
(in such numbers as may from time to time be prescribed by Applicable Law) of
such additional, amended or successor forms, certificates or statements as may
be required under Applicable Law to permit the Debtor to make payments hereunder
for the account of such Note Investor, without deduction or withholding of
United States federal income or similar Taxes.
(e) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the Note
Investors in connection with this Agreement or the funding or maintenance of the
Outstanding Amount hereunder, the Note Investors are required to compensate a
bank or other financial institution in respect of Taxes under circumstances
similar to those described in this section, then within ten (10) days after
demand by the Note Investors, the Debtor shall pay to the Note Investors such
additional amount or amounts as may be necessary to reimburse the Note Investors
for any amounts paid by them.
16
(f) Without prejudice to the survival of any other agreement of the Debtor
hereunder, the agreements and obligations of the Debtor contained in this
SECTION shall survive the termination of this Agreement.
SECTION 2.5 FEES.
Notwithstanding any limitation on recourse contained in this Agreement, the
Debtor shall pay, in the manner and at the times specified in the Fee Letter,
the fees specified in the Fee Letter.
ARTICLE III
COVENANTS
SECTION 3.1 DISTRIBUTIONS.
(a) The Debtor will duly and punctually pay the principal of and interest
on the Notes in accordance with the terms of the Notes and this Agreement and
the Note Purchase Agreement. Without limiting the foregoing, the Debtor will
cause the Paying Agent to distribute all amounts on deposit in the Collection
Account on each Payment Date, in the following order of priority:
(i) FIRST, to FIFS, as Servicer, an amount equal to any unreimbursed
Servicer Advances;
(ii) SECOND, to the Deal Agent for payment to the Note Investor, an
amount equal to the sum of the following:
(A) the Note Interest accrued during the related Accrual Period
and any past due Note Interest (including interest on overdue
amounts);
(B) the accrued and unpaid Program Fee and Facility Fee for the
related Collection Period; and
(C) all other amounts (other than the Outstanding Amount) then
due under this Agreement and the Note Purchase Agreement to the Deal
Agent, the Note Investor or the Affected Parties;
(iii) THIRD, to the Deal Agent for payment to the Note Investor, the
Monthly Principal Payment Amount and the Monthly Paydown Amount (if
applicable);
(iv) FOURTH, (A) prior to the occurrence of the Termination Date, to
the Reserve Account, until such time as the amount on deposit in the
Reserve Account is equal to the Required Reserve Account Amount; and (B)
upon the occurrence of the Termination Date, the remaining amounts to the
Note Investor to reduce the balance of the Note until the Note is paid in
full; and
(v) FIFTH, the remaining amounts, if any, to the Debtor.
17
(b) To the extent funds on deposit in the Collection Account are
insufficient to pay the accrued and unpaid Note Interest for the related Accrual
Period, on each Business Day on which an Accrual Period ends, FIFS, as Servicer
shall advance such amount (each such advance, a "SERVICER ADVANCE" and
collectively, the "SERVICER ADVANCES"); PROVIDED, HOWEVER, FIFS, as Servicer
shall not be required to make a Servicer Advance except to the extent that it
reasonably and in good faith expects to be reimbursed for such Servicer Advance
from the collections in the Collection Account (as determined in its sole
discretion).
(c) To the extent amounts received in respect of the Collateral are not
sufficient to make the distribution on any Payment Date as set forth in SECTION
3.1(a)(ii) and (iii), the Collateral Agent, upon receipt of written direction
from the Deal Agent, shall withdraw or cause to be withdrawn the amount set
forth in such written direction (the "RESERVE ACCOUNT WITHDRAWAL") from the
Reserve Account and deposit such amount into the Collection Account on such
Payment Date. In addition, upon the occurrence of the Termination Date, the
Collateral Agent, at the written direction of the Deal Agent, shall withdraw
from the Reserve Account such amount as may be specified by the Deal Agent in
such written direction and shall cause such amount to be applied to the payment
of accrued Note Interest and the reduction to zero of the Outstanding Amount.
The use of any Reserve Account Withdrawal shall not cure any Termination Event
or Unmatured Termination Event that results from the failure of the Debtor to
make any payment hereunder.
SECTION 3.2 FUTURE SECURITIZATIONS.
The Debtor agrees that it will grant to the Collateral Agent, for the
benefit of the Secured Parties, a security interest in all additional Collateral
that the Debtor acquires pursuant to the terms of the Sale Agreement.
SECTION 3.3 MONEY FOR PAYMENTS TO BE HELD IN TRUST.
(a) On or before each Payment Date, the Debtor shall deposit or cause to be
deposited in the Collection Account all Collections, such amounts to be held in
trust for the benefit of the Persons entitled thereto and shall promptly notify
the Collateral Agent of its action or failure so to act.
(b) The Collateral Agent shall act as the initial Paying Agent hereunder
and is hereby authorized by the Debtor to make payments to and distributions
from the Collection Account.
(c) The Paying Agent hereby agrees with the Deal Agent, subject to the
provisions of this SECTION 3.3, to:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Deal Agent notice of any default by the Debtor of which
it has actual knowledge (or any other obligor upon the Notes) in the making
of any payment required to be made with respect to the Notes;
18
(iii) at any time during the continuance of any such default, upon the
written request of the Deal Agent, forthwith pay to the Deal Agent all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Deal Agent all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
(d) [RESERVED].
(e) Subject to applicable laws with respect to the escheat of funds, any
money held by the Paying Agent in trust for the payment of any amount due with
respect to any Note and remaining unclaimed for two (2) years after such amount
has become due and payable shall be discharged from such trust and be paid to
the Debtor, at the Debtor's request and shall be deposited by the Paying Agent
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Debtor for payment thereof (but
only to the extent of the amounts so paid to the Debtor), and all liability of
the Paying Agent with respect to such trust money shall thereupon cease;
PROVIDED, HOWEVER, that the Paying Agent, before being required to make any such
repayment to the Debtor, shall at the expense of the Debtor cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the City of
New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty (30) days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Debtor. The Paying Agent shall also adopt and employ, at the expense of
the Debtor, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Collateral Agent or of the Paying Agent, at
the last address of record for each such Holder).
SECTION 3.4 EXISTENCE.
(a) The Debtor will keep in full effect its existence, rights and
franchises as a limited partnership under the laws of the State of Delaware and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Note Purchase Agreement, the Notes, the
Collateral and each other instrument or agreement included in the Collateral.
(b) The Debtor will do all things necessary to maintain its corporate
existence separate and apart from the Seller and the Servicer and all other
Affiliates of the Seller and the Servicer, including, without limitation, (i)
practicing and adhering to all partnership formalities required by its limited
partnership agreement and its other governance documents, such as maintaining
appropriate books and records; (ii) having a general partner which is a limited
purpose limited
19
liability company with a member that is a corporation having a board of
directors at least one member of which is not an officer, director or employee
of any of its Affiliates (other than a special purpose corporation); (iii)
refraining from holding itself out as responsible for debts of any of its
Affiliates or the debt of any other entity or for decisions or actions with
respect to the affairs of any of its Affiliates; (iv) maintaining all of its
deposit and other bank accounts and all of its assets separate from those of any
other Person; (v) maintaining all of its financial records separate and apart
from those of any other Person and ensuring the Servicer's consolidated
financial statements relating to the Debtor and its Affiliates on a consolidated
basis contain appropriate disclosures concerning the Debtor's separate
existence; (vi) accounting for and managing all of its liabilities from its own
funds and separately from those of any of its Affiliates; (vii) refraining from
filing or otherwise initiating or supporting the filing of a motion in any
bankruptcy or other insolvency proceeding involving the Debtor, the Seller, the
Servicer or any other Affiliate of the Debtor to substantively consolidate
assets and liabilities of the Debtor with the assets and liabilities of any such
Person or any other Affiliate of the Debtor; (viii) maintaining adequate
capitalization in light of its business and purpose; (ix) conducting all of its
business (whether written or oral) solely in its own name and through the duly
authorized agents of FIALAC Holdings; (x) paying appropriate rent for any
premises it leases from the Seller or any of its Affiliates; and (xi)
compensating, in an amount equal to the fair market value for any services
rendered by the Seller or its Affiliates on its behalf.
SECTION 3.5 PROTECTION OF COLLATERAL.
The Debtor intends the security interests Granted pursuant to this
Agreement in favor of the Secured Parties to be prior to all other liens in
respect of the Collateral, and the Debtor shall take all actions necessary to
obtain and maintain, in favor of the Collateral Agent, for the benefit of the
Secured Parties, a first lien on and a first priority, perfected security
interest in the Collateral. The Debtor will from time to time prepare (or cause
to be prepared), authorize and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action
necessary or advisable to:
(a) Grant more effectively all or any portion of the Collateral to the
Secured Parties;
(b) maintain or preserve the liens and security interests (and the
priorities thereof) in favor of the Collateral Agent, for the benefit of the
Secured Parties, created by this Agreement or carry out more effectively the
purposes hereof;
(c) perfect, publish notice of or protect the validity of any Grant made or
to be made by this Agreement;
(d) enforce any of the Collateral;
(e) preserve and defend title to the Collateral and the rights of the
Collateral Agent in such Collateral against the claims of all persons and
parties; and
(f) pay all taxes or assessments levied or assessed upon the Collateral
when due.
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The Debtor hereby designates the Collateral Agent as its agent and
attorney-in-fact to authorize any financing statement, continuation statement or
other instrument required by this SECTION 3.5.
SECTION 3.6 OPINIONS AS TO COLLATERAL.
On the Closing Date, the Debtor shall furnish to the Collateral Agent and
the Deal Agent an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Agreement, any supplements hereto, and any other requisite documents, and
with respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the lien
and security interest in favor of the Collateral Agent, for the benefit of the
Secured Parties, created by this Agreement and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
SECTION 3.7 PERFORMANCE OF OBLIGATIONS.
(a) The Debtor will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Agreement, the other Transaction Documents or such other instrument or
agreement.
(b) The Debtor may contract with other Persons acceptable to the Deal Agent
to assist it in performing its duties under this Agreement, and any performance
of such duties by a Person identified to the Collateral Agent in an Officer's
Certificate of the Debtor shall be deemed to be action taken by the Debtor.
Initially, the Debtor has contracted with the Servicer to assist the Debtor in
performing its duties under this Agreement.
(c) The Debtor will punctually perform and observe all of its obligations
and agreements contained in this Agreement, the Transaction Documents and in the
instruments and agreements included in the Collateral, including but not limited
to preparing (or causing to be prepared) and filing (or causing to be filed) all
UCC financing statements and continuation statements required to be filed by the
terms of this Agreement, the Sale Agreement and the Asset Purchase Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Debtor shall not waive,
amend, modify, supplement or terminate this Agreement or any provision hereof
without the consent of the Collateral Agent, the Deal Agent and the Holders of
at least a majority of the Outstanding Amount of the Notes.
(d) The Debtor agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Transaction Documents (i) without the prior consent of the Deal Agent, or (ii)
if the effect thereof would adversely affect the Holders of the Notes.
21
SECTION 3.8 HEDGE REQUIREMENTS.
At the request of the Deal Agent, the Debtor shall enter into one or more
Hedge Transactions for the Note for the purpose of hedging its obligations under
this Agreement, provided that each such Hedge Transaction shall be entered into
with a Hedge Counterparty and governed by a Hedging Agreement and all payments
made by the Hedge Counterparty with respect to each such Hedge Transaction shall
be made to the Collection Account. As additional security hereunder, Debtor
hereby assigns to the Collateral Agent on behalf of the Holders of the Note all
right, title and interest of Debtor in each related Hedging Agreement, each
related Hedge Transaction, and all present and future amounts payable by a
related Hedge Counterparty to the Debtor under or in connection with the
respective Hedging Agreement and Hedge Transaction(s) with that Hedge
Counterparty ("HEDGE COLLATERAL"), and grants a security interest to the
Collateral Agent, for the benefit of the Secured Parties, in the Collateral.
Debtor acknowledges that, as a result of that assignment, Debtor may not,
without the prior written consent of the Note Investor, exercise any rights
under any related Hedging Agreement or Hedge Transaction, except for Debtor's
right under any Hedging Agreement to enter into Hedge Transactions in order to
meet the Debtor's obligations under this SECTION 3.8. Nothing herein shall have
the effect of releasing the Debtor from any of its obligations under any Hedging
Agreement or any Hedge Transaction, nor be construed as requiring the consent of
any Secured Party to the performance by the Debtor of any such obligations. The
Debtor shall enter into one or more ISDA Master Agreements, together with
related schedules thereto, each in form and substance satisfactory to the Deal
Agent. The Debtor may not terminate any Hedge Transaction except with the prior
written consent of all Noteholders.
SECTION 3.9 NEGATIVE COVENANTS.
So long as any Notes are Outstanding, the Debtor shall not:
(a) except as expressly permitted by this Agreement or the other
Transaction Documents, sell, transfer, exchange or otherwise dispose of any of
the properties or assets of the Debtor, including those included in the
Collateral, unless directed to do so by the Deal Agent;
(b) claim any credit on, or make any deduction from the payment of the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Collateral;
(c) enter into, acquire or become a party to any Derivative other than
pursuant to and in compliance with SECTION 3.8; or
(d) (i) permit the validity or effectiveness of this Agreement to be
impaired, or permit the lien in favor of the Collateral Agent created by this
Agreement to be amended, hypothecated, subordinated, terminated or discharged,
or permit any Person to be released from any covenants or obligations with
respect to the Notes under this Agreement except as may be expressly permitted
hereby, (ii) permit any lien, charge, excise, claim, security interest, mortgage
or other encumbrance (other than the lien of this Agreement) to be created on or
extend to or otherwise arise upon or burden the Collateral or any part thereof
or any interest therein or the proceeds thereof, (iii) permit the lien of this
Agreement not to constitute a valid first priority (other than with respect to
any such
22
tax, mechanics, or other lien) security interest in the Collateral or (iv)
amend, modify or fail to comply with the provisions of the Transaction Documents
without the prior written consent of the Deal Agent.
SECTION 3.10 ANNUAL STATEMENT AS TO COMPLIANCE.
The Debtor will deliver to the Collateral Agent and the Deal Agent, within
120 days after the end of each fiscal year of the Debtor (commencing with the
fiscal year ended April 30, 2002) an Officer's Certificate stating that
(a) a review of the activities of the Debtor during such year and of
performance under this Agreement has been made under such Responsible Officer's
supervision; and
(b) to the best of such Responsible Officer's knowledge, based on such
review, the Debtor has complied in all material respects with all conditions and
covenants under this Agreement throughout such year, or, if there has been a
default in the compliance of any such condition or covenant, specifying each
such default known to such Responsible Officer and the nature and status
thereof.
SECTION 3.11 DEBTOR MAY NOT CONSOLIDATE.
The Debtor will not merge or consolidate with, or convey, transfer, lease
or otherwise dispose of any of its assets (whether now owned or hereafter
acquired) except as expressly permitted under the Transaction Documents, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of any Person, other than, with respect to asset
dispositions, in connection herewith.
SECTION 3.12 AMENDMENT TO PARTNERSHIP AGREEMENT.
The Debtor will not amend, modify or otherwise make any change to its
partnership agreement to delete or otherwise nullify or circumvent the
provisions set forth on EXHIBIT A hereto.
SECTION 3.13 NO OTHER BUSINESS.
The Debtor shall not engage in any business other than the transactions
permitted or contemplated by this Agreement and the Transaction Documents and
activities incidental thereto.
SECTION 3.14 NO BORROWING.
The Debtor shall not issue, incur, assume, guarantee or otherwise become
liable, directly or indirectly, for any Indebtedness except for (a) the Notes,
(b) any Hedge Transaction or (c) any other Indebtedness permitted by or arising
under the Transaction Documents. The proceeds of the Notes shall be used
exclusively to fund the Debtor's purchase of the Collateral and the other assets
specified in the Sale Agreement, to fund the Reserve Account and to pay the
Debtor's organizational, transactional and start-up expenses.
SECTION 3.15 REPURCHASE OF COLLATERAL.
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Upon discovery by the Deal Agent, the Servicer, the Debtor or the
Collateral Agent of a breach of any of the representations, warranties or
covenants relating to the Collateral and the servicing thereon (whether made
hereunder, under any basic document or under the documents for the related
Security Facility), the party discovering such breach shall give prompt notice
to the others. Within fifteen (15) Business Days of such notice being given, the
Debtor shall repurchase such Collateral from the Note Investor and shall deposit
an amount equal to the Repurchase Amount in the Collection Account to be applied
pursuant to SECTION 3.1(a).
SECTION 3.16 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Sale Agreement or this Agreement, the Debtor
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.17 CAPITAL EXPENDITURES.
The Debtor shall not make any expenditure (by long-term or operating lease
or otherwise) for capital assets (either realty or personalty).
SECTION 3.18 COMPLIANCE WITH LAWS.
The Debtor shall comply with the requirements of all Applicable Laws, the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Debtor to perform its obligations under
the Notes, this Agreement or any Transaction Document.
SECTION 3.19 RESTRICTED PAYMENTS.
The Debtor shall not, directly or indirectly, (a) except to the extent and
in such amount that funds have been distributed to the Debtor pursuant to
SECTION 3.1(a)(v), pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof to any general partner or limited partner of the Debtor or otherwise
with respect to any partnership interest or security in or of the Debtor, or to
the Servicer, (b) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (c) set aside or otherwise
segregate any amounts for any such purpose; PROVIDED, HOWEVER, that the Debtor
may make, or cause to be made distributions to the Servicer, the Deal Agent and
the Collateral Agent as permitted by, and to the extent funds are available for
such purpose under, the Sale Agreement. The Debtor will not, directly or
indirectly, make payments to or distributions from the Collection Account except
in accordance with this Agreement and the Transaction Documents.
SECTION 3.20 NOTICE OF TERMINATION EVENTS.
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Upon a general partner (or a Responsible Officer thereof) of the Debtor
having actual knowledge thereof, the Debtor agrees to give the Collateral Agent
and the Deal Agent prompt written notice of each Termination Event hereunder,
each default on the part of the Seller of its obligations under the Sale
Agreement and each default on the part of the Sellers of their respective
obligations under the Asset Purchase Agreement.
SECTION 3.21 FURTHER INSTRUMENTS AND ACTS.
Upon request of the Collateral Agent or the Deal Agent, the Debtor shall
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purposes of
this Agreement.
SECTION 3.22 AMENDMENTS TO SALE AGREEMENT.
The Debtor shall not agree to any amendment to the Sale Agreement unless
the Collateral Agent, the Deal Agent or the Holders of the Notes consent to
amendments thereto as provided therein.
SECTION 3.23 INCOME TAX CHARACTERIZATION.
For purposes of federal income, state and local income and franchise and
any other income taxes, the Debtor shall treat the Notes as indebtedness of the
Debtor and hereby instructs the Collateral Agent to treat such Notes as
indebtedness of the Debtor for federal state tax reporting purposes.
SECTION 3.24 TRANSACTIONS WITH AFFILIATES.
The Debtor shall not enter into, or be a party to, any transaction with any
of its Affiliates, except the transactions permitted or contemplated by this
Agreement or any other Transaction Document.
SECTION 3.25 LOCATION OF OFFICES; CORPORATE NAME.
The Debtor shall not, without providing thirty (30) days prior written
notice to the Collateral Agent and without filing such amendments to any
previously filed financing statements as the Secured Parties may require (a)
change the location of its principal executive office, or (b) change its state
of formation, name, identity or corporate structure in any manner which would
make any financing statement or continuation statement filed by the Debtor in
accordance with this Agreement misleading within the meaning of Article 9-506 of
any applicable enactment of the UCC. The Debtor shall at all times maintain each
office in which it holds or services the Collateral and its principal executive
office within the United States of America.
SECTION 3.26 [RESERVED].
SECTION 3.27 MAINTENANCE OF BOOKS AND RECORDS; INSPECTIONS.
The Debtor shall maintain its books and records separate from the books and
records of any other entity. The officers of the Deal Agent, or such employees
of the Deal Agent as the Deal
25
Agent may designate, with reasonable notice, may visit and inspect any of the
properties of the Debtor, examine (either by the Deal Agent or the Deal Agent's
agents or employees) any of the Collateral, or other assets of the Debtor,
including the books of account of the Debtor, and discuss the affairs, finances
and accounts of the Debtor with its officers and with its independent
accountants, at such times as they may reasonably desire.
The Deal Agent may conduct at any time, with reasonable notice, and from
time to time, and the Debtor will fully cooperate with, field examinations and
audits of the inventory and business affairs of the Debtor. Such examination
will be conducted no more than three (3) times per year, except upon the
occurrence of any material adverse change in the financial condition of a
Debtor. The Debtor shall reimburse the Deal Agent for all out-of-pocket costs
and expenses in connection with such examinations.
SECTION 3.28 NO COMMINGLING.
The Debtor shall maintain separate bank accounts and no funds of the Debtor
shall be commingled with funds of any other entity.
ARTICLE IIIA
COLLECTION ACCOUNT; RESERVE ACCOUNT
SECTION 3A.1 COLLECTION ACCOUNT.
(a) The Collateral Agent shall establish and maintain in the name of the
Collateral Agent, for the benefit of the Secured Parties, an Eligible Deposit
Account of the type described in clause (i) of the definition thereof, which
shall be known as the collection account (the "COLLECTION ACCOUNT"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Secured Parties.
(b) The Debtor and the Seller shall require the trustee of each of the
Securitizations to remit any payments due to the Debtor or the Seller in
connection with the portion of the Collateral related to such Securitization
directly to the Collection Account. The Debtor shall cause all payments received
under or pursuant to any Hedge Transaction to be deposited directly to the
Collection Account.
(c) The Collection Account shall be initially established with First Union.
The Collection Account shall at all times be an Eligible Deposit Account. All
amounts held in such account shall, to the extent permitted by applicable laws,
rules and regulations, be invested at the written direction of the Debtor, by
the bank or trust company maintaining the Collection Account in Eligible
Investments that will mature on the next Payment Date. Should the Collection
Account no longer be an Eligible Deposit Account, then the Collateral Agent
shall within ten (10) Business Days (or such longer period, not to exceed thirty
(30) calendar days, as to which the Secured Parties shall consent), with such
bank's or trust company's assistance as necessary, cause the Collection Account
to be moved to a bank or trust company such that the Collection Account will be
an Eligible Deposit Account.
SECTION 3A.2 RESERVE ACCOUNT.
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(a) The Collateral Agent shall establish and maintain in the name of the
Collateral Agent, for the benefit of the Secured Parties, an Eligible Deposit
Account known as the reserve account (the "RESERVE ACCOUNT"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Secured Parties. Except as otherwise provided in this Agreement,
the Collateral Agent shall possess all right, title and interest in all funds on
deposit from time to time in the Reserve Account and in all proceeds thereof.
(b) If on any Payment Date, prior to the occurrence of a Termination Event,
after giving effect to any Reserve Account Withdrawals, the amount on deposit in
the Reserve Account would exceed the Required Reserve Account Amount, such
excess shall be released to the Debtor. Upon the occurrence of a Termination
Event, all amounts on deposit in the Reserve Account shall be applied by and as
determined by the Deal Agent, in its sole discretion. Upon the indefeasible
payment in full of in cash of all amounts owing under this Agreement and any
other Transaction Documents, all amounts on deposit in the Reserve Account shall
be released to the Debtor.
(c) The Reserve Account shall be initially established with First Union.
The Reserve Account shall at all time be an Eligible Deposit Account. All
amounts held in such account shall, to the extent permitted by applicable laws,
rules and regulations, be invested at the written direction of the Deal Agent
(or if the Deal Agent shall so advise in writing, the Debtor), by the bank or
trust company maintaining the Reserve Account in Eligible Investments. Should
the Reserve Account no longer be an Eligible Deposit Account, then the
Collateral Agent shall within ten (10) Business Days (or such longer period, not
to exceed thirty (30) calendar days, as to which the Secured Parties shall
consent), with such bank's or trust company's assistance as necessary, cause the
Reserve Account to be moved to a bank or trust company such that the Reserve
Account will be an Eligible Deposit Account.
ARTICLE IV
[RESERVED]
ARTICLE V
TERMINATION EVENTS AND REMEDIES
SECTION 5.1 TERMINATION EVENTS.
"TERMINATION EVENT" wherever used herein, means any one of the following
events (whatever the reason for such Termination Event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) failure on the part of the Debtor, Seller or Servicer to make any
payment of interest or principal which is or has become due under the terms of
the Transaction Documents when the same becomes due and payable;
27
(b) failure on the part of the Debtor, Seller or Servicer to duly observe
or to perform in any material respect any covenants, agreements or undertakings
of the Debtor set forth in any Transaction Document;
(c) any representation or warranty of the Debtor, Seller or Servicer in any
of the Transaction Documents is discovered to be untrue in any material respect
or any statement or certificate furnished by the Debtor, Seller or Servicer
pursuant hereto or thereto is discovered to be untrue in any material respect on
the date as of which the facts therein set forth or so certified were deemed to
have been made;
(d) the Debtor, Seller or Servicer (i) shall generally not pay, or shall be
unable to pay, or shall admit in writing its inability to pay its debts as such
debts become due; or (ii) shall make an assignment for the benefit of creditors,
or petition or apply to any tribunal for the appointment of a custodian,
receiver, or trustee for it or for a substantial part of its assets; or (iii)
shall commence any proceeding under any bankruptcy, reorganization,
arrangements, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction whether now or hereafter in effect; or (iv) shall have had any
such action or application filed or any such proceeding commenced against it in
which an order for relief is requested or entered or an adjudication or
appointment is made (which application or proceeding is not dismissed within
sixty (60) days of filing); or (v) shall indicate, by any act or omission, its
consent to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (vi) shall suffer
any such custodianship, receivership, or trusteeship or the occurrence of any
event or existence of any condition which could be the ground, basis or cause
for any action, application, proceeding or petition described in this SECTION
5.1(d);
(e) the Debtor voluntarily or involuntarily is dissolved, terminates or is
terminated;
(f) a final judgment for the payment of money shall be entered against or a
settlement shall be made by, the Debtor, Seller or Servicer or any of their
Subsidiaries in excess of $1,000,000 which, within sixty (60) days after such
entry, shall not have been vacated, discharged or stayed or bonded pending
appeal;
(g) the occurrence of a Servicer Event of Default;
(h) the Net Investment exceeds either (i) the Maximum Net Investment for
the lesser of (A) a period of thirty (30) consecutive days and (B) until the
Payment Date immediately following the date such Net Investment first exceeds
the Maximum Net Investment, (ii) the Borrowing Base, or (iii) the Facility
Limit;
(i) any change in control in the form of a merger, consolidation or
otherwise of the Seller or the Servicer in which such Seller or Servicer is not
the surviving entity;
(j) any change in control in the form of a merger, consolidation or
otherwise of the Debtor;
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(k) any change in the operations of the Debtor, the Seller or the Servicer,
which adversely affects (i) the collectibility of the Collateral or (ii) the
Debtor's, Seller's or Servicer's ability to perform under the Transaction
Documents to which it is a party;
(l) the Cash Flow Ratio is less than the greater of (i) 8.00% and (ii)
twelve (12) times the percentage equivalent of a fraction, the numerator of
which is the sum of the amounts payable to the Deal Agent pursuant to SECTIONs
3.1(a)(ii) and 3.1(a)(iii) and the denominator of which is the Net Investment as
of the first day of the related Collection Period;
(m) the weighted average Cumulative Net Loss Ratio, calculated on a static
pool basis acceptable to the Deal Agent, for the three (3) most recent calendar
quarters (for the Servicer's entire servicing portfolio) exceeds (i) .75% for
pools that are outstanding for two (2) calendar quarters, (ii) 1.50% for pools
that are outstanding for three (3) calendar quarters, (iii) 2.00% for pools that
are outstanding for four (4) calendar quarters, and (iv) 3.25% for pools that
are outstanding for six (6) calendar quarters;
(n) the Secured Parties (through the Collateral Agent) shall fail for any
reason to have a valid and perfected first priority security interest in the
Collateral and the proceeds thereof;
(o) a material event of default occurs, or an event occurs which, with the
giving of notice or the passage of time or both, would constitute a material
event of default, under any agreement of the Debtor, the Seller, the Servicer or
any of their Subsidiaries in connection with any Indebtedness in excess of
$1,000,000;
(p) the failure of the Amortization Date to occur within 270 days after the
Closing Date;
(q) a breach of any of the financial covenants under the Securitizations;
(r) [reserved];
(s) the amount on deposit in the Reserve Account is less than the Required
Reserve Account Amount for thirty (30) consecutive days;
(t) any payment or distribution is received or deemed received under, with
respect to or in connection with any item of Collateral by any of the Debtor,
FIFS, any Seller or any of their Affiliates and the full amount of such
distribution is not transferred immediately upon receipt thereof to the
Collection Account;
(u) any cleanup call or similar action occurs with respect to any
transaction giving rise to any Securitization and such call or action occurs
without the prior written consent of the Deal Agent; PROVIDED, however, the Deal
Agent's consent shall not be required if (i) prior to giving effect to such
clean up call, no event has occurred which constitutes a Termination Event
hereunder, (ii) the aggregate amount of cash reserves for the Securitization
that is subject to such clean up call (before giving effect to such clean up
call) is deposited to the Collection Account in immediately available funds,
(iii) any assets that are acquired or re-acquired in connection with such
cleanup call are transferred subject to this Agreement, the Transaction
Documents and the lien of the Collateral Agent, (iv) after giving effect to such
clean up call, the Net Investment does not
29
exceed the Borrowing Base or the Facility Limit, and (v) the Deal Agent shall
have received such agreements, opinions of counsel and certificates as its may
request relating thereto; and
(v) the departure of any two of the following executives from the Seller or
its consolidated Subsidiaries: Xxxxx Xxxxx, Xxxxxx Duck, and Xxxxxx Xxxxxx, if a
replacement for such individual(s) acceptable to the Deal Agent is not made
within ninety (90) days.
SECTION 5.2 REMEDIES.
(a) Upon the occurrence of a Termination Event, the Revolving Period shall
end and the Termination Date shall occur. Upon the occurrence of a Termination
Event, in addition to any other remedies provided for herein, all amounts on
deposit in the Collection Account after making the payments required to be made
pursuant to SECTION 3.1(a)(ii) will be used to reduce the Net Investment and all
amounts on deposit in the Reserve Account may, at the sole discretion of the
Deal Agent, be used to reduce the Net Investment.
SECTION 5.3 [RESERVED].
SECTION 5.4 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
COLLATERAL AGENT.
(a) The Debtor covenants that if a default is made in the payment of any
principal or interest on any Note when the same becomes due and payable, the
Debtor will, upon demand of the Collateral Agent, pay to it, for the benefit of
the Holders of the Notes, the whole amount then due and payable on such Notes
for principal and interest, with interest upon the overdue principal, and, to
the extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest, at the Note Interest Rate and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Collateral Agent and its agents and counsel.
(b) Each Secured Party hereby irrevocably and unconditionally appoints the
Deal Agent as its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any notice, document,
certificate, paper, pleading or instrument and to do in the name of the Deal
Agent as well as in the name, place and stead of such Secured Party such acts,
things and deeds for or on behalf of and in the name of such Secured Party under
this Agreement (including specifically under this SECTION 5.4) and under the
Transaction Documents which such Secured Party could or might do or which may be
necessary, desirable or convenient in such Deal Agent's sole discretion to
effect the purposes contemplated hereunder and under the Transaction Documents
and, without limitation. following the occurrence of an Event of Default,
exercise full rights power and authority to take, or defer from taking, any and
all acts with respect to the administration, maintenance or disposition of the
Collateral.
(c) If a Termination Event occurs and is continuing, the Collateral Agent
may in its discretion but with the consent of the Deal Agent and shall, at the
direction of the Deal Agent, proceed to protect and enforce its rights and the
rights of the Noteholders by such appropriate Proceedings as the Collateral
Agent or the Deal Agent shall deem most effective to protect and
30
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Agreement or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Collateral Agent by this Agreement or by law.
(d) In case there shall be pending, relative to the Debtor or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Collateral, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or Collateral Agent in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or shall have taken possession of the Debtor or its property or
such other obligor or Person, or in case of any other comparable judicial
proceedings relative to the Debtor or other obligor upon the Notes, or to the
creditors or property of the Debtor or such other obligor, the Collateral Agent,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Collateral Agent shall have made any demand pursuant to the provisions of
this SECTION 5.4, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Collateral Agent (including any claim for reasonable
compensation to the Collateral Agent and each predecessor Collateral Agent,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Collateral Agent and each predecessor Collateral Agent, except as a result
of negligence, bad faith or willful misconduct) and of the Noteholders
allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of an Collateral Agent,
standby Collateral Agent or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Collateral Agent on
their behalf, and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Collateral
Agent or the Holders of Notes allowed in any judicial proceedings relative
to the Debtor, its creditors and its property;
and any Collateral Agent, receiver, liquidator, custodian or other similar
official in any such proceeding is hereby authorized by each of such Noteholders
to make payments to the Collateral Agent, and, in the event that the Collateral
Agent shall consent to the making of payments directly to such Noteholders, to
pay to the Collateral Agent such amounts as shall be sufficient to cover
reasonable compensation to the Collateral Agent, each predecessor Collateral
Agent and their respective agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the Collateral Agent and
each predecessor Collateral Agent except as a result of negligence, willful
misconduct or bad faith.
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(e) Nothing herein contained shall be deemed to authorize the Collateral
Agent to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Collateral Agent to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of an Collateral Agent
in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this Agreement or
under any of the Notes, may be enforced by the Collateral Agent without the
possession of any of the Notes or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Collateral Agent shall be brought in its own name as Collateral Agent of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Collateral Agent, each
predecessor Collateral Agent and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Notes.
(g) In any proceedings brought by the Collateral Agent (and also any
proceedings involving the interpretation of any provision of this Agreement),
the Collateral Agent shall be held to represent all the Holders of the Notes,
and it shall not be necessary to make any Noteholder a party to any such
proceedings.
SECTION 5.5 [RESERVED].
SECTION 5.6 [RESERVED].
SECTION 5.7 [RESERVED].
SECTION 5.8 LIMITATION OF SUITS.
Subject to SECTION 11.18, no Holder of any Note (other than the Initial
Note Investor) shall have any right to institute, or encourage others to
institute, any proceeding, judicial or otherwise, with respect to this
Agreement, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to the Collateral Agent
of a continuing Termination Event;
(b) the Deal Agent and the Holders of not less than 51% of the Outstanding
Amount of the Notes have consented in writing to the institution of such
proceeding;
(c) such Holder or Holders requesting the institution of such proceeding
have offered to the Collateral Agent indemnity reasonably satisfactory to it
against the costs, expenses and liabilities to be incurred in complying with
such request,
(d) the Collateral Agent for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute such proceedings;
and
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(e) no direction inconsistent with such written request has been given to
the Collateral Agent during such sixty (60) day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no Holders requesting the institution of
such proceeding shall have any right in any manner whatsoever by virtue of, or
by availing of, any provision of this Agreement to affect, disturb or prejudice
the rights of any other Holders of Notes or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Agreement, except in the manner herein provided.
In the event the Collateral Agent shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Collateral Agent in its sole discretion may determine what action, if any, shall
be taken, notwithstanding and other provisions of this Agreement.
SECTION 5.9 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.
Notwithstanding any other provisions in this Agreement, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Agreement and,
subject to SECTION 11.18, to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.10 RESTORATION OF RIGHTS AND REMEDIES.
If the Deal Agent or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Agreement and such proceeding has been
discontinued or abandoned for any reason, then and in every such case the
Debtor, the Collateral Agent and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Collateral Agent and the Noteholders shall continue as though no such proceeding
had been instituted.
SECTION 5.11 RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Deal Agent or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.12 DELAY OR OMISSION NOT A WAIVER.
No delay or omission of the Deal Agent or any Holder of any Note to
exercise any right or remedy accruing upon any Unmatured Termination Event or
Termination Event shall impair any such right or remedy or constitute a waiver
of any such Unmatured Termination Event or Termination Event or an acquiescence
therein. Every right and remedy given by this ARTICLE V or by law to the
Collateral Agent or to the Noteholders may be exercised from time to time,
and as
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often as may be deemed expedient, by the Collateral Agent or by the Noteholders,
as the case may be.
SECTION 5.13 [RESERVED].
SECTION 5.14 WAIVER OF PAST DEFAULTS.
The Deal Agent and the Holders of Notes of not less than a majority of the
Outstanding Amount of the Notes may waive any past Unmatured Termination Event
or Termination Event and its consequences except a default (a) in payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Debtor, the Collateral
Agent and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Unmatured Termination Event or impair any right consequent
thereto. Upon any such waiver, such Unmatured Termination Event shall cease to
exist and be deemed to have been cured and not to have occurred, and any
Termination Event arising therefrom shall be deemed to have been cured and not
to have occurred, for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Termination Event or impair any right
consequent thereto.
SECTION 5.15 UNDERTAKING FOR COSTS.
All parties to this Agreement agree, and each Holder of any Note by such
Holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit against the Collateral Agent for any
action taken, suffered or omitted by it as Collateral Agent, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this SECTION 5.15 shall not apply to (a) any
suit instituted by the Collateral Agent, (b) any suit instituted by the Deal
Agent or any Noteholder, or group of Noteholders, in each case holding in the
aggregate more than 51% of the Outstanding Amount of the Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of principal of
or interest on any Note on or after the respective due dates expressed in such
Note and in this Agreement.
SECTION 5.16 WAIVER OF STAY OR EXTENSION LAWS.
The Debtor covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Agreement; and the Debtor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Collateral Agent, but will suffer and permit the
execution of every such power as though no such law had been enacted.
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SECTION 5.17 ACTION ON NOTES.
The Collateral Agent's right to seek and recover judgment on the Notes or
under this Agreement shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Agreement. Neither
the lien of this Agreement nor any rights or remedies of the Collateral Agent or
the Noteholders shall be impaired by the recovery of any judgment by the
Collateral Agent against the Debtor or by the levy of any execution under such
judgment upon any portion of the Collateral or upon any of the assets of the
Debtor.
SECTION 5.18 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Collateral Agent to do so and at
its expense, the Debtor agrees to take all such lawful action as the Collateral
Agent may request to compel or secure the performance and observance by the
Seller, of its obligations to the Debtor under or in connection with the Sale
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Debtor under
or in connection with the Sale Agreement to the extent and in the manner
directed by the Collateral Agent, including the transmission of notices of
default on the part of the Seller thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance of Seller
of its obligations under the Sale Agreement.
(b) If a Termination Event has occurred and is continuing, the Collateral
Agent may, and, at the written direction of the Deal Agent shall, exercise all
rights, remedies, powers, privileges and claims of the Debtor against the Seller
under or in connection with the Sale Agreement, including the right or power to
take any action to compel or secure performance or observance by the Seller of
its obligations to the Debtor thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale Agreement, and
any right of the Debtor to take such action shall be suspended.
ARTICLE VI
THE COLLATERAL AGENT
SECTION 6.1 DUTIES OF THE COLLATERAL AGENT.
The Secured Parties hereby appoint FUSI to act solely on their behalf as
Collateral Agent hereunder, and FUSI hereby accepts such appointment. The
Collateral Agent, both prior to the occurrence of a Termination Event hereunder
and after a Termination Event shall have been cured or waived, shall undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement. The Collateral Agent shall at all times after the occurrence of
a Termination Event which has not been cured or waived exercise such of the
rights and powers vested in it pursuant to this Agreement using the same degree
of care and skill as a prudent person would exercise or use in the conduct of
his or her own affairs.
All Collections received by the Collateral Agent from the Collection Agent
or otherwise will, pending remittance to the Secured Party entitled thereto, be
held in trust by the Collateral Agent for the benefit of the Secured Parties and
together with all other payment obligations of the
35
Debtor hereunder owing to the Secured Parties shall be payable to the Secured
Parties in accordance with the provisions of ARTICLE II hereof.
The Collateral Agent shall only resign if it shall (a) become incapable of
acting as Collateral Agent in accordance with the terms of this Agreement, (b)
be adjudicated insolvent or bankrupt or otherwise become subject to any
bankruptcy, insolvency, reorganization or liquidation proceeding, (c) be no
longer qualified as the Collateral Agent as such term is defined in the
agreement governing its responsibility as Collateral Agent or otherwise be
subject to replacement pursuant to or such agreement governing its
responsibility as Collateral Agent or (d) materially breach any of the
provisions of this Agreement or PROVIDED, FURTHER, that, without the consent of
the Deal Agent, such resignation shall not be effective until a successor
Collateral Agent acceptable to the Deal Agent shall have accepted appointment as
Collateral Agent hereunder and shall have agreed to be bound by the terms of
this Agreement.
Except as otherwise provided herein, the Collateral Agent shall not resign
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which the Collateral Agent
could take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Collateral Agent shall be evidenced as to CLAUSE (i) above by an opinion of
counsel to such effect delivered to the Collateral Agent and the Secured
Parties. Notwithstanding the foregoing, the Collateral Agent may resign if,
after demand therefor, it does not receive payment of any compensation due from
the Debtor pursuant to the letter agreement described in SECTION 6.2. No
resignation of the Collateral Agent shall become effective until a successor
Collateral Agent approved by the Deal Agent and the successor Collateral Agent
shall have assumed the responsibilities and obligations of the Collateral Agent
hereunder.
SECTION 6.2 COMPENSATION AND INDEMNIFICATION OF COLLATERAL AGENT.
The Collateral Agent shall be compensated for its activities hereunder and
reimbursed for reasonable out-of-pocket expenses pursuant to a separate letter
agreement between the Collateral Agent and the Debtor. All such amounts shall be
payable as provided for in the letter agreement. Subject to the terms of such
letter agreement, the Collateral Agent shall be required to pay the expenses
incurred by it in connection with its activities hereunder from its own account.
Notwithstanding any other provisions in this Agreement, the Collateral Agent
shall not be liable for any liabilities, costs or expenses of the Debtor arising
under any tax law, including without limitation any Federal, state or local
income or franchise taxes or any other tax imposed on or measured by income (or
any interest or penalties with respect thereto or from a failure to comply
therewith).
The Debtor shall indemnify the Collateral Agent, its officers, directors,
employees and agents for, and hold it harmless against any loss, liability or
expense incurred without willful misconduct, gross negligence or bad faith on
its part, arising out of or in connection with (a) the acceptance or
administration of this Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement and (b) the
negligence, willful misconduct or bad faith of
36
the Debtor in the performance of its duties hereunder. The provisions of this
SECTION 6.2 shall survive the termination of this Agreement.
SECTION 6.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COLLATERAL
AGENT.
The Collateral Agent agrees to make the following representations,
warranties and covenants, and further agrees that the Secured Parties shall be
deemed to have relied upon such representations, warranties and covenants in
accepting their interest in the Collateral.
(a) ORGANIZATION AND GOOD STANDING. The Collateral Agent is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) DUE AUTHORIZATION. The execution, delivery, and performance of this
Agreement and any other Transaction Document to which the Collateral Agent is a
party have been duly authorized by the Collateral Agent by all necessary
corporate action on the part of the Collateral Agent.
(c) BINDING OBLIGATION. This Agreement and the other Transaction Documents
to which the Collateral Agent is a party each constitutes a legal, valid and
binding obligation of the Collateral Agent, enforceable in accordance with its
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(d) NO CONFLICT. The execution and delivery by the Collateral Agent of this
Agreement and the other Transaction Documents to which the Collateral Agent is a
party, and the performance of the transactions contemplated by this Agreement
and the other Transaction Documents and the fulfillment of the terms hereof and
thereof applicable to the Collateral Agent, will not conflict with, violate,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, any Applicable Law
or any indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Collateral Agent is a party or by which it is bound.
SECTION 6.4 LIABILITY OF THE COLLATERAL AGENT.
(a) The Collateral Agent shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Collateral Agent in
such capacity herein. 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.
37
(b) The Collateral Agent shall not be liable for an error of judgment made
in good faith, unless it shall be proved that the Collateral Agent shall have
been negligent in ascertaining the pertinent facts.
(c) 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 a Secured Party relating to the exercise of any
power conferred upon the Collateral Agent under this Agreement.
(d) The Collateral Agent shall not be charged with knowledge of any
Termination Event unless a Responsible Officer of the Collateral Agent obtains
actual knowledge of such event or the Collateral Agent receives written notice
of such event from the Debtor, the Seller, the Note Investor, any Liquidity Bank
or the Deal Agent, as the case may be.
(e) Without limiting the generality of this SECTION 6.4, the Collateral
Agent shall have no duty (i) to see to any recording, filing or depositing of
this Agreement or any other Transaction Document or any financing statement or
continuation statement evidencing a security interest in the Collateral, or to
see to the maintenance of any such recording or filing or depositing or to any
recording, refiling or redepositing of any thereof, (ii) to see to the payment
or discharge of any tax, assessment or other governmental charge or any Lien or
encumbrance of any kind owing with respect to, assessed or levied against, any
part of the Collateral, (iii) to confirm or verify the contents of any reports
or certificates of the Servicer or the Debtor delivered to the Collateral Agent
pursuant to this Agreement believed by the Collateral Agent to be genuine and to
have been signed or presented by the proper party or parties or (iv) to
ascertain or inquire as to the performance or observance of any of the Debtor's,
the Seller's or the Servicer's representations, warranties or covenants or the
Servicer's duties and obligations as servicer with respect to the Collateral.
(f) 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, or in the exercise of any of its rights or powers, if there
shall be reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability shall not be reasonably
assured to it.
(g) The Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, officer's certificate, 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.
(h) The Collateral Agent may consult with counsel and any opinion of such
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.
(i) 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 Deal Agent
38
pursuant to the provisions of this Agreement, unless the Deal Agent shall have
offered to the Collateral Agent reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby; nothing
contained in this Agreement, however, shall relieve the Collateral Agent of its
obligations, upon the occurrence of a Termination Event (that shall not have
been cured or waived), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(j) The Collateral Agent shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
(k) Prior to the occurrence of a Termination Event and before the
Collateral Agent has received notice of such Termination Event and after the
waiver of any Termination Event that may have occurred, 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, unless
requested in writing so to do by a Secured Party; 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 by the
Debtor, 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 Debtor or, if paid by the Collateral
Agent, shall be reimbursed by the Debtor upon demand.
(l) The Collateral Agent may execute any of the trusts or powers hereunder
or perform any duties under this Agreement either directly or by or through
agents or attorneys or a custodian. The Collateral Agent shall not be
responsible for any misconduct or negligence of any such Deal Agent or custodian
appointed with due care by it hereunder.
SECTION 6.5 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE COLLATERAL AGENT.
The Collateral Agent shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the
Collateral Agent is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Collateral Agent substantially as an
entirety shall be a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia and, if the
Collateral Agent is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Secured Parties in
form satisfactory to the Secured Parties, the performance of every covenant and
obligation of the Collateral Agent hereunder; and
(b) the Collateral Agent has delivered to the Secured Parties an officer's
certificate and an opinion of counsel each stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply with this
SECTION 6.5 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
39
SECTION 6.6 LIMITATION ON LIABILITY OF THE COLLATERAL AGENT AND OTHERS.
The directors, officers, employees or agents of the Collateral Agent shall
not be under any liability to the Deal Agent, any Secured Party or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement;
PROVIDED, HOWEVER, that this provision shall not protect the directors,
officers, employees and agents of the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Except as provided in SECTION 6.4, the
Collateral Agent shall not be under any liability to any Secured Party or any
other Person for any action taken or for refraining from the taking of any
action in its capacity as Collateral Agent pursuant to this Agreement whether
arising from express or implied duties under this Agreement; PROVIDED, HOWEVER,
that this provision shall not protect the Collateral Agent against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Collateral Agent may rely in good faith
on any document of any kind PRIMA FACIE properly executed and submitted by any
Person respecting any matters arising hereunder. The Collateral Agent shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to administer the Collections and the Collection
Account in accordance with this Agreement which in its reasonable opinion may
involve it in any expense or liability.
SECTION 6.7 INDEMNIFICATION OF THE SECURED PARTIES.
The Collateral Agent shall indemnify and hold harmless the Deal Agent and
the Secured Parties from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of willful misfeasance, bad faith, or
gross negligence in the performance of the duties of the Collateral Agent or by
reason of reckless disregard of obligations and duties of the Collateral Agent
hereunder or by reason of the acts, omissions or alleged acts or omissions of
the Collateral Agent pursuant to this Agreement. The provisions of this
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof.
ARTICLE VII
[RESERVED]
ARTICLE VIII
DISBURSEMENTS AND RELEASES
SECTION 8.1 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Collateral Agent may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Collateral Agent
pursuant to this Agreement and the Transaction Documents. The Collateral Agent
40
shall apply all such money received by it, or cause the Paying Agent to apply
all money received by it as provided in this Agreement and the Transaction
Documents. Except as otherwise expressly provided in this Agreement or in the
Sale Agreement, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Collateral,
the Collateral Agent may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
an Unmatured Termination Event or Termination Event under this Agreement and any
right to proceed thereafter as provided in ARTICLE V.
SECTION 8.2 RELEASE OF COLLATERAL.
(a) Subject to the payment of its fees and expenses pursuant to SECTION 6.2
and the provisions of SECTION 11.1(b), the Collateral Agent may, in its sole
discretion, and when required by the provisions of this Agreement shall, execute
instruments provided to it to release property from the lien of this Agreement,
in a manner and under circumstances that are not inconsistent with the
provisions of this Agreement. No party relying upon an instrument executed by
the Collateral Agent as provided in this ARTICLE VIII shall be bound to
ascertain the Collateral Agent's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Collateral Agent shall, at such time as there are no Notes
outstanding and all sums due the Collateral Agent pursuant to SECTION 6.2 have
been paid, (i) release any remaining portion of the Collateral that secured the
Notes from the lien of this Agreement and (ii) release to the Debtor or any
other Person entitled thereto any funds then on deposit in the Collection
Account or the Reserve Account, as the case may be. The Collateral Agent shall
release property from the lien of this Agreement pursuant to this SECTION 8.2(b)
only upon receipt of a request by the Debtor accompanied by an Officer's
Certificate, meeting the applicable requirements of SECTION 11.1.
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SECTION 8.3 OPINION OF COUNSEL.
The Collateral Agent shall receive at least seven (7) days' prior written
notice when requested by the Debtor to take any action pursuant to SECTION
8.2(a), accompanied by copies of any instruments involved, and the Collateral
Agent shall also require as a condition to such action, an Opinion of Counsel in
form and substance satisfactory to the Collateral Agent and the Deal Agent,
stating the legal effect of any such action by the Collateral Agent, outlining
the steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Agreement;
PROVIDED, HOWEVER, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral and PROVIDED, FURTHER, that an
Opinion of Counsel need not be given to take any action pursuant to SECTION
8.2(b). Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Collateral Agent in connection with any such action.
ARTICLE IX
[RESERVED]
[ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Debtor to the Collateral Agent
or the Deal Agent to take any action under any provision of this Agreement, the
Debtor shall furnish to the Collateral Agent and to the Deal Agent (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with
and (ii) if required pursuant to the terms of this Agreement, an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
42
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Collateral Agent that is to be made the basis for the
release of any property or securities subject to the lien of this Agreement, the
Debtor shall, in addition to any obligation imposed in SECTION 11.1(a) or
elsewhere in this Agreement, furnish to the Collateral Agent and the Deal Agent
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within ninety (90) days of such
deposit) to the Debtor of the Collateral or other property or securities to be
so deposited.
(ii) Whenever any property or securities are to be released from the
lien of this Agreement, the Debtor shall also furnish to the Collateral
Agent and the Deal Agent an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within ninety (90) days of such release) of the property or securities
proposed to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Agreement in
contravention of the provisions hereof.
(iii) Notwithstanding any other provision of this SECTION 11.1, the
Debtor may (A) collect, liquidate, sell or otherwise dispose of the
Collateral as and to the extent permitted or required by the Transaction
Documents and (B) make cash payments out of the Collection Account and the
Reserve Account as and to the extent permitted or required by the
Transaction Documents.
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO COLLATERAL AGENT.
(a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Responsible Officer of the Debtor may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Responsible
Officer or
43
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Debtor, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Debtor, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two (2) or more
applications, requests, consents. certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Agreement, in connection with any application or
certificate or report to the Collateral Agent, it is provided that the Debtor
shall deliver any document as a condition of the granting of such application,
or as evidence of the Debtor's compliance with an term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Debtor to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Collateral Agent's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in ARTICLE VI.
SECTION 11.3 ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Collateral Agent, and, where it is hereby expressly required, to the Debtor.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and (subject to SECTION 6.1) conclusive in favor of
the Collateral Agent and the Debtor, if made in the manner provided in this
SECTION 11.3.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any customary manner of the Collateral Agent.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Collateral
Agent or the Debtor in reliance thereon, whether or not notation of such action
is made upon such Note.
SECTION 11.4 NOTICES, ETC. TO COLLATERAL AGENT AND DEBTOR.
44
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Agreement to
be made upon, given or furnished to or filed with:
(a) The Collateral Agent by any Noteholder or by the Debtor shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Collateral Agent at the
address previously furnished in writing to each Noteholder and the Debtor, or
(b) The Debtor or the Seller by the Collateral Agent or by any Noteholder
shall be sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed certified mail or sent by confirmed
facsimile transmission and shall deemed to have been duly given upon receipt to
the Debtor addressed to: Xxxxxx X. Duck, in care of First Investors Financial
Services, Inc., 000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 or at any other
address previously furnished in writing to the Collateral Agent by the Debtor.
The Debtor shall promptly transmit any notice received by it from the
Noteholders to the Collateral Agent.
SECTION 11.5 NOTICES TO NOTEHOLDERS; WAIVER.
(a) Where this Agreement provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at such Noteholder's address as it appears on
the Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to any Noteholder is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Noteholder shall
affect the sufficiency of such notice with respect to other Noteholders, and any
notice that is mailed in the manner herein provided shall conclusively be
presumed to have been duly given.
(b) Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Collateral
Agent but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Collateral Agent shall be deemed to
be a sufficient giving of such notice.
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Agreement or any of the Notes to the
contrary, the Debtor may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Collateral Agent or the
Paying Agent to such Holder, that is different
45
from the methods provided for in this Agreement for such payments or notices,
provided that such methods are reasonable and consented to by the Collateral
Agent and the Paying Agent (which consent shall not be unreasonably withheld).
The Debtor will furnish to the Collateral Agent and the Paying Agent a copy of
each such agreement and the Collateral Agent and the Paying Agent will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 [RESERVED].
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and SECTION headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement and the Notes by the Debtor
shall bind its successors and assigns, whether so expressed or not. All
agreements of the Collateral Agent in this Agreement shall bind its successors.
SECTION 11.10 [RESERVED].
SECTION 11.11 BENEFITS OF THE AGREEMENT.
Nothing in this Agreement or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, and
the Noteholders and any other party secured hereunder, and any other person with
an ownership interest in any part of the Collateral, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
SECTION 11.12 LEGAL HOLIDAYS.
In any case where the date on which any payment is due shall not be a
Business Day, then (notwithstanding any other provision of the Notes or this
Agreement) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date an
which nominally due, and no interest shall accrue for the period from and after
any such nominal date.
SECTION 11.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION
TO VENUE.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO AND EACH HEDGE
COUNTERPARTY HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL
COURT LOCATED WITHIN THE STATE OF
NEW YORK,
NEW YORK COUNTY. EACH OF THE PARTIES
HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE
46
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
SECTION 11.14 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND
EACH HEDGE COUNTERPARTY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 11.15 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire Agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings
other than the fee letter delivered by the Debtor to the Deal Agent and the Note
Investors.
SECTION 11.16 RECORDING OF AGREEMENT.
If this Agreement is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Debtor and at its
expense accompanied by an Opinion of Counsel to the effect that such recording
is necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Collateral Agent under this Agreement.
SECTION 11.17 NO RECOURSE.
(a) No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of any Secured Party as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any administrator of such Secured Party
or any incorporator, affiliate, stockholder, officer, employee or director of
such Secured Party or of any such administrator, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise; IT BEING EXPRESSLY AGREED
47
AND UNDERSTOOD that the agreements of such Secured Party contained in this
Agreement and all of the other agreements, instruments and documents entered
into by it pursuant hereto or in connection herewith are, in each case, solely
the corporate obligations of such Secured Party, PROVIDED THAT, in the case of
any Note Investor, such liabilities shall be paid only after the repayment in
full of all Commercial Paper Notes and all other liabilities contemplated in the
program documents with respect to such Note Investor, and that no personal
liability whatsoever shall attach to or be incurred by any administrator of such
Secured Party or any incorporator, stockholder, affiliate, officer, employee or
director of such Secured Party or of any such administrator, as such, or any of
them, under or by reason of any of the obligations, covenants or agreements of
such Secured Party contained in this Agreement or in any other such instrument,
document or agreement, or which are implied therefrom, and that any and all
personal liability of every such administrator of such Secured Party and each
incorporator, stockholder, affiliate, officer, employee or director of such
Secured Party or of any such administrator, or any of them, for breaches by such
Secured Party of any such obligations, covenants or agreements, which liability
may arise either at common law or in equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of, and in consideration
for, the execution of this Agreement.
(b) Notwithstanding anything contained in this Agreement, no Note Investor
shall have an obligation to pay any amount required to be paid by it hereunder
to any of the Liquidity Agent, the Deal Agent or the Collateral Agent in excess
of any amount available to such Note Investor after paying or making provision
for the payment of its Commercial Paper Notes. All payment obligations of each
Note Investor hereunder are contingent upon the availability of funds in excess
of the amounts necessary to pay Commercial Paper Notes; and each of the
Liquidity Agent, the Deal Agent and the Collateral Agent agrees that they shall
not have a claim under SECTION 101(5) of the Bankruptcy Code if and to the
extent that any such payment obligation exceeds the amount available to Note
Investor to pay such amounts after paying or making provision for the payment of
its Commercial Paper Notes.
(c) The provisions of this SECTION 11.17 shall survive the termination of
this Agreement.
SECTION 11.18 NO PETITION.
The Collateral Agent, by entering into this Agreement, and each Noteholder
(other than the Initial Noteholder), by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Debtor, encourage
others to or join in any institution against the Debtor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Agreement or any
of the Transaction Documents.
SECTION 11.19 INSPECTION.
The Debtor agrees that, on reasonable prior notice, it will permit any
representative of the Collateral Agent or of the Deal Agent, during the Debtor's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Debtor, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants, and to
discuss the Debtor's affairs, finances and accounts with the Debtor's officers,
employees, and
48
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Collateral Agent shall and shall cause
its representatives to hold in confidence all such information except to the
extent disclosure may be required by law and except to the extent that the
Collateral Agent may reasonably determine that such disclosure is consistent
with its obligations hereunder.
49
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement
to be duly executed by their respective officers, hereunto duly authorized, all
as of the day and year first above written.
DEBTOR: FIRST INVESTORS RESIDUAL FUNDING LP,
as Debtor
By: FIALAC Holdings, Inc., its sole general partner
By:
------------------------------------------------
Name: Xxxxxx X. Duck
Title: Vice President and Chief Financial Officer
SELLER: FIRST INVESTORS FINANCIAL SERVICES,
INC.
By:
------------------------------------------------
Name: Xxxxxx X. Duck
Title: Vice President and Chief Financial Officer
DEAL AGENT
AND COLLATERAL AGENT FIRST UNION SECURITIES, INC.
By:
------------------------------------------------
Name:
Title:
EXHIBIT A
PARTNERSHIP AGREEMENT
[to come]
