EXHIBIT 10.14
RECEIVABLES FUNDING AND SERVICING AGREEMENT, dated as of November 24,
1997 (the "Agreement") by and among CPS WAREHOUSE CORP., a Delaware corporation
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(the "Borrower"), the financial institutions listed on the signature pages of
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this Agreement under the heading "Investors" and their respective successors and
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assigns; VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation, ("VFCC")
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as lender (a "Lender"), FIRST UNION CAPITAL MARKETS CORP. ("FCMC"), as deal
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agent (the "Deal Agent"); FIRST UNION NATIONAL BANK ("First Union"), as the
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liquidity agent (the "Liquidity Agent") and as the collateral agent (the
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"Collateral Agent") and CONSUMER PORTFOLIO SERVICES, INC., a California
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corporation (as such, together with its successors and assigns, the "Parent"),
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as servicer hereunder (as such, together with its successors and permitted
assigns, the "Servicer").
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W I T N E S S E T H:
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WHEREAS, the Borrower is an Affiliate of the Parent:
WHEREAS, the Borrower has been formed for the sole purpose of
purchasing and financing certain Receivables originated or purchased by the
Parent and purchased by or contributed to the Borrower pursuant to the
Receivables Transfer Agreement, dated as of November 24, 1997 (the "Receivables
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Transfer Agreement"), by and between the Parent and the Borrower;
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WHEREAS, the Borrower and the Lenders intend that the Lenders will
make advances to the Borrower from time to time, such advances to be secured by
certain receivables and other collateral owned by the Borrower:
WHEREAS, the Deal Agent has been requested and is willing to act as
agent on behalf of the Lenders in connection with the making and financing of
such advances;
WHEREAS, in order to effectuate the purposes of this Agreement, the
Lenders and the Deal Agent desire that a servicer be appointed to perform
certain servicing, administrative and collection functions in respect of the
Receivables financed by the Lenders under this Agreement;
WHEREAS, the Parent has been requested and is willing to act as the
Servicer; and
WHEREAS, in order to secure the advances made to the Borrower by the
Lenders, the Borrower intends to grant to the Lenders a security interest in
such Receivables and other collateral owned by the Borrower, and the Lender
intends to assign such security interest to the Collateral Agent and to grant to
the Collateral Agent a security interest in certain other collateral.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Accrued Monthly Yield" means, for any day within a Settlement Period,
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the Daily Yield and Daily Facility Fees calculated for each day from and
including the first day of the Settlement Period through and including the day
for which the calculation is being made.
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"Accrued Servicing Fee" means, for any day of determination within a
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Settlement Period, the Servicing Fee calculated for each day from and including
the first day of such Settlement Period through and including such day of
determination.
"Acquisition Amount" has the meaning set forth in the Liquidity
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Purchase Agreement, dated as of November 24, 1997, by and among VFCC, the
investors party thereto, FCMC, as deal agent and First Union, as liquidity
agent, as the same may be amended, supplemented or otherwise modified from time
to time.
"Actual Payment" means, with respect to any Contract, all payments
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received by, from or for the account of the related Obligor on such Contract.
"Added Receivables" means all Transferred Receivables pledged
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hereunder since the later to occur of the Effective Date and date of the last
Disposition.
"Additional Amounts" means any amounts payable to any Affected Party
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under Sections 2.10 and 2.11.
"Additional Costs" has the meaning specified in Section 2.10(b).
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"Adjusted Eurodollar Rate" means on any day, an interest rate per
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annum equal to the product of (i) the LIBOR Rate on such day and (ii) 100% minus
the Eurodollar Reserve Percentage on such day.
"Administration Agreement" means that certain Administration
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Agreement, dated as of September 28, 1995, between VFCC and First Union Capital
Markets Corp., as the same may be amended, supplemented, or otherwise modified
from time to time.
"Advance" has the meaning set forth in Section 2.01.
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"Advance Rate" means, for any Receivable within a Subgroup of
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Receivables and date within a Report Period, a percentage equal to the lesser of
(a) 97% and (b) 1 minus the product of (i) three (3) and (ii) the Net Loss
Factor applicable to the related Subgroup of Receivables during such Report
Period.
"Advances Available" means, as of the date of any calculation, (a) the
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Availability as of such date, minus (b) Advances Outstanding, but, if less than
$150,000, Advances Available shall be deemed to be zero.
"Advances Outstanding" means, for any day, the aggregate principal
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amount of Advances outstanding on such day, after giving effect to all
repayments and issuances of Advances on such day.
"Adverse Claim" means any claim of ownership or any lien, security
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interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the security interest created under this Agreement
or the Collateral Agent Agreement.
"Affected Party" means any Lender, the Deal Agent, any letter of
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credit provider, enhancer, or liquidity provider of a Lender, or any affiliate
of the foregoing persons.
"Affiliate" means, as to any Person, any other Person that, directly
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or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For the purposes of this definition, the terms "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or to cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
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"Agent's Account" means a special account (account number 22341), in
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the name of the Deal Agent, maintained at Banker's Trust Company.
"Aggregate Unpaids" means at any time, an amount equal to the sum of
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the aggregate outstanding principal amount of Advances, all Daily Yield accrued
and all other amounts owed (whether due or accrued) hereunder or under the Fee
Letter to the Deal Agent, the Liquidity Agent and the Lenders at such time.
"Agreement" means this Receivables Funding and Servicing Agreement,
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among the Borrower, the Lenders, the Servicer, the Deal Agent, the Liquidity
Agent, the Collateral Agent and the Investors.
"Allocation Formula" has the meaning set forth in the Consent of
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General Electric Capital Corporation and Redwood Receivables Corporation, dated
as of November 24, 1997.
"Allotment Obligors" means Obligors in respect of the Transferred
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Receivables who make payments by way of wire transfers to the Lockbox Account
from a financial institution through an electronic allotment system.
"Alternative Rate" means an interest rate per annum equal to the
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Adjusted Eurodollar Rate or the Base Rate; provided, however, that the
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Alternative Rate for any outstanding principal amount of any Advance allocated
to a Fixed Period shall be the Eurodollar Rate unless (a) on or before the first
day of such Fixed Period, the relevant Lender shall have notified the Deal Agent
that a Eurodollar Disruption Event has occurred, (b) such Fixed Period is a
period of less than one month or (c) such outstanding principal amount of such
Advance is less than $2,000,000.
"Amount Financed" with respect to a Receivable means the amount
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originally advanced to the related Obligor with respect to the related Financed
Vehicle (and all other costs, accessories, fees, taxes, insurance and the like).
"Applicable Margin" has the meaning set forth in the Fee Letter from
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time to time.
"APR" has the meaning given to that term pursuant to the Truth-in-
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Lending Act.
"Assignment and Acceptance" means an assignment and acceptance entered
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into by an Investor and an Eligible Assignee, and accepted by the Deal Agent, in
substantially the form of Exhibit A to the Liquidity Purchase Agreement.
"Assignment of Insurance Interests" means the Assignment of Insurance
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Interests in the form attached as Exhibit 3 to the Receivables Transfer
Agreement.
"Availability" means, as of any date, the lesser of (a) the product of
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the Borrowing Base as of such date and the Weighted Average Advance Rate, or (b)
the Maximum Facility Amount.
"Balance Sheet Date" means December 31, 1996.
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"Base Rate" means on any date, a fluctuating rate of interest per
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annum equal to the higher of (a) the Prime Rate and (b) the Federal Funds Rate
plus the Applicable Margin.
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"Basic Documents" means this Agreement, the Notes, the Receivables
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Transfer Agreement, the Sale Assignments, the Custodial Agreement, the Liquidity
Purchase Agreement and all agreements, instruments, certificates, financing
statements or other documents required to be delivered hereunder or thereunder.
"Borrower" means CPS Warehouse Corp.
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"Borrower Account Collateral" has the meaning specified in Section
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8.01(c).
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"Borrower Assigned Agreements" has the meaning specified in Section
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8.01(b).
"Borrower Notice" means a notice in the form of Exhibit A, setting
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forth the information required by Section 2.03(a).
"Borrower Secured Obligations" means all obligations of every nature
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of the Borrower (other than to the Parent or Servicer), now or hereafter
existing, under this Agreement, the Notes, and any promissory note or other
document or instrument delivered pursuant to such documents, and all amendments,
extensions or renewals hereof or thereof, whether for principal, interest, fees,
expenses or otherwise, whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owned with others, direct or indirect,
absolute or contingent, liquidated or unliquidated, and whether or not from time
to time decreased or extinguished and later increased, created or incurred and
all or any portion of such obligations that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from the
Lenders, the Deal Agent, the Liquidity Agent or the Collateral Agent as a
preference, fraudulent transfer or otherwise.
"Borrower's Share" means the ratio of the Maximum Facility Amount to
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the aggregate maximum commitments under this Agreement and all Other Funding
Agreements.
"Borrowing Base" means, as of the date of its computation, an amount
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equal to (a) the aggregate Contract Principal Balance of Transferred Receivables
that are Eligible Receivables, plus (b) an amount equal to the aggregate
Contract Principal Balance of Eligible Receivables to be purchased or
contributed on that date.
"Borrowing Base Certificate" means, on any Business Day, an Officer's
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Certificate in the form of Exhibit B, computing for such Business Day the
Borrowing Base, the Availability and Advances Available.
"Borrowing Excess" means, for any date, as disclosed in the most
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recently submitted Borrowing Base Certificate, the extent to which the then
Advances Outstanding exceeds the Availability as of such date.
"Breakage Costs" has the meaning specified in Section 2.11.
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"Business Day" means any day of the year other than a Saturday, Sunday
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or any day on which (a) banks generally are required, or authorized, to close in
New York, New York or Charlotte, North Carolina and (b) if the term "Business
Day" is used in connection with the Adjusted Eurodollar Rate, dealings in United
States Dollar deposits are carried on in the London interbank market.
"Certificate of Title" means, with respect to each Financed Vehicle,
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the Certificate of Title (or other evidence of ownership) issued by the
department of motor vehicles, or other appropriate governmental body, of the
state in which the Financed Vehicle is to be registered.
"Change in Control" shall mean the time when (i) any Person or "group"
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(other than the shareholders of such Person as of the date hereof currently
holding in excess of thirty percent (30%) of the voting power for the election
of directors of such Person under ordinary circumstances) has acquired
"beneficial ownership" (as such terms are defined under Section 13d-3 of and
Regulation 13D under the Securities Exchange Act of 1934, as amended), either
directly or indirectly, of outstanding shares of Stock of the Servicer having
more than thirty percent (30%) of the voting power for the election of directors
of the Servicer under ordinary circumstances, (ii) more than fifty percent (50%)
of the Members of the Servicer's board of directors shall have been replaced by
new directors not nominated for membership on the board by a majority of
directors who were either (x) directors on the Effective Date or (y) directors
after the Effective Date and whose nomination to the board of directors of the
Servicer was itself approved by a majority of directors on the board who were
directors on the Effective Date, or (iii) (except for transfer of Receivables in
connection with any securitization) the Servicer has sold, transferred,
conveyed, assigned or otherwise disposed of all or substantially all of the
assets of the Servicer.
"Collateral" means the collateral pledged by the Borrower in Section
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8.01.
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"Collateral Agent" means First Union or such other party designated as
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agent for the Secured Parties.
"Collection Account" means the account maintained with the Depositary
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described in Section 6.01(b).
"Collection Account Deficiency" means, for any Settlement Date, any
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deficiency in the amounts on deposit in the Collection Account necessary to make
the payments required under Sections 6.04(a)(i) through (iii).
"Collections" means, with respect to any Receivable, all cash
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collections and other Proceeds of such Receivable (including late charges, fees
and interest arising thereon and all recoveries with respect to Receivables that
have been written off as uncollectible).
"Commercial Paper" means commercial paper issued by VFCC.
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"Commitment" means for each Investor, the commitment of such Investor
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to fund any Advance to the Borrower in an amount not to exceed the amount set
forth opposite such Investor's name on the signature pages of this Agreement, as
such amount may be modified in accordance with the terms hereof.
"Commitment Termination Date" means the earlier of (a) the date so
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designated pursuant to Section 9.01 as a result of a Termination Event, and (b)
the Final Maturity Date.
"Consolidated Net Worth Percentage" means, with respect to any Person,
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a fraction (expressed as a percentage), in which the numerator equals the Net
Worth and the denominator equals the total assets of such Person and its
consolidated Subsidiaries.
"Contract" means an installment or conditional sale contract, with any
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amendments, owned or acquired by the Borrower pursuant to which an Eligible
Obligor has: (i) purchased a Motor Vehicle having a useful life longer than the
Contract term; (ii) granted a security interest in the Motor Vehicle to secure
the Obligor's payment thereunder; and (iii) agreed to pay the unpaid purchase
price and a finance charge in periodic installments no less frequently than
monthly installments.
"Contract Date" means, with respect to a Contract, the date of
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effective execution of such Contract by the parties thereto.
"Cost of Funds" means for any day of determination the sum of (1) the
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average (weighted on the basis of the outstanding principal amount of relative
Advances bearing interest at the respective rates) of the Weighted Average CP
Rate, Weighted Average Liquidity Rate, and Weighted Average Base Rate, and (2)
the Fixed Rate Spread Percentage.
"Contract Principal Balance" means, with respect to any Contract, an
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amount equal to the Gross Contract Balance less the Unearned Interest Amount.
"CP Disruption Event" means the inability of a Lender, at any time,
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whether as a result of a prohibition, a contractual restriction or any other
event or circumstance whatsoever, to raise funds through the issuance of its
commercial paper notes (whether or not constituting commercial paper notes
issued to finance fundings hereunder) in the United States commercial paper
market.
"CP Rate" means as to a Fixed Period, a rate equivalent to the sum of
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(i) the rate (or if more than one rate, the weighted average of the rates) at
which Commercial Paper having a term equal to such Fixed Period may be sold by
any placement agent or commercial paper dealer selected by VFCC, as agreed
between each such agent or dealer and VFCC and notified by VFCC to the Deal
Agent and the Servicer (which rate shall include any fee paid or payable to any
such placement agent or commercial paper dealer); provided, however, if
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the rate (or rates) as agreed between any such agent or dealer and VFCC with
regard to any Fixed Period for the applicable Advance is a discount rate (or
rates), the CP Rate for such Fixed Period shall be the rate (or if more than one
rate, the weighted average of the rates) resulting from converting such discount
rate (or rates) to an interest-bearing equivalent rate per annum (which rate
shall include any fee paid or payable to any such placement agent or commercial
paper dealer) and (ii) the Applicable Margin.
"XX Xxxxxx" means any Person holding record or beneficial ownership of
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Commercial Paper.
"Credit and Collection Policies" means the credit, collection,
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customer relations and service policies of the Parent in effect on the Effective
Date, as set forth in writing and delivered to the Deal Agent on or before the
Effective Date pursuant to Section 3.01(o), and, as such policies may hereafter
be amended, modified or supplemented from time to time in accordance with
Section 7.05(h).
"Custodian" means Norwest Bank Minnesota, National Association or such
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other custodian as the Collateral Agent may appoint.
"Custodial Agreement" means that certain Custodial Agreement dated as
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of the date hereof among the Custodian, Collateral Agent, Parent, Servicer and
Borrower.
"Daily Facility Fee" means, for any day an amount equal to the product
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of (i) the Facility Fee Rate and (ii) an amount equal to Maximum Facility Amount
on such day divided by 360.
"Daily Yield" means for each Advance and day in any Fixed Period, the
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product of
YRT x A
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360
where:
A = the outstanding principal amount of the Advance allocated to
such Fixed Period, and
YRT = the Yield Rate for such Fixed Period, plus the Applicable
Margin for such Advance;
provided, however that (a) no provision of this Agreement shall require the
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payment or permit the collection of Daily Yield in excess of the maximum
permitted by applicable law and (b) Daily Yield shall not be considered paid by
any distribution if at any time such distribution is rescinded or must otherwise
be returned for any reason.
"Deal Agent" means FCMC, as Deal Agent hereunder, together with its
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successors and assigns.
"Dealer Agreement" means any dealer agreement entered into by VFCC for
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the distribution of Commercial Paper.
"Debt" of any Person means (without duplication) all liabilities,
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obligations and indebtedness of such Person (a) for borrowed money, (b)
evidenced by promissory notes, bonds, debentures, notes or other similar
instruments, (c) to pay the deferred purchase price of property or services, (d)
as lessee under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (e) secured by any lien or other charge upon
property or asset, owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (f) under any interest
rate, swap, "cap", "collar" or other hedging agreement, (g) under reimbursement
agreements or similar agreements with respect to the issuance of letters of
credit (other than obligations in respect of letters of credit opened to provide
for payment of goods and services purchased in the ordinary course of business),
(h) under direct or indirect guaranties in respect of, and obligations
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(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (h) above, and (i) for
liabilities in respect of unfunded vested benefits under plans covered by ERISA.
For the purposes hereof, the term "guarantee" shall include any agreement,
whether such agreement is on a contingency or otherwise, to purchase, repurchase
or otherwise acquire Debt of any other Person, or to purchase, sell or lease, as
lessee or lessor, property or services, in any such case primarily for the
purpose of enabling another person to make payment of Debt, or to make any
payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
"Debt Ratio" means a fraction (expressed as a percentage), in which
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the numerator equals the total Debt (other than Subordinated Debt) of such
Person and the denominator equals the Net Worth.
"Default Rate" means, with respect to any Settlement Period the
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percentage equivalent of a fraction, the numerator of which is the product of
(a) 12 and (b) the Contract Principal Balance of all Transferred Receivables
that became Defaulted Receivables during such Settlement Period and the
denominator of which is the average Contract Principal Balance of all
Transferred Receivables during such Settlement Period.
"Defaulted Receivable" means, with respect to any Settlement Period, a
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Receivable with respect to which any of the following has occurred during such
Settlement Period: (i) the Financed Vehicle that secures such Receivable has
been repossessed and the Servicer has determined in good faith that payments
thereunder are unlikely to be resumed, or (ii) the Financed Vehicle that secures
such Receivable has been repossessed without reinstatement of such Receivable on
or before the last day of such Settlement Period and any applicable redemption
period has expired.
"Delinquency Rate" means, with respect to any Settlement Period the
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percentage equivalent of a fraction the numerator of which is the Contract
Principal Balance of all Transferred Receivables that are Delinquent Receivables
on the last day of such Settlement Period and the denominator of which is the
Contract Principal Balance of Transferred Receivables as of the last day of such
Settlement Period.
"Delinquent Receivables" means, as of the end of any Settlement
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Period, the sum of all Receivables, other than Liquidated Receivables, which
have at least two Scheduled Payments (or any part thereof) due and unpaid,
provided, that if the Obligors have paid more than 90% of the most overdue
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Scheduled Payments such scheduled Payment shall be deemed paid for purposes
hereof.
"Depositary" means Bankers Trust Company and any other Person
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designated as the successor Depositary from time to time.
"Disposition" means a Securitization, Whole Loan Sale transaction, or
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other disposition of Receivables subject to this Agreement, in each case by the
Parent or an Affiliate thereof.
"Disposition Period" means a Settlement Period in which a Disposition
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occurs.
"Dollar" and "$" mean lawful currency of the United States of America.
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"Effective Date" means November 24, 1997.
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"Eligible Assignee" has the meaning specified in the Liquidity
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Purchase Agreement.
"Eligible Obligor" means any Obligor which is not an Excluded Obligor.
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"Eligible Originator" means the Parent, LINC, Samco, and such other
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Person or Persons as may from time to time be consented to in writing by the
Parent, the Borrower, the Deal Agent, and the Liquidity Agent, such consent not
to be unreasonably withheld.
"Eligible Receivable" means each Receivable pursuant to a Contract
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delivered by the Borrower to the Custodian acting as agent for the Collateral
Agent which is listed on a List of Contracts delivered by the Borrower to the
Custodian at the same time, and which satisfies each of the following
requirements:
(a) All of the representations and warranties in Sections 4.01, 4.02
and 4.03 are true with respect to, and all conditions precedent in Section 3.02
have been and continue to be met with respect to, the Contract, Financed
Vehicle, Obligor, Required Obligor Insurance, and Optional Obligor Insurance.
(b) The first Scheduled Payment is due within forty-five (45) days
after the date of the Contract and the Contract Date is within five (5) days of
the delivery of the Financed Vehicle.
(c) The Contract has a fixed APR and the Finance Charge was computed
using a fixed rate.
(d) The initial term of the Contract does not exceed sixty (60) months
and the Schedule of Payments has equal monthly payments except for the final
payment which may be within 5% of the other equal payments, the payment
obligation is in Dollars, and at the time the Contract as delivered to the
Custodian, there were at least twenty (20) remaining Scheduled Payments.
(e) The Contract is for the absolute sale of the Financed Vehicle to
the Obligor, and the Financed Vehicle is not on approval or subject to any
agreement between the Obligor and the Vehicle Dealer for the repurchase or
return of the Financed Vehicle.
(f) The Contract was selected in accordance with the Allocation
Formula from new or used automobile or light truck installment sale contracts or
promissory notes in the Parent's portfolio utilizing no selection procedures
adverse to the Lenders relative to similar new or used automobile or light truck
installment sale contracts or promissory notes in Borrower's and Parent's
Portfolio taken as a whole.
(g) The Vehicle Dealer has been paid all amounts due for the purchase
of the Contract from the Vehicle Dealer.
(h) The Obligor is an Eligible Obligor.
(i) The Contract contains the original signature of the Obligor and
the Vehicle Dealer.
(j) The Contract is the only unsatisfied original executed Contract
for the purchase of the Financed Vehicle and accurately reflects all of the
actual terms and conditions of the Obligor's purchase of the Financed Vehicle.
(k) Neither the Borrower nor an Affiliate has made any agreement with
the Obligor to reduce the amount owed on the Contract.
(1) Neither the Borrower nor an Affiliate is required to perform any
additional service for, or perform or incur any additional obligation to, the
Obligor in order for the Borrower to enforce the Contract.
(m) The Contract, at the time the Borrower purchased it, materially
complied with the Credit and Collection Policies; or the Deal Agent approved any
material deviation from the Credit and Collection Policies for that Contract in
writing.
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(n) The Obligor's obligations under the Contract are secured by a
validly perfected first priority security interest in the Financed Vehicle in
favor of the Servicer as secured party and such security interest has been
validly assigned to the Lenders under this Agreement.
(o) The Contract has not been, nor is it designated to be,
terminated, satisfied, canceled, subordinated or rescinded in whole or in part;
nor has the Financed Vehicle been released, or designated for release, from the
security interest granted by the Contract; and all of the holder's obligations
under the Contract have been performed except those which arise subsequent to
the delivery to the Deal Agent.
(p) No provision of the Contract has been waived, extended, altered
or modified in any respect except in accordance with the Credit and Collection
Policies.
(q) The day of the month that Scheduled Payments are due has not been
changed from the original Schedule of Payments except for no more than one
change which did not change the due date in a manner such that there was more
than a thirty (30) day period for which no Scheduled Payment was due.
(r) No claims of rescission, setoff, counterclaim, defense or other
material disputes have been asserted with respect to the Contract or Financed
Vehicle.
(s) There are no unsatisfied liens or claims for taxes, labor,
materials, fines, confiscation, or replevin relating to the Contract or Financed
Vehicle. There is no unsatisfied claim against the Obligor based on the
operation or use of the Financed Vehicle. All taxes due for the purchase, use
and ownership of the Financed Vehicle have been paid. All taxes due on the
transfer of the Contract to the Borrower and the Lenders have been paid.
(t) The Contract requires Required Obligor Insurance and the Servicer
is a loss payee or insured under the Required Obligor Insurance.
(u) The Company has not repossessed the Vehicle or commenced a
replevin action or other lawsuit against the Obligor or Financed Vehicle.
(v) The model year of the Financed Vehicle is in accordance with the
Credit and Collection Policies at the time the Contract is delivered to the
Custodian.
(w) The obligation of the original Obligor has not been released or
assumed by another Person unless the release or assumption was properly
documented and the Deal Agent consents in writing to it for purposes of the
Contract being an Eligible Contract.
(x) The Obligor Documents exist and the Obligor Delivery Documents
have been delivered to the Custodian in accordance with Section 1(b) of the
Custodial Agreement.
(y) As of the date of the initial Advance hereunder that is made with
respect to such Eligible Receivable, there are not more than two Scheduled
Payments (or any part thereof) due and unpaid, provided, that if the Obligors
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have paid more than 90% of the most overdue Scheduled Payments such Scheduled
Payment shall be deemed paid for purposes hereof, and on each day thereafter,
there are not more than three Scheduled Payments (or any part thereof) due and
unpaid, provided, that if the Obligors have paid more than 90% of the most
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overdue Scheduled Payments such Scheduled Payment shall be deemed paid for
purposes hereof.
(z) The cash down payment has been paid in full by the Obligor in
accordance with the Credit and Collection Policies.
(aa) The Contract was purchased by an Eligible Originator from a
Vehicle Dealer in the ordinary course of the Vehicle Dealer's business (or, with
reference to Samco only, from a finance company in the ordinary course of the
finance company's business) within 60 days after the Contract Date.
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(bb) The first or second Scheduled Payment (or both) remain(s) unpaid
more than thirty (30) days after its/their scheduled due date(s).
(cc) The Amount Financed does not exceed one hundred fifty percent
(150%) of the net cost, or value, if applicable, shown on the Vehicle Dealer
Invoice.
(dd) The Amount Financed on the Contract Date does not exceed $29,000
and the Vehicle has no more than 85,000 miles on its odometer on the Contract
Date.
(ee) Not more than one hundred eighty (180) days has elapsed since the
date the Contract was pledged to the Lender hereunder.
(ff) On or before the date which is one hundred twenty (120) days
after the Contract Date, the original Certificate of Title or equivalent title
documents issued by the relevant state motor vehicle authority, if applicable,
shall be delivered to the Custodian.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
it may be amended from time to time and the regulations promulgated thereunder.
"Event of Bankruptcy" means, with respect to any specified Person, the
-------------------
occurrence of any of the following events:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or any
substantial part of its assets, or any similar action with respect to such
Person under any law (foreign or domestic) relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and such case
or proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 days or an order for relief in respect of such Person shall be
entered in an involuntary case under the federal bankruptcy laws or other
similar laws (foreign or domestic) now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for, such Person or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail to, or admit in writing its
inability to, pay its debts generally as they become due.
"Eurocurrency Liabilities" has the meaning defined in Regulation D of
------------------------
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
"Eurodollar Disruption Event" means with respect to all Advances
---------------------------
allocated to any Fixed Period, any of the following: (a) a determination by a
Lender 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 make, fund or
maintain any Advance for such Fixed Period, (b) the failure of one or more of
the Reference Banks to furnish timely information for purposes of determining
the Adjusted Eurodollar Rate, (c) a determination by a Lender that the rate at
which deposits of United States Dollars are being offered to such Lender in the
London interbank market does not accurately reflect the cost to such Lender of
making, funding or maintaining any Advance for such Fixed Period or (d) the
inability of a Lender to obtain United States Dollars in the London interbank
market to make, fund or maintain any Advance for such Fixed Period.
-10-
"Eurodollar Reserve Percentage" of any Reference Bank for any Fixed
-----------------------------
Period for any Advance means the reserve percentage applicable during such Fixed
Period (or, if more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Fixed 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 equal to such Fixed Period.
"Event of Servicer Termination" has the meaning specified in Section
-----------------------------
9.02.
"Excluded Obligor" means an Obligor which is (a) an Affiliate of the
----------------
Parent or the Borrower, (b) a Governmental Authority or (c) which is domiciled
outside the United States.
"Extension Date" has the meaning given to such term in Section 2.01(b)
--------------
hereof.
"Facility Fee" means a fee payable by the Borrower to the Lender for
------------
each Settlement Period equal to the product of (i) the average daily Maximum
Facility Amount during such Settlement Period, (ii) the Facility Fee Rate, and
(iii) the actual number of days in the Settlement Period divided by 360.
"Facility Fee Rate" has the meaning set forth in the Fee Letter.
-----------------
"Fee Letter" means the fee letter agreement dated November 24, 1997
----------
between the Borrower and the Deal Agent.
"Federal Funds Rate" means 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. New York City time.
"Final Maturity Date" means November 23, 1998 or, if extended, in the
-------------------
sole discretion of VFCC and each Investor in accordance with the terms of
Section 2.01 (b), the Extension Date.
"Finance Charge" has the meaning given to that term in the Truth-in-
--------------
Lending Act.
"Financed Vehicle" means the new or used Motor Vehicle purchased by an
----------------
Obligor pursuant to a Contract, or any substituted vehicle which is properly
documented.
"First Union" means First Union National Bank, with its principal
-----------
office in Charlotte, North Carolina, in its individual capacity and its
successors.
"Fixed Period" means for any outstanding principal amount of any
------------
Advance, (a) if Daily Yield in respect of all or any part thereof is computed by
reference to the CP Rate, the period of 270 days or less set by the Deal Agent
pursuant to Section 2.04 hereof, (b) if Daily Yield in respect thereof is
computed by reference to the Adjusted Eurodollar Rate, a period of any number of
days up to one month, or one, two or three months and (c) if Daily Yield in
respect thereof is computed at the Base Rate, a period of 1 to and including 31
days, in each case, as determined pursuant to Section 2.04.
"Fixed Rate Spread Percentage" means, for any Settlement Period, the
----------------------------
positive or negative percentage equivalent of a fraction, the numerator of which
is the product of (a) the aggregate amount paid to (if positive) or received
from (if negative) any counterparty with respect to Hedging Instruments and (b)
12, and the
-11-
denominator of which is the average aggregate outstanding principal balance of
Transferred Receivables that are Eligible Receivables for such Settlement
Period.
"Funding Date" means each day on which an Advance is made.
------------
"GAAP" means generally accepted accounting principles as in effect in
----
the United States, consistently applied, as of the date of such application.
"Governmental Authority" means the United States of America, any
----------------------
state, local or other political submission thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"Governmental Consents" has the meaning specified in Section
---------------------
4.02(a)(xiv).
"Gross Contract Balance" means, with respect to any Contract, an
----------------------
amount equal to the number of remaining Scheduled Payments multiplied by the
amount of each Scheduled Payment minus any Prepayments or other payments applied
-----
to reduce the unpaid principal balance of such Contract.
"Hedging Counterparty" means an entity (i) (A) whose commercial paper
--------------------
or short-term deposit rating is at least P-1 from Moody's and at least A-1 from
S&P and (B) who shall agree that, in the event that its commercial paper or
short-term deposit rating is reduced below A-1 by S&P or P-1 by Moody's, it
shall secure its obligations as the Lenders may reasonably request, and (ii)
which shall be rated at least Aa and A2 by S&P and Moody's, respectively and
(iii) which has entered into a Hedging Instrument.
"Hedging Instrument" means any interest rate cap agreement, interest
------------------
rate floor agreement, interest rate swap agreement or other interest rate
hedging agreement entered into by the Borrower with a Hedging Counterparty and
payable no less frequently than quarterly to the Borrower, which agreement
requires the Hedging Counterparty to deposit amounts payable by the Hedging
Counterparty thereunder directly to the Collection Account.
"Income Taxes" means any federal, state, local or foreign taxes based
------------
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, and any minimum taxes or
withholding taxes based upon any of the foregoing, including any penalties,
interest or additions to tax imposed with respect thereto.
"Ineligible Receivable" means a Transferred Receivable that is not an
---------------------
Eligible receivable.
"Indemnified Amounts" has the meaning specified in Section 12.01(a).
-------------------
"Indemnified Party" has the meaning specified in Section 12.01(a).
-----------------
"Interest Coverage Ratio" means (a) the sum of the Borrower's year-to-
-----------------------
date pre-tax income and the Borrower's year-to-date interest expense, divided by
(b) the Borrower's year-to-date interest expense.
"Investments" means, with respect to any Borrower Account Collateral,
-----------
the certificates, instruments or other Permitted Investments in which amounts in
such accounts are invested from time to time.
"Investors" means the financial institutions from time to time party
---------
hereto and to the Liquidity Purchase Agreement.
"Issuer" means VFCC and any other Lender whose principal business
------
consists of issuing commercial paper or other securities to fund advances or the
acquisition and maintenance of receivables, accounts, instruments, chattel
paper, general intangibles and other similar assets.
-12-
"Lenders" means collectively, VFCC, the Investors and any other Person
-------
that agrees, pursuant to the pertinent Assignment and Acceptance, to fund
Advances pursuant to Article II of this Agreement.
"LIBOR Rate" means for a Fixed Period, an interest rate per annum
----------
equal to the sum of (i) the rate appearing on the Telerate Page 3750 as of 11:00
a.m. (London time) on the Business Day which is the second Business Day
immediately preceding the first day of such Fixed Period for a term comparable
to such Fixed Period or, if no such rate appears on such day, the average
(rounded upward to the nearest one-sixteenth (1/16) of one percent) per annum
rate of interest determined by First Union at its principal office in Charlotte,
North Carolina (each such determination, absent manifest error, to be conclusive
and binding) as of two Business Days prior to the first day of the applicable
Fixed Period, to be the rate at which deposits in immediately available funds in
United States Dollars are being, have been, or would be offered or quoted by the
Reference Banks to major banks in the interbank market for Eurodollar deposits
at or about 11:00 A.M. (Charlotte, North Carolina time) on such day, for a term
comparable to such Fixed Period and in an amount approximately equal to the
requested Advance and (ii) the Applicable Margin.
"LINC" means LINC Acceptance Company LLC, a Delaware limited-liability
----
company, the chief executive office of which is set forth in Schedule 1 hereto.
"Liquidated Receivable" means a Receivable (i) which has at least five
---------------------
(5) Scheduled Payments (or any part thereof) due and unpaid, provided that if
the Obligors have paid more than 90% of the most overdue Scheduled Payments such
Scheduled Payment shall be deemed paid for purposes hereof, or (ii) as to which
the Servicer has determined that all recoveries in respect of such receivable
have been received, or (iii) with respect to which the related Financed Vehicle
has been repossessed and disposed of.
"Liquidity Agent" means First Union and its successors and assigns as
---------------
agent for the Investors pursuant to the Liquidity Purchase Agreement.
"Liquidity Purchase Agreement" means the Liquidity Purchase Agreement
----------------------------
dated as of November 24, 1997, among VFCC, the Deal Agent, the Liquidity Agent
and the investors party thereto.
"List of Contracts" means the list substantially in the form of
-----------------
Exhibit I hereto with respect to each Contract or group of Contracts.
"Loans" means any indebtedness issued by the Borrower to an Affected
-----
Party, including Advances.
"Lockbox" means a lockbox or post office box established by the
-------
Servicer under the control of the Collateral Agent.
"Lockbox Account" means an account in the name of the Collateral Agent
---------------
described in Section 6.01(a).
"Lockbox Account Bank" means each bank or financial institution listed
--------------------
on Schedule 2 (as such schedule may be amended from time to time by written
notice from the Servicer to the Lender and the Deal Agent and its successors and
assigns in accordance with a Lockbox Agreement).
"Lockbox Agreement" means each agreement among a Lockbox Account Bank,
-----------------
the Servicer and the Collateral Agent executed in connection with establishment
of a Lockbox Account in form and substance satisfactory to the Deal Agent.
"Maximum Facility Amount" means at any time, $150,000,000, as such
-----------------------
amount may be adjusted from time to time pursuant to Section 2.01(c) and Section
2.03, provided, however, that at all times, on or after the Termination Date,
-------- -------
the "Maximum Facility Amount" shall mean the aggregate outstanding principal
amount of Advances.
-13-
"Maximum Lawful Rate" has the meaning specified in Section 2.07(c).
-------------------
"Monthly Report" has the meaning set forth in Section 5.02(a)(ii).
--------------
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Motor Vehicle" means a passenger motor vehicle, van or light duty
-------------
truck which is not manufactured for a particular commercial purpose.
"Net Loss Factor" means, with respect to any Subgroup of Receivables
---------------
and Report Period, the average (if more than one Net Loss Rate) of the Net Loss
Rate with respect to such Subgroup of Receivables reported as of the three (3)
most recent Reset Dates (or such lesser number of Reset Dates for which such
information is available), provided, however, that the Net Loss Rate shall be
-------- -------
deemed to be zero (0) for any Report Period for which a Net Loss Rate cannot be
calculated because no Receivables in such Subgroup had yet been transferred
under the Receivables Transfer Agreement.
"Net Loss Rate" means, with respect to any Subgroup of Receivables and
-------------
Settlement Period, the percentage equivalent of a fraction, determined as of the
Reset Date immediately following such Settlement Period, the numerator of which
is the product of (a) Net Losses for such Subgroup of Receivables and Settlement
Period and (b) 12, and the denominator of which is the average aggregate
Contract Principal Balance of Transferred Receivables for each day in such
Settlement Period that there were Transferred Receivables in such Subgroup,
provided, however, that the denominator for computing the Net Loss Rate for the
-------- -------
Added Receivables Subgroup shall be the average aggregate Contract Principal
Balance of all Transferred Receivables that were Added Receivables for each day
in such Settlement Period that there were Transferred Receivables in such
Subgroup.
"Net Losses" means, for any Settlement Period, the excess of (i) the
----------
unpaid principal balance of Transferred Receivables that became Liquidated
Receivables during such Settlement Period, minus (ii) the sum (a) of all
recoveries in respect of such Liquidated Receivables and (b) recoveries received
during such Settlement Period in respect of Transferred Receivables that became
Liquidated Receivables prior to such Settlement Period.
"Net Portfolio Yield" has the meaning set forth in Section 9.01(r).
-------------------
"Net Worth" means the total of shareholders' equity (including capital
---------
stock, additional paid-in capital and retained earnings) plus Subordinated Debt,
less (i) the total amount of loans to shareholders, officers or employees (other
than loans of less than $l0,000 to employees), and (ii) the total amount of any
intangible assets, including, without limitation, deferred charges and goodwill.
"Notes" has the meaning set forth in Section 2.05(a).
-----
"Obligations" means all amounts owed by the Borrower under this
-----------
Agreement, including Advances, Interest, Fees, Additional Amounts and
indemnities.
"Obligor" means, with respect to any Receivable, the Person primarily
-------
obligated to make payments with respect thereto.
"Obligor Delivery Documents" means:
--------------------------
(a) the fully executed original of the Contract (together with
any agreements modifying the Contract, including without limitation any
extension agreements);
(b) the original Certificate of Title in the name of the Parent
(or, with respect to the Samco or Linc Receivables, Samco or Linc,
respectively) or such documents that the Parent shall keep on file, in
accordance with its customary procedures, evidencing the security interest
of the Parent
-14-
(or, with respect to the Samco or Linc Receivables, Samco or Linc,
respectively) in the Financed Vehicle or, if not yet received, a copy of
the application therefor showing the Parent (or, with respect to the Samco
or Linc Receivables, Samco or Linc, respectively) as secured party.
"Obligor Documents" means, with respect to each Obligor:
-----------------
(a) the original Certificate of Title or equivalent title
documents issued by the relevant state motor vehicle authority, if
applicable, meeting the requirements for Obligor Delivery Documents;
(b) the original executed Contract and the executed assignment
thereof, meeting the requirements for Obligor Delivery Documents;
(c) hereafter, on new Financed Vehicles a copy of the Vehicle
Dealer Invoice and invoices for any additional equipment included in the
Contract;
(d) an original or copy of the credit application of the
Obligor;
(e) copies of, but with respect to portfolio purchase of
Contracts, only if such are available to the Borrower from the seller of
the portfolio purchase Contracts:
(i) an electronic image of the credit bureau reports,
(ii) an electronic image of the credit analysis,
(iii) the completed verification of employment and income
forms, and
(iv) the Obligor's references;
(f) written verification of Required Obligor Insurance showing
the Servicer as loss payee, additional insured, or lienholder at the time
of the Borrower's purchase of the Contract, but with respect to portfolio
purchases of Contracts, only if such are available to the Borrower from the
seller of the Contracts;
(g) a certificate for each type of Optional Obligor Insurance
purchased by the Obligor; and
(h) the Servicer's loan process or "deal structure" sheet.
"Officer's Certificate" means, with respect to any Person, a
---------------------
certificate of such Person signed on its behalf by the Chairman of the Board,
Vice Chairman of the Board, the President, a Vice President, the Treasurer, the
Secretary or any other duly authorized officer of such Person acceptable to the
Deal Agent.
"Optional Obligor Insurance" means any insurance (other than Required
--------------------------
Obligor Insurance) which insures a Financed Vehicle or an Obligor's obligations
under a Contract, including but not limited to credit life, credit health,
credit disability, unemployment insurance and any service contract, mechanical
breakdown coverage, warranty or extended warranty for Financed Vehicles.
"Optional Prepayment of Advances" means the option of the Borrower to
-------------------------------
repay an Advance pursuant to a Borrower Notice and in accordance with Article
VI.
"Optional Repayment Amount" means the principal amount of any Optional
-------------------------
Prepayment of Advances, plus the interest accrued on such principal amount
through the prepayment date, as set forth in any Borrower Notice.
-15-
"Other Costs" has the meaning specified in Section 14.03(a).
-----------
"Other Funding Agreements" means other agreements for the purchase or
------------------------
funding of receivables entered into from time to time by VFCC in which it is
contemplated that such purchases or fundings will be financed in the same manner
as contemplated hereunder.
"Parent" means Consumer Portfolio Services, Inc.
------
"Permitted Investments" means one or more of the following:
---------------------
(a) 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 which have a maturity of not more than 270 days from the date
of acquisition;
(b) 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;
(c) 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 securities of which are rated at
least A-1 by S&P and P-1 by Moody's;
(d) repurchase obligations with a term of not more than ten days
for underlying securities of the types described in clauses (a), (b) and
------- --- ---
(c) above entered into with any bank of the type described in clause (c)
--- ------ ---
above;
(e) commercial paper rated at least A-1 by S&P and P-1 by
Moody's; and
(f) demand deposits, time deposits or certificates of deposits
(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
depository institution authorities; provided that at the same time such
--------
investment, or the commitment to make such investment, is entered into, the
short-term debt rating of such depository institution or trust company
shall be at least A-1 by S&P and P-1 by Moody's.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, association, joint venture,
Governmental Authority or any other entity of whatever nature.
"Portfolio Requirements" means, with respect to the Eligible
----------------------
Receivables at any date of determination specified below, each of the following
requirements:
(i) the Contract Principal Balance as of the end of the prior
Settlement Period of all Eligible Receivables secured by Financed Vehicles
that were new at the time of the sale generating such Eligible Receivable
shall not exceed 40% of the aggregate Contract Principal Balance of
Eligible Receivables as of the end of such Settlement Period;
(ii) the aggregate Contract Principal Balance as of the end of
the prior Settlement Period of all Eligible Receivables (a) purchased from
non-manufacturer franchised Vehicle Dealers shall not exceed an amount
equal to 10% of the aggregate Contract Principal Balance of Eligible
Receivables as of the end of such Settlement Period and (b) purchased from
any single Vehicle Dealer shall not
-16-
exceed an amount equal to 5% of the aggregate Contract Principal Balance of
Eligible Receivables as of the end of such Settlement Period;
(iii) the aggregate Contract Principal Balance as of the end of
the prior Settlement Period of all Eligible Receivables (a) originated
under the Delta Program (as defined in the Credit and Collection Policies)
shall not exceed 25% of the aggregate Contract Principal Balance of
Eligible Receivables at the end of the Settlement Period, and (b)
originated under the First Time Buyer Program (as defined in the Credit and
Collection Policies) shall not exceed 20% of the aggregate Contract
Principal Balance of Eligible Receivables at the end of such Settlement
Period; and
(iv) the aggregate Contract Principal Balance as of the end of
the prior Settlement Period of all Eligible Receivables (a) originated in
California shall not exceed 30% of the aggregate Contract Principal Balance
of Eligible Receivables as of the end of such Settlement Period; and (b)
originated in any other state shall not exceed 15% of the aggregate
Contract Principal Balance of Eligible Receivables at the end of such
Settlement Period.
"Potential Termination Event" means an event which, upon the giving of
---------------------------
notice or the passage of time, or both, would become a Termination Event.
"Prepayment" means, with respect to a Contract on any day of
----------
determination, the amount, if any, by which the Actual Payment exceeds the
Scheduled Payment due for the period during which such Actual Payment is
received.
"Prime Rate" means 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.
"Proceeds" means, with respect to any Collateral, whatever is
--------
receivable or received when such Collateral is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment, including returned premiums, with respect to any
insurance relating to such Collateral.
"Program Documents" means any letter of credit agreement, liquidity
-----------------
agreement, collateral agreement, depositary agreement, commercial paper, dealer
agreement or any similar agreement relating to the funding of an Advance by a
Lender.
"Rating Agency" means each of Moody's and S&P.
-------------
"Receivable" means:
----------
(a) indebtedness of an Obligor (whether constituting an account,
chattel paper, instrument or general intangible) arising in connection with
a Contract, including the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto;
(b) all security interests or liens and property subject thereto
from time to time securing or purporting to secure payment by the Obligor;
(c) all guarantees, indemnities and warranties and proceeds
thereof, proceeds of insurance policies, financing statements and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
(d) all Collections with respect to any of the foregoing;
(e) all Records and Obligor Documents with respect to any of the
foregoing; and
-17-
(f) all Proceeds of any of the foregoing.
"Receivable Yield" means, for any Contract, the internal rate of
----------------
return for such Contract after taking into account the Unearned Discount Amount
in respect thereof.
"Receivables Transfer Agreement" means the Receivables Transfer
------------------------------
Agreement, dated November 24, 1997, between the Parent and the Borrower,
providing for the purchase by, or the contribution to, the Borrower from the
Parent of Receivables from time to time,
"Records" means all Contracts and other documents, books, records and
-------
other information (including, without limitation, computer programs, tapes,
disks, data processing software and related property and rights) prepared and
maintained by the Parent, the Servicer or the Borrower with respect to
Receivables and the related Obligors.
"Reference Banks" means three major banks in the London interbank
---------------
market selected by the Deal Agent.
"Register" has the meaning set forth in Section 14.01A.
--------
"Regulatory Change" shall mean any change after the Effective Date in
-----------------
federal, state or foreign law or regulations (including, without limitation,
Regulation D of the Federal Reserve Board) or the adoption or making after such
date of any interpretation, directive or request applying to any Affected Party
of or under any federal, state or foreign law or regulations (whether or not
having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
"Rejected Amount" means, with respect to the Borrower, the amount of
---------------
the capital contribution which the Parent is required to make to the Borrower
(as determined by the Deal Agent) as a result of breaches of representations and
warranties with respect to Receivables sold or contributed to the Borrower by
the Parent pursuant to Section 4.04(iii) of the Receivables Transfer Agreement.
"Remaining Receivables" means, with respect to any Settlement Period,
---------------------
all Transferred Receivables remaining immediately after any Disposition
occurring in such Settlement Period, or if none, the preceding Disposition,
provided that, there shall be no Remaining Receivables until a Disposition
-------------
occurs after the date hereof.
"Report Date" means, with respect to any Report Period, the first
-----------
Business Day of such Report Period.
"Report Period" means with respect to any Settlement Period, the
-------------
period from and including the fifth (5th) Business Day in such Settlement
Period, to but excluding the fifth (5th) Business Day of the next succeeding
Settlement Period.
"Request Notice" has the meaning set out in the Receivables Transfer
--------------
Agreement.
"Required Information" means, with respect to a Receivable, (a) the
--------------------
Obligor, (b) the Obligor's address, (c) the Amount Financed, (d) the Gross
Contract Balance, (e) the Contract Principal Balance, (f) any discounts, and (g)
whether or not such Receivable is an Eligible Receivable.
"Required Investors" means at a particular time, Investors with
------------------
Commitments in excess of 50% of the Facility Limit.
"Required Obligor Insurance" means the casualty insurance that the
--------------------------
Obligor is required to obtain pursuant to the terms of the Contract.
-18-
"Required Reserve Account Amount" means, with respect to any
-------------------------------
Settlement Date following the date on which a financial covenant set forth in
Section 7.06 is not met, 0.10% of the average daily Maximum Facility Amount
during the immediately preceding Settlement Period or such lesser amount as the
Deal Agent may agree to in writing.
"Reserve Account Deposit Amount" means with respect to any Settlement
------------------------------
Date, the excess as of such Settlement Date (prior to giving effect to
distributions or deposits to the Successor Servicer Reserve Account on such
Settlement Date) of (i) the Required Reserve Account Amount over (ii) the
balance of funds on deposit in the Successor Servicer Reserve Account.
"Reset Date" means, with respect to any Report Period, first Business
----------
Day of such Report Period, provided, however, that the first Reset Date under
-------- -------
this Agreement shall be the Reset Date occurring in January 1997.
"Restrictions on Transferability" means any material condition to, or
-------------------------------
restriction on, the ability of the holder or an assignee of the holder of any
right, title or interest to sell, assign, transfer or otherwise liquidate such
right, title or interest in a commercially reasonable time and manner or which
would otherwise materially deprive the holder or any assignee of the holder of
the benefits thereof.
"Revolving Period" means the period commencing on the Effective Date
----------------
of this Agreement and ending on the day immediately prior to the Commitment
Termination Date.
"Samco" means Samco Acceptance Corp., a Delaware corporation, the
-----
chief executive office of which is set forth in Schedule 1 hereto.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-
---
Hill, Inc.
"Sale Assignment" means the assignment entered into between the Parent
---------------
and the Borrower on any Transfer Date substantially in the form of Exhibit 1 to
the Receivables Transfer Agreement.
"Sale Date" has the meaning given to that term in the Receivables
---------
Transfer Agreement.
"Sale Price" has the meaning given to that term in the Receivables
----------
Transfer Agreement.
"Schedule of Payments" means, for any Contract, the schedule of
--------------------
payments disclosed in such Contract.
"Scheduled Payment" means, for any Contract, the periodic installment
-----------------
payment amount disclosed in the Schedule of Payments for such Contract.
"Secured Parties" means, collectively, the Lenders.
---------------
"Securitization" means a disposition of Receivables in one or a series
--------------
of structured-finance securitization transactions.
"Servicer" means the Parent, or any Person designated as Successor
--------
Servicer, and its successors and assigns from time to time hereunder.
"Servicer Termination Notice" means a notice by the Deal Agent to the
---------------------------
Servicer that an Event of Servicer Termination has occurred and that the
Servicer's appointment hereunder has been terminated.
"Servicing Fee" means the monthly Servicing Fee set forth in the Fee
-------------
Letter.
-19-
"Servicing Records" means all documents, books, records and other
-----------------
information (including, without limitation, computer programs, tapes, disks,
data processing software and related property and rights) prepared and
maintained by the Servicer with respect to the Transferred Receivables and the
related Obligors.
"Settlement Date" means, with respect to a Settlement Period, the
---------------
seventh (7th) Business Day of the next succeeding Settlement Period, provided,
--------
however, that the first Settlement Date under this Agreement shall be the
-------
Settlement Date occurring in January 1997.
"Settlement Period" means in the case of the initial Settlement
-----------------
Period, the period beginning with the Effective Date to and including the last
day of the calendar month in which such Effective Date occurs; with respect to
the final Settlement Period, the period ending on the Final Maturity Date and
beginning with the first day of the calendar month in which the Final Maturity
Date occurs; and with respect to all other Settlement Periods, each calendar
month.
"Subgroup" means, with respect to any Settlement Period, the Remaining
--------
Receivables or the Added Receivables, as the case may be.
"Subordinated Debt" means any Debt which is subordinated in right of
-----------------
payment to the obligations of the Borrower under this Agreement.
"Sub-Servicer" means any Person with whom the Servicer enters into a
------------
Sub-Servicing Agreement.
"Sub-Servicing Agreement" means any written contract between the
-----------------------
Servicer and any Sub-Servicer, relating to servicing, administration or
collection of Transferred Receivables as provided in Section 7.01, in such form
as has been approved in writing by the Servicer and the Deal Agent.
"Subsidiary" means, as to any Person, any corporation or other entity
----------
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person.
"Successor Servicer" has the meaning specified in Section 11.02.
------------------
"Successor Servicer Reserve Account" has the meaning specified in
----------------------------------
Section 6.01(c).
"Successor Servicing Fees and Expenses" means the fees and expenses
-------------------------------------
payable by the Borrower to Successor Servicer, as agreed to by the Borrower, the
Lenders, the Deal Agent and the Liquidity Agent.
"Taxes" has the meaning specified in Section 2.12.
-----
"Telerate" means, when used in connection with any designated page and
--------
rate, the display page so designated on the Dow Xxxxx Telerate Service (or such
other page as may replace that page on that service, or such other service as
may be nominated as the information vendor, for the purpose of displaying rates
comparable to such designated rate).
"Termination Event" has the meaning specified in Section 9.01.
-----------------
"Transfer Date" means each date on which a Transferred Receivable is
-------------
sold or contributed to the Borrower by the Parent under the Receivables Transfer
Agreement.
"Transferred Receivable" means any Receivable which has been purchased
----------------------
by the Borrower or contributed as capital by the Parent to the Borrower, under
the Receivables Transfer Agreement and not subsequently disposed of in a
Disposition.
-20-
"Truth-in-Lending Act" means the federal Act cited as 15 U.S.C.
--------------------
(S)1601 et seq., as amended.
"Transfer Request" has the meaning specified in Section 8.07(a).
----------------
"UCC" means, for any jurisdiction, the Uniform Commercial Code as from
---
time to time in effect in such jurisdiction.
"Unearned Discount Amount" means, with respect to any Contract, the
------------------------
product of (i) the original dollar discount at which the Contract was purchased
from the Vehicle Dealer or other cash fees paid by the Vehicle Dealer and (ii)
the ratio of which the numerator is the Contract Principal Balance and the
denominator is the original Amount Financed with respect to such Contract.
"Unearned Interest Amount" means, with respect to any Contract, that
------------------------
portion of the total finance charge to be paid with respect to such Contract
which the Obligor would not be required to pay in the event of a total
prepayment, for which the exact computation to be made is based on the Rule of
78s, or such other method as provided for in such Contract.
"Vehicle Dealer" means the seller of the Financed Vehicle to the
--------------
Obligor.
"Vehicle Dealer Invoice" means (i) as to new Financed Vehicles, the
----------------------
invoice prepared by the manufacturer and (ii) as to used Financed Vehicles, the
XXXXXX WHOLESALE BLUE BOOK value or NADA USED CAR GUIDE TRADER wholesale value,
as typically used in the applicable market.
"Weighted Average Advance Rate" means, as of any date of
-----------------------------
determination, the weighted average (weighted on the basis of relative aggregate
Contract Principal Balances) of the most recent Advance Rates for each Subgroup.
"Weighted Average Base Rate" means for any date of determination the
--------------------------
average of Base Rates as of such dates for all Advances to which Base Rates
apply, weighted by the outstanding principal balance of Advances to which each
such Base Rate applies.
"Weighted Average CP Rate" means for any date of determination the
------------------------
average of CP Rates as of such dates for all tranches of outstanding Commercial
Paper, weighted by the outstanding Commercial Paper in each tranche.
"Weighted Average Liquidity Rate" means for any date of determination
-------------------------------
the average of the Adjusted Eurodollar Rates as of such dates for all Advances
to which Adjusted Eurodollar Rates apply, weighted by the outstanding principal
balance of Advances to which each such Adjusted Eurodollar Rate applies.
"Whole Loan Sale" means a disposition of Receivables pursuant to a
---------------
whole-loan sale.
"Yield Rate" For any Fixed Period for all principal amounts of
----------
Advances allocated to such Fixed Period:
(a) to the extent the relevant Lender will be funding the
applicable Advance on the first day of such Fixed Period through the
issuance of commercial paper, a rate equal to the CP Rate for such Fixed
Period, and
(b) to the extent the relevant Lender will not be funding the
applicable Advance on the first day of such Fixed period through the
issuance of commercial paper, a rate equal to the Alternative Rate for such
Fixed Period or such other rate as the Deal Agent and the Borrower shall
agree to in writing.
-21-
Section 1.02. Other Terms. All accounting terms not specially
-----------
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC of the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9. All hourly references
herein shall refer to New York City time.
Section 1.03. Interpretation. Except as otherwise indicated, all
--------------
agreements defined in this Agreement refer to the same as from time to time
amended or supplemented or as the terms of such agreements are waived or
modified in accordance with their terms.
ARTICLE II
ADVANCES
Section 2.01. Advances.
--------
(a) On the terms and conditions hereinafter set forth, the
Borrower may for any Funding Date, at its option, request that the Lenders
make advances (each, an "Advance") to the Borrower in an amount not to
-------
exceed the Availability less Advances Outstanding. VFCC may, in its sole
discretion, fund, or if VFCC shall decline to fund, the Liquidity Agent
shall fund on behalf of the Investors, Advances from time to time during
the Revolving Period. Under no circumstances shall any Lender make any
Advance if, after giving effect to such Advance, the aggregate principal
amount of Advances outstanding hereunder would exceed the Availability
(calculated after giving effect to any purchase of additional Eligible
Receivables with the proceeds of such Advance). In addition, no Advance
shall be made if an event described in Section 9.01(c) has occurred and is
continuing on such day with respect to either of the Borrower or the
Parent.
(b) The Borrower may, within 60 days, but no later than 45 days,
prior to the then Final Maturity Date, by written notice to the Deal Agent,
make written request for VFCC and the Investors to extend the Commitment
Termination Date for an additional period of 364 days. The Deal Agent will
give prompt notice to VFCC and each of the Investors of its receipt of such
request for extension of the Final Maturity Date. VFCC and each Investor
shall make a determination, in their sole discretion and after a full
credit review, not less than 15 days prior to the then applicable Final
Maturity Date as to whether or not they will agree to extend the Final
Maturity Date; provided, however, that the failure of VFCC or any Investor
-------- -------
to make a timely response to the Borrower's request for extension of the
Final Maturity Date shall be deemed to constitute a refusal by VFCC or the
Investor, as the case may be, to extend the Final Maturity Date. The Final
Maturity Date shall only be extended upon the consent of both (i) VFCC and
(ii) 100% of the Investors and upon payment to the Deal Agent of the
facility renewal fee specified in the Fee Letter. Any date to which the
Commitment Termination Date is extended is referred to herein as the
"Extension Date."
--------------
(c) At any time after the Effective Date, the Borrower may, by
written notice to the Deal Agent as agent for the Lenders delivered at
least ten Business Days prior to a Funding Date, request an increase in the
Maximum Facility Amount; provided that (i) any such increase must be in a
--------
minimum amount of $25,000,000 and in integral multiples of $1,000,000 in
excess thereof and (ii) no Termination Event or Potential Termination Event
has occurred and is continuing. VFCC and each Investor, in their sole
discretion and after full credit review and subject to receipt from S&P and
Xxxxx'x that such proposed increase will not cause the rating maintained by
such Rating Agency with respect to any Lender's short-term Commercial Paper
notes to be reduced, may approve such request for an increase in the
Maximum Facility Amount, which increase shall become effective only upon
receipt by the Borrower of written consent of both (i) VFCC and (ii) 100%
of the Investors to such increase.
Section 2.02. Procedures for Advances. Subject to the conditions
-----------------------
described in Section 2.01, each Advance shall be made in accordance with the
procedures described in Section 2.02(b).
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(a) (i) On each day of requested Advance, the Borrower shall file by
5:00 p.m. Eastern time on the day before such Advance, a Borrowing Base
Certificate and copies of any Request Notices delivered under the Receivables
Transfer Agreement with the Deal Agent. Availability will be calculated based
on the most recent Borrowing Base Certificate delivered to the Deal Agent. The
Borrower may request additional Advances up to the Advances Available, if any.
If there is a Borrowing Excess, the Borrower must repay, in accordance with the
procedures set forth in Sections 6.02(a)(iii) and 6.04(a)(iii)(E), Advances
Outstanding to the level of the new Availability.
(ii) The Borrower shall give the Deal Agent written notice of each
borrowing, repayment of each Advance, or termination or reduction of the Maximum
Facility Amount and Optional Prepayments of Advances (in each case, a "Borrower
--------
Notice"). Each such Borrower Notice shall specify the amount (subject to Section
------
2.01 hereof) of Advances to be borrowed or repaid and the Funding Date or
repayment date (which shall be a Business Day).
(iii) Each Borrower Notice requesting an Advance shall include a
representation by the Borrower that the Advance requested shall not on the
Funding Date exceed the Advances Available, based upon the most recent Borrowing
Base Certificate.
(b) Each Advance shall be made on at least one Business Day's notice
from the Borrower by 5:00 p.m. Eastern time to the Deal Agent or, if the Daily
Yield to accrue with respect to such Advance is computed by reference to the
Adjusted Eurodollar Rate, on at least three Business Days' notice from the
Borrower to the Deal Agent. Each Borrower Notice shall specify (i) the aggregate
amount of such Advance, which shall be in an amount equal to $2,000,000 or
integral multiples of $100,000 in excess thereof, and (ii) the Funding Date.
Following receipt of such Borrower Notice, the Deal Agent will determine whether
VFCC will make the Advance. If VFCC declines to make a proposed Advance, the
Advance shall be made by the Investors; the Deal Agent shall promptly notify the
Liquidity Agent and the Investors in writing of any declination by VFCC to make
an Advance. On the date of such Advance, VFCC or the Liquidity Agent upon
receipt of funds from the Investors shall, upon satisfaction of the applicable
conditions set forth in Article III, make available an amount equal to the
principal amount of such Advance to the Borrower; provided, however, that such
-------- -------
amount shall not exceed the Availability or their respective Commitments.
With respect to any Advance to be made by the Investors hereunder,
each Investor shall promptly pay to the Liquidity Agent at an account designated
by the Liquidity Agent, for the benefit of the Borrower, its Acquisition Amount.
The Liquidity Agent shall promptly deposit the aggregate Acquisition Amounts
received in the Agent's Account; provided, however, that the Borrower and each
-------- -------
Investor agree that the Liquidity Agent shall not be required to deposit any
amount in respect of the Acquisition Amounts in excess of the aggregate of the
Acquisition Amounts actually received by the Liquidity Agent. All payments in
respect of the principal amount of any Advance shall be made by each of the
Investors to the Liquidity Agent and by the Liquidity Agent to the Deal Agent on
the Business Day such Investor and the Liquidity Agent receive a notice from the
Deal Agent for the funding of an Advance; provided, however, if any such notice
--------
is delivered to the Liquidity Agent or an Investor after 4:00 p.m. (New York
City time) on a Business Day, payments in respect of the related Advance shall
be made by 9:30 a.m. (New York City time) on the next Business Day.
Section 2.03. Reduction of the Facility Limit; Repayment.
------------------------------------------
(a) The Borrower may, upon at least five Business Days' notice
to the Deal Agent, terminate in whole or reduce in part the portion of the
Maximum Facility Amount that exceeds the sum of the aggregate principal
amount of Advances Outstanding, and the Commitments of the Investors shall
be reduced proportionately; provided, however, that each partial reduction
-------- -------
of the Maximum Facility Amount shall be in an aggregate amount equal to
$1,000,000 or an integral multiple thereof. Each notice of reduction or
termination pursuant to this Section 2.03(a) shall be irrevocable.
-23-
(b) The Borrower may, at any time prior to the occurrence of the
Commitment Termination Date, repay all or a portion of any Advances
Outstanding at a price sufficient to repay in full (i) the amount of the
outstanding principal amount to be repaid in respect of such Advances, (ii)
all Daily Yield accrued thereon and (iii) any and all Breakage Costs
payable under Section 2.11. In addition, on such repayment date, as a
condition to such repayment, all fees, expenses and other amounts payable
to any Lender or other Person under this Agreement or any other Basic
Document through the latest ending Fixed Period shall be paid in full in
cash.
Section 2.04. Selection of Fixed Periods.
--------------------------
Each Advance shall at all times have an associated amount of
principal, a Yield Rate and a Fixed Period applicable to it. The Deal Agent
shall, in consultation with the Borrower, select (a) each Fixed Period and (b)
Yield Rates to apply to such Advance for such Fixed Periods and shall allocate a
portion of the aggregate outstanding principal amount of the Advance to each
selected Fixed Period, so that all of the outstanding principal amount of the
Advance is at all times allocated to one or more Fixed Periods, provided that,
-------------
on or after the Commitment Termination Date, the Deal Agent shall, in its sole
discretion, select each such Fixed Period and such Yield Rates to apply to such
Advance for such Fixed Periods. Each Fixed Period (other than the initial Fixed
Period for an Advance) shall commence on the last day of the immediately
preceding Fixed Period. Any Fixed Period that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding Business Day;
provided, however, that if Daily Yield in respect of such Fixed Period is
-------- -------
computed by reference to the Adjusted Eurodollar Rate, and such next succeeding
Business Day is in the next calendar month, then such Fixed Period shall end on
the next preceding Business Day. In addition, whenever any Fixed Period as to
which Daily Yield accrues at the Adjusted Eurodollar Rate commences on the last
Business Day in a month or on a day for which there is no numerically
corresponding day in the month in which such Fixed Period ends, the last day of
such Fixed Period shall occur on the last Business Day of the month in which
such Fixed Period ends. Furthermore, if a CP Disruption Event shall have
occurred and be continuing, the relevant Lender, or the Deal Agent on its
behalf, may, upon notice to the Borrower, terminate any Fixed Period then in
effect if such Lender has funded the principal amount of the Advance allocated
to such Fixed Period by issuing its commercial paper notes. Any Fixed Period
that commences before the Commitment Termination Date and that would otherwise
end on a date occurring after the Termination Date shall end on the Commitment
Termination Date.
Section 2.05. Notes.
-----
(a) The Advances made by each Lender hereunder shall be
evidenced by a duly executed promissory note of the Borrower to each
applicable Lender in substantially the form of Exhibit C hereto (each, a
---------
"Note"). Each Note shall be dated the initial Funding Date, shall be
----
payable to the applicable Lender in a principal amount equal to the Maximum
Facility Amount as originally in effect, and shall otherwise be duly
completed. The Advances evidenced by the Notes shall be payable as provided
in Article VI hereof.
(b) The Deal Agent as agent for the Lenders shall enter on a
schedule attached to each Note a notation (which may be computer generated)
with respect to each Advance made hereunder of: (i) the date and principal
amount thereof and (ii) each payment and repayment of principal thereof.
The failure of the Deal Agent to make any such notation on the schedule to
any such Note shall not limit or otherwise affect the obligation of the
Borrower to repay the Advances in accordance with their respective terms as
set forth herein.
Section 2.06. Principal Repayments. The Advances (a) shall be
--------------------
repaid as and when necessary, as set forth in Sections 2.03(b) 6.03, 6.04 and
6.05, to cause the aggregate principal amount of the Advances Outstanding not to
exceed the Availability, and (b) may be repaid at any time and from time to
time, in whole or in part, upon prior written notice to the Deal Agent as
provided in Section 2.03(b) hereof and any amount so repaid may, subject to the
terms and conditions hereof, be reborrowed hereunder during the Revolving
Period; provided, however, that all repayments of Advances or any portion
thereof shall be made together with
-24-
payment of (i) all interest accrued on the amount repaid to (but excluding) the
date of such repayment and (ii) except in the case of an Optional Prepayment of
Advances pursuant to Section 2.10(d), any and all Breakage Costs payable
pursuant to Section 2.11.
Section 2.07. Interest.
--------
(a) The Borrower shall pay to the Lender, as set forth in Sections
6.04 and 6.05, Daily Yield on the unpaid principal amount of each Advance for
the period commencing on and including the Funding Date of such Advance until
but excluding the date such Advance shall be paid in full.
(b) Notwithstanding the foregoing, the Borrower shall pay interest on
unpaid Daily Yield, on any Advance or any installment thereof, and on any other
amount payable by the Borrower hereunder (to the extent permitted by law) that
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise) for the period commencing on the due date thereof to (but
excluding) the date the same is paid in full at the applicable Daily Yield.
(c) Anything in the Basic Documents to the contrary notwithstanding,
if at any time the rate of interest payable by any Person under the Basic
Documents exceeds the highest rate of interest permissible under any applicable
law (the "Maximum Lawful Rate"), then, so long as the Maximum Lawful Rate would
-------------------
be exceeded, the rate of interest under such Basic Document shall be equal to
the Maximum Lawful Rate. If at any time thereafter the rate of interest payable
under such Basic Document is less than the Maximum Lawful Rate, such Person
shall continue to pay interest under such Basic Document at the Maximum Lawful
Rate until such time as the total Daily Yield received from such Person is equal
to the total interest that would have been received had the applicable law not
limited the interest rate payable under such Basic Document. In no event shall
the total interest received by any Lender and the Collateral Agent under the
Basic Documents exceed the amount which the Lender and the Collateral Agent
could lawfully have received, had the interest due under such Basic Documents
been calculated since the Effective Date at the Maximum Lawful Rate.
Section 2.08. Fees. (a) On each Settlement Date, the Borrower
----
shall pay to the Servicer, the Servicing Fee, or to the Successor Servicer, the
Successor Servicing Fees and Expenses.
(b) On each Settlement Date, the Borrower shall pay to the Lender the
Facility Fee.
Section 2.09. Time and Method of Payments. Subject to the provisions
---------------------------
of Sections 6.03, 6.04 and 6.05, all payments of principal, Daily Yield, fees
and other amounts (including indemnities) payable by the Borrower hereunder
shall be made in Dollars, in immediately available funds, to the Deal Agent not
later than 11:00 a.m., New York City time, on the date on which such payment
shall become due. Any such payment made on such date but after such time shall,
if the amount paid bears interest, be deemed to have been made on, and interest
shall continue to accrue and be payable thereon until, the next succeeding
Business Day. If any payment of principal or Daily Yield becomes due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day and such extension shall be included in computing interest in
connection with such payment. All payments hereunder and under the Notes shall
be made without setoff or counterclaim and in such amounts as may be necessary
in order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Notes. Upon payment in full of
the applicable Note, following the Commitment Termination Date, the Deal Agent
as agent for the applicable Lender shall xxxx each Note "Paid" and return them
to the Borrower.
Section 2.10. Additional Costs; Capital Requirements. (a) In the
--------------------------------------
event that any existing or future law, regulation or guideline, or
interpretation thereof, by any court or administrative or governmental authority
charged with the administration thereof, or compliance by any Affected Party
with any request or directive (whether or not having the force of law) of any
such authority shall impose, modify or deem applicable or result in the
application of, any capital maintenance, capital ratio or similar requirement
against Loan commitments made by any Affected Party under this Agreement or a
Program Document, and the result of any event referred to above is to impose
upon any Affected Party or increase any capital requirement applicable as a
-25-
result of the making or maintenance of, such Affected Party's loan commitment
(which imposition of capital requirements may be determined by each Affected
Party's reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by the Deal Agent on behalf of such
Affected Party as promptly as practicable after it obtains knowledge that such
law, regulation, guideline, interpretation, request or directive exists and
determines to make such demand, the Borrower shall immediately pay to the
Collateral Agent on behalf of such Affected Party from time to time as specified
by the Deal Agent additional amounts which shall be sufficient to compensate
such Affected Party for the Borrower's Share of such imposition of or increase
in capital requirements together with interest on each such amount from the date
demanded until payment in full thereof at the Daily Borrowing Rate. A
certificate setting forth in reasonable detail the amount necessary to
compensate such Affected Party as a result of an imposition of or increase in
capital requirements submitted by the Deal Agent to the Borrower shall be
conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any Regulatory Change shall: (i) change the
basis of taxation of any amounts payable to any Affected Party in respect of
any Loans (other than taxes imposed on the overall net income of such Affected
Party for any such Loans by the United States of America or the jurisdiction in
which such Affected Party has its principal office); (ii) impose or modify any
reserve, Federal Deposit Insurance Corporation premium or assessment, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Affected Party;
or (iii) impose any other conditions affecting this Agreement in respect of
Loans (or any of such extensions of credit, assets, deposits or liabilities);
and the result of any event referred to in clause (i), (ii) or (iii) above
shall be to increase such Affected Party's costs of making or maintaining any
Loans or its commitment under a Program Document, or to reduce any amount
receivable by such Affected Party hereunder in respect of any of its Loans or
its commitment (such increases in costs and reductions in amounts receivable
are hereinafter referred to as "Additional Costs") then, upon demand made by
----------------
the Deal Agent on behalf of such Affected Party, as promptly as practicable
after it obtains knowledge that such a Regulatory Change exists and determines
to make such demand, the Borrower shall pay to the Collateral Agent on behalf
of such Affected Party, from time to time as specified by the Deal Agent,
additional commitment fees or other amounts which shall be sufficient to
compensate such Affected Party for the Borrower's Share of such increased cost
or reduction in amounts receivable by such Affected Party from the date of such
change, together with interest on each such amount from the date demanded until
payment in full thereof at the Daily Borrowing Rate.
(c) Determinations by any Affected Party for purposes of this Section
2.10 of the effect of any Regulatory Change on its costs of making or
maintaining Loans or on amounts receivable by it in respect of Loans, and of
the additional amounts required to compensate such Affected Party in respect of
any Additional Costs, shall be set forth in a written notice to the Borrower in
reasonable detail and shall be conclusive, absent manifest error.
(d) If the Borrower is required to pay any additional amounts
pursuant to a Regulatory Change, then the Borrower may terminate the Maximum
Facility Amount prior to any such Regulatory Change pursuant to Section 2.03(a)
and make an Optional Prepayment of Advances without incurring any amounts
payable pursuant to Section 2.11 resulting solely from such Optional Prepayment
of Advances.
Section 2.11. Breakage Costs. The Borrower shall pay to the
--------------
Liquidity Agent for the account of each Lender, upon the request of the
Liquidity Agent or the Deal Agent, such amount or amounts as shall compensate
the Lenders for any loss (including loss of profit), cost or expense incurred by
the Lenders (as reasonably determined by the Liquidity Agent or the Deal Agent)
as a result of any repayment of an Advance (and interest thereon) other than on
the maturity date of the Commercial Paper funding such Advance, such
compensation to include, without limitation, an amount equal to any loss or
expense suffered by the Lenders during the period from the date of receipt of
such repayment to (but excluding) the maturity date of such Commercial Paper, if
the rate of interest obtainable by the Lenders upon the redeployment of an
amount of funds equal to the amount of such repayment (including for such
purpose reinvestment income on such amount in the Collection Account) is less
than the Daily Yield applicable to such Commercial Paper (such expense to be
referred to as "Breakage Costs"). The determination by any Lender of the amount
--------------
of any such loss or expense shall be set forth in a written notice to the
Borrower in reasonable detail and shall be conclusive, absent manifest error. No
-26-
Breakage Costs will be payable by the Borrower under this Section 2.11 if (i)
the Borrower gives the Deal Agent advance notice of a Securitization, including
the date thereof, (ii) the Lender subsequently issues Commercial Paper with a
maturity date after the date of such Securitization, and (iii) the Lender incurs
Breakage Costs in connection with a repayment of an Advance funded by the
issuance of such post-notice Commercial Paper.
Section 2.12. Taxes.
-----
(a) Any and all payments by the Borrower or the Servicer
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
---------
case of the Lenders and the Deal Agent, Income Taxes that are imposed on a
Lender or the Deal Agent by the state or foreign jurisdiction under the
laws of which such Lender or the Deal Agent (as the case may be) is
organized or conducts business or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower
-----
or the Servicer shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to a Lender or the Deal Agent, (i) the
Borrower shall make an additional payment to such Lender or the Deal Agent,
as the case may be, in an amount sufficient so that, after making all
required deductions (including deductions applicable to additional sums
payable under this section), such Lender or the Deal Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or the Servicer, as the case may
be, shall make such deductions and (iii) the Borrower or the Servicer, as
the case may be, shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) The Borrower will indemnify each Lender and the Deal Agent
for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this section) paid by
such Lender or the Deal Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto; provided that such Lender or the Deal Agent, as
--------
appropriate, making a demand for indemnity payment shall provide the
Borrower with a certificate from the relevant taxing authority or from a
responsible officer of such Lender or the Deal Agent stating or otherwise
evidencing that such Lender or the Deal Agent has made payment of such
Taxes and will provide a copy of or extract from documentation, if
available, furnished by such taxing authority evidencing assertion or
payment of such Taxes. This indemnification shall be made within ten days
from the date the Lender or the Deal Agent (as the case may be) makes
written demand therefor.
(c) Within thirty (30) days after the date of any payment by the
Borrower of any Taxes, the Borrower will furnish to the Deal Agent
appropriate evidence of payment thereof.
(d) If a Lender is not created or organized under the laws of
the United States or a political subdivision thereof, such Lender shall, to
the extent that it may then do so under applicable laws and regulations,
deliver to the Borrower (with, in the case of a Lender, a copy to the Deal
Agent) (i) within 15 days after the date hereof, or, if later, the date on
which such Lender becomes a Lender pursuant to this Agreement two (or such
other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form 4224 or Form 1001 (or any
successor forms or other certificates or statements which may be required
from time to time by the relevant United States taxing authorities or
applicable laws or regulations), as appropriate, to permit the Borrower to
make payments hereunder for the account of such Lender, as the case may be,
without deduction or withholding of Income 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
2.12(d), copies (in such numbers as may from time to time be prescribed by
applicable laws or regulations) of such additional, amended or successor
forms, certificates or statements as may be required under applicable laws
or regulations to permit the Borrower to make payments hereunder for the
account of such Lender, without deduction or withholding of Income Taxes.
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(e) For any period with respect to which a Lender or the Deal
Agent has failed to provide the Borrower with the appropriate form,
certificate or statement described in clause (d) of this section (other
-----
than if such failure is due to a change in law occurring after the date of
----
this Agreement), the Deal Agent or such Lender, as the case may be, shall
not be entitled to indemnification under clauses (a) or (b) of this section
with respect to any Taxes.
(f) Within thirty (30) days of the written request of the
Borrower therefor, the Deal Agent and such Lender, as appropriate, shall
execute and deliver to the Borrower such certificates, forms or other
documents which can be furnished consistent with the facts and which are
reasonably necessary to assist the Borrower in applying for refunds of
taxes remitted hereunder.
(g) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to
the Lenders in connection with this Agreement or the funding or maintenance
of Advances hereunder, the Lenders 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 days after demand by the
Lenders, the Borrower shall pay to the Lenders such additional amount or
amounts as may be necessary to reimburse the Lenders for any amounts paid
by them.
(h) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this section shall survive the termination of this Agreement.
ARTICLE III
CONDITIONS TO LENDING
Section 3.01. Conditions Precedent to Effectiveness of Agreement.
--------------------------------------------------
The effectiveness of this Agreement is subject to the condition precedent that
the Deal Agent shall have received on or before the Effective Date the
following, in form and substance satisfactory to the Deal Agent:
(a) An executed copy of each Basic Document, each in a form approved
by the Deal Agent and evidence to the effect that all conditions precedent to
the effectiveness thereof shall have been satisfied;
(b) A certificate from an officer of the Parent in the form of
Exhibit D to the effect that the performance of the Receivables Transfer
Agreement will not render the Borrower insolvent and the Borrower will be able
to remain economically viable without further investments by the Parent for the
foreseeable future;
(c) With respect to the Borrower:
(i) the certificate or articles of incorporation of the
Borrower certified, as of a date no more than ten (10) days prior to
the Effective Date, by the Secretary of State of its state of
incorporation;
(ii) a good standing certificate, dated no more than ten (10)
days prior to the Effective Date, from the respective Secretary of
State of its state of incorporation and each state in which the
Borrower is required to qualify, or represents that it is qualified,
to do business;
(iii) a certificate of the Secretary or Assistant Secretary of
the Borrower certifying as of the Effective Date: (A) the names and
true signatures of the officers authorized on its behalf to sign this
Agreement, (B) a copy of the Borrower's by-laws, and (C) a copy of the
resolutions of the board of directors of the Borrower approving the
Basic Documents to which it is a party and the transactions
contemplated hereby and thereby;
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(iv) an Officer's Certificate in the form of Exhibit E hereto;
and
(v) the Notes shall have been duly executed and delivered by
the Borrower to the Deal Agent and shall be in full force and effect.
(d) With respect to the Servicer:
(i) the certificate or articles of incorporation of the
Servicer certified, as of a date no more than ten (10) days prior to
the Effective Date, by the Secretary of State of its state of
incorporation;
(ii) a good standing certificate, dated no more than ten (10)
days prior to the Effective Date, from the respective Secretary of
State of its state of incorporation and each state in which the
Servicer is required to qualify, or represents that it is qualified,
to do business;
(iii) a certificate of the Secretary or Assistant Secretary of
the Servicer certifying as of the Effective Date: (A) the names and
true signatures of the officers authorized on its behalf to sign this
Agreement, (B) a copy of the Servicer's by-laws, and (C) a copy of the
resolutions of the board of directors of the Servicer approving the
Basic Documents to which it is a party and the transactions
contemplated thereby and hereby; and
(iv) an Officer's Certificate in the form of Exhibit F hereto;
(e) Certified copies of requests for information or copies on form
UCC-11 (or a similar search report certified by a party acceptable to the Deal
Agent), dated a date no more than fourteen (14) days prior to the Effective Date
listing all effective financing statements and other similar instruments and
documents which name the Parent (under its present name and any previous name)
as debtor, together with copies of such financing statements;
(f) Executed financing statements (form UCC-3), if any, necessary to
release all security interests and other rights of any Person in Transferred
Receivables previously granted by the Parent including, without limitation, all
such releases specified by the Parent prior to the date hereof;
(g) Any necessary third party including any Governmental Authority)
consents to the closing of the transactions contemplated by this Agreement on
behalf of the Borrower or Servicer hereby, in form and substance satisfactory to
the Deal Agent;
(h) Executed financing statements (form UCC-1), in respect of
Transferred Receivables, (i) pursuant to the Receivables Transfer Agreement,
naming the Parent as the assignor and the Borrower as the assignee, and (ii)
pursuant to Article VIII, naming the Borrower as the debtor, the Collateral
Agent on behalf of the Lenders as secured parties, or other, similar instruments
or documents, as may be necessary or, in the opinion of the Deal Agent,
desirable under the UCC of all appropriate jurisdictions or any other applicable
law (including the Assignment of Claims Act) to perfect the Collateral Agent's
interests in all Transferred Receivables in which an interest may be assigned
hereunder;
(i) The opinion of counsel to the Borrower and the Parent in form and
substance satisfactory to Deal Agent and the Collateral Agent;
(j) The favorable opinion of co-counsel to the Borrower and the
Parent, as to the true sale of the Transferred Receivables from the Parent to
the Borrower, the nonconsolidation of the Borrower's assets into the bankruptcy
estate of the Parent and such other matters as the Deal Agent may require;
(k) Payment of the Lenders' estimated legal fees and other fees and
costs as specified in the Fee Letter;
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(l) Consolidated and consolidating balance sheets and statements of
income and changes in financing position of the Parent and its Subsidiaries for
each of the years in the three year period ended the Balance Sheet Date, audited
by a nationally recognized accounting firm except with respect to consolidating
statements;
(m) The Borrower's pro-forma balance sheet, dated as of the calendar
quarter preceding the Effective Date and certified by the chief financial
officer of the Parent;
(n) Confirmation of the ratings of the Commercial Paper as A-1 by S&P
and P-1 by Xxxxx'x;
(o) A copy of the Parent's Credit and Collection Policies;
(p) Establishment of a cash management system acceptable to the
Lender and the Deal Agent;
(q) The Borrower shall have executed an Assignment of Insurance
Interests;
(r) Fully executed copies of the Lockbox Agreement; and
(s) Such other approvals, consents, opinions, documents and
instruments, as the Deal Agent may reasonably request.
Section 3.02. Conditions Precedent to All Advances. Each Advance
------------------------------------
(including the initial Advance) shall be subject to the further conditions
precedent that:
(a) On the related Funding Date, the Borrower shall have certified in
the related Borrowing Base Certificate that, except as specifically disclosed in
the related Borrower Notice (or specifically disclosed in a prior instance to
the Deal Agent in writing), and specifically consented to by the Deal Agent in
its sole discretion:
(i) The representations and warranties of the Borrower, the
Parent and the Servicer set forth in Sections 4.01, 4.02 and 4.03 are true
and correct on and as of such date, before and after giving effect to such
borrowing and to the application of the proceeds therefrom, as though made
on and as of such date;
(ii) No event has occurred, or would result from such Advance or
from the application of the proceeds therefrom, which constitutes a
Termination Event or would constitute a Termination Event but for the
requirement that notice be given or time elapse or both;
(iii) The Borrower is in compliance with each of its covenants
set forth herein; and
(iv) No event has occurred which constitutes an Event of
Servicer Termination or would constitute an Event of Servicer Termination
but for the requirement that notice be given or time elapse or both;
(b) The Commitment Termination Date shall not have occurred;
(c) Before and after giving effect to such borrowing and to the
application of proceeds therefrom, there exists no Borrowing Excess;
(d) Each Transferred Receivable submitted by the Borrower for
computation of the Borrowing Base is an Eligible Receivable; and
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(e) No claim has been asserted or proceeding commenced challenging
the Basic Documents;
(f) The Deal Agent has not obtained or been provided with material
adverse credit information about the Parent, which information has not been
disproved by the Parent to the satisfaction of the Deal Agent;
(g) There shall have been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations, or
properties of the Borrower since the preceding Advance.
(h) The Deal Agent shall have received evidence that the Custodian
has received the related Obligor Delivery Documents.
(i) The Parent and Borrower shall have taken such other action,
including delivery of approvals, consents, opinions, documents and instruments
to the Lender and the Deal Agent, as the Deal Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants to the Deal Agent and the Lenders as of the
date hereof, as of the Effective Date and on each subsequent Funding Date as
follows:
(a) The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and is
duly qualified to do business, and is in good standing, in each jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The Borrower has the power and authority to own, pledge,
mortgage, operate and convey all of its properties, to conduct its business as
now or proposed to be conducted and to execute and deliver the Basic Documents
and to perform the transactions contemplated hereby and thereby.
(c) The Borrower is a wholly-owned subsidiary of the Parent.
(d) The Borrower is operated in such a manner that it would not be
substantively consolidated in the trust estate of the Parent (that is, such that
the separate corporate existence of the Borrower and the Parent would be
disregarded), in the event of a bankruptcy or insolvency of the Parent and in
such regard:
(i) the Borrower is a limited purpose corporation whose
activities are restricted in its certificate or articles of incorporation;
(ii) neither the Parent nor any Affiliate of the Parent is
involved in the day-to-day management of the Borrower.
(iii) other than the purchase and contribution of Receivables
and other transactions contemplated by the Receivables Transfer Agreement,
transactions contemplated by other securitizations and the underlying
facilities thereto, the payment of dividends and the return of capital, any
lease or sublease of office space or equipment, and the payment of
Servicing Fees to the Servicer under this Agreement, the Borrower engages
in no intercorporate transactions with the Parent or any Affiliate of the
Parent;
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(iv) the Borrower maintains separate corporate records and
books of account from the Parent, holds regular corporate meetings, and
otherwise observes corporate formalities and has a separate business office
from the Parent, which office may be a clearly identifiable, separately
allocated space on the premises of the Parent;
(v) the financial statements and books and records of the
Borrower and the Parent prepared after the Effective Date reflect the
separate corporate existence of the Borrower;
(vi) the Borrower maintains its assets separately from the
assets of the Parent and any other Affiliate of the Parent (including
through the maintenance of separate bank accounts), the Borrower's funds
and assets, and records relating thereto, have not been and are not
commingled with those of the Parent or any other Affiliate of the Parent
and the separate creditors of the Borrower will be entitled to be satisfied
out of the Borrower's assets prior to any value in the Borrower becoming
available to the Borrower's equity holders;
(vii) neither the Parent nor any Affiliate of the Parent (A)
pays the Borrower's expenses; (B) guarantees the Borrower's obligations, or
(C) advances funds to the Borrower for the payment of expenses or
otherwise;
(viii) all business correspondence of the Borrower and other
communications are conducted in the Borrower's own name, on its own
stationery and through a separately-listed telephone number;
(ix) the Borrower does not act as agent for the Parent or any
of its Affiliates, but instead presents itself to the public as a
corporation separate from the Parent, independently engaged in the business
of purchasing and financing Receivables;
(x) the Borrower maintains at least one independent director
who at all times shall not be a shareholder, director, officer, employee or
associate of the Parent or any Affiliate of the Parent (other than the
Borrower and except that such independent director may be a director of one
or more other limited purpose subsidiaries of the Parent) as provided in
its certificate or articles of incorporation;
(xi) the Borrower is solvent and will not be rendered insolvent
by the transactions contemplated by the Basic Documents and, after giving
effect to such transactions, the Borrower will not be left with an
unreasonably small amount of capital with which to engage in its business
nor will the Borrower have intended to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature, and
the Borrower does not contemplate the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of
a receiver, liquidator, conservator trustee or similar official in respect
of the Borrower or any of its assets; and
(xii) the bylaws or Articles of Incorporation of the Borrower
require it to maintain (A) correct and complete books and records of
account, and (B) minutes of the meetings and other proceedings of its
shareholders and board of directors.
(e) Except as permitted by the Receivables Transfer Agreement and
this Agreement, the Borrower has not engaged, and does not presently engage, in
any activity other than the activities undertaken pursuant to the Basic
Documents, nor has the Borrower entered into any agreement other than the Basic
Documents and any agreement necessary to undertake any activity pursuant to the
Basic Documents.
(f) The execution, delivery and performance by the Borrower of the
Basic Documents and the transactions contemplated hereby and thereby (i) have
been duly authorized by all necessary corporate or other action on the part of
the Borrower, (ii) do not contravene or cause the Borrower to be in default
under (A) the Borrower's certificate or articles of incorporation or by-laws,
(B) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or
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instrument binding on or affecting the Borrower or its property or the Parent
or its property, or (C) any law, rule, regulation, order, license requirement,
writ, judgment, award, injunction, or decree applicable to, binding on or
affecting the Borrower or its property or the Parent or its property, and (iii)
do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Borrower or the Parent (other than in
favor of the Lenders and the Collateral Agent as contemplated hereunder).
(g) The Basic Documents have each been duly executed and delivered by
the Borrower.
(h) No consent of, notice to, filing with or permits, qualifications
or other action by any Governmental Authority or any other party is required (i)
for the due execution, delivery and performance by the Borrower of the Basic
Documents, (ii) for the perfection of or the exercise by each of the Lenders,
the Deal Agent or the Collateral Agent of any of its rights or remedies
hereunder or thereunder, (iii) for the grant by the Borrower of the security
interests granted under Section 8.01 of this Agreement, (iv) for the perfection
of or the exercise by each of the Lenders or the Collateral Agent of its rights
and remedies provided for in this Agreement, or (v) to ensure the legality,
validity, enforceability or admissibility into evidence of this Agreement in any
jurisdiction in which any of the Collateral is located, in each case other than
consents, notices, filings and other actions which have been obtained or made
and complete copies of which have been provided to the Deal Agent.
(i) No transaction contemplated by this Agreement requires compliance
with any bulk sales act or similar law.
(j) Each Basic Document is the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its respective
terms. Each of the Borrower Assigned Agreements to which the Parent or the
Borrower is a party constitutes the legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with its terms, subject
to any applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the
enforceability of creditors' rights generally and general equitable principles,
whether applied in a proceeding at law or in equity.
(k) There is no pending or threatened, nor any reasonable basis for
any, action, suit or proceeding against or affecting the Borrower, its officers
or directors, or the property of the Borrower, in any court or tribunal, before
any arbitrator of any kind or before or by any Governmental Authority.
(l) No injunction, writ, restraining order or other order of any
nature adverse to the Borrower or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by the
Basic Documents has been issued by a Governmental Authority nor been sought by
any Person.
(m) The principal place of business and chief executive office of the
Borrower, and the office where the Borrower keeps its Records and the original
copies of the Borrower Assigned Agreements are located at the address of the
Borrower for notices under Section 14.01 and as set forth on Schedule 1, and
there are currently no, and during the past four months (or such shorter time
as the Borrower has been in existence) there have not been any, other locations
where the Borrower is located (as that term is used in the UCC of the
jurisdiction where such principal place of business is located) or keeps
Records.
(n) The Borrower does not have and has never conducted business using
tradenames, fictitious names, assumed names or "doing business as" names.
(o) The Borrower does not have any Subsidiaries.
(p) The Borrower is solvent and will not become insolvent after
giving effect to the transactions contemplated by the Basic Documents. The
Borrower has no Debts to any Person other than pursuant to the Basic Documents.
The Borrower, after giving effect to the transactions contemplated by the Basic
Documents, will have an adequate amount of capital to conduct its business in
the foreseeable future.
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(q) For federal income tax, reporting and accounting purposes, the
Borrower will treat the purchase or absolute assignment of each Transferred
Receivable pursuant to the Receivables Transfer Agreement as a purchase or
absolute assignment of the Parent's full right, title, and ownership interest in
such Transferred Receivable to the Borrower (and those Receivables contributed
to the Borrower by the Parent pursuant to the Receivables Transfer Agreement
shall be accounted for as an increase in the stated capital of the Borrower) and
the Borrower has not in any other manner accounted for or treated the transfers
of Transferred Receivables contemplated in this Agreement or the other Basic
Documents.
(r) The Borrower has complied and will comply in all respects with
all applicable laws, rules, regulations, judgments, agreements, decrees and
orders with respect to its business and properties and all Collateral.
(s) The Borrower has filed on a timely basis all tax returns
(including, without limitation, foreign, federal, state, local and otherwise)
required to be filed, is not liable for taxes payable by any other Person and
has paid or made adequate provisions for the payment of all taxes, assessments
and other governmental charges due from the Borrower. No tax lien or similar
Adverse Claim has been filed, and no claim is being asserted, with respect to
any such tax, assessment or other governmental charge. Any taxes, fees and
other governmental charges payable by the Parent in connection with the
execution and delivery of the Basic Documents and the transactions contemplated
hereby or thereby have been paid or shall have been paid if and when due at or
prior to such Sale Date.
(t) Each Borrowing Base Certificate and Request Notice is accurate in
all material respects.
(u) The Collateral and each part thereof is owned by the Borrower
free and clear of any Adverse Claim or Restrictions on Transferability and the
Borrower has the full right, corporate power and lawful authority to assign,
transfer and pledge the same and interests therein and all substitutions
therefor and additions thereto pursuant to Section 8.01, and upon making each
Advance, the Collateral Agent on behalf of the Secured Parties will have
acquired a perfected, first priority and valid security interest in such
Collateral, free and clear of any Adverse Claim or Restrictions on
Transferability. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Collateral Agent as
"Secured Party" pursuant to Article VIII of this Agreement or, with respect to
-------------
the Transferred Receivables, in favor of the Borrower pursuant to the
Receivables Transfer Agreement.
(v) Each Transferred Receivable was purchased by or contributed to
the Borrower on the relevant Sale Date pursuant to the Receivables Transfer
Agreement.
(w) Each purchase of Receivables under the Receivables Transfer
Agreement will constitute (i) a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a purchase
or other acquisition of notes, drafts, acceptances, open accounts receivable or
other obligations representing part or all of the sales price of merchandise,
insurance or services within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended.
(x) All information heretofore or hereafter furnished by or on behalf
of the Borrower to the Collateral Agent, the Deal Agent or any Lender in
connection with this Agreement or any transaction contemplated hereby is and
will be true and complete in all material respects and does not and will not
omit to state a material fact necessary to make the statements contained therein
not misleading.
(y) The Borrower is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments arising in
the ordinary course of business) to the Pension Benefit Guaranty Corporation
("PBGC") (or any successor thereto) under ERISA.
----
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(z) (i) The Borrower is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporation restriction that could have, and no provision of
applicable law or governmental regulation is reasonably likely to have, a
material adverse effect on the condition (financial or otherwise), business,
operations, results of operations or properties of the Borrower, or could have
such an effect on the ability of the Borrower to carry out its obligations under
the Basic Documents to which the Borrower is a party and (ii) the Borrower is
not in default under or with respect to any contract, agreement, lease or other
instrument to which the Borrower is a party and which is material to the
Borrower's condition (financial or otherwise), business, operations or
properties, and the Borrower has not delivered or received any notice of default
thereunder.
(aa) There has been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations, or
properties of the Borrower.
(bb) The Borrower is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended. The making of the Advances by the Lenders, the application of the
proceeds and repayment thereof by the Borrower and the consummation of the
transactions contemplated by the Basic Documents to which the Borrower is a
party will not violate any provision of such Act or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
(cc) There is not now, nor will there be at any time in the future,
any agreement or understanding between the Parent and the Borrower (other than
as expressly set forth herein) providing for the allocation or sharing of
obligations to make payments or otherwise in respect of any taxes, fees,
assessments or other governmental charges.
(dd) Each of the representations and warranties of the Borrower
contained in the Basic Documents is true and correct in all material respects
and the Borrower hereby makes each such representation and warranty to, and for
the benefit of, the Collateral Agent, the Deal Agent and the Lenders as if the
same were set forth in full herein.
(ee) Schedule 2 lists all Lockboxes and the Lockbox Account maintained
by the Borrower or otherwise in respect of the Transferred Receivables.
Section 4.02. Representations and Warranties of the Borrower With
---------------------------------------------------
Respect to the Parent and the Transferred Receivables. The Borrower represents
-----------------------------------------------------
and warrants to the Lender, the Deal Agent and the Collateral Agent that on the
Effective Date it has entered into the Receivables Transfer Agreement with the
Parent and that, as of each Funding Date, the Parent has made the following
representations and warranties pursuant to such Receivables Transfer Agreement
as of each Sale Date, which representations and warranties are or will be true
and correct as of such Sale Date:
(a) With respect to the Parent:
(i) the Parent is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of its business requires it to be
so qualified;
(ii) the Parent has the power and authority to own, pledge,
mortgage, operate and convey all of its properties and assets, to execute
and deliver the Basic Documents and to perform the transactions
contemplated hereby and thereby;
(iii) the Parent is operated in such a manner that the Borrower
would not be substantively consolidated in the trust estate of the Parent
(that is, such that the separate corporate existence of the Borrower and
the Parent would be disregarded in the event of a bankruptcy or insolvency
of the Parent);
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(iv) the execution, delivery and performance by the Parent of
the Basic Documents and the transactions contemplated hereby and thereby
(A) have been duly authorized by all necessary corporate or other action on
the part of the Parent, (B) do not contravene or cause the Parent to be in
default under (1) the Parent's certificate or articles of incorporation or
by-laws, (2) any contractual restriction with respect to any Debt of the
Parent or its Affiliates, contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting the Parent or its property,
or (3) any law, rule, regulation, order, writ, judgment, award, injunction
or decree applicable to, binding on or affecting the Parent or its
property, and (C) do not result in or require the creation of any Adverse
Claim or Restrictions on Transferability upon or with respect to any of its
properties (other than in favor of the Borrower with respect to the
Receivables Transfer Agreement and the Lender and the Collateral Agent
under Article VIII of this Agreement);
(v) the Basic Documents have each been duly executed and
delivered by the Parent;
(vi) no approval or consent of, notice to, filing with or
licenses, permits, qualifications or other action by any Governmental
Authority or any other party, is required or necessary for the conduct of
the Parent's business as currently conducted and for the due execution,
delivery and performance by the Parent of the Basic Documents or for the
perfection of or the exercise by the Borrower, the Lenders, the Deal Agent
or the Collateral Agent of any of their rights or remedies hereunder or
thereunder, other than consents, notices, filings and other actions which
have been obtained or made and complete copies of which have been provided
to the Lenders, the Deal Agent and the Collateral Agent;
(vii) each Basic Document delivered by the Parent is (or upon
execution and delivery will be if not executed and delivered as of the date
hereof) the legal, valid and binding obligation of the Parent enforceable
against the Parent in accordance with its respective terms subject to (i)
any applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the
enforceability of creditors' rights generally and (ii) general equitable
principles, whether applied in a proceeding at law or in equity;
(viii) there is no pending or threatened, nor any reasonable
basis for any, action, suit or proceeding, against or affecting the Parent,
its officers or directors, or the property of the Parent, in any court or
tribunal, before any arbitrator of any kind or before or by any
Governmental Authority (A) asserting the invalidity of the Basic Documents,
(B) seeking to prevent the transfer, sale, contribution, or pledge of any
Receivable or the consummation of any of the transactions contemplated
hereby or thereby, (C) seeking any determination or ruling that might
materially and adversely affect (1) the performance by the Borrower or the
Parent of its obligations under the Basic Documents, (2) the validity or
enforceability of the Basic Documents, (3) the Transferred Receivables, the
Contracts or the interests or the Borrower or the Lender therein, or (4)
the federal income tax attributes of the contribution, sale or pledge of
the Transferred Receivables, or (D) asserting a claim for payment of money
in excess of $500,000 (other than such judgments or orders in respect of
which adequate insurance is maintained by the Parent for the payment
thereof);
(ix) no injunction, writ, restraining order or other order of
any nature adverse to the Parent or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by
the Basic Documents has been issued by a Governmental Authority nor been
sought by any Person;
(x) the principal place of business and chief executive office
of the Parent are located at the address of the Parent referred to in the
Receivables Transfer Agreement and there are now no, and during the past
four months there have not been any, other locations where the Parent is
located (as that term is used in the UCC of the jurisdiction where such
principal place of business is located) or keeps Records;
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(xi) the legal name of the Parent is as set forth at the
beginning of this Agreement and the Parent has not changed its name in the
last six (6) years, and during such period the Parent did not use, nor does
the Parent now use, any tradenames, fictitious names, assumed names or
"doing business as" names;
(xii) the Parent is solvent and will not become insolvent after
giving effect to the transactions contemplated by the Basic Documents, the
Parent is paying its Debts as they mature; the Parent has not incurred
Debts beyond its ability to pay as they mature; and the Parent, after
giving effect to the transactions contemplated by the Basic Documents, will
have an adequate amount of capital to conduct its business in the
foreseeable future;
(xiii) for federal income tax, reporting and accounting purposes,
the Parent will treat the sale of each Receivable sold or assigned pursuant
to the Receivables Transfer Agreement as a sale of, or absolute assignment
of, its full right title and ownership interest in such Receivable to the
Borrower (and those Receivables contributed to the Borrower by the Parent
pursuant to the Receivables Transfer Agreement shall be accounted for as an
increase in the stated capital of the Borrower), and the Parent has not in
any other respect accounted for or treated the transactions contemplated by
the Basic Documents;
(xiv) the Parent has complied in all material respects with all
applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Receivables and related Contracts
(including, without limitation, all applicable environmental, health and
safety requirements) and all restrictions contained in any indenture, loan
or credit agreement, mortgage, security agreement, bond, note or other
agreement or instrument binding on or affecting the Parent or its property,
and has and maintains all permits, licenses, authorizations, registrations,
approvals and consents of Governmental Authorities for (A) the activities
and business of the Parent and each of its Subsidiaries as currently
conducted and as proposed to be conducted, (B) the ownership, use,
operation and maintenance by each of them of its properties, facilities and
assets, and (C) the performance by the Parent and the Borrower of the Basic
Documents (hereinafter referred to collectively as "Governmental
------------
Consents"), with respect to which any noncompliance or failure to maintain
--------
such items would, separately or in the aggregate, have a material adverse
effect;
(xv) no practice, procedure or policy employed or proposed to
be employed by the Parent in the conduct of its business violates any law,
regulation, Judgment, agreement, order or decree applicable to the Parent
which, if enforced, would have a material adverse effect on (1) the
performance by the Borrower or the Parent of its obligations under the
Basic Documents to which it is a party, (2) the validity or enforceability
of the Basic Documents, (3) the Transferred Receivables or the Contracts or
the interests of the Borrower or the Lender therein, or (4) the federal
income tax attributes of the contribution, sale or pledge of the
Transferred Receivables;
(xvi) without limiting the generality of the prior
representation, no condition exists or event has occurred which, in itself
or with the giving of notice or lapse of time or both, would result in the
suspension, revocation, impairment, forfeiture or non-renewal of any
Governmental Consent applicable to the Parent or any Subsidiary except
where such events or conditions would not, separately or in the aggregate,
have a material adverse effect on (1) the performance by the Borrower or
the Parent of its obligations under the Basic Documents to which it is a
party, (2) the validity or enforceability of the Basic Documents, (3) the
Transferred Receivables or the Contracts or the interests of the Borrower
or Lenders therein, or (4) the federal income tax attributes of the
contribution, sale or pledge of the Transferred Receivables;
(xvii) the Parent has filed on a timely basis all tax returns,
(including, without limitation, foreign, federal, state, local and
otherwise) required to be filed and has paid or made adequate provisions
for the payment of all taxes, fees, assessments and other governmental
charges due from the Parent; no tax lien or similar Adverse Claim has been
filed, and no claim is being asserted, with respect to any such tax, fees,
assessment or other governmental charge. Any taxes, fees, assessments and
other
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governmental charges payable by the Parent in connection with the execution
and delivery of the Basic Documents and the transactions contemplated
hereby or thereby have been paid or shall have been paid if and when due at
or prior to such Sale Date;
(xviii) with respect to the Parent or any of its Subsidiaries,
there has occurred no event which has or is reasonably likely to have a
material adverse affect on the Parent's operations, including its ability
to perform its obligations under the Basic Documents as Parent, Servicer or
otherwise;
(xix) the Parent is licensed or otherwise has the lawful right
to use all patents, trademarks, servicemarks, tradenames, copyrights,
technology, know-how and processes used in or necessary for the conduct of
its business as currently conducted that are material to its financial
condition, business, operations, results of operations and assets,
individually or taken as a whole;
(xx) (i) (A) the consolidated balance sheets of the Parent and
its consolidated Subsidiaries for each of the last three fiscal years in
the period ending prior to the Balance Sheet Date as delivered prior to
such Sale Date and the related statements of income and shareholders'
equity of the Parent and its consolidated Subsidiaries for such fiscal
years then ended, certified without qualification by independent certified
public accountants, copies of which have been furnished to the Deal Agent,
are complete and correct, fairly present the consolidated financial
condition, business, operations and results of operations of the Parent and
its consolidated Subsidiaries as at such date and the consolidated results
of the operations of the Parent and its consolidated Subsidiaries for the
periods ended on such dates, all in accordance with GAAP and (B) the
unaudited consolidated balance sheets and the related statements of income
and shareholders' equity of the Parent and its consolidated Subsidiaries
for each fiscal quarter in the period since the most recent consolidated
balance sheet and related statement of income and shareholders' equity
referred to in clause (A) above and ended at least 45 days prior to such
Sale Date, copies of which have been furnished to the Deal Agent are
complete and correct and fairly present the consolidated financial
condition, business and operations of the Parent and its consolidated
Subsidiaries as of the last day of such fiscal quarters and the
consolidated results of the operations of the Parent and its consolidated
Subsidiaries for the periods ended on such dates, all in accordance with
GAAP, and (ii) since the last date for which a balance sheet of the Parent
and its consolidated Subsidiaries has been delivered to the Lender and the
Deal Agent, except as disclosed to the Deal Agent, there has been no
material adverse change in any such condition, business, operations or
results of operations;
(xxi) since the last unaudited quarterly financial statements
of the Company, except as otherwise disclosed to the Deal Agent, there have
been no material adverse changes in the financial condition or results of
operation and there have been no material increases in the liabilities
(liquidated or contingent) and no material decreases in the assets of the
Parent or the Borrower other than normal recurring seasonal changes
consistent with prior years' experience;
(xxii) each Request Notice contains a complete and accurate list
of all Transferred Receivables sold or contributed by the Parent to the
Borrower as of its date;
(xxiii) there has been no material adverse change in the
condition (financial or otherwise), business, operations, results of
operations or properties of the Parent since the Balance Sheet Date;
(xxiv) no Obligor of an Eligible Receivable being sold on any
Sale Date has any claim of a material nature against or affecting the
Parent or the property of the Parent;
(xxv) each pension plan or profit sharing plan to which the
Parent or any Affiliate is a party has been administered and fully funded
in accordance with the obligations of the Parent under law
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and as set forth in such plan, and the Parent has complied with the
applicable provisions of ERISA in effect as of such Sale Date;
(xxvi) each Obligor of a Transferred Receivable (excluding
Allotment Obligors) has been directed, and is required to, remit or wire
all payments with respect to such Receivable for deposit in a Lockbox or
the Lockbox Account;
(xxvii) the Parent has valid business reasons for selling or
contributing its interests in the Transferred Receivables rather than
obtaining a loan with the Transferred Receivables as collateral;
(xxviii) the Parent has not agreed to pay any fee or commission
to any agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with the Basic Documents or
the transactions contemplated hereby or thereby which would give rise to
any valid claim against the Borrower for any brokerage commission, finder's
fee or like payment;
(xxix) all information heretofore or hereafter furnished by the
Parent or any Affiliate of the Parent with respect to the Parent to the
Borrower, Lenders, Deal Agent or Collateral Agent in connection with any
transaction contemplated by the Basic Documents is and will be true and
complete in all material respects and does not and will not omit to state a
material fact necessary to make the statements contained herein or therein
not misleading. With respect to the Parent, there has occurred no event
which has or is reasonably likely to have a material adverse effect
thereon;
(xxx) no part of the proceeds received by the Parent or any
Affiliate from the Sale Price will be used directly or indirectly for the
purpose of purchasing or carrying, or for payment in full or in part of,
Debt that was incurred for the purposes of purchasing or carrying, any
"margin stock," as such term is defined in (S) 221.3 of Regulation U of the
Board of Governors of the Federal Reserve System;
(xxxi) there is not now, nor will there be at any time in the
future, any agreement or understanding between the Parent and the Borrower
(other than as expressly set forth herein) providing for the allocation or
sharing of obligations to make payments or otherwise in respect of any
taxes, fees, assessments or other governmental charges;
(xxxii) no transaction contemplated by the Basic Documents
requires compliance with any bulk sales act or similar law;
(xxxiii) each purchase of Receivables under the Receivables
Transfer Agreement will constitute (A) a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended, and
(B) a purchase or other acquisition of notes, drafts, acceptances, open
accounts receivable or other obligations representing part or all of the
sales price of merchandise, insurance or services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended;
(xxxiv) (A) the Parent is not a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject
to any charter or corporation restriction that is reasonably likely to
have, and no provision of applicable law or governmental regulation is
reasonably likely to have, a material adverse effect on the condition
(financial or otherwise), business, operations, results of operations, or
properties of the Parent, or could, have such an effect on the ability of
the Parent to carry out its obligations under the Basic Documents to which
the Parent is a party and (B) the Parent is not in default under or with
respect to any contract, agreement, lease or other instrument to which the
Parent is a party and which is material to the Parent's condition
(financial or otherwise), business, operations, results of operations, or
properties, and the Parent has not delivered or received any notice of
default thereunder;
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(xxxv) the Parent is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the investment Company
Act of 1940 as amended. The purchase or acquisition of the Transferred
Receivables by the Borrower, the application of the proceeds and the
consummation of the transactions contemplated by the Basic Documents to
which the Parent is a party will not violate any provision of such Act or
any rule, regulation or order issued by the Securities and Exchange
Commission thereunder;
(xxxvi) the bylaws or the articles of incorporation of the
Parent require it to maintain (A) books and records of account, and (B)
minutes of the meetings and other proceedings of its shareholders and board
of directors; and
(xxxvii) each of the representations and warranties of the Parent
contained in the Basic Documents is true and correct in all material
respects and the Parent hereby makes each such representation and warranty
to, and for the benefit of, the Collateral Agent, the Deal Agent and the
Lenders as if the same were set forth in full herein.
(b) With respect to each Transferred Receivable:
(i) the Required Information contained in the Request Notice
and the Sale Assignment is true and correct;
(ii) such Receivable is an Eligible Receivable, and is a
receivable arising in connection with a Contract in the ordinary course of
the Parent's business in a current transaction;
(iii) such Receivable was created in accordance with the
requirements of (A) a Contract and (B) the Credit and Collection Policies;
(iv) a copy of any related Contract to which the Parent is a
party has been delivered to the Deal Agent and the Collateral Agent;
(v) such Receivable represents the genuine, legal, valid and
binding obligation in writing of the Obligor enforceable by the holder
thereof in accordance with its terms subject to (A) any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the enforceability of
creditors' rights generally and (B) general equitable principles, whether
applied in a proceeding at law or in equity, and neither the Receivable nor
the related Contract has been satisfied, subordinated, rescinded or amended
in any manner;
(vi) neither the Receivable nor the related Contract is or
will be subject to any exercise of any right of rescission, set-off,
recoupment, counterclaim or defense, whether arising out of transactions
concerning the Contract or otherwise;
(vii) prior to its sale or contribution to the Borrower such
Receivable was owned by the Parent free and clear of any Adverse Claim or
Restrictions on Transferability, and the Parent had the right to
contribute, sell, assign and transfer the same and interests therein as
contemplated under the Receivables Transfer Agreement and, upon such sale
or contribution, the Borrower acquired a valid ownership interest in such
Receivable, free and clear of any Adverse Claim and any other Restriction
on Transferability;
(viii) this Agreement and the Sale Assignment related to such
Receivable constitute a valid sale, contribution, transfer, assignment,
set-over and conveyance to the Borrower of all right, title and interest of
the Parent in and to such Receivable;
(ix) such Receivable was purchased or contributed under the
Receivables Transfer Agreement, and the Receivables Transfer Agreement and
the related Sale Assignment constitutes a valid
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transfer, assignment, set-over and conveyance to the Borrower of all right,
title and interest of the Parent in and to such Receivable sold or
contributed thereunder;
(x) such Receivable is entitled to be paid pursuant to the
terms of the related Contract, has not been paid in full or been
compromised, adjusted, extended, satisfied, subordinated, rescinded or
modified, and is not subject to compromise, adjustment, extension,
satisfaction, subordination, rescission or modification by the Parent;
(xi) the Parent has submitted to the Obligor all necessary
documentation (including an invoice) for payment of such Receivable and has
fulfilled all its other obligations in respect thereof;
(xii) any stated term of such Receivable is not greater than 60
months;
(xiii) such Receivable is an "account" or "chattel paper" within
the meaning of the UCC of the jurisdiction where the Parent's chief
executive office is located;
(xiv) neither such Receivable nor the related Contract
contravenes in any material respect any laws, rules or regulations
applicable thereto (including, without limitations, laws, rules and
regulations relating to usury, consumer protection, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and no party to such related Contract is
in violation of any such law, rule or regulation in any material respect;
(xv) such Receivable does not arise from a transaction for
which any additional performance by Borrower or acceptance or other act of
the Obligor remains to be performed as a condition to payments on such
Receivable;
(xvi) there are no proceedings or investigations pending or
threatened before any Governmental Authority (A) asserting the invalidity
of such Receivable or such Contract, (B) asserting the bankruptcy or
insolvency of the related Obligor, (C) seeking the payment of such
Receivable or payment and performance of such Contract, or (D) seeking any
determination or ruling that might materially and adversely affect the
validity or enforceability of such Receivable or such Contract;
(xvii) as of the applicable date of transfer thereunder, no
Obligor on such Receivable is bankrupt, is insolvent, is unable to make
payment of its obligations when due, is the debtor in a voluntary or
involuntary bankruptcy proceeding, or is the subject of a comparable
receivership or insolvency proceeding, other than Obligors under the
protection of a bankruptcy court or receivership which has approved payment
by any such Obligor of such Receivable; and
(xviii) the Parent has no knowledge of any fact (including any
defaults by the Obligor on any other accounts) which should have led it to
expect at the time of transfer of such Receivable that any Scheduled
Payment of such Receivable would not be paid in full when due or to expect
any other material adverse effect on (A) the performance by the Parent or
the Borrower of its obligations under the Basic Documents, (B) the validity
or enforceability of any of the Basic Documents to which it is a party, (C)
the Transferred Receivables or the Contracts or the interests of the
Borrower or Lender therein or (D) the federal income tax attributes of the
contribution, sale or pledge of the Transferred Receivables; and
(xix) the Military Assistance Command or, if applicable, each
financial institution making payments on behalf of any Allotment Obligor
has been directed, and is required to, remit all payments with respect to
the Transferred Receivables for deposit in the lockbox account maintained
by the Servicer for receipt of such funds;
The Borrower hereby certifies that (A) the benefits of such representations and
warranties of the Parent have been assigned to the Lenders and the Collateral
Agent; (B) the rights of the Borrower under the Receivables Transfer
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Agreement to require a capital contribution or payment of a Rejected Amount from
its Parent may be enforced by the Lenders and the Collateral Agent; and (C) the
Receivables Transfer Agreement provides that the representations, warranties and
covenants described in Sections 4.01, 4.02 and 4.03 shall survive the sale of
the Transferred Receivables and the termination of the Receivables Transfer
Agreement and this Agreement.
Section 4.03. Representations and Warranties of the Servicer. The
----------------------------------------------
Servicer represents and warrants to the Lenders, the Deal Agent and the
Collateral Agent as follows as of the date hereof:
(a) The Servicer is a corporation duty organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and is
duly qualified to do business, and is in good standing, in every jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The Servicer has the power and authority to execute and deliver
this Agreement and the transactions contemplated hereby.
(c) The execution, delivery and performance by the Servicer of each
Basic Document to which it is a party and all other agreements, instruments and
documents which may be delivered by it pursuant hereto and thereto and the
transactions contemplated hereby and thereby (i) have been duly authorized by
all necessary corporate or other action on the part of the Servicer, (ii) do not
contravene or cause the Servicer to be in default under (A) its charter or by-
laws, (B) any contractual restriction with respect to any Debt of the Servicer
or contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note or other agreement or instrument binding on or
affecting it or its property, or (C) any law, rule, regulation, order, writ,
judgment, award, injunction or decree binding on or affecting it or its
property, and (iii) do not result in or require the creation of any Adverse
Claim upon or with respect to any of its properties.
(d) Each Basic Document to which it is a party has been duly executed
and delivered by the Servicer.
(e) No consent of, notice to, filing with or permits, qualifications
or other action by any Governmental Authority or any other party is required for
the due execution, delivery and performance by the Servicer of any Basic
Document to which it is a party or any other agreement, document or instrument
to be delivered hereunder other than any consents, notices, permits,
qualifications, filings or other actions which have been obtained or made and
complete copies of which have been provided to the Deal Agent and the Collateral
Agent.
(f) Each Basic Document to which it is a party is the legal, valid
and binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the enforceability of creditors' rights generally and
general equitable principles, whether applied in a proceeding at law or in
equity.
(g) There is no pending or threatened, nor any reasonable basis for
any, action, suit, investigation or proceeding of a material nature against or
affecting the Servicer, its officers or directors, or the property of the
Servicer, in any court or tribunal, before any arbitrator of any kind or before
or by any Governmental Authority (i) asserting the invalidity of any Basic
Document or any document to be delivered by the Servicer hereunder or
thereunder, or (ii) seeking any determination or ruling that might materially
and adversely affect (A) the performance by the Servicer of its obligations
under any Basic Document, or (B) the validity or enforceability of any Basic
Document or any document to be delivered by the Servicer hereunder or
thereunder.
(h) No injunction, writ, restraining order or other order of any
material nature adverse to the Servicer or the conduct of its business or which
is inconsistent with the due consummation of the transactions contemplated by
the Basic Documents has been issued by a Governmental Authority or, to the
knowledge of the Servicer, has been sought by any other Person.
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(i) The Servicer has filed all tax returns (including, without
limitation, foreign, federal, state, local and otherwise) required to be filed
by it and has paid or has made adequate provision for the payment of all taxes,
fees, assessments and other governmental charges due from the Servicer, no tax
lien or other similar Adverse Claim has been filed, and no claim has been filed,
and no claim is being asserted, with respect to any such tax, fee, assessment or
other governmental charge. Any taxes, fees and other governmental charges
payable by the Servicer in connection with the transactions contemplated by the
Basic Documents and the execution and delivery of the Basic Documents have been
paid or shall have been paid at or prior to the earlier of the Effective Date
and the date the Policy is issued as specified therein.
(j) The Servicer is not required to be registered as an "investment
company" under the Investment Company Act.
(k) Each of the representations and warranties of the Servicer
contained in the Basic Documents is true and correct in all material respects
and the Servicer hereby makes each such representation and warranty contained in
the Basic Documents to, and for the benefit of, the Lenders, the Deal Agent and
the Collateral Agent.
(l) The Servicer is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments arising in
the ordinary course of business) to the PBGC (or any successor thereof) under
ERISA.
(m) There has been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations or
properties of the Servicer since the Balance Sheet Date.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants of the Borrower. The Borrower
-------------------------------------
shall, unless the Deal Agent shall otherwise consent in writing:
(a) perform each of its obligations under the Basic Documents and
comply in all respects with all of its obligations under the Basic Documents and
comply with all applicable laws, rules, regulations and orders with respect to
the Basic Documents, to its business and properties and all Transferred
Receivables, related Contracts and Collections with respect thereto;
(b) preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation and shall conduct its
business in accordance with the terms of its certificate of incorporation and
bylaws;
(c) engage exclusively in the activities contemplated by the Basic
Documents;
(d) continue to operate its business in the manner set forth in
Sections 4.01 (d) and (e);
(e) cause to be delivered to Deal Agent and the Collateral Agent on
or before 90 days after the end of each year,(i) an Officer's Certificate of the
Borrower, dated the date of such delivery, bringing down to such date the
matters set forth in the Officer's Certificate in the form of Exhibit E
delivered pursuant to Section 3.01(c)(iv), and (ii) an Officer's Certificate of
the Servicer, dated the date of such delivery, bringing down to such date the
matters set forth in the Officer's Certificate in the form of Exhibit F
delivered pursuant to Section 3.01(d)(iv);
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(f) deposit all Collections it may receive (i) in respect of
Transferred Receivables into the Lockbox Account within one Business Day of
receipt and (ii) in respect of Receivables transferred or sold to a third party
in connection with any securitization into the Collection Account within two
Business Days of receipt;
(g) use the proceeds of the Advances made hereunder solely for (i)
the purchase of Receivables from the Parent, (ii) payment of dividends to its
shareholder, and (iii) payment of administrative fees or Servicing Fees or
expenses to the Parent or routine administrative expenses;
(h) have or maintain a positive Consolidated Net Worth Percentage;
(i) cooperate fully with all requests of the Deal Agent and the
Collateral Agent regarding the information any documents necessary or desirable
to allow each of the Lenders, the Deal Agent and the Collateral Agent to carry
out its responsibilities hereunder;
(j) permit the Lender, the Deal Agent and the Collateral Agent to
make or cause to be made (and, after the occurrence of and during the
continuance of a Termination Event, at the Borrower's expense) inspections and
audits of any books, records and papers of the Borrower and the Servicer and to
make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Borrower and the Servicer,
on reasonable notice, at all such reasonable times and as often as required in
order to assure that the Borrower is and will be in compliance with its
obligations under the Basic Documents or to evaluate the Lenders' investment in
the then outstanding Notes;
(k) pay, perform and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due, unless and to the
extent only that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by the Borrower and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of an Adverse Claim against any of its properties;
(l) upon request of the Collateral Agent or the Deal Agent, xxxx all
of its Records to show the interests of the Lenders and Collateral Agent;
(m) promptly notify the Deal Agent in writing of any litigation,
legal proceeding or dispute, whether or not in the ordinary course of business,
adversely affecting the Borrower, whether or not fully covered by insurance, and
regardless of the subject matter thereof; and
Section 5.02. Reporting Requirements of the Borrower. The Borrower
--------------------------------------
shall furnish, or cause to be furnished, to the Deal Agent and the Collateral
Agent:
(a) (i) before 5:00 p.m. Eastern time on the date of each Requested
Advance, a Borrowing Base Certificate; and (ii) monthly, as soon as available,
and in any event, not later than the Report Date, a Monthly Report in the form
of Exhibit G;
(b) as soon as available and in any event within 90 days (or the next
succeeding Business Day if the last day of such period is not a Business Day)
after the end of each fiscal year, a copy of the annual 10-K report and audited
consolidated financial statements for such year for the Parent and its
consolidated Subsidiaries, certified, in a manner acceptable to the Deal Agent
and the Collateral Agent, by independent public accountants acceptable to the
Deal Agent and the Collateral Agent and each other report or statement sent to
shareholders or publicly filed by the Parent or the Borrower;
(c) as soon as available and in any event within 45 days (or next
succeeding Business Day if the last day of such period is not a Business Day)
after the end of each of the first three quarters of each fiscal year of the
Parent, a consolidated balance sheet of the Parent and its consolidated
Subsidiaries as of the end of such quarter and including the prior comparable
period, and consolidated statements of income and retained
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earnings, and of cash flow, of the Parent and its consolidated Subsidiaries for
such quarter and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by the chief financial
officer or chief accounting officer of the Parent identifying such documents as
being the documents described in this paragraph (c) and stating the information
set forth therein fairly presents the financial condition of the Parent and its
consolidated Subsidiaries as of and for the periods then ended, subject to year-
end adjustments consisting only of normal, recurring accruals and confirming
that the Parent is in compliance with all financial covenants in this Agreement;
(d) as soon as possible and in any event within five days after the
occurrence of a Termination Event (including without limitation a material
adverse change in the financial condition of the Borrower as determined by the
Deal Agent and notified in writing to the Borrower) or a Potential Termination
Event, the statement of the chief executive officer of the Borrower setting
forth complete details of such Termination Event or Potential Termination Event
and the action which the Borrower has taken, is taking and proposes to take with
respect thereto;
(e) as soon as available and in any event within 90 days after the
end of each fiscal year, a letter from a firm of independent public accountants
acceptable to the Deal Agent (and upon which the Deal Agent and the Collateral
Agent may rely) to the effect that such firm has examined the Monthly Reports
and issued its report therefor and that such examination (1) was made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm consisted necessary in the circumstances; (2) included tests relating to
auto loans serviced for others in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers (the "Program"), to the extent
-------
the procedures in the Program are applicable to the servicing obligations set
forth in this Agreement; (3) included an examination of the delinquency and loss
statistics relating to the Borrower's portfolio of automobile and light truck
installment sales contracts; and (4) except as described in the report,
disclosed no exceptions or errors in the records relating to automobile and
light truck loans serviced for others that, in the firm's opinion, paragraph
four of the Program requires such firm to report. The accountant's report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Borrower certificates; (2) except as disclosed
in the report, no exceptions or errors in the Borrower certificates were found;
(3) the delinquency and loss information, relating to the Receivables contained
in the Borrower certificates were found to be accurate and (4) except for (i)
such exceptions as such firm shall believe to be immaterial, and (ii) such other
exceptions as shall be set forth in such statement; such firm has examined the
Monthly Reports delivered during the previous calendar year (including the
Borrowing Base Certificates attached thereto) and such Records relating to the
Transferred Receivables as such firm deems necessary as a basis for the report
contemplated by this Section 5.02(e);
(f) not later than each Report Date, such reports determined by the
Deal Agent to be necessary for the Parent to track and monitor the Contracts,
Collections, Financed Vehicles and insurance, which reports shall include,
without limitation, the reports set out in Exhibit H accompanied by such other
information and certifications as set out in Exhibit H; and
(g) promptly, from time to time, such other information, documents,
records or reports respecting the Transferred Receivables or the Contracts or
the condition or operations, financial or otherwise, of the Borrower, or the
Parent or any of its Subsidiaries, as the Deal Agent or the Collateral Agent
may, from time to time, reasonably request.
Section 5.03. Negative Covenants of the Borrower. The Borrower shall
----------------------------------
not, without the written consent of the Required Investors, the Deal Agent and
the Collateral Agent:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist or consent to, cause or permit in the
future (upon the happening of a contingency or otherwise) the creation,
incurrence or existence of, any Adverse Claim or Restriction on Transferability
(and any such purported disposition shall be null and void), upon or with
respect to any Transferred Receivable or related Contract with respect thereto,
or upon or with respect to the Lockbox Account, the Lockboxes, the Collection
Account, the
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Successor Servicer Reserve Account or any other account to which any Collections
of any Receivable are deposited or any other Collateral or any of the Borrower's
property, or assign any right to receive income, in respect thereof;
(b) extend, amend, forgive, discharge, compromise, waive, cancel or
otherwise modify the terms of the any Basic Document, the Credit and Collection
Policies or of any Transferred Receivable, or amend, modify or waive any term or
condition of any Contract related thereto;
(c) make any change in its instructions (i) to Obligors regarding
payments to the Lockbox Account or Lockboxes (other than to a new Lockbox
Account pursuant to Section 6.01(a)(iii)) or (ii) with respect to Allotment
Obligors regarding payments to be made to the Borrower or to be deposited to the
lockbox account maintained by the Servicer for the receipt of such funds;
(d) amend its articles or certificate of incorporation, its by-laws
or any Basic Document;
(e) except as otherwise provided herein or in the Receivables
Transfer Agreement, merge with or into, consolidate with or into, convey,
transfer, lease or otherwise dispose of all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets or capital stock or other ownership interest of, any Person
(whether in one transaction or in a series of transactions), or own any
Subsidiary;
(f) prepare any financial statements which shall account for the
transactions contemplated by the Receivables Transfer Agreement in any manner
other than as a purchase or absolute assignment of the Transferred Receivables
to the Borrower from the Parent, or in any other respect account for or treat
the transactions contemplated hereby (including but not limited to, for
accounting, tax and reporting purposes) in any manner other than as a purchase
or absolute assignment of the Transferred Receivables to the Borrower from the
Parent;
(g) at any time (i) advance credit to any Person, or (ii) declare any
dividends, or return any capital, if after giving effect to such distribution,
there would be a Borrowing Excess;
(h) create, incur, permit to exist or have outstanding any Debt,
except:
(i) Debt of the Borrower to the Lenders, any Affected Party or
any Indemnified Party under this Agreement and the Notes;
(ii) taxes, assessments and governmental charges, non-interest
bearing accounts payable and accrued liabilities, in any case not more than
90 days past due from the original due date thereof, and non-interest
bearing deferred liabilities other than for borrowed money (e.g., deferred
taxes), in each case incurred and continuing in the ordinary course of
business; and
(iii) the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
(i) issue any additional shares or any right or option to acquire any
shares, or any security convertible into any shares, of the capital stock of the
Borrower;
(j) except as otherwise provided herein or in the Receivables
Transfer Agreement, enter into, or be a party to, any transaction with any
Person, other than pursuant to this Agreement or the Receivables Transfer
Agreement; or
(k) make or suffer to exist any purchases of assets or investments in
any Person, including, without limitation, any shareholder, director, officer or
employee of the Borrower or any of the Parent's other Subsidiaries, except
Transferred Receivables and Permitted Investments.
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Section 5.04. Borrower Hedging Instruments.
----------------------------
(a) If, as of any date of determination greater than six (6) months
after the Effective Date of this Agreement, the Parent or its Affiliates have
not entered into a Securitization within the past six (6) months, the Borrower
shall obtain a Hedging Instrument in form and substance satisfactory to the Deal
Agent with a Hedging Counterparty with an aggregate notional amount equal to 60%
or more of the aggregate Contract Principal Balance of Transferred Receivables;
provided, however, if the Termination Event described Section 9.01(r) hereof has
-------- -------
previously occurred, such aggregate notional amount shall equal 80% of the
aggregate Contract Principal Balance of Transferred Receivables.
(b) All Hedging Instruments shall be obligations of VFCC, provided,
--------
that in the event of a purchase under the Liquidity Purchase Agreement, a pro-
rata interest of the related obligations of VFCC shall be assumed (and a
corresponding pro-rata interest of VFCC's rights shall be taken) by the related
Investor on and after the date of such purchase.
(c) Each Hedging Instrument that provides for any payment obligation
of the VFCC must (i) be nonrecourse to VFCC, (ii) contain a non-petition
covenant provision in the form of Section 14.05 hereof, (iii) contain a
provision limiting any payments due under the Hedging Instrument solely to funds
available therefor pursuant to Article VI hereof, and (iv) provide for the
termination or assumption of the Hedging Instrument upon the transfer of the
Receivables from VFCC.
ARTICLE VI
COLLECTIONS AND DISBURSEMENTS; FEES
Section 6.01. Establishment of Accounts.
-------------------------
(a) Lockbox Account.
---------------
(i) The Deal Agent and Servicer have jointly established and
shall maintain in the name of the Borrower in trust for the Collateral
Agent a segregated account with a Lockbox Account Bank and controlled by
the Collateral Agent titled "CPS Warehouse Corp. in trust for First Union
--------------------------------------------
National Bank, secured party--Lockbox Account". The Borrower agrees that
---------------------------------------------
the Collateral Agent shall have exclusive dominion and control of the
Lockbox Account and all monies, instruments and other property from time to
time in the Lockbox Account.
(ii) The Borrower and the Servicer and the Parent, as the case
may be, shall instruct all Obligors (other than Allotment Obligors) to make
or wire all payments on the Receivables to the Lockbox Account or Lockbox,
as the case may be, and all Collections on Receivables, will, pending
remittance to the Collection Account, be held for the benefit of the
Collateral Agent and immediately after such proceeds have cleared and
become available in accordance with the policies of the Lockbox Account
Bank, shall be deposited directly into the Collection Account.
(iii) in the event that the Lockbox Agreement terminates for any
reason or the Lockbox Account Bank fails to comply with its obligations
under the Lockbox Agreement for any reason, then the Borrower shall
promptly notify all Obligors to make all future payments to a new Lockbox
Account established in accordance with the next succeeding sentence with
the Lockbox Account Bank or another depositary institution. The Borrower
shall not close such existing Lockbox Account unless it shall have (1)
received the prior written consent of the Deal Agent and the Collateral
Agent, (2) established a new account with the Lockbox Account Bank or with
a new depositary institution satisfactory to the Deal Agent and the
Collateral Agent, (3) entered into an agreement covering such new account
with the Lockbox Account Bank or with such new depositary institution
substantially in the form of such Lockbox Agreement which is satisfactory
in all respects to the Deal Agent and the Collateral
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Agent (whereupon, for all purposes of the Basic Documents, such new account
shall become such Lockbox Account, such new agreement shall become such
Lockbox Agreement and any new depositary institution shall become the
Lockbox Account Bank), and (4) taken all such action as the Collateral
Agent shall require to grant and perfect a first priority security interest
in such new Lockbox Account to the Collateral Agent under Section 8.01 of
this Agreement.
(b) Collection Account. (i) The Deal Agent, as agent for the
------------------
Collateral Agent, has established and shall maintain a segregated deposit
account with the Depositary titled "Variable Funding Capital Corporation--
-------------------------------------
Collection Account (CPS Warehouse Corp.)". The Borrower agrees that the Deal
----------------------------------------
Agent shall have exclusive dominion and control of the Collection Account and
all monies, instruments and other property from time to time in the Collection
Account.
(ii) Pursuant to Section 6.02, the Collateral Agent shall
instruct the Lockbox Account Bank to transfer, on each Business Day in same
day funds, all available funds deposited in the Lockbox Account before such
Business Day to the Collection Account. In addition to the amount deposited
into the Lockbox Account, the Borrower and Servicer will deposit or cause
to be deposited in the Collection Account all cash, checks, money orders,
wire transfers or moneygrams or other Proceeds received in respect of
Transferred Receivables immediately upon the receipt thereof in the
original form received (if other than cash). Moreover, the Servicer shall,
within one Business Day of receipt, transfer all Collections on behalf of
Allotment Obligors, in respect of Transferred Receivables directly to the
Collection Account. Until so deposited, all such Proceeds shall be held in
trust for the Collateral Agent by the Borrower or Servicer, as the case may
be. The Lenders, the Deal Agent and the Collateral Agent may deposit into
the Collection Account from time to time all monies, instruments and other
property received by any of them as Proceeds of the Transferred
Receivables. On each Settlement Date before the Commitment Termination
Date, so long as no Termination Event shall have occurred and be
continuing, the Deal Agent shall (or shall permit the Servicer to) instruct
and cause the Depositary to release funds on deposit in the Collection
Account in the order of priority set forth in Section 6.04. On each
Business Day on and after the Commitment Termination Date and on each
Business Day during any period while a Termination Event has occurred and
is continuing, the Collateral Agent may and the Deal Agent shall apply all
amounts when received in the Collection Account in the order of priority
set forth in Section 6.05.
(iii) In the event that the Depositary wishes to resign as
depositary of the Collection Account for any reason or fails to carry out
the instructions of the Deal Agent or the Collateral Agent for any reason,
then VFCC or the Deal Agent shall promptly notify all Secured Parties. The
Deal Agent shall not close the Collection Account unless it shall have (A)
received the prior written consent of the Deal Agent and the Collateral
Agent, (B) established a new account with the Depositary or with a new
depositary institution satisfactory to the Deal Agent and the Collateral
Agent, (C) entered into an agreement covering such new account with such
new depositary institution satisfactory in all respects to the Deal Agent
and the Collateral Agent (whereupon such new account shall become the
Collection Account for all purposes of the Basic Documents), and (D) taken
all such action as the Collateral Agent shall require to grant and perfect
a first priority security interest in such new Collection Account to the
Collateral Agent under this Agreement.
(c) Successor Servicer Reserve Account. If at any time the financial
----------------------------------
covenants in Section 7.06 are not met, the Borrower, for the benefit of the
Collateral Agent, shall cause to be established and maintained a deposit account
with the Depositary (the "Successor Servicer Reserve Account") which shall be
----------------------------------
identified as the "Successor Servicer Reserve Account in trust for First Union
-----------------------------------------------------------
National Bank, as Collateral Agent" and shall bear a designation clearly
----------------------------------
indicating that the funds deposited therein are held for the benefit of the
Lenders.
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(d) Application of Successor Servicer Reserve Account.
-------------------------------------------------
(i) If the fees and expenses payable in connection with
setting up the Successor Servicer remain unpaid on any Settlement Date,
such unpaid amount shall be withdrawn from the Successor Servicer Reserve
Account on such Settlement Date and deposited into the Collection Account
for application under Section 6.04(a)(ii) and Section 6.05(b).
(ii) If, after giving effect to the allocations of,
distributions from, and deposits in, the Successor Servicer Reserve Account
on any Settlement Date, the amount in the Successor Servicer Reserve
Account is greater than the Required Reserve Account Amount for such
Settlement Date, the Deal Agent may withdraw from the Successor Servicer
Reserve Account such excess amount and deposit such amounts into the
Collection Account. On the first Business Day after the Commitment
Termination Date, following the payment in full of all amounts owing to the
Lenders, the Deal Agent and the Liquidity Agent, any funds remaining on
deposit in the Successor Servicer Reserve Account shall be paid to the
Borrower.
Section 6.02. Funding of Collection Account.
-----------------------------
(a) No later than 11:30 a.m. Pacific time on each Business Day:
(i) The Borrower shall instruct each Lockbox Account Bank to
transfer all Collections deposited in the Lockbox Account prior to such
Business Day to the Collection Account immediately after such funds have
cleared and become available in accordance with the policies of the Lockbox
Account Bank;
(ii) the Servicer shall transfer all Collections received by it
or on its behalf with respect to Transferred Receivables prior to such
Business Day to the Collection Account;
(iii) if, on the prior Business Day, the Deal Agent has notified
the Borrower of any Borrowing Excess pursuant to Section 6.03, the Borrower
shall deposit cash in the amount of such Borrowing Excess in the Collection
Account;
(iv) if, pursuant to a Borrower Notice, the Borrower has
requested to make an Optional Prepayment of Advances on such Business Day,
the Borrower shall deposit cash into the Collection Account in an amount
equal to such Optional Repayment Amount;
(v) if on such Business Day the Borrower is required to make
other payments under this Agreement not previously retained out of
Collections (including Indemnified Amounts not previously paid), the
Borrower shall deposit an amount equal to such payments in the Collection
Account;
(vi) if, on the prior Business Day, the Parent made a capital
contribution or payment of a Rejected Amount, repurchased Ineligible
Receivables, or substituted Ineligible Receivables with Eligible
Receivables pursuant to the Receivables Transfer Agreement, the Borrower
shall deposit cash in the amount received from the Parent for such
repurchase in the Collection Account;
(vii) the Servicer shall deposit into the Collection Account the
Gross Contract Balance of any Transferred Receivable it elects to pay
pursuant to Section 7.03; and
(viii) pursuant to Section 8.07, the Borrower shall deposit, or
shall cause to be deposited, all proceeds in connection with any
securitization with a third party trustee, conduit or similar entity in the
Collection Account.
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(b) If, two Business Days prior to any Settlement Date, the Deal
Agent notifies the Borrower of any Collection Account Deficiency pursuant to
Section 6.04(b), the Borrower shall deposit cash in the amount of such
deficiency into the Collection Account no later than 11:30 a.m. on such
Settlement Date.
Section 6.03. Borrowing Excess--Revolving Period.
--------------------------- ------
If on any Business Day, the Deal Agent shall notify the Borrower of
any Borrowing Excess, the Borrower shall deposit the amount of such Borrowing
Excess in the Collection Account by 11:30 a.m. on the following Business Day.
Section 6.04. Disbursements From the Collection Account-Settlement
----------------------------------------------------
Date Procedures-Revolving Period
---- ---------------------------
(a) No later than 11:00 a.m. on each Settlement Date during the
Revolving Period, the amounts held in the Collection Account shall be disbursed
by the Servicer acting under a revocable power of attorney from the Deal Agent,
or otherwise the Deal Agent in the following priority:
(i) to each Hedging Counterparty, if there are any amounts
owing to such Hedging Counterparty under the related Hedging Instruments;
(ii) if an Event of Servicer Termination has occurred and a
Successor Servicer has been appointed, to the Successor Servicer in an
amount equal to its accrued and unpaid Servicing Fees and any other amounts
owed to the Successor Servicer (including unpaid costs associated with the
transfer of servicing to such Successor Servicer);
(iii) to the Deal Agent for distribution to the Lenders (or, if
applicable, any Indemnified Party), the following amounts in the following
priority:
(A) an amount equal to the accrued and unpaid Daily Yield
to the end of the preceding Settlement Period;
(B) all Facility Fees accrued and unpaid to the end of the
preceding Settlement Period;
(C) all Additional Amounts incurred and payable to any
Affected Party through the end of the preceding Settlement
Period;
(D) all other amounts accrued and payable under this
Agreement other than principal payments on Advances (including
Indemnified Amounts incurred and payable to any Indemnified
Party) through the end of the preceding Settlement Period;
(E) if there is a Borrowing Excess, an amount equal to
such excess, in reduction of Advances Outstanding; and
(F) if a Successor Servicer Reserve Account is required to
be established pursuant to Section 7.06, to the Successor
Servicer Reserve Account until the Required Reserve Account
Amount is met;
(iv) to the Servicer on behalf of the Borrower, in an amount
equal to its accrued and unpaid Servicing Fee to the end of the preceding
Settlement Period;
(v) retained in the Collection Account, the Accrued Monthly
Yield and Accrued Servicing Fee as of that date;
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(vi) to the extent that the balance in the Collection Account
exceeds the amount to be retained or disbursed under Sections 6.04(a)(v),
that excess to an account previously designated by the Borrower.
(b) Two Business Days prior to each Settlement Date, the Deal Agent
shall determine and notify the Borrower of any Collection Account Deficiency for
the preceding Settlement Period, and the Borrower shall deposit cash in the
amount of such Collection Account Deficiency to the Collection Account pursuant
to Section 6.02(b).
Section 6.05. Liquidation Settlement Procedures. On each Business
---------------------------------
Day on and after the Commitment Termination Date, the Deal Agent shall transfer
all amounts from the Collection Account in the following priority:
(a) other than from amounts on deposit in the Collection Account
representing payments under any Hedging Instrument, to the related Hedging
Counterparty, if there are any amounts owing to such Hedging Counterparty under
the related Hedging Instrument, such amounts;
(b) if an Event of Servicer Termination has occurred and a Successor
Servicer has been appointed, to the Successor Servicer in an amount equal to its
accrued and unpaid Servicing Fees and any other amounts owed to the Successor
Servicer (including unpaid costs associated with the transfer of servicing to
such Successor Servicer);
(c) to the Deal Agent for distribution to the Lenders, in an amount
equal to:
(i) on any such Business Day on which there are Advances
Outstanding, accrued and unpaid Daily Yield and Daily Facility Fees through
and including such date;
(ii) on any such Business Day on which there are Advances
Outstanding, the principal of all Advances Outstanding;
(d) to the Deal Agent for distribution to the Lenders or Indemnified
Parties, as the case may be:
(i) all Additional Amounts Incurred and payable to any
Affected Party; and
(ii) all Indemnified Amounts incurred and payable to any
Indemnified Party.
(e) if a Successor Servicer Reserve Account is required to be
established pursuant to Section 7.06, to the Successor Servicer Reserve Account
until the Required Reserve Account Amount is met;
(f) if an Event of Servicer Termination has not occurred, to the
Servicer in an amount equal to its accrued and unpaid Servicing Fee; and
(g) to an account previously designated by the Borrower, the balance,
if any.
Section 6.06. Notification by Servicer. The Servicer shall notify
------------------------
the Borrower, the Deal Agent and the Liquidity Agent of the determinations and
disbursements made pursuant to Sections 6.04, 6.05 and 6.08.
Section 6.07. Investment of Accounts. During the Revolving Period,
---------------------
to the extent there are uninvested amounts deposited in the Collection Account
or the Successor Servicer Reserve Account, the Deal Agent shall invest all such
amounts in Permitted Investments selected by the Deal Agent that mature no later
than the immediately succeeding Business Day the immediately succeeding
Settlement Date. Any earnings thereon
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shall be deposited into the related account on or after the Commitment
Termination Date, any investment of such amounts shall be solely at the
discretion of the Deal Agent subject to the restrictions described above.
Section 6.08. Termination Procedure.
---------------------
(a) On the earlier of (i) the first Business Day after the Commitment
Termination Date on which current Advances Outstanding have been reduced to zero
or (ii) the Final Maturity Date, if the payments required to be made pursuant to
Sections 6.05(a) and (b) have not been made in full, the Borrower shall
immediately deposit into the Collection Account an amount sufficient to make
such payments in full.
(b) On the first Business Day after the Commitment Termination Date on
which the payments required pursuant to Subsections 6.05(a) and (b) and (c) have
been made in full, all amounts held in the Collection Account or the Successor
Servicer Reserve Account, if any, shall be disbursed to the Borrower and all
security interests of the Lender and the Collateral Agent in all Transferred
Receivables owned by the Borrower shall be released by the Lender and the
Collateral Agent. Such disbursement shall constitute the final payment to which
the Borrower is entitled pursuant to the terms of this Agreement.
ARTICLE VII
APPOINTMENT OF THE SERVICER
Section 7.01. Appointment of the Servicer. The Borrower hereby
---------------------------
appoints the Servicer as its agent to service the Transferred Receivables and
enforce its respective rights and interests in and under each Transferred
Receivable and each related Contract and to serve in such capacity until the
termination of its responsibilities pursuant to Sections 7.10, 9.02 or 11.01.
The Servicer hereby agrees to perform the duties and obligations with respect
thereto set forth herein. The Servicer may, with the prior consent of the
Borrower, the Lender, the Deal Agent, and the Collateral Agent subcontract with
a Sub-Servicer for collection, servicing or administration of the Transferred
Receivables, provided, that (a) the Servicer shall remain liable for the
--------
performance of the duties and obligations of the Sub-Servicer pursuant to the
terms hereof, and (b) any Sub-Servicing Agreement that may be entered into and
any other transactions or services relating to the Transferred Receivables
involving a Sub-Servicer shall be deemed to be between the Sub-Servicer and the
Servicer alone and the Borrower, the Lender, Deal Agent and the Collateral Agent
shall not be deemed parties thereto and shall have no obligations, duties or
liabilities with respect to the Sub-Servicer.
Section 7.02. Duties and Responsibilities of the Servicer.
-------------------------------------------
(a) The Servicer shall conduct the servicing, administration and
collection of the Transferred Receivables and shall take, or cause to be taken,
all such actions as may be necessary or advisable to service, administer and
collect Transferred Receivable from firms to time.
(b) The duties of the Servicer shall include, without limitation:
(i) preparing and submitting of claims to, and post-billing
liaison with, Obligors on Transferred Receivables;
(ii) arranging for the direct remittance of all Collections
with respect to each Allotment Obligor to the Collection Account;
(iii) using its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of
the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined eventual payment in full is unlikely. The Servicer shall
follow such customary and usual practices and procedures as it shall become
necessary or advisable in its servicing of automotive receivables, which
may include reasonable efforts to realize upon any recourse to
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Vehicle Dealers and selling the Financed Vehicle at public or private sale.
The foregoing shall be subject to the provision that, in any case in which
the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession will increase the Proceeds by an amount greater
than the amount of such expenses;
(iv) maintaining all necessary Servicing Records with respect
to the Transferred Receivables and providing such reports to the Liquidity
Agent and the Deal Agent in respect of the servicing of the Transferred
Receivables (including information relating to its performance under this
Agreement) as may be required hereunder or as the Liquidity Agent or the
Deal Agent may reasonably request;
(v) maintaining and implementing administrative and operating
procedures (including, without limitation, an ability to recreate Servicing
Records evidencing the Transferred Receivables in the event of the
destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or
advisable for the collection of the Transferred Receivables (including,
without limitation, records adequate to permit the identification of each
new Transferred Receivable and all Collections of and adjustments to each
existing Transferred Receivable);
(vi) promptly delivering to the Deal Agent or the Collateral
Agent, from time to time, such information and Servicing Records (including
information relating to its performance under this Agreement) as the Deal
Agent or the Collateral Agent may from time to time reasonably request;
(vii) identifying each Transferred Receivable clearly and
unambiguously in its Servicing Records to reflect that such Transferred
Receivable is owned by the Borrower and pledged to the Collateral Agent;
(viii) complying in all material respects with the Credit and
Collection Policies in regard to each Transferred Receivable and the
related Contracts;
(ix) complying in all material respects with all applicable
laws, rules, regulations and orders with respect to it, its business and
properties and all Transferred Receivables, related Contracts and
Collections with respect thereto;
(x) preserving and maintaining its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation,
and qualifying and remaining qualified in good standing as a foreign
corporation and qualifying to and remaining authorized to perform
obligations as Servicer (including enforcement of collection of Transferred
Receivables on behalf of the Lenders and the Collateral Agent) in each
jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification would materially adversely
affect (A) the rights or interests of the Lenders and the Collateral Agent
in the Transferred Receivables, (B) the collectibility of any Transferred
Receivable, (C) the ability of the Servicer to perform its obligations
hereunder, or (D) the ability of the Parent to perform its obligations
under this Agreement or under the Contracts;
(xi) immediately notifying the Liquidity Agent and the Deal
Agent of the occurrence of a Termination Event (including, without
limitation, a material adverse change in the financial condition of the
Parent) or a Potential Termination Event;
(xii) notifying the Liquidity Agent and the Deal Agent of any
material action, suit, proceeding, dispute, offset deduction, defense or
counterclaim that is or may be (1) asserted by an Obligor with respect to
any Transferred Receivable; or (2) reasonably expected to have a material
adverse effect on the Contracts as a whole or on the ability of the
Servicer or the Originator to perform
-53-
its obligations under the Basic Documents or on the Servicer or the
Borrower or any of their respective property;
(xiii) arranging for the direct remittance of all Collections
with respect to each Transferred Receivable to the Lockbox Account or
Lockbox, as the case may be; and
(xiv) immediately notifying the Deal Agent and the Collateral
Agent of (A) any proposed change in the Credit and Collection Policies or
(B) any change in procedures in connection with the Collections with
respect to Allotment Obligors which would permit the Servicer to cause such
financial institutions making payments on behalf of the Allotment Obligors
to make payments in respect of Transferred Receivables directly to the
Collection Account.
(c) The Lenders, the Deal Agent and the Collateral Agent shall not
have any obligation or liability with respect to any Transferred Receivables or
related Contracts, nor shall any of them be obligated to perform any of the
obligations of the Servicer hereunder.
Section 7.03. Authorization of the Servicer. Each of the Borrower
-----------------------------
and the Deal Agent on behalf of the Lenders hereby authorizes the Servicer
(including any successor thereto) to take any and all reasonable steps in its
name and on its behalf necessary or desirable and not inconsistent with the
pledge of the Transferred Receivables to the Lender and the Collateral Agent, in
the determination of the Servicer, to collect all amounts due under any and all
Transferred Receivables, including, without limitation, endorsing any of their
names on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Transferred Receivables and, after the delinquency of any
Transferred Receivable and to the extent permitted under and in compliance with
applicable law and regulations, to commence proceedings with respect to
enforcing payment of such Transferred Receivables and the related Contracts, and
adjusting, settling or compromising the account or payment thereof, to the same
extent as the Parent could have done if it had continued to own such Receivable.
The Parent, the Borrower and the Deal Agent on behalf of the Lenders shall
furnish the Servicer (and any successors thereto) with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder, and shall cooperate with the
Servicer to the fullest extent in order to ensure the collectibility of the
Transferred Receivables. Notwithstanding anything to the contrary contained
herein, Deal Agent on behalf of the Lenders shall have the absolute and
unlimited right to direct the Servicer (whether the Servicer is the Parent or
otherwise) to commence or settle any legal action to enforce collection of any
Transferred Receivable or to foreclose upon, repossess or take any other action
which the Collateral Agent or the Deal Agent deems necessary or advisable with
respect thereto; provided, that the Servicer may, rather than commencing such
action or taking other enforcement action, at its option elect to pay the
Borrower the Contract Principal Balance of such Transferred Receivable. In no
event shall the Servicer be entitled to make any Lender, the Collateral Agent or
the Deal Agent a party to any litigation without such party's express prior
written consent, or to make the Borrower a party to any litigation without the
Deal Agent's consent.
Section 7.04. Servicing Fees. As compensation for its servicing
--------------
activities and as reimbursement for its expenses in connection therewith, the
Servicer shall be entitled to receive the Servicing Fees in the manner set forth
in Sections 6.04 and 6.05, payable monthly in arrears on each Settlement Date
with respect to the preceding Settlement Period. The Servicer shall be required
to pay for all expenses incurred by the Servicer in connection with its
activities hereunder (including any payments to accountants, counsel or any
other Person) and shall not be entitled to any payment therefor other than the
Servicing Fees.
Section 7.05. Negative Covenants of the Servicer. The Servicer
----------------------------------
shall not, without the prior written consent of the Deal Agent and the
Collateral Agent:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with respect
to (and any such purported disposition shall be null and void) any Transferred
Receivable or related Contract with respect thereto, or upon or with respect to
the
-54-
Collection Account or any other account to which any Collections of any
Receivable are deposited, or assign any right to receive income in respect
thereof;
(b) extend, amend or otherwise modify the terms of any Transferred
Receivable (other than adjusting, settling or compromising the account or
payment of a Transferred Receivable pursuant to Section 7.03 and except for
deferments in the ordinary course of business which are consistent with the
Credit and Collection Policies), or amend, modify or waive any term or condition
of any Contract related thereto;
(c) make any material change in the character of its business;
(d) merge with or into, consolidate with or into, or convey, transfer,
lease or otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or substantially all of the
assets or capital stock or other ownership interest of, any Person (whether in
one transaction or in a series of transactions), provided, however, that the
-------- -------
Servicer may, without the consent of the Deal Agent, invest not more than 25% of
its Net Worth to acquire all or substantially all of the assets or capital stock
or other ownership interest of another Person;
(e) make any change to its corporate name or use any trade names,
fictitious names, assumed names or "doing business as" names;
(f) make any change in its instructions to Allotment Obligors to make
payments to the Collection Account;
(g) assign or otherwise dispose of any shares of the Borrower; or
(h) agree or consent to or otherwise permit to occur any amendment,
modification, change, supplement, or rescission of the Credit and Collection
Policies in whole or in part in any manner that could have a material adverse
effect upon the Receivables or interests of the Lenders or the Deal Agent.
Section 7.06. Financial Covenants. The Servicer shall have or
-------------------
maintain:
(a) Net Worth of not less than the sum of (i) $55 million and (ii) one
half of the net income of the Servicer and its consolidated subsidiaries as set
forth in its most recent annual consolidated financial statement;
(b) Interest Coverage Ratio equal to or greater than 1.5 to 1; and
(c) a Debt Ratio of less than 5.0 to 1.0.
If at any time the financial covenants set forth in this Section 7.06
are not met, in addition to, and without limiting, any other right or remedy
contained herein, the Deal Agent may require the Borrower to establish a
Successor Servicer Reserve Account pursuant to Section 6.01(c) hereof.
Section 7.07. Reporting . During the term of this Agreement, the
---------
Servicer shall keep or cause to be kept in reasonable detail books and records
of the account of the Servicer's assets and business, including, but not limited
to, books and records relating to the transactions contemplated in the Basic
Documents, which shall be furnished to the Deal Agent upon request. The books
of the Servicer shall be kept on an accrual basis and the Servicer shall report
its operations for tax purposes on an accrual basis. The fiscal year of the
Servicer shall end on March 31 of each year. The Servicer shall furnish to the
Liquidity Agent and the Deal Agent:
(a) as soon as available and in any event within ninety (90) days (or
the next succeeding Business Day if the last day of such period is not a
Business Day) after the and of each fiscal year of the Servicer a copy of the
consolidated financial statement of the Servicer and its consolidated
Subsidiaries as of the end of
-55-
such year and the related consolidated statements of income and retained
earnings, and of cash flow, of the Servicer and its consolidated Subsidiaries
for such year, in each case reported on by a firm of nationally recognized
independent public accountants;
(b) on or before the 45th day (or next succeeding Business Day if the
last day of such period is not a Business Day) after each fiscal quarter, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of the Servicer during the preceding fiscal quarter and of its
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Servicer
has fulfilled all its obligations under this Agreement throughout such quarter,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof; (iii) the Servicer has complied with the covenants set forth in
Sections 7.05 and 7.06 and (iv) the representations and warranties of the
Servicer in Section 4.03 are true and correct as if made on the date of such
Officer's Certificate;
(c) promptly after the sending or filing thereof, copies of all
reports which the Servicer sends to its security holders, public filings with
any Governmental Authority and the annual report of the Servicer; and
(d) such other periodic, special or other reports or information as
the Liquidity Agent and the Deal Agent may reasonably require.
Section 7.08. Annual Statement as to Compliance. The Servicer
---------------------------------
shall deliver to the Liquidity Agent and the Deal Agent on or before July 15 of
each year an Officer's Certificate stating, as to each signer thereof, that (a)
a review of the activities of the Servicer during the preceding fiscal year and
of its performance under this Agreement has been made under such officer's
supervision, (b) to the best of such officer's knowledge, based on such review,
the Servicer has fulfilled all its obligations under this Agreement throughout
such year or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof, (c) the Servicer has complied with the covenants set forth
in Sections 7.05 and 7.06, and (d) the representations and warranties of the
Servicer in Section 4.03 are true and correct as if made on the date of such
Officer's Certificate.
Section 7.09. Annual Independent Public Accountants' Servicing and
----------------------------------------------------
Compliance Report. On or before June 15 of each year, the Servicer at its
-----------------
expense shall cause a firm of nationally recognized independent public
accountants to furnish a statement to the Collateral Agent and the Deal Agent to
the effect that such firm has examined such Servicing Records relating to the
Transferred Receivables as such firm deems necessary as a basis for the report
contemplated by this Section 7.09 and has issued its report therefor and that
such examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other audit procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers (the "Program"), to the extent the procedures in the Program
-------
are applicable to the servicing obligations set forth in this Agreement (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light truck installment sales contracts;
and (4) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light truck loans serviced for others
that, in the firm's opinion, paragraph four of the Program requires such firm to
report. The accountants' report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer certificates were found; (3) the delinquency and loss
information, relating to the Receivables contained in the Servicer certificates
were found to be accurate and (4) except for (i) such exceptions as such firm
shall believe to be immaterial, and (ii) such other exceptions as shall be set
forth in such statement, such firm has examined the financial statements for the
preceding year of the Servicer and the Servicer's financial covenants in this
Agreement and, on the basis of such examination, the Servicer has complied
during such year with such covenants, and (c) that the Lenders, the Deal Agent
and the Collateral Agent may rely on such report.
-56-
Section 7.10. Termination of Servicer. With the prior written
-----------------------
consent of the Required Investors, the Deal Agent and the Collateral Agent, the
Borrower may terminate the Servicer.
Section 7.11. Corporate Existence. The Servicer shall maintain its
-------------------
corporate existence and shall at all times continue to be duly organized under
the laws of the State of California and duly qualified and duly authorized and
shall conduct its business in accordance with the terms of its certificate of
incorporation and bylaws.
Section 7.12. Cooperation With Requests for Information or Documents.
------------------------------------------------------
The Servicer will cooperate fully with all reasonable requests of the Borrower,
the Deal Agent and the Collateral Agent regarding the provision of any
information or documents, necessary, including the provision of such information
or documents in electronic or machine-readable format, or desirable to allow
each of the Borrower, the Deal Agent and the Collateral Agent to carry out its
responsibilities under the Basic Documents.
ARTICLE VIII
GRANT OF SECURITY INTERESTS
Section 8.01. Borrower's Grant of Security Interest. As security
-------------------------------------
for the prompt payment or performance in full when due, whether at stated
maturity, by acceleration or otherwise, of all Borrower Secured Obligations, the
Borrower hereby assigns and pledges to the Collateral Agent, as agent for the
Lenders, and grants to the Collateral Agent, as agent for the Lenders, a
security interest in and lien upon, all of the Borrower's right, title and
Interest in and to the following, in each case whether now or hereafter existing
or in which Borrower now has or hereafter acquires an interest and wherever the
same may be located (collectively, the "Collateral"):
----------
(a) all Transferred Receivables, Contracts and Collections;
(b) each Lockbox Agreement and all Basic Documents now or hereafter in
effect relating to the purchase, servicing or processing of Transferred
Receivables (the "Borrower Assigned Agreements"), including (i) all rights of
----------------------------
the Borrower to receive moneys due and to become due under or pursuant to the
Borrower Assigned Agreements, (ii) all rights of the Borrower to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Borrower Assigned Agreements, (iii) the Borrower's right of foreclosure as
lienholder of the vehicles underlying the Receivables; (iv) claims of the
Borrower for damages arising out of or for breach of or default under the
Borrower Assigned Agreements, and (v) the right of the Borrower to amend, waive
or terminate the Borrower Assigned Agreements, to perform under the Borrower
Assigned Agreements and to compel performance and otherwise exercise all
remedies and rights under the Borrower Assigned Agreements;
(c) all of the following (the "Borrower Account Collateral"):
---------------------------
(i) each Lockbox Account, the Lockboxes and all funds held in
each Lockbox Account and the Lockboxes and all certificates and
instruments, if any, from time to time representing or evidencing each
Lockbox Account, the Lockboxes or such funds,
(ii) the Collection Account and the Successor Servicer Reserve
Account, all funds held in the Collection Account and the Successor
Servicer Reserve Account, and all certificates and instruments, if any,
from time to time representing or evidencing the Collection Account or such
funds,
(iii) all Investments from time to time of amounts in each
Lockbox Account, the Collection Account and the Successor Servicer Reserve
Account, and all certificates and instruments, if any, from time to time
representing or evidencing such Investments,
-57-
(iv) all notes, certificates of deposit and other instruments
from time to time delivered to or otherwise possessed by any Lender or any
assignee or agent on behalf of each Lender in substitution for or in
addition to any of the then existing Borrower Account Collateral, and
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any and all of the then existing Borrower
Account Collateral;
(d) all additional property that may from time to time hereafter be
granted and pledged by the Borrower or by anyone on its behalf under this
Agreement, including the deposit with any Lender, the Deal Agent or the
Collateral Agent of additional moneys by the Borrower; and
(e) all Proceeds, accessions, substitutions, rents and profits of any
and all of the foregoing Collateral (including Proceeds that constitute property
of the types described in Sections 8.01 (a) through (d) above) and, to the
extent not otherwise included, all payments under insurance (whether or not any
Lender or any assignee or agent on behalf of the Lender is the loss payee
thereof) or any indemnity, warranty or guaranty payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral.
Section 8.02. Reserved.
--------
Section 8.03. Reserved.
--------
Section 8.04. Delivery of Collateral. All certificates or
----------------------
instruments representing or evidencing Collateral shall be delivered to and held
by or on behalf of the Collateral Agent pursuant to this Agreement, and shall be
in suitable form for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent and to the extent not
constituting an assignment shall be irrevocable powers of attorney coupled with
an interest. The Collateral Agent shall have the right, at any time in its
discretion and without notice to the Borrower or the Lender, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any or
all of the Collateral. In addition, the Collateral Agent shall have the right
at any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
Section 8.05. Borrower Remains Liable. Notwithstanding anything in
-----------------------
this Agreement, (a) each of the Borrower and the Parent shall remain liable
under the Transferred Receivables, Contracts, Borrower Assigned Agreements and
other agreements included in the Collateral to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Deal Agent as agent of the Lenders or the
Collateral Agent of any of its rights under this Agreement shall not release the
Borrower or the Servicer from any of their respective duties or obligations
under the Transferred Receivables, Contracts, Borrower Assigned Agreements or
other agreements included in the Collateral, (c) the Deal Agent as agent of the
Lenders and the Collateral Agent shall not have any obligation or liability
under the Transferred Receivables, Contracts, Borrower Assigned Agreements or
other agreements included in the Collateral by reason of this Agreement, and (d)
neither the Collateral Agent nor any of the other Secured Parties shall be
obligated to perform any of the obligations or duties of the Borrower or the
Servicer under the Transferred Receivables, Contracts, Borrower Assigned
Agreements or other agreements included in the Collateral or to take any action
to collect or enforce any claim for payment assigned under this Agreement.
Section 8.06. Covenants of the Borrower and Servicer Regarding the
----------------------------------------------------
Collateral.
----------
(a) Offices and Records. The Borrower shall keep its chief place of
-------------------
business and chief executive offices and the office where it keeps its Records
at the respective locations specified in Schedule 1 or, upon thirty (30) days
prior written notice to the Collateral Agent, at such other location in a
jurisdiction where all action required by Section 8.06(f) shall have been taken
with respect to the Collateral. The Borrower and the Servicer shall, for not
less than three years or for such longer period as may be required by law, from
the date on
-58-
which any Transferred Receivable arose, maintain the Records with respect to
each Transferred Receivable, including records of all payments received, credits
granted and merchandise returned. The Borrower and the Servicer will permit
representatives of the Deal Agent and the Collateral Agent at any time and from
time to time during normal business hours, and at such times outside of normal
business hours as the Deal Agent and the Collateral Agent shall reasonably
request, (i) to inspect and make copies of and abstracts from such records, and
(ii) to visit the properties of the Borrower or the Servicer utilized in
connection with the collection, processing or servicing of the Transferred
Receivables for the purpose of examining such Records, and to discuss matters
relating to the Receivables or the Borrower's or Servicer's performance under
this Agreement with any officer or employee of !he Borrower or Servicer having
knowledge of such matters. In connection therewith, the Deal Agent or the
Collateral Agent may institute procedures to permit it to confirm the Obligor
balances in respect of any Transferred Receivables. Each of the Borrower and the
Servicer agrees to render to the Deal Agent and the Collateral Agent such
clerical and other assistance as may be reasonably requested with regard to the
foregoing. If a Termination Event shall have Occurred and be continuing,
promptly upon request therefor, the Borrower or the Servicer shall deliver to
the Collateral Agent records reflecting activity through the close of business
on the immediately preceding Business Day.
(b) Collection of Transferred Receivables. Except as otherwise
-------------------------------------
provided in this Section 8.06(b), the Borrower shall continue to collect or
cause to be collected, at its own expense, all amounts due or to become due to
the Borrower under the Transferred Receivables, the Borrower Assigned Agreements
and any other Collateral. In connection with such collections, the Borrower may
take (and at the Collateral Agent's direction after a Termination Event has
occurred and is continuing, shall take) such action as the Borrower or the
Collateral Agent may deem necessary or advisable to enforce collection of the
Transferred Receivables and the Borrower Assigned Agreements; provided, however,
that the Collateral Agent may, at any time that a Termination Event has occurred
and is continuing, notify any Obligor with respect to any Transferred
Receivables or obligors under the Borrower Assigned Agreements of the assignment
of such Transferred Receivables or Borrower Assigned Agreements, as the case may
be, to the Collateral Agent and direct that payments of all amounts due or to
become due to the Borrower thereunder be made directly to the Collateral Agent
or any servicer, collection agent or lockbox or other account designated by the
Collateral Agent and, upon such notification and at the expense of the Borrower,
the Collateral Agent may enforce collection of any such Transferred Receivables
or the Borrower Assigned Agreements and adjust, settle or compromise the amount
or payment thereof.
(c) Maintain Records of Transferred Receivables. The Borrower and the
--------------------
Servicer shall, at their own cost and expense, maintain satisfactory and
complete records of the Collateral, including a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Each of the Borrower and the Servicer will xxxx
conspicuously with a legend, in form and substance satisfactory to the
Collateral Agent, its records, computer tapes, computer disks and credit files
pertaining to the Collateral and the Related Contracts, and its file cabinets or
other storage facilities where it maintains information pertaining to the
Collateral, to evidence this Agreement and the assignment and security interest
granted by this Article VIII. Upon the occurrence and during the continuation
---
of a Termination Event, the Borrower and Servicer shall (1) deliver and turn
over to the Collateral Agent or to its representatives, or at the option of the
Collateral Agent shall provide the Collateral Agent or its representatives with
access to, after the occurrence of a Termination Event, at any time, and during
all other times, during ordinary business hours, on demand of the Collateral
Agent, all of the Borrower's and Servicer's facilities, personnel, books and
records pertaining to the Collateral, including all Records, and (ii) allow the
Collateral Agent to occupy the premises of the Borrower and the Servicer where
such books, records and Records are maintained, and utilize such premises, the
equipment thereon and any personnel of the Borrower or the Servicer that the
Collateral Agent may wish to employ to administer, service and collect the
Transferred Receivables.
(d) Performance of Borrower Assigned Agreements. The Borrower shall
-------------------------------------------
(i) perform and observe all the terms and pro visions of the Borrower Assigned
Agreements to be performed or observed by it, maintain the Borrower Assigned
Agreements in full force and effect, enforce the Borrower Assigned Agreements in
accordance with their terms and take all such action to such end as may be from
time to time requested by the Collateral Agent, and (ii) upon request of the
Deal Agent or the Collateral Agent, make to any other party to the
-59-
Borrower Assigned Agreements such demands and requests for information and
reports or for action as the Borrower is entitled to make under the Borrower
Assigned Agreements.
(e) Notice of Adverse Claim. Each of the Borrower and the Servicer
-----------------------
shall advise the Deal Agent and the Collateral Agent promptly, in reasonable
detail, (i) of any Adverse Claim known to it made or asserted against any of the
Collateral, and (ii) of the occurrence of any event which would have a material
adverse effect on the aggregate value of the Collateral or on the assignments
and security interests granted by the Borrower in this Agreement.
(f) Further Assurances; Financing Statements.
----------------------------------------
(i) Each of the Borrower and the Servicer severally agrees
that at any time and from time to time, at its expense, it shall promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable or that the Deal Agent
or the Collateral Agent may request to perfect and protect the assignments
and security interests granted or purported to be granted by this Article
VIII or to enable the Lenders, the Deal Agent or the Collateral Agent to
exercise and enforce its rights and remedies under this Agreement with
respect to any Collateral. Without limiting the generality of the
foregoing, the Borrower shall execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices as may be necessary or desirable or that the Deal Agent of the
Collateral Agent may request to protect and preserve the assignments and
security interests granted by this Agreement.
(ii) The Borrower and the Lenders hereby severally authorize
the Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Borrower or the Lender where
permitted by law. A photographic or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement where permitted by law. The
Collateral Agent will promptly send to the Borrower any financing or
continuation statements thereto which it files without the signature of the
Borrower and will promptly send to the Lenders any financing or
continuation statements thereto which it files without the signature of the
Lenders except in the case of filings of copies of this Agreement as
financing statements, the Collateral Agent will promptly send the Borrower
or the Lenders, as the case may be, the filing or recordation information
with respect thereto.
(iii) Each of the Borrower and the Servicer shall furnish to the
Collateral Agent from time to time such statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
Section 8.07. Release of Collateral.
---------------------
(a) Generally. For purposes of effecting Dispositions or if the
---------
Borrowing Base is in excess of Advances Outstanding, so long as there is no
Potential Termination Event or Termination Event hereunder, the Borrower may
obtain releases of a Lender's security interest in all or any part of the
Collateral and from time to time, to the extent that (immediately after giving
effect to any requested release) there exists no Borrowing Excess and there is
no Potential Termination Event or Termination Event. Each request for a partial
release of Collateral (a "Transfer Request") shall be addressed to the Deal
----------------
Agent, demonstrating compliance with the immediately preceding sentence and, if
applicable, acknowledging that the receipt of proceeds from such sale or
transfer to third parties shall be deposited into the Collection Account in
accordance with Section 6.02(a).
(b) Transfers. With respect to each Transfer Request that is received
---------
by the Deal Agent by 9:00 a.m. (Los Angeles, California time) on a Business Day,
the Deal Agent shall use due diligence and reasonable efforts to review such
Transfer Requests and prepare the files, identified in each Transfer Request,
for shipment by 9:00 a.m. on the second succeeding Business Day. However,
requested transfers will not be made if the relevant conditions set forth in
Section 8.07(a) are not met.
-60-
(c) Continuation of Lien. Unless released in writing by the Lenders,
--------------------
as herein provided, the security interest in favor of the Collateral Agent, in
all Collateral transmitted pursuant to Section 3.4(b), shall continue in effect
-----------
until such time as the Lenders shall have received payment in full of the
proceeds from the sale or transfer of such Collateral to third parties in
accordance with this Section 8.07.
(d) Application of Proceeds; No Duty. Neither of the Deal Agent, nor
--------------------------------
the Collateral Agent, nor any Lender shall be under any duty at any time to
credit Borrower for any amount due from any third party in respect of any
purchase of any Collateral contemplated above, until the Collateral Agent has
actually received such amount in immediately available funds for deposit to the
Collection Account. Neither the Collateral Agent nor the Lenders, nor Deal
Agent shall be under any duty at any time to collect any amounts or otherwise
enforce any obligations due from any third party in respect of any such purchase
of Receivables covered by the release of such portion of Collateral or in
respect of a securitization thereof with a third party.
(e) Representation in Connection with Releases, Sales and Transfers.
---------------------------------------------------------------
The Borrower represents and warrants that each request for any release or
transfer pursuant to Section 8.07(a) shall automatically constitute a
representation and warranty to the Lenders, the Deal Agent and the Collateral
Agent to the effect that immediately before and after giving effect to such
release or Transfer Request, there is no Potential Termination Event or
Termination Event or Borrowing Excess.
(f) Release of Security Interest. Upon the Deal Agent's request, the
----------------------------
Collateral Agent shall promptly release, at the Borrower's expense, all UCC
Financing Statements in connection with the release of such part of Collateral
covered in connection with the Transfer Request and shall deliver, at the
Borrower's expense, the documents and certificates (including the applicable
Obligor Delivery Documents) on the released portion of Collateral to the trustee
or such similar entity in connection with the third party securitization;
provided that the trustee or such similar entity in connection with the third
--------
party securitization acknowledges and agrees (i) that all proceeds thereof that
it receives, are held in trust for the Lenders and (ii) at such time that the
Lenders shall instruct such trustee to transfer such proceeds, the trustee shall
transfer such funds pursuant to such instructions.
ARTICLE IX
TERMINATION EVENTS
Section 9.01. Termination Events. If any of the following events
------------------
(each, a "Termination Event") shall occur and be continuing:
-----------------
(a) (i) the Borrower shall default in the payment of any amount owed
by it hereunder and such failure shall remain unremedied for three Business
Days, or (ii) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement and such failure shall remain
unremedied for five Business Days, in each case after written notice thereof
shall have been given by the Deal Agent or the Collateral Agent to the Borrower;
or
(b) (i) a default (in the case of the Borrower only) or a material
default (in the case of the Parent only), has occurred and is continuing under
any instrument or agreement to which First Union or any of its Affiliates is a
party, evidencing, securing or providing for the issuance of Debt of the Parent
or the Borrower, or (ii) a default has occurred and is continuing entitling any
other party to accelerate any payment of Debt in excess of $500,000, in the
aggregate, under any Instrument or agreement evidencing, securing or providing
for the issuance of Debt of the Parent or the Borrower; or
(c) the Parent or the Borrower shall generally not pay any of its
respective Debts as such Debts become due, or shall admit in writing its
inability to pay its Debts generally, or shall make a general assignment for the
benefit of creditors, or any-proceeding shall be instituted by or against the
Parent or the Borrower seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or any of its Debts under any law
relating to
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bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur and, solely with respect to the
Parent, any such proceeding remains unremedied for 60 days, or the Parent or the
Borrower shall take any corporate action to authorize any of the actions set
forth in this subsection; or
(d) judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for
the payment thereof) in excess of $500,000 in the aggregate against the Parent
or any of its Affiliates shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of thirty (30) days or more; or
(e) a judgment or order for the payment of money in excess of $5,000
is rendered against the Borrower; or
(f) there is a material breach of any of the representations and
warranties of the Borrower set forth in Section 4.01 or 4.02; or
(g) any Governmental Authority (including the Internal Revenue Service
or the Pension Benefit Guaranty Corporation), shall file notice of a lien with
regard to any assets of the Parent (other than a lien (i) limited by its terms
to assets other than Receivables and (ii) not materially adversely affecting the
financial condition at the Parent or the Parent's ability to perform as Servicer
hereunder); or
(h) any Governmental Authority (including the Internal Revenue Service
or the Pension Benefit Guaranty Corporation) shall file notice of a lien with
regard to any of the assets of the Borrower; or
(i) as of any Settlement Date, the Default Rate has been greater than
9.5% for each of the three (3) preceding Settlement Periods; or
(j) as of any Settlement Date the Delinquency Rate has been greater
than 4.25% for each of the three (3) preceding Settlement Periods; or
(k) the Deal Agent or the Collateral Agent has determined that any
event which materially adversely affects the collectibility of the Receivables
has occurred, or that any other event which materially adversely affects the
financial condition of the Parent or the Borrower, the ability of the Parent or
the Borrower to collect Receivables or the ability of the Borrower to perform
hereunder has occurred and such material adverse effect has not been eliminated
within thirty (30) days of Collateral Agent's written notice to Borrower and
Parent of such change; or
(l) a material deterioration has taken place in the quality of the
Transferred Receivables or in the collectibility thereof which either the Deal
Agent or the Collateral Agent, in each of its sole discretion, determines to be
material and such material deterioration has not been eliminated within thirty
(30) days of Collateral Agent's written notice to Borrower and Parent of such
deterioration; or
(m) there shall occur a failure of the Parent to make any payment,
repurchase Ineligible Receivables or substitute Ineligible Receivables with
Eligible Receivables as required under the Receivables Transfer Agreement and
such failure shall continue for three Business Days, or if the Receivables
Transfer Agreement shall for any reason cease to evidence the transfer to the
Borrower (or its assignees or transferees) of the legal and equitable title to,
and ownership of, the Transferred Receivables; or
(n) the Receivables Transfer Agreement has been amended or terminated
without the written consent of the Lenders, the Deal Agent and the Collateral
Agent; or
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(o) an Event of Servicer Termination has occurred; or
(p) the Deal Agent has determined that the funding of Receivables
hereunder is impracticable due to a drop in or withdrawal of any of the ratings
assigned to a Lender's Commercial Paper, the imposition of Additional Amounts,
restrictions on the amount of Transferred Receivables it may finance, the
inability of the Lender to issue Commercial Paper or for any other reason
whatsoever; or
(q) the Lenders and the Collateral Agent cease to hold a first
priority, perfected security interest in the Transferred Receivables; or
(r) the Net Portfolio Yield for the Settlement Period in which such
date of determination occurs shall not equal or exceed 10.5%, where the "Net
---
Portfolio Yield" is the weighted average of the Receivable Yields with respect
---------------
to all Transferred Receivables (weighted on the basis of the outstanding
principal balance of each Receivable as of the end of such Settlement Period)
less the Cost of Funds; or
----
(s) the obligations of the Investors to purchase Pro Rata Shares of
Purchased Interests under the Liquidity Purchase Agreement (as defined therein)
or to make Advances under this Agreement have terminated; or
(t) a breach of the covenants in Section 7.06 has occurred; or
(u) a breach of a provision of any Basic Documents has occurred; or
(v) the Eligible Receivables fail to meet the Portfolio Requirements
for a period of 30 days; or
(w) any letter of credit, liquidity facility or similar facility with
respect to a Lender shall either (i) cease to be in full force and effect; or
(ii) the related provider shall have terminated its commitment thereunder; or
(x) as of any Settlement Date, the weighted average (weighted by the
average aggregate Contract Principal Balance of each Subgroup of Receivables) of
the Net Loss Rates (computed separately for each Subgroup of Receivables) has
been greater than 3.25% for each of the three (3) preceding Settlement Periods;
then, and in any such event, the Deal Agent shall, at the request, or
may with the consent, of the Required Investors, by notice to the Borrower
declare the Commitment Termination Date to have occurred, whereupon the
Commitment Termination Date shall forthwith occur, without demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, provided, that in the event that any of the Termination Events
--------
described in subsections (c), (i), (j), (r), (v) or (x) herein have occurred or
the Termination Event described in subsection (a)(i) has occurred and remained
unremedied for thirty days, the Commitment Termination Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
Section 9.02. Events of Servicer Termination . If any of the
------------------------------
following events (each, an "Event of Servicer Termination") shall occur and be
-----------------------------
continuing:
(a) the Servicer shall fall to perform or observe any term, covenant
or agreement contained in this Agreement and such failure shall remain
unremedied for three (3) Business Days after written notice thereof shall have
been given by the Liquidity Agent, the Collateral Agent or the Deal Agent to the
Servicer; or
(b) (i) a default has occurred and is continuing under any instrument
or agreement to which First Union or any of its Affiliates is a party,
evidencing, securing or providing for the Issuance of Debt of the Servicer, or
(ii) a default has occurred and is continuing entitling a party to accelerate
any payment of Debt under any instrument or agreement evidencing, securing or
providing for the issuance of Debt of the Servicer; or
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(c) the Servicer shall generally not pay any of its Debts as such
Debts become due, or shall admit in writing its inability to pay its Debts
generally, or shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against the Servicer seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or any of its Debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property, or any of the actions sought
in such proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) shall
occur and any such proceeding remains undismissed for 60 days, or the Servicer
shall take any corporate action to authorize any of the actions set forth in
this subsection; or
(d) judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $500,000 in the aggregate against the Servicer or
any of its Affiliates shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of 30 days or more; or
(e) there is a material breach of any of the representations and
warranties of the Servicer set forth in Section 4.03; or
(f) the Deal Agent or the Collateral Agent shall have determined that
any event which materially adversely affects the ability of the Servicer to
collect Receivables or to otherwise perform hereunder has occurred, and such
material adverse effect has not been eliminated within thirty (30) days of the
Collateral Agent's written notice to Servicer of such event; or
(g) a Termination Event shall have occurred or this agreement shall
have been terminated; or
(h) the Servicer shall assign or purport to assign any of its
obligations hereunder or under the Receivables Transfer Agreement without the
prior written consent of the Deal Agent and the Collateral Agent; or
(i) a Change In Control has occurred;
then, and in any such event, the Deal Agent shall (on behalf of the
Borrower), at the request, or may with the consent, of the Required Investors or
the Collateral Agent, by delivery of a Servicer Termination Notice to the
Borrower and the Servicer, terminate the servicing responsibilities of the
Servicer hereunder, without demand, protest or further notice of any kind, all
of which are hereby waived by the Servicer. Upon any such declaration, all
authority and power of the Servicer under this Agreement and the Receivables
Transfer Agreement shall pass to and be vested in the Successor Servicer
appointed pursuant to Section 11.02; provided, that notwithstanding anything to
--------
the contrary herein, the Borrower agrees that it will continue to follow the
procedures set forth in Section 7.02(b)(ii) with respect to Collections on
Transferred Receivables from Allotment Obligors.
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All related costs of replacing the Servicer and transferring the
servicing of the Receivables to a Successor Servicer, including but not limited
to all internal and external costs and reimbursable expenses of the Servicer,
shall be borne by the Servicer.
ARTICLE X
REMEDIES
Section 10.01. Actions Upon Termination Event. If any
------------------------------
Termination Event shall have occurred and be continuing and the Deal Agent shall
have declared the Commitment Termination Date to have occurred or the Commitment
Termination Date shall have been deemed to have occurred pursuant to Section
9.01, then the Collateral Agent may exercise in respect of the Collateral, in
addition to any and all other rights and remedies otherwise available to it all
of the rights and remedies of a secured party upon default under the UCC (such
rights and remedies to be cumulative and nonexclusive), and, in addition, may
take the following remedial actions:
(a) The Collateral Agent may, without notice to the Borrower except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Borrower Secured Obligations against
amounts payable to the Borrower from the Lockbox Account, the Lockboxes, the
Collection Account, the Successor Servicer Reserve Account or any part of such
accounts in accordance with the priorities required by Section 10.03.
(b) The Collateral Agent may, without notice except as specified
below, solicit and accept bids for and sell the Collateral or any part of the
Collateral in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Lenders', Deal Agent's or Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable. The
Borrower agrees that, to the extent notice of sale shall be required by law, at
least ten Business Days' notice to the Borrower of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Every such sale shall operate to divest all right, title, interest,
claim and demand whatsoever of the Borrower in and to the Collateral so sold,
and shall be a perpetual bar, both at law and in equity, against the Borrower,
the Parent, any Person claiming the Collateral sold through the Borrower, the
Parent and their respective successors or assigns.
(c) Upon the completion of any sale under Section 10.01 (b), the
Borrower or the Servicer will deliver or cause to be delivered all of the
Collateral sold to the purchaser or purchasers at such sale on the date of sale,
or within a reasonable time thereafter if it shall be impractical to make
immediate delivery, but in any event full title and right of possession to such
property shall pass to such purchaser or purchasers forthwith upon the
completion of such sale. Nevertheless, if so requested by the Collateral Agent
or by any purchaser, the Borrower shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments of conveyance
and transfer and releases as may be designated in any such request.
(d) At any sale under Section 10.01 (b), the Lenders, any holder of a
Note (the identity of which, if other than the Collateral Agent, shall be
disclosed by the Borrower to each Rating Agency), the Collateral Agent or any
Secured Party may bid for and purchase the property offered for sale and, upon
compliance with the terms of sale, may hold, retain and dispose of such property
without further accountability therefor. Any holder of a Note purchasing
property at a sale under Section 10.01 (b) may set off the purchase price of
such property against amounts outstanding under such Note in full payment of
such purchase price.
(e) The Collateral Agent may exercise at the Borrower's expense any
and all rights and remedies of the Borrower under or in connection with the
Borrower Assigned Agreements or the other Collateral,
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including any and all rights of the Borrower to demand or otherwise require
payment of any amount under, or performance of any provisions of, the Borrower
Assigned Agreements.
Section 10.02. Receipt of Payments in Trust. All payments
----------------------------
received by the Borrower, the Parent, the Servicer, the Lenders or the Deal
Agent under or in connection with the Collateral shall be received in trust for
the benefit of the Collateral Agent, shall be segregated from other funds of
such party and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement).
Section 10.03. Application of Proceeds. Any cash held by or on
-----------------------
behalf or the Collateral Agent as Collateral, whether from Transferred
Receivables or otherwise, and all cash proceeds received by the Collateral Agent
in respect of any of, sale of, collection from or other realization upon all or
any part of the Collateral, shall be applied as set forth in Section 6.05. Any
surplus of such cash or cash proceeds held by or on behalf of the Collateral
Agent shall be disposed of in accordance with Section 6.08.
Section 10.04. Exercise of Remedies. No failure or delay on the
--------------------
part of the Collateral Agent to exercise any right, power or privilege under
this Agreement and no course of dealing between the Borrower, the Servicer, the
Lenders, the Liquidity Agent or the Deal Agent, on the one hand, and the
Collateral Agent, on the other hand, shall operate as a waiver of such right,
power or privilege, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Agreement are
cumulative and not exclusive of any rights or remedies which the Collateral
Agent or the Secured Parties would otherwise have pursuant to law or equity. No
notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances, or
constitute a waiver of the right of the other party to any other or further
action in any circumstances without notice or demand.
Section 10.05. Severability of Remedies. The invalidity of any
------------------------
remedy in any jurisdiction shall not invalidate such remedy in any other
jurisdiction. The invalidity or unenforceability of the remedies herein
provided in any jurisdiction shall not in any way affect the right of the
enforcement in such jurisdiction or elsewhere of any of the other remedies
herein provided.
Section 10.06. Waiver of Agreement. Each of the Borrower and the
-------------------
Servicer agrees, to the full extent that it may lawfully so agree, that neither
it nor anyone claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now
or hereafter in force in any locality where any Collateral may be situated in
order to prevent hinder or delay the enforcement or foreclosure of this
Agreement, or the absolute sale of any of the Collateral or any part thereof, or
the final and absolute putting into possession thereof, immediately after such
sale, of the purchasers thereof, and each of the Borrower and the Servicer, for
itself and all who may at any time claim through or under it, hereby waives, to
the full extent that it may be lawful so to do, the benefit of all such laws,
and any and all right to have any of the properties or assets constituting the
Collateral marshalled upon any such sale, and agrees that the Collateral Agent
or any court having jurisdiction to foreclose the security interests granted in
this Agreement may sell the Collateral as an entirety or in such parcels as the
Collateral Agent or such court may determine.
Section 10.07. Power of Attorney. Each of the Borrower and the
-----------------
Servicer hereby irrevocably appoints the Collateral Agent its true and lawful
attorney (with full power of substitution) in its name, place and stead and at
its expense, in connection with the enforcement of the rights and remedies
provided for in this Article X, including with the following powers: (a) to
give any necessary receipts or acquittance for amounts collected or received
hereunder, (b) to make all necessary transfers of the Collateral in connection
with any sale or other disposition made pursuant hereto, (c) to execute and
deliver for value all necessary or appropriate bills of sale, assignments and
other instruments in connection with any such sale or other disposition, the
Borrower and the Servicer hereby ratifying and confirming all that such attorney
(or any substitute) shall lawfully do hereunder and pursuant hereto, and (d) to
sign any agreements, orders or other documents in connection with or pursuant to
any Basic Document. Nevertheless, if so requested by the Collateral Agent or
a purchaser of Collateral, the Borrower shall ratify and confirm any such sale
or other disposition by executing and delivering to the Collateral Agent or
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such purchaser all proper bills of sale, assignments, releases and other
instruments as may be designated in any such request.
Section 10.08. Continuing Security Interest. This Agreement shall
----------------------------
create a continuing security interest in the Collateral until the satisfaction
of Section 6.08 of this Agreement.
ARTICLE XI
SUCCESSOR SERVICER
Section 11.01. Servicer Not to Resign. The Servicer shall not
----------------------
resign from the obligations and duties hereby imposed on it except upon
determination that (a) the performance of its duties hereunder has become
impermissible under applicable law, and (b) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (a) above by an
opinion of counsel to such effect delivered to the Collateral Agent and the Deal
Agent. No such resignation shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 11.02.
Section 11.02. Appointment of the Successor Servicer. In
-------------------------------------
connection with the termination of the Servicer's responsibilities under this
Agreement pursuant to Section 9.02 or 11.01, the Deal Agent shall appoint a
successor Servicer to the Servicer which shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of the Servicer under this
Agreement (such successor Servicer being referred to as the "Successor
---------
Servicer"); provided, that the Successor Servicer shall have no responsibility
--------
for any actions of the Servicer prior to the date of its appointment as
Successor Servicer. In selecting a Successor Servicer, the Deal Agent may
obtain bids from any potential Successor Servicer and may agree to any bid it
deems appropriate. The Successor Servicer shall accept its appointment by
executing, acknowledging and delivering to the Deal Agent and the Collateral
Agent an instrument in form and substance acceptable to the Deal Agent and the
Collateral Agent.
Section 11.03. Duties of the Servicer. At any time following the
----------------------
appointment of a Successor Servicer:
(a) The Servicer agrees that it will terminate its activities as
Servicer hereunder in a manner acceptable to the Collateral Agent so as to
facilitate the transfer of servicing to the Successor Servicer including,
without limitation, timely delivery (i) to the Collateral Agent of any funds
that were required to be remitted to the Collateral Agent for deposit in the
Collection Account, and (ii) to the Successor Servicer, at a place selected by
the Successor Servicer, of all Servicing Records and other information with
respect to the Transferred Receivables. The Servicer shall account for all
funds and shall execute and deliver such instruments and do such other things as
may reasonably be required to more fully and definitely vest and confirm in the
Successor Servicer all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.
(b) The Servicer shall terminate each Sub-Servicing Agreement that may
have been entered into and the Successor Servicer shall not be deemed to have
assumed any of the Servicer's interest therein or to have replaced the Servicer
as a party to any such Sub-Servicing Agreement.
Section 11.04. Effect of Termination or Resignation. Any
------------------------------------
termination or resignation of the Servicer under this Agreement shall not affect
any claims that the Borrower, the Collateral Agent, any Lender, the Liquidity
Agent or the Deal Agent may have against the Servicer for events or actions
taken or not taken by the Servicer arising prior to any such termination or
resignation.
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ARTICLE XII
INDEMNIFICATION
Section 12.01. Indemnities by the Borrower. (a) Without limiting
---------------------------
any other rights that the Collateral Agent, the Lenders, the Deal Agent, the
Liquidity Agent, or any director, officer, employee or agent or incorporator of
such party (each an "Indemnified Party") may have hereunder or under applicable
-----------------
law, the Borrower hereby agrees to indemnify each Indemnified Party from and
against any and all claims, losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, and related costs and expenses of any
nature whatsoever, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts"), which
-------------------
may be imposed on, incurred by or asserted against an Indemnified Party in any
way arising out of or relating to (i) any breach of the Borrower's obligations
under any Basic Document, (ii) the financing or the pledge of the Transferred
Receivables, or (iii) any Receivable or any Contract, excluding, however,
Indemnified Amounts to the extent resulting solely from gross negligence or
willful misconduct on the part of such Indemnified Party. Without limiting or
being limited by the foregoing, the Borrower shall pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating to or resulting
from:
(A) reliance on any representation or warranty made or deemed
made by the Borrower (or any of its officers) under or in connection with
any Basic Document or any report or other information delivered by the
Borrower pursuant hereto which shall have been incorrect in any material
respect when made or deemed made or delivered;
(B) the failure by the Borrower to comply with any term,
provision or covenant contained in any Basic Document or any agreement
executed by it in connection with this Agreement or with any applicable
law, rule or regulation with respect to any Transferred Receivable or its
related Contract, or the nonconformity of any Transferred Receivable or its
related Contract with any such applicable law, rule or regulation; or
(C) the failure to vest and maintain vested in the Borrower legal
and equitable title to and ownership of the Receivables that are, or are
purported to be, Transferred Receivables, together with all Collections in
respect thereof, free and clear of any Adverse Claim or Restrictions on
Transferability (except as permitted hereunder) whether existing at the
time of the purchase of such Receivable or at any time thereafter, and to
maintain or transfer to the Collateral Agent a first priority, perfected
security interest therein.
(b) Any Indemnified Amounts subject to the indemnification provisions
of this Section 12.01 not paid in accordance with Article VI, to the extent that
funds are available therefor in accordance with the provisions of Article VI,
shall be paid to the Indemnified Party within five Business Days following
demand therefor.
Section 12.02. Indemnities by the Servicer. (a) Without limiting
---------------------------
any other rights that an Indemnified Party may have hereunder or under
applicable low, the Servicer hereby agrees to indemnify each Indemnified Party
from and against any and all Indemnified Amounts that may be imposed on,
incurred by or asserted against an Indemnified Party in any way arising out of
or relating to any breach of the Servicer's obligations under this Agreement
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party. Without
limiting or being limited by the foregoing, the Servicer shall pay on demand to
each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from:
(i) reliance on any representation or warranty made or deemed
made by the Servicer (or any of its officers) under or in connection with
any Basic Document or any report or other information delivered by the
Servicer pursuant hereto which shall have been incorrect in any material
respect when made or deemed made or delivered; or
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(ii) the failure by the Servicer to comply with any term,
provision or covenant contained in any Basic Document or any agreement
executed by it in connection with this Agreement or with any applicable
law, rule or regulation with respect to any Transferred Receivable or its
related Contract, or the imposition of any Adverse Claim (except as
permitted hereunder) with respect to a Transferred Receivable as a result
of the Servicer's actions hereunder.
(b) Any Indemnified Amounts subject to the indemnification provisions
of this Section shall be paid to the Indemnified Party within five Business Days
following demand therefor.
ARTICLE VIII
THE DEAL AGENT AND THE LIQUIDITY AGENT
Section 13.01. Authorization and Action.
------------------------
(a) Each Lender hereby designates and appoints FCMC as Deal Agent
hereunder, and authorizes the Deal Agent to take such actions as agent on its
behalf and to exercise such powers as are delegated to the Deal Agent by the
terms of this Agreement together with such powers as are reasonably incidental
thereto. The Deal Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Deal Agent shall be read into this Agreement or
otherwise exist for the Deal Agent. In performing its functions and duties
hereunder, the Deal Agent shall act solely as agent for the Lenders and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Borrower or any of its successors or assigns.
The Deal Agent shall not be required to take any action that exposes the Deal
Agent to personal liability or that is contrary to this Agreement or applicable
law. The appointment and authority of the Deal Agent hereunder shall terminate
at the indefeasible payment in full of the Aggregate Unpaids or under any the
Fee Letter.
(b) Each Investor hereby designates and appoints First Union as
Liquidity Agent hereunder, and authorizes the Liquidity Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the Liquidity Agent by the terms of this Agreement together with such powers as
are reasonably incidental thereto. The Liquidity Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Investor, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
Liquidity Agent shall be read into this Agreement or otherwise exist for the
Liquidity Agent. In performing its functions and duties hereunder, the
Liquidity Agent shall act solely as agent for the Investors and does not assume
nor shall be deemed to have assumed any obligation or relationship of trust or
agency with or for the Borrower or any of its successors or assigns. The
Liquidity Agent shall not be required to take any action which exposes the
Liquidity Agent to personal liability or which is contrary to this Agreement or
applicable law. The appointment and authority of the Liquidity Agent hereunder
shall terminate at the indefeasible payment in full of all outstanding principal
amounts of Advances, Daily Yield and any amount at any time due hereunder or
under the Fee Letter.
Section 13.02. Delegation of Duties.
--------------------
(a) The Deal Agent may execute any of its duties under this Agreement
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Deal Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
(b) The Liquidity Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Liquidity Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
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Section 13.03. Exculpatory Provisions.
----------------------
(a) Neither the Deal Agent nor any of its directors, officers, agents
or employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement (except for its,
their or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower contained in this Agreement
or in any certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this Agreement or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other document furnished in connection herewith, or for
any failure of the Borrower to perform its obligations hereunder, or for the
satisfaction of any condition specified in Article III. The Deal Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower. The Deal Agent shall not be deemed to have knowledge of any
Termination Event unless the Deal Agent has received notice from the Borrower or
a Lender.
(b) Neither the Liquidity Agent nor any of its directors, officers,
agents or employees shall be (i) liable for any action lawfully taken or omitted
to be taken by it or them under or in connection with this Agreement (except for
its, their or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to the Deal Agent or any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Borrower to perform its
obligations hereunder, or for the satisfaction of any condition specified in
Article III. The Liquidity Agent shall not be under any obligation to the Deal
Agent or any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower. The Liquidity Agent shall not be deemed to have knowledge of any
Termination Event unless the Liquidity Agent has received notice from the
Borrower, the Deal Agent or a Lender.
Section 13.04. Reliance.
--------
(a) The Deal Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Deal Agent. The Deal Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other document furnished in connection herewith unless it shall first receive
such advice or concurrence of VFCC or the Required Investors or all of the
Lenders, as applicable, as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders, provided that unless and until the Deal
--------
Agent shall have received such advice, the Deal Agent may take or refrain from
taking any action, as the Deal Agent shall deem advisable and in the best
interests of the Lenders. The Deal Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request of VFCC or
the Required Investors or all of the Lenders, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders.
(b) The Liquidity Agent shall in all cases be entitled to rely, and
shall be fully protected in relying, upon any document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Liquidity Agent. The Liquidity
Agent shall in all cases be fully justified in failing or refusing to take any
action under this Agreement or any other document furnished in connection
herewith unless it shall first receive such advice or concurrence of Required
Investors as it deems appropriate or it shall first be indemnified to its
satisfaction by the
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Investors, provided that unless and until the Liquidity Agent shall have
--------
received such advice, the Liquidity Agent may take or refrain from taking any
action, as the Liquidity Agent shall deem advisable and in the best interests of
the Investors. The Liquidity Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of the
Required Investors and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Investors.
Section 13.05. Non-Reliance on Deal Agent, Liquidity Agent and Other
-----------------------------------------------------
Lenders.
-------
Each Lender expressly acknowledges that neither the Deal Agent, the
Liquidity Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Deal Agent hereafter taken, including, without
limitation, any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Deal Agent or the Liquidity
Agent. Each Lender represents and warrants to the Deal Agent and to the
Liquidity Agent that it has and will, independently and without reliance upon
the Deal Agent, the Liquidity Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of the Borrower and made its
own decision to enter into this Agreement.
Section 13.06. Reimbursement and Indemnification.
---------------------------------
The Investors agree to reimburse and indemnify VFCC, the Deal Agent,
the Liquidity Agent and each of their respective officers, directors, employees,
representatives and agents ratably according to their Pro-Rata Shares, to the
extent not paid or reimbursed by the Borrower (i) for any amounts for which
VFCC, the Liquidity Agent, acting in its capacity as Liquidity Agent, or the
Deal Agent, acting in its capacity as Deal Agent, is entitled to reimbursement
by the Borrower hereunder and (ii) for any other expenses incurred by VFCC, the
Liquidity Agent, acting in its capacity as Liquidity Agent, or the Deal Agent,
in its capacity as Deal Agent and acting on behalf of the Lenders, in connection
with the administration and enforcement of this Agreement.
Section 13.07. Deal Agent and Liquidity Agent in their Individual
--------------------------------------------------
Capacities.
----------
The Deal Agent, the Liquidity Agent and each of their respective
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower or any Affiliate of the Borrower as though
the Deal Agent or the Liquidity Agent, as the case may be, were not the Deal
Agent or the Liquidity Agent, as the case may be, hereunder. With respect to
the making of Advances pursuant to this Agreement, the Deal Agent, the Liquidity
Agent and each of their respective Affiliates shall have the same rights and
powers under this Agreement as any Lender and may exercise the same as though it
were not the Deal Agent or the Liquidity Agent, as the case may be, and the
terms "Investor," "Lender," "Investors" and "Lenders" shall include the Deal
-------- ------ --------- -------
Agent or the Liquidity Agent, as the case may be, in its individual capacity.
Section 13.08. Successor Deal Agent or Liquidity Agent.
---------------------------------------
(a) The Deal Agent may, upon five (5) days' notice to the Borrower and
the Lenders, and the Deal Agent will, upon the direction of all of the Lenders
(other than the Deal Agent, in its individual capacity) resign as Deal Agent.
If the Deal Agent shall resign, then the Required Investors during such 5-day
period shall appoint from among the Lenders a successor agent. If for any
reason no successor Deal Agent is appointed by the Required Investors during
such 5-day period, then effective upon the termination of such five day period,
the Lenders shall perform all of the duties of the Deal Agent hereunder and the
Borrower shall make all payments in respect of the Aggregate Unpaids or under
the Fee Letter directly to the applicable Lender and for all purposes shall deal
directly with the Lenders. After any retiring Deal Agent's resignation
hereunder as Deal Agent, the provisions of Articles VII and VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Deal Agent under this Agreement.
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(b) The Liquidity Agent may, upon five (5) days' notice to the
Borrower, the Deal Agent and the Investors, and the Liquidity Agent will, upon
the direction of all of the Investors (other than the Liquidity Agent, in its
individual capacity) resign as Liquidity Agent. If the Liquidity Agent shall
resign, then the Required Investors during such 5-day period shall appoint from
among the Investors a successor Liquidity Agent. If for any reason no successor
Liquidity Agent is appointed by the Required Investors during such 5-day period,
then effective upon the termination of such five day period, the Investors shall
perform all of the duties of the Liquidity Agent hereunder and the Borrower
shall make all payments in respect of principal amounts of Advances Outstanding,
Daily Yield and any amount due at any time hereunder or under the Fee Letter
directly to the applicable Investor and for all purposes shall deal directly
with the Investors. After any retiring Liquidity Agent's resignation hereunder
as Liquidity Agent, the provisions of Articles VII and VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Liquidity Agent under this Agreement.
ARTICLE XIVA
ASSIGNMENTS; PARTICIPATIONS
Section 14.01A. Assignments and Participations.
------------------------------
(a) Each Investor may upon at least thirty (30) days' written notice
to VFCC, the Deal Agent, the Liquidity Agent and S&P and Xxxxx'x, assign to one
or more banks or other entities all or a portion of its rights and obligations
under this Agreement; provided however, that (i) each such assignment shall be
-------- -------
of a constant, and not a varying percentage of all of the assigning Investor's
rights and obligations under this Agreement, (ii) the amount of the Commitment
of the assigning Investor being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than the lesser of (A) $10,000,000 or an
integral multiple of $1,000,000 in excess of that amount and (B) the full amount
of the assigning Investor's Commitment, (iii) each such assignment shall be to
an Eligible Assignee, (iv) the parties to each such assignment shall execute and
deliver to the Deal Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$5,000 or such lesser amount as shall be approved by the Deal Agent, (v) the
parties to each such assignment shall have agreed to reimburse the Deal Agent,
the Liquidity Agent and VFCC for all fees, costs and expenses (including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for each of the Deal Agent, the Liquidity Agent and VFCC) incurred by the Deal
Agent, the Liquidity Agent and VFCC, respectively, in connection with such
assignment and (vi) the Borrower shall have consented to such assignment, which
consent shall not be unreasonably withheld, and provided further that upon the
-------- -------
effective date of such assignment the provisions of Section 3.03(f) of the
Administration Agreement shall be satisfied. Upon such execution, delivery and
acceptance by the Deal Agent and the Liquidity Agent and the recording by the
Deal Agent, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be the date of acceptance thereof by the
Deal Agent and the Liquidity Agent, unless a later date is specified therein,
(i) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of an Investor
hereunder and (ii) the Investor assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Investor's
rights and obligations under this Agreement, such Investor shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Investor assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Investor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Investor makes no representation
or warranty and assumes no responsibility with
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respect to the financial condition of VFCC or the performance or observance by
VFCC of any of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of such financial
statements and other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Deal Agent or the Liquidity Agent, such assigning Investor or any other Investor
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assigning Investor and such assignee confirm that
such assignee is an Eligible Assignee; (vi) such assignee appoints and
authorizes each of the Deal Agent and the Liquidity Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to such agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as an Investor.
(c) The Deal Agent shall maintain at its address referred to herein a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Investors and the
Commitment of, and the principal amount of, each Advance by each Investor from
time to time (the "Register"). The entries in the Register shall be conclusive
--------
and binding for all purposes, absent manifest error, and VFCC, the Borrower and
the Investors may treat each Person whose name is recorded in the Register as an
Investor hereunder for all purposes of this Agreement. The Register shall be
available for inspection by VFCC, the Liquidity Agent or any Investor at any
reasonable time and from time to time upon reasonable prior notice.
(d) Subject to the provisions of Section 14.01(a), upon its receipt of
an Assignment and Acceptance executed by an assigning Investor and an assignee,
the Deal Agent and the Liquidity Agent shall each, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A to
---------
the Liquidity Purchase Agreement, accept such Assignment and Acceptance, and the
Deal Agent shall then (i) record the information contained therein in the
Register and (ii) give prompt notice thereof to VFCC.
(e) Each Investor may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and each Advance made by it); provided, however, that (i) such
-------- -------
Investor's obligations under this Agreement (including, without limitation, its
Commitment hereunder) shall remain unchanged, (ii) such Investor shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Deal Agent and the other Investors shall continue to
deal solely and directly with such Investor in connection with such Investor's
rights and obligations under this Agreement, and provided further that the Deal
-------- -------
Agent shall have confirmed that upon the effective date of such participation
the provisions of Section 3.3(f) of the Administration Agreement shall be
satisfied. Notwithstanding anything herein to the contrary, each participant
shall have the rights of an Investor (including any right to receive payment)
under Sections 2.10 and 2.12; provided, however, that no participant shall be
-------- -------
entitled to receive payment under either such Section in excess of the amount
that would have been payable under such Section by the Borrower to the Investor
granting its participation had such participation not been granted, and no
Investor granting a participation shall be entitled to receive payment under
either such Section in an amount which exceeds the sum of (i) the amount to
which such Investor is entitled under such Section with respect to any portion
of any Advance made by such Investor which is not subject to any participation
plus (ii) the aggregate amount to which its participants are entitled under such
----
Sections with respect to the amounts of their respective participations. With
respect to any participation described in this Section 14.01A(e), the
participant's rights as set forth in the agreement between such participant and
the applicable Investor to agree to or to restrict such Investor's ability to
agree to any modification, waiver or release of any of the terms of this
Agreement or any other Deal Document or to exercise or refrain from exercising
any powers or rights which such Investor may have under or in respect of this
Agreement or any other Deal Document shall be limited to the right to consent to
any of the matters set forth in Section 2.01 of this Agreement.
(f) Each Investor may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.1, disclose to the assignee or participant or proposed
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assignee or participant any information relating to the Borrower or VFCC
furnished to such Investor by or on behalf of the Borrower or VFCC.
(g) In the event (i) an Investor ceases to qualify as an Eligible
Assignee, or (ii) an Investor makes demand for compensation pursuant to Section
2.10 or Section 2.12, VFCC may, and, upon the direction of the Borrower and
prior to the occurrence of a Termination Event, shall, in any such case,
notwithstanding any provision to the contrary herein, replace such Investor with
an Eligible Assignee by giving three Business Days' prior written notice to the
such Investor. In the event of the replacement of an Investor, such Investor
agrees (i) to assign all of its rights and obligations hereunder to an Eligible
Assignee selected by VFCC upon payment to such Investor of the amount of such
Investor's Advances together with any accrued and unpaid Daily Yield thereon,
all accrued and unpaid commitment fees owing to such Investor and all other
amounts owing to such Investor hereunder and (ii) to execute and deliver an
Assignment and Acceptance and such other documents evidencing such assignment as
shall be necessary or reasonably requested by VFCC or the Deal Agent. In the
event that any Investor ceases to qualify as an Eligible Assignee, such affected
Investor agrees (1) to give the Deal Agent, the Borrower and VFCC prompt written
notice thereof and (2) subject to the following proviso, to reimburse the Deal
Agent, the Liquidity Agent, the Borrower, VFCC and the relevant assignee for all
fees, costs and expenses (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for each of the Deal Agent, the Liquidity
Agent, the Borrower and VFCC and such assignee) incurred by the Deal Agent, the
Liquidity Agent, the Borrower, VFCC and such assignee, respectively, in
connection with any assignment made pursuant to this Section 14.01(g) by such
affected Investor; provided, however, that such affected Investor's liability
-------- -------
for such costs, fees and expenses shall be limited to the amount of any up-front
fees paid to such affected Investor at the time that it became a party to this
Agreement.
(h) Nothing herein shall prohibit any Investor from pledging or
assigning as collateral any of its rights under this Agreement to any Federal
Reserve Bank in accordance with applicable law and any such pledge or collateral
assignment may be made without compliance with this Section.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices, etc.
-------------
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth on Schedule 1 hereto or
specified in such party's Assignment and Acceptance or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective upon receipt, or
in the case of (a) notice by mail, five days after being deposited in the United
States mails, first class postage prepaid, (b) notice by telex, when telexed
against receipt of answer back, or (c) notice by facsimile copy, when verbal
communication of receipt is obtained, provided, however, that no notice or
-------- -------
communication sent pursuant to Article II shall be effective until received.
Section 14.02. Binding Effect; Assignability. This Agreement shall
-----------------------------
be binding upon and inure to the benefit of the Borrower, the Servicer, the
Lenders, the Deal Agent, the Liquidity Agent and their respective permitted
successors and assigns. Neither the Borrower nor the Servicer may assign any of
their rights and obligations hereunder or any interest herein without the prior
written consent of the Collateral Agent and the Deal Agent, which consent shall
not be unreasonably withheld, and unless each Rating Agency shall have confirmed
in writing to the Deal Agent that such assignment would not result in a
withdrawal or reduction of the then current rating by such Rating Agency of the
Commercial Paper. The Lenders, the Collateral Agent, the Liquidity Agent and
the Deal Agent may, at any time, with the consent of the Borrower, which consent
shall not be unreasonably withheld, assign any of their respective rights and
obligations hereunder or interest herein to any Person. Any such assignee may
further assign at any time its rights and obligations hereunder or interests
herein without the
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consent of the Borrower, the Parent or the Servicer. This Agreement shall create
and constitute the continuing obligations of the parties hereto in accordance
with its terms, and shall remain in full force and effect until its termination;
provided, that the rights and remedies with respect to any breach of any
--------
representation and warranty made by the Borrower or the Servicer pursuant to
Article IV and the indemnification and payment provisions of Article XII shall
be continuing and shall survive any termination of this Agreement.
Section 14.03. Costs, Expenses and Taxes. (a) In addition to the
-------------------------
rights of Indemnification under Article XII hereof, the Borrower agrees to pay
upon demand all reasonable costs and expenses and taxes (excluding Income Taxes)
incurred by the Lenders, the Deal Agents or the Collateral Agent ("Other Costs")
-----------
in connection with the administration (including periodic auditing, Rating
Agency requirements, modification and amendment) of the Basic Documents and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Lender, the Deal
Agent and the Collateral Agent with respect thereto and with respect to advising
the Lenders, the Deal Agent or the Collateral Agent as to its rights and
remedies under the Basic Documents and the other agreements executed pursuant
hereto. The Borrower further agrees to pay within five Business Days after
demand all reasonable costs, counsel fees and expenses in connection with the
enforcement (whether through negotiation, legal proceedings or otherwise) of the
Basic Documents and the other agreements and documents to be delivered
hereunder, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 14.03 in
accordance with the provisions of Article VI to the extent that funds are
available therefor in accordance therewith.
(b) In addition, the Borrower shall pay on demand any and all stamp,
sales, excise and other taxes and fees (subject to Section 3.01(k)) payable or
determined to be payable in connection with the execution, delivery, filing or
recording of the Basic Documents or the other agreements and documents to be
delivered hereunder, and agrees to indemnify and save each Indemnified Party
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
(c) In the event that the Deal Agent determines that any of the costs
referred to in paragraphs (a) or (b) above were in any part incurred on behalf
of, or are attributable to the actions of, borrowers or sellers under Other
Funding Agreements, the Borrower shall have no liability hereunder in excess of
the Borrower's Share of such costs.
(d) If the Borrower or the Servicer fails to perform any agreement or
obligation contained herein, any Lender, the Collateral Agent or the Deal Agent
may (but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of such party incurred in connection
therewith shall be payable by the party which has failed to so perform upon such
party's demand therefor.
Section 14.04. Confidentiality. Except to the extent otherwise
---------------
required by applicable law or as required to be filed with the Securities and
Exchange Commission or unless the Deal Agent shall otherwise consent in writing,
the Borrower and the Servicer agree to maintain the confidentiality of this
Agreement (and all drafts hereof and documents ancillary thereto) in its
communications with third parties and otherwise and not to disclose, deliver or
otherwise make available to any third party (other than its directors, officers,
employees, accountants or counsel) the original or any copy of all or any part
of this Agreement (or any draft hereof and documents ancillary thereto).
Section 14.05. No Proceedings. Each of the Borrower, the Deal
--------------
Agent, the Liquidity Agent, the Servicer and the Lenders hereby agrees that it
will not institute against, or join any other Person in instituting against VFCC
or the Borrower any proceedings of the type referred to in the definition of
"Event of Bankruptcy" hereunder until one year and one day shall have elapsed
--------------------
since the last day on which any Commercial Paper remained outstanding.
Section 14.06. Amendments; Waivers; Consents. No modification,
-----------------------------
amendment or waiver of or with respect to any provision of the Basic Documents
or any other agreements, instruments and documents delivered pursuant hereto,
nor consent to any departure by the Borrower or the Servicer from any of the
terms or
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conditions thereof, shall be effective unless it shall be in writing and signed
by each of the parties hereto. Any waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No consent to or
demand on the Borrower, the Parent or the Servicer in any case shall, in itself,
entitle it to any other consent or further notice or demand in similar or other
circumstances. The Basic Documents and the documents referred to therein embody
the entire agreement among the Borrower, the Lenders, the Deal Agent, the
Liquidity Agent, the Collateral Agent and the Servicer and supersede all prior
agreements and understandings relating to the subject hereof.
Section 14.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
------------------------------------------------------
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
-----
WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW
PROVISIONS THEREOF).
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY SUBMITS TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL, AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
--------------------
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 14.07(b) SHALL AFFECT THE RIGHT OF ANY PARTY TO
THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT ANY PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY
OTHER JURISDICTION.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR IN CONNECTION
WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
Section 14.08. Execution in Counterparts; Severability. This
---------------------------------------
Agreement may be executed by the 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. 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
shall not in any way be affected or impaired thereby in such jurisdiction and
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation shall not be impaired thereby in
any other jurisdiction.
Section 14.09. Descriptive Headings. The descriptive headings of
--------------------
the various sections of this Agreement are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 14.10. Ratable Payments. If any Lender, whether by setoff
----------------
or otherwise, has payment made to it with respect to any portion of the
Aggregate Unpaids owing to such Lender (other than payments received pursuant to
Sections 2.10, 12.01 or 12.02) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase for cash
without recourse or warranty a portion of the Aggregate Unpaids held by the
other Lenders so that after such purchase each Lender will hold its ratable
proportion of the Aggregate Unpaids; provided that if all or any portion of such
--------
excess amount is thereafter
-76-
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
Section 14.11. Recourse Against Certain Parties.
--------------------------------
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 Lender 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 Lender or any
incorporator, affiliate, stockholder, officer, employee or director of such
Lender 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 and understood that the agreements of such
-- ----- --------- ------ --- ----------
Lender 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 Lender, provided that, in
-------------
the case of VFCC, such liabilities shall be paid only after the repayment in
full of all Commercial Paper and all other liabilities contemplated in the
program documents with respect to VFCC, and that no personal liability
whatsoever shall attach to or be incurred by any administrator of such Lender or
any incorporator, stockholder, affiliate, officer, employee or director of such
Lender or of any such administrator, as such, or any other them, under or by
reason of any of the obligations, covenants or agreements of such Lender
contained in this Agreement or in any other such instruments, documents or
agreements, or which are implied therefrom, and that any and all personal
liability of every such administrator of such Lender and each incorporator,
stockholder, affiliate, officer, employee or director of such Lender or of any
such administrator, or any of them, for breaches by such Lender of any such
obligations, covenants or agreements, which liability may arise either at common
law or at equity, by statute or constitution, or otherwise, is hereby expressly
waived as a condition of and in consideration for the execution of this
Agreement. The provisions of this Section 14.11 shall survive the termination
of this Agreement.
-77-
IN WITNESS WHEREOF, the parties have caused this Receivables Funding
and Servicing Agreement to be executed by their respective officers thereunto
duty authorized, as of the date first above written.
THE SERVICER: CONSUMER PORTFOLIO SERVICES, INC., as
Servicer
By ____________________________________
Name:
Title:
THE BORROWER: CPS WAREHOUSE CORP., as
Borrower
By ____________________________________
Name:
Title:
VFCC: VARIABLE FUNDING CAPITAL
CORPORATION, as a Lender
By: First Union Capital Markets Corp.,
as attorney-in-fact
By __________________________________
Name:
Title:
THE DEAL AGENT: FIRST UNION CAPITAL MARKETS CORP.
By ____________________________________
Name:
Title:
-78-
THE LIQUIDITY AGENT: FIRST UNION NATIONAL BANK
By ____________________________________
Name:
Title:
THE COLLATERAL AGENT: FIRST UNION NATIONAL BANK
By ____________________________________
Name:
Title:
THE INVESTORS: FIRST UNION NATIONAL BANK
By ____________________________________
Name:
Title:
Commitment: $150,000,000
-79-
SCHEDULE 1 TO THE FUNDING AGREEMENT
ADDRESSES FOR NOTICE
CONSUMER PORTFOLIO SERVICES INC.
0 Xxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
CPS WAREHOUSE CORP.
0 Xxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Stock
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
VARIABLE FUNDING CAPITAL CORPORATION
c/o First Union Capital Markets Corp.
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
With a copy to:
Lord Securities Corp.
0 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
Confirmation No.:(000) 000-0000
FIRST UNION NATIONAL BANK
One First Union Center, TW-6
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxx, Xx.
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
FIRST UNION CAPITAL MARKETS CORP.
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
LINC ACCEPTANCE COMPANY LLC
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention:
Facsimile No.:
Telephone No.:
SAMCO ACCEPTANCE CORP.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention:
Facsimile No.:
Telephone No.
EXHIBIT A TO THE FUNDING AGREEMENT
FORM OF BORROWER NOTICE - REQUEST FOR ADVANCE
[Insert Date]
Variable Funding Capital Corporation
Attention:
First Union Capital Markets Corp.,
as Deal Agent
Attention:
Re: Receivables Funding and Servicing Agreement,
dated as of November 24, 1997
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(a) of the Receivables
Funding and Servicing Agreement, dated as of November 24, 1997 (the "Funding
-------
Agreement"), among CPS Warehouse Corp. (the "Borrower"), Variable Funding
--------- --------
Capital Corporation (the "Lender"), Consumer Portfolio Services, Inc. (the
------
"Parent"), First Union Capital Markets Corp., First Union National Bank and the
-------
investors party thereto. Capitalized terms used but not defined in this notice
have the meanings ascribed to such terms in the Funding Agreement.
The Borrower hereby requests that the Lender make an Advance to the
Borrower on _______________, 199__ pursuant to Section 2.02(b) of the Funding
Agreement in the amount of $_______________ to be disbursed to the Borrower in
accordance with Section 2.02(b) of the Funding Agreement. The Parent and the
Borrower hereby confirm that the conditions set forth in Section 3.02 of the
Funding Agreement for the making of such Advance have been met.
Very truly yours,
Consumer Portfolio Services, Inc.
By:__________________________________
Name:
Title:
CPS Warehouse Corp.
By:__________________________________
Name:
Title:
FORM OF BORROWER NOTICE - REPAYMENT OF ADVANCE
[Insert Date]
Variable Funding Capital Corporation
Attention:
First Union Capital Markets Corp.,
as Deal Agent
Attention:
Re: Receivables Funding and Servicing Agreement,
dated as of November 24, 1997
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(a) of the Receivables
Funding and Servicing Agreement, dated as of November 24, 1997 (the "Funding
-------
Agreement"), among CPS Warehouse Corp. (the "Borrower"), Variable Funding
--------- --------
Capital Corporation (the "Lender"), Consumer Portfolio Services, Inc. (the
------
"Parent"), First Union Capital Markets Corp. (the "Deal Agent"), First Union
------- ----------
National Bank and the investors party thereto. Capitalized terms used but not
defined in this notice have the meanings ascribed to such terms in the Funding
Agreement.
The Borrower hereby notifies the Lender and the Deal Agent that on
___________________, 19__ (which is a Business Day) the Borrower intends to
repay $_______________ of Advances currently outstanding to the Borrower
pursuant to Section 2.03 of the Funding Agreement, including (i) all Yield
accrued on the principal amount of Advances being repaid through the date of
repayment, and (ii) any and all Breakage Costs payable under Section 2.11 of the
Funding Agreement.
Very truly yours,
CPS Warehouse Corp.
By:__________________________________
Name:
Title:
2
FORM OF BORROWER NOTICE - REDUCTION OF COMMITMENT
[Insert Date]
Variable Funding Capital Corporation
Attention:
First Union Capital Markets Corp.,
as Deal Agent
Attention:
Re: Receivables Funding and Servicing Agreement,
dated as of November 24, 1997
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(a) of the Receivables
Funding and Servicing Agreement, dated as of November 24, 1997 (the "Funding
-------
Agreement"), among CPS Warehouse Corp. (the "Borrower"), Variable Funding
--------- --------
Capital Corporation (the "Lender"), Consumer Portfolio Services, Inc. (the
------
"Parent"), First Union Capital Markets Corp. (the "Deal Agent"), First Union
------- ----------
National Bank and the investors party thereto. Capitalized terms used but not
defined in this notice have the meanings ascribed to such terms in the Funding
Agreement.
The Borrower hereby irrevocably notifies the Lender and the Deal Agent
pursuant to Section 2.03(a) of the Funding Agreement that on __________________,
199_ (which is a Business Day at least five (5) days after the date this notice
is given) the Maximum Facility Commitment shall be reduced to $______________.
After such reduction, the Maximum Facility Commitment will not be less than the
Advances Outstanding after giving effect to, and conditioned upon, the repayment
of Advances set forth in the attached notice.
Very truly yours,
CPS Warehouse Corp.
By:__________________________________
Name:
Title:
3
FORM OF BORROWER NOTICE - TERMINATION OF COMMITMENT
[Insert Date]
Variable Funding Capital Corporation
Attention:
First Union Capital Markets Corp.,
as Deal Agent
Attention:
Re: Receivables Funding and Servicing Agreement,
dated as of November 24, 1997
Ladies and Gentlemen:
This notice is given pursuant to Section 2.02(a) of the Receivables
Funding and Servicing Agreement, dated as of November 24, 1997 (the "Funding
-------
Agreement"), among CPS Warehouse Corp. (the "Borrower"), Variable Funding
--------- --------
Capital Corporation (the "Lender"), Consumer Portfolio Services, Inc. (the
------
"Parent"), First Union Capital Markets Corp. (the "Deal Agent"), First Union
------- ----------
National Bank and the investors party thereto. Capitalized terms used but not
defined in this notice have the meanings ascribed to such terms in the Funding
Agreement.
The Borrower hereby irrevocably notifies the Lender and the Deal Agent
pursuant to Section 2.03(a) of the Funding Agreement that on _________________,
199_ (which is a Business Day at least five (5) days after the date this notice
is given) the Maximum Facility Commitment shall be terminated.
Very truly yours,
CPS Warehouse Corp.
By:__________________________________
Name:
Title:
4
EXHIBIT B TO FUNDING AGREEMENT
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C TO FUNDING AGREEMENT
FORM OF NOTE
$[Insert Amount] [Insert Date]
FOR VALUE RECEIVED, CPS Warehouse Corp., a Delaware corporation (the
"Borrower"), promises to pay to [Variable Funding Capital Corporation] (the
---------
"Lender"), or registered assigns, the principal sum of
-------
_________________________________ DOLLARS ($_______________) or, if less, the
unpaid principal amount of the aggregate loans ("Advances") made by the Lender
--------
to the Borrower pursuant to the Funding Agreement (as defined below), as set
forth on the attached Schedule, on the dates specified in Section 2.06 of the
Funding Agreement, and to pay the Daily Yield (as defined in the Funding
Agreement) on the unpaid principal amount of this Note on each day that such
unpaid principal amount is outstanding on the dates specified in Section 2.07 of
the Funding Agreement.
This Note is issued pursuant to Section 2.05 of the Receivables
Funding and Servicing Agreement, dated as of November 24, 1997 (the "Funding
-------
Agreement"), among the Borrower, Consumer Portfolio Services, Inc., Variable
---------
Funding Capital Corporation, First Union Capital Markets Corp., First Union
National Bank, and as collateral agent for the Secured Parties (as defined in
the Funding Agreement) and the Investors. Capitalized terms used but not
defined in this Note are used with the meanings ascribed to them in the Funding
Agreement.
Notwithstanding any other provisions contained in this Note, if at any
time the Daily Yield payable by the Borrower under this Note, when combined with
any and all other charges provided for in this Note, in the Funding Agreement or
in any other document (to the extent such other charges would constitute
interest for the purpose of any applicable law limiting interest that may be
charged on this Note), exceeds the highest rate of interest permissible under
applicable law (the "Maximum Lawful Rate"), then so long as the Maximum Lawful
-------------------
Rate would be exceeded the rate of interest under this Note shall be equal to
the Maximum Lawful Rate. If at any time thereafter the rate of interest payable
under this Note is less than the Maximum Lawful Rate, the Borrower shall
continue to pay interest under this Note at the Maximum Lawful Rate until such
time as the total interest paid by the Borrower is equal to the total interest
that would have been paid had applicable law not limited the interest rate
payable under this Note. In no event shall the total interest received by the
Lender under this Note exceed the amount which the Lender could lawfully have
received had the interest due under this Note been calculated since the date of
this Note at the Maximum Lawful Rate.
Payments of the principal of, premium, if any, and Daily Yield on this
Note shall be made by the Borrower to the holder hereof by wire transfer of
immediately available funds by 11:00 a.m. New York City time, in the manner and
at the address specified for such purpose as provided in Section 2.09 of the
Funding Agreement, or in such manner or at such other address as the holder of
this Note shall have specified in writing by the Borrower for such purpose,
without the presentation or surrender of this Note or the making of any notation
on this Note.
If any payment under this Note falls due on a day which is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day and Daily Yield shall be payable on any principal so extended.
and all notices of any kind whatsoever with respect to this Note.
The holder hereof may, as provided in Sections 14.01A and 14.02 of the
Funding Agreement, sell, assign, transfer, negotiate, grant participations in or
otherwise dispose of all or any portion of this Note and the indebtedness
evidenced by the Note.
This Note is secured by the security interests granted to the Lender
pursuant to Section 8.01 of the Funding Agreement, the holder of this Note is
entitled to the benefits of the Funding Agreement and may enforce the agreements
of the Borrower contained in the Funding Agreement and exercise the remedies
provided for by, or otherwise available in respect of, the Funding Agreement,
all in accordance with the terms of the Funding Agreement. If a Termination
Event shall occur and be continuing, the unpaid balance of the principal of this
Note, together with accrued Daily Yield, may be declared and become due and
payable in the manner and with the effect provided in the Funding Agreement.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (WITHOUT
APPLICATION OF ITS CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed and
delivered by its duly authorized officer as of the date set forth above.
CPS Warehouse Corp.
By:__________________________________
Name:
Title:
2
Form of Schedule to Note
Date of Principal Principal Outstanding
Advance or Amount of Amount of Principal
Repayment Advance* Repayment Amount
---------- --------- --------- ------
________________________
* The aggregate principal amount of all Advances among all Lenders may not
exceed the Maximum Facility Amount.
3
EXHIBIT D TO FUNDING AGREEMENT
FORM OF OFFICER'S CERTIFICATE AS TO INSOLVENCY
EXHIBIT E TO FUNDING AGREEMENT
FORM OF OFFICER'S CERTIFICATE OF BORROWER
EXHIBIT F TO FUNDING AGREEMENT
FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT G TO FUNDING AGREEMENT
FORM OF MONTHLY REPORT
FINANCIAL COVENANTS/TERMINATION EVENTS
CONSUMER PORTFOLIO SERVICES, INC.
For the Month of __________________.
Document Actual
Reference Covenant Covenant Level Amount
--------- -------- -------------- ------
I. Servicer 7.06(a) Net Worth ______
7.06(b) Interest Coverage Ratio ______
7.06(c) Debt Ratio ______
II. Borrower 5.01(h) Consolidated Net Worth ______
Percentage
9.01(i) Default Rate ______
9.01(j) Delinquency Rate ______
9.01(x) Weighted average Net ______
Loss Rate
EXHIBIT H TO FUNDING AGREEMENT
TRACKING REPORTS
Report Frequency
------ ---------
Borrowing Base Certificate Each Advance Date
Discount Report Summary Monthly
Trial Balance of Contracts Monthly
Gross Delinquency Summary Report Monthly
Loans Paid Off During Month Monthly
Loans Charged-Off During Month Monthly
Monthly Transaction Report Monthly
Delinquency Detail Report Monthly
Borrowing Base Certificate shall be provided to the Deal Agent in
accordance with the terms of the Funding Agreement Within ____ Business Days
after the end of each month, the Borrower shall deliver to the Deal Agent the
Monthly Report and the above monthly reports together with a certificate of the
chief executive officer, the chief financial officer or the chief accounting
officer of the Servicer, certifying as to the completeness and accuracy of the
above reports. The Borrower shall deliver to the Deal Agent, no later than the
____ Business Day following each month an up-to-date master file back-up tape in
a form usable by Deal Agent's computer, which contains original Contract
information and current Contract status information mutually determined by the
Collateral Agent and the Borrower.
EXHIBIT I TO FUNDING AGREEMENT
FORM OF LIST OF CONTRACTS
[To be provided by Consumer Portfolio Services, Inc.]
