SERVICING AGREEMENT
Dated as of August 15, 2002
among
XXXXXX XXXXXXX FUNDING LLC,
FOOTHILL CAPITAL CORPORATION,
and
XXXXXX XXXXXXX CAPITAL & FINANCE CORPORATION
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "AGREEMENT"), dated as of
August 15, 2002, is among XXXXXX XXXXXXX CAPITAL &
FINANCE CORPORATION, a Delaware corporation ("XXXXXX XXXXXXX CAPITAL" or "XXXXXX
XXXXXXX"), as Servicer (in such capacity, the "Servicer"), FOOTHILL CAPITAL
CORPORATION, in its capacity as arranger and administrative agent under the Loan
and Security Agreement referred to below (in such capacities, the "Agent") and
XXXXXX XXXXXXX FUNDING LLC, a Delaware limited liability company (the
"COMPANY"). Unless otherwise indicated, certain terms that are capitalized and
used throughout this Agreement are defined in (i) the Loan and Security
Agreement of even date herewith (as the same may be amended, supplemented or
otherwise modified from time to time, the "LOAN AND SECURITY AGREEMENT") among
the Company, the Lenders set forth therein and the Agent or (ii) if not defined
in the Loan and Security Agreement, the Purchase, Sale and Contribution
Agreement of even date herewith (as the same may be amended, supplemented or
otherwise modified from time to time, the "PURCHASE, SALE AND CONTRIBUTION
AGREEMENT") among the Company, the Servicer and the Originators set forth
therein.
BACKGROUND
1. The Company is a limited liability company, all of the outstanding
interests of which are owned by the Originators. Xxxxxx Xxxxxxx Capital is a
wholly-owned subsidiary of Xxxxxx Xxxxxxx Ltd. ("FWL"). Each Originator is a
wholly-owned subsidiary of FWL.
2. The Originators generate Receivables in the ordinary course of
their respective businesses.
3. The Originators, in order to finance their respective businesses,
are entering into the Purchase, Sale and Contribution Agreement. The Company
intends to finance the purchase of Receivables pursuant to the Loan and Security
Agreement.
4. In order to facilitate the above transactions, the Company wishes
to engage Xxxxxx Xxxxxxx Capital as Servicer of the Receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
Section 1.APPOINTMENT OF THE SERVICER. (a) The servicing,
administering and collection of the Pool Receivables shall be conducted by the
Person so designated from time to time as the Servicer in accordance with this
Section. Until the Agent gives notice to Xxxxxx Xxxxxxx (in accordance with this
Section) of the designation of a new Servicer, Xxxxxx Xxxxxxx is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. Upon (i) the occurrence of an Event of
Default under the Loan and Security Agreement, (ii) a failure by the Servicer,
any Originator or the Company to perform or observe any term, covenant or
agreement under this Agreement, the Loan and Security Agreement or the Purchase,
Sale and Contribution Agreement, which failure continues for 10 days after
knowledge or notice thereof (or continues for such other grace period set forth
in the applicable agreement) or (iii) the failure by the Company or the Servicer
to make any payment when due under this Agreement, the Loan and Security
Agreement or the Purchase, Sale and Contribution Agreement (each such event
under clauses (i)-(iii), a "Termination Event"), the Agent may designate as
Servicer any Person (including itself) to succeed Xxxxxx Xxxxxxx or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in
CLAUSE (A), Xxxxxx Xxxxxxx agrees that it will terminate its activities as
Servicer hereunder in a manner that the Agent determines will facilitate the
transition of the performance of such activities to the new Servicer, and Xxxxxx
Xxxxxxx shall, at its own expense, cooperate with and assist such new Servicer.
Such cooperation shall include, upon reasonable notice and during regular
business hours, access to and transfer of related records and use by the new
Servicer of all licenses, hardware or software necessary or desirable to collect
the Pool Receivables and the Related Security.
(c) Xxxxxx Xxxxxxx acknowledges that, in making their decision to
execute and deliver the Loan and Security Agreement, the Agent, the Lenders and
the Company have relied on Xxxxxx Xxxxxxx'x agreement to act as Servicer
hereunder. Accordingly, without the prior written consent of the Agent (which
consent shall not be unreasonably withheld or delayed), Xxxxxx Xxxxxxx agrees
that it will not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
any subservicer (each a "SUB-SERVICER"); PROVIDED, that, in each such
delegation: (i) the Agent consents, in writing, to such delegation, (ii) such
Sub-Servicer shall agree in writing to perform the duties and obligations of the
Servicer pursuant to the terms hereof, (iii) the Servicer shall remain primarily
liable for the performance of the duties and obligations so delegated, (iv) the
Company, the Agent and the Lenders shall have the right to look solely to the
Servicer for performance and (v) the terms of any agreement with any
Sub-Servicer shall provide that the Agent may terminate such agreement upon the
termination of the Servicer hereunder by giving notice of its desire to
terminate such agreement to the Servicer and each Sub-Servicer.
Section 2.DUTIES OF THE SERVICER. (a) The Servicer shall take or
cause to be taken all such action as may be necessary or advisable to administer
and collect each Pool Receivable from time to time, all in accordance with this
Agreement, the Loan and Security Agreement and the Purchase, Sale and
Contribution Agreement and all applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and Collection
Policies. The Servicer shall cause the Collections to be deposited in the Cash
Management Accounts in accordance with the Loan and Security Agreement. The
Company shall deliver to the Servicer and the Servicer shall hold for the
benefit of the Company and the Agent (for the benefit of the Lenders and
individually), in accordance with their respective interests, all records and
documents (including computer tapes or disks) with respect to each Pool
Receivable. Notwithstanding anything to the contrary contained herein, the Agent
may direct the Servicer (whether the Servicer is Xxxxxx Xxxxxxx or any other
Person) to commence or settle any legal action to enforce collection of any Pool
Receivable or to foreclose upon or repossess any Related Security; PROVIDED,
HOWEVER, that no such direction may be given unless a Purchase and Sale
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Termination Event or Unmatured Purchase and Sale Termination Event has occurred
and is continuing.
(b) The Servicer shall, as soon as practicable following actual
receipt of collected funds, turn over to the Company the collections of any
indebtedness that is not a Pool Receivable, less, if Xxxxxx Xxxxxxx or an
Affiliate thereof is not the Servicer, all reasonable and appropriate
out-of-pocket costs and expenses of such Servicer of servicing, collecting and
administering such collections. The Servicer, if other than Xxxxxx Xxxxxxx or an
Affiliate thereof, shall, as soon as practicable upon demand, deliver to the
Company all records in its possession that evidence or relate to any
indebtedness that is not a Pool Receivable, and copies of records in its
possession that evidence or relate to any indebtedness that is a Pool
Receivable.
(c) The Servicer's obligations hereunder shall terminate on the later
of: (i) the date on which the Loan and Security Agreement has been terminated
and the Obligations thereunder have been paid in full and (ii) the date on which
all amounts required to be paid to the Lenders, the Agent and any other
Indemnified Party hereunder shall have been paid in full.
After such termination, the Servicer, if Xxxxxx Xxxxxxx or an
Affiliate thereof was not the Servicer on the date of such termination, shall
promptly deliver to the Company all books, records and related materials that
the Company previously provided to the Servicer, or that have been obtained by
the Servicer, in connection with this Agreement.
Section 0.XXXX MANAGEMENT ARRANGEMENTS. On the date hereof, the
Company shall enter into one or more agreements, consistent with the terms of
the Loan and Security Agreement, with all of the Cash Management Banks and
deliver original counterparts thereof to the Agent.
Section 4.ENFORCEMENT RIGHTS. (a) At any time following the
occurrence of a Termination Event:
(i) the Agent may instruct the Company or the Servicer to
direct the Obligors that payment of all amounts payable under any
Pool Receivable is to be made directly to the Agent or its designee
and the Company or the Servicer, as the case may be, shall give such
direction at the expense of the Company or Servicer, as the case may
be, PROVIDED, that if the Company or the Servicer, as the case may be
fails to give such direction, the Agent (at the Company's or
Servicer's, as the case may be, expense), may so direct the Obligors,
(ii) the Agent may instruct the Company or the Servicer to
give notice of the Agent's interest in Pool Receivables to each
Obligor, which notice shall direct that payments be made directly to
the Agent or its designee, and the Company or the Servicer, as the
case may be, shall give such notice at the expense of the Company or
the Servicer, as the case may be; PROVIDED, that if the Company or
the Servicer, as the case may be, fails to so notify each Obligor,
the Agent (at the Company's expense) may so notify the Obligors, and
(iii) the Agent may request the Servicer to, and upon such
request the Servicer shall, at its own expense: (A) assemble all of
the records necessary or desirable to collect
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the Pool Receivables and the Related Security, and transfer or
license to a successor Servicer the use of all software necessary or
desirable to collect the Pool Receivables and the Related Security,
and make the same available to the Agent or its designee at a place
selected by the Agent, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
in a manner acceptable to the Agent and, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to the Agent or its designee.
(b) The Company hereby authorizes the Agent and the Servicer (with
the consent of the Agent), and irrevocably appoints each of the Agent and the
Servicer (with the consent of the Agent), to the extent permitted by applicable
law, as its attorney-in-fact with full power of substitution and with full
authority in the place and stead of the Company, which appointment is coupled
with an interest, to take any and all steps in the name of the Company and on
behalf of the Company necessary or desirable, in the determination of the Agent
or the Servicer (with the consent of the Agent), after the occurrence of a
Termination Event, or following the designation of a successor Servicer (if such
successor Servicer is not an Affiliate of Xxxxxx Xxxxxxx) to collect any and all
amounts or portions thereof due under any and all Pool Assets, including
endorsing the name of the Company on checks and other instruments representing
Collections and enforcing such Pool Assets. Notwithstanding anything to the
contrary contained in this subsection, none of the powers conferred upon such
attorney-in-fact pursuant to the preceding sentence shall subject such
attorney-in-fact to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
Section 5.RESPONSIBILITIES OF THE COMPANY. (a) Anything herein to the
contrary notwithstanding, the Company shall: (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Agent or the Lenders of their respective rights hereunder
shall not relieve the Company from such obligations, and (ii) pay when due any
taxes, including any sales taxes payable in connection with the Pool Receivables
and their creation and satisfaction. The Agent and the Lenders shall not have
any obligation or liability with respect to any Pool Asset, nor shall either of
them be obligated to perform any of the obligations of the Company, Xxxxxx
Xxxxxxx or the Originators thereunder.
(b) Xxxxxx Xxxxxxx hereby irrevocably agrees that if at any time it
shall cease to be the Servicer hereunder, it shall act (if the then-current
Servicer so requests) as the data-processing agent of the Servicer and, in such
capacity, Xxxxxx Xxxxxxx shall conduct the data-processing functions of the
administration of the Receivables and the Collections thereon in substantially
the same way that Xxxxxx Xxxxxxx conducted such data-processing functions while
it acted as the Servicer.
Section 6.SERVICING FEE. (a) The Servicer will receive a fee for its
services hereunder (the "Servicing Fee") in accordance with the Loan Agreement
and in an amount set forth in a fee letter, dated the date hereof, from the
Company, agreed and accepted by the Servicer, and in form and substance
satisfactory to the Agent.
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(b) If the Servicer ceases to be Xxxxxx Xxxxxxx or an Affiliate
thereof, the Servicing Fee shall be the greater of (i) the amount set forth in
clause (a) above and (b) an amount specified by the successor Servicer not to
exceed 110% of the aggregate reasonable costs and expenses incurred by such
successor Servicer in connection with the performance of its obligations as
Servicer.
(c) The Servicing Fee shall be subordinated in right of payment to
the payment in full of all of the Obligations under the Loan and Security
Agreement. No portion of the Servicing Fee shall be paid in the event that a
Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination
Event has occurred and is continuing. In the event any Purchase and Sale
Termination Event or Unmatured Purchase and Sale Termination Event has occurred
and is continuing, the Servicing Fee will continue to accrue in accordance with
this Section 6 and shall be paid to the Servicer on the date on which such
Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination
Event shall have been cured or waived.
(d) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the Company,
whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of the assets and liabilities
of the Company or any sale of all or substantially all of the assets of the
Company other than as permitted by the Purchase Agreement (such proceedings
being herein collectively called "Bankruptcy Proceedings"), the Obligations
under the Loan and Security Agreement shall first be paid and performed in full
and in cash before the Servicer shall be entitled to receive and to retain any
payment or distribution in respect of the Servicing Fee.
(e) In the event that the Servicer receives any payment or other
distribution of any kind or character from the Company or from any other source
whatsoever, in respect of the Servicing Fee, other than as expressly permitted
by the terms of this Section 6, such payment or other distribution shall be
received in trust for the Agent and the Lenders under the Loan and Security
Agreement and shall be turned over by the Servicer to the Agent (for the benefit
of the Lenders) forthwith.
(f) Notwithstanding any payments or distributions received by the
Agent and the Lenders under the Loan and Security Agreement in respect of the
Servicing Fee, the Servicer shall not be subrogated to any rights of the Agent
and the Lenders in respect of the Obligations until the Obligations have been
paid and performed in full and in cash.
Section 7.INDEMNITIES BY THE SERVICER. Without limiting any other
rights that the Agent, the Lenders or any of their respective Affiliates,
employees, members, officers, directors, agents, counsel, successors,
transferees or assigns (each, an "INDEMNIFIED PARTY") may have hereunder or
under applicable law, the Servicer hereby agrees to indemnify each Indemnified
Party from and against any and all claims, damages, expenses, costs, losses and
liabilities actually incurred arising out of or resulting from (whether directly
or indirectly): (a) the failure of any information provided to the Lenders or
the Agent by, or on behalf of, the Servicer to be true and correct in any
material respect, (b) the failure of any representation, warranty or statement
made or deemed made by the Servicer (or any of its officers) under or in
connection with this Agreement, the Loan and Security Agreement or the Purchase,
Sale and Consolidation Agreement
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to have been true and correct in any material respect as of the date made or
deemed made in all respects when made, (c) the failure by the Servicer to comply
in all material respects with any applicable law, rule or regulation with
respect to any Pool Receivable or the related Contract, (d) any dispute, claim,
offset or defense of the Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool resulting from or related to the
collection activities with respect to such Receivable, or (e) any failure of the
Servicer to perform its duties or obligations in accordance with the provisions
hereof in all material respects.
Section 0.XXXXXXX NOTE RECORDS. Servicer agrees to make all
appropriate record keeping entries with respect to Company Notes or otherwise to
reflect the payments made under Article III of the Purchase, Sale and
Contribution Agreement. Furthermore, Servicer shall hold the Company Notes for
the benefit of the Originators. Servicer will xxxx the Company Notes "CANCELLED"
and return such Company Notes to the Company upon the final payment thereof
after the occurrence of the Purchase and Sale Termination Date.
Section 9.REPORTS. On the Closing Date and on each Tuesday thereafter
(by the close of business on such day), or if any Tuesday is not a Business Day,
on the immediately following Business Day (by the close of business on such
day), the Servicer shall deliver to the Company, the Agent and each Originator
(a) a Purchase Report, as set forth in the Purchase, Sale and Contribution
Agreement containing the information set forth therein and the Company's
purchases of, and/or the contribution of, Receivables from each Originator that
are to be made on the Closing Date or that were made during the preceding week,
as applicable, and (b) an accounting of all Collections received by the Company
on the Closing Date or during the preceding week, as applicable, and any
expenditures made by the Company on the Closing Date or during the preceding
week, as applicable. In addition, on the Closing Date and on each Business Day
thereafter (by the close of business on such day), the Servicer shall deliver to
the Company, the Agent and each Originator any other reports required to be
given by the Servicer or the Company on such date under the Loan and Security
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date
first above written.
XXXXXX XXXXXXX FUNDING LLC,
By:
----------------------------------------------
Title:
FOOTHILL CAPITAL CORPORATION,
as Agent
By:
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Title:
XXXXXX XXXXXXX CAPITAL & FINANCE CORPORATION,
as Servicer
By:
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Title:
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